Bruce Bonyhady, Chairman, National Disability Insurance Agency
CEDA: Adelaide
10 March 2016


Good afternoon, ladies and gentlemen.

I would like to acknowledge the traditional owners of the land on which we are meeting, the Kaurna people and pay my respects to their Elders, past and present.

I would also like to acknowledge the Hon Leesa Vlahos, Minister for Disabilities, Dr Duncan McFetridge, Shadow Minister for Disabilities and my fellow Board Director, Mr John Hill.

I would also like to thank the Committee for Economic Development of Australia for inviting me to speak today.

I’m an economist.

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It’s one of those professions everyone knows about, but few really understand.

The National Disability Insurance Scheme or NDIS is a bit like economics.

We all have opinions about it, but how many of us really understand it?

We know the NDIS is the most significant economic and social reform since the introduction of the original Medicare scheme in the 1970s and compulsory superannuation in the 1980s.

We know it will make our country more prosperous and ensure opportunity is more equitable and accessible.

The NDIS is the kind of smart, innovative, agile policy that Australia needs to address the challenges of the 21st century.

It’s a platform for innovation that harnesses the power of markets to serve people with disability – and boost the economy.

With that in mind, I want to brief you on the key features and facts of the NDIS.

And the best way for me to do that is to answer the questions I am most frequently asked:

What is the NDIS?

Why do we need it?

What will it cost?

And who benefits?

I then want to explain the market and business opportunities that the NDIS will create – opportunities which I hope will excite you.

Let me start with the first question.


What is the NDIS?

The NDIS was established on 1 July 2013.

Currently, the Scheme is in nine trial sites and has more than 22,000 participants – including more than 5,300 participants in South Australia.

It is on time and on budget – and client satisfaction is above 90 per cent.

In other words, we’re exactly where we need to be.

One of the three key goals in the Strategic Plan of the National Disability Insurance Agency is to keep building public confidence in the Scheme.

That means continuing to meet goals, and maintaining and building a performance culture within the Agency.

In short, performance is everything.

That’s the lesson I’ve learned over many years working in funds management and banking – because organisations that perform earn the right to grow.

At the NDIA we monitor our performance continuously and publish our results quarterly.

For the Scheme, though, there’s more to performance than just quarterly targets.

We must also keep learning as we build the Scheme so that it performs over the lifetime of each and every participant, because the real impact of the NDIS will be measured in generations.

The Scheme’s trial period is scheduled to end in the middle of this year.

When it is fully operational, in 2019, the Scheme will serve around 460,000 participants.

Here in South Australia, we are on track to deliver the NDIS to 32,000 people by the time the Scheme is fully rolled out.

Last December, the Prime Minister and Premier Weatherill signed an agreement that detailed when different segments of the population will enter the Scheme.

That agreement included bringing forward some funding to get more South Australian children into the Scheme sooner.

I emphasise this point because I know how important certainty is to the tens of thousands of people with a disability in this state – and their families.

We want to get those 32,000 South Australians into the Scheme as soon as possible – and start changing lives for the better.

The assistance those 32,000 South Australian participants receive will be based on need – primarily using a functional assessment, rather than a medical diagnostic approach.

The NDIS provides ‘reasonable and necessary’ benefits.

Those benefits encompass personal care and support, access to the community, therapy services and essential equipment.

NDIS participants include people with intellectual, physical, sensory and psychosocial disabilities.

There are also early intervention services for children with significant developmental delay and manifest disabilities, and adults with progressive disabling conditions.

Each participant has a plan and goals which focus on maximising independence and social and economic participation.

The Scheme is being funded through an increase in the Medicare levy and general revenues and so reflects capacity to pay.

The NDIS is designed to work alongside the Disability Support Pension and other measures, which provide income replacement for people with disability who cannot work.

However, unlike the DSP, the NDIS is not means-tested.

The Scheme is also designed to work side-by-side with health, education and other universal services.

It is not responsible for these service systems – and scope-creep and “gaps” between these systems and the NDIS are two of the risks that the Agency is monitoring and managing on a daily basis.

