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Tuesday, 3 May 2016
Page: 4251


Mr PORTER (PearceMinister for Social Services) (17:45): I thank the members opposite for their contributions to this second reading debate on the National Disability Insurance Scheme Savings Fund Special Account Bill 2016. I start by noting that the government is fully committed to properly, adequately and sustainably funding the National Disability Insurance Scheme.

It is for precisely that reason that the government is bringing forward this bill to establish a new ongoing special account that will assist the Commonwealth in meeting its future financial commitments to the NDIS. The special account created by this bill will be known as the National Disability Insurance Scheme Savings Fund Special Account. For the purposes of this contribution, I will simply refer to it as 'the savings fund'.

The savings fund will allow the government, over future budgets, to identify savings from existing programs and set aside those savings to assist in meeting the Commonwealth's financial commitments to the NDIS. Let us be crystal clear: a failure to support this bill—a bill designed to establish a vehicle in which the Commonwealth government can accumulate clearly identified savings and protect those savings for the exclusive use of the future funding of the NDIS—is a failure to support a process that is absolutely necessary for the NDIS. It is absolutely necessary to give certainty and peace of mind to the 460,000 estimated participants. It is absolutely necessary to also give assurance to all Australian citizens that the NDIS funding gap, which is absolutely real and which arises in 2019-20, will not be funded by further taxes or by borrowings.

The only conceivable reason to not support a bill designed to protect savings for the care of Australians with a disability would be misplaced political pride. To not support this bill because of a preference to maintain a pretence that there is no challenge of funding here, a pretence that there is no funding gap that needs addressing, would be a shameful triumph of political party pride and a wish to establish a mythology over the interests of participants and soon-to-be participants of the NDIS.

It is staggering that the Labor Party would prefer to have 460,000 participants know that Labor did not support a bill that gives financial certainty to the scheme because they preferred to maintain a pretence that there is no challenge of funding, inherent in the NDIS, arising in 2019-20. I will come, shortly, to this issue of the funding gap and to the fact that members opposite wish to maintain this pretence that there is no challenge here, that all funding is perfectly identified and protected and available. That is simply—on any measure and any assessment—incorrect.

I find it completely staggering that there is not fulsome support for a bill that gives certainty to the 460,000 participants to the NDIS. That certainty is necessary because of a financial failure of members opposite to address an issue and a challenge that was always going to be confronted by any government when the NDIS went full scheme in 2019-20. Presently, to fund the NDIS, the Commonwealth redirects existing disability related spending and the DisabilityCare Australia Fund towards the cost of the NDIS.

There are three essential, clearly identified and known sources of funding for the NDIS. The first is existing Commonwealth disability funding, which is redirected towards the NDIS. That accounts for about $1.1 billion. These figures I am using relate to the 2019-20 year. In 2019-20 $1.1 billion is garnered from existing Commonwealth disability funding being redirected towards the NDIS. The Commonwealth share of the increase in the Medicare levy, through the DisabilityCare Australia Fund, in 2019-20 will be $3.3 billion. Redirecting funding that is currently provided to the states for specialist disability services accounts, in 2019-20, for $1.9 billion.

Therefore, in total, the Commonwealth directs slightly over $6 billion—about $6.3 billion—from these three known, clearly identifiable sources to the NDIS. The Commonwealth's responsibility, financially, to the NDIS in 2019-20 is around $11.3 billion. There is $6.3 billion covered. That leaves a gap of close to $5 billion in 2019-20 and a gap that grows each year the NDIS grows, as it certainly will do after 2019-20. Therefore, what the government is facing—and this is not a political problem; this is a problem of financial reality—is a funding gap of close to $5 billion that arises in 2019-20 when the NDIS transitions to a full scheme, and that grows in the years after 2019-20.

Members of the previous Labor government make some claims that, essentially, they 'clearly identified' additional savings to assist in meeting the funding requirements of the NDIS from 2019-20. I put to the House, and I do so in great confidence, that that pretence is a very clumsy attempt to rewrite history and to claim now that there were adequate specific savings set aside to fully fund the NDIS. That pretence is wrong, and demonstrably wrong, for three reasons. The first is that the claim that enough savings to cover that $5 billion further half of Commonwealth spending were, in the words of members opposite, 'clearly identified' is simply not capable of anything resembling proper verification.

Let me start to address that issue by saying that Labor's actual budget papers at the time—not the glossies and not the pamphlets, but the actual budget papers of the time—did not link savings to the NDIS. That proposition appeared in a 2013-14 budget glossy. That budget glossy has a chart which appears in the document on page 4. The chart is entitled 'Meeting the costs of DisabilityCare in Australia'. It notes those sources of funding that I have noted. It notes some of the areas of funding that can be identified, and they are reforms to retirement incomes and private health insurance reforms—and I will come to address those in a moment. But then, curiously, it has entries depicted in blue on the bar graph which are described in these terms: 'Other long-term savings'. By any basic arithmetic and calculation of what those 'other long-term savings' would need to amount to to cover that $5 billion gap to which I have just referred, there would have to be in the vicinity of $2.4 billion worth of 'other long-term savings' in 2019-20.

