Bruce Bonyhady Speech: ‘The What? Why? Who? And Market Opportunities of the NDIS’

Bruce Bonyhady, Chairman, National Disability Insurance Agency
CEDA: Social Services Reform
5 November 2015


Good afternoon, ladies and gentlemen.

I would like to acknowledge the traditional owners of the land on which we are meeting, the Jagera and Turubul peoples and pay my respects to their elders past and present.

I would also like to thank the Committee for Economic Development of Australia for inviting me to speak at today’s important forum.

I’m an economist by trade.

It’s one of those professions everyone knows about, but few really understand.

The National Disability Insurance Scheme is a bit like economics.

We all know about it, but how many of us really understand it?

We know that the NDIS is the most significant economic and social reform since the introduction of the original Medicare scheme in the 1970s and compulsory superannuation in the 1980s.

We know it will make our country more prosperous and ensure that opportunity is more equitable and accessible.

But what we cannot know is precisely how, in the years and decades to come, the NDIS will deliver economic growth and equality of opportunity for people with disability, their families and carers.

We cannot know, because the NDIS is – amongst other things – a platform for innovation which harnesses the power of markets to serve people with disability.

With that in mind, I will begin by briefing you on the key features of the NDIS.

And the best way for me to do that is to answer the questions I am most frequently asked:

  • What is the NDIS?
  • Why do we need it?
  • And who benefits?

I will then turn to the market and business opportunities that the NDIS will create and which I hope will excite you.

Let me start with the first question.

What is the NDIS?

The NDIS was established on 1 July 2013.

Currently, the Scheme is in eight sites and has more than 19,500 participants, with another site due to commence shortly in North Queensland, in Townsville, Palm Island and Charters Towers.

It is on time and on budget – and client satisfaction is above 90 per cent.

In other words, we’re exactly where we need to be.

One of the key goals in the Strategic Plan of the National Disability Insurance Agency, which has responsibility for the NDIS, is to keep building public confidence in the Scheme.

That means continuing to meet goals, and maintaining and building a performance culture within the Agency.
In short, performance is everything.

That’s the lesson I’ve learned over many years working in funds management and banking – because organisations that perform earn the right to grow.

For the NDIS, though, there’s more to performance than just meeting quarterly targets.

We must also keep learning as we build the Scheme so that it performs over the lifetime of each and every participant, because the real impact of the NDIS will be measured in generations, rather than quarterly reports.

That’s why, during the trial period, we have refined the design and operation of the NDIS – to ensure it best meets the needs of people with disability and is sustainable.

However, the learning will not stop – the Scheme will need to keep learning and refining its operations each and every year.

The Scheme’s trial period is scheduled to end in the middle of next year.

When it is fully operational, in 2019, the Scheme will serve around 460,000 participants.

The assistance those participants receive will be based on need – primarily using a functional assessment, rather than a medical diagnostic, approach.

The NDIS provides ‘reasonable and necessary’ benefits.

Those benefits encompass personal care and support, access to the community, therapy services and essential equipment.

NDIS participants include people with intellectual, physical, sensory and psychosocial disabilities.

There are also early intervention services for children with significant developmental delay and manifest disabilities and adults with progressive disabling conditions.

Each participant has a plan and goals which focus on maximising independence and social and economic participation.

The Scheme is being funded through an increase in the Medicare levy and general revenues and so reflects capacity to pay.

The NDIS is designed to work alongside the Disability Support Pension and other measures, which provide income replacement for people with disability who cannot work.

However, unlike the DSP, the NDIS is not means-tested.

The Scheme is also designed to work side-by-side with health, education and other universal services which people with disability need to access.

It is not responsible for these service systems – and scope-creep and “gaps” between these systems and the NDIS are two of the risks that the Agency is monitoring and managing on a daily basis.

Needless to say, there are a number of risks associated with a reform as complex as the NDIS – such is the nature of nation building schemes.

But you should have confidence that the Board is well aware of the risks and has a comprehensive risk management strategy in place.

Besides, the rewards of the NDIS far outweigh the risks, just as the benefits of the NDIS greatly exceed the costs.

Once the NDIS is in place, every Australian who is born with or acquires a disability before the age of 65 and whose disability is permanent, which significantly affects their functional capacity and who require ongoing support will be covered.

In short, the NDIS is a universal insurance scheme.

It is based on insurance principles.

Let me spell out those principles for you.

Traditionally, the costs of disability services have been approached using a short- to medium-term outlook.

