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Extending NDIS poses threat

Andrew Baker | Australian Financial Review | 21 February 2013

Given the struggle the Gillard government is having with ballooning debt and deficit, and the failure of the minerals resource rent tax to raise the projected revenue, it is surprising it is considering expanding the national disability insurance scheme eligibility to include some disabled people aged over 65.

This is the government caving in to a scare campaign aimed at the hundreds of thousands of elderly people with disabilities who are currently ineligible for NDIS supports. For example, the special interest group National Seniors is claiming: “At 64 you’re covered for the rest of your life [by the NDIS]; at 65 you’re out on the street.”

The first claim is correct: Those aged 64 years or below who acquire a disability will be able to stay on the NDIS all their lives. But the second part of the claim is false. People aged over 65 who acquire a disability will not be “out on the street” but will receive disability supports through the aged care system.

Furthermore, people aged over 65 who acquire a disability in a catastrophic accident (for example in a motor vehicle accident) will be covered by the national injury insurance scheme.

Scrapping the 65 years NDIS eligibility cut-off is perhaps the most serious risk to the long-term financial viability of the NDIS, which is to cost $22 billion a year when it is fully operational in 2018-19.

The $22 billion a year figure covers 441,000 people under the age of 65 and not one soul older than 65, of whom about 600,000 have a severe or profound disability. Those eligible for NDIS support may receive funded services valued at $250,000 or more every year.

Expanding the scheme beyond the current boundaries would cost hundreds of millions if not billions more than $22 billion a year.

But the extra spending is only part of the problem. The NDIS was deliberately designed to provide disability care and support to those of working age or younger in order to help many of them move off welfare payments like the disability support pension and into work.

About 54 per cent of people with disability are in the workforce, compared with about 83 per cent of people without disability. By increasing the number of people with disability in the workforce, the NDIS would reduce government expenditure on the disability support pension and increase taxation revenue because more people will be in jobs and pay income tax.

The Productivity Commission estimated the economic benefits of the NDIS were so great (increasing GDP by $8 billion by 2050, rising to $32 billion by 2050 if the DSP is reformed) that the scheme would essentially pay for itself.

Expanding the NDIS to include those aged 65 and over would not extend these economic benefits because most of those in that age group with a disability already receive the age pension and are neither expected to work nor required to look for work as a condition of receiving the pension.

So the benefits that come from providing NDIS-funded support to those aged 64 and younger do not exist for those aged 65 and older. Age pensioners with a severe and profound disability warranting NDIS-funded supports will not make the move off welfare and into work.

Compounding this problem is the strong correlation between ageing and disability, and ageing and the severity of a disability. In a nutshell, the older we get the more disabled we get, and the more money that needs to be spent on care and support.

Removing the NDIS age restriction would create an arbitrage opportunity. People with disability would choose the scheme (NDIS or aged care) that provided them with the best care (which would likely be the most expensive).

While this would be a good arrangement for the care recipient, it would be a poor arrangement for taxpayers and government, who would be forced to pay out additional sums of taxpayer money for disability care without much to show for it in public benefits.

The age restrictions on the NDIS are crucial in maintaining the scheme’s financial integrity and maximising its economic benefits by ensuring more people with disability move off welfare and into work. If we allow those over 65 who acquire a disability to access the NDIS, we can be sure that the opposite will occur.

Andrew Baker is a policy analyst at The Centre for Independent Studies and author of The New Leviathan: A National Disability Insurance Scheme.