http://www.theaustralian.com.au/national-affairs/policy/ndis-trial-costs-blow-out-by-30pc-scheme-hit...
COSTS on the pilots for the new national disability care program blew out by as much as 30 per cent in the first six months, hitting $46,000 a person, punching a hole in the May budget and threatening billion-dollar hits in the years ahead.
The blowout in the national disability insurance scheme is part of the “shocking” turnaround from the surplus Labor predicted for 2017-18 to a $32 billion deficit that Joe Hockey revealed to state treasurers yesterday.
The figures for the first three months of NDIS test sites in NSW, South Australia, Tasmania and Victoria show the average cost per person was $46,000, 30 per cent higher than predicted.
For the following three months, from October to December last year, the average cost per person in the pilot programs had dropped to $40,466 but was still 15 per cent above the average budgeted cost.
The Treasurer told his state counterparts yesterday that the “business as usual” result of Labor’s plans for a 6 per cent increase in expenditure across the budget between the fourth year of the outlook and the year beyond would be a $32bn deficit.
Mr Hockey said later he believed the state treasurers were “pretty shocked” by the deficit figure and there was a common understanding that “We need to get our budget in order”.
“Labor locked in those big increases in expenditure and they didn’t have the money to do it,” Mr Hockey said, referring to the NDIS, Gonski school funding reforms, overseas aid, hospitals and defence.
New monthly budget figures released by Finance Minister Mathias Cormann yesterday show it is likely the government will report a slightly better deficit for 2013-14 than the $47bn foreshadowed in the mid-year budget update before Christmas, because of lower welfare payments.
The NDIS is due to be fully operational in 2019-20 at a current estimated annual cost of $22bn, including state government contributions.
Government analysis of the first six months of the trials for the NDIS also showed much lower-than-predicted service to the disabled. Between July and September last year, after the Gillard Labor government rushed the scheme in a year early, against Productivity Commission advice, the number of people in the scheme was 921, less than half what had been projected.
As the pilot programs progressed in the final quarter of last year, the number of “plan completions” for service to the disabled rose to 2500, a little more than half the target of 4340.
Despite lower-than-expected delivery of service, the NDIS cost $400 million more than estimated for the first six months of the test sites.
Because of the deal the Gillard government did to get the states to sign up to the NDIS, the federal government takes the risk for cost overruns. So the $400m blowout in the first six months of the pilot schemes will have to be borne by the Abbott government in the May budget, plus any further cost overruns in the last six months of this financial year.
The new National Disability Insurance Agency is developing advice for the Abbott government on whether the current timetable for rolling out the NDIS over the next five years is “consistent” with the scheme being successful.
Most of the cost overruns are sheeted home to “significant errors” in the federal agreement with South Australia and NSW.
In the South Australian test site there had been a significant underestimate of the number of eligible people for “reasonable and necessary” support as outlined in the original NDIS proposal. In NSW there was a miscalculation on the number of eligible cases because the number of people in large institutions was not properly taken into account.
The NDIS, introduced as a pilot scheme by Julia Gillard and backed by Tony Abbott as opposition leader, is estimated to provide “reasonable and necessary support” for 460,000 people.
A cost rise of just 15 per cent on the estimate of the full rollout year of 2019-20 would add $3bn to budget spending.
In July 2011 the Productivity Commission recommended the NDIS not be launched until July this year and the time between be used to prepare for the rollout. The Gillard government announced it would start the scheme with four test sites from July last year, 12 months earlier than recommended and two months prior to the federal election. The then Labor government allocated funding for the test sites but the biggest costs for the NDIS when it was operational were pushed beyond Labor’s four-year budget funding period.
The cost blowouts and failure to meet targets for delivering care to disabled people follow last week’s scathing review of Labor’s establishment of the NDIS.
The review, sought by NDIA chairman Bruce Bonyhady, likened the NDIS to “a plane that took off before it had been fully built and is being completed while it is in the air” and questioned the viability of rolling out the huge project.
is he going to break another ? he's definitely not someone who's assurances can be taken seriously is he ? what an untrustworthy weasel .. but we knew that already didn;t we ..
