The NDIS is one of the central fiscal bets of the federal budget. In this podcast, our disability experts discuss what the government’s proposed reforms will really cost — and what needs to change.
In this podcast, Grattan Senior Associate Hannah Orban talks to Grattan Disability Program Director Sam Bennett and Grattan Associate Reilly Polaschek about the NDIS reform bill and the Senate inquiry extension.
Read our submission to the Senate inquiry, or more of our
disability research.
Transcript
Hannah Orban: The National Disability Insurance Scheme is in strife. The NDIS has grown too big, too fast, and it’s set to cost nearly fifty-four billion dollars in the twenty-five/twenty-six financial year, and yet the NDIS has been life-changing for hundreds of thousands of Australians with disability and their families.
In the twenty twenty-six federal budget, the Albanese government announced major reforms and cuts to the NDIS, and reform is necessary. It now supports more than seven hundred and seventy thousand people, far more than the roughly four hundred and ninety thousand envisaged when the Productivity Commission first proposed the scheme back in twenty eleven.
The costs of the NDIS have been growing much faster than other major social programs. Although the government was hoping to get these changes passed quickly, the legislation was referred to a Senate committee in May. After four thousand submissions, three days of public hearings, two delays to the findings being published, and one interim report, we found out on Tuesday the twenty-third of June that the committee was extending the inquiry by another eight weeks.
This is a tense moment for the government. The government’s budget depends heavily on the NDIS cuts to meet its savings targets. Of the $63.8 billion in savings and reprioritisations that the Treasurer claimed on budget night, $37.8 billion, or about 60%, comes from the proposed NDIS reforms alone. That means the NDIS is one of the central fiscal bets of the budget.
But how good a bet is it? What do these savings really cost? And if the reforms pass through the Senate, will they change the NDIS for the better or for the worse?
Welcome to the Grattan Podcast. This podcast is being produced on the lands of the Gadigal and Wurundjeri people. Grattan acknowledges and celebrates the First Nations people on whose traditional lands we meet and work, and whose cultures are amongst the oldest in human history.
I’m Hannah Orban, senior associate in the disability program at Grattan Institute, and I’m here today with Sam Bennett, director of Grattan’s disability program, and Reilly Polaschek, associate at the Grattan Institute. Hi, Sam. Hi, Reilly. Thanks for joining me today.
Sam Bennett: Hey, Hannah.
Hannah Orban: Sam, you were the lead author on Grattan’s submission to the inquiry into the NDIS bill, and you also gave evidence on the final day of hearings. NDIS reform has been happening for years now, and these reforms are the latest instalment in this saga. What does this mean for NDIS reform? Where are we up to now?
Sam Bennett: Yes, you’re right, Hannah. It has been rather a saga. It can be very tricky following the bouncing ball of NDIS reform because there’s been a lot of it over a long period of time. But I’ll try and give our listeners a sense of where we’ve come from and where we’re up to today.
We had government back in 2023, for the first time, introduce a growth moderation target. The scheme’s costs have been growing at over twenty percent a year for the four years prior to that. They said that initially they wanted to bring that growth rate down to eight percent.
And they brought forward legislation in 2024 to try and enable that. I was looking back — we recorded a podcast around that time. Following the name of the legislation, or the bill as it was at that point in time, we were asking, “Will this legislation get the NDIS back on track?” And somewhat belatedly, unfortunately, I think we can clearly say today that it didn’t.
We’re still tracking at a growth rate of eleven point three percent at the moment, and that growth rate has actually gone up rather than down in the last twelve months. So what we saw in April this year was a huge package of reforms announced by Minister Butler at the Press Club. In May, we saw how those reforms were supposed to impact the forward estimates as a big part of the federal budget.
A very big savings contribution in terms of the government’s fiscal repair. And then we saw legislation brought forward and introduced to Parliament to enable all of those changes to occur. And as you said, we’ve had a pretty quick four-week Senate inquiry undertaken to have a look at all of this.
