The NDIS is a vital part of Australia’s social fabric, but the scheme has grown too big, too fast.
 Grattan’s new report, Saving the NDIS: How to rebalance disability services to get better results, presents a four-step plan to make the NDIS sustainable. In this podcast, report authors Sam Bennett, Mia Jessurun, and Hannah Orban are joined by Senior Fellow Alastair McEwin to discuss how to rein in costs while ensuring disabled Australians get the support they need.
Transcript
Hannah Orban: The National Disability Insurance Scheme is the largest social reform in Australia since the introduction of Medicare. It has transformed the lives of hundreds of thousands of disabled Australians and their families and been responsible for employing many hundreds of thousands of Australians in the disability sector.
The NDIS is a vital part of Australia’s social fabric, but the scheme has grown too big too fast. Our new report, Saving the NDIS: How to rebalance disability services to get better results presents a four-step plan to make the NDIS sustainable. I’m Hannah Orban, one of the co-authors of the report, and with me are my colleagues, Program Director Sam Bennett, Senior Fellow Alastair McEwin and Associate Mia Jessurun.
I want to start off by acknowledging that each of us on the podcast have different experiences of disability in our lives, whether that’s through personal lived experience or through family members close to us. When we talk about reforming the NDIS, we’re talking about people’s lives and support systems, including for people we know and love.
So, I just want to acknowledge that any of the discussions of NDIS reform can sometimes be difficult. And our goal at Grattan is not to just point out the problems in the system, but to provide solutions to improve disability services in Australia and make them better for people with disability. Al, you were a commissioner in the Disability Royal Commission and before that you were the Disability Discrimination Commissioner for the Australian Human Rights Commission. So, you know better than most how people with disability lived before the NDIS and how it’s changed things. Can you tell us how we got the NDIS in the first place, and do we need it?
Alastair McEwin: Hannah, it’s a very important question because none of us really want to go back to what we call the dark days prior to the NDIS. What was happening before the NDIS were people with disabilities were unable to get the services they needed, the system was fragmented, states and territories had different approaches to disability support. Families were in crisis, and we had many thousands of disabled people living shut away from society. They were living in accommodation that no one would want to live in.
Families were desperate to see better support, and we’re also hearing a lot about parents who were aging, and they were really worried about their disabled child having the support after their parents were no longer around to do so. So, what happened? We saw a great campaign called Every Australian Counts and that was a great example of people in the disability sector coming together, disabled people, their families and carers and disability service providers, and they were all united on the one thing we needed to see a better system. And why do we need the NDIS? The NDIS is a great example of articulating human rights, particularly the right to live in the community, just like anyone else.
So, it’s a very important scheme and it’s absolutely one that we need to see continue into the future.
Hannah Orban: Sam, the NDIS is now one of the biggest pressures on the federal Budget. How did it get to this point and what’s forecast for the future?
Sam Bennett: Yeah, that’s right Hannah. The cost’s now exceeding aged care services and Medicare, and it’s beaten only in terms of the pressure on federal budgets by revenue assistance to the states and the cost of the age pension.
it’s been growing at about 24% in the last four years on average. Medicare, just as a point of comparison, is growing up 5.6% this year. Aged care payments at about 5.2. It’s a good thing that we’re spending more on disability. As Al said, that was a deliberate and highly necessary, uplift in the funding available, from what was available prior to the NDIS.
The issue is more about being able to control that level of growth, because those historical levels that I’ve just referred to, they’re not sustainable into the future without putting, further real pressure on other important functions, of government. but the reason we’ve seen this level of growth is there really haven’t been any effective levers in place to control it.
We see that as a consequence of design and governance failures that were baked into the NDIS from the outset, mainly that the NDIS doesn’t operate like an actual insurance scheme. It hasn’t had clear criteria for who’s covered. It doesn’t have predictable ways to allocate resources, and there’s no real connection between the actuarial model, so that’s how much we expect the scheme to cost, and individual decision making about how much and what supports people get in their plans. It was legislated pretty poorly in a way that didn’t, mirror the Productivity Commission’s design intent very well. We’ve had vague criteria. We’ve had unclear system boundaries, and that’s led to cost shifting, over the last 10 years.
And those misaligned incentives in the system have really meant that there’s not been sufficient compulsion, until more recent times for governments to sort out, the challenges with the design of, of the scheme. So none of these issues are, are new actually, if you look back nine years, to, uh, the reporting from the NDIS we saw then that there were more entrants than expected, including in younger age groups, very few people leaving the scheme despite, uh, the intention that it delivered time-limited early intervention for some groups. Wildly inconsistent decision making, uh, with different levels of funding for people with very similar levels of need.
And a pretty bureaucratic nightmare that people have had to try and find their way through. The last government did start to act. But we think, that’s been too slow and that some of the measures governments are currently progressing, to moderate growth, uh, are not sufficient. The forecast at the moment is that the scheme will grow by 8% by July 2026.
