JULIA Gillard scored a PR coup last week by outmanoeuvring the Coalition premiers to make it appear that they were blocking the goal of a national disability insurance scheme.
The reality was different. It would be more accurate to say that the PM moved the scheme's goalposts to favour her government then blasted the premiers for not kicking to where she had moved them.
It's an important issue that deserves more than superficial examination. In an era when the policy climate is hostile to big government initiatives and new spending, here is a big new initiative to fill what is widely seen as a gap in community services. No one is against the NDIS. Everyone wants to make it work.
The question is: how? The dispute between the Prime Minister and the premiers was not over the need for a scheme, but over who should pay for it or, to be exact, over who should pay for its "launch phase", the trials proposed in all states except Queensland (where the Newman government didn't want one).
With good reason, the states had assumed that the Commonwealth would pay the cost. What really happened last week was that Gillard refused to have any launch sites unless the states shared the cost. A day or two of bad headlines was enough to show Ted Baillieu and Barry O'Farrell that the political cost of holding out would outweigh the fiscal cost of giving in. So they gave in.
But that does not resolve the issue. As Baillieu points out, to roll out the full scheme will cost 20 to 30 times as much as these trials. The real issue is: who will pay for the full scheme. Baillieu and O'Farrell correctly suspect that the Commonwealth is using the issue of who funds the trials as the thin end of the wedge, to lock them into sharing the cost of the full rollout.
Hence their resistance last Wednesday. And the fact that they crumbled on Friday says more about how the media treats these issues than the merits of their case.
Let's go back to the start. In 2008, activists such as Bruce Bonyhady, of Yooralla, and Rhonda Galbally, of the National People with Disabilities and Carer Council, got the ear of Bill Shorten, then parliamentary secretary for disability and children's services, pointing out the gaps and shortfalls in the funding of services for the disabled. Shorten saw the moral imperative. He commissioned a taskforce headed by Ian Silk, CEO of Australian Super, which urged the government to investigate the feasibility of a national disability insurance scheme.
To give political cover against charges of big spending on welfare, the Rudd government commissioned the Productivity Commission to do the feasibility study. The commission's report last August set out a blueprint for the scheme, arguing that the patchwork of services for disabled people were "inequitable, underfunded, fragmented and inefficient, and give people with a disability little choice".
On funding, the report was unambiguous. "The Australian government (should) take responsibility for meeting the entire funding needs of the NDIS," it said. "This would provide certainty, clear lines of funding responsibility, avoid the inefficiencies of the Commonwealth-state 'blame game' . . . and reflect the Australian government's unique capacity to raise efficient and sustainable taxes of the magnitude required."
Despite inaccurate spin by Gillard and Jenny Macklin, the commission did not propose that the states share the funding, or make the absurd suggestion that the states return tax powers to Canberra. Rather, in line with its small government theology, it proposed that Canberra fund the $7.2 billion-a-year cost from spending cuts unspecified while the states cut stamp duties by the amount of disability spending taken over by Canberra.
That was the first problem. The obvious solution, proposed by many (now including the Liberal premiers), was to pay for the scheme by a Medicare-style levy. Instead, the commission proposed a tax cut, and a "magic asterisk": unspecified spending cuts. Officially, its report was warmly praised. Unofficially, its failure to spell out a source of funds meant it was doomed.
The Council of Australian Governments pledged to introduce the scheme. Federal and state ministers began meeting to discuss how it would work. But by COAG's April meeting, the commission's report was just "a good starting point"; Macklin got the states to agree that "design and implementation of (an NDIS) will be a shared responsibility of the Commonwealth and the states". She now depicts that as implying agreement by the states to share the bill; the states disagree.
The commission got two things right. The states do not have the fiscal means to meet their share of an expanded bill. And as we saw last week, to share responsibility is to open the sluice gates for endless buck passing. The best solution would be a referendum to return to the states the tax powers the constitution intended them to have. But that would require bipartisan political support; we don't do that here.
The Commission's preference for a Commonwealth takeover is the next best. But whatever it says, the Commonwealth has rejected that. So we now we have third best: shared responsibility and buck passing.
Tony Abbott says the Coalition would pay for it all by spending cuts. OK, Tony, what would you cut? Tell us that, and we will take you seriously. Until then, let the buyer beware.
