Bills Digest no. 1, 2016-17
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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Paula Pyburne
Law and Bills Digest Section
2
September 2016
Contents
History of the Bill
Purpose of the Bill
Background
About the NDIS
Current position
Future projections
Paying for the NDIS
National Commission of Audit report
What the Productivity Commission
recommended
What is a special account?
Committee consideration
Selection of Bills Committee
Senate Standing Committee for the
Scrutiny of Bills
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Special appropriations
Key issues and provisions
Concluding comments
Date introduced: 31
August 2016
House: House of
Representatives
Portfolio: Social
Services
Commencement: On
Royal Assent
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can
be found on the Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at September 2016.
History of the Bill
The National Disability Insurance Scheme Savings Fund
Special Account Bill 2016 (the first Bill) was introduced into the House of
Representatives on 16 March 2016.[1]
The Bill was passed by that chamber but had not been debated in the Senate when
the Parliament was dissolved for the election. The first Bill lapsed on the
dissolution of the Parliament on 9 May 2016.
The National Disability Insurance Scheme Savings Fund
Special Account Bill 2016 (this Bill), which was introduced into the House of
Representatives on 31 August 2016, is in equivalent terms to the first Bill. A Bills
Digest was prepared in respect of the first Bill.[2]
The material in this Bills Digest has been sourced from that earlier one.
Purpose of the Bill
The purpose of this Bill is to establish the National
Disability Insurance Scheme Savings Fund Special Account (the Special Account)
which will be used to assist the Commonwealth to meet its funding obligations
under the National
Disability Insurance Scheme Act 2013[3]
(NDIS Act).
Background
About the NDIS
In 2009, in response to a campaign for national disability
insurance, the Productivity Commission was asked to ‘examine a range of options
and approaches, including international examples, for the provision of
long-term care and support for people with severe or profound disability’.[4]
The Productivity Commission report found:
The current disability support system is underfunded, unfair,
fragmented, and inefficient, and gives people with a disability little choice
and no certainty of access to appropriate supports. The stresses on the system
are growing, with rising costs for all governments.[5]
In response to the Productivity Commission’s report and
recommendations, the Council of Australian Governments (COAG) signed an
Intergovernmental Agreement for the NDIS Launch on 7 December 2012.[6]
In 2013, the Commonwealth Government enacted the NDIS
Act which:
- established
the framework for the NDIS and the National Disability Insurance Scheme Launch
Transition Agency (the Agency) and its Board. This enabled the NDIS to be
launched, and the Agency to operate the launch, in five sites across Australia
from July 2013
- sets
out the objects and principles under which the NDIS is to operate, including
ensuring that people with disability are supported to exercise choice and
control over the care and support they receive, and giving effect in part to
the United Nations Convention on the Rights of Persons with Disabilities[7]
- sets
out the process for a person becoming a participant in the scheme, how
participants develop a personal, goal-based plan with the Agency, and how
reasonable and necessary supports will be assured to participants and
- provides
that the Agency will be responsible for the provision of support to people with
disability, their families and carers. This could include providing funding to
individuals and organisations to help people with disability participate more
fully in economic and social life.[8]
The states and territories subsequently signed bilateral
agreements with the Commonwealth detailing the operational and funding
arrangements for the NDIS in each trial site. These agreements included matters
such as the planned intake of participants and the balance of cash and in-kind
contributions to the scheme.[9]
Current position
The gradual roll out of the NDIS at specific
sites in all states and territories has been ongoing since July 2013.[10] In November 2015 Bruce
Bonyhady, Chairman of the Agency, reported that the NDIS ‘is in eight sites and
has more than 19,500 participants, with another site due to commence shortly in
North Queensland, in Townsville, Palm Island and Charters Towers’.[11]
More recently, Mr Bonyhady reported:
... the NDIS is on time and on budget and client satisfaction
is above 90 per cent ...
