With the announcement of Bill Shorten’s retirement from politics came the assurance that the remainder of the current National Disability Insurance Scheme (NDIS) Minister’s term will see him work towards a more sustainable NDIS. Public pressure has been mounting to reduce the financial burden of the $42 million scheme, which now costs the public purse more than Medicare. The higher-than-expected number of children with autism and developmental delays on the NDIS has caused controversy for its contribution to the cost blowout, with more than 8 per cent of five- to seven-year-olds now on the scheme, the majority with a Level 2 autism diagnosis. Fraud and rorts are reported on extensively in the media, and range from the employment of family and friends for services to organised crime groups encouraging the use of NDIS funds for drugs and alcohol. These have gradually diminished social licence for the scheme. While responsibility for addressing fraud and reining in cost growth will ultimately lie with Shorten’s successor, the first round of NDIS reform following the 2023 NDIS Review was handed down during his final term. The most high-profile change is to the list of NDIS-funded services and supports, which in the haste to ensure the sustainability and integrity of the scheme was published less than 48 hours before coming into effect.
The NDIS is one of the most costly and rapidly implemented policy reforms in Australia’s history. The scheme has been remarkably successful at bringing disability rights issues to the forefront of public discourse, helping shift societal attitudes to encourage a more nuanced and empathetic view of disability. Despite this, the disability community, government and media continue to question why a scheme intended to promote respect, dignity and empowerment through disability service provision seems to have had the opposite effect for some, making this an appropriate time to investigate the economic framing that has shaped the NDIS’s evolution and execution.
History
The NDIS was a new model for Australia when it was rolled out in 2013. Politically, it was a product of multiple forces. Two key events were influential in shaping this unique model: the first was the Australia Summit 2020, held by then-prime minister Kevin Rudd in 2008, where economist Bruce Bonyhady introduced the idea of incorporating social insurance principles within a publicly funded National Disability Scheme. Bonyhady’s ‘insurance’ concept was palatable, transitioning the conceptualisation of disability support from charity to service provision.
But the formation of the NDIS occurred in an era of institutionally entrenched, path-dependent process policy development, propelled by the global surge of neoliberal reforms designed to reshape the welfare state by introducing markets for social services.
This became clear in the second event: the public inquiry into the NDIS conducted by the Productivity Commission in 2010–11. Unsurprisingly, the Commission assessed the policy through the prism of the market solution panacea, augmenting the individualised funding model concept to greater emphasise competition and choice—two words that were used some 597 times by participants and commissioners in the Inquiry Report. These foundational roots are echoed in the objectives of the scheme, which focus on ‘individualised support’, ‘choice and control’, ‘capacity building’ and ‘efficiency and effectiveness’, among other things. These are the optimal outcomes for the NDIS ‘market’ to provide for its ‘consumers’.
A new funding model was thus created for Australia. The establishment of the NDIS was intended as a stimulatory measure to create ‘clear incentives for [market] growth, expansion and entrance by new organisations’. Operating as a quasi-market, the National Disability Insurance Agency (NDIA) intervenes to facilitate ‘a vibrant, multifaceted, open and competitive marketplace’. This market stewardship role doesn’t go as far as supplementing the supply of services when demand is not being met, but rather involves overseeing the provider registration process, implementing the NDIS quality and safeguarding framework, and setting prices. The role of the NDIA in distributing information to providers and participants is particularly pertinent, since changes in supply and demand aren’t signalled by prices like they are in conventional markets. Therefore, as pointed out by Georgia Van Toorn in her detailed account of the making of the NDIS, the scheme is premised on two parallel but contradictory framings—one based on social insurance principles that imply a state-centric and universal means of social protection, and one based on market principles—whereby individualised funding delivers social support via the mechanism of the market.