And that was a target that was set by National Cabinet back in 2023 that the NDIS is now working towards, but there are some pretty heroic assumptions in there. and nothing’s currently, assured. So, it’s been a long road from here, but in many ways, to quite a predictable destination. Bad design can have a momentum all of its own.
Uh, the important thing is what happens next really.
Hannah Orban: On the one hand, the disability community fought hard for the NDIS as Al told us. And, and people are rightly concerned about reforms to it. But on the other hand, without reform, it sounds like we run a worse risk, which is that the NDIS could be abolished if it becomes too costly.
And none of us want to return to the dark old days, as Al said of, of disability supports, which were really heavily rationed and crisis driven, and didn’t give people with disability much choice. The government has a plan at the moment to moderate the growth of the NDIS. As you were just saying, Sam. Mia is the current plan on track?
Mia Jessurun: So, listeners who are familiar with disability policy might remember that in 2023, the government commissioned an independent review of the NDIS, and late last year we saw legislation pass that implemented some of the recommendations of that review. A lot of that legislative change really goes to scheme sustainability and reflects the government’s current plan to try and bring down scheme growth to 8% as Sam mentioned.
We have, on the one hand, seen some growth moderation in recent years. This year in 2024-25, we’re on track to see growth of about 10.6%, which is a pretty significant fall from the last five years where we’ve seen an average annual growth of nearly 25% every single year. But it’s really too early for that kind of growth moderation to be attributed to those longer-term legislative reforms.
A lot of them aren’t fully implemented if they’ve been implemented at all. And so, for example, like a really important part of that current plan to moderate scheme growth is the establishment of foundational supports, which are lower-level disability supports that would be delivered outside of individualized NDIS funding packages.
Those supports were meant to be operational by 1 July 2025. If you are listening to this on the day it comes out, that’s tomorrow. We know that’s not going to happen and we’re going to be waiting at least six months we’ve heard for those services, if not longer. Services that haven’t materialized yet, can’t be responsible for bringing down growth in the scheme.
So, what we think is going on instead is that in recent quarters we’ve seen really significant slowdown in the operations of the National Disability Insurance Agency who are the part of government who are responsible for administering the NDIS.
It’s been taking longer and longer to approve access for people who are applying and testing their eligibility for the scheme. And it’s also been taking longer to reassess the plans of people who are currently accessing the scheme but might’ve had a change of circumstances that means that they need a little bit more support.
Those really are the two drivers of scheme growth. More people coming into the scheme and the plans of people who are already in the scheme going up over time. And so those things taking longer and happening at a slower pace probably are driving growth moderation, but that’s not a long-term plan.
Really what that means is that at the moment, growth moderation is coming at the expense of disabled people who are having to wait longer to get the services that they need. Our report outlines a different plan, a way for governments to still make those kind of sustainability targets but do so in a way that doesn’t come at the expense of disabled people.
Hannah Orban: The report outlines four key policy changes that are needed to save the NDIS, and I want to start with one of those changes, which is about rebalancing the disability services system.
Sam, can you tell us what it means to rebalance the disability services system and what’s off balance right now?
Sam Bennett: The thing that’s out of balance, and listeners might not know this, is that although the scheme has grown pretty big and it’s supporting more people than we expected it to, most people with disability in Australia actually don’t get anything from it. And even for those that do get into the scheme, some of them in quite large numbers not everyone’s well served by the current service design, which is all about a total reliance on this model of individualized funding. So, this is what most people associate with the NDIS today. Uh, it’s that people get this bucket of money, this individualized funding allocation, and they’re able to use that to meet their needs and pursue their goals. But that was never meant to be the only game in town. There were supposed to be multiple tiers of coverage, and not a sole reliance on individualized funding. There were supposed to be other services in the ecosystem and those other services were supposed to actively help prevent, reduce, or delay demand, for individualized funding.
But by and large, those services haven’t yet materialized. And as I said, the current model doesn’t work well for some groups, I’ll take the example, of a family, of a child with a developmental delay or disability. Our research shows that giving people a bucket of money, to navigate a complex system to decide what the evidence is for best supports for your child, without much support to do that and in a marketplace where many of the providers are incentivized to deliver more and more therapy rather than the best, early intervention result necessarily for your child. It is not the optimal way, to use, public resources. A far better way, and there’s pretty universal consensus around what best practice looks like in early childhood intervention, is to make sure people have got timely access to the supports they need, so that their child can access those in the places that they already live, learn and play. So, we think we do need, some different approaches, and that the government’s focus on foundational supports, uh, is the right one. Uh, the recent co-location of disability and the new, Department of Health, Disability and Aged Care offers some really good opportunities for how these new services can be made, to work together seamlessly. Um, but we do think there are issues with how they’re going about that at the moment, uh, that we can talk about, which may mean that they don’t materialize at all. So, when we talk about rebalancing, in summary, we really mean two things. We mean building out that ecosystem of other disability supports that were always supposed to be there, which can much more effectively and efficiently meet the needs of some groups than the current model.