On 1 July the NDIS will move from a trial to a
fully fledged program in all States and Territories (except WA). This is after
having been assessed and reassessed by each Government and their Treasuries.[12]
Future projections
Agreements for the full scheme roll out of
the NDIS have been reached with New South Wales, Victoria, Queensland, South
Australia, Tasmania, the Australian Capital Territory and the Northern
Territory. On 28 April 2016, the Commonwealth Government announced the
trial site in Western Australia would be extended by 12 months to 30 June
2017 to ensure people with disability continue to receive supports while a full
scheme approach is finalised.[13]
Accordingly, the scheme will be available to
all eligible residents in the Australian Capital Territory by July 2016, in New
South Wales and South Australia by July 2018, and in Tasmania, Victoria,
Queensland and the Northern Territory by July 2019.[14] When it is fully
operational in 2019 the Scheme will serve around 460,000 participants across
Australia.[15]
The full scheme Heads of Agreement for each
state and territory outline the parameters for transition to full scheme
arrangements within specific timelines.[16]
Paying for the NDIS
When the NDIS Act was enacted it did ‘not include any
provisions establishing a funding mechanism for the NDIS’.[17]
The Parliamentary Library’s Budget Review 2012–13 stated:
The NDIS will be a major and highly complex reform to the way
in which disability care and support are funded. It is likely to have
far-reaching effects throughout the disability services sector. The NDIS will
also represent a significant new area of Commonwealth responsibility and
expenditure. The estimated annual cost (nearly $14 billion) is around the same
amount spent on the Disability Support Pension, more than the current annual
cost of the Pharmaceutical Benefits Scheme ($10 billion), and not substantially
less than the current annual cost of Medicare ($18 billion) ...
... The question of how the NDIS will be funded (will there be
an agreed formula entrenched in legislation?) is crucial in determining whether
the longstanding problem of funding shortfalls will be adequately addressed. In
the absence of an adequate and secure funding base, the NDIS would, in the long
run, provide little advance on current arrangements.[18]
National Commission of Audit report
The National Commission of Audit report of 2014 stated:
The NDIS represents a major new area of Commonwealth spending
responsibility, which is yet to be fully implemented. It is a worthy scheme
with widespread community support. There are, however, significant financial
risks associated with the introduction of the scheme. The Commonwealth is
bearing the majority of the risk of any cost overruns. In negotiations with
States the Commonwealth agreed to meet all extra costs during its launch and
transition and at least 75 per cent of cost overruns of the mature scheme. The
Commission considers that the NDIS should continue to be supported but it
should be implemented in a way which is fiscally responsible and minimises
risks of higher than expected spending. This can be achieved by exercising
budget control to ensure the long-term sustainability of the NDIS.[19]
What the
Productivity Commission recommended
The Productivity Commission recommended that the NDIS
would:
... lock in tax revenue to meet its annual liabilities, without
a yearly battle through the budget process to secure sufficient funding in
competition with other government spending initiatives .... In effect, the NDIS
will be funded by a mandatory annual insurance premium.[20]
The Productivity Commission proposed, amongst other
things, that the Australian Government specify in legislation a special
account—the ‘national disability insurance fund’. It was proposed:
... the legislative provision would require the Australian
Government to earmark funds according to the prescribed formula. The elements
of this approach that ensure a stable revenue stream are its legislated basis
and that the amount earmarked for the fund would not be an absolute amount of
dollars, but act effectively as a rate applied to a growing income base.
Without the latter, the amount of revenue would fall relative to the costs of
the NDIS, and making up the shortfall would require new legislation—leaving too
much scope for future governments to renege on a stable source of revenue. As
much as possible, the formula should be as simple as possible and transparent.[21]
What is a special account?
Under section 81 of the Constitution[22]
all moneys raised or received by the Commonwealth form part of the Consolidated
Revenue Fund (CRF). Furthermore, section 83 of the Constitution
provides that no money may be drawn from the Treasury of the
Commonwealth without a legal appropriation authority.[23]
The CRF in section 81 of the Constitution is synonymous with the
Treasury in section 83.[24]
Under section 80 of the Public Governance,
Performance and Accountability Act 2013[25]
if an Act establishes a special account and identifies the purposes of the
special account, then the CRF is appropriated for expenditure for those
purposes, up to the balance for the time being of the special account.
