Tuesday, 3 May 2016
National Disability Insurance Scheme Savings Fund Special Account Bill 2016; Second Reading
As I was saying earlier today, since this data on cost is only based on the first quarter of operations, it is too early to draw any definitive conclusions. Under the header 'Medicare Levy funding arrangements', the report says:
The cost of the NDIS is being met in part by an increase in the Medicare Levy from 1.5 per cent to 2 per cent. This increase takes effect from 1 July 2014. There will always be a risk that collections from the levy are less than forecast, which will require the funding shortfall to be made up from other funding sources.
There is a great deal to like about the National Disability Insurance Scheme, which is why it is coalition policy. It is why we are here today debating legislation around this scheme.
The NDIS is designed to replace and to enhance existing disability support services provided by the Commonwealth and the states. Eligible participants will have a disability support plan developed for them by the National Disability Insurance Agency and intended to meet their current and future support needs. Packages under the NDIS arrangements are based on a concept of what is reasonable and necessary for any individual client. Participants' needs are assessed and tailored, and service packages developed and funded. The scheme is demand driven. The NDIS will provide long-term care and support but not income to recipients. The income needs of Australians with disabilities are being met through other means, including the Commonwealth income support system.
As forecast by the National Commission of Audit report, the cost of the scheme escalates rapidly from $1.1 billion this year to $4.3 billion next year and $19.2 billion for the 2018-19 financial year. It is budgeted to cost about $22 billion a year, or about one per cent of GDP, once it is fully operational from 2020. But the increase in the Medicare levy and the cuts to other disability programs are only expected to cover costs until the 2016-17 financial year. Despite this, those opposite claim the project was fully funded. What a joke. What an absolutely disgraceful joke by those members over there. This is a joke on the people of Australia, in particular people with disability. You set up a scheme which was not properly funded, you left it to the government to clean up the mess and then you shamelessly tried to take the high moral ground when it comes to caring for people with a disability. You lot over there really have no shame. We saw the member for Jagajaga in here earlier today scaremongering and doing what she normally does. We saw really shine when she was talking about $19 billion being a rounding error. Nineteen billion dollars as a rounding error! No wonder this scheme was not funded by those opposite!
I want to refer back to two very important paragraphs in the National Commission of Audit report. They state very clearly:
Analysis conducted by the Australian Government Actuary has confirmed that there are uncertainties around all cost elements of the NDIS, e.g. populations, severity distributions and average costs …
… … …
The NDIS is a new scheme with associated uncertainty associated around costs and participant numbers. Most of the financial risk associated with this uncertainty will be borne by the Commonwealth.
That is exactly right. Yet, we have the world's worst Treasurer assure us that it was fully funded. As I said, we know what their capability is. They think $19 billion is a rounding error. They are just outrageous. You cannot trust them with money.
Now, to the legislation at hand: the National Disability Insurance Scheme Savings Fund Special Account Bill 2016. This bill is fully committed to implementing the NDIS. This is a long-term commitment for people who need life-long support. The coalition has successfully managed the rollout of the NDIS to ensure that this is being delivered on time and on budget. The Commonwealth has now signed bilateral agreements for the transition to the full scheme with New South Wales, Victoria, Queensland, South Australia and Tasmania. In the ACT the agreed eligible population will be fully covered by September 2016. Which means that together, these agreements provide certainty for around 85 per cent of the 460,000 Australians expected to be eligible for the scheme. The comparative trial in Western Australia is also being extended and expanded until 30 June 2017 to give certainty to around 10,900 current and future participants of ongoing support from the NDIS. The Commonwealth and WA governments have agreed to finalise arrangements for the state-wide rollout of the NDIS by October 2016, with the full rollout in WA to continue from 1 July 2017. The Commonwealth is committed to finalising arrangements with the Northern Territory as soon as possible.
