Productivity Commission releases issues paper to assist stakeholders with submissions for the NDIS.  In seeking comment and information the study sets out some of the issues and questions the Commission has identified as relevant at this early stage. For those making a submission there is no need to comment on every issue raised in the paper and participants are welcome to submit material on other issues, provided they are directly relevant to the study’s terms of reference.

The issues paper contains and outlines:

  • the scope of the study
  • Commission’s procedures
  • matters about which the Commission is seeking comment and information
  • how to make a submission.

This study is a review of NDIS costs and is to help inform the final design of the full scheme. The study will examine factors affecting scheme costs in light of the benefits and impacts of the scheme on the lives of people with disability, and Australians more generally.

In the Heads of Agreement signed by the Commonwealth and the States and Territories in 2012 and 2013, it was agreed that the Productivity Commission would review NDIS costs in 2017 to inform the final design of the full scheme, prior to its commencement.

The terms of reference for this study asked the Commission to look at:

  • the sustainability of scheme costs, including current and future cost pressures, and how to manage any potential cost overruns
  • whether jurisdictions have the capacity to deliver disability care and support services as the scheme expands
  • how the NDIS impacts on, and interacts with, mainstream services 
  • whether efficiencies have been achieved within the scheme
  • whether there are any issues with scheme design, including the application of market and insurance principles, in ensuring the best possible outcomes for people with profound or severe permanent disability
  • funding and governance arrangements, including financial contributions, risk-sharing, and the ‘escalation parameters’, which define the annual increase in funding required by different jurisdictions.

Future estimates – some pressures emerging

The NDIA projects that by 2019-20 the NDIS will include 460,000 participants and cost about $22 billion each year. The projections originate from work undertaken by the Commission for its 2011 report on Disability Care and Support.

At that time, the Commission projected that the scheme would cover 411,000 participants and would cost $13.6 billion (gross) at maturity. The estimates have been updated by the NDIA to include: inflation and population changes; costs associated with participants aged over 65 years (who enter the scheme prior to 65 years); and additional epidemiological data on incidence and mortality rates for different disabilities.

According to the NDIA (2016f), the projection of total scheme costs based on updating the Commission’s 2011 projections remain the most reliable available. That said, the NDIA has identified some cost pressures from the trial sites that need to be managed for the full scheme going forward. They include:

  • higher than expected numbers of children (especially in South Australia, Victoria and the ACT trial sites)
  • increasing package costs over and above the impacts of inflation and ageing (as participants move onto their second and third plans)
  • potential participants continuing to approach the scheme — the number of people approaching the scheme in some of the trial sites that have been operating since 2013 is more than would be expected if only people with newly acquired conditions were approaching the scheme
  • lower than expected participants exiting the scheme (particularly children who entered the scheme under the early intervention requirements) 
  • a mismatch between benchmark package costs and actual package costs. There is a greater than expected level of variability in package costs for participants with similar conditions and levels of function (NDIA 2016f).

The NDIA have put in place initiatives to address these cost pressures including the Early Childhood Early Intervention (ECEI) approach, and the reference package and first plan process.

The NDIS is intended to meet people’s disability support needs, not to replace other mainstream services (including, for example, health care, aged care, education and transport). The ability of the NDIS to effectively interface with mainstream services is critical to ensuring both good outcomes for participants and the long-term financial sustainability of the scheme.

In its 2011 report, the Commission also recommended the establishment of a National Injury Insurance Scheme (NIIS) to provide lifetime care and support to people who suffer catastrophic injury from a motor vehicle accident, workplace accident, medical treatment or general accident.

The development of the NIIS has been agreed to by all States and Territories and is proposed to provide fully-funded care and support for all new catastrophic injuries on a no-fault basis.

While a national initiative, the NIIS is proposed to be an amalgam of State and Territory schemes. Progressing the NIIS varies across the States and Territories. Currently no jurisdiction operates NIIS in full as envisaged by the Commission (PC 2011).

Once fully operational, the NIIS is to operate separately to the NDIS and be fully funded through premiums, levies and other contributions. Until the NIIS is fully established, the needs of some individuals who acquire a disability through a catastrophic accident will be met through the NDIS, with cost implications for the scheme. These can be reasonably expected to recede once the NIIS is fully operational.

Will the workforce be ready?

The disability care and support workforce is broad-ranging — covering in-home carers to allied health professionals. The full rollout of the NDIS will require substantial growth across all areas of the disability care and support workforce in the coming years. Understanding the nature of the challenges that will affect the expansion of the workforce, and how they will affect wages, costs and service delivery, is particularly important for this study.

Some of these challenges include:

  • Difficulties in recruiting staff for disability care and support roles. • Some jurisdictions have greater capability to meet workforce targets than others.
  • Reducing the burden on informal carers will affect the need for formal carers.  
  • An ageing population will reduce supply and increase demand for carers. 

There are a number of factors that could help the workforce be ready. These include:

  • improving the attractiveness of caring occupations
  • extending existing part-time and casual carers hours 
  • making greater use of technology to fill roles/tasks undertaken by workers, or making workers more productive
  • making greater use of skilled migration to fill persistent workforce gaps.

Will providers be ready?

Transition to the full rollout of the NDIS depends partly on the ability of disability providers to supply the goods and services demanded by scheme participants. The ability of providers to supply the supports demanded will affect the quantity, price, quality and responsiveness of supports, and therefore the costs (and benefits) of the scheme. While the development of the sector has been described as being ‘on track’ (JSCNDIS 2015, p. 77), stakeholders have identified issues that may present a risk to readiness, including:

  • The price cap set by the NDIA may not be attractive to providers
  • The small size of many providers
  • The move from block-funding to fee-for-service
  • Barriers to entry
  • In-kind services2
  • Thin markets
  • Effect of competition on not-for-profit providers

Will participants be ready?

For many participants entering the NDIS, the ability to exercise choice and control over the quantity and scope of supports will be a new experience that will provide them with freedom, dignity and a better quality of life. For some, entering the scheme, determining a plan of supports, finding providers, and negotiating services will be daunting and difficult, and perhaps especially for self-managed participants.

The response to these challenges could have a bearing on scheme sustainability, both in terms of costs and the wellbeing of participants. If participants find it difficult to negotiate the right individualised supports, then the insurance approach of the NDIS will be undermined — if participants get the wrong supports at the wrong time, scheme costs would be expected to increase. Alternatively, if participants find it difficult to find providers and negotiate services, then this could lead to underutilised supports, which would improve the bottom line of the scheme, but could have ramifications for the wellbeing of participants and future scheme costs.

The Productivity Commission is the Australian Government’s independent research and advisory body on a range of economic, social and environmental issues affecting the welfare of Australians.

Due date for submissions is March 24, 2017 with the position paper to be released in May 2017. The final report will be provided to the government on September 20, 2017 and released shortly after.

Submissions can be lodged online at: or posted to: Review of NDIS Costs Productivity Commission, GPO Box 1428, Barton ACT 2600. Freecall for regional areas: 1800 020 083 or go to: