Illustration: Jim Pavlidis In its 2011 review, the Productivity Commission estimated state and federal governments were spending a combined $8 billion a year supporting people with disabilities. It also slammed that old system as: "inequitable, underfunded, fragmented, inefficient and gives people with disability little choice and no certainty of access to appropriate supports". It recommended a shift from a welfare-style, block-funding for providers model to a scheme which puts money in the hands of disabled people to spend as they see fit to meet their needs and life goals. The commission estimated the improved system would cost about $15 billion a year.

Fast forward, and the scheme is ramping up from trial stage covering around 60,000 people to full operation in 2019-20 when about 460,000 people with disabilities will receive annual funding of $22 billion – shared between federal and state governments. Worried about that increase in costs from $15 billion in 2011 to $22 billion by 2020? Don't be. Remember there's nearly a decade of inflation and natural increase in population between those two figures. As was always planned, the Productivity Commission is currently conducting a review of the costs of the scheme. With the government on the hunt for budget savings, it is imperative the NDIS remains quarantined from any knee-jerk budget cuts. That's no outpouring from a bleeding heart, but a rational calculation to save taxpayers money in the long term.

There is talk of tougher restrictions on eligibility. But closing the door to people who would otherwise qualify for support only risks their disabilities become more severe over time and costing taxpayers even more when they do land in the system. In a submission to the review, the founding father of the NDIS and its inaugural chair, Bruce Bonyhady, says the scheme is in need of "refinement" rather than any major changes. One of those refinements is providing more support to people who fall just outside eligibility requirements for the scheme. Failing such support, people with disabilities will be forced to exaggerate their conditions to secure access to funding. Bonyhady also warns against governments ditching non-NDIS support schemes for disabled people and in effect adding those costs to the NDIS tab – inflating scheme costs. He also wants more flexibility given to the agency to manage costs across the scheme, rather than being subject to arbitrarily imposed spending speed limits from year to year.

More fundamentally, Bonyhady – a father of two sons with cerebral palsy and a former funds manager for ANZ and BT Financial who was inexplicably removed as NDIS chair by the social services minister, Christian Porter, just before Christmas and replaced with a board of corporate heavyweights with little lived experience of disability – warns special attention must be given to designing an efficient and truly competitive market for disability support services. Almost half a million people with disabilities are, in effect, about to go shopping for the first time, rather than being passive recipients of services. "It is clear that the introduction of the NDIS implies a big demand shock, with demand effectively doubling in a very short period of time." Absent a supply response, demand shocks mean higher prices. While NDIS prices are currently fixed, the intention is to move to a system with floating price signals. In order to keep prices as low as possible, a market of informed consumers and much expanded supply is needed.

Writes Bonyhady: "In effect, a new and vastly expanded disability market place is emerging and participants and their families and carers need to become highly discerning buyers, who have reliable, accessible and timely information at their fingertips, enabling them to navigate effectively and overcome inherently high transaction costs." New websites such as clickability.com.au, a Trip Advisor for disability services, and hireup.com.au, an Uber or Airtasker-style website to connect disabled people to support services, are helping. But a NSW government submission to the PC review suggests a government-run website for disability service reviews may be better. NSW also cautions against any random cuts to the scheme, arguing higher prices might actually be necessary in the short term to encourage new, innovative suppliers into the market. "While higher prices may increase funding in plans, lower prices may cause withdrawal or absence of providers in the market, subsequently resulting in cost pressures and service discontinuity for participants."

Overall, the NSW submission warns against any attempts to minimise short-term costs. "In particular, evolving budget pressures should not lead to regular changes to eligibility criteria or assessment of what is reasonable and necessary. We want providers to invest in the disability sector and to provide innovative services to people with disability. Changing eligibility will introduce greater risk and uncertainty. It will reduce provider enthusiasm to participate in this market. It will erode participant confidence and trust in the scheme." So don't believe the scare campaigns. The NDIS is a transformative scheme – on par with Medicare – based on market principles of choice, competition and putting power back in the hands of people with disabilities to shape their lives rather than be passive recipients of welfare. While refinements are needed to control costs, it is clear an arbitrary crackdown on scheme costs now would end up costing much more in the long term if a competitive market for disability services is prevented from flourishing.