National Disability Insurance Scheme: a quick guide


17 February 2022

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Rosalind Hewett (an update of an earlier quick guide by Luke Buckmaster and Shannon Clark)
Social Policy

What is the National Disability Insurance Scheme?

The National Disability Insurance Scheme (NDIS) provides funding to people who have permanent and significant disability for supports to help them in their daily lives, participate in the community and reach their goals. It also provides funding for early intervention for children to reduce the impacts of their disability later in life.

The NDIS began on 1 July 2013 with trial sites in Tasmania, South Australia, Victoria and New South Wales, with full scheme rollout commencing in July 2016. The NDIS is now available in all states and territories, with Western Australia’s full transition to the NDIS to be completed by 30 June 2023.

The NDIS is an individualised, fee-for-service form of funding. It is based on the premise that people with disability each have different goals and support needs and should be able to exercise choice about the supports they require. Each NDIS participant has a plan that contains their goals and funded supports that the National Disability Insurance Agency (NDIA) has determined to be reasonable and necessary supports.

The NDIS is based on social insurance principles, in that it uses actuarial estimates of long-term and lifetime costs, and is based on the concept that support, investment and early intervention may help the long-term functional capacity of people with disability. It is not means tested and, like many other Australian Government social policy programs—such as Medicare and the Pharmaceutical Benefits Scheme—it is an uncapped (demand-driven) scheme.

The NDIS replaced the previous system of block funding, in which funding for supports went directly to providers rather than individuals on the basis of the supports they requested.

Key terms

  • Participant—a person who has been found eligible for NDIS supports
  • Plan—an individualised package of supports that the NDIA has agreed to fund, and the document setting out those supports and the participant’s goals
  • Local Area Coordinators (LACs)—workers contracted by government-funded organisations, who are often a participant’s main point of contact with the NDIS, and help them implement their plans and connect with community services and other government services
  • Supports—specific therapies, assistive technology items, paid assistance from a support worker, or other types of care and support funded by the NDIS
  • Support worker—a person paid to provide care and/or assistance to an NDIS participant
  • Informal supports—unpaid support and care provided to an NDIS participant by family members, friends, carers and members of the community
  • Review—a review by the NDIA of a person’s plan, typically because the plan is due to expire or because of a change in circumstances. A review may also be a review of a reviewable decision (that is, a decision that the NDIA has made that falls under section 99 of the National Disability Insurance Scheme Act 2013, e.g. that a person does not meet the access criteria)
  • The Early Childhood Approach (formerly the Early Childhood Early Intervention, or ECEI, pathway)—a specific pathway for some children under 7, focused on providing supports intended to reduce the functional impact of the child’s disability later in life. Not all children in this pathway continue on to become NDIS participants
  • Participant Service Guarantee—a charter with key performance indicators, principles and timeframes for decisions that the NDIA measures itself against, which the Government intends to legislate
  • Host jurisdiction—a particular state or territory where the NDIS is operating
  • Functional capacity assessment—an assessment of a person’s functional capacity, using standardised tests administered by an allied health professional.

Objectives and principles of the National Disability Insurance Scheme

The NDIS was established with bipartisan support incorporating views from people with disability and the disability sector to the Productivity Commission’s 2011 inquiry into Disability Care and Support. That inquiry set the foundations for the scheme and continues to be referred to as the basis for policy decisions.

The National Disability Insurance Scheme Act 2013 (NDIS Act) (Cth) established the NDIS and the NDIA, which is the independent statutory agency responsible for administering the NDIS. The NDIS Rules are legislative instruments made under the NDIS Act which contain the operational and administrative details of the NDIS.

Objects of the NDIS Act (as outlined in section 3) include:

  • supporting the independence and social and economic participation of people with disability
  • providing reasonable and necessary supports, including early intervention supports, for NDIS participants
  • enabling people with disability to exercise choice and control in the pursuit of their goals and the planning and delivery of their supports
  • facilitating the development of a nationally consistent approach to the access to, and the planning and funding of, supports for people with disability
  • promoting the provision of high quality and innovative supports that enable people with disability to maximise independent lifestyles and full inclusion in the community.

When giving effect to the objects of the Act, regard must be given to such factors as the financial sustainability of the NDIS, the provision of services by other agencies, departments or organisations, and the need for interaction between mainstream services (such as health) and supports funded by the NDIS.

Who is eligible for the NDIS and who receives supports?

Around one in six people in Australia (in 2018 this was estimated to be about 4.4 million people) has a disability. As of 31 December 2021, more than 500,000 of these are NDIS participants.

To become an NDIS participant, a person must:

  • be aged under 65 at the time of applying
  • reside in Australia and be an Australian citizen, permanent resident or Protected Special Category visa holder
  • have a permanent disability that affects the person’s capacity for social or economic participation and results in substantially reduced functional capacity to undertake one or more of the following activities:
    • communication
    • social interaction
    • learning
    • mobility
    • self-care
    • self-management
  • be likely to require support under the NDIS for the person’s lifetime.

The NDIA publishes data on participants by disability type, including in its quarterly reports. As of 31 December 2021, a third of participants had autism as their primary disability, almost one in five participants had an intellectual disability as their primary disability, and just over one in ten had a psychosocial disability as their primary disability. Other primary disability types with less than 20,000 participants included cerebral palsy, acquired brain injury, global developmental delay, visual impairment, multiple sclerosis, stroke and spinal cord injury.

Figure 1: NDIS participants by primary disability type, as of 31 December 2021

Source: National Disability Insurance Agency, NDIS Quarterly Report to disability ministers: appendices (Table E.12), (Canberra: National Disability Insurance Agency, 31 December 2021); see also notes 26 and 27 in Tab E.

What supports does the NDIS fund?