Governments plan for expenditures over a 12-month period to at most a five-year time frame – and the funds available for disability have changed depending on the economy, tax revenues and the requirements of other portfolios.

Consequently, disability services have had to perennially justify their existence – and there are always short- to medium-term pressures to cap or cut costs.

Insurance models are very different.

Under an insurance model, expenditure is factored in over the life of an individual – and scheme sustainability is measured by calculating the total future costs of all those who are insured.

This approach creates an incentive to make short term investments that maximise lifetime opportunities and reduce long-term costs.

For example, the best way to reduce long-term costs is to increase an individual’s independence and lift his or her participation in the community and the workforce.

A second aspect of insurance schemes is that they continually compare experience with forecasts.

Divergences are investigated carefully, as part of an insurance prudential governance cycle, to control long-term costs and ensure Scheme sustainability.

To shape future directions of the NDIS we are also building an outcomes framework to measure the medium and long-term benefits of the NDIS for participants and their families.

The measures include choice and control, independent living, relationships, health and well-being, home, lifelong learning, work and social, community and civic participation.

Monitoring the outcomes across these domains and over time, as well as the financial metrics, will help us ensure the Scheme is sustainable, while also enabling the participants in the NDIS to build better lives.

This shift from a welfare to an insurance model for disability services – together with the alignment it creates between the interests of the Scheme and the interests of participants, families and carers – is revolutionary.

The NDIS is not just reforming the old system – it is replacing and transforming it.

Why do we need the NDIS?

In size, scale and complexity the NDIS is enormous.

Like Medicare and compulsory superannuation, it is a national investment in our social and economic infrastructure.

And it will make Australia a world-leader in disability support and inclusion by balancing individual responsibility and family care with government support and the disruptive innovation of the marketplace.

If you’re in doubt, let me convince you of the need for the NDIS in just three points.

My first point is social:

The previous system of disability care was broken.

That’s not just my view: it’s the opinion of the Productivity Commission and the Prime Minister.

In 2011, the Productivity Commission released an independent report that found the nation’s disability system was:

‘Underfunded, unfair, fragmented, inefficient and gives people with a disability little choice.’

Prime Minister Turnbull agreed with that finding, telling Parliament in 2011:

The present system for disability welfare is as inefficient as it is limited; as frayed as it is broken.

It is a system where funding is directed to service providers rather than towards the people who need that care themselves or, indeed, towards their carers.

If the service providers are not able to meet the requirements of the person suffering from disabilities, that is too bad; if they are, then join the queue.

These challenges are multiplied when moving across local boundaries, let alone to a different state.

The facts support the Prime Minister’s position.

Until now, Australians with disability have been born into a world where they were treated as second-class citizens.

According to the OECD, 45 per cent of Australians with a disability were living at or below the poverty line in 2010 – the worst outcome of any OECD country.

Australia’s record in terms of employment of people with disability is also very poor, ranking in the bottom one-third of OECD countries.

And, most disturbingly, people with disability are significantly overrepresented in Australia’s jails.

Not only that, Australians could only insure privately against the risks of being born with or acquiring a significant and permanent disability in cases of workplace accidents, proven medical negligence and some injuries from motor vehicle accidents.

In short, Australia’s private and public sectors have failed to either insure or provide for significant and permanent disability.

The NDIS will put an end to this segregation of access and opportunity.

My second point is economic:

Doing nothing would have cost more than implementing the NDIS.

The cost of the NDIS, once fully operational, will be $22 billion a year in 2019-20.

That sounds expensive until you consider the alternative.

Since the 1990s, disability expenditures by Australian governments have increased at between 7 and 8 per cent per annum in real terms, which is completely unsustainable.

There are demographic reasons for this surge in demand.

People with disability are living much longer;

Families are smaller, and more geographically dispersed;

And there are increasing rates of marital breakdown, especially amongst families with children with a disability.

Until the NDIS was introduced about 80 per cent of the care for people with disabilities was provided informally by families and friends.

Consequently every 1 percentage point reduction in informal care, for example, from 80 per cent to 79 per cent, has translated into a five per cent increase in government spending – without any net increase in total support.

In short, without the NDIS, governments were being forced to spend more on crisis and emergency supports and government funded disability services were in a death spiral.

In 2011 PricewaterhouseCoopers found that – without the NDIS – government expenditures on disability would increase to two-to-three times the projected costs of the NDIS.

In other words, the NDIS is a smart investment.

