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2024–25 Budget Issues Brief no. 25
NATIONAL DISABILITY INSURANCE SCHEME FUNDING
Key points
•
The Government is providing $468.7 million over five years from 2023–24 to support people
with disability and get the National Disability Insurance Scheme (NDIS) back on track.
–
This includes funding to detect and address fraud and noncompliance, upgrade the NDIS
Quality and Safeguards Commission’s ICT environment to better safeguard NDIS
participants, and respond to key NDIS Review recommendations.
•
On 27 March 2024, the Government introduced the National Disability Insurance Scheme
Amendment (Getting the NDIS Back on Track) Bill 2024 No. 1 (the Bill) to Parliament.
–
Changes included in the Bill will provide NDIS participants with greater transparency and
flexibility in relation to their plans.
–
The Bill will moderate growth in NDIS expenditure by determining NDIS participant plan
budgets more consistently based on participant need, supporting participants to spend in
accordance with their plans, clarifying the information that participants need to provide to
support plan reassessments, and clarifying what types of supports can be funded.
•
Payments related to the NDIS are expected to increase by $1.3 billion in 2023–24 and
$14.6 billion over 4 years from 2024–25 ($15.9 billion over 5 years from 2023–24). This
comprises:
–
$1.0 billion in 2023–24 and $14.4 billion over four years from 2024–25, based on revised
projections from the NDIS Actuary showing increased expenditure on supports for NDIS
participants
–
$0.3 billion in 2023–24 and $0.2 billion over four years from 2024–25, due to accounting
adjustments relating to state and territory ‘in‐kind’ supports and updates to estimates of
NDIS participants in residential aged care.
•
The NDIS legislative reforms being undertaken by the Government as part of the
National
Disability Insurance Scheme – Getting the NDIS back on track measure are expected to offset
these increases and moderate the additional growth in NDIS payments by $14.4 billion over four
years from 2024–25.
–
Taken together, payments related to the NDIS are expected to increase by $1.5 billion
over five years ($1.3 billion in 2023–24 due largely to unavoidable spending, and
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$0.3 billion over four years from 2024–25 from accounting adjustments related to state
and territory ‘in‐kind’ supports, updates to estimates of NDIS participants in residential
aged care, and impacts from migration decisions).
•
Total NDIS participant costs are now projected to be $40.7 billion in 2023–24 and $207.6 billion
over the four years from 2024–25 in underlying cash terms (or $42.4 billion in 2023–24 and
$211.3 billion over the four years from 2024–25 in fiscal balance terms). This is broadly
consistent with the 2023–24 MYEFO estimates.
•
Total NDIS participants as at 31 December 2023 were 646,449.1
Key facts and figures
2024–25 Budget funding to get the NDIS back on track
•
The Government will provide $468.7 million over five years from 2023–24 through the measure
National Disability Insurance Scheme ‐
getting the NDIS back on track. This funding
includes:
–
$160.7 million over four years from 2024–25 (and $24.6 million per year ongoing) to
upgrade the NDIS Quality and Safeguards Commission’s ICT environment, to better
protect the safety of NDIS participants, reduce regulatory burden on NDIS providers, and
improve cyber security
–
$129.8 million over two years from 2023–24 (announced on 30 January 2024) for initial
design and consultation work in response to the findings of the NDIS Review, including to
reform how supports are determined and funded, and to develop additional foundational
supports outside the NDIS
–
$83.9 million over two years from 2023–24 (announced on 18 February 2024) to
commence work on boosting fraud detecting information technology systems at the
National Disability Insurance Agency (NDIA), to further safeguard the integrity of the NDIS
–
$45.5 million over four years from 2024–25 (and $13.3 million per year ongoing) to
establish a NDIS Evidence Advisory Committee, to provide independent and transparent
advice to Government on the efficacy and cost‐benefits of supports funded by the NDIS
–
$23.5 million over two years from 2024–25 for Services Australia to continue fraud
investigation and response activities as part of the Fraud Fusion Taskforce
1 NDIS Quarterly Report, Quarter 2 2023‐24.
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$20.0 million over two years from 2024–25 for initial design and consultation work on
reforms to help participants and people with disability navigate services
–
$5.3 million in 2024–25 for the Independent Health and Aged Care Pricing Authority to
work with the Department of Social Services and the NDIA to undertake initial work to
reform NDIS pricing arrangements, including reviewing existing pricing approaches and
developing a pricing data strategy.
–
The Government will also establish a NDIS Implementation Advisory Committee and a
NDIS Implementation Working Group, to oversee implementation of reforms
recommended by the NDIS Review and agreed by Government.
–
The Government has already provided partial funding for this measure in previous
updates.
NDIS legislative reform
•
The National Disability Insurance Scheme Amendment (Getting the NDIS Back on Track) Bill
2024 No. 1 (the Bill) was introduced into the Parliament on 27 March 2024. The Bill continues
the work of the Government to improve outcomes for NDIS participants and will support the
effective and sustainable operation of the NDIS.
