Costs of reform have to be shared
As the cliché goes, desperate times call for desperate measures, and this goes double in an election year when winning or losing government is at stake. With the Gillard government polling so poorly that it has nothing to lose and something to gain, there is a real danger that 2013 will see the spewing of more bad policy from a desperate government that doesn't have to deal with the consequences of its decisions after the election late next year.
One possible victim of this desperation is the proposed National Disability Insurance Scheme, which is one of the few worthwhile policies of the Gillard government. The NDIS is a valuable but expensive long-term reform to Australia's underfunded, unfair and dysfunctional system of disability care and support.
The scheme, according to the Productivity Commission's blueprint, will provide supported accommodation, respite, aids and equipment, and other types of care and support to more than 410,000 peopl with a severe or profound disability. The commission expects the NDIS to cost $15 billion (gross) and $8 billion (net) (in 2009-10 dollars) when it is fully operational in 2018-19.
This spending is in addition to the $20 billion or so the government already spends on income support for disability and carer pensioners. Despite the extraordinary cost, the scheme is universally popular and has public support from all sides of politics at both the state and federal levels.
Labor wants to own the NDIS and has staked its short- and long-term future on making it real. Labor likes to frame the NDIS as part of a long tradition of Labor reforms ''in the style of Medicare, superannuation and the minimum wage''.
Labor has also committed to implement the scheme a year early so it officially starts only a few months before the 2013 election. With the possibility of a prospective Coalition government repealing the carbon tax, the NDIS may be the only positive legacy from six years of federal Labor government.
For this to happen, Gillard needs to get the state governments to agree to the NDIS' two major sticking points of governance and funding arrangements. The scheme is very expensive and disability care and support is the responsibility of the states and territories so they need to be on side if the NDIS is going to happen.
Putting aside the usual federal-state argy bargy, the political significance of the NDIS to the Gillard government has provided significant leverage to the Coalition state governments in NSW, Victoria and Queensland that they could use to get a deal that would be good for the states but bad for the Commonwealth.
A bad deal would involve the Commonwealth taking over complete responsibility from the states for providing long-term disability care and support to more than 400,000 people, but without taking into account the various benefits the states will enjoy from that takeover.
The states stand to benefit not just from offloading financial and political responsibility for disability care and support to the Commonwealth but also from numerous budgetary offsets in areas affected by the lack of support for people with disability.
For example, the offsets could include reduced hospital and respite expenditure through the elimination of ''bed blocking'' by people with disabilities; more savings could be generated from the criminal justice system and through reduced offending and reoffending rates by people with mental health issues or an intellectual disability. There might also be less pressure on state-funded crisis support services through reduced child relinquishment rates.
Collectively, the NDIS could save state and territory governments hundreds of millions each year across the broad range of services. A bad deal that fails to take these savings into account could threaten the long-term financial viability of the NDIS.
A weak Gillard government desperate to win an election, secure a legacy, and maintain its identity will be tempted to offer the states a bad deal that not only takes over complete responsibility for providing disability services but also pays state governments for this privilege. The Commonwealth would be a fool to offer such a generous deal and the states would be fools to refuse it.
The federal opposition is well within its rights to doubt the calibre and integrity of any long-term agreement the Gillard government signs. A bad deal with the states on the NDIS would give a future Coalition government the political ammunition it needs to tear up any agreement and start again.
Labor should put the prospect of short-term political gains from a quick and easy NDIS deal with the states to one side and play some hardball to make sure all governments pay their fair share of the costs. This will protect both the long-term financial sustainability of the NDIS and the legacy of the Rudd-Gillard Labor government for years to come.
Andrew Baker is a policy analyst at The Centre for Independent Studies.