The NDIS therefore replaced a disparate block funding model of procured disability services that existed across state, territory and Commonwealth jurisdictions. Previously, not-for-profit organisations were directly funded to provide services, with most relying on just one provider to meet their needs. Service provision under this model was inadequate, inequitable and inappropriate, with long waitlists and unmet needs the norm. In lieu of directly provided or funded services, the NDIS provides monetary payments in the form of an ‘individualised budget’ which participants can use to purchase services from a quasi-market of disability providers, both private and not-for-profit. Services that can be funded are vast in number, even after the recent ‘crackdown’ on sex work, tarot card readings and yoga. They include all means of personal care, support workers, transport, home modifications, assistive technology, continence aids and other consumables, allied health assessments, and therapy. This model was founded on the principle that people with a disability are entitled to support that is self-directed and suitable to their individual needs. The ‘insurance’ part comes from how support is costed and financed—based on individual needs and calculated annually, in theory creating an incentive for the state to intervene early and fund supports that promote independence later in life. Therefore, the NDIS has shifted the role of the state to developing, regulating and legislating markets for disability services, based on the economic principles of choice, competition, efficiency and cost containment.
Combining state-sponsored insurance, embedded with moral hazard and information asymmetries, with a private market for the socially beneficial good of disability services has caused the scheme’s objectives to unfold in uneven and unintended ways.
Individualised support
Tailoring individual support plans has created a vast industry and process to perform this.
The NDIS has strict eligibility criteria for individual funding plans. Eligibility is assessed by a Local Area Coordinator (LAC), who acts as an intermediary between the NDIS and participants but does not require a medical background. The assessment focuses on how a disability affects the person’s daily life and participation, with supporting evidence from medical reports considered but with less emphasis. Once eligibility is confirmed, an NDIS plan is created to outline the supports and services needed, provided they are deemed ‘reasonable and necessary’, although assessors face challenges in maintaining consistency.
While the focus on individualised assessments and supports has attempted to respond to the diversity of people’s needs and circumstances, the 2023 NDIS Review noted that the scheme has become incredibly complex and confusing for staff and agencies. Linda, a self-managed NDIS participant who was interviewed during the process of writing this article, described the scheme as ‘illogical and unwieldy’, with a ‘constantly changing set of rules and assessment criteria’. Linda is acutely aware of the relationship between the level of funding she receives, her (advantageous) socioeconomic position and her ability to advocate for herself, saying, ‘I have friends who are bureaucrats and medical professionals. I know the things I need to say to tick the boxes’. Linda’s NDIS budget has still been roughly halved since she joined the scheme five years ago—not adjusting for inflation or constant increases in the NDIA-set prices for services—while her degenerative condition has progressed. Her recent application for a change of circumstance to acquire more funding to meet her increasing daily needs was a six-month process that ended in rejection.
There are many more people (and children in particular) on the NDIS than was originally forecast, with the cost of the scheme now estimated to reach $60.3 billion by 2030. This has led to widespread individual funding cuts, discharges and greater difficulty getting onto the NDIS in the first place. In the 2024 financial year, 25,000 fewer Australians joined the scheme, and there was growth in the number of children exiting the NDIS, with the cost of the NDIS coming in $600 million lower than what was expected. There is also a lack of trust between participants and the NDIA, and a widespread fear that support will be taken away at the next planning meeting, or that the NDIA will not respond to circumstance changes in a timely way, if at all. These concerns are justified. The NDIA assessment process is currently so backlogged that most plans are simply rolled over, with some participants waiting three or four years for their ‘annual’ plan review. When these reviews are conducted it’s not uncommon for individual budgets to be curtailed by up to 60 per cent, sometimes representing a cut of tens of thousands of dollars. In most cases, having a diagnosis has become almost essential for children over seven to qualify for the NDIS, and the NDIA now promotes (and funds) privately procured Functional Capacity Assessments, an assessment tool that has become widely popularised as an administrative credential for acquiring funding. This, in addition to the ‘use it or lose it’ approach to individual budgets, encourages participants to fight for and use as much funding as possible.
On the supply side, individualised funding arrangements have encouraged the establishment of a large number of small, diversified business entrants, a major transformation from the previous block funding model that involved large not-for-profit businesses providing for most of a person’s needs. This has been extremely beneficial in facilitating flexible service delivery that is tailored to participants’ lives, such as home, school or community visits, thus addressing the inflexibility and gaps of the previous system. Still, the Disability Royal Commission found in 2023 that the NDIS’s ‘inappropriate funding structures’, combined with a lack of regulatory oversight, have enabled provider organisations to prioritise financial imperatives over client wellbeing. Because the state governments’ function as the service providers of last resort has been eliminated, in the instance of a potential conflict between a participant’s needs and a provider’s business risk—whether actual or perceived—the need for profit-making will dominate the need for support. This is a highly precarious environment for individuals whom providers may refuse to work with (e.g. individuals with complex or acute needs), or those who aren’t eligible for the NDIS. People with psychosocial disabilities are much less likely to be eligible for the NDIS, with numerous cases of plan refusals being handed down to people with decades-long histories of schizophrenia, major depressive disorders, bipolar and severe anxiety, including those with frequent hallucinations and hospital admissions. As businesses engage in practices to manage governance, risk and viability in this marketised environment, ‘thin markets’ with insufficient providers or capacity to meet demand have also emerged. At the same time, other disability markets have experienced the rapid establishment of businesses with insufficient experience or capability to provide a quality service—like a sports physio clinic with no history of providing disability services agreeing to take on an 18-month-old baby with Down Syndrome as a client, an actual example given to me by a paediatric physiotherapist working for NDIS clients.
Local market failures and thin markets have emerged partly because the disability services market is insulated, with prices for services and supports set above the market rate by actuaries who are not legislated to (and have not been shown to) take market conditions into account, as demonstrated in the following quote from an NDIS participant in the 2023 Review:
I try to use mainstream services and products rather than go to disability specific market due to the ridiculous prices charged by providers. As has been stated time and again, an able bodied person can go to an allied health professional and be charged $90, but I go for the same service and because I am NDIS funded I get charged more than $200 … Not only is it discriminatory but also costs the government more dollars, and the person with disability gets less support.
Participants who are distrusting of the NDIS are incentivised to maximise their budgets and use all of their annual funding, all while budgets get cut, needs assessments become more arbitrary and the NDIA struggles to keep up with a backlog of plan reviews. In some cases, emails to the NDIA won’t be read for weeks or months.
This situation has invited new levels of demand, generated inflation and increased costs in a way that is divorced from the actual degree of satisfaction in the community. The social licence needed for the NDIS to continue to provide individualised support will depend on the financial sustainability of the scheme and the adequacy of the quasi-market structure to meet the needs of people with disabilities. The myriad reviews and inquiries into the scheme in recent years are an indication of the effort being made to reform it. Recently, the NDIS Commissioner endorsed calls by some economists to replace intermediaries with privately procured ‘navigators’ who would help design plans, manage budgets and identify service providers. It is unclear how this position would differ from those already in existence—support coordinators are already a thing—or whether other reforms aimed at expanding the NDIA’s stewardship function would save public funds. Ultimately, the success of future interventions will reveal the degree to which market failures are embedded into the structure of the system.
Choice and control
Choice and control are fundamental to the NDIS, exemplifying the principle that those with disabilities should have the autonomy to shape their own lives and manage their care and support. The scheme operationalises these values through flexible plan management options and the freedom to select and change service providers. ‘Choice and control’ seems to be one of the more well-achieved objectives, with participant interviews painting a generally positive picture. The central challenge is that outcomes remain unequal and highly correlated to individual circumstances.
Effective exercise of choice and control by participants depends on their—and their carers’, supporters’ and families’—access to accurate information about prices and quality. One of the key findings of the NDIS Review was that information available to participants is often limited, outdated and hard to find or understand. As Linda explained to me, understanding complex information across different sources requires significant time and effort from participants, their families, their carers and their intermediaries: ‘Energy and effort is already an issue for people with a disability. There are a whole lot of people who are mentally or physically disenfranchised because they don’t have the energy to navigate the NDIS system’.
Exercising choice and control within the NDIS is particularly challenging for those in complex socioeconomic situations, people who speak English as a second language, and those who are socially isolated from other participants who might otherwise share information via word of mouth. Further, the challenges for delivering a competitive disability services model are extreme for rural and remote communities, and this model has been found to be fundamentally flawed in responding to cultural, socioeconomic and linguistic differences of Aboriginal people, for whom disability levels are twice as high as for non-Indigenous Australians.
