ANSWER TO QUESTION

ADDITIONAL ESTIMATES SPILL OVER QUESTION ON NOTICE

PDMS reference: SQ21-000071 Date asked: 03 May 2021 Asked by: Senator Steele-John

The attached answer has been approved by the Minister for the National Disability Insurance Scheme and Government Services.

SENATOR THE HON LINDA REYNOLDS CSC / /2021

Encl.

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Additional Estimates – 03 May 2021

ANSWER TO QUESTION ON NOTICE Social Services Portfolio National Disability Insurance Agency

Topic: Scheme Sustainability

Question reference number: NDIA SQ21-000071

Outcome Number: 3

Senator: Steele-John Type of Question: Spoken. Hansard Page: 39 Date set by the Committee for the return of answer: 21 May 2021

Minister – thank you very much for your reflections … Q3 report from the NDIA board and the NDIA will be released in a couple of weeks and I have had a talk to board about level of detail in that report and I am very confident that when published it will contain significantly more information and more data than it had previously. We also have the budget coming in a week and around that budget time I will certainly be releasing more information… Steele-John – In terms of your concerns specifically around scheme sustainability which data sets have you been provided with that speak to that are the source of your concern? Minister – so some of those will be in Q3 report which will be published in a couple of weeks and I can take on notice some more financial data to the committee, it is a combination of sources so obviously the budget documents themselves and in terms of the 3.9 billion we had to put in extra. So it is the budget documents themselves, it is also going back and having a look at the estimates from Productivity Commission in 2011, 2017 and the estimates not only of growth, package numbers but also how much the packages themselves were anticipated to have costed. So as I said in my opening statement over the last couple of years there was a lesser take up than what we had originally planned and budgeted for with the states and territories. We were thinking over the last couple of years it would be about $150,000 per year but that was averaging at about $100,000 so we had less packages on board at that time but that masked the fact that the packages themselves on average were far more expensive and we are now at that point where the numbers are now where we thought they would be at the average budget cost so we can provide you with all those numbers and the trajectories, I would be very happy to do that chair.

Answer: There is continued significant pressure on Scheme sustainability due to higher than expected numbers of participants and higher than expected average payments per participant.

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FOI 21/22-0187

The number of participants in the early phase-in sites increased by 13% in 2019-20 (as demonstrated in Chart 1), which is well above population growth and ageing. Additionally, the average payment per participant has increased by 12.5% per annum for the past three years, which is significantly greater than:

Wage inflation of 1.5% to 2.5% per annum.
The assumptions in the 2017 Productivity Commission Report of around 4% per annum.
Future portfolio budget estimates of around 2% per annum.

Plan budgets have increased for participants the longer they are in the Scheme and the utilisation of these plan budgets has also increased.

Chart 1: Year-on-year increases in active participants (Financial Year)

[Image of chart showing year-on-year increases in active participants]

Further, average payments have increased by 17% per annum over the last three years to 31 March, for both participants in Supported Independent Living (SIL) and participants not in SIL. Charts 2 and 3 below refer.

Chart 2: Average annualised payments per participant by year – SIL participants

[Image of chart showing average annualised payments per participant by year]

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Chart 3: Average annualised payments per participant by year – Non-SIL participants

For participants who have been in the Scheme and received at least five plans (around 19% of participants), payments have increased by 38% per annum.

Chart 4: Plan budgets, utilisation and payments for participants who have received five plans at 31 March 2021

For participants who have been in the Scheme and received four plans (around 15% of participants), payments have increased by 43% per annum.

Further, approximately 44% of participants are on their first or second plan, resulting in significant upside risk to payment inflation.

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Chart 5: Plan budgets, utilisation and payments for participants who have received four

plans at 31 March 2021

The rates of growth outlined above pose a significant challenge to overall Scheme affordability.

The Portfolio Budget Statements allocation for the 2020-21 Financial Year is $23.3 billion (Chart 6 refers). If recent rates of growth in average payments and new entrants are extrapolated, without mitigating actions, total overall Scheme costs could potentially be in excess of $40 billion within three years.

Chart 6: Extrapolation of scheme cost without mitigating actions - $billion

Extrapolation of scheme cost without mitigating actions - $billion

| | |—|| | | | 50 | | 45 | | 40 | 36+ | 35 | 29+ | billions $ | 30 | 25 | 23+ | 20 | | 15 | | 10 | | 5 | | 0 | | | | 2019-20 | 2020-21 | 2021-22 | 2022-23 |

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Senate Community Affairs Legislation Committee

Additional Estimates – 03 May 2021

SENATE

QUESTION ON NOTICE CLEARANCE SHEET

Number: SQ21-000071
Date Due to Table Office: 21 May 2021

Cleared by: Martin Hoffman Chief Executive Officer

Contact Officer: Lisa Studdert Deputy Chief Executive Officer Markets, Government and Engagement

Additional Comments:

Previous answers: [Select at least one option below]

☒ This question (or similar) has not been asked at a recent Senate Estimates hearing. ☐ This question (or similar) has been asked at a recent Senate Estimates hearing. Ref Nos: [Add PDR No/s]. Copy/ies attached and wording has been used in preparing this response. ☐ This question (or similar) has been asked previously via a Parliamentary / Parliamentary Committee Inquiry Question on Notice. Ref Nos: [PDR No/s]. Copy/ies attached and wording has been used in preparing this response.

Data Verification

Source: N/A
Data Checked by: N/A

Departmental Clearance:

Cleared by email on: 16 May 2021 by:

Name: Martin Hoffman
Position: Chief Executive Officer

Contact phone number: [redacted — s22(1)(a)(ii)]

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