Needless to say, there are a number of risks associated with a reform as complex as the NDIS – such is the nature of nation building schemes.

The Board is well aware of the risks and has a comprehensive risk management strategy in place.

The Agency has also voluntarily adopted the risk management standard applied by the Australian Prudential Regulation Authority to insurers.

Once the NDIS is in place, every Australian who is born with or acquires a disability before the age of 65 – and whose disability is permanent and significantly affects their functional capacity and who requires ongoing support – will be covered.

In short, the NDIS is a universal insurance scheme.

It is based on insurance principles.

Let me spell out those principles for you.

Traditionally, the costs of disability services have taken a short- to medium-term outlook.

Governments plan for expenditures over a 12-month period to at most a five-year time frame – and the funds available for disability change depending on the economy, tax revenues and the requirements of other portfolios.

Consequently, disability services have had to perennially justify their existence – and there are always short- to medium-term pressures to cap or cut costs.

Insurance models are very different.

Under an insurance model, expenditure is factored in over the life of an individual – and scheme sustainability is measured by calculating the total future costs of all those who are insured.

This approach creates an incentive to make strategic investments that maximise lifetime opportunities and reduce long-term costs.

For example, the best way to reduce long-term costs is to increase an individual’s independence and lift his or her participation in the community and the workforce.

A second aspect of insurance schemes is that they continually compare experience with forecasts.

Divergences are investigated carefully, as part of an insurance prudential governance cycle, to control long-term costs and ensure Scheme sustainability and that the NDIS best meets the needs of people with disability.

A recent example of the Agency learning and adapting are the changes to our approach to early intervention, particularly for children with autism and developmental delay, which we announced two weeks ago.

In this case, our results were on track in three of our trial sites but not in two others and we saw an opportunity to create a new approach. Our revised approach is based on best practices across all of our sites plus expert advice. We are calling this new approach Early Childhood Early Intervention, because it is family centred.

To shape future directions of the NDIS we are also building an outcomes framework to measure the medium- and long-term benefits of the NDIS for participants and their families.

Those measures include choice and control, independent living, relationships, health and well-being, home, lifelong learning, work, an social, community and civic participation.

Monitoring the outcomes across these domains will ensure the Scheme remains sustainable.

This shift from a welfare to an insurance model for disability services is revolutionary.

It is revolutionary because the NDIS is not just reforming the old system – it is replacing and transforming it.


Why do we need the NDIS?

If you’re in doubt about the need for the NDIS, let me convince you in two points.

My first point is social:

The previous system of disability care was broken.

That’s not just my view: it’s the opinion of the Productivity Commission and the Prime Minister.

In 2011, the Productivity Commission released an independent report that found the nation’s disability system was:

‘Underfunded, unfair, fragmented, inefficient and gives people with a disability little choice.’

Prime Minister Turnbull agreed with that finding, telling Parliament in 2011:

‘The present system for disability welfare is as inefficient as it is limited; as frayed as it is broken.’

The facts support the positions of the Productivity Commission and the Prime Minister.

Until now, Australians with disability have been born into a world where they were treated as second-class citizens.

According to the OECD, 45 per cent of Australians with a disability were living at or below the poverty line in 2010 – the worst outcome of any OECD country.

Australia’s record – in terms of employment of people with disability – is also poor, ranking in the bottom one-third of OECD countries.

And, most disturbingly, people with disability are significantly overrepresented in Australia’s jails.

Not only that, Australians could only insure privately against the risks of being born with or acquiring a significant and permanent disability in cases of workplace accidents, proven medical negligence and some injuries from motor vehicle accidents.

In short Australia’s private and public sectors have failed to either insure or provide for significant and permanent disability.

We need the NDIS to put an end to this segregation of access and opportunity.

My second point is economic:

Before the NDIS, government spending on disability was spiralling out of control.

Since the 1990s, disability expenditures by Australian governments have increased at between 7 and 8 per cent per annum in real terms.