The competency of LACs is varied, compounded by the quasi-market structure and the unclear role of the NDIA, whose guidelines on pricing, quality standards and cancellation procedures are often vague and confusing. Those involved in the scheme have reported on it being common for families and participants to lose funding due to the complexity of the system and the disconnect between the NDIA and the people who use the NDIS. This ambiguity makes it difficult to determine the extent to which a participant’s experience is a reflection of the rules of the NDIS or the practices of individual service providers. Providing participants with a clear vision of what is expected and possible under the NDIS is necessary to truly empower choice in this client-driven system.
Whether high availability of choice is a sufficient motivating factor for quality and efficiency improvements is another question, one that speaks to the broader economic rationale for the marketisation of disability services.
Efficiency and effectiveness
Since before its implementation, the NDIS has been promoted as an efficient and effective alternative to the direct public provision of services. Discourse amongst key players like the Productivity Commission almost always frames publicly provided services as being fated to bureaucracy and inefficiency, while ignoring the paradoxical relationship between efficiency and effectiveness in care economies. Health and care service provision is time-intensive work, and opportunities to increase labour productivity are limited. There’s only so much extra care you can squeeze out of a care worker in an hour, which is why the overall cost of health, social and care services tends to increase at a faster rate than that of other goods and services in the economy. Any attempt to achieve greater efficiency (increased labour productivity) means the service provider allocating less time to each participant, and because time spent between care providers and receivers is the integral component of care work, there is generally a negative relationship between the level of competition and service quality in care economies.
The nature of disability also means that changing service providers may involve high costs, or significant physical and emotional consequences for the participant. In any case, there is a certain level of time involved in familiarisation and planning during any new NDIS engagement. These costs undermine the core tenet of the NDIS, which assumes participants as consumers who can act freely according to their preferences, making them what economists like to call ‘sticky’. These costs cause a market power imbalance in favour of service providers, creating market settings that reward volume rather than quality of support. In some cases, providers have begun to engage in predatory practices such as locking clients into time contracts or long-term commitments—something that is discouraged by the NDIA but is occurring at an increasing rate nonetheless. Non-market mechanisms, such as campaigning and advocacy, can become the only method of effecting change available to participants and their support networks. An engaged therapist or support worker will likely spend a large portion of their billable hours advocating with the NDIA, other service providers and other institutions (e.g. schools, the mainstream healthcare system) to ensure positive outcomes for their clients. A participant’s experience with the NDIS can therefore be heavily reliant on the ethical grounding and clinical operating style of individual providers and professionals. Resolving issues or changes can take months of phone calls, emails and administrative headaches with the NDIA, and has led to examples of situations where carers and therapists work unpaid until funding is renewed. Mental health carer and advocate Mary Hollick, who is a member of the Ballarat Mental Health Carers Circle, described it as ‘catastrophic to see the atomisation by a legal and bookkeeping mentality that has broken all the services up, costed them individually, and then expected families with no training to put it together’.
Another barrier to efficiency gains is prices not always reflecting the full cost of the complexity of service delivery. As an example, it is commonplace for private therapy practices to provide financial rewards to staff who exceed their NDIS ‘billables’, which include, in addition to therapy service hours, time spent conducting assessments and evaluations, developing programs, consulting with other professionals and reviewing participant progress. Discharging a participant from an unnecessary service or adjusting therapy to better meet specific needs can be costly and often relies on the initiative of the service provider. Market incentives therefore can have the effect of reducing the time and scheduling afforded to making adjustments that may actually achieve cost savings. This situation has led to a drastic increase in the level of support delivery in specialised clinical settings (e.g. speech pathology, occupational therapy and physiotherapy), despite best practice guidelines emphasising a community-embedded approach to care. On the other hand, for participants whose needs are likely to remain constant throughout the course of their lives, efforts to make productivity gains are more likely to result in neglect rather than over-therapy.
While this is highly frustrating for those involved, perhaps it should not come as a surprise that a single, uniform scheme being applied across the diverse spectrum of disabilities, needs and life stages is causing unequal outcomes for participants.
