Disability insurance scheme comes in at $1.6bn less than expected, but advocates blame shortfall on problems for people accessing the scheme

This article is more than 1 year old

This article is more than 1 year old

Two of the biggest savings in the budget have come from the welfare sector with data-matching technology expected to save $2.1bn over the next five years from social security payments and a slower than expected uptake of plans under the National Disability Insurance Scheme delivering an immediate $1.6bn boost to the budget bottom line.

The $2.1bn saving in social security payments is one of the few big ticket savings in this year’s budget.

Roads, rail and car parks get $100bn infrastructure spend in Australian budget – but over a decade Read more

It is being achieved by extending automatic reporting of employment income using the single touch payroll system to reporting income for social security purposes.

This system, currently used by the Australian Tax Office, provides automated payroll data from businesses that have 20 or more employees. It will be rolled out to all employers by July 2020.

The government believes that providing automated access to the payroll data to the departments of social security and human services will greatly reduce the likelihood of welfare recipients receiving an overpayment or a payment they are no longer entitled to.

The departments of human services and social security currently use a controversial system in which the 1.2 million people who receive some income each year while on benefits are required to estimate their likely income in the next fortnight to determine their next payment.

If they underestimate it, or continue to claim benefits when not entitled, they incur a debt to the department.

The government’s use of automated systems to assess and levy welfare debts and requiring welfare recipients to provide payslips, sometimes dating back years, to justify their income has been subject to much criticism from welfare advocates.

The government hopes to sell the new scheme as a win-win, that will result in more accurate social security payments, fewer debts and disputes and savings for the budget.

Based on historical data, government officials say 1.4% of recipients receive a payment each fortnight that they were not entitled to, while 1% receive an overpayment and 0.8% receive an underpayment.

The seven graphs that expose the Coalition’s 2019 budget fairy tale | Greg Jericho Read more

The $1.6bn reduction in the NDIS payments for 2019-20 will be more controversial as advocates have argued that the slower than expected uptake is not due lower demand, but problems in people accessing the scheme.

“We are six years into the rollout and we have heard of people waiting two years for a wheelchair, so it needs concerted attention,” said Kirsten Dean from disability advocate group Every Australian Counts.

“Nobody thought it would be easy, but this is a big and complicated scheme and it needs greater attention,” she said.

Greens spokesman on disability services, Jordan Steele-John, said about 23% of the government’s claimed surplus of $7.1bn came from cutting the NDIS.

“The Treasurer says we’re back in the black, but that surplus is built on the backs of disabled people,” he said. “That’s sick.”

He said the underspend on NDIS plans should have been directed to lifting staff capabilities and improving the IT systems used by the NDIS.

A week ago the government announced it was increasing the service fees to NDIS providers such as therapists, physiotherapists and others, which was welcomed by the sector because it should help expand access to those services by making them more viable for people to provide.

The $850m cost, however, is being met within the cost of the plans themselves. The government says it overestimated the average cost of an NDIS plan and most are coming in below $47,000 originally budgeted for.

There are also cash payment savings in the budget of $1.4bn over four years coming from lower than expected payments in the income support for seniors program.

The savings – $311m in 2019-20 and $1.4bn over the next four years - are due to “continued reductions in recipient numbers as a result of previously announced government policies aimed at improving the targeting to those most in need, including the ongoing impact of lifting the pension age to 67,” the government said.

The expansion of single touch payroll will cost $25m to implement in 2019-20 but is expected to save $647m in 2020-21, rising to $756m in 2022-23 in prevented welfare overpayments.

“This measure will assist income support recipients by greatly reducing the likelihood of them receiving an overpayment of income support payments ( and subsequently being required to repay it),” the budget papers say.