•
The Bill creates a new reasonable and necessary budget framework for NDIS participant plans,
aligned with the original intent of the NDIS to support people with permanent and significant
disability as part of a broader system of supports.
•
The Bill provides for a needs assessment process and method for calculating the total amount of
a participant’s funding at a whole‐of‐person level, to be specified in NDIS rules and/or other
legislative instruments. These instruments will be developed in consultation with people with
disability, and health and allied health technical professionals.
•
The Bill includes a new definition of ‘NDIS supports’, to clarify which supports will be funded by
the NDIS, and which supports will not.
•
The Bill will also allow the CEO of the NDIA to specify the total funding amount under a
participant plan, and will clarify the requirement that an NDIS participant may only spend NDIS
funding in accordance with their plan.
•
These changes are projected by the NDIS Actuary to moderate growth in NDIS payments by
$14.4 billion over four years from 2024–25, taking into account the annual growth targets under
the NDIS Financial Sustainability Framework which take effect from 1 July 2026. The projected
moderation in growth takes into consideration the expected impact and implementation
timeframes of the legislative changes. This includes changes that will have a more immediate
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impact, such those to support participants to spend in accordance with their plans, as well as
the impact of the proposed new needs assessment and budget model as part of the new
planning framework for the NDIS.
•
The impact of these legislative changes are in addition to the impact of the administrative
changes announced in the 2023–24 Budget through the measure titled
Improving the
Effectiveness and Sustainability of the National Disability Insurance Scheme.
Changes to the NDIS estimates
•
The current NDIS estimates (as at the 2023–24 MYEFO) are based on the 2022–23 Annual
Financial Sustainability Report, which uses data up to June 2023. The NDIS Actuary has
subsequently updated the projections using data up to December 2023. This update projects
additional payments of $1.0 billion in 2023–24 and $14.4 billion over the four years from
2024–25 compared to the 2023–24 MYEFO estimates and taking into account the NDIS
Sustainability Framework targets from 1 July 2026. The impact of these changes on the NDIS
estimates, by year, are included in the
National Disability Insurance Scheme – getting the NDIS
back on track measure as related payments variations.
•
Budget Paper No.1, Statement 3, shows that the Government has increased the NDIS
participant cost estimates (in underlying cash terms) by $1.3 billion in 2023–24 and $0.3 billion
over four years from 2024–25, compared to the 2023–24 MYEFO (refer Table 1 below). This
incorporates:
–
the increase of $1.0 billion in 2023–24 and $14.4 billion over four years from 2024–25
consistent with the NDIS Actuary’s December 2023 projections, once the impact of the
NDIS Financial Sustainability Framework is accounted for
–
a decrease of $14.4 billion over four years from 2024–25 due to the moderation in
expenditure growth from NDIS legislative reform
–
an increase of $269.6 million in 2023–24 and $236.8 million in 2024–25, due to changes in
the accounting treatment of state and territory ‘in‐kind’ contributions
–
an increase of $20.7 million over four years from 2024–25 from the 2024–25 Budget
measure
Permanent Migration Program ‐ 2024–25 planning levels and multi‐year planning
–
an increase of $7.7 million in 2023–24 and $5.2 million over four years from 2024–25 from
revisions of expenditure estimates for NDIS participants in residential aged care.
•
Budget Paper No.2, Statement 6, shows that expenses related to the NDIS are estimated to
increase by $11.1 billion over four years from 2023–24 to 2026–27 and $4.5 billion in 2027–28
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(or $15.6 billion over five years from 2023–24), prior to the impacts of the NDIS legislative
reforms.
–
This $15.6 billion increase to expenses is different to the $15.9 billion increase to
payments due to the timing of payments, and because accounting adjustments relating to
state and territory ‘in‐kind’ contributions impact payments but not expenses.
•
NDIS participant costs are projected to grow in underlying cash balance terms by:
–
11.1 per cent in 2024–25
–
10.6 per cent in 2025–26
–
8.1 per cent in 2026–27
–
8.1 per cent in 2027–28.
•
Projected growth in fiscal balance terms is 9.3 per cent in 2024–25, 9.5 per cent in 2025–26,
8.0 per cent in 2026–27 and 8.0 per cent in 2027–28, consistent with the commencement of the
NDIS Financial Sustainability Framework from 1 July 2026.
•
The Commonwealth share of participant costs is projected to grow in underlying cash balance
terms by 11.9 per cent in 2024–25, 11.9 per cent in 2025–26, 9.6 per cent in 2026–27 and
9.4 per cent in 2027–28 (refer Attachment A).
Table 1: Changes to the NDIS estimates since the 2023–24 MYEFO
Underlying cash balance
2023‐24 2024‐25 2025‐26 2026‐27 2027‐28
Total over
($billion)
4 Years from
2024‐25
2024‐25 Budget
‐40.7
‐45.2
‐50.0
‐54.0
‐58.4
‐207.6
NDIS Actuary Dec 2023
‐1.0
‐2.0
‐3.8
‐4.1
‐4.5
‐14.4
projections
Changes to in‐kind
‐0.3
‐0.2
0.0
0.0
0.0
‐0.2
accounting treatment
2024‐25 Migration Planning
0.0
..