And we also mean by doing that in a way that better targets those services, fixing design flaws in the NDIS and ensuring more people can get a piece of the pie. So, rebalancing it’s a way to make the considerable investment governments have made in the NDIS work better and smarter so that it can deliver better results for a larger group.
Hannah Orban: So, you’re saying that we actually need more disability services to save the NDIS, you know, won’t that cost a lot more money? Isn’t that the problem with the NDIS when it cost $42 billion last financial year?
Mia Jessurun: That’s a great question, and I guess it is a bit counterintuitive at first. We definitely agree that there is a really important role for establishing new services outside the NDIS, but I think where we differ from the government’s current plan is that we agree it’s not tenable for governments to find substantial amounts of new money to fund additional services with new money in addition to their already huge NDIS contributions. We’ve seen 18 months of negotiations so far since governments committed to funding foundational supports, and we have very little progress to show for that.
We think that that probably comes down to that, states and territories and the federal government are in really tight budgetary constraints already at the moment, and so it’s just not going to happen. What we propose in our report is a different way. It’s some new thinking around how governments can fund foundational supports without new money.
Our proposition is that it’s not the amount of money in the system, but it’s how it’s targeted. And so, it’s possible to redirect a small amount of funds from the current NDIS out of individualized funding and use that funding to establish a really ambitious tier of foundational supports. What that would look like is some types of services and some specific cohorts moving slowly out of individualized funding into receiving commission services as general or targeted foundational supports.
And those supports we think would better meet the needs of those groups but also take pressure off the NDIS to be the only source of services for people with disability in Australia.
Hannah Orban: Sam, you mentioned savings to the NDIS. Doesn’t that mean cuts?
Sam Bennett: No, it definitely doesn’t mean cuts. We don’t want to see a return to the bad old pre-NDIS days that Al was referring to. And we don’t want to see any cuts to vital services that disabled Australians rely on. Um, we’re on track at the moment for 2% of GDP or thereabouts to be what Australia spends on the NDIS, and we don’t think that’s wrong actually, that feels right and appropriate. But when we talk about savings in our report, what we’re really referring to is moderating growth. So that is about the NDIS growing at a slightly slower rate than it does today. It’s not cutting things that currently exist, it’s stopping it, getting as big as fast as it is at the moment.
The NDIS today is more than four times as expensive as the Productivity Commission said it would be. At this stage, and we can debate their modelling as to how accurate that was at the outset, but not by that much, I don’t think. And even under our plans, the growth rate remains higher than comparable programs and likely, actually higher than it can remain over the longer term. So, people really do need to get this aspect into, into perspective. All of the numbers in the NDIS are really big at the moment, so it’s easy to misconstrue what we’re talking about. The Grattan Plan does save 12 billion if it was implemented, over a 10-year period. That’s a lot of money unquestionably.
Um, but that’s effectively the difference of bringing the growth rate down by 0.5 percentage points over that 10-year period to around 7.5%. The other saving we talk about is not needing new money for foundational supports. And Mia’s already talked about that. So that’s not a cut to an existing budget.
That’s about getting governments focused on the task of getting their current investments working better so that we actually get those supports established ’cause we think that’s good for everybody.
Hannah Orban: Foundational supports sound like a pretty big change to the disability services system. It’s great to hear that it doesn’t actually involve cuts, but rather redirecting funding. Just thinking for a moment about, for example, families who have children with developmental delay or disability, what would this change be like for them?
Alastair McEwin: It’s a really important question, one that we’ve thought about a lot here at the Grattan Institute. As Sam has pointed out, we want to see programs for children with developmental delays delivered in settings that most people see as natural. For example, school. We want to see kids with disabilities learning and playing with their non-disabled peers.
So, we think a lot of the funding that currently goes to the NDIS through individual plans could be and should be redirected into foundational support, whether they are general or targeted. It doesn’t really matter. The main focus is that as a child with a disability is getting support in a natural setting, like a school. Long term, that also means better outcomes.
You’ll have children with disabilities who are better able to be more independent in those settings. And of course, kids without disabilities are living and learning and playing with disabled kids, and hopefully that of course will produce long-term outcomes for a better acceptance of disabled people in society.
We acknowledged, of course, that this is a change that will be confronting for many families, particularly those who are getting funding through the NDIS. We are in no way suggesting that there will never be kids with disabilities on the NDIS. There will always be a need for those with high support needs. That said, many of the services for kids with developmental delays could be delivered through foundational support, and that’s why we are suggesting a repurposing of those funds from the NDIS into foundational supports.
