Cost and benefits: The NDIS budget debate

So what is driving the massive increase and what is the government doing about it?

And while the political debate is focused on the cost, what about the benefits of the scheme to the economy and wellbeing of Australians with serious and permanent disabilities?

What is the NDIS and how much is it costing?

The NDIS is an uncapped, non means-tested scheme which funds supports and services for people with severe and permanent disabilities.

It costs a lot.

The latest federal budget papers show the NDIS is forecast to cost almost $34 billion this financial year and grow to $50.3 billion by 2025-26.

It will soon surpass Medicare in terms of government spending and the gap between the two is only set to widen in the coming years.

The scheme ranked only behind interest payments on government debt as the fastest growing spending pressure on the federal budget in the past financial year.

It's important to note the Commonwealth co-funds the NDIS with the states and territories, which will tip in a combined $10.45 billion in this financial year.

But the cost burden is increasing on the federal government, as it is responsible for the budget overruns and funding the agency in charge of the scheme.

Not quite.

There has been many reports and reviews forecasting the scheme's future costs - but none predicted it would grow quite this big, quite this quickly.

The 2011 Productivity Commission report which led to the scheme's creation estimated it would cost about $13.5 billion each year to support roughly 410,000 people with permanent and serious disabilities.

The commission revised those projections in a report published six years later, estimating the NDIS would cost $22 billion and support roughly 475,000 in the first year it was fully up and running.

It noted those new numbers were "broadly consistent" with the original forecast once population growth and a 2012 Fair Work Commission wages ruling for social and community sector workers had been accounted for.

But the projections keep getting revised up and up.

There are now more than 554,000 participants on the NDIS and that number is forecast to rise to more than one million in 2032, according to the most recent projections from the scheme actuary.

The same report projects the scheme could cost between $72 billion and as much as $115 billion a year in a decade's time.

Not everyone is buying those numbers - and for good reason.

The figures have been called into question in recent weeks after the release of the actuary's previously secret reports dating back to 2013 revealed it had consistently overestimated the scheme's costs.

It's complex and subject to ongoing contention.

Clearly, there are more people meeting the eligibility criteria to join the NDIS.

The biggest driver of participant growth is children and teenagers with autism and developmental delays.

There were almost 200,000 people 18 and under in those two disability groups - more than a third of the participant base - according to the latest data from the agency.

There was a belief that with early intervention, children would be able to graduate off the NDIS. But that hasn't happened at the rate expected.

Another driver is thought to be the notion that the NDIS has become an "oasis in the desert" for people with a disability.

Under the Productivity Commission's original model, the NDIS was to exist for people with "significant care and support needs". The remaining, much larger, disability population would have access to a so-called tier 2, which would link them to mainstream, stated-based support services.

But tier 2 has never really got off the ground and the states and territories have been accused of using the NDIS as cover to retreat from disability care.

Bruce Bonyhady, the inaugural chair of the NDIS and one of the experts tapped to lead a new review of the scheme, said there has been a "complete failure" to invest in support outside the scheme.

Professor Bonyhady suggested disabled people who weren't eligible for the scheme were becoming "unnecessarily more disabled" as they struggled outside it, which increased the prospects of them needing to join the NDIS in the future.

A father of two sons with disabilities, he said it was "human nature" for parents to seek the best for their children, which, in the absence of adequate support outside the NDIS, meant fighting to get them onto it.

Separate to surging participant numbers, the average annual funding to participants for "reasonable and necessary" supports and services has risen from $45,800 in 2019 to $56,200 in 2021.

It's important to note that just because a participant has the funding in their plan, it doesn't mean it's being spent.

The so-called "utilisation rate" has hovered around 70 per cent in recent years.

NDIS Minister Bill Shorten has also identified red tape, waste and fraud - including from criminal gangs - as major cost drivers.

The scheme's spiraling costs have prompted warnings it could collapse under its own weight without drastic changes, such as tightening the eligibility criteria.

Having rubbished warnings about the scheme's trajectory when he was in opposition, Mr Shorten now accepts costs are growing too fast.

But Mr Shorten isn't about to start cutting plans or making sweeping changes to entry rules or funding guidelines in order to "moderate" the cost growth.

He thinks savings can be found through fighting fraud - $126.3 million was allocated in the budget to target crooks ripping off taxpayers and participants - and improving the efficiency of decision-making.

Like Professor Bonyhady, he believes the states and territories need to step up and provide more support to disabled people outside the scheme, including schools helping children with developmental delays.

"The NDIS cannot be the only lifeboat in the ocean," he said in a speech earlier this month.

The political debate surrounding the NDIS has focused overwhelmingly on its ballooning costs, sidelining discussion about the scheme's real or potential economic benefits.

The scheme was always envisaged as an economic investment in Australia's future, not to mention the lives and livelihoods of people with severe disabilities and their families.

Australian of the Year and disability advocate Dylan Alcott last week enthused about how the NDIS was changing the lives of young people.

"[A new report showed] the kids with early intervention on the NDIS, who were under the age of six, had double the amount of friends to the kids who weren't. I had no friends when I was five. I like, I got goose bumps, I love that about the NDIS," he said.

The Productivity Commission's original report argued the benefits would far outweigh the costs, including through savings to other government services and boosting economic participation for people with disabilities and their carers.

Progressive thinktank Per Capita last year published analysis which found every dollar invested in the scheme delivered $2.25 in return, as result of job creation and spending on local businesses.

Defenders of the scheme quickly point to that report whenever the cost debate reignites.

But aside from that study, which was commissioned by peak body National Disability Services, data measuring the broader benefits of the scheme is scarce.

Read more from The Canberra Times' campaign examining the future of the scheme: