Senate Community Affairs Legislation Committee, , 2:36:27 to 4:01:22
Discussion focuses on the National Cabinet agreement regarding NDIS escalation rates and the risk-sharing arrangements between the Commonwealth and states.
Topics: Social services, Government spending
Speakers: Blair Comley PSM, Hon Anne Ruston, Dr Liz Develin, Unknown Speaker, Hon Jenny McAllister, Dorinda Cox
>> Thank you, Chair. Um so um I'd like to have a chat about the um the NDS funding agreement as as it relates to the NH. Cool. Um as of today um precisely what have the states and territories agreed to in relation to the funding of the roll out of thriving kids?
So the >> states and territories have agreed uh that thriving kids would have um well overall $4 billion of expenditure on it. >> 2 billion from the Commonwealth and 2 billion from the states and territories over the 5-year period. >> Um of the uh $2 billion that the Commonwealth is um contributing 1.4 4 billion of that will be allocated to the states and territories. So they will have $3.4 billion in total to >> Um they have committed to begin the roll out of the thriving kids program for state-based programs from the 1st of October uh uh this year >> 2026. >> 2026 >> with full roll out um up and running by 1 January 2028. So having effectively 15 months to scale the programs up from 1 October 2026 to the 1st of January 2028.
Um okay so in his press release on the 30th of January the prime minister indicated that national cabinet had agreed to several key reforms in relation to NDI funding and thriving but then only a few days later the health minister indicated at a press conference on the 11th of February that no agreements with the states and territories had been locked in which is
correct. So there is the the sequence of the NH sorry the the overall deal which included the NHR and disability was that the heads of agreement was signed at the national cabinet that was held on the 30th of uh January and then there was a subsequent process to finalize bilateral agreements uh and the thriving kids agreement with an intention of that being finalized in the next few weeks.
>> Okay. So in terms of the prime minister's statement, several key reforms in relation to the NDIS funding and thriving kids had been agreed at national cabinet. What were those several key reforms?
>> Well, the ones I've just described to you on thriving kids. So the the heads of agreement provides the overall framework, the bilaterals really.
>> What were the reforms? They've agreed to the program. They' already agreed to the $2 million. That was something that happened a long time ago. So they've agreed to the the start date and the
>> roll out programs. They also uh also agreed in that thing to um support the access arrangements that would happen with respect to children with um autism and development delay with mild to moderate support needs from January 2028.
>> Okay. The minister then subsequently said that no agreements with the states and territories have been locked in. So So we we're sort of arguing about the difference between the word agreed and
point is that the heads of agreement has the the clear spirit of what those agreements are. There's been a lot of engagement with states and territories on a bilateral basis as to what the content would be. >> Um, but the the formal signing of those bilaterals hasn't occurred yet. So, I can throw to Miss Develin if she wants to expand, but um it's it's it's nothing more than um we are the heads of agreements provides a fair bit of structure. There's been a lot of engagement with the states and territories on a bilateral basis. There is still some details to work out which is in fact why the states and territories um are not required to start rolling out the programs until 1 October 2026 to allow the sort of final detailed scheme design to be undertaken.
>> Okay.
>> Dr. Develin, did you want to add anything
or not?
>> Morning Senator. I would only add that the bilateral agreements that the secretary has referenced will really give effect in terms of the detail of the services the states and territories will plan out will obviously include the commonwealth's commitment to services. There'll also be implementation plans. So it really is a far more detailed document to describe the funding arrangements between the commonwealth and states and the interplay between the services that they will deliver in the
Commonwealth. So to that effect, if you're talking about the services that we provide, how they'll provide them, etc., etc. So, do we actually already have a a plan as to what this thriving kids program is intended to look like? Because I mean, obviously, in order to put into place these agreements for the delivery of these services starting to roll out from the 1st of October, there must be a a a product that Thriving Kids
quite a series I mean the consultation on foundational supports which is now described as thriving kids has gone on for uh a couple of years. This is not new. What has been more recent is the thriving the work of the thriving kids advisory group which provided to governments very much a conceptual model of what would be best practice and the elements of a national framework and we've also had the parliamentary inquiry which was in a significant consultation process with the sector. I think the best way to conceive it is that the thriving kids advisory group recommends the elements to governments of what should be included in any model. So that will include systems and services that help with the identification of of children both from a universal perspective but also to those that might have more targeted needs. It also provides comments on the sorts of settings that these services should be offered. It also talks about the sorts of information and where parents should be pointed to. It also talks about targeted supports and who should who should deliver those sorts of services. So it very much provides the framework which we obviously then respond to with the states and and there we anticipate the bilateral agreements will describe the state services to offer early
identification. So just in terms of the um the agreement and the $25 billion that was put on the table for the NH um and the additional $2 billion from each of the two jurisdictions. What um requirement or what undertaking did the states and territories give in relation to their commitment to to roll out thriving kids? Is there still a capacity for the states and territories if they're not able to negotiate an agreement between what they're doing um and what the Commonwealth is doing in relation to the the cohort of um uh people that would previously have been on the NDIS and now going into this new program. What is the binding commitment as as part of the the NH agreement that means that the states have to undertake this program? Is that is there anything
in there? That is a key feature of the heads of agreement around this split of the $4 billion that will be towards
>> oh I'm sorry just the split of the $4 billion it doesn't actually apply to the $25 billion. So we've handed over $25 billion for the NH for the hospitals at the same time we sort of talking about that we got agreement on the the NDIS component that sat with it but is that now a completely separate negotiation to what happened with the 25 billion?