A pretty bland report from them, to be honest, which saw the light of day on Tuesday. And then, as you said, an extension of a further eight weeks to the inquiry. We also saw some amendments brought forward — this is as a result of the Greens’ support for Labor’s legislation around tax reform. There are a couple of amendments made that address some of the concerns that senators heard in those hearings as well.
So we’re at, as you said, a really important juncture. Those previous legislative amendments in 2024 never did anything to the scheme’s eligibility criteria, and that is one of the key drivers of cost growth within the NDIS — essentially how many people are coming in and how much their plans are costing and growing over time impacts on those costs.
So it was always likely we were going to need to come back with another reform package. But as the current growth rate goes to show at eleven point three, it’s still way higher than it needs to be to be a sustainable rate over the longer term, in terms of government being able to balance all of its responsibilities across different functions of government.
So that’s where we are today. We won’t see a parliament vote on this bill until at least the 14th of August, if not a little later than that. We can expect the Greens to oppose it when that occurs. We don’t know yet what the Coalition will do. It seems unlikely they will oppose it, but we’ve got another eight weeks within which we will hear a lot more about this.
Hannah Orban: So you mentioned the amendments government proposed in the bill, and these address some of the really major structural issues in the NDIS. Eligibility criteria is one of the big ones, the budget-setting process for people’s funding, and a raft of other reforms.
There’s been a lot of controversy about what’s in the bill, but Grattan’s own submission to the inquiry said that there are some measures that should be passed. So Sam, what’s good in the bill?
Sam Bennett: Well, the things I’m broadly pleased to see in there, as you’ve just alluded to, are the ones where you can see that government is grappling with a major design flaw that’s been quite long-standing. And cumulatively, it’s those design flaws that are responsible for the unsustainability of the program today. We called in our Saving the NDIS report last year for government to grapple with those issues, and they are doing so in this bill, or at least attempting to do so, including in ways that are pretty close to what Grattan recommended.
We also warned in that report that we wanted to ensure that government wasn’t hitting the target but missing the point — successfully slowing growth, but doing that in ways that make the scheme worse for the people that rely on it. So it’s with that in mind that we’ve looked at the reform package, and we wrote that submission.
Are these the right things to be doing, or are they regressive measures? Do they fix real problems, or are they causing unnecessary damage? And the good news is that there are things in the bill that are doing a lot of the right things, or at least attempting to fix real issues. Who the scheme is for and how the access criteria works — that really does need to work better. How the NDIS sets budgets and does planning, how we get much more consistent and predictable decision-making — those are real problems that need fixing. How the market operates, how government can do better in stewarding that market, and what support should be available outside the scheme — critically, we called our Saving the NDIS report Rebalancing disability services to deliver better results, and that’s what we’re talking about there.
So I’m pleased to see all of those things in there. They make sense to me, but it’s not to say it won’t be very challenging to deliver them. But I’ll dive into one or two of those in a bit more detail for our listeners.
On eligibility, it’s really important that a scheme like the NDIS has some robust criteria that help identify who the program is actually for, so that it doesn’t end up becoming all things to all people or picking up the responsibilities of other service systems. The legislation looks at several aspects of eligibility, and one of the main animating concepts of the NDIS access criteria is this idea of substantially reduced functional capacity.
It was always intended that the NDIS should be diagnosis agnostic — so that means that it’s not about the disability that you have, it’s about the extent to which an impairment impacts on your function.
That’s a really important concept. It’s currently not well defined in NDIS legislation. It’s not well operationalised in the NDIS today, either.
So the bill provides a clearer definition, and it seeks to introduce a standardised approach to functional assessment and a more objective measure of when the threshold for access is met. And that’s a good thing in terms of more consistent and equitable decision-making.
At the moment, that doesn’t happen well. People provide a lot of their own evidence of varying quality, which is then assessed against some pretty vague criteria that have proved to be difficult to administer. And there are some inequities built into that as well, because people that can afford specialist assessments — which the NDIS doesn’t currently pay for — can generally expect a better result.