The NDIS funds supports and services in areas such as mobility, assistive technology, personal care, home modifications, transport, finding and keeping a job, therapy, and help with household tasks. It also funds providers to cover building and maintenance costs of specialist disability accommodation (SDA) options for people with very high support needs and extreme functional impairment.

The NDIS does not provide funding for supports unrelated to the participant’s disability or its functional impact on their lives (such as groceries), or supports that the NDIA considers would be better funded by other systems, such as health or education.

How is the NDIS funded and how much does it cost per year?

The NDIS is funded through a pooled approach between the Commonwealth and state/territory governments, with the latter’s contributions based on bilateral agreements with the Commonwealth. Each state and territory contributes cash payments and in-kind services equivalent to what they would have paid if the NDIS was not established. The Commonwealth is then responsible for the balance between the total NDIS costs and the state and territory contributions, including any costs outside those agreed in the bilateral agreements. The Commonwealth currently contributes more than half of total costs for the scheme.

Figure 2 sets out state, territory and Commonwealth Government contributions to the NDIS in 2019–20 and 2020–21, according to the Productivity Commission’s Report on Government Services.

Figure 2: NDIS contributions by jurisdiction for 2019–20 and 2020–21*

Source: Productivity Commission, Report on Government Services 2022: Services for People with Disability (Canberra: Productivity Commission, 25 January 2022), Table 15A.1; see also notes (i) and (j) and relevant notes for each jurisdiction.

*Data is subject to several limitations, as outlined in notes attached to the original source (above). Dollar amounts are in 2020–21 dollars.

Most expenditure on the NDIS is on participant costs. According to the NDIA’s September 2021 quarterly report (p. 96), in 2020–21 participant costs amounted to $23.2 billion. For comparison, costs in 2019–20 and 2018–19 amounted to $17.6 billion and $10.5 billion respectively, reflecting the scheme’s staged roll-out. The NDIS Scheme Actuary produces cost projections in annual financial sustainability reports, which are summarised in the NDIA’s annual reports.

Part of the Commonwealth’s contribution comes from the DisabilityCare Australia Fund (DCAF). The DCAF is a sovereign wealth fund established under the DisabilityCare Australia Fund Act 2013 (DCAF Act). The DCAF is a special account that operates to reimburse the Commonwealth, states and territories for their NDIS expenditure. Since July 2014, some revenue from the Medicare levy has been invested in the DCAF. Other Commonwealth NDIS expenditure is provided from consolidated revenue or borrowings.

Table 1 outlines when current bilateral agreements began, along with estimated annual contributions from 2018–23. Allocations are reviewed every five years, with current projections all ending by December 2023 (following a commissioned independent cost review).

Table 1: Projected state/territory contributions to the NDIS, as set out in full-scheme bilateral agreements

State/ territory Commencement of bilateral agreement 2018–19 2019–20 2020–21 2021–22 2022–23
NSW 2018 $3.2 billion $3.3 billion $3.5 billion $3.6 billion $3.7 billion
VIC 2019 N/A $2.6 billion $2.7 billion $2.8 billion $2.9 billion
ACT 2019 N/A $168.8 million $175.5 million $182.6 million $189.9 million
Qld 2020 (some clauses from 2019) N/A N/A $2.1 billion $2.2 billion $2.3 billion
SA 2018 $747.9 million $777.7 million $808.7 million $840.9 million $874.4 million
TAS 2019 N/A $244.3 million $254.0 million $264.1 million $274.6 million
NT 2019 N/A $103.6 million $107.7 million $112.0 million $116.5 million
WA* 2017 N/A N/A N/A N/A N/A

Source: Bilateral Agreement between the Commonwealth of Australia and the State of New South Wales on the National Disability Insurance Scheme, 25 May 2018: 14; Bilateral Agreement between the Commonwealth and Victoria on the National Disability Insurance Scheme, 17 June 2019: 15; Bilateral Agreement between the Commonwealth of Australia and the Australian Capital Territory on the National Disability Insurance Scheme, 22 March 2019: 1 14; Bilateral Agreement between the Commonwealth of Australia and State of Queensland on the National Disability Insurance Scheme, 9 July 2019: 1, 14; Bilateral Agreement between the Commonwealth of Australia and the State of South Australia on the National Disability Insurance Scheme, 28 June 2018: 1, 14; Bilateral Agreement between the Commonwealth of Australia and the State of Tasmania on the National Disability Insurance Scheme, 10 December 2019: 1, 14; Bilateral Agreement between the Commonwealth and the Northern Territory Governments on the National Disability Insurance Scheme, 22 March 2019: 1, 15.

* Western Australia’s contributions are subject to a complex set of conditions based on actual participant numbers and are divided into NDIA costs and participant costs. Western Australia is not due to reach full-scheme status until 2023.

Governance, oversight and appeals

The NDIA Board is responsible for NDIS governance. The Board sets the NDIA’s strategic direction, ensures its compliance with statutory requirements, monitors performance and reports to the Ministerial Council.

The following bodies are responsible for oversight of various facets of the NDIS:

The NDIA publicly reports on its activities in the following forms:

  • Annual reports, prepared by the Board, which include information and analysis on participants and/or funding or provision of supports by the Agency
  • Quarterly reports, prepared by the Board and provided to the Ministerial Council every three months, which include information on participants in each host jurisdiction and/or the funding or provision of supports by the Agency in relation to each host jurisdiction.

The Administrative Appeals Tribunal and the Commonwealth Ombudsman deal with appeals and complaints about NDIA decision-making. The NDIS Quality and Safeguards Commission regulates registered NDIS providers and deals with complaints about quality and safety.

Ongoing challenges

Challenges that have arisen as the NDIS has been implemented include:

 

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