The NDIS is due to reach the full scheme 2019-20 financial year, by which time it will be injecting $22 billion each year into the Australian economy and improving the lives of around 460,000 Australians with disability. The Commonwealth will be responsible for funding more than half of the $22 billion. But because of the failure of the previous Labor government to fully and specifically set aside funding for the NDIS, this will leave a funding gap from the 2019-20 financial year—a gap which will grow to over $5 billion.
The Commonwealth's share of the increase in the Medicare levy will cover less than half of the Commonwealth's annual contributions to the NDIS at full rollout. Unlike the increased revenue from increasing the Medicare levy that was set aside in the Disability Care Australia Fund, other savings, which Labor supposedly made to help fund the NDIS, were put into consolidated revenue and were never set aside to fund the NDIS. That is an absolute shame; I cannot believe the Labor Party did that. Yes, I can, because you cannot trust them with money.
The government is fully committed to properly, adequately and sustainably funding the NDIS, and will fully meet the funding gap. The government will guarantee the final funding source for the NDIS by setting up the National Disability Insurance Scheme Savings Fund Special Account. Creating this new special account is a simple move, and it is smart policy. The savings fund will give a clear line of sight of the funding set aside by government for the NDIS to meet the funding gap.
We are not funding the NDIS gap from borrowings or by raising more taxes on hardworking Australians. That is the Labor Party's way. As I said, we are setting this up and making sure that it is funded. The account will allow us to pool underspends and savings from across government over future years, locking them in as major contributions to the NDIS. The fund will grow consistently over future budgets, charting a transparent and responsible path to meet our NDIS contribution as a full scheme.
I commend the bill to the House. Finally, I would like to put on record that I cannot believe that Labor thinks that $19 billion is a rounding error. It is typical of them, and it is why they did not do as they were supposed to, but we can be trusted to do the right thing.
I welcome the opportunity to speak briefly on the National Disability Insurance Scheme Savings Fund Special Account Bill 2016. The values of a government are very clearly reflected in its budget. A budget is where a government puts money on the table, effectively—to use the old saying—to put its money where its mouth is. A budget is, indeed, a true measure of the government's priorities and the interests it represents. Furthermore, it is a reflection of what the government stands for. Nothing is more telling about a government than the way it treats the most disadvantaged people in the community—the most vulnerable and the voiceless. On those criteria, the Turnbull government has to date failed miserably.
It has only been because of opposition by Labor and other crossbench senators that many of the heartless policies of the Turnbull government have either been blocked or modified. They are policies that go to the issue of fairness, which the Prime Minister constantly likes to refer to. Fairness is directly tied to this bill and so I want to mention it now. One has only to look at how this government has cut family payments to families that are not on huge incomes. A typical family with two children in high school will be $2600 worse off and a single parent family with two children in high school will be $4700 worse off because of the policies of this government. Most members of this House would agree that a single parent would be doing it very tough in trying to keep two children in high school. This government also cut $1 billion plus in pensioner concessions—concessions which go to the neediest people in this country. They passed that responsibility onto the states or local government, effectively turning their backs on pensioners to the tune of $1 billion. We also saw the government trying—but not able to do so because of the efforts of Labor and crossbench senators—to change the indexation of pensions. That would have seen pensioners lose a considerable amount from their fortnightly income. We also saw this government try to add Medicare co-payments to this country's medical system. The people most affected by those co-payments would have been those on lower incomes, including pensioners. Then we saw the government—and I believe it is still on their books—try to reduce the amount of time that a pensioner can stay overseas to six weeks before their pension may be cut. These are the policies of a government which talks about fairness.
It does not stop there. We also saw the same principles applied to students. They wanted to increase student fees to university so that degrees could cost $100,000. They wanted to index HECS loans for students and add interest charges. Again, only through the work of the Labor opposition and crossbenchers was that blocked. We also saw the apprenticeship tools allowance of $5½ thousand cut, and we saw youth allowance, instead of Newstart, applied to many young people.