>> It's an integrated uh agreement. So the condition of getting the 25 billion was that you would roll out the the thriving
>> and so there's no mechanism or capacity for the states and territories to not do that now. That's totally binding.
>> Yes.
>> Yeah. Okay. Cool. That's that was all the question was um Okay. So as part of that agreement um the the escalation rate of the NDIS um which currently the states are capped at 4% and there was an agreement to move to eight. Is that correct? so that doesn't come into effect until 2028. Is that correct?
>> Yes. Right.
so you obviously project forward quite a way in terms of the um the trajectory for the um the growth of the NDIS and I the minister had said that it was 6% was these target.
>> So let's go back a step. Um the commitment on the states and territories is to bear a risk share up to 8%. >> If the scheme growth is less than that then they wouldn't pay the 8%. They would they would pay whatever it is
>> but previously they would only have to have paid four%. >> So the minister is seeking for it to be six and I mean actually probably the minister that's you um seeking it to be six. Um so if previously the it had been capped at four and now if it's capped at eight you're it'll be fully that they will pay their full share of that growth factor. What's the savings to government over the next 10 years of the decision by the states and territories to accept an 8% cap as opposed to a 4% cap on your six 6%
you like me to have the first crack minister? >> So we'll come to the question of the quantum of savings. But I think you have to think about this senator as a as a risk sharing arrangement not something that you say this is the precise number that's going to happen in you know 5 years 10 years etc. At the moment uh prior to this agreement, the states and territories did not bear any of the upside risk associated with high growth of the NDIS. And it could be argued that has led to um uh perverse incentives in terms of the incentives for the states to ensure that people did not end up in the NDIS. Um what this risk sharing agreement does is increase the incentives of the states and territories to um lean into both their own services but also um potentially scheme design issues. Um obviously in the NDIS there are a range of rules that need to be agreed that require the agreement of the states and territories. In the past they haven't borne that upside risk. So you know at the moment the the growth rate of the scheme I think last year and the actual Graham my comment from memory was around 10%. >> Uh there have been years in recent time where we've had 20% growth rate in the NDIS where the states have been capped at 4%. Which is why the original conception when the NDIS was put in place was it will be a 50/50 cost share between the Comwalth and the states and it's been got much closer to 70 or 75% commission. So the commitment the the the the heads of agreement signed by the states and territories in the Commonwealth committed to an intention to try and achieve a growth rate of 5 to 6% >> in the scheme um as being something that was more sustainable in the long run which is more in line with the growth of other social expenditure programs. um the the precise amount that the Commonwealth would benefit from the states and territories moving to 8% for those last three years which of course the last one at least is outside the Ford estimates but the first I think two are not um depends on what the growth rate of the scheme would be um and that would be something uh at the moment I could defer to uh the NDIA probably the current guardians of those estimates Um but those estimates are you know around the 7 to 8% per year mark and therefore the
>> 7 to8% savings per year or
>> no the growth rate is around 7 to 8%. So the saving would be the difference between the 4% cap and whatever that turned out to be whether it was 3 or 4%.
>> Yeah. So that's what I'm just I mean obviously you must do some actuarial sort of assessment in terms of the the potential for this. So I'm just trying to understand um you know what what the value to the Commonwealth of the agreement of moving from 4 to 8% might be on the basis of you know best information that you have before you and that's the only way you can deal with your forward estimates. So what what is the um
>> just flagging this is the uh this is the final answer. We're at the hard marker and um we we need to break. So I suppose
you know just to make it simple I mean like I I if the projected growth rate over the next 5 years is 6% which is clearly where everybody's trying to get to what would be the savings to the federal government of the arrangement for the um the states and territories to now be contributing 6% that um you know up to 6% as opposed to previously at 4%. If it was at 6%. Cuz I'm assuming that's what you're modeling because that's what you think you're hoping it's going to be. I I think
Senator the the answer is that these are questions that you'd imagine being dealt with in the ordinary course of the budget. Um I mean we we do provide um you know regular updates to the budget over the course of the year but as the secretary has explained uh there are interactions between that growth rate the timing of those changes coming into being and the decisions that are yet to be taken by states and territories and the commonwealth about exactly how that 5 to 6% ambition uh is to be obtained.
>> Okay. Well, I'm happy to leave it now. Anything you come back after with that it gives you a bit more time to work it
out. >> That's great. Thank you, Senator Ruston. Um, we are at the hard marker of the lunch break. Um, we will be returning at 100 p.m. in outcome for on disability back in session and we are in continuation in outcome for uh disability and carers and I'll hand the call to Senator Hanson.