Zoe Mithen Disability advocate
Fixing the NDIS mess requires honesty, not scapegoating. Costs can only be controlled by limiting participant numbers – tightening eligibility – or cutting average per person funding levels
Since 2017, when the National Disability Insurance Scheme rolled out in my area of Victoria, it has been a lifeline.
Living with schizoaffective disorder (bipolar type) and autism level 2 – diagnosed only in middle age – I’ve experienced firsthand how the scheme can transform lives.
The NDIS’s cost troubles trace back to 2013, when Labor debated the NDIS Bill in Parliament amid leadership turmoil, and provided inaccurate figures for the costs. Andrew Meares
However, I’m increasingly dismayed by the narrative that NDIS participants like me are to blame for spiralling NDIS costs. This isn’t just unfair – the problems with NDIS costs are a symptom of a deeper public policy failure that began more than a decade ago.
For five years, NDIS participants have lived in limbo, uncertain about future funding and support. Media headlines decry ballooning costs – now exceeding $42 billion annually – while politicians dodge accountability.
As someone with a BA in history, I’ve spent years slowly researching the NDIS’s financial foundations. What I’ve uncovered is a story of missteps, miscalculations, and missed opportunities that should alarm anyone who values sound economic governance.
The NDIS’s cost troubles trace back to 2013, when Labor debated the NDIS bill in parliament amid leadership turmoil, and provided inaccurate figures for the costs. It was an election year and the Liberals probably didn’t want to debate the bill stringently as they didn’t wish to look harsh.
The Productivity Commission’s 2011 report, which underpinned the NDIS, estimated an annual cost of $13.6 billion – a $6.1 billion increase over the $7.5 billion then spent by federal and state governments on disability services.
But this figure was static, unadjusted for inflation – “2011 dollars”, not future dollars.
By 2018-19, the scheme’s planned national rollout year, inflation alone would have pushed costs higher.
Then came the Fair Work Commission’s 2012 social, community, home care and disability services (SCHADS) industry award decision, hiking disability sector wages. This hadn’t been factored into the Productivity Commission’s estimate.
In addition, the Productivity Commission underestimated participant numbers. It relied on industry consultations – reflecting existing, underfunded services – rather than ABS data. Many eligible people were missing out on pre-NDIS; the scheme was meant to fix that.
Current ABS data shows 750,000 Australians aged from birth up to 65 have severe or profound disabilities, and are eligible for the NDIS. There are also people eligible for the NDIS as they need early intervention, or are already NDIS participants and turn 65 and opt to stay in the NDIS rather than go to My Aged Care.
Enter the Australian Government Actuary, tasked by Treasury under then-treasurer Wayne Swan to update these figures. In 2012, the AGA projected the NDIS would cost $22 billion annually by 2018-19, incorporating wage increases and inflation, with an average cost of $50,000 per annum per participant. Yet participant estimates barely budged.
At a May 2012 Senate Estimates hearing, these issues surfaced. The Liberals questioned the Productivity Commission and the AGA, speaking about the 2011 estimate not being in future dollars, and the 2012 SCHADS award decision, and even raising the possibility of 700,000 NDIS participants.
Labor’s Penny Wong deflected, accusing critics of opposing the NDIS – a tactic to stifle debate.
“Australians with disabilities aren’t the problem; poor policy is.”
Fast forward to 2013: the Parliamentary Bills Digest claimed the NDIS would cost $14 billion annually – a figure suspiciously close to the outdated 2011 estimate. Only three MPs mentioned costs during the NDIS Bill debate.
Liberal Paul Fletcher cited the AGA’s $22 billion – correctly. Labor’s Ed Husic said $15 billion – wrongly. Andrew Wilkie referred to costs but dismissed the need for restraint. The rest stayed silent on the matter.
The NDIS Act passed in March 2013 with most of parliament believing the cost would be $13.6 billion a year. Yet a couple of months later, when the 2013 budget emerged, it confirmed the $22 billion figure cited by Fletcher. The die was cast.
The NDIS’ gradual rollout masked these flaws initially. Costs didn’t balloon until 2020, as participant numbers surged. Today, more than 610,000 people rely on the scheme. Around 200,000 more people than the 2011 Productivity Commission’s estimate of 411,000.
Average funding per person has risen too, but only in line with price inflation, going from $50,000 in 2019-2020 to $65,200 now, tracking NDIS price inflation of 4.5 per cent to 5.5 per cent annually. At 5 per cent inflation per annum, $50,000 in 2019-2020 becomes $63,814.08 by 2024-25 – roughly where we are now.
Aside from agency expenses, the NDIS cost formula is simple: participant numbers times average funding per person. But the SCHADS award hike and inflation increased average funding, and participant numbers were underestimated from the start.
This isn’t pedantry about a decade-old error. It’s about a failure that haunts participants today. Since 2020, we’ve faced relentless scrutiny, blamed for a “cost blowout” that was predictable from 2012.
Politicians who botched the policymaking now point fingers at us. The NDIS was meant to foster inclusion, not vilification.
Fixing this mess requires honesty, not scapegoating. Costs can only be controlled by limiting participant numbers – tightening eligibility – or cutting average per-person funding levels. Neither option is palatable without transparent debate.
The Albanese government’s recent reforms do not show us the details of what will happen. This doesn’t just affect participants. Businesses in the $42 billion NDIS ecosystem – providers, employers, and investor – need clarity too. Uncertainty stifles planning and innovation.
Australians with disabilities aren’t the problem; poor policy is. In 2013, parliament had a chance to get this right. It didn’t. Today, we bear the cost – financially and emotionally.
The media should hold policymakers accountable, rather than scapegoating participants. The NDIS’s promise depends on it.