The new welfare state leviathan

The National Disability Insurance Scheme (NDIS) was described in a CIS report five years ago as “the new leviathan”; “in budgetary terms, another Medicare”; and “a monster of a government program.” This has been confirmed in spades, and it is hardly surprising that paying for the $22 billion monster has become a contentious issue.

The scheme’s most ardent advocates insist it is fully funded because various revenue and expense offsets were announced when it was launched. This is just so much sophistry.

The offsets were never enough, and in any case were not put into a jam jar labelled ‘NDIS’. That is not how the budget works. As long as there is a deficit, nothing the government does can be said to be fully funded by current revenue, and all spending programs and all revenue sources are subject to scrutiny for ways out of the deficit hole.

The real issue is the NDIS has attracted such political support that even at birth it is a sacred cow of public policy. It has become politically incorrect to be critical of it or anything connected to it. The former CEO of Myer learned that when he dared state the truth — that increasing the Medicare levy to help pay for the NDIS would be bad for retail sales.

Ideally, the scheme would have been deferred until it could be afforded, but that opportunity has gone. Still, the NDIS cannot defy budget arithmetic: it has to be paid for, and doing so as it ramps up over the next three years makes balancing the budget so much harder. To state — as various ministers have this week — that this means spending less elsewhere and/or raising more revenue is to state the incontrovertible.

It is to be hoped the government is not softening us up for another hike in the Medicare levy. This is just an increase in income tax by another name, and would make a mockery of this government’s rhetoric in favour of lower income tax. If the NDIS is sacred, then the way to make room for it in the budget is to squeeze other programs.