If we go to other policy areas of this government, we see a pattern of the unfairness that I allude to. We have had refugees left to languish in offshore detention centres for almost three years now. We have seen cuts to the funding of Indigenous programs around the country, when both sides of politics, supposedly, are committed to closing the gap. We have even seen it with respect to animal welfare, whether it is greyhounds being sent to Macau, sheep and cattle being shipped overseas, or animals being used for cosmetic testing. We have not heard a word of care or concern from this government about this cruelty or seen any steps taken to prevent it. Nor did we hear anything from them about the Japanese whaling which saw over 300 whales caught and killed, supposedly for research. Again, when we were in government, we made it clear that we would oppose that practice and we took the Japanese to the International Court of Justice. The then opposition, now the government, supported that move at the time and said they would continue to do to so, but we have heard not a word from them.
So I am not at all surprised that this government, the Turnbull government, is now seeking to play politics with the National Disability Insurance Scheme. Few areas of policy that I have been involved in since I have been in this place go to the heart of fairness more than the National Disability Insurance Scheme. But, clearly, the Prime Minister's interpretation of 'fairness' is very different from the interpretation of 'fairness' that I have from the people that I represent.
People with a disability, their families, their friends and other supporters are among some of the most disadvantaged and the most limited in this society, and I have heard comments by members opposite that support that view when they talk about some of the families that they know. These are people for whom every day of their lives is a struggle—both for the person with disability and for the family members and carers who support them, who sometimes go for days and weeks on end without a break of any kind whatsoever. These are the people whom, when Labor was elected in 2007, we saw needed support from the government and for whom we talked about and finally introduced the National Disability Insurance Scheme.
For them, the scheme represented a light at the end of the tunnel. It is a scheme that was not only introduced but fully funded by the previous Labor government. I can recall the debates in respect to it. All the way through, there was always negativity about it from members opposite. They were dragged kicking and screaming to support the NDIS. They never truly supported it in the same way or with the same passion as I saw from members on this side of the House. Now it is very, very clear that they again want to play politics with the issue. The Minister for Social Services is here at the table, and I took note of his response to a question without notice earlier today. The minister said:
For the benefit of members opposite, the NDIS will cost the Commonwealth $11.3 billion—$1.1 billion comes from existing Commonwealth funding on disabilities, $1.9 billion from redirecting moneys that would otherwise go to the states and $3.3 billion from the increase in the Medicare levy, leaving an amount close to $5 billion.
That is simply a dishonest claim. The NDIS was always fully funded. It was fully funded by Labor when we announced it, through the ½ per cent increase in the Medicare levy, changes to retirement incomes, changes to tax concessions for fringe benefits, changes to tobacco excise indexation and changes to import processing charges. Through those collective measures, the scheme was funded.
The truth of the matter is that this government has squandered the money. It has squandered the money through its own mismanagement of the economy over the last three years. The figures speak for themselves, and it is not just the NDIS figures. Projected total debt for the year 2016-17 is expected to go to $317 billion on this government's watch. This is not its first year of government; we are talking about a government that is now three years into its term. My understanding is that, similarly, the deficit for this year is expected to double. We will get the actual figures tonight. But, clearly, this is a government that has mismanaged the economy, has mismanaged its own finances and is now seeking to claim that the $5 billion shortfall it wants to make up was never, ever funded by the previous government. It is simply dishonest to say that.
The NDIS—and we will know after tonight just what the final outcome is—is a scheme that people are pinning their hopes on, people who, I know personally, have struggled for years and years. I know many families in which there are children, parents, brothers or sisters who will fall within the category of NDIS beneficiary once the scheme is in place. These are people that this country has neglected for far too long. My criticism in that respect is of all governments right up until the time the NDIS was brought in as a future policy. In my view these people should not be treated in any way that is below their expectations of the scheme once it is initiated and brought in.
