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The National Disability Insurance Scheme:
Is it financially sustainable?
Indicators to keep an eye on
The National Disability Insurance Scheme (NDIS) is already wreaking significant change on the disability support sector.
The NDIS will fund 460,000 individual support packages for eligible participants, plus “information, linkage and capacity building” for people
who are deemed ineligible. The total annual budget for the NDIS is set at $22 billion, following the full implementation of the scheme in
The question remains though, is $22 billion enough? Is the NDIS financially sustainable in its current shape and form?
This article will outline the four key indicators that will determine the financial sustainability of the NDIS, as well as advice for both
consumers and providers within the scheme.
Indicator One - Pricing of funded supports
Unit Price for Standard Personal / Community Support
July 2014 July 2015 July 2016
Estimated Transitional Price
In 2014, the government’s plan was to step down to an efficient unit
price for standard personal/community support by July 2016.The
original estimated efficient price was $39.80/hour (future value after
indexation and Equal Remuneration Order adjustments).
However, the reality is that as of July 2016, the actual price is
$42.79/hour ($43.58/hour for ACT/SA/WA/NT) - 7.5% higher than
Indicator Two - Level of funded supports
Average Annual Package Cost (2015-2016)
The average annual package cost is an important indicator that
combines the effects of price and service level of supports funded.The
original modeled average cost by the Productivity Commission was
$34,969.The National Disability Insurance Agency’s (NDIA) benchmark
or “target” for 2015-16 was $38,588.
The actual average annual package cost for the four trial sites
combined (Hunter, Barwon, Canberra and Perth Hills - other sites
that have either just commenced transition or have an age-biased
participant population have been excluded) was $43,275, exceeding
the benchmark by 12%, and 24% higher than originally modelled.
Price of funded
Level of funded
Total budget required
The following key indicators are important to keep an eye on, if you’re concerned about the financial sustainability of the NDIS.
Indicator Three - Number of participants with
Number of Participants
ACT Trial SA Trial
Original Estimate (provided by States)
The number of participants estimated to receive individual packages
under the NDIS (i.e. becoming “participants”) at full scheme was
460,000.There are early signs that the actual number of participants
eligible for individual funding may be significantly higher, as
demonstrated in the chart above.
Trial site experience so far has revealed that the estimated number
of participants has been raised by 36% in the ACT across all ages
and 68% in South Australia for children up to the age of 14, which is a
Indicator Four - Non-participant expenses
NDIS Budget Breakdown 2019/2020
There are three categories of non-participant expenses that make
up approximately 10% of the NDIS total budget, on top of individual
funding to participants:
1. Specialist Disability Accommodation (SDA) funding -
Although SDA will be included in participants’ NDIS plans, it will only
be paid directly to registered SDA providers of enrolled properties, as
a contribution towards capital costs of land and buildings. SDA only
commenced from July 2016, and will have an annual budget of $700
million when the NDIS is fully rolled out.
2. Information, Linkage, and Capacity Building (ILC)
grants - $131m budget
ILC is expected to support 900,000 people with a disability who will
not be eligible for individual funding.The grants component of this
funding stream will have an annual budget of $131 million.The Local
Area Coordination (LAC) component of ILC is included in Agency Costs
3. Agency Costs including LAC - $1.3 billion budget
At full scheme, the $1.3 billion budgeted for agency costs is expected
to cover all operating costs of the NDIA and the outsourced LAC
The combined effect
The above factors determine the total budget required for the NDIS. If
the average package cost is 12% higher than budgeted, as across the
four trial sites so far, and the number of participants increases by 36%
as seen in the ACT, then the whole scheme would have a 47% or over
$10 billion budget blowout by the time it has fully rolled out.
If this is going to be the case, the government may take one or a
combination of the following actions to address this discrepancy in the
1. Tighten up prices
Given the price points for personal and community supports are
already very low, supported accommodation and allied health therapy
prices may be scrutinised and tightened, as these two services are
perceived to be lucrative under the current fee schedule.
Participants may be asked to make a co-contribution towards their
package costs (like an insurance excess) or pay a gap fee when using
“non-bulk billing” services. Many quality services may be deemed as
3. Reduce the level of supports people receive within
This could be done in a number of ways, including
■■ universally cutting back hours and budgets by adopting leaner
■■ gradually reducing certain supports or restricting them to once
off, such as support coordinating and therapy; or,
■■ tightening up eligibility criteria for “high and complex needs” and
access to higher levels of supports.
In trial sites, we have seen significant budget reduction in some
individuals’ second or third plans compared with their first plans.
4. Tighten up eligibility for individual packages
The NDIS is not a capped scheme, so there is no ceiling for the total
number of participants. However, access criteria may be adjusted
to make it harder for people with lower levels of needs to access
5. Reduce the budget for non-participant expenses
Insignificant savings may be achieved through outsourcing/reducing
other functions of the NDIA in addition to the LAC.
Advice for people with a disability
The budget pressure means it may become harder to access the
scheme, plan budgets may be reduced, and individuals may be asked
to make co-payments.
To protect your own interest, the following actions should be taken:
1. Submit your access request and book planning meetings as soon
as the NDIS starts rolling out in your area or for your age group;
2. Prepare yourself before the planning meeting by reviewing your
support needs, prioritising, substantiating and articulating your
needs, and try to include everything you can as long as they are
“necessary and reasonable”;
3. Use up your package budget within the plan period as you may
not get the same level of funding again next year (unless there is
a valid reason, e.g. no provider/long waits); and,
4. Set reasonable expectations about the level and continuity of
certain supports within your individual funding packages.
Advice for service providers
As a service provider, if you expect the NDIS to be a significant source
of income, then be prepared for (more) changes to how plans are
constructed and funds are allocated, and take the following actions:
1. Review your business model regularly, conduct scenario analysis
and test how and to what extent your organisation would be
affected by changes in NDIS prices, service demand, service mix
2. Consider whether and how to grow and diversify. Generally,
growth gives you larger scale to derive efficiency and reduce
costs, whilst diversification means eggs are not kept in one
3. Be agile. Maintain sufficient cash reserve and a flexible workforce.
If you need additional fixed assets, try leasing rather than outright
purchasing. If you need to upgrade IT systems, try cloud-based
4. Stay tuned to changes and developments of the NDIS. Read
NDIA’s quarterly reports, dashboards and market position
statements, ask peer organisations in trial sites about their
experience, and analyse your clients’ NDIS plans for trends.
How can Nexia Australia help?
Nexia Australia’s NDIS specialists can assist current and
future service providers with NDIS transitioning, costing
and pricing, business models and processes as well as
Contact NDIS Specialist, Billy Kang, to discuss your
t 02 6279 5400
m 0413 220 679