At last, some good news on the NDIS

It might be hard to believe – the situation has been looking dire.

Yes, the NDIS is in strife. At nearly $42 billion this financial year, and set to rise to $58 billion by 2028, the costs of the NDIS are growing too quickly for the scheme as we know it to be sustainable.

This threatens not only the government’s bottom line but also the certainty of the daily supports that hundreds of thousands of Australians with disability rely on.

You can imagine how stressed the disability community feels about the prospect of losing what they need.

Yes, the NDIS has a targeting problem – there are lots of people who need some support but get nothing from it, and there are many people who do get admitted onto the scheme but are then poorly served by it.

This is true for people with disability who get a bucket of NDIS money – sometimes in the hundreds of thousands of dollars a year – but little to no help to plan how best to spend it.

And it’s especially true for people who need early intervention, notably children, and people with psychosocial disability (a name for disability that results from mental illness).

Families get a bucket of money and then have to try to differentiate between therapies for their children, while under pressure from therapy providers.

And people with psychosocial disability often receive funding that is poorly aligned with the evidence about what works best. This risks creating dependency rather than enabling personal recovery.

And yes, the federal, state, and territory governments are now stuck in an 18-month-long negotiation gridlock about how to fund “foundational supports” – that is, less-intensive supports for all people with disability, many of whom aren’t eligible for the NDIS.

The original plan was for these supports to be rolled out from July 1, 2025 – tomorrow. But we now know that is not going to happen.

To make matters worse, hospital funding and state GST revenue are also bundled up in the same negotiation.

So, what’s the good news? Governments can fix all these problems with the NDIS. And the better news is that they can do it without spending any extra money.

Grattan Institute’s latest report – Saving the NDIS: How to rebalance disability services to get better results – lays out how governments can solve these policy problems, ensuring the NDIS will still be here for future generations of Australians who need it.

The solution is in better spending the money already in the disability services system.

By redirecting a small amount of funding from the NDIS – about 10 per cent – governments can fund an ambitious program of foundational supports.

This would mean that, with the same money, more people with disability could get more services.

Setting up more services is vital for saving the NDIS, too.

Foundational supports are the missing middle of disability supports, helping people who need a bit more than mainstream services, but who don’t need a high-cost individualised plan.

Disability services for people with lower-intensity support needs, and for children and people with psychosocial disability, would help take pressure off the NDIS in two ways.

First, by helping to reduce, prevent, or delay people’s need for more intensive individualised support from the NDIS.

Second, diverting people to foundational supports would take pressure off the NDIS because disabled people would have somewhere else to go for the support they need.

NDIS eligibility should be changed so that children with developmental delay and disability are directed to commissioned services that cost less and better serve more children and families for the same funding.

Grattan Institute’s plan factors in the $19 billion of savings that the government is banking on over the next four years, and goes one better.

Our plan would result in a further reduction in NDIS payments of about $12 billion over the next 10 years, and a further saving of $34 billion over the same period from not needing to find new money to fund foundational supports.

Governments have been pushing to reach the 8 per cent growth target for the NDIS by July 2026, set by national cabinet in April 2023.

And yet, since September 2023, the performance of the National Disability Insurance Agency against its participant service guarantee – a set of metrics designed to ensure a basic level of timely service to people with disability – has nosedived.

Notably, performance against the metrics that drive NDIS growth – decisions about whether people can get into the scheme, and reassessments of their plan funding – have fared badly, with the agency meeting both metrics less than 25 per cent of the time.

People with disability must be the focus of NDIS reform.

Our analysis shows that the federal, state, and territory governments can rein in NDIS costs in ways that will make the NDIS better and fairer – and more sustainable.

Governments should make an urgent course correction. The NDIS is worth saving. It is a vital part of Australia’s social fabric that can still be world leading.

All of these services for the same money – now that’s a good news NDIS story.