Federal Treasury has looked at offloading some financial responsibility for the $22 billion National Disability Insurance Scheme (NDIS) to the private sector.
The Government has warned the NDIS has a multi-billion dollar funding gap, and Treasury is grappling with projected federal deficits of more than $120 billion.
A freedom of information (FOI) investigation by ABC News has obtained documents showing Treasury has explored shifting some of the scheme’s cost to the private sector through social impact bonds, particularly for children with developmental problems.
Social bonds use private finance, with governments paying a return that depends on the outcome achieved.
Under the heading “application of social impact bonds to the NDIS”, the Cabinet-sensitive paper said: “Private investors would provide upfront finance to either the National Disability Insurance Agency or a disability services provider.”
“The Government would guarantee a return for the private investor in the event that certain outcomes are achieved,” it read.
The NDIS will see funding go directly to people with disabilities and their families, rather than directly to service providers.
Treasury said most clients had severe and permanent disability, and using the bonds to fund this cohort could increase the cost to the Government.
But it found private finance could be used for children with developmental delays in an early intervention stream.
“There could be a substantial reduction in the cost of future disability supports and an increased likelihood of these children joining the workforce in later years,” it said.
Treasury said this group comprised 3 per cent of the NSW trial site, and that 460,000 people were expected to take part in the NDIS when fully rolled out.
NDIS ‘actually a saving to Government’
NDIS advocate and former NSW Labor minister John Della-Bosca said social impact bonds generally had merit, but said the scheme’s funding formula was set and no case had been made for change.
“I don’t see why now we need to complicate the funding of the NDIS even further by bringing up this issue,” Mr Della-Bosca said.
“I think a lot of people in government, particularly in Canberra, just don’t get the message that the NDIS … it will be actually a saving to Government overall.”
The Gillard government hiked the Medicare levy to 2 per cent to help finance the program, but this will not cover its full cost.
Social Services Minister Christian Porter said the Government would be left with a $5.2 billion funding gap in 2019-20.
“The Commonwealth Government is not currently considering using social impact bonds as a way of funding the NDIS,” a spokesman for Mr Porter said.
“The Government remains fully committed to funding the NDIS and will find more than $5 billion to ensure it is completely funded on full scheme roll-out in 2019-20.”
Labor’s disability spokeswoman Jenny Macklin said the Government was continuing to complain about the NDIS’s cost.
“This is not the time for messing around with the National Disability Insurance Scheme,” she said.
“People with disability really don’t want any more uncertainty about the NDIS.”
Scheme to begin roll-out in July
Full-scheme roll-out is to start from July this year, and is predicted to increase the number of private disability service providers, including those which operate for profit.
“The business opportunities are not just limited to traditional providers of specialised disability services,” NDIA chairman Bruce Bonyhady said last year.
The NSW Government in 2013 became the first administration in Australia to use capital markets to reduce the strain on public coffers when it launched bonds to reduce the number of children in foster care.
The National Disability Insurance Agency last year said factors including the increasing prevalence of autism, workforce and supply shortages, and states shifting health costs could cause overruns.
South Australia’s trial has been plagued by problems and many families have been left out of pocket after the State Government underestimated by about half the number of children who would be eligible.
This reportedly happened despite warnings from SA’s peak autism body that up to 11,000 local children would need support from the NDIS.
– ABC with Michael McKinnon