A special account which has been established under an
enactment, such as is proposed by the Special Account Bill, can only be varied,
revoked or abolished with the amendment or repeal of the provision which
establishes the Special Account in the enabling legislation.[26]
While Special Accounts can record amounts solely from
Commonwealth appropriations, they can also record amounts from other sources as
allowed by the terms of the Special Account’s establishing legislation. These
funds can include indirect taxes or other imposts (for example, an industry levy),
contributions by other governments, or discretionary contributions by members
of the community. Amounts standing to the credit of Special Accounts may only
be debited strictly in accordance with the Account’s purpose.[27]
Committee consideration
Selection of Bills Committee
At its meeting of 17 March 2016 the Selection of Bills
Committee decided to defer consideration of the first Bill to its next meeting.[28]
At its meeting of 1 September 2016 the Selection of Bills Committee deferred
consideration of the current Bill.
However, during the second reading debate on the first Bill,
Member for Bendigo, Lisa Chesters, indicated that Labor would be seeking to
have the first Bill referred to a Senate Committee for inquiry and report,
stating:
We want this legislation to be tested and the people with a
disability, their carers and their organisations to be able to ask questions.
This enquiry needs to be established to allow proper scrutiny of this Bill. It
will allow people with a disability and their advocates to provide feedback.
This is complex policy, and everybody acknowledges that. So we need to allow
people the chance to properly scrutinise this Bill and provide their own
comments ... That is why it is important that we establish a Senate enquiry to
look at this legislation.[29]
Senate Standing Committee for the Scrutiny of Bills
The Standing Committee for the Scrutiny of Bills had no
comments about the first Bill.[30]
At the time of writing this Bills Digest the Committee had made no comment
about this Bill.
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bill’s compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[31]
Parliamentary Joint Committee on Human Rights
At the time of writing this Bills Digest, the Parliamentary
Joint Committee on Human Rights had not commented on this Bill. The Committee
considered that the first Bill did not raise human rights concerns.[32]
Policy position of non-government parties/independents
At the time of writing this Bills Digest, Labor had
commented specifically on the funding of the NDIS and whether there was a
budgetary short fall rather than on the establishment of a special account per
se.[33]
Position of major interest groups
At the time of writing this Bills Digest, stakeholder
groups had not commented on either the first Bill or this Bill.
Financial
implications
According to the Explanatory Memorandum for this Bill it:
... will have nil or negligible financial impact over the forward
estimates. The special account would not increase the Commonwealth’s gross debt
and would not have a negative impact on the Budget bottom line as the special
account sits within the Consolidated Revenue Fund and there are no associated
Public Debt Interest or management costs.[34]
According to the Minister for Social Services, Christian
Porter:
At full-scheme rollout, the bill for
the NDIS will be $22 billion a year ... The Commonwealth government will be
committed to $11.3 billion worth of funding to the NDIS. Of that, $1.1 billion
comes from existing Commonwealth funding, $3.3 billion from the Medicare levy
and $1.9 billion from existing specialist disability services. That leaves a
gap of $5 billion. We have created an account into which we will place identified
savings to the tune of $5 billion over the next period of three years, to 2019.[35]
Special appropriations
Speaking about the first Bill, Minister for Social
Services, Christian Porter, said that it would collect underspends and savings
that will help meet the Commonwealth’s contribution to the NDIS from 2019–20. Once
the fund is set up the government will ‘set aside specific, identified and
protected savings... The fund will have an opening balance of $162.4 million,
which was set aside in the 2015–16 Mid-Year Economic and Fiscal Outlook’.[36]
Key issues and provisions
Clause 5 establishes the National Disability
Insurance Scheme Savings Fund Special Account as a Special Account for the
purposes of the Public Governance, Performance and Accountability Act.
The Minister for Social Services has said that there is:
... $5 billion worth of funding shortfalls from 2019-20
onwards. This Special Account is the mechanism for securing that funding
shortfall ...
The Special Account 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 future financial commitments to the
NDIS.[37]
Accordingly, clause 6 provides that the purposes of
the Special Account are:
- to
assist the Commonwealth to meet its funding obligations in relation to the NDIS
Act
- to
make payments to the National Disability Insurance Scheme Launch Transition
Agency for the purposes of the Agency
- to
reduce the balance of the Special Account (and, therefore, the available
appropriation for the account) without making a real or notional payment.
