False Economy: The economic benefits of the National Disability Insurance Scheme and the consequences of government cost-cutting

This report discusses, where data is available, some of the issues surrounding the new NDIA modelling. It then goes on to assess the broad economic activity generated by the NDIS, including employment and consumption, and the potential costs of limiting NDIS spending at sub-optimal levels.

The report estimate that:

  1.  The NDIS employs over 270,000 people over 20 different occupations, and contributes to the employment of tens of thousands more workers indirectly;
  2. The economic impact of the scheme is likely very large, even compared to other types of government spending. A conservative estimate of the multiplier effect of the NDIS would be in the range of 2.25; and
  3. Such a multiplier effect would mean that the economic contribution of the NDIS in 2020-2021 is around $52.4 billion.

Because the NDIS has such a strong impact on employment and in generating economic activity, underfunding the scheme has significant costs. We estimate that for every $1 billion that the NDIS is under- funded, significant negative outcomes occur across the economy including:

  1. A drop in employment of around 10,200 jobs, reducing the employment rate by 0.1%;
  2. A decline in total economic activity of $2.25 billion; and
  3. 0.14% reduction in total GDP, or a 0.22% reduction in the services economy.

The consequences of underinvesting in the NDIS would be disproportionately born by women, carers and people living with a disability.

It is essential that contested decisions are based on sound, transparent and publicly-available analysis, not made behind closed doors based on secret modelling.

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Finance, Budget, National Disability Insurance Scheme (NDIS)

Per Capita

Date published:
Thu 4th Nov, 2021