Terms of reference

I, Scott Morrison, Treasurer, pursuant to Parts 2 and 4 of the Productivity Commission Act 1998, hereby request that the Productivity Commission (the Commission) undertake a study into the National Disability Insurance Scheme (NDIS) costs.

Background

The Heads of Agreement between the Commonwealth and the States and Territories (States) on the NDIS stated that the Commission would undertake a review of scheme costs in 2017. This review is intended to inform the final design of the full scheme, prior to its commencement.

Scope of the study

The Commission should address the following issues identified in the Heads of Agreement for the review of scheme costs:

• the sustainability of scheme costs
• jurisdictional capacity
• cost pressures (including wages pressures)
• changes in the agreed escalation parameters
• if efficiencies have been achieved within the scheme
• whether there has been any impact on mainstream services; and
• examine the most appropriate levers to manage any potential cost overruns.

In addressing these issues, the Commission should consider:

(a) Commonwealth and State funding and governance arrangements for the NDIS, including financial contributions and risk-sharing;

(b) the interaction with, and role of, other services in meeting reasonable and necessary support for people with severe and profound disability; and

(c) whether there are any issues with the scheme’s design, including the application of market and insurance principles, in ensuring the best possible outcomes for people with severe and profound disability.

In conducting the analysis, the Commission should take into account its 2011 report into disability care and support and subsequent agreements between governments for the implementation of the NDIS. The Commission will be provided with all the data on scheme rollout it considers necessary for the analysis.

Process

The Commission is to consult broadly, including with the Australian, State and Territory Governments.

The Commission will report within eight months of receipt of the terms of reference, or by 15 September 2017, whichever is later.

The Hon Scott Morrison MP
Treasurer

[Read the NDIS Costs Terms of Reference].