This is completely unsustainable.

There are demographic reasons for this surge in demand.

People with disability are living much longer;

Families are smaller, and more geographically dispersed;

And there are increasing rates of marital breakdown, especially amongst families with children with a disability.

In 2011 PricewaterhouseCoopers found that – without the NDIS – government expenditures on disability would increase to two-to-three times the projected costs of the NDIS.

We therefore need the NDIS to put disability services on a sustainable footing.

In short, the NDIS is the smartest, most cost-effective investment Australia can make in disability services.


What will the NDIS cost?

The Productivity Commission estimated in 2011 that, once fully operational, the cost of the NDIS would be $22 billion a year.

That estimate was based on survey data.

Since the Scheme commenced on 1 July, 2013, the NDIA has been able to compare the trial-site data with the Productivity Commission projections.

We now have ten-times the data available to the Productivity Commission and what this more reliable and up-to-date evidence shows is that $22 billion continues to be the best estimate of the cost of the NDIS when it is fully rolled out nationally in 2019-20.

In other words, we are – contrary to some ill-informed claims – on budget.

Further, the most authoritative source of information on NDIS costs will continue to be our quarterly reports which are available on our website.


Who Benefits from the NDIS?

I mentioned that, when fully operational, the NDIS will have 460,000 participants.

But the NDIS is not just for those 460,000 Australians, their families and carers.

The NDIS is for everyone….and for future generations.

By paying premiums to the NDIS through the Medicare Levy, Australians share the risk and help each other.

Pooling the risks makes them affordable for all.

In the years and decades to come, thousands of Australian citizens will either be born with or acquire a disability.

And the probability is that some of those future participants will be related to people sitting in this room.

Those boys and girls may be your children or grandchildren.

Those men and women may be your partner.

Or it might be you.

Whoever they are, those Australians will be people with ambitions and abilities – and they will deserve a fair go to harness their abilities and realise their ambitions.

But the NDIS is not just in the interest of people with disability their families and carers – now and in the future.

The NDIS is good for all Australians because it will create jobs and boost the economy.

According to the Productivity Commission, the NDIS will boost Gross Domestic Product by 1 per cent by 2050.

Let me put that another way: national expenditure on disability services is projected to increase by 0.5 per cent as a result of the NDIS – but, in return, the economy is projected to grow by 1 per cent.

By any measure the NDIS is a sound investment in our community, our economy and our future.


Market Opportunities

The NDIS is creating major business opportunities – and these opportunities extend beyond the disability sector.

Earlier this year Professor Ian Harper completed his review of Competition Policy.

Professor Harper recommended that government human services should be consumer directed as this would drive significant improvements in efficiency and effectiveness.

The NDIS has anticipated that thinking – and is implementing the consumer-directed approach to service delivery on a scale not seen anywhere in the world.

Consider the evidence.

Currently, governments spend more than $8 billion-a-year on disability services.

Around one-half of these services are provided directly by State and Territory governments.

And the remaining services are delivered by not-for-profit organisations who have contracts with governments under so-called block-funded arrangements.

A fraction of funding goes towards individualised services.

Under the NDIS, the annual cost of disability supports will grow to $20.6 billion by 2019-20.

That means the total market for disability supports will more than double over the next four years.

However, the contestable market for disability services will grow even faster – increasing between three- and four-fold.

Not only that, block-funded arrangements will be replaced with person-directed funding.

Every participant in the NDIS will have the control to purchase the services and supports that best meet their needs;

Services will be individualised and decentralised, with local area coordination of locally-based care;

And support through the NDIS will be portable.

That means if a person with a disability wants to move to another state with their family their entitlement to the NDIS – and therefore the level and standard of care they receive – will move with them.

By the end of June there will be around 35,000 participants in the NDIS.

Based on bilateral agreements that have now been signed between the Commonwealth and New South Wales, Victoria, South Australia and Tasmania,

  • 65,000 people will enter the NDIS in 2016-17,
  • 105,000 in 2017-18
  • and 95,000 in 2018-19.

In South Australia:

  • 4,400 people will enter the Scheme in 2016-17,
  • 13,100 in 2017-18
  • and 6,300 in 2018-19.

The market will need to grow rapidly to keep up with this increase in participants.

The workforce needed to service this new market is expected to grow by around 60,000 to 70,000 people on a full-time equivalent basis.

In South Australia the NDIS will directly create about 5,000 new full-time jobs.

Companies will need to build their services around the individual needs of NDIS participants – and they will need to be competitive.

The business opportunities will not be limited to traditional providers of specialised disability services.

Organisations in adjacent sectors – such as health and aged care – as well as community-based services and local government, will be encouraged to serve NDIS participants.

The National Disability Insurance Agency also wants to outsource administration costs.

In fact, once we’re fully rolled out our administration costs are projected to be just 7 per cent of total Scheme costs.

That would be best practice for the insurance sector – and another example of how the Agency is being managed along business lines.

The NDIA also has an important role as market steward.

In the next few months, the Agency will issue a Statement of Opportunities and Intent.

It will include an analysis of supply and demand – broken down by local government area and service types – to make it easier for existing and new suppliers to identify market opportunities nationally and locally.

We also want to contribute to future efficiency gains.

For instance, we want to help to establish a survey of service providers to enable them to benchmark their operating costs.

We are also reaching out to other sectors – such as education and training institutions – to assist with workforce development.

Ultimately, we want to facilitate a local and national market that has new and established service providers, as well as a skilled and adaptable workforce, with people with disability, their families and carers at the centre of – and in control of – that marketplace.

And we want to use technology to make that marketplace as innovative and accessible as possible.


Technology and Big Data

The NBN – which is scheduled to be complete in 2020 – will underpin the Agency’s e-market strategy, as well as our rural and remote strategy.

And we know from the response to NDIS New World – a technology conference we held last November – that accessibility is now part of the DNA of every major global technology company.

The digital divide is being replaced by digital inclusion for people with disability.

When the NDIS is fully operational, we will allocate around $1 billion-a-year to participants to spend on technology.

We want to create an e-market that provides efficient and secure links between participants and suppliers –

Keeping participants informed so they choose the best services

And keeping suppliers informed so they improve their offerings.

New apps are already being developed and many more will follow.

As a result, the technology market generated by the NDIS will be much larger than $1 billion per annum.

The NDIS will turbocharge investment in technology – and this will lead to increased efficiency, effectiveness and creativity.

I expect improvements will accelerate as we aggregate more data about the Scheme and its participants.

Currently, we have two and a half years’ worth of data from 22,000 participants.

By 2019, we will have data from 460,000 participants and Australia will have the richest data base on disability anywhere in the world.

The Agency has a large actuarial team. Their analysis of data has already led to refinements in the Scheme.

Those refinements will continue for as long as this Scheme is in operation.

That’s because Big Data doesn’t just tell us about what happened yesterday.

It can also tell us what is probably going to happen tomorrow – and that depth of insight is vital for an insurance scheme looking to make life-long investments.

We don’t know exactly what hidden connections we will find.

That’s because we don’t yet know what the data will be.

All I can tell you is that we will aggregate and analyse the data.

We will learn and innovate.

We will enable new business opportunities.

And, most importantly, we will improve the lives of people with disability their families and carers.



In conclusion, the Prime Minister has said that this is an exciting time to be an Australian.

It is an even more exciting time to be an Australian with a disability.

It’s exciting because – after years of campaigning, designing, planning and successful piloting – we are about to move into the full rollout stage of the NDIS.

It’s exciting because, at long last, people with disability will have the opportunity of an ordinary life.

For families and carers, there will be certainty of support when they can no longer care for a loved one with disability.

For all Australians there is the knowledge that the NDIS will be there if they, or their children or grand-children need it.

For business, including the not-for-profit sector, the NDIS is a major growth opportunity.

Above all, the NDIS is an unprecedented opportunity for this state and our country.

Thank you.

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