It was Labor that brought in the NDIS, and we did so after consulting widely on matters of disability. Personally, I remember going to forums in my own electorate with the member for Maribyrnong, the current Leader of the Opposition, to discuss national disability issues. I heard the stories of the people who came to those forums, as I had heard their stories in my previous engagement with them as Mayor of Salisbury, when I set up a disability task force to try and deal with these issues at a local government level. It was with great joy that I saw our side of politics, the Labor Party, introduce a national disability insurance scheme. Yes, I accept that it is going to be costly. I also accept that it will take time to fully implement the scheme. But a commitment to it was the best news that people who needed the support would have heard for a long time.
I will finish on this point: if there really was a $5 billion shortfall, as the minister says, why was it not raised when the government was first elected in 2013—in the government's 2014 budget? Why have we not been talking about it for the last two years and why has it simply appeared, this the third year of the government being in office, just ahead of tonight's budget?
I do not know what the government has in mind, and I will find out in a couple of hours time, just like everyone else. But I say to the minister and the government: anything less than what the people of Australia were led to believe they would be getting from the National Disability Insurance Scheme will be a huge disappointment to them. And they will not be fooled by the politics that is being played. I can assure the minister and other members of this House that I will continue to advocate and campaign as strongly as I can to ensure that the National Disability Insurance Scheme is delivered as promised—in full and in the time frame it was promised to be delivered in.
I thank the members opposite for their contributions to this second reading debate on the National Disability Insurance Scheme Savings Fund Special Account Bill 2016. I start by noting that the government is fully committed to properly, adequately and sustainably funding the National Disability Insurance Scheme.
It is for precisely that reason that the government is bringing forward this bill to establish a new ongoing special account that will assist the Commonwealth in meeting its future financial commitments to the NDIS. The special account created by this bill will be known as the National Disability Insurance Scheme Savings Fund Special Account. For the purposes of this contribution, I will simply refer to it as 'the savings fund'.
The savings fund will allow the government, over future budgets, to identify savings from existing programs and set aside those savings to assist in meeting the Commonwealth's financial commitments to the NDIS. Let us be crystal clear: a failure to support this bill—a bill designed to establish a vehicle in which the Commonwealth government can accumulate clearly identified savings and protect those savings for the exclusive use of the future funding of the NDIS—is a failure to support a process that is absolutely necessary for the NDIS. It is absolutely necessary to give certainty and peace of mind to the 460,000 estimated participants. It is absolutely necessary to also give assurance to all Australian citizens that the NDIS funding gap, which is absolutely real and which arises in 2019-20, will not be funded by further taxes or by borrowings.
The only conceivable reason to not support a bill designed to protect savings for the care of Australians with a disability would be misplaced political pride. To not support this bill because of a preference to maintain a pretence that there is no challenge of funding here, a pretence that there is no funding gap that needs addressing, would be a shameful triumph of political party pride and a wish to establish a mythology over the interests of participants and soon-to-be participants of the NDIS.
It is staggering that the Labor Party would prefer to have 460,000 participants know that Labor did not support a bill that gives financial certainty to the scheme because they preferred to maintain a pretence that there is no challenge of funding, inherent in the NDIS, arising in 2019-20. I will come, shortly, to this issue of the funding gap and to the fact that members opposite wish to maintain this pretence that there is no challenge here, that all funding is perfectly identified and protected and available. That is simply—on any measure and any assessment—incorrect.
I find it completely staggering that there is not fulsome support for a bill that gives certainty to the 460,000 participants to the NDIS. That certainty is necessary because of a financial failure of members opposite to address an issue and a challenge that was always going to be confronted by any government when the NDIS went full scheme in 2019-20. Presently, to fund the NDIS, the Commonwealth redirects existing disability related spending and the DisabilityCare Australia Fund towards the cost of the NDIS.
