How much did the NDIA spend on consultants?!

You may have heard the National Disability Insurance Agency has been spending a lot of money on consultants. In September, the ABC reported “The agency overseeing the National Disability Insurance Scheme has spent almost $30 million on consultants in just two years”. Two months later, the Australian now reports that number has increased 6-fold to $180 million in a smaller time frame of just 16 months…That’s over $11 million/month!

So how did the number change so much?

There is a big difference between $30 million and $180 million ($150 million, to be exact). So how did the already huge number get even bigger in such a short period of time?

The ABC’s report is based on figures from the NDIA running from July 2014 through to June 2016 (just up to before the launch of the myplace portal that saw the entire system collapse for months). During these two years, the NDIA spent $28 million on what the ABC calls ‘external advisors’. This was itself a near 6-fold increase on the $4.7 million spent during 2013-2014.

By contrast, the report from the Australian, showing $180 million spent on consultants is from a more recent time period. The Australian picks up where the ABC left off, starting at July 2016 and calculating spend on consultants through to October 2017. This leads to the slightly awkward 16month time frame.

So even though the reports from the ABC and the Australian both came out recently, the ABC is using numbers from last year, while the Australian is using more recent figures from this year. That’s why the totals are so different ($150 million different).

Is the NDIA really spending $180 million on consultants!?

The Australian published the 12 consultants who got paid more than $5 million. The combined total for these consultants was $142 million.

So what about the other $38 million?

The remaining $38 million was made up of contracts worth under $5 million. For example, Price Waterhouse Coopers (PwC) is the only Big 4 accounting firm absent from the list presented by the Australian (EY, Deloitte & KPMG all took home contracts worth more than $5 million).

However, PwC was not left out completely by the NDIA in its payouts to consultants. The ABC reports the agency paid PwC at least $350,000. This was to review the failed myplace portal computer system after the massive collapse of the platform last year. Fellow Big 4 firm Deloitte holds the NDIA tech contract as ‘ICT Services Strategic Partner’ and invoiced the agency for over $20 million that year according to the Australian.

Is this normal?

According to the Australian, the Department of Social Services spent $15.5million on consultants during the 2016-17 financial year. The NDIA spent more than 11x the amount the DSS spent on consultants. The DSS oversees the NDIA.

The NDIS is huge, isn’t this just a small fraction of the total budget?

At full rollout, the NDIS is expected to cost $22 billion per year. That is a lot of money too.

However we haven’t reached full rollout yet. In 2016-2017 the NDIS cost “about $5bn” according to the Australian.

$180 million is over 3% of the ~$5 billion the NDIS cost last year. That would mean that more than 3c in every NDIS dollar was spent on consultants.

Should I be mad?

That’s up to you.

On one hand, the agency is clearly struggling. There have been no shortage of disasters and fiascos to demonstrate that the NDIA hasn’t been up to the job of delivering the NDIS all Australians were promised. It may be considered good news that the Agency is willing to spend big on getting help.

On the other hand, many of these firms have been with the NDIA for a number of years. Clearly they haven’t prevented the mass failures that have undermined the NDIS.

The average (median) NDIS package is approximately $34,000/year. Some people get more, many people get less, but that’s the average. At that average price for an NDIS package, $180 million would fund an additional 5,294 plans. We know there are a lot of people out there who are missing out on getting properly funded under the NDIS, either due to being over 65 or for other reasons. So the question for the NDIA may be, have these consultants delivered value worth more than supporting an extra 5,000+ people to participate in the NDIS?

What do you think, has the NDIA spent this $180 million well on consultants? Let us know your thoughts in the comments

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Sources:

http://www.abc.net.au/news/2017-09-25/ndis-disability-scheme-has-cost-30m-in-consultants/8980300

[Paywall] http://www.theaustralian.com.au/national-affairs/health/ndis-executives-splash-out-180m-on-strategic-advice/news-story/b6299a237f5eed1d673695ade8beae20

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