Debate about the National Disability Insurance Scheme driven by the usual ‘taxpayer’s money’ arguments

Today, we have a guest blogger in the guise of Professor Scott Baum from Griffith University who has been one of my regular research colleagues over a long period of time. Today, he is writing about the way the Federal Australian government is starving the National Disability Insurance Scheme of funding. The usual arguments are being used – ‘taxpayer’s funds’ are in short supply – which seriously undermine the future for thousands of people with disabilities. The NDIS is the national structure that supports people with disabilities to increase their capacity to participate in employment and provide opportunities for them to so. So, once again, to Scott …

Debate about the National Disability Insurance Scheme driven by the usual ‘taxpayer’s money’ arguments

Recently (July 13, 2021) the national daily newspaper in Australia ‘The Australian’ ran an editorial titled – NDIS must remain sustainable (paywall).

The editorial was in response to earlier news reports whereby the government minister in charge of the NDIS was, among other things, complaining about the costs of the scheme and the need for reform.

For those who are unaware, the NDIS is Australia’s National Disability Insurance Scheme.

It was initiated by a Labor-led Federal Government in 2014 and finally rolled out nationally (July 1, 2016) by a Liberal-led government who – trumpeted that is was an:

… historic day for disability care.

The Objectives of the scheme include:

  • supporting the independence and social and economic participation of people with disability
  • providing reasonable and necessary supports, including early intervention supports, for 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 and
  • promoting the provision of high quality and innovative supports to people with disability.

As of the 31st of March 2021 there were roughly 450,000 participants in the scheme.

As is usually the case with these things, there is always a lot of debate about the costs.

In the news article (July 9, 2021) – Reform plans on back-burner but NDIS is not fit for purpose-(paywall) – the Minister said:

The stark fact is that the scheme is on track in the latest federal budget to overtake the cost of Medicare, from $28.1bn this year to $33.3bn in 2024-25. Without action, the scheme actuary forecasts the cost will further escalate to $40.6bn in 2024-25.

For context, Medicare is Australia’s National health scheme providing those eligible with access to health services.

When these types of numbers are thrown around there is the usual hand wringing about ‘hits to the budget bottom line’ or ‘how will we be able to pay for this?’

We learn from the editorial in The Australian that:

Senator Reynolds has foreshadowed a redraft to produce a new model to rein in the costs.

Up to this point the editorial appeared to make sense.

But then it started going off the rails.

It started talking about ‘taxpayers money’ and that:

Taxpayers are not a bottomless pit.

This theme of taxpayer’s money etc was carried over to the remarks in the comments section.

Many of the views expressed reveal that armchair commentators are labouring under the misconception that taxpayers fund government spending.

What do you expect when those views are peddled by the mainstream media?

One reader commented

The NDIS is a debt-bomb … the NDIS has become a bottomless pit swallowing up scarce taxpayer dollars like a cosmic black-hole.

Another noted:

… does anyone consider the stress experienced by taxpayers who fund the system.

Unfortunate views by the lowest common denominator.

If any of them (either the journalist or the arm chair commentators) had even the slightest inkling about Modern Monetary Theory, they would know that comments about wasting taxpayer’s money are rubbish and frankly an unhelpful neo-liberal smokescreen that suggests that some people are more deserving than others.

These ‘taxpayer’s money’ arguments are not just limited to disability support but are rolled out more broadly when discussion turns to the provision of health care.

As we read in this blog post – A government can always afford high-quality health care provision (July 18, 2017):

Health care is one of several policy areas where the debate descends into fiasco because the typical application of mainstream economics obscures a widespread understanding of how the monetary system operates and the opportunities that system provides a currency-issuing government.

The NDIS, like the health system more generally, should be well funded.

Those unfortunate enough to be born with a disability or to acquire one during their life should not be faced with the prospect of being treated as second class citizens.

There are certainly more efficient ways of delivering the scheme, but talk of budget blowouts shouldn’t come into it.

A sovereign currency issuing government, such as Australia, does not face a financial constraint.