There are three essential, clearly identified and known sources of funding for the NDIS. The first is existing Commonwealth disability funding, which is redirected towards the NDIS. That accounts for about $1.1 billion. These figures I am using relate to the 2019-20 year. In 2019-20 $1.1 billion is garnered from existing Commonwealth disability funding being redirected towards the NDIS. The Commonwealth share of the increase in the Medicare levy, through the DisabilityCare Australia Fund, in 2019-20 will be $3.3 billion. Redirecting funding that is currently provided to the states for specialist disability services accounts, in 2019-20, for $1.9 billion.
Therefore, in total, the Commonwealth directs slightly over $6 billion—about $6.3 billion—from these three known, clearly identifiable sources to the NDIS. The Commonwealth's responsibility, financially, to the NDIS in 2019-20 is around $11.3 billion. There is $6.3 billion covered. That leaves a gap of close to $5 billion in 2019-20 and a gap that grows each year the NDIS grows, as it certainly will do after 2019-20. Therefore, what the government is facing—and this is not a political problem; this is a problem of financial reality—is a funding gap of close to $5 billion that arises in 2019-20 when the NDIS transitions to a full scheme, and that grows in the years after 2019-20.
Members of the previous Labor government make some claims that, essentially, they 'clearly identified' additional savings to assist in meeting the funding requirements of the NDIS from 2019-20. I put to the House, and I do so in great confidence, that that pretence is a very clumsy attempt to rewrite history and to claim now that there were adequate specific savings set aside to fully fund the NDIS. That pretence is wrong, and demonstrably wrong, for three reasons. The first is that the claim that enough savings to cover that $5 billion further half of Commonwealth spending were, in the words of members opposite, 'clearly identified' is simply not capable of anything resembling proper verification.
Let me start to address that issue by saying that Labor's actual budget papers at the time—not the glossies and not the pamphlets, but the actual budget papers of the time—did not link savings to the NDIS. That proposition appeared in a 2013-14 budget glossy. That budget glossy has a chart which appears in the document on page 4. The chart is entitled 'Meeting the costs of DisabilityCare in Australia'. It notes those sources of funding that I have noted. It notes some of the areas of funding that can be identified, and they are reforms to retirement incomes and private health insurance reforms—and I will come to address those in a moment. But then, curiously, it has entries depicted in blue on the bar graph which are described in these terms: 'Other long-term savings'. By any basic arithmetic and calculation of what those 'other long-term savings' would need to amount to to cover that $5 billion gap to which I have just referred, there would have to be in the vicinity of $2.4 billion worth of 'other long-term savings' in 2019-20.
On a number of occasions, I have heard several members opposite say these 'other long-term savings' were verified: Treasury verified them; they have been discussed in Senate estimates. The notion that these 'other long-term savings' have been verified is simply not true. Let me read to you a passage from Senate estimates:
Senator FIFIELD: Mr Ray, I might just return to the helpful document you provided at the start of proceedings today and try my luck. This relates to chart 3, 'DisabilityCare Australia' on the last page of the document. There is a category 'Other long-term savings' of $20.6 billion for 2013-14 to 2022-23. Are you able to further disaggregate that by each of the measures there over the time scale?
Here is a direct question to the Treasury official referring directly to that budget glossy that I have just referred to. It referred directly to what must have been $2.4 billion worth of savings in 2019-20, and Senator Fifield noted here that it represented a figure of $20.6 billion between 2013-14 and 2022-23 that is described simply as 'other long-term savings'. The question was: can you tell us what those other long-term savings are? The Treasury representative commenced his answer by saying:
The short answer is no, because for one of those measures we cannot tell you at all what the out numbers are, and that is the change to the indexation of tobacco excise.
Does that ring any bells? Is this not the past coming back to haunt the present? Mr Ray went on to say:
… we cannot disaggregate it because of that.