The Explanatory Memorandum to the Special Account Bill
provides that the credits to the Special Account may result from:
- underspends and net savings from
the NDIS and other portfolio savings, as determined by the Minister for Social
Services
- discretionary decisions by the
Prime Minister or the Cabinet and
- decisions by the Prime Minister or
the Cabinet about identified savings from other Commonwealth portfolios.[38]
The effect of clauses 5 and 6 together is that the
CRF is appropriated for expenditure only for those purposes outlined above, up
to the balance for the time being of the Special Account.
As stated above, the Commonwealth is setting up the
Special Account to meet an expected future funding shortfall. This is required
because the Intergovernmental Agreement on the National Disability Insurance
Scheme Launch states as follows:
Governments agree that managing unexpected costs is a
critical issue. The Commonwealth agrees that it will fund any costs associated
with high population numbers, higher per person care and support costs, 100 per
cent of the Agency’s cash flow risk and any other risk sharing arrangements
identified in Schedules A-E during the launch and transition to a full scheme ...[39]
Clause 7 of the Special Account Bill sets out the
manner in which funds may be credited to the Special Account. It empowers the
Minister to determine in writing that a specified amount is to be credited to
the Special Account on a particular day or that a specified amount is to be
credited in specified instalments on specified days. That determination is not
a legislative instrument and so would not be a disallowable instrument under
the Legislation
Act 2003, and would not be required to be tabled in both Houses of the
Parliament.[40]
Clause 8 of the Special Account Bill allows the Minister to delegate any
or all of his, or her, powers
under clause 7 to the Secretary of the Department or an SES employee, or acting
SES employee, in the Department.
Under clause 9 the Minister must cause a review of
the operation of the National Disability Insurance Scheme Savings Fund
Special Account Act 2016 to be undertaken in the financial year ending on
30 June 2027. However there is no stated requirement that the report of the
review be tabled in both Houses of the Parliament or that it be published.
Concluding comments
When the NDIS is fully operational in 2019 it will cost $22 billion a year, of which the Commonwealth government will
pay $11.3 billion. As stated above, the Commonwealth agreed in the
Intergovernmental Agreement on the National Disability Insurance Scheme Launch,
that it will fund any costs associated with high population numbers, higher per
person care and support costs, 100 per cent of the Agency’s cash flow risk and
any other risk sharing arrangements during the launch and transition to a full
scheme. This is an enormous and imprecisely quantified
financial commitment.
It would appear then that the
creation of a special account is a prudent measure to ensure that funds are put
aside to meet that commitment.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Parliament
of Australia, ‘National
Disability Insurance Scheme Savings Fund Special Account Bill 2016 homepage’,
Australian Parliament website.
[2]. P
Pyburne, National
Disability Insurance Scheme Savings Fund Special Account Bill 2016 [and]
National Disability Insurance Scheme Amendment Bill 2016, Bills digest,
112, 2015–16, Parliamentary Library, Canberra, 2016.
[3]. National Disability
Insurance Scheme Act 2013.
[4]. Productivity
Commission (PC), Disability
care and support, Inquiry
report, 54, 2 vols., PC, Canberra, 31 July 2011, p. v.
[5]. Ibid.,
vol. 1., p. 2.
[6]. National
Disability Insurance Scheme (NDIS), ‘Intergovernmental
agreements’, NDIS website.
[7]. Convention
on the Rights of Persons with Disabilities, done in New York on 13
December 2006, opened for signature 30 March 2007, [2008] ATS 12 (entered into
force for Australia 16 August 2008).
[8]. Revised
Explanatory Memorandum, National Disability Insurance Scheme Bill 2013, p.
i.
[9]. NDIS,
‘Intergovernmental
agreements’, NDIS website.
[10]. NDIS,
‘Our sites’, NDIS
website.
[11]. B
Bonyhady (NDIA Chairman), The what?
why? who? and market opportunities of the NDIS, Brisbane, speech to the
Committee for Economic Development of Australia, 5 November 2015.
[12]. B
Bonyhady (NDIA Chairman), Statement from
NDIA Chairman, Bruce Bonyhady in response to the story in the Australian on 16
April, media release, NDIS website, 16 April 2016.