My third point is about opportunity:

The NDIS is in the national interest.

The Productivity Commission found that the NDIS would result in an additional 320,000 people with a disability and 80,000 carers being employed and boost Gross Domestic Product by 1 per cent by 2050.

Let me put that another way: national expenditure on disability services is projected to increase by 0.5 per cent as a result of the NDIS – but, in return, the economy is projected to increase by 1 per cent.

By any measure the NDIS is a sound investment in our community and our economy.

Who Benefits from the NDIS?

I mentioned that, when fully operational, the NDIS will have 460,000 participants.

But the NDIS is not just for those 460,000 Australians, their families and carers.

The NDIS is for everyone .and for future generations.

By paying premiums to the NDIS through the Medicare Levy, Australians share the risk and help each other.

Pooling the risks makes them affordable for all.

In the years and decades to come, thousands of Australian citizens will either be born with or acquire a disability.

And the probability is that some of those future participants will be related to people sitting in this room.

Those boys and girls may be your children or grandchildren.

Those men and women may be your partner.

Or it might be you.

Whoever they are, those Australians will be people with ambitions and abilities.

They will be like you and me – and they will deserve a fair go so they can harness their abilities and realise their ambitions as equal citizens.

Market Opportunities

How the NDIS achieves its goals will be through markets, because for the first time the NDIS is harnessing the power of markets to serve people with disability.

Consequently, the NDIS is creating major business opportunities and these extend well beyond the disability sector.

Earlier this year Professor Ian Harper completed his review of Competition Policy.

Professor Harper recommended that government human services should be consumer directed as this would drive significant improvements in efficiency and effectiveness.

The NDIS has anticipated that thinking – and is implementing the consumer-directed approach to service delivery on a scale not seen anywhere in the world.

Consider the evidence.

Currently governments spend more than $8 billion per year on disability services.

Around half of these services is provided directly by State and Territory governments.

And the remaining services are delivered by not-for-profit organisations who have contracts with governments under so-called block-funded arrangements.

A fraction of funding goes towards individualised services.

Under the NDIS, the annual cost of disability supports will grow to $20.6 billion by 2019-20.

That means the total market for disability supports will more than double over the next four years.

However, the contestable market for disability services will grow even faster – increasing between three- and four-fold.

That’s because I expect that governments will choose not to deliver more direct services themselves.

In fact, in some jurisdictions, such as New South Wales, governments will withdraw from the direct provision of disability supports.

Not only that, block-funded arrangements will be replaced with person-directed funding.

Every participant in the NDIS will have control over the services and supports they receive;

Services will be individualised and decentralised, with local area coordination of locally-based care;

And support through the NDIS will be portable.

That means if a person with a disability wants to move to another state with their family their entitlement to the NDIS – and therefore the level and standard of care they receive – will move with them.

If a person with a disability wants to choose to receive services from a new entrant in the disability sector they can.

The point I am making is:

Don’t think of the NDIS as another government-controlled scheme – think of it as a new national consumer-controlled marketplace with enormous growth potential.

If companies want to win a share of this market, they will need to be competitive.

They will need to think national and act local.

They will need to adapt to the individual needs of the NDIS participants.

The business opportunities are not just limited to traditional providers of specialised disability services.

There will be opportunities for organisations in adjacent sectors such as health and aged care.

There will also be opportunities for other community services and local governments to expand, as part of services which are more inclusive of people with disability.

In addition the National Disability Insurance Agency is looking to outsource administration costs, as part of a commitment to the most efficient and effective service delivery.

At full scheme our administration costs are projected to be 7 per cent of total scheme costs, which would be best practice for an insurance scheme.

The workforce needed to service this new market under the NDIS is expected to grow by around 60,000 to 70,000 people on an FTE basis.

The new workers will need to be trained and their training needs will vary, depending on the roles they will need to play.

This will lead to new courses and qualifications – meaning the NDIS is a major opportunity for the education sector as well.

The NDIA has an important role as market steward.

We are talking to potential new entrants to the disability sector and to educational and training institutions.

Ultimately, we want to create an enabling environment which encourages innovation and new entrants, as well as established players.

We are looking to create an e-market that provides efficient and secure links between participants and suppliers – keeping participants informed so they can choose the best services and keeping suppliers informed so they can improve their offerings.

When the NBN is complete in 2020, access to the internet will be close to Australia-wide and this will underpin the Agency’s e-market strategy and also our rural and remote strategy.

