A new report has recommended four policy changes to “save” the National Disability Insurance Scheme (NDIS), as federal and state governments continue to negotiate a funding deal for a new tier of services to be set up outside the scheme.
That new system — called foundational supports — was agreed to in 2023 and initially slated to begin by July 2025, but those services are still a long way off and yet to be properly defined.
The Grattan Institute’s report, released on Sunday evening, posited that a “rebalancing” of current NDIS spending could help save tens of billions of dollars while also making sure more people outside the scheme could get support.
The NDIS has been projected to cost $48 billion this financial year, before overtaking spending on defence by 2026-27 and reaching $63 billion by 2028-29.
However, most Australians with disability are not supported by the scheme. The NDIS’ 717,000 participants account for about 13 per cent of the estimated 5.5 million Australians with disability.
“The NDIS has become the only game in town: you either get a NDIS package, or you get minimal mainstream services,” Sam Bennett, Grattan’s disability program director
said.Foundational supports: the proposal
- Lower-level supports not delivered through the NDIS
- To be jointly funded by the Commonwealth and states and territories
- Run by the states in places like education and health services
- First stages to focus on “programs that build social connections” and “information supports to help people find other services”
- Subsequent stages to be larger and more targeted
The Grattan report has called for “firmer boundaries” clarifying who the NDIS was for, changes to how claims were managed to make outcomes more consistent, and a new National Disability Agreement to define the responsibilities of different levels of government.
But the biggest saving would come from a “modest” redirection of funds from the pool of money set aside for individual plans, into a new tier of foundational supports specifically for kids with developmental delay and people with psychosocial disability.
Overall, the thinktank estimated its blueprint could save $12 billion over 10 years and then a further $34 billion over the same period by not requiring new money to fund foundational supports.
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Grattan senior fellow Alistair McEwin, a former disability discrimination commissioner, said the institute was in “no way” proposing anyone be kicked off the scheme unnecessarily.
“What we’re saying is that supports for some children with developmental delay and people with psychosocial disability can be provided more effectively, more quickly and more fairly in other state or territory-based schemes,” he said.
“We … want to see that, no matter where you are in Australia, you get support.”
Alastair McEwin says Grattan’s proposal is not about kicking certain cohorts off the scheme unneccesarily, but spending money smarter. (ABC News: Brendan Esposito)
In a statement, NDIS Minister Mark Butler said the government would consider the report.
“[This is a] really important piece of work focusing on securing the sustainability and original intent of the NDIS so it works for participants and their families,” he said.
Foundational supports deal in limbo
Alongside foundational supports, the Albanese government has been making other changes to the NDIS in pursuit of the 8 per cent annual growth target it set two years ago.
The scheme is now growing at around 10 per cent, down from more than 20 per cent when Labor was elected in 2022.
NDIS stats at a glance
- The scheme now has more than 717,000 participants
- 10 per cent of all kids aged 5 to 7 are on the scheme, but many leave it when their early intervention period ends
- Autism is the most common primary diagnosis (38 per cent of all participants), followed by intellectual disability (13 per cent)
- Scheme estimated to be 1.7 per cent of GDP in 2024-25, rising to 2.1 per cent by 2033-34
Source: National Disability Insurance Agency
This year’s budget projections had the scheme on track to meet the 8 per cent target by 2026-27.
However, they assumed foundational supports and the shifting of services back to the states (which ceased most disability services when the NDIS began) would have started by this financial year.
Mr Butler said this week that funding negotiations with the states and territories were ongoing, and the Commonwealth was working to finalise them as soon as possible.
Before the states sign up, they want the federal government to scrap its 6.5 per cent annual growth cap on hospital funding.
Mark Butler says the federal government is working to finalise the funding deal. (ABC News: Ian Cutmore)
One of the main drivers behind the NDIS’s growth is the larger than expected numbers of kids — many of whom are autistic or have developmental delays — joining and then not leaving the scheme due to the lack of services elsewhere.
Melbourne University associate professor Sue Olney, who has been researching the NDIS for more than a decade, said the scheme was never designed to support all people with disability.
She said too many previous changes to the scheme’s rules happened before alternative supports were put in place, and it was crucial that was not repeated going forward.
“The transition is critical. It’s not enough to focus on changing the NDIS unless there are other supports in place for people to move to,”
she said.There’s another problem facing the NDIS. It’s probably not what you think
Muriel Cummins of advocacy group Every Australian Counts said the disability community was diverse and what foundational supports eventually offered needed to reflect that.
“A blanket program rollout across the country really might miss some of the nuance of needs in the community,”
she said.
The NDIS has transformed the lives of its participants, enabling many to live more independently, gain employment, and give back to the economy through taxes.
A 2021 report from thinktank Per Capita found that for every dollar spent on the scheme, $2.25 was returned to the economy.