POLICY BULLETIN 3, 2014 - NATIONAL DISABILITY INSURANCE SCHEME: IMPACT ON THE COMMONWEALTH BUDGET T0 2019-20

Abstract

NDIS expenses are entirely paid by the Commonwealth, through the NDIA. Funds are provided by Commonwealth appropriation. From 1 July 2014, the Commonwealth collects the DisabilityCare Australia (DCA) levy, 0.5% of taxable income. The levy is an extension of the Medicare levy (1.5%). The DCA levy is paid into the DisabilityCare Australia Fund (DCA Fund), which is invested by the Future Fund Guardians. $825M of the DCA levy proceeds (just less than 25%) is reserved in 2014-15 to assist the States and Territories meet their NDIS obligations over time; this amount will be indexed in future years at 3.5% per annum. The Commonwealth releases this funding to the States and Territories as they meet their obligations in relation to the NDIS. The Commonwealth/State agreements provide for the States to make payments to the Commonwealth to offset the Commonwealth NDIS expenses. The Commonwealth/State agreements for initiating the NDIS provide for the States to repay a portion of their Specific Purpose Payments (SPPs) received from the Commonwealth in respect of disability, as the NDIS progressively reduces the proportion of services for people with disability that are financed through the existing arrangements. The paper gathers detail from across the 2014-15 Budget papers 1 on each of these sources of financing, over the period of the Forward Estimates (2014-15 to 2017-18) and for 2018-19 and 2019-20. It also draws on the Bilateral Agreements for NDIS Launch between the Commonwealth and various State and Territory Governments and the Heads of Agreement between the Commonwealth and the various State and Territory Governments on the National Disability Insurance Scheme. Estimates made by the Australian Government Actuary are also used.