Parliamentary Committee Recommends Stronger Action on NDIS Fraud

Bans on providers struck off in other parts of the care economy, penalties for offering kickbacks and stronger action on conflicts of interest are among the recommendations made by a parliamentary committee analysing the extent of fraud in the National Disability Insurance Scheme (NDIS).

The committee's 12 recommendations were made public today, after hearing a raft of criticism from law enforcement, government officials, disability groups and service providers.

Among their concerns were the scheme's original design, how fast it was rolled out, the exploitation of participants by sophisticated criminals, and insufficient regulatory power.

To counter that, the committee recommended government agencies share information more effectively so bad actors banned in one part of the care economy could not pick up work in the NDIS.

It also recommended making it mandatory for those receiving kickbacks to be reported and penalised, and creating a system to manage conflicts of interest across the NDIS.

Implementing a NDIS worker registration scheme, per advice from a separate taskforce in 2024, and stronger whistleblower protections were also put forward.

The Labor-led inquiry was set up in March by minister Jenny McAllister, who welcomed the report and said the government would "seriously consider" the recommendations.

The report comes as a separate Senate inquiry scrutinising the Albanese government's proposed cuts to the NDIS was extended last week until mid-August.

Those changes would create new civil penalties and grant the agency that runs the scheme new powers to issue fines, request key data, use warrants to search premises, and force people in for questioning.

"The government has already passed new laws which deliver stronger penalties for fraudsters and crooks, and our NDIS reform bill before the parliament gives the [agency running the scheme] the powers it needs to protect people with a disability from fraud," Senator McAllister said.

"When we first came to government in 2022, the NDIS was a soft target for fraudsters. Now our investments in enforcement capability are bearing fruit."

The minister said the government understood there was "more work to do to get the shonks, grifters, fraudsters and crooks out of the disability sector".

'Gaps remain open'

The Coalition's three committee members said the final recommendations did not go far enough.

"Australians with disability, and the taxpayers who fund the NDIS, expect that those who defraud and exploit the scheme will be confronted directly, not merely monitored more efficiently; especially when participants are facing cuts," they wrote.

"The evidence before this committee called for structural reform of the unregistered market and of the controls at the point of entry. The committee report delivers neither. Those gaps remain open, and the task of closing them now falls to the government."

Spending on the NDIS, which now supports more than 774,000 participants, has now surpassed $50 billion a year.

The scheme is growing at about 11 per cent per year, half the rate it was growing under the Coalition, but well above the 2 per cent target the Albanese government has set for the next few years.

While not the top driver of overall cost growth, fraud remains a key target for the government.

Fraud has been a constant talking point in recent years, with the government citing it, alongside overall scheme sustainability, as justification for its proposed cuts.

The National Disability Insurance Agency (NDIA) commissioned focus groups in 2023 that found people were more "amenable" to support an overhaul of the scheme if "rorts, fraud and unreasonable pricing" were posed as an existential threat to it.

In contrast, RedBridge research found they had "strong resistance to any discussion of costs alone as a driver of reforms".

Greens senator Jordon Steele-John said the party strongly supported "decisive action to prevent and prosecute" fraud, but accused the government of using concerns around it to build a "narrative".

"The Greens are concerned that the government has sought to build public support for significant reductions in NDIS expenditure, including through commissioned research on public messaging, instead of first demonstrating that it is effectively using its existing powers to detect, prevent and prosecute provider fraud," he wrote.

The first phase of mandatory registration for NDIS businesses, a move the government hopes will give it greater oversight of the sector, began yesterday with digital platform and supported independent living providers.

The overhaul of the scheme stuck in the Senate would expand those requirements to all "high-risk providers" and also enforce a new payment system to better ensure the legitimacy of claims.

The government earlier this week trumpeted the work of its multi-agency fraud taskforce, saying it had now sent 17 NDIS criminals to jail for more than 60 years collectively since its set up in 2022.

It said the Fraud Fusion Taskforce had contributed to seven successful prosecutions in NDIS cases last financial year alone, with a further seven awaiting sentencing.