services for people with mental illness to reduce the disabling impacts of mental illness (Mental Health Coalition SA, sub. 513, pp. 4, 5)
• priority to oral health care [of special needs’ groups], to ensure effective preventative care and early intervention (Australian Dental Association sub. 552, p. 10)
• awareness of macular degeneration risk factors, such as smoking, maintaining a healthy weight, protecting eyes from sunlight, fitness and blood pressure to reduce the risk or slow progression of the disease (Macular Degeneration Foundation, sub. 77, p. 11)
• interventions in the education system (Australian Blindness Forum, sub. 438, p. 19)
• the timely provision of appropriate accommodation for people with disability, which could lessen the time spent by persons with disability in hospitals and residential aged care facilities and enable families who would otherwise care for them to obtain employment (CASA, sub. 54, pp. 1–2).
Economic assessments of such interventions can also illuminate these benefits. For example, box 11.10 presents a cost savings analysis in 2007 of a New Zealand program to prevent rugby injuries. This analysis estimates (actual) cost savings of up to $NZ700 000 and a return on each dollar invested of around $NZ12.70 for the program.
There are many other prospective gains to the NDIS from interventions occurring outside the scheme, some of them not immediately obvious. For instance, child protection agencies could provide services that target vulnerable families where there is a risk of children acquiring inflicted traumatic brain injury or other disabilities due to physical abuse, such as shaken baby syndrome (BIA 2010).
It is likely to be impractical for the NDIS to fund or coordinate many of the above interventions. This is mainly because many of them often have purposes other than addressing the impact or risk of disability (as in child protection), or the agencies responsible for them already have well-developed expertise (such as health agencies in respect of early and preventative interventions for people with mental illness). The problem of delineating the responsibilities of the various agencies for early interventions and interventions to reduce the risk of disability is not a new one. It is notable that the Queensland Early Intervention Initiative, aimed at funding new services or the expansion of existing services for families with children with a disability, expressly excluded the use of the funds for medication, rehabilitation,
11.26 DISABILITY CARE AND SUPPORT
school and education support and other services (Queensland Government 2007, p. 14).
Box 11.10 Cost savings from a concussion management education program in rugby
Gianotti et al. (2007) assessed the impacts of a concussion management education program in rugby in reducing the number and cost of moderate to serious concussion/brain injury claims to the New Zealand Accident Compensation Corporation (ACC). The program consisted of a RugbySmart educational video and a sideline concussion check tool developed by the ACC. The tool was designed to be small enough to be carried in the coaches’, referees’ or match officials’ pockets and to be waterproof.
To evaluate the effectiveness of the program, rugby concussion/brain injuries in 2004 and 2005 were compared with claims in 2003. A comparison was also made for other groups of moderate to serious concussion brain/brain injury claims from 1999 to 2005. Over the 2 year period of implementation of the concussion management education program, the authors found that:
• new rugby concussion/brain injury moderate to serious claims reduced by 11 per cent (actual) and 58 per cent (forecast). Rugby player numbers increased by 14 per cent over this time
• other non-rugby claims for moderate and severe concussion/brain injury claims climbed steeply
• the median number of days between a concussion/brain injury and the player seeking medical treatment decreased from 6 to 4 days.
Gianotti et al. also undertook an investment and cost-savings analysis of the programme. They estimated that the:
• cost savings after the program was implemented were $NZ690 690 (actual) to $NZ3 354 780 (forecast).
• the two year cost of the program was $NZ54 810, returning between $NZ12.70 (actual) and $NZ61.21 (forecast) for every $NZ1 invested.
That said, there are strong grounds for defined linkages between the NDIS and other agencies in undertaking early interventions and interventions to reduce the risk of disability. The linkages might involve consultation in the funding and design of programs (for example, in relation to inflicted acquired brain injury in children, sporting injuries, and preventative health) as well as the provision by the NDIA of data as appropriate. Such an approach would require the formalisation of links between the NDIS and health, education and other relevant agencies.
FINANCING 12.1
12 Where should the money come from?
Financing the NDIS
Key points
While private insurance policies can provide useful cover for income loss for people experiencing disability, they are not suited to universal coverage of the population against the potential costs of long-term care and support associated with disability. In the absence of collecting additional tax revenue to fund improved disability services, the Australian Government should reduce other, lower priority, areas of spending to finance the NDIS.
People with disability need much more certainty about getting reasonable supports over their lifetime and governments need a sustainable revenue source to achieve that. That fact, combined with the need for a stable funding source to underpin a proper governance arrangement for the NDIS, means that funding for the NDIS should not be subject to the annual budgetary review process. It should be hypothecated from a new or existing tax, or from general revenue using a specific formula.
Most tax bases are ill-suited to hypothecation because they are either too small relative to the demands of the NDIS or involve significant inefficiencies. The Commission has ruled out all state and territory government taxes for this purpose. At the Australian Government level, only personal income tax or consumption taxes would be suitable. However, better still, the Commission favours an arrangement in which — according to a legislated formula — the Australian Government directs payments from consolidated revenue into a ‘National Disability Insurance Premium Fund’. This approach means that the Australian Government can use whatever is the most efficient tax financing arrangement at the time, or fund the NDIS from savings in spending elsewhere.
The Commission prefers a partly-funded scheme over a fully-funded one. The latter would involve too high an initial cost for the budget, while the former still has the advantage of building up reserves for prudential reasons.
The Commission proposes that the Australian Government enter into an Intergovernmental agreement with state and territory governments specifying that:
• the Australian Government would collect the full amount needed to fund the NDIS through the National Disability Insurance Premium Fund
• State and territory governments should offset the Australia-wide tax implications of the NDIS by reducing state taxes by the amount of own-state revenue they used to provide to disability services (recognising that many state taxes are not efficient), or, as a less preferred option, by transferring that revenue either directly or indirectly to the Australian Government.
12.2 DISABILITY CARE AND SUPPORT
The Commission has proposed sweeping changes to current arrangements for disability services. While many of these changes are to the way the system operates, nevertheless one of the most important changes in a national disability scheme is much more public funding. (How much more is the subject of chapter 14.)
This chapter focuses on how to create a sufficient pool of money for the NDIS — and the options for bringing together ‘old’ money already allocated to disability care and support by the Australian and state and territory governments, with ‘new’ money financed in any number of ways.
Section 12.1 discusses the various possible sources of funding for an NDIS, including private insurance. Section 12.2 considers the tax design criteria unique to collecting revenue for an NDIS, while section 12.3 explores the realistic options for collecting revenue. Section 12.4 considers how to achieve greater certainty about long-term support for people with disability, exploring the advantages and disadvantages of hypothecation, and how sustainable revenues might be achieved. Section 12.5 examines whether the NDIS should be funded on a pay-as-you go basis, partially funded or fully funded. Section 12.6 discusses how financing arrangements would occur when the most important current financers are state and territory governments, while section 12.7 considers the related question of how to take into account the significant variations in existing state allocations of resources to people with a disability.
A warning for readers
While there are various estimates of tax rates and monetary flows between various jurisdictions in this chapter, these are not intended to represent the real flows that would follow the implementation of the NDIS. They are intended to illustrate concretely the processes involved in financing. Estimates of the costs of the NDIS are in chapter 14, while the ultimate determination of monetary flows between the Australian Government and state and territory governments will occur some years from now and involve different base values.
12.1 The money can only come from several sources
What about private funding?
Some might argue that disability care and support should be funded privately. Most things can be insured. People insure their lives, their capacity to pay mortgages, their travel, their possessions and the consequences of their mistakes.
FINANCING 12.3