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NDIS: some economic policy contests, issues and implications

NDIS: some economic policy contests, issues and implications. A commuting case study Dr Jack Frisch. 1. PC costs are based on “necessary” – not “appropriate” - supports (Auditor-General). Legislation based on “necessary” but marketing based on “appropriate”. Will lead to:

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NDIS: some economic policy contests, issues and implications

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  1. NDIS: some economic policy contests, issues and implications A commuting case study Dr Jack Frisch

  2. 1. • PC costs are based on “necessary” – not “appropriate” - supports (Auditor-General). • Legislation based on “necessary” but marketing based on “appropriate”. • Will lead to: • disappointment if “necessary” • cost over-runs if “appropriate” Economic policy contests . . . Jack Frisch - Economics of Disability NDIS Commute Case Study

  3. 2. • NDIS is mainly a redistributive project and only partly about “productivity” and “workforce participation”. • It is aimed at 400,000 people with high needs – not the 20% of people with disability. Economic policy contests . . . Jack Frisch - Economics of Disability NDIS Commute Case Study

  4. 3. • The PC cost assumptions suggest the NDIS likely will extend to those currently “out” but not expand to those already “in”. • The PC Benefits/ Costs ratio at 7:1 offer no justification for cost-cutting. • The state of the economy and polity suggest tears and disappointment. Economic policy contests . . . Jack Frisch - Economics of Disability NDIS Commute Case Study

  5. Finance Individual Entities Economics Social – Nation, Region, Community ≠ • Profit and Loss • Surplus/Deficit • Efficiency • Wellbeing/Fairness (?) Annual Reports • GNP • Benefit-Costs • “Wellbeing” • Tangible, hard numbers • Intangibles and guesstimates Jack Frisch - Economics of Disability NDIS Commute Case Study

  6. Productivity Commission Chapter 20 • Additional economic cost = $1.56 B • < $6.50 B • (24% of $6.5 B Budget – rest redistribution) • Employment participation benefit = + $ 2.8 B • Carer employment participation = + $ 1.5 B • Value of $1 of redistribution = +$ 6.2 B • TOTAL BENEFIT = + $ 10.5 B • Benefit-Cost ratio = 6.7:1 (c.f. NBN?) Jack Frisch - Economics of Disability NDIS Commute Case Study

  7. Max/Ruth commute to Work • Max works in town, lives close to city • Currently to work by bus; returns by taxi • TTS, Mobility Allowance, bus driver • Ruth – lives slightly closer to city; flexible work start/finish, so bus both ways; will be less flexible after her promotion • Impact of NDIS? • What will they ask for? • How will their plans be evaluated? • Cost implications? Efficient? Fair? Jack Frisch - Economics of Disability NDIS Commute Case Study

  8. Marginal utility of income - $1 to taxpayer = $3.6 to person with significant profound disability • Asymmetric information – hiding information affects all transactions • Value and Price • Economic Cost = Budget Cost – Redistribution • i.e. Value added ≠ Distribution • Willingness to pay > Price • Value = Function-value + Wellbeing-value • i.e. Use value = need value + desire value • Externalities – outsiders affected by a trade • Value of time = $ not earned in employment Five Economic “Intangibles” Jack Frisch - Economics of Disability NDIS Commute Case Study

  9. Criterion • Min Cash • Max’s utility • Social utility • NDIA protocol • NDIS funding resolution • Bus only • Depends on value to Max of integrating on bus – B&T • Depends on how commuters value time loss – T-both ways • Depends on • information costs • “necessary” v. “appropriate” • governance. • B&T most likely for Max but not clear for Ruth. NDIS Resolution Equivocal Jack Frisch - Economics of Disability NDIS Commute Case Study

  10. Assumptions of Market- Ideology Economics Reality of Economics of Disability Preferences – rational Reversion to average and equilibrium Single context • Hierarchy of Need • Outside “normal” range of the Bell-curve • Multiple contexts Jack Frisch - Economics of Disability NDIS Commute Case Study

  11. Insights of Mainstream Economics Market imperfections MAY justify government role Imperfect competition  regulation Public goods  public finance Externalities  regulation, taxes, subsidies Imperfect information  create markets Government imperfections MAY lead to cost overrun Imperfect information  “noise” and “silence” Multiple conflicting goals & accountabilities  disjointed underperformance and over-servicing Jack Frisch - Economics of Disability NDIS Commute Case Study

  12. Why we need economics of disability • Social model is only a half-model without social justice if excludes costs and appeals only to emotion/charity • Risks not being taken seriously • Why we can’t leave DisabEcs to either accountants or mainstream economists • “Price=Value” model ignores essentials • Needs • Marginality • Multiple contexts CONCLUSION Jack Frisch - Economics of Disability NDIS Commute Case Study

  13. You can request the final copy of the paper this PPt is based on by emailing disabecs@gmail.com • You can also • download a copy of this PowerPoint • download updating drafts of final copy of the paper this PPt is based on • make comments and register for updates on Disability Economics at • www.disabecs.com Availability of final paper Jack Frisch - Economics of Disability NDIS Commute Case Study

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