NDIS Fraud Reports Reveal the System’s Weakest Points

Last year, nearly 45 million Australian dollars in the National Disability Insurance Scheme (NDIS), payments were canceled as they were considered fraudulent. But more recent estimates suggest this may be a far cry from the level of fraud that occurs in the system.

Michael Phelan, head of the Australian Criminal Intelligence Commission, warned as much as possible $6 billion a year could be misused, including by organized crime syndicates.

Reports bring shame on criminals who take advantage of people with disabilities. They also reveal the pressure points within a disability support program that has lost the trust of many participants and requires greater oversight.

Read more: With a return to Labor government, it’s time to ‘reset’ the NDIS

Cost explosion

The former federal government expressed great concern about the possibility explode costs of the NDIS.

Plans to introduce “independent assessments” of individual budget allocations met with significant backlash from the disability community, and the government backed down.

Yet over the past year, many participants have seen their budgets drastically reduced. These cuts were widely seen as attempts to control NDIS costs by cutting individual plans.

Now, it looks like vendor fraud — not individual plans — might be a bigger factor in the budget boost. And these criminal activities are to the detriment of people with disabilities.

Read more: Independent assessments of the NDIS are not being considered at this time. It’s a good thing – the proof wasn’t there

How does this fraud take place?

There are a number of ways in which NDIS fraud can occur.

The most disturbing reports indicate that NDIS participants are threatens violently, extorted or threatened with involuntary admission to a psychiatric institution if they do not agree to surrender their right to the budget.

NDIS Minister Bill Shorten also suggests there may be evidence of “phantom” where fake NDIS clients are created and invoices for services are paid without being verified.

Concerns have also emerged that the bills could be padded by the contractors, then the participants see their budgets charged more than the value of the services that were provided.

Load the maximum

Finally, a number of NDIS participants suggested that providers overcharge for certain services. The National Disability Insurance Agency (the NDIA which administers the NDIS) has a Price policy which sets a maximum price that registered vendors can charge NDIS participants for specific items.

For example, providers can charge a maximum of $51.81 per hour for cleaning activities, which can reach $72.53 in remote areas and $77.71 in very remote areas. But the average hourly wage for a cleaner in Melbourne is around $23.13.
Individuals may find that the cost of their services increases when they become an NDIS participant, as providers charge the maximum amount allowed under the program. There are also reports of vendors offering double pricing for the same service with one price for NDIS participants and another for non-NDIS vendors.

It’s not necessarily fraudulent, but highlights some of the system’s challenges.


Minister Shorten has announcement a multi-agency working group will be launched to examine these issues. It will bring together the NDIA, the tax office and the police to investigate fraud and questionable practices. The announcement acknowledges the fact that the NDIA may not be able to identify all of the fraud on its own.

The NDIA was originally supposed to have a little less 11,000 Personal. The Abbott government then limited the number of agency employees to 3,000. Although the staffing cap was lifted gradually, it is still well below the necessary numbers. External labor is largely used including for management positions. This means that the NDIA may not have the staff needed to carefully review the applications of the 520,000 program participants or detect fraudulent activity.

The disability sector is not the first to experience problems of this kind. The privatization of care services has resulted in excessive services or charges for services that are not provided in other publicly funded markets. These included Vocational education and training and family child care.

Without proper safeguards and oversight, individuals and organized groups may seek ways to profit from these services. There are a number of lessons for these sectors that can be learned that should have been incorporated into the NDIS from the start.

A simple solution could be to ask participants to approve invoices above a certain financial value. This would put control in the hands of the people receiving services, as the project was intended to do. This however will not address situations where individuals are intimidated and is therefore only part of the reforms needed.

Read more: What the NDIS must do to restore trust, in the words of people who use it

Stand up, rebuild trust

Finally, advocates who can support people with disabilities also have a vital role to play in monitoring and communication. The creation of the NDIS resulted in significant cuts to disability advocacy services. This gap means there is less knowledge shared, for example on what the appropriate fee should be or how to raise an issue if attendees feel they have been overcharged. Given last year’s cuts to NDIS plans, participants may well feel apprehensive about raising an issue for fear of further cuts to their support allocations.

What is clear is that the level of confidence of NDIS participants in the program and the NDIA has seriously declined over the past few years. Reports of fraud and other criminal activity further erode this trust. To function as intended, the NDIS needs a significant commitment to co-design all solutions with – not just for – NDIS participants.

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