The only constraints are the real constraints imposed by the resources that are available to be employed to deliver the services.

The efficiency problem in the NDIS has to do with the use of private providers rather than wasteful spending on services that some bureaucrat deems unnecessary.

As always, when the government announces a pot of money, private sector providers enter the game.

One newspaper report (July 14, 2017) – The new breed of entrepreneurs chasing NDIS profit – told us that:

NDIS has the potential to turbo-charge their business …[and] … would-be entrepreneurs all looking to grab a slice of the bounty.

Then we read in this article (June 10, 2021) – NDIS provider accused of compromising safety of people with disability in quest for growth – about:

… lavish spending by executives on alcohol and entertainment, and a creeping corporate culture that critics say puts profit before everything else … one manager spent thousands of dollars on a corporate credit card at bars and pubs last year, including $1,500 in a single night at a Gold Coast nightclub.

The usual neo-liberal profits before everything else mantra.

No wonder the providers have signage stating “I heart (love) NDIS”.

The evidence suggests that relies on private market profit driven providers will deliver sub-optimal outcomes.

We learn from a 2017 academic research report – Choice, control and the NDIS – about:

… services closing because they were no longer competitive (for example those provided through local governments) …

There were also perceptions that competition, rather than encouraging innovative practice, was driving providers to cut corners or to restrict services to those that are the cheapest and easiest to deliver.

When the profit motive overrides the care motive in health care the outcomes are never good!

Any sophisticated society will deem health care to be a basic human right.

The NDIS was developed within the spirit of the – Convention on the Rights of Persons with Disabilities.

That convention focuses on providing:

  • Respect for inherent dignity, individual autonomy including the freedom to make one’s own choices, and independence of persons;
  • Full and effective participation and inclusion in society;
  • Respect for difference and acceptance of persons with disabilities as part of human diversity and humanity;
  • Equality of opportunity; and
  • Accessibility.


Framing the policy debate around increasing ‘budget’ efficiencies and ensuring appropriate use of ‘taxpayer’s money’ results in discussions that hinder rather than help these goals.

In doing so, those in power have forgotten their duty to care for the Australian people.

If they only admitted that they were wrong about the way public finances work, they could get on with the real job at hand: Helping those in need to lead a meaningful and engaged life.

That is enough for today!

(c) Copyright 2021 William Mitchell. All Rights Reserved.

This Post Has 4 Comments

  1. You can’t pay for anything with money that has been deleted out of existence.

    Federal taxes are about freeing up real resources – not actually literally funding anything.

  2. It would be interesting to see an analysis, through the MMT lens, of the demand by nurses in the UK for a 12.5% increase in pay.
    My back of a postage stamp calculation suggests that it could be non-inflationary if those currently unemployed were brought into productive employment to provide the extra goods and services required to meet the increased spending of NHS workers after their pay rise.
    So it could be non-inflationary, but only if it did not lead to large wage increase demands from other sections of the work force. I suspect such a large wage increase, if won, would trigger demands for substantial wage increases from other workers which in total would be inflationary.

  3. The still dominant narrative, possibly genuinely held by otherwise well educated people, that the taxpayer funds federal spending, is incredibly damaging to overall well being, and also divisive as some taxpayers do not want to “pay for” X or Y and they tend to blame the individual for being poor and unable to provide for themselves.

    It’s an uphill battle to counter and challenge this and even among so called progressives the view is that the rich must be taxed to “pay for” spending on the less well off.

    I will keep trying to spread the word as Bill regularly exhorts us to do!

  4. I know what you mean Barri – the term ‘taxpayers money’ is such common language when it comes to federal government spending – you hear it everywhere. Now clearly federal taxes may need to be raised at times when federal government spending increases to help keep inflation under control, but it is not literally ‘taxpayers money’ that the federal government is spending. After coming across MMT, whenever I hear the term ‘taxpayers money’ in the context of federal government spending being mentioned on the radio and TV I find myself shaking my hand and saying in frustration “Not literally taxpayers money!”

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