The Federal Government has signalled a possible delay to the full rollout of the National Disability Insurance Scheme (NDIS), after a review found “significant problems” with the agency set up to run it.

The review of the National Disability Insurance Agency (NDIA) has likened it to “a plane that took off before it had been fully built and is being completed while it is in the air”.

The minister charged with the NDIS, Assistant Minister for Social Services Mitch Fifield, told the Senate it makes for sobering reading.

“The review makes clear that the agency’s foundations need significant work in order to deliver and sustain the full NDIS,” he said.

“The agency has developed an action plan and will provide further advice as to whether the current implementation timetable is consistent with a successful full scheme rollout.”

Senator Fifield’s comment echoes previous statements from senior Coalition figures that indicate the national start date of 2018-19 could be pushed back.

When it is fully operational the NDIS is slated to cost the Commonwealth $8 billion a year, paid in part by an increase to the Medicare levy.

It is being trialled in four areas – Tasmania, South Australia, Victoria’s Barwon region and the Hunter Valley in New South Wales.

The NDIS is designed to cater for the individual needs of more than 400,000 people with significant and permanent disability.

Senator Fifield has previously said the scheme was running over budget and he was worried about the costs of administration and overheads.

But the peak body for non-government services in the sector, National Disability Services, says the review must not be used to delay the rollout.

“The NDIS is eight months into a six-year marathon,” NDS chief executive Ken Baker said.

“We’ve exerted a lot of effort and ingenuity to get this far so quickly – it’s too early to decide that the road ahead is too steep.”

Bringing forward launch date caused problems

The review has listed “a large number of significant problems” with the NDIA, including a “weaker” capability and “less developed” processes caused by a decision to bring forward the scheme’s start date by a year.

The previous Labor government changed the original launch date from July 1, 2014 to 12 months earlier – a decision the review says caused problems with staffing arrangements from board level down.

“There is also a lack of clear guidance for staff on the way the scheme operates, including eligibility and reasonable and necessary support,” the review found.

It found the earlier start date meant “all effort” was on working towards the trial phase and “insufficient effort was devoted to preparation for the next phases of the rollout”.

“As a result there are some challenges emerging,” it says, adding “the biggest challenge of all is over the horizon”.

“There are also major pieces of work to be done on service provider development, workforce availability, housing, mental health, market regulation and design,” the review stated.

Shifting of headquarters presents challenge

Commissioned by the Abbott Government in December, the review also pointed to a decision by Labor to shift the headquarters from Canberra to Geelong as presenting a “particular challenge” with recruitment and retention.

Labor decided last June – just one month before the new launch of the first trial sites – to move the NDIA to the Victorian city, where thousands of jobs have been lost particularly in the manufacturing sector.

The capability review has found that most of the staff at the national office are temporary and will not move to the new headquarters in Geelong when it opens in July.

Most of the senior management of the agency will also change in the next few months.

The review said this would cause an “unavoidable” drop in capability over the next six months – a time when the scheme is due to be rolled out to trial sites in Western Australia, Northern Territory and the ACT.

However, it also says there are advantages to basing the headquarters in Geelong, including “access to more appropriate skills” from bodies such as the Victorian Transport Accident Commission and WorkCover.

The NDIS was initiated by the Gillard government and passed Parliament last May with bipartisan support.