We’ve also got these access lists in place at the moment, which this process is intended to replace. Those have streamlined entry into the scheme for people with particular diagnoses, most notably autism assessed at being at level two. And it’s the failings of those criteria — of being able to adequately identify the people for whom the scheme was intended — that have been a significant contributing factor to the numbers that are now on it, particularly kids, where we see about a hundred and ninety-five percent above the original projections.
So all of that makes sense. But the more challenging aspect is that when you apply that more objective threshold, there are a lot of people currently on the NDIS that the government is saying shouldn’t be. The government estimates that around two hundred and forty thousand people currently on the scheme would not meet the new eligibility threshold.
And then there are other people too that current projections would have seen coming onto the NDIS over the next few years under existing policy settings who now won’t. So the total number by which the scheme will be smaller as a result of this change is upwards of three hundred thousand.
There are issues with that, though. No such assessment tool exists at the moment that can really assess function for the really diverse population we have on the NDIS, so that will be challenging. And more importantly, the people that are not assessed as eligible still have needs to be met.
If they’re not being met by the NDIS — and actually, we found in our work that many of them probably aren’t best served by an individualised funding system like the NDIS — there do need to be other options available. And at the moment, as we know, there are very few. So there will be a big onus on governments agreeing the additional foundational supports that they’ve committed to establishing, and making sure that those are in place in time for when the new assessment starts to roll out and impact on people on the scheme from January 2028.
Another thing that I think is good about what the bill enables is a better way for government to be working to make sure the market is delivering what it needs to for people. Listeners may be aware that the NDIS has worked entirely to a market-based model. People have funding in their plans, and then they shop around in the marketplace to try and find the best support at the best price to meet their needs — at least, that is the theory. And for some people that works really well; for others, less so, and we’ve talked about that in some of our research over time.
Government hasn’t really had many levers other than setting the price to shape the market and ensure that services are high quality and are going to deliver what the NDIS was supposed to deliver and achieve. So it makes logical sense to try and redress the balance here — for government to have more tools in the box and to be more hands-on in how it manages the market, including through directly commissioning some services where that makes sense.
And actually, the things that government has identified as a priority for direct commissioning in its explanatory memorandum are not bad places to start. Some of the intermediary supports, like plan management and support coordination — there’s hugely variable quality there. It’s reasonable to assume that government might be able to get a more efficient and effective service if it was directly commissioning that, without a significant negative impact on choice for people on the scheme.
I also think supported independent living is an area where we really do need to see a different approach. That’s something we’ve written about in our reports as well. This is the part of the scheme that provides intensive in-home support for people. And at the moment, we know most of those folks are still in the same group homes they were in when they transferred into the NDIS. Most people haven’t had a lot of alternative choices provided to them, and the costs are huge. You’ve got 5% of the participants accounting for about a third of the whole costs of the NDIS through this supported independent living part of the scheme.
So it makes sense, but there are some risks there as well, which I would want to guard against. Part of the problem is that we’ve got a lot of vacancies in old group homes that no one wants to live in. I don’t want to see government directly commissioning supported independent living just with a view to fixing that problem. They should be commissioning it with a view to transforming the way that those supports work, so that people have more opportunities to live independently in ordinary homes in the community, and that those services are high quality and working as well as they can.
So it really all depends on how government sets up its commissioning process and understands what it’s trying to do there. But in terms of whether that’s a good idea — yes, it fixes a real problem. The market hasn’t delivered everything for everybody in the way that was intended. There is more of a role for government to take a stronger hand on the tiller in this part of the NDIS.
Hannah Orban: A lot of those changes, it sounds like, are about slowing the growth of the NDIS down. However, the government has also proposed cuts in the reforms, such as cuts to social, civic, and community participation. Reilly, what are the proposed cuts, and what’s their potential impact?
