Australia’s current
disability support system is “underfunded, unfair, fragmented and
inefficient”.
This damning conclusion was
reached by the Productivity Commission which published an enquiry
report at the end of July in which it calls for radical reform of
disability insurance in Australia.
Go deeper with GlobalData
The Productivity Commission
is the Australian government’s independent research and advisory
body on a range of economic, social and environmental issues
affecting the welfare of Australians.
In its extensive 1,200 page
report, the Productivity Commission put forward no less than 86
proposed changes to the existing system. If implemented they would
lead to the establishment of two national insurance
schemes.
The largest scheme would be
the National Disability Insurance Scheme. According to the
commission, it would be like the national Medicare scheme in that
all Australians with a significant and ongoing disability would get
long-term care and support. However, they would not receive any
income. This would be left to private insurance and to the
Australian government’s income support system.
A second scheme, the National
Injury Insurance Scheme, would cover the lifetime care and support
needs of people who acquire a catastrophic injury from an
accident.
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By GlobalDataThis smaller scheme would be
based on the motor accident compensation schemes that operate in
some states and territories of Australia.
Three weeks after the
commission’s release of its report, its recommendations on a
National Disability Insurance Scheme were accepted in principal by
the Council of Australian Governments (COAG). Among steps to be
taken will be the formation of a select council of ministers from
commonwealth, states and territories to start work immediately to
lay the foundations for a national disability insurance scheme. The
select council will report at COAG’s first meeting in
2012.
If all goes according to the
commission’s proposals, the scheme will begin an initial regional
rollout during Australia’s 2014/2015 fiscal year. Rollout of
national coverage is anticipated during the following fiscal
year.
The scheme will not be cheap.
The commission estimates that A$610m ($640m) will be required to
establish the necessary administrative infrastructure prior to the
commencement of the scheme’s rollout in 2014/2015.
Costs in the initial rollout
phase are estimated at A$900m while in its first year of national
rollout (2015/2016) it is estimated that the scheme will cost
A$2.4bn to operate.
When the scheme is fully
implemented in 2018/2019 its annual operational cost is projected
to stand at A$6.5bn.
The commission noted that all
estimated expenses represent the additional amounts that will be
spent compared to the total amount of A$6.2bn currently spent by
all state governments on assistance to people with
disabilities.
The commission estimates that
about 410,000 people would meet the criteria to receive funded
individualised support. From a long-term benefit perspective to the
economy, the commission estimates that under a reasonable scenario,
there could be additional employment growth of 220,000 by 2050,
including for people with less severe disabilities.
The positive impact of this
employment gain would be around a 1% increase in Australia’s GDP,
or about A$32bn in current price terms.
No firm proposals for the funding of the scheme have been
put forward. However, Australian think tank Per Capita believes the
proposed scheme should be funded by tax levies on individuals. Per
Capita estimates that the weekly average tax levy would be A$15 per
taxpayer.
