The Australian economy is literally disabled

Yesterday’s good jobs number had me wondering again just how big is the National Disability Insurance Scheme (NDIS) and associated spending. There is still a mystery in national accounts data over why GDP is so poor but jobs growth still solid and one answer may be welfare spending.

There is a boom underway from a total spend of roughly $150b in 2015/16:

Ramped up to $200b in 2022/23:

The boom is mostly driven by the NDIS roll out.

To some extent this is front end loaded with a three year lift above from zero to $20b this year. This is large scale stimulus, adding roughly 0.4% to GDP each year, equivalent to this year’s much vaunted tax cut every year. Moreover, it is ALL spent.

We can see the impact in the jobs segments:

And in wages:

I have a few mates that work in senior levels of the NDIS and they all say the same thing. The hiring is bananas and so is the turnover, usually because anyone senior enough to be worthwhile is out and into the private sector to cream the largesse as soon as possible.

It still doesn’t fully explain a jobs boom that doesn’t show up in private employment indexes but it does help explain the jobs/GDP disconnect given the spending is immensely labour intensive, literally carers galour.

None of this is to say that the NDIS is not a good idea. That is not at all my point.

What it does show is that economic figures are being distorted by the introduction of a segment of pre-existing activity into something now measured as GDP. And that, quite literally, Australian economic growth is today disabled. We should also note that the spending increase roughly halves from here.

In economic terms, it’s not exactly a picture of wealth generating dynamism.

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