Reilly Polaschek: Yeah, Hannah. There are two main categories of support that the government is proposing to cut in this reform package. There’s the social, civic, and community participation budgets — as you mentioned, the government is proposing to cut these by fifty percent, a flat cut to all participants who have this support category in their plan. And then there are also capacity building daily activities budgets, with a proposed reduction of ten percent.
They’re a bit jargony, those terms. But what they mean is: capacity building daily activity supports mainly go towards therapies, trainings, and assessments — things like speech therapy to help with communication.
And social and community supports are really to help people with disability get out of the house and participate in their community. A lot of the supports in this category are provided by support workers. It could involve a support worker accompanying someone with disability to attend a local community group, helping them to get there, helping them with any personal care needs, and other assistance that might be needed in the process of participating in that community group.
These supports are included in about half of all participants’ plans, and that reflects that not everybody on the NDIS has increasing their social and community participation as a goal. But for many, it is a really important goal. And importantly, we know that a lot of the people who rely on these particular supports are the people who have the highest support needs.
Our analysis found that people who had a higher functional need, or a lower assessed functional capacity, were more likely to be using social and community participation supports and were more likely to be using higher amounts of those supports as well.
Another way of seeing this is by looking at the people on the NDIS who require living supports. They receive about five times as much in social supports as others. So for people who had supported independent living or specialist disability accommodation in their plan last year, the average social and community participation support budget was about seventy-nine thousand dollars, compared to only fifteen thousand for others on the scheme.
That means a fifty percent reduction of that budget will imply about forty thousand dollars less support funding for those people, compared to a reduction of only seven and a half thousand for others.
So these cuts are not going to fall evenly. And these supports are funded for a reason. We know, unfortunately, that the risk of loneliness and social isolation for people with disability is high — and higher than for other people.
And that’s one of the problems that the government set out to address with the NDIS design. The objects of the act include supporting the independence and social and economic participation of people with disability, and that’s why the NDIS funds these supports — to ensure that it lives up to its original ambition.
Hannah Orban: I think something people might be curious to know is: why has government chosen to cut this part of the NDIS budget and not a different area? Can you explain that to us?
Reilly Polaschek: Yeah. What we can glean from the government’s own explanatory memorandums and appearances at the Senate inquiry this month is that the government needed savings fast, and that this support category was really the easiest target — being a large sum of annual NDIS payments and providing what the government seems to have deemed as non-critical supports.
Aside from the cost of these supports alone, the rationale we’ve heard from government for the reduction appears to treat these supports as lower priority because they’re less directly connected to immediate health and safety than supports such as toileting, showering, meal preparation, and cleaning.
But we know this is too narrow a view of disability support. Social and community participation should not be treated as a lower order support simply because it’s less directly connected to immediate physical care. The NDIS legislation and access criteria don’t support this view. Social and economic participation are as important a factor as any other to consider.
The government also tried to justify the cuts by saying these budgets are out of step with the broader care economy, and used a comparison to aged care packages to support this point. But this is a misplaced analogy. These are not like-for-like supports, nor are the cohorts directly comparable.
We know that people with disability face substantially higher barriers to social and community participation than older Australians do. In fact, in twenty twenty-two, adults with disability were nearly twenty percentage points more likely to face barriers to social and community participation than older Australians.
One of the recommendations from the recently released Senate committee report on the legislation recommends that government clarify which critical supports will not be impacted by the proposed cuts to participant budgets.
And this has been a bit of a theme throughout the consultation — the idea that government just needed to clarify itself, to make it more clear that the cuts it proposed won’t cause harm to participants.
But actually, it seems like it’s the government that’s making the misunderstanding here.
All supports in NDIS participant plans are critical. They’re there for a reason, and a scheme that funds only the minimum required to keep people clean, fed, and safe in their homes would not deliver the NDIS promise to Australians with permanent and significant disability.
Hannah Orban: Government has introduced these cuts in the name of a sustainable NDIS. Sam, what does government mean by a sustainable NDIS, and will this package get us there?
