Goal 2: Financial Sustainability

To achieve Goal 2, the Scheme’s ‘short-term and long-term costs should be estimated and managed using actuarial evidence’,31 in line with the Agency’s insurance principles.

Under Goal 2, the NDIA also reports on performance criteria under Program 1.1 – Reasonable and necessary care and support for participants32 (relating to costs of supports) and Program 1.3 – Agency Costs33 under the PB Statements.34

Strategy 2.1

Strategy 2.1 is to ‘base governance and operations on strong insurance principles using comprehensive and reliable data’.35

Over the year, the Agency focussed on building the capacity to deliver the following activities as identified in the Corporate Plan:

  • basing Agency decision-making on actuarial advice and best available evidence;
  • establishing effective estimation and management of short-term and long-term costs;
  • operating within the funding envelope approved by governments as informed by Productivity Commission estimates; and
  • identifying and managing financial risks of the Scheme.

Key performance measures for Strategy 2.1

  • Scheme costs were within the bilateral estimates and actuarial forecasts – as required under the PB Statements.36 The Productivity Commission has also noted that Scheme costs are broadly on track with the NDIA’s long-term modelling.37
  • The NDIA is on-track to decrease operating costs from 23.7 per cent of Scheme costs to the targeted 6.4 per cent by 2019-20.38  At the end of full Scheme rollout average costs are expected to sit at the lower end of the band of the Productivity Commission proposed funding target of seven to 10 per cent of package costs.
  • The NDIS undertakes actuarial analysis and reporting, along with targeted research and evaluation to effectively implement the Scheme’s insurance principles.39
  • The NDIA has produced long-term modelling of Scheme costs based on actuarial analysis and reporting.
  • The NDIA has invested in targeted research. As an example, it has recently invested in the development of nationally consistent Autism guidelines with the Cooperative Research Centre for Living with Autism.
  • Using the NDIS Outcome Framework, the NDIA has collected participant, families and carers baseline data on 98 per cent of participants who received their first plan in 2016-17.
  • The Scheme Actuary attends Executive Management Group meetings as an observer to ensure that governance and operations are based on strong insurance principles. In addition, the Scheme Actuary attends the NDIA Board’s Sustainability Committee monthly meetings.

Strategy 2.2

Strategy 2.2 is to ‘invest, including through intervention, in a lifetime approach.’40 This involves focussing on lifetime value for Scheme participants and seeking to maximise opportunities for early investment in independence, and social and economic participation with the most cost-effective allocation of resources.

Over the year, the Agency focussed on building the capacity to deliver the following activities as identified in the Corporate Plan:

  • investing early to deliver improved and sustainable outcomes and to reduce long-term costs;
  • designing and funding reasonable and necessary packages of supports for participants which encourage creativity and effectiveness;
  • developing effective interfaces with complementary mainstream service systems that will meet changing needs and deliver best outcomes over a lifetime for participants; and
  • utilising available general and community supports for all people with disability first.

Key performance measures for Strategy 2.2

Twenty-four per cent of all participants have entered the Scheme under early intervention criteria this year.

Ninety-eight per cent of current plans include funding for capacity building supports. Capacity building supports are aimed at increasing the capacity of participants, their families and carers, to achieve social and economic outcomes.

Strategy 2.3

Strategy 2.3 is for the Agency to ‘drive support services and workforce to be high-quality, effective, efficient and responsive to the diversity of Scheme participants, so as to create a new, dynamic and non-inflationary market for disability supports.’41

Over the year, the Agency focussed on building the capacity to deliver the following activities as identified in the Corporate Plan:

  • investing significantly in research and adopting a risk based, fair and minimalist approach to regulation;
  • supporting a robust and dynamic market where all providers deliver high-quality and effective support to participants with diverse disabilities across Australia, including rural and remote areas; and
  • influencing the market to ensure current and new support workers are retained and attracted to diverse and flexible opportunities and careers in a rapidly expanding disability sector.

Key performance measures for Strategy 2.3

  • The Agency has developed an integrated assurance approach in 2016-17 to support the Agency’s rapid growth and changing risk profile. The approach aligns assurance activities under a single umbrella within the enterprise risk management framework. This risk-based approach guides the Agency’s assurance in relation to market operations, including provider audits.
  • The NDIA has a role in influencing the market to ensure that ‘a healthy market is developing that increases the mix of support options and innovative approaches.’42 In 2016-17:
    • the number of registered providers grew from 3,519 to 8,698 over the year, including 3,512 individuals/sole traders and 5,186 companies;
    • participants are supported by, on average, 1.49 providers with 0.5 new providers per participant in the fourth quarter of 2016-17; and
    • there were 3,291 new providers delivering supports to participants.

Commentary:
Currently, the Productivity Commission’s estimate of $22 billion a year at full Scheme remains the best estimate of the long-term costs of a well-managed Scheme. Actuarial work continues to verify the long-term costs of the NDIS. This includes managing already identified costs pressures, such as higher than expected numbers of children entering the Scheme and increasing package costs over and above the impacts of inflation and ageing. Deliberate interventions, such as the  approach, will make a difference to the lives of those with disability and help manage the Scheme’s long-term sustainability.

The NDIA is actively supporting  in the establishment of the new National Disability Insurance Scheme Quality and Safeguards Commission. These arrangements will support NDIS participants to exercise choice and control, ensure appropriate safeguards are in place for NDIS supports, and establish expectations for providers and their staff to deliver quality support. States and territories will maintain current quality and safeguarding arrangements in the meantime.

The NDIA Board and Management has commissioned an Independent Review of Pricing that will make recommendations about future pricing options, taking into consideration the need for prices to facilitate market growth. This review is integral to the NDIA’s commitment to grow the market for disability supports and services with a view to establishing a balance between demand and supply.

31. This is one of the indicators of success under Goal 2 in the NDIA Corporate Plan 2016-21, page 18. Back to footnote

32. 2016-17 PB Statements Program 1.1 (Reasonable and necessary care and support for participants), page 151. Back to footnote

33. 2016-17 PB Statements Program 1.3 (Agency Costs), page 153. Back to footnote

34. 2016-17 PB Statements Program 1.1 (Reasonable and necessary care and support for participants), page 151. Back to footnote

35. NDIA Corporate Plan 2016-21, page 18. Back to footnote

36. 2016-17 PB Statements Program 1.1 (Reasonable and necessary care and support for participants), page 151. Back to footnote

37. Productivity Commission Position Paper on NDIS Scheme Costs (June 2017), page 53. Back to footnote

38. 2016-17 PB Statements Program 1.3 (Agency Costs), page 152. Back to footnote

39. NDIA Corporate Plan 2016-21, page 18. Back to footnote

40. NDIA Corporate Plan 2016-21, page 18. Back to footnote

41. NDIA Corporate Plan 2016-21, page 18. Back to footnote

42. This is one of the indicators of success under Goal 2 of the NDIA Corporate Plan 2016-21, page 18. Back to footnote