Disability scheme architect rejects cost blowout claim

A key architect of the National Disability Insurance Scheme has dismissed as fear-mongering new analysis describing the program as the “new leviathan of the Australian welfare state” that will cost $7 billion more than expected.

Using figures from the Australian Government Actuary, a report by the right-wing think tank The Centre for Independent Studies, , claims the Productivity Commission’s $15 billion annual cost estimate for the scheme is $7 billion short of the amount which will be required when it is up and running in 2018-19.

But John Walsh, a partner at PriceWaterhouseCoopers, who played a key role in producing the Productivity Commission report, said the think tank’s analysis was poor.

“It’s using numbers in the worst way to put across an ideological point of view,” he said.

“What its doing is inflating the cost of the NDIS to a future point of time without acknowledging that over that same period taxation revenue and productivity will increase at the same rate.”

A policy analyst at the centre, Andrew Baker, said the commission’s $15 billion costing was misleading as it was based on 2009-10 figures and did not take into account inflation, population growth or wage increases.

“The Productivity Commission provided a snapshot based on the best available data and that was for 2009-10,” he said.

“They costed it as if the NDIS existed that year. Then they ignored the other part of the question, which is what would it cost when it’s actually implemented.”

Mr Baker said the funding gap had the potential to derail the scheme, due to be introduced into federal Parliament this month and trialled from next year.

“‘It needs to be fully funded so people can get the sort of support they need,” he said.

He predicted the cost would grow exponentially, particularly once the pension age began to go up from 2017. By 2023, the pension age will be 67, meaning those eligible for the disability scheme will receive support for longer. The Centre for Independent Studies estimates a further 18,400 people will be eligible for the scheme by 2023.

Using figures from similar disability schemes, the centre estimates the cost of the scheme will grow by 6 per cent each year from 2018-19, taking its overall cost to $29.5 billion by 2023-24.

It described the scheme as similar in scale to Medicare, which cost $15.7 billion in 2009-10.

A spokeswoman for the Minister for Disability Reform, Jenny Macklin, denied there would be a cost blowout, saying the costings in the Australian Government Actuary’s report were within the range estimated by the Productivity Commission.

The original release of this article first appeared on the website of Hangzhou Night Net.

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