Sam Bennett: Well, it’s a really good question, Hannah, because it’s something that you see bandied around all the time now in relation to the NDIS, and there are a couple of places you can look to get under the skin of what we’re talking about there.
First, there are the documented insurance principles on which the NDIS is based, and they essentially say that the NDIS is sustainable so long as you have a balance between, on the one hand, the people on the NDIS believing they’ve got enough money to buy quality goods and services that help them to live an ordinary life in the community — and on the other, the contributors, that’s all levels of government of course, feeling that the scheme is affordable, that the costs are under control, and that it’s continuing to represent value for money, and they’re willing to contribute to it on that basis.
Arguably there’s a third component, and we’ve heard quite a lot about this one, including from the minister — which is that the scheme retains its social licence. So the public can see that this is something worth their tax dollars continuing to go to. That’s how I would understand sustainability.
In more recent times, government has put a number on that, and it’s chosen to do so by referring to a rate at which growth of the scheme’s cost is sustainable. As I said a bit earlier, we’ve had different iterations of that over time as government has sought to get the NDIS under control. But more recently, through that Press Club speech — and a bit before, in fact — Minister Butler talked about getting scheme growth rates down to between five and six percent.
And to me, that seems very reasonable. I think that is a reasonable aspiration for government. I say that because if you look at comparable growth rates in other programs — say Medicare and aged care payments — those were both between sort of five and six percent in the last financial year.
So hoping that the NDIS, as it reaches a level of maturity, should even out at around five to six percent growth — which would cover inflation and population growth — feels like a reasonable thing to aim for. The question, though, if you look at the reform package, is: does it get us there?
And it does — but it also takes us an awful lot further than that in the short term, particularly over the first four years of the forward estimates. We actually see the growth rate brought down over those years to one point one percent on average. And in one of those years — the twenty-seven/twenty-eight financial year — growth is actually contracting by one point nine percent.
So that’s a real terms cut to the scheme. The question I have is: why is it necessary to bring the scheme down to one point one percent, when the package of reforms should be aiming for what the government has stated is its policy objective of getting the scheme to between five and six percent?
We’ve got a real issue with the measure that Reilly was talking about, and we don’t think the bill should progress with that intact. And that was what I said in my evidence to the Senate inquiry. The modelling we’ve done shows that if you actually take that measure out entirely — and it’s a big contributor to the NDIS savings, absolutely; it’s about thirteen billion of the thirty-seven billion that is attached to this reform package — but if you take that out entirely, you still get a growth rate over the forward estimates of just over three percent. You still get to the government’s stated sustainable growth rate of between five and six percent at the back end of the forward estimates.
So I would question the necessity for that, or at least the extent to which government has made clear and explained the case for why the cuts need to happen quite so deep and quite so early. And it does lead one to think that rather than this being all about NDIS reform and achieving sustainability, there is a bigger calculation in Treasury really driving a lot of this — which is: what are the savings we need to see in the federal budget, and where do we get them from?
So it’s actually very possible for the NDIS to be sustainable through this reform package — and just to be very clear, we’re completely supportive of that as a goal, and five to six percent seems like a good growth rate. Why is it taking us to one point one over the forwards? There hasn’t been a strong case for that made by government, in my view.
Hannah Orban: One of the common narratives we hear from the press and the government is that there’s rampant fraud and rorting in this scheme. If the government were able to get on top of fraud, Reilly, how much would this actually save the scheme?
Reilly Polaschek: It’s a great question, Hannah, and of course integrity of the scheme is incredibly important — and not just for savings reasons. The NDIS is a program with significant costs that delivers very important supports, and it’s important for participants, providers, and Australian taxpayers that the scheme is protected from bad actors.
That being said, fraud is unlikely to be a big driver of cost growth. An investment in fraud and compliance initiatives, while necessary, is not going to deliver the government the big savings that it needs from the NDIS. Treasury’s own modelling estimates fraud and pricing-related measures will save about zero point nine billion over the next four years.
