Funding support for people with disability

Dr Luke Buckmaster and Michael Klapdor, Social Policy Section

In recent years, there have been increasing calls in Australia for the introduction of a new, national, long-term mechanism for funding support for people with disability—national disability insurance. Such calls have been made by a range of groups and individuals, from unions, disability advocacy groups, and medical associations, to carers’ representatives and people living with disability or in a caring role.

Those arguing for a new approach have suggested there are a number of significant problems with the current system. These include:

  • the fragmented and complex nature of the current disability services system
  • continuing failure of funded services to meet demand
  • the lack of an entitlement to disability care and support services based on need, equivalent to the entitlement provisions present in Australia’s social security and universal health care systems
  • differential treatment between those who acquire a disability through a workplace or motor vehicle accident and those who acquire permanent disabilities in other ways (including at birth)—that is, while the former generally receive financial support, there is no automatic support for the latter
  • projections of a significant increase in the number of people with a severe or profound disability—according to the Australian Institute of Health and Welfare, around 2.3 million Australians will have a high level of disability by 2030
  • a likely shortfall in the numbers of people available to undertake caring responsibilities.

The current Australian disability support system separates the provision of income support from the provision of services. Both the income support and services component of the disability support system are funded from general revenue, rather than through a dedicated fund or insurance pool.

  • 1.2 million people in Australia with a severe or profound limitation in 2003
  • Estimated at 2.3 million by 2030
  • 64 per cent of those with severe or profound limitations received income support
  • Ageing population will produce an increased demand on services and welfare as well as a shortage of carers
  • AIHW estimated unmet demand for 23 800 people under the age of 65 for accommodation and respite, 3700 people for community access and 1700 people for disability employment services
  • Cost $5.2 billion to meet unmet demand

The Commonwealth provides income support primarily through the Disability Support Pension (DSP) for those affected by disability. Until recently, the provision and funding of disability services by the Commonwealth, State and Territory Governments was dealt with under the Commonwealth State Territory Disability Agreement (CSTDA). Under the Council of Australian Governments (COAG) reforms to Commonwealth-state financial relations, announced in March 2008, the CSTDA was replaced with the National Disability Agreement (NDA). In the new agreement the areas of responsibility remain essentially the same.

Under the NDA, open and supported employment services, as well as targeted employment support services, are administered by the Commonwealth Government. State and territory governments administer accommodation support, community support and community access services for people with disability, along with respite care services that provide relief and support to families or carers of people with disability.

Funding through the CSTDA/NDA has been an area of dispute in recent years, with the states and territories and many in the disability sector claiming that funding provided by the Commonwealth is inadequate.

The Commonwealth, in partnership with the states and territories, is currently developing a National Disability Strategy (NDS). The purpose of the NDS will be to guide the development of disability policy across the jurisdictions.

Following recommendations by the Disability Investment Group, the Rudd-Gillard Government directed the Productivity Commission to investigate the feasibility of new approaches. These included investigating a social insurance model, for funding and delivering long-term disability care and support for people with severe or profound disabilities however they are acquired. The Commission will report to the Government in July 2011.

Therefore, the Parliament may be required to consider one or more proposals for the design of a new approach to funding support for the disabled.

Key features of the scheme proposed by advocates of national disability insurance are:eligibility for those born with a disability or who acquire a permanent disability through an accident, injury or as a result of a medical condition, including mental illness

  • a ‘no fault’ model: provision of support and care for people with disabilities would be separated from legal action for negligence/culpable behaviour
  • a lifetime approach to care, rather than simply at times of crisis
  • active case management
  • universal (non means tested) access
  • funding possibly drawn from a special supplement to the Medicare levy, private health insurance, third party car insurance and/or workplace insurance
  • national standards of assessment, care, support and case management.

Some expected benefits of national disability insurance are likely to be improved health and employment outcomes as a result of an increased focus on early intervention and more private investment opportunities in an expanded disability services sector. Reduced expenditure on income support and medical care would be expected to offset some of the cost of the scheme. If adopted, such a scheme would be about more than ensuring a funding base for disability services into the future. It could enable the development of a more long-term, integrated and planned approach to disability services than is possible under current arrangements.

The introduction of a national disability insurance scheme would be a major reform. As with Paid Parental Leave, Australia’s most recent major social policy reform, there is likely to be significant debate about the design of any proposed disability scheme. Key questions are likely to include what will it cost, how will it be funded, who will be eligible (or, perhaps more importantly, ineligible), and how the scheme would interact with existing supports and services (including DSP, Medicare).

Library publications and key documents

Disability Investment Group, The Way Forward - A New Disability Policy Framework for Australia, Department of Families, Housing, Community Services and Indigenous Affairs, November 2009,

Productivity Commission, Disability care and support, Productivity Commission Issues Paper, 17 May 2010, viewed 2 September 2010,