Imminent reform to rein in the cost of the National Disability Insurance Scheme (NDIS) and mounting calls for the GST “no-worse-off guarantee” to be made permanent will dominate Wednesday’s national cabinet meeting in Canberra.
Key points:
- The federal government is seeking extra state contributions to the NDIS
- State and territory governments are lobbying for the GST “no-worse-off guarantee”, due to expire in 2027, to be made permanent
- The Commonwealth government will on Wednesday release and respond to a long-awaited review of the NDIS
Both parties have sought to highlight budgetary pressures as they lean on one another for additional funding for competing pressures.
The federal government is seeking additional support from states and territories as it embarks on reforming the NDIS which is forecast to grow at 10.4 per cent each year over the next decade, making it the highest-growing government payment.
States and territories last week told the federal government they would only negotiate their contribution to the scheme if the GST “no-worse-off guarantee” was made permanent.
“State and territory treasurers believe the GST ‘no-worse-off guarantee’ needs to be resolved before any states and territories can consider any proposals for change,” the treasurers communique read.
The “no-worse-off guarantee” for GST was set up in 2018 after the then Coalition government struck a deal with Western Australia to ensure it received no less than a 70 per cent GST share. That deal with the states and territories — excluding WA — and is set to expire in 2027.
In a communique released after the meeting, state and territory treasurers said they stood to lose a collective $4.9 billion a year if the guarantee was not extended, a figure expected to grow over time.
“Without the Guarantee, the Commonwealth will be fully responsible if states and territories are forced to consider a new tax or levy to ensure essential services are not compromised or reduced,” the communique read.
“Due to the way the current GST distribution model works, the Commonwealth has plenty of capacity to pay the guarantee from windfall company tax receipts. It seems only fair to share our nation’s prosperity.
“For these reasons, all State and Territory Treasurers urge Treasurer Chalmers to make the only acceptable offer: to honor [sic] the No-Worse-Off Guarantee in perpetuity.”
Queensland Premier Annastacia Palaszczuk said an end to that deal would leave her government up to a billion dollars a year worse off.
Arriving in Canberra ahead of the meeting Victorian Premier Jacinta Allen told the ABC she was looking forward to a very productive meeting.
“State treasurers have been pretty clear in terms of the position on continuing the ‘no-worse-off guarantee’ on GST, and that’s important because as state governments we provide school and hospital services. We’ll have those discussions in the room,” she said.
Federal Treasurer Jim Chalmers has sought to highlight the ballooning cost of the guarantee to the Commonwealth.
“The cost of this deal has blown out. Scott Morrison thought it was going to be $6 billion. It’s become $33 billion that’s not irrelevant to us,” he said.
“There’s not tens of billions of dollars down the back of the Commonwealth’s couch.”
NDIS cost pressures
Prior to this year’s federal budget the NDIS Actuary projected that without action the scheme’s expenses would increase by $17.2 billion in the next four years.
In March the government announced $732.9 million over four years to improve the effectiveness and sustainability of the scheme.
The government has committed to reducing the magnitude of the scheme’s growth by reaching an annual growth target of 8 per cent by July 2026.
Ms Palaszczuk this week described the NDIS as “a very big issue for the federal government”.
“I’m looking forward to seeing further information that will be coming though about what is being proposed by the Commonwealth but also to what are those costs going to be. I’m happy to look at that in good faith,” she said.
Mr Chalmers said he was hopeful of a positive outcome from the meeting.
“We believe there’s a deal to be done but not a deal at any cost. We believe that there’s progress that can be made together if we want to,” he said.
“Our instinct and our inclination is to always work with the states and the territories where that’s possible, where that’s responsible and where that’s affordable and where we can advance our common interests.”