..
..
..
..
Program measure
NDIS participants in
..
..
..
..
..
..
residential aged care
NDIS legislative reforms
0.0
2.0
3.8
4.1
4.5
14.4
2023‐24 MYEFO (baseline)
‐39.4
‐45.0
‐50.0
‐54.0
‐58.4
‐207.3
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Medium term
•
Medium term projections for NDIS participant support costs are unchanged from the
2023–24 MYEFO and reflect the continued impacts of the annual growth targets under the NDIS
Financial Sustainability Framework.
•
NDIS Commonwealth‐funded participant payments growth is expected to average 9.2 per cent
over the medium term (2024–25 to 2034–35), compared to 10.1 per cent in the
2023–24 MYEFO (2023–24 to 2033–34).
•
This average annual growth rate includes the commitment of National Cabinet to an NDIS
Financial Sustainability Framework from 1 July 2026 through to the end of the medium term
(2034–35).
•
NDIS medium term projections do not yet reflect the increase in the cap on state and territory
NDIS contribution escalation rates from 1 July 2028, agreed at National Cabinet on
6 December 2023 as part of negotiations around the next National Health Reform Agreement
(NHRA). The Contingency Reserve includes a provision to reflect the outcomes of the December
National Cabinet meeting. Changes to the medium term NDIS projections to reflect National
Cabinet decisions will be considered once there is final agreement to the next NHRA, expected
later in 2024.
Background
National Cabinet decisions
•
On 28 April 2023, National Cabinet committed to a NDIS Financial Sustainability Framework to
moderate growth in NDIS costs. The Framework provides an annual growth target for NDIS
participant support costs of no more than 8 per cent by 1 July 2026, with further moderation of
growth as the Scheme matures.
•
On 6 December 2023, National Cabinet agreed to work together to:
–
implement legislative and other changes to the NDIS to improve the experience of
participants and restore the original intent of the Scheme to support people with
permanent and significant disability, within a broader ecosystem of supports
–
adjust state and territory NDIS contribution escalation rates, increasing from 4 per cent to
be in line with actual Scheme growth, capped at 8 per cent, with the Commonwealth
paying the remainder of Scheme costs growth, commencing from 1 July 2028.
•
National Cabinet also agreed on 6 December 2023 to jointly design additional foundational
supports, with:
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foundational supports to be delivered through existing government service settings where
appropriate, phased in over time
–
funding to be agreed through new Federal Funding Agreements, with additional costs split
50:50, and final details to be settled through the Council on Federal Financial Relations
–
additional expenditure for state and territories on new foundational disability services to
be capped to ensure the combined health and disability reforms will see all states and
territories better off.
2023–24 Budget measure
•
In the 2023–24 Budget, the Government provided $732.9 million over four years from 2023–24
through the measure
Improving the Effectiveness and Sustainability of the National Disability
Insurance Scheme, for initiatives to support the effective and sustainable operation of the NDIS.
Funding included:
–
$429.5 million over four years from 2023–24 to invest in the NDIA’s capability and
systems, to improve processes and planning decisions
–
$73.4 million over four years from 2023–24 to better support participants to manage their
plans within budget, including assistance from the NDIA during the year and holding plan
managers, support coordinators and providers to account
–
$63.8 million over two years from 2023–24 to take a lifetime approach to ensure plans are
more transparent and flexible for life events
–
$56.4 million over four years from 2023–24 to strengthen supported independent living
decisions, including by introducing a home and living panel with highly trained staff to
improve consistency across decisions, and updating guidelines for planners to improve
participants’ ability to live independently
–
$48.3 million over two years from 2023–24 to invest in the NDIA’s ability to detect,
respond to, and reduce non‐compliant payments and fraud, and to develop a business
case for new IT platforms and systems to detect and prevent fraud and non‐compliant
payments
–
$29.3 million over two years from 2023–24 to support the quality and effectiveness of
services provided to participants, through improving oversight of services and assisting
participants to choose evidence‐based supports
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$24.6 million over four years from 2023–24 to work with participants and providers to
trial blended payment models, to increase incentives for providers to innovate service
delivery and improve outcomes
–
$7.6 million over two years from 2023–24 to partner with communities to pilot alternative
commissioning approaches to improve access to supports in remote and First Nations
communities.
•
The NDIS Actuary projected that together, these initiatives would moderate participant support
cost growth by $15.3 billion in fiscal balance terms over four years from 2023–24.
•
The 2023–24 Budget measure also reflected National Cabinet’s decision on 28 April 2023 to
commit to a NDIS Financial Sustainability Framework to further moderate growth in NDIS costs.
–
The Framework will provide an annual growth target for NDIS participant support costs of
no more than 8 per cent by 1 July 2026, with further moderation of growth as the Scheme
matures.
–
As at the 2023–24 Budget this was projected to moderate growth in NDIS participant
support costs by $622.8 million in 2026‐27, and $59.0 billion over the seven years from
2027‐28 to 2033‐34 (in underlying cash terms).
Contact (SES)
James Steen
Finance
s22
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