The NDIS needs reform, but the government risks using blunt short-term cuts to meet Budget savings targets before the harder work of building fairer assessments and foundational supports is in place.
The federal Budget depends heavily on the government’s NDIS reforms. Of the $63.8 billion in savings and reprioritisations claimed on Budget night, $37.8 billion – about 60 per cent – comes from proposed NDIS reforms.
That means the NDIS is one of the central fiscal bets of the Budget.
And reform is necessary. The NDIS has grown too big, too fast. The scheme is expected to cost almost $54 billion in 2025-26. It now supports more than 770,000 people, far more than the roughly 490,000 envisaged when the Productivity Commission first proposed the scheme back in 2011. The costs of the NDIS have been growing much faster than other major social programs.
The case for reform is clear. The harder question is whether this package will fix the underlying design problems with the scheme or simply cut costs bluntly. The big risk is that the government hits its savings target but misses the point.
Much of the reform package points in the right direction. The government is right to clarify eligibility for entry to the NDIS. Far more people are in the scheme than it was designed for, and once in the scheme, they tend to stay for the long term. Many people who are on the scheme are not in the cohort that the NDIS was set up to serve.
The government is also right to move towards a better process for planning people’s individual NDIS budgets – one that uses a standardised process of assessment as the starting point. A scheme this large cannot depend on a planning process that too often leaves people with similar needs receiving very different budgets.
And the government is right to question whether a pure market model works for every NDIS service. Directly commissioning some services could improve quality, reduce waste, and give government more control over cost and performance.
These much-needed reforms will not be easy to deliver. Most of the structural reforms – planning, eligibility, direct commissioning, foundational supports – are still a year or two away. And the NDIA’s record of delivering major reform on time is not strong.
So in the meantime, alongside the long-term reforms, the government is proposing blunt short-term cuts to people’s existing NDIS budgets. These are expected to deliver $13.2 billion in savings over four years – more than a third of the total NDIS savings package.
The most troubling measure is a proposed 50 per cent reduction to social and community participation budgets, alongside a 10 per cent reduction to capacity-building daily activity supports.
Social and community participation supports help disabled people build independence, form relationships, and engage in their local communities.
Treating this support as less important than personal care misunderstands the purpose of the NDIS. The scheme was not created merely to keep people clean, fed, and safe. It was created to support independence, choice and control, and social and economic participation.
The proposed cuts will not fall evenly. People with the largest social participation budgets are often those with the highest support needs. People in supported living arrangements, people with intellectual disability, psychosocial disability, Down syndrome or visual impairment, and people with lower functional capacity are likely to be hit hardest in dollar terms.
When those supports disappear, the need does not disappear with them. Families and informal carers will be expected to pick up the slack. In practice, that most often means women.
The government says alternative supports are coming. A $200m Inclusive Communities Fund is meant to replace some of the slashed social supports. The ‘Thriving Kids’ program is intended to support some children outside the NDIS. Foundational supports are meant to provide services for people who do not need an individualised NDIS plan.
That is the right idea. But these supports are not yet ready at scale. It has already taken governments two-and-a-half years to agree on Thriving Kids. We are yet to see any detail on the other Foundational Supports. The Inclusive Communities Fund is being held in the Contingency Reserve pending further design and consultation.
The government should build one fair assessment process for eligibility and planning, rather than forcing people through duplicated bureaucracy. It needs to ensure foundational supports are in place before it tightens access to the NDIS. Foundational supports should include a National Psychosocial Disability Program to provide evidence-based supports in the community to the many thousands of Australians with significant psychosocial disability with unmet need. And the government should add a mandatory post-implementation review so Parliament can see whether the reforms are working or causing harm.
Minister Mark Butler is right to say that the NDIS needs saving. But the government should not use short-term cuts to buy time while the harder reforms catch up.
The government should slow down on the blunt cuts and speed up on the harder task: building an NDIS that is clearer, fairer, sustainable – and works for the people who need it.
Dr Sam Bennett is director of the disability program at Grattan Institute and lead author of the 2025 Grattan report, Saving the NDIS: How to rebalance disability services to get better results.
Sam Bennett
Dr Sam Bennett is lead author of Grattan Institute’s new report, Bridging the gap: Meeting the needs of Australians with psychosocial disability, which can be read for free at www.grattan.edu.au.