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Tuesday, 3 May 2016
Page: 4187

Mrs GRIGGS (Solomon) (13:24): I rise to add my voice in support of the National Disability Insurance Scheme Savings Funds Special Account Bill 2016. I want to start off by picking up on a point that the member for Hughes made. We had the member for Jagajaga in here yesterday talking, predicting and being a clairvoyant. Today we have had her out at the doors talking about rounding errors. She is putting her accounting expertise out there for everyone to see. I have to say: nowhere have I ever seen $19 billion referred to as a rounding error. That puts us in the position where we have the Labor Party lecturing us on how we should fund things, and they cannot even get a rounding error definition correct. I think $19 billion for a rounding error is just horrific.

During my preparations for this speech I came across—as I am sure others in this House have—the National Commission of Audit report into the National Disability Insurance Scheme. This document, which dates back to 2014, makes some points about the uncertainties and financial pitfalls associated with the NDIS that are very relevant to this debate. Under the heading 'Drivers', the report states:

The Commonwealth’s contribution to the NDIS is expected to escalate rapidly in the forward estimates as the number of clients covered increases with the expansion of the scheme. There is some uncertainty over the actual number of clients, since the NDIS is effectively a demand driven programme. Initial estimates were based on the PC Report, but there is the potential for actual numbers to be higher. In particular, it is possible that eligibility within the broad mental health disability area may be much higher than forecast.

Around half the people currently eligible for the Disability Support Pension are likely to be in the NDIS. This suggests that there are likely to be many people who attempt to test their eligibility for the NDIS.

The report continues:

Care and support costs account for over 90 per cent of the total costs of the NDIS. Any difference between the actual and estimated average package costs will have significant financial impacts. Care and support costs are expected to be highly volatile in the early stages.

Data from the first quarter of the NDIS shows that average package costs are well above the original forecast ($46,000 compared to $35,000) … However, given the early stages of implementation it is difficult to read too much into these early estimates. It may be the case that package costs have so far been tailored to people with greater disability and therefore higher needs.

The report then goes into an examination of issues around the NDIS. It says:

The NDIS is a new scheme with associated uncertainty associated around costs and participant numbers. Most of the financial risk associated with this uncertainty will be borne by the Commonwealth. Under agreements with the States and Territories, the Commonwealth will meet 100 per cent of cost overruns during the launch and transition stages and at least 75 per cent, and up to 100 per cent, in the full scheme.

The initial roll-out of the NDIS includes both a launch and a transition phase. During this latter component, scheme numbers are forecast to increase from just over 30,000 in 2015-16 to over 450,000 in 2018-19 ... This represents a significant scaling up of operations, which poses a number of risks, including for the capacity of the new agency. It also increases the likelihood of any workforce pressures being amplified, thus potentially leading to wage pressures within the scheme. These pressures are likely to be exacerbated by increased demand for staff with similar skills in other areas such as aged care.

Next, the report moves into uncertainties around the extent of demand that the NDIS will generate. The report says:

Around 90 per cent of NDIS costs are expected to result from the provision of care and support packages. This means that a small 10 per cent increase in customer numbers and/or package costs can translate into large increases in overall expenditure.

Analysis conducted by the Australian Government Actuary has confirmed that there are uncertainties around all cost elements of the NDIS, e.g. populations, severity distributions and average costs …. .

Preliminary performance data is currently showing that the number of people registering interest in participating in the scheme is 50 per cent more than the expected number of participants for the period 1 July to 30 September 2013. Plan costs are also currently exceeding modelled average costs by around 30 per cent … Since this data on costs is only based on the first quarter of operations—

The DEPUTY SPEAKER ( Hon. BC Scott ): The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.