That’s only about two percent of the total savings in this reform package and only about half a percent of the total scheme cost. So there’s definitely a bit of a mismatch between the political narrative and the fiscal reality. The public narrative is often about rorts and fraudsters racking up a huge bill for the NDIS, but most of the savings in this bill are going to come from the structural reforms that Sam talked through earlier and blunt support reductions — not from fraud control.
Hannah Orban: Yeah, point nine billion doesn’t sound like very much when you’re thinking about a savings package of thirty-eight billion over four years. Sam, this is a really significant set of reforms — I think previously you said it’s the biggest reform to the NDIS since it started all the way back in 2013.
However, in your testimony before the Senate, you said that you didn’t want to see the bill passed in its current form. What amendments would you want to make to this bill?
Sam Bennett: Look, I think some version of this bill needs to pass. That’s the first thing I would say, because government does need to be able to get on within a reasonable timeframe with the really important job of NDIS repair. And as I mentioned previously, I do think there are lots of elements of the bill that go precisely to that.
But you’re right, I didn’t want to see the bill pass in its current form. Some of the amendments we’ve actually seen agreed to by the Greens — which help clarify the intended use of some of those strengthened eligibility criteria, to rule out some perverse outcomes that could have occurred — are very sensible. There might be some other aspects of the way those criteria are applied that could also warrant some sort of deeper explanation on the face of the bill, or if not then in rules.
But aside from that, the two things I would want to see are: firstly, some sort of mandatory review mechanism built into the legislation. That’s not uncommon in legislative packages like this. As you mentioned, it’s a huge range of reforms that this bill enables, and it impacts on hundreds of thousands of people. So I think it’s perfectly reasonable to say that there should be some mechanism whereby an evaluation — perhaps every eighteen months to two years — needs to come back to the parliament, showing what the impact has been and whether the measures in the bill are having their intended effects. That would allow proper scrutiny of the implementation of this substantial package.
And the second thing is that I just think those cuts that we’ve talked about — and that Reilly took us through — need to come out. There’s a power in the act, which is currently very broad and reasonably unconstrained, that talks about the minister being able to cut categories of support by up to ninety-nine point nine percent. That’s called “support determinations” in the bill.
There have been some commitments made as part of the Greens’ deal with Labor to amend that, to ensure it’s clear it can’t be used for some particular categories of support considered critical, like activities of daily living and in-home personal care supports. But to be honest, I don’t think that power should be in there at all. It doesn’t sit comfortably with the overall objectives of the scheme, so I’d like to see the whole clause that relates to support determinations come out.
Beyond the legislation itself — and this isn’t really something I would expect to see in there — what I’d also want to see from government is a really clear clarification and commitment about what further foundational supports it intends to fund and establish, for whom, and by when. With a commitment to sequence the new eligibility assessments based on the availability of those foundational supports for different cohorts.
That’s really a way of mitigating the risk that currently exists with this legislation — that certain parts of it will get ahead of the others, and we’ll see eligibility reassessments undertaken that result in people coming off the scheme before there are other supports in place to support them.
Hannah Orban: For whom and when — those are the key questions for foundational supports, and we’re still waiting on some answers to those. The Senate committee has extended the inquiry for another eight weeks. Reilly, what happens now?
Reilly Polaschek: Unfortunately, we don’t really have an answer for the listeners. Will there be more community consultation over two months? How does the government plan on doing this, and how is that going to help it make the legislation and the broader reforms better? The government already received about four and a half thousand submissions in its very short consultation window this month, and last time I checked, those still hadn’t all been published on the government’s website.
It’s not clear if the government will make more amendments beyond the changes it’s already promised to the Greens. Some version of this bill will likely pass, but it’s unclear how different it’s going to look from the legislation we’ve already seen.
Hannah Orban: I guess we’ll have to wait and see what happens over the next eight weeks.
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