[13]. NDIS,
‘NDIS in Western
Australia’, NDIS website.
[14]. NDIS,
‘Intergovernmental
agreements’, NDIS website.
[15]. B
Bonyhady, The
what? why? who? and market opportunities of the NDIS, op. cit.
[16]. NDIS,
‘Intergovernmental
agreements’, NDIS website.
[17]. L
Buckmaster and J Tomaras, National
Disability Insurance Scheme Bill 2012, Bills digest, 72, 2012–13,
Parliamentary Library, Canberra, 11 February 2013, p. 18.
[18]. L
Buckmaster, National
Disability Insurance Scheme: Budget review 2012–13, Research paper series,
9, 2011–12, Parliamentary Library, Canberra, 2012, pp. 131-134.
[19]. National
Commission of Audit, Towards
responsible government, Commonwealth of Australia, 2014, p. 91.
[20]. PC,
Disability
care and support, op.
cit., vol. 2., p. 573.
[21]. Ibid.,
vol. 2., pp. 659–660.
[22]. Constitution.
[23]. Northern
Suburbs General Cemetery Reserve Trust v Commonwealth (1993) 176 CLR 555, [1993] HCA 12.
[24]. Department
of Finance and Administration, Guidelines
for the management of special accounts, Financial Management Guidance
no. 7, October 2003, p. 5.
[25]. Public Governance,
Performance and Accountability Act 2013.
[26]. Department
of Finance and Administration, Guidelines
for the management of special accounts, op. cit., p. 17.
[27]. History
of the development of special accounts is in C Lawson, ‘”Special
Accounts” under the Constitution: amounts appropriated for designated purposes’,
University of New South Wales Law Journal, 29(2), 2006, pp. 114–146.
[28]. Senate
Standing Committee for Selection of Bills, Report,
4, 2016, 17 March 2016.
[29]. L
Chesters, ‘Second
reading speech: National Disability Insurance Scheme Savings Fund Special
Account Bill 2016’, House of Representatives, Debates, 3 May 2016,
p. 4181.
[30]. Senate
Standing Committee for the Scrutiny of Bills, Alert
Digest, 5, 2016, The Senate, 3 May 2016, p. 9.
[31]. The
Statement of Compatibility with Human Rights can be found at the end of the Explanatory
Memorandum to the National Disability Insurance Scheme Savings Fund Special
Account Bill 2016.
[32]. Parliamentary
Joint Committee on Human Rights, Thirty-seventh
Report of the 44th Parliament, 2 May 2016, p. 1.
[33]. J
Macklin (Shadow Minister for Disability Reform and Shadow Minister for Families
and Payments) and T Burke (Shadow Minister for Finance),
Pickpocket Porter steals NDIS money, joint media release, 9 April 2016;
J Macklin (Shadow Minister for Disability Reform and Shadow Minister for
Families and Payments) and T Burke (Shadow Minister for Finance), Government
must explain what it’s done with NDIS funds, joint media release, 18
April 2016.
[34]. Explanatory
Memorandum, National Disability Insurance Scheme Savings Fund Special
Account Bill 2016, p. 1.
[35]. C
Porter, ‘Questions
without notice: National Disability Insurance Scheme’, [Questioner: E
Jones], House of Representatives, Debates, 17 March 2016, p. 3530.
[36]. M
Cormann (Minister for Finance) and C Porter (Minister for Social Services), New
NDIS account to lock in funding, media release,
16 March 2016.
[37]. C
Porter, ‘Second
reading speech: National Disability Insurance Scheme Savings Fund Special
Account Bill 2016’, House of Representatives, Debates, 16 March
2016, p. 3247; K Vickery, ‘NDIS
faces "funding challenges"’, Daily Telegraph, 29 January
2016, p. 22.
[38]. Explanatory
Memorandum, National Disability Insurance Scheme Savings Fund Special
Account Bill 2016, p. 1.
[39]. Council
of Australian Governments (COAG), ‘Intergovernmental
Agreement on the National Disability Insurance Scheme Launch’, COAG
website, 7 December 2012, paragraph 28.
[40]. Legislation
Act, section 3AA.
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