NDIS consulting spend over 16 months reaches $180 million

14 December 2017 Consultancy.com.au 5 min. read

The National Disability Insurance Scheme has come under fire for blowout spending as it attempts to recoil from a plague of problems surrounding the scheme. As the NDIS recoverers from a staffing and IT issues, the government is being scrutinised for its increasing spend on consulting and outside expertise.

The Australian consulting market continues to grow at 5% per annum, reaching a total value of $4.6 billion last year. Whilst this is in line with global trends, growth has on one hand been driven by a relatively strong economy, international expansion into the region and Australia’s secure business environment.

On the other however, growing government spending on consulting has also been responsible for a substantial fraction of the growth. Malcolm Turnbull’s time as PM, following on from previous Labor PM’s has seen a trend of outsourcing public services to the private sector with a rise in spending on external expertise rising by 8.2% to $845 since he took office.

The stark rise has been driven by a desire for digital adoption across both the Federal Government and the education sector. Spending on consultants in the past few years has attracted ample media scrutiny following information being made public that the bill has totalled $5 billion over the past decade.

As if the bill itself wen’t enough to consider negligent, the successive governments has also been accused of multiple conflicts of interest with consulting companies being political donors and both ex-civil servants and even a former PM being hired by the tax payer.

Consulting spend of the Australian National Disability Scheme

A leaked financial records of the NDIS which was first reported by The Australian have brought new information into the public sphere. The executives of the National Disability Insurance Agency (NDIA) have paid consulting firms and contractors over $180 million in just over a year to October 2017. Of that substantial figure, up to $41.5 million has been spent on “strategic advice” by two of the major consulting industry players.

The $22 billion reform has been heavily criticised by the Productivity Commission after a lengthy process to bring the scheme to fruition. The government and states signed bilateral agreements under the Julia Gillard’s Labor government in 2013 with the NDIS to be rolled out by the 1st of July 2016.

An IT infrastructure malfunction in mid-2016 saw multiple NDIS clients left in bureaucratic chaos. To amend the faults in the digital system, the NDIA’s consulting bill almost tripled its $66 million budget between 2015-16. The blowout took the total spending to almost a quarter of a billion dollars. In stark comparison, during the same period the Department of Social Services spent only $15.5 million on consultants in 2016-17.

The Boston Consulting Group (BCG) was the leading beneficiary in governments spending hike earning $21 million. Hired to plan the ‘participant pathway’ reform, transitioning existing disability recipients into the new regimented support packages system, BCG’s contract came to an end on October 30th.

However, a further $10 million was spent on consultants at the Australian Healthcare Associates for telephone planning and information gathering of NDIS clients. There has been a cloud of criticism surrounding both the initial transition and the telephone interactions by participants who labelled the support packages as deceitful and confusing.

Deloitte, the Big Four firm were not far behind BCG in their earnings from the NDIA. The professional services firm continue to hold a contract with the NDIA to help the government agency recover from numerous digital issues. Deloitte have so far received upwards of $20 million in their efforts to rectify these issues acting as the NDIA’s information and communication technologies (ICT) Services Strategic Partner

An NDIA spokeswoman recently commented on the difficulties that the agency is facing, stating that the issues are par for the course. “The National Disability Insurance Scheme is a complex and highly valued national reform and the scale, pace and nature of the changes it is driving are unprecedented in Australia.”

National Disability Insurance Agency short staffed

Having barely reached a quarter of the 460,000 participant target set for mid-2020, the NDIS has struggling to draw across existing draw more than 120,000 Australians. However the 2020 target seems to look far into the distance as the system is considerably understaffed. The NIDS is finding it difficult to recruit staff with medical experience into full-time employment despite the fact that the NDIA has spent heavily on recruitment services.

Hays Specialist Recruitment has been the largest recipient, having drawn in over $15 million and a further $7.5 million was awarded to DFP Recruitment Services. The NDIA also spent $17 million on a commercial property specialist by name of Cushman & Wakefield.

The NDIA currently employs 2127 staff, 1012 contractors and 2203 local area co-ordinators. According to executives at the Senate hearing in October, that the Agency remains “about 500-ish” equivalent ­positions short of the public service cap of 2460 places. Whilst a number of these  – however a number of these full time hires are non-permanent, it leads to many service users feel under-supported.