Hannah Orban: Thanks, Al. Reassuring to hear that the system will be there for kids, um, across the board.
There are three more key policy changes that the report recommends, about boundaries, budgets, and government accountability. Sam, can you tell us a bit about these three policies and why it’s these three changes that are so critical for the future of the NDIS?
Sam Bennett: Yes, Hannah. We, we think all reforms proposed in our report need to work together.
Just delivering the more balanced ecosystem of foundational supports that we’ve been primarily talking about won’t fix all of the NDIS’ problems. We need to also make sure. That it’s clear who the scheme is for and that the way that it allocates funding, is much more predictable for government, consistent and fair, for the people that need, those funds from the NDIS.
So, the other changes we propose that you’ve referred to, they’re really about ensuring that the NDIS actually operates as the social insurance scheme it was intended to be. That it has clear liabilities, that it’s got a fair and predictable way of making decisions. And then it isn’t the victim of cost shifting or overreach where government’s funding responsibilities aren’t clear or where the incentives in the system just aren’t working in everyone’s best interests.
So that better boundaries piece, it’s really about being clear who the scheme is for and equipping the agency and community, uh, with the clarity and the mechanisms to manage eligibility for the scheme in a way that’s really fair and equitable. So, from our research, we’ve suggested, changes to eligibility criteria that it will make it easier for the NDIS to meet the needs it was designed to meet. Because not everybody’s needs as legitimate as they may be, are best met through a system of disability insurance that’s about, addressing barriers to social and economic participation. Some people need to be supported, through other service systems.
The fairer planning part is about how the NDIS works out what people should get in their plans. We’ve talked about that before in this podcast actually, at the point that the NDIS review put its recommendations to government. We’re supportive of the changes to the planning approach in the scheme that government, is progressing so long as they’re well designed, and implemented.
And our report talks about what some of the ways, that, that design, should look like, if it’s going to really deliver. the best outcomes for people, with disability. We think there’s a benefit in getting your budget derived from a standardized assessment. but that if you get that, and the budget there is more predictable and consistent, for governments, people with disability, with individualized funding should have more choice in who they involve in their planning. They should have more choice and flexibility in how they use their money.
And then finally on the accountability point, the current national disability agreement is defunct. It was crafted in 2008, well before the NDIS even existed.
That’s a problem. It hasn’t been replaced in terms of the role of Australia’s disability strategy. There is no clear articulation, to hold governments accountable for their respective responsibilities and accountabilities for funding disability supports. So that’s what we think needs to happen. Uh, we need a new National Disability Agreement, that really provides the clarity, around those funding responsibilities into the future.
Hannah Orban: 2008 was a very long time ago, especially for disability services in Australia. Sam and Al, I’m interested to hear from you both on this next question. If government made all four of these changes, what would be the future of the NDIS and what would the future be like for people with disability?
Alastair McEwin: Hannah, it’s a great question because we all want to see a disability support system that no matter where you are in Australia, and no matter what kind of support you need, there should be a reassurance that you can get that support, whether it’s through the NDIS or through mainstream settings.
For example, school, hospital even the justice system, if you happen to be in the justice system, you should be able to get disability support, specific support that will enable you to navigate the justice system and then ideally back out into the community to be independent as possible. So, we of course, want to see a fairer, more equitable approach to disability support, and that I think can be achieved through the reform that we are suggesting here at the Grattan Institute. And having said that, ultimately, we will see a scheme not only of the NDIS, but also disability support in mainstream setting where taxpayers can actually see value for money and ultimately, of course, a better life for disabled Australians.
Sam Bennett: Well, the main thing, I think, is that the NDIS would be there, it needs to endure, for future generations of disabled Australians.
And that’s vital. It’s a vital part of Australia’s social fabric that we need to see pro protected. It needs to be sustainable, and that isn’t just about the costs to government. It also means that the social contracts on which the scheme depends, is really strong.
The public and the community can see the benefits, which are being derived, from what would be a truly world leading scheme. And then finally we need to have a much better understanding of the results. Uh, we talk in our report, about the unfortunate debate on sustainability of the NDIS being often only on one side of the ledger, the cost of the scheme really clear. The outcomes, how people are getting results from the NDIS, much harder to pin down that needs to change.
Governments need to get much better at evaluating the impact of the NDIS, understanding, the many benefits that it is giving to disabled Australians and to our diverse economy and society. If all of those things are working well, that’ll be the Australian NDIS that we’ve got.
Hannah Orban: Sam, Al and Mia, thank you so much. We’ll include a link to the report in the show notes. Thanks for listening today, Grattan Institute is a non-for-profit organization . Please consider donating to our work at grattan.edu.au. You can also find us on all major social media networks as Grattan Institute.