Last week, we held a major technology conference NDIS New World, here in Brisbane. 1,500 people attended, along with all of the major global technology companies – IBM, Apple, Microsoft, Google, Cisco and SAP.

We heard how accessibility is now no longer at the margins in the technology industry.

Accessibility is now part of the DNA of every major global technology company because they believe that accessibility is an essential feature of their products and software.

This is an extraordinary development, from the perspective of people with disability, used to battling for access at every turn.

This transformation and the harnessing of the research and development power of the world’s leading technology companies to improve accessibility will be revolutionary for people with disability, their families and carers.

Change will be exponential, because Moore’s Law, which says that computing power doubles every two years is now being applied to the benefit of people with disability.

The digital divide is being replaced by digital inclusion for people with disability.

This is occurring, not as a result of altruism, but self-interest, because those of us who do not have disabilities expect our mobile devices to work in every environment – when we cannot see them, when we cannot hear them and when we cannot touch them.

An example is voice to text and text to voice software which were developed primarily for able-bodied people but are of enormous benefit if you are vision impaired or have an intellectual disability and so have limited literacy skills.

When the NDIS is fully operational, we will allocate around $1 billion-a-year to participants to spend on technology.

Technology will also help participants become informed consumers. New apps are already being developed and many more will follow.

As a result, the technology market generated by the NDIS will be much larger than $1 billion per annum.

The NDIS will therefore turbocharge investment in technology.

As a consequence, a number of the leading global technology companies are considering incubating accessibility ideas in Australia.

The NDIS is also leading to new Australian social entrepreneurs specialising in the disability sector and we heard from a number of them at the New World Conference.

In many ways, the internet is the ultimate social good.

With the internet and internet start-ups the currency of success is new subscribers, rather than revenues, which is why so many online services and apps are either free or relatively inexpensive.

As a result, the internet is an ‘open-source’ opportunity for people with disability.

The NDIS is an ‘open-source’ opportunity for businesses as well – both for-profit and not-for-profit businesses.

The role of the National Disability Insurance Agency is to encourage innovation and ensure there is competition in the new NDIS marketplace.

Over time, consistent with the recommendations of the Harper Review, this will lead to increased efficiency, effectiveness and creativity.

I expect improvements will accelerate as we aggregate more data about the Scheme and its participants.

Currently, we have two years’ worth of data from less than 20,000 participants.

By 2019, we will have data from 460,000 participants and Australia will have the richest data base on disability anywhere in the world.

The Agency has a large actuarial team. Their analysis of data has already led to refinements in the Scheme.

Those refinements will continue for as long as this Scheme is in operation.

After all, as the statistician Nate Silver says, it is necessary to ‘stop and smell the data’.

The bottom line is that the more data we aggregate and analyse and make that data available widely the better the NDIS will become.

You might ask ‘better in what way?’

My answer would be: ‘In every way.’

That’s because Big Data doesn’t just tell us about what happened yesterday.

It can also tell us what is probably going to happen tomorrow – and that depth of insight is vital for an insurance scheme looking to make life-long investments.

The more refined our analysis can be, the more sustainable the NDIS will be, and the greater the life-long benefits for the Scheme’s participants shall be.

Ultimately, I expect that the analysis of NDIS data and the policy and practice actions that will flow from that analysis will provide information useful to communities and policy makers around the world.

The data will help us to understand in detail more:

about our society and disability,

about the lifetime costs of preventable causes of disability such as diabetes and foetal alcohol spectrum disorders, and

about how different types of support can lead to better outcomes for people with disability.

We don’t know exactly what hidden connections we will find.

That’s because we don’t yet know what the data will be.

All I can tell you is that we will aggregate and analyse the data.

We will learn and innovate.

We will enable new business opportunities.

And, most importantly, we will improve the lives of people with disability their families and carers.


In concluding, the Prime Minister recently said that this is an exciting time to be an Australian.

It is an even more exciting time to be an Australian with a disability.

It’s exciting because – after years of campaigning, designing, planning and successful piloting – we are about to move into the full rollout stage of the NDIS.

It’s exciting because, at long last, people with disability will have the opportunity of an ordinary life.

For families and carers, there will be certainty of support when they can no longer care for a loved one with disability.

For all Australians there is the knowledge that the NDIS will be there if they, or their children or grand-children need it.

For business, including the not-for-profit sector, the NDIS is a major growth opportunity.

Above all, the NDIS is an unprecedented opportunity for our country.

Thank you.