On a number of occasions, I have heard several members opposite say these 'other long-term savings' were verified: Treasury verified them; they have been discussed in Senate estimates. The notion that these 'other long-term savings' have been verified is simply not true. Let me read to you a passage from Senate estimates:

Senator FIFIELD: Mr Ray, I might just return to the helpful document you provided at the start of proceedings today and try my luck. This relates to chart 3, 'DisabilityCare Australia' on the last page of the document. There is a category 'Other long-term savings' of $20.6 billion for 2013-14 to 2022-23. Are you able to further disaggregate that by each of the measures there over the time scale?

Here is a direct question to the Treasury official referring directly to that budget glossy that I have just referred to. It referred directly to what must have been $2.4 billion worth of savings in 2019-20, and Senator Fifield noted here that it represented a figure of $20.6 billion between 2013-14 and 2022-23 that is described simply as 'other long-term savings'. The question was: can you tell us what those other long-term savings are? The Treasury representative commenced his answer by saying:

The short answer is no, because for one of those measures we cannot tell you at all what the out numbers are, and that is the change to the indexation of tobacco excise.

Does that ring any bells? Is this not the past coming back to haunt the present? Mr Ray went on to say:

… we cannot disaggregate it because of that.

On 5 June 2013, despite assurances by members opposite that this was all sorted through and the Treasury had given a very crisp, delineated, disaggregated explanation of what 'other long-term savings' were, when directly asked the question in estimates the Treasury official simply could not identify what those were. The first problem with the claim that this funding gap does not exist—the pretence clung to by members opposite—falls down because this notion that there were clearly identified savings just cannot be verified. That phrase, 'clearly identified savings', has several different nomenclatures about it. The member for Jagajaga wrote me a letter which refers to 'a number of savings and revenue measures'. So we have got 'other long-term savings' and 'a number of savings and revenue measures', and I have seen the formulation of 'other savings' used.

Mr Deputy Speaker, I am sure that you would tend to agree that, when you are dealing with reformation, this is one of the greatest reforms in the history of welfare services in Australia. You are dealing with a figure of $2.4 billion arising in 2019-20 and the best that you can do in clinging to the pretence that that is fully funded is to describe globally that amount in 2019-20 as 'other savings'. A figure of $2.40 is miscellany; $2.4 billion should be capable of list based Excel spreadsheet verification—it just should be. Anyone opposite who wants to provide that list to me, I would very much like to see it. The offer is standing.

The member for Jagajaga writes me a letter bemoaning the fact that we state quite correctly that there is a $5 billion gap. I invite her to send me the consolidated list of what savings add up to $2.4 billion in 2019-20. What are they? It is simply not good enough in this place to say that 'other savings measures' is an accurate, adequate and purposeful description of one of the biggest welfare reforms that has ever occurred in Australia's history when that description is meant to describe a very large piece of the funding that is required to make the system real. The first reason is that this notion of 'clearly identified savings' is only to be accepted if you accept that it is appropriate to describe $2.4 billion worth of savings as clearly identified with the use of the term 'other'. It is simply not good enough. The second reason why there is a big problem with the contention that there is no funding gap in 2019-20 is that the golden rule of public finances is that where a genuine budget savings is made it can only be spent once. Labor announced its supposed NDIS funding in the 2013-14 budget, or so it is claimed by members opposite. But let me simply state from the outset that, while many of the savings can never or have never been verified, it is also the case that many of the savings measures that had at least been nominated had been announced significantly before the NDIS appeared in budget papers and had been on any reasonable assessment of the circumstances of their announcement assigned to other purposes, with no mention of the NDIS whatsoever.

I will just stop at this point and note here that in the mad scramble to cover over what has been described as a rounding error with respect to tobacco excise, the shadow Treasurer today—and I believe I am quoting him if the media are reporting accurately, and I have no reason to believe that they are not—said that you do not need to worry about the fact that the revenue is $20 billion short on the excise. You do not need to worry because of the fact that 'Labor has never directly hypothecated the revenue from tobacco excise for school spending'. Let me say that now, in scrambling to correct an error, things have to be directly hypothecated, but it seems to be good enough back in 2013-14 to simply announce a savings measure within the 24-month period that you also announce a spend, and the two are meant to be linked. The reality is that reforms from private health insurance, which are claimed to be set aside for the NDIS and which were estimated for $1.1 billion worth of funding in 2019-20, were announced in MYEFO prior to the budget that committed to and supposedly funded the NDIS. Those savings were described in these terms:

Savings from this measure will be redirected to partially offset the cost of the Dental Health Reform package announced on 29 August 2012.

Then, globally, all of the savings in that MYEFO were described by the member for Lilley in these terms:

To return the budget to surplus in 2012-13 and beyond, the Government has made substantial targeted savings, ensuring that Australia's public finances remain strong.

At the time that they are announced they are spent on dental health care. They are spent on budget repair. Then years later they are claimed for the NDIS. This is simply absurd. These are the problems that have arisen. This is the reason why we need to fix this gap and this is the reason the legislation is before the House. If members opposite fail to support it, that will be known in every school hall and every town hall around this nation.

Question agreed to.

Bill read a second time.

Message from the Administrator recommending appropriation announced.