The excellent e61 Institute published some new findings about the National Disability Insurance Scheme, or NDIS, earlier today. Basically, it’s a bloated mess that has morphed so far beyond its stated purpose that something urgently needs to be done:
“Spending now accounts for around 1.7 per cent of Australia’s GDP and represents a significant share of total federal spending. When it was launched over a decade ago, the NDIS was expected to grow gradually and serve about 400,000 people with permanent and significant disability. Today, it supports more than 700,000 people – and costs have grown faster than expected.”
One reason costs have ballooned is because the government managed to destroy the market for disability care:
“NDIS service usage data from Kismet Healthcare shows that for most support categories, providers are charging at or just below the cap. In highly specialised services like therapy (e.g. occupational therapy, speech pathology) and support coordination, more than nine in ten claims sit within 5 per cent of the maximum allowed rate.
This suggests that providers are not using the price cap as an upper bound, but as the going rate. In a well-functioning competitive market, more variation is expected – lower prices to attract customers, or higher prices for higher quality or complex support. But within the NDIS, that competitive pricing dynamic appears to be largely absent.”
As the report notes, the NDIS’s Independent Pricing Committee is trying to fix that problem by allowing more flexibility with pricing. That’ll help at the margin, and while reducing the annual rate of growth from something like 12% to 8% is a worthy goal, I have an even better idea: rip it up and start over.
A political non-starter, you say? Perhaps. But in the long run, if the NDIS isn’t reined in then it will fail and end up morphing into some Canberra swamp creature that still costs a lot while helping fewer of those who really need it.
So, here’s my idea: from 1 July 2026, anyone who currently qualifies for the NDIS will instead receive monthly cash transfers up to a fixed limit based on their assessed level of disability. It’s a scaling cap so that very high-need cases are covered, but the principle is simple: the money goes to the individual and it’s then entirely up to them how they spend it.
The market for disability services becomes genuinely competitive again, the Independent Pricing Committee is dissolved, price caps are removed, and the government of the day can determine by how much the NDIS budget changes each year.
Problem solved. Good luck, though, overcoming institutional lock-in and the army of NDIS rent-seekers that would descend on Canberra if such a change were ever proposed!