Collaboration
Successfully building the skills and capabilities of people with disability to increase their independence requires the involvement of a person’s entire network. When the NDIS was introduced, it was designed to be one part of a broader ecosystem of support. However, the fragmented network of specialised provider businesses caused by the demarcation of funding has extracted the NDIS from broader structural arrangements, created silos of individual services and led to confusion over responsibilities. Competitive pressures also provide disincentives for disability organisations to share key participant information with other providers if they feel it could give away their competitive edge or affect the viability of their organisation. And the NDIS is becoming increasingly disconnected from other institutions like schools, childcare, supported living providers and the mainstream health network. Within the education system, for example, there is a growing pushback from schools on allowing NDIS-funded therapists into classrooms, impeding the transfer of knowledge and implementation of therapeutic services in a developmentally critical environment. In other cases, a NDIS plan can be perceived by schools and social services providers as an absolution of responsibility over a child’s developmental outcomes. A lack of care continuity is particularly problematic in the case of children, who can easily ‘fall through the cracks’ of developmental outcomes if services and support are not implemented at key milestones. On the opposite end of the age spectrum, individuals aged sixty-five and older find themselves ineligible for the NDIS, leaving them dependent on the all-encompassing My Aged Care system. Unfortunately, this program lacks the personalisation and specificity needed to address their unique needs, offering no extra funding for essential equipment or necessary caregiver support.
What has become evident is that no amount of individualised NDIS funding can address the physical, systemic and social barriers to accessibility and inclusivity that exist in the broader environment of a person with a disability. The NDIS Review acknowledged that since the introduction of the scheme, the community capacity-building activities and the continuation of home and community care services that were recommended at the scheme’s inception have not been delivered, and that all levels of government have neglected efforts to make mainstream services more accessible and inclusive. The NDIS has been referred to as an ‘Oasis in the Desert’ for the way that governments have come to rely on it as the dominant and only source of support for people with disability, leaving those not eligible without the support they once had. Estimates from 2022 predicted that while 4.4 million Australians live with disability, just over 12 per cent of these are on the NDIS, according to the latest quarterly report, with Australians aged sixty-five and above and people living with lesser-known or ‘invisible disabilities’ the largest groups going without support.
What went wrong?
The NDIS was founded with the goal of removing capriciousness and uncertainty from disability services, yet it is piling up layers upon layers of confusion, misallocation, frustration, hurt and unfairness. Into the future, unanticipated uptake threatens its financial viability. What went wrong?
The unexpectedly high number of NDIS participants is in part a reflection of the success of the scheme in meeting the needs of many who have previously gone without. Budgets may be individualised, but the aggregated nature of the scheme’s administration and regulation is ineffective and inappropriate for the management of this large and varied recipient base. The broad-brush application of funding and assessment criteria has arbitrated participants and the NDIA from the intention and social significance of the scheme. A detrimental cycle has ensued, whereby participants aim to maximise their endowments for as long as possible, the NDIA responds by cutting budgets and adjusting assessment criteria, and ultimately many are left ineligible or with insufficient funding. While participants bear the brunt of the stressful, inequitable and defeating process of managing constantly changing rules and systems, the private market has been able to run freely and profit from oversized returns. Information and power asymmetries in the favour of private businesses have inflated demand, with competition and siloed service delivery preventing the actualisation of a best practice collaborative approach to care services and in some cases leading to exploitation and abuse. The funnelling of responsibility for disability services into a singular, contained scheme has reduced the onus on other institutions to work towards better disability outcomes, undoubtedly increasing the dependency of people with a disability on the scheme.
A ‘foundational supports’ system jointly funded by the Commonwealth and the states is proposed, to be implemented in July 2025 with the aim of filling the gaps created by changes to the NDIS. While it is unclear how this will look or work, moving some of the core essential services and resources required by people with a disability into the public domain and increasing the role of other key institutions are important first steps in reducing the reliance on and financial burden of the NDIS. The sustainability of the scheme will also depend on collective efforts to address the causal components of developmental delays in children. The disaggregation of assessment criteria and incentives based on disability and participant type could help to ensure the NDIS prioritises support for those who genuinely need it, and encourage participants to discharge from services when they are no longer required.
The question yet to be asked, that may need be raised in the future, is whether the cost of market intervention required to achieve a well-functioning and sustainable scheme is truly worth the ostensible benefits of its free-market and insurance-based foundations.
Disclaimer: This essay was written and published before the author joined the Public Service, and is in a personal capacity.