At long last, the Albanese government is starting to rein in Australia’s biggest grey rhino, the National Disability Insurance Scheme (NDIS):
“Mark Butler has revealed Labor will seek to slash the growth of the National Disability Insurance Scheme down to between 4 per cent and 5 per cent a year over the long term to get the $40bn a year scheme in line with other major health programs like Medicare, confirming “eligibility will need to change” to achieve this goal.
In comments that he said he knew would be “hard for some parents to hear”, the Health and Disability Minister said too many autistic children were on the scheme and that access to the NDIS for young Australians needed to fundamentally change.”
The announcement followed a story in The Age last week that claimed “16 per cent of all six-year-old boys in the country” were drawing from the NDIS, which is still growing at an annual rate above 10%.
I don’t doubt that the change to eligibility will reduce the rate of growth in the NDIS. It was necessary; without changes, the NDIS’s unchecked growth would force future tax hikes or service cuts elsewhere. That’s because it’s an extremely generous scheme—“a child with autism may receive 70 therapy sessions a year”—with no income means testing, creating strong incentives for anyone who might be eligible to seek out a diagnosis.
In policymaking, incentives should be aligned as much as possible. If you remove that feedback loop, people are less aware of the scarce resources they’re consuming and they’ll continue to demand more of them. Without price signals to reflect the costs, even if just partial costs (e.g. co-payments or income-adjusted contributions), demand will always exceed supply.
Given that budgets aren’t unlimited, that generally leads governments to ration supply, which it can do on two main margins: eligibility restrictions (e.g., removing autism) or supply constraints (e.g., stricter provider rules). The first is what the Albanese government just announced, and perhaps other disabilities will follow in due course. At least until the NDIS is only providing for whom it was originally intended—those with severe and permanent disabilities, not developmental delays or autism.
The second margin simply makes it more difficult to access NDIS services. For example, it could make it harder to become a NDIS service provider by adding more stringent qualification requirements, registration fees, or compliance obligations. This would reduce the stress on the budget but could also make the NDIS considerably worse for those on it as both quantity (e.g. fewer providers, longer wait times) and quality (e.g., less specialised care) deteriorate. Eventually, the NDIS could end up resembling countries where healthcare is completely “free”, i.e. long wait times and panels deciding who gets treated.
While I would like to see the NDIS shift to a more decentralised, market-based model, the first option is clearly preferable, so it’s great to see the Albanese government making that move with autism. The unfortunate reality of political incentives is that they usually steer governments to follow the second option, which is essentially subsidise demand and then when it becomes a fiscal problem, restrict supply.