On 5 June 2013, despite assurances by members opposite that this was all sorted through and the Treasury had given a very crisp, delineated, disaggregated explanation of what 'other long-term savings' were, when directly asked the question in estimates the Treasury official simply could not identify what those were. The first problem with the claim that this funding gap does not exist—the pretence clung to by members opposite—falls down because this notion that there were clearly identified savings just cannot be verified. That phrase, 'clearly identified savings', has several different nomenclatures about it. The member for Jagajaga wrote me a letter which refers to 'a number of savings and revenue measures'. So we have got 'other long-term savings' and 'a number of savings and revenue measures', and I have seen the formulation of 'other savings' used.
Mr Deputy Speaker, I am sure that you would tend to agree that, when you are dealing with reformation, this is one of the greatest reforms in the history of welfare services in Australia. You are dealing with a figure of $2.4 billion arising in 2019-20 and the best that you can do in clinging to the pretence that that is fully funded is to describe globally that amount in 2019-20 as 'other savings'. A figure of $2.40 is miscellany; $2.4 billion should be capable of list based Excel spreadsheet verification—it just should be. Anyone opposite who wants to provide that list to me, I would very much like to see it. The offer is standing.
The member for Jagajaga writes me a letter bemoaning the fact that we state quite correctly that there is a $5 billion gap. I invite her to send me the consolidated list of what savings add up to $2.4 billion in 2019-20. What are they? It is simply not good enough in this place to say that 'other savings measures' is an accurate, adequate and purposeful description of one of the biggest welfare reforms that has ever occurred in Australia's history when that description is meant to describe a very large piece of the funding that is required to make the system real. The first reason is that this notion of 'clearly identified savings' is only to be accepted if you accept that it is appropriate to describe $2.4 billion worth of savings as clearly identified with the use of the term 'other'. It is simply not good enough. The second reason why there is a big problem with the contention that there is no funding gap in 2019-20 is that the golden rule of public finances is that where a genuine budget savings is made it can only be spent once. Labor announced its supposed NDIS funding in the 2013-14 budget, or so it is claimed by members opposite. But let me simply state from the outset that, while many of the savings can never or have never been verified, it is also the case that many of the savings measures that had at least been nominated had been announced significantly before the NDIS appeared in budget papers and had been on any reasonable assessment of the circumstances of their announcement assigned to other purposes, with no mention of the NDIS whatsoever.
I will just stop at this point and note here that in the mad scramble to cover over what has been described as a rounding error with respect to tobacco excise, the shadow Treasurer today—and I believe I am quoting him if the media are reporting accurately, and I have no reason to believe that they are not—said that you do not need to worry about the fact that the revenue is $20 billion short on the excise. You do not need to worry because of the fact that 'Labor has never directly hypothecated the revenue from tobacco excise for school spending'. Let me say that now, in scrambling to correct an error, things have to be directly hypothecated, but it seems to be good enough back in 2013-14 to simply announce a savings measure within the 24-month period that you also announce a spend, and the two are meant to be linked. The reality is that reforms from private health insurance, which are claimed to be set aside for the NDIS and which were estimated for $1.1 billion worth of funding in 2019-20, were announced in MYEFO prior to the budget that committed to and supposedly funded the NDIS. Those savings were described in these terms:
Savings from this measure will be redirected to partially offset the cost of the Dental Health Reform package announced on 29 August 2012.
Then, globally, all of the savings in that MYEFO were described by the member for Lilley in these terms:
To return the budget to surplus in 2012-13 and beyond, the Government has made substantial targeted savings, ensuring that Australia's public finances remain strong.
At the time that they are announced they are spent on dental health care. They are spent on budget repair. Then years later they are claimed for the NDIS. This is simply absurd. These are the problems that have arisen. This is the reason why we need to fix this gap and this is the reason the legislation is before the House. If members opposite fail to support it, that will be known in every school hall and every town hall around this nation.
Question agreed to.
Bill read a second time.
Message from the Administrator recommending appropriation announced.