Budget Locks in NDIS Cuts as Labor Tries to Rein in $38 Billion in Costs

The federal government has locked in its sweeping changes to the National Disability Insurance Scheme (NDIS), saying the reforms are needed to slow the rapidly increasing costs of the scheme.

Treasurer Jim Chalmers said changes outlined in the budget would deliver about $37.8 billion in savings over the forward estimates, accounting for more than half of the broader budget savings measures.

The government says the reforms are needed to return the scheme to its “original intent” while maintaining support for people with disability.

Focus on Supported Independent Living

A key area targeted by the reforms is Supported Independent Living (SIL), which provides intensive daily support for people with high needs, often in shared housing arrangements.

Although only a small proportion of NDIS participants receive SIL funding, the government says it accounts for a significant share of total scheme spending.

Some individual support packages now exceed $400,000 a year.

Disability providers have also raised concerns about the financial viability of delivering SIL services, particularly in regional areas and for participants with complex care needs.

Changes to Assessments and Oversight

Under the reforms, the government will introduce new plan management and support coordination arrangements for participants.

Budget documents say criteria around plan reassessments will be tightened and guidance strengthened on what qualifies as “reasonable and necessary” support.

A new planning framework is expected to begin from April 2027.

The government also plans to introduce “standardised, evidence-based assessments of functional capacity” for participants.

Some disability advocates and political opponents have criticised the proposal, arguing it could result tin reduced support for some people on the scheme.

The National Disability Insurance Agency (NDIA) will receive expanded investigative and enforcement powers as part of a broader crackdown on fraud and over-servicing.

Costs Have Increased Since Rollout

The NDIS has grown significantly since it was introduced in 2013.

According to budget papers and Parliamentary Library analysis, annual scheme costs have risen from about $11.8 billion in 2016–17 to more than $44 billion in 2023–24.

Spending is projected to exceed $48 billion in 2024-25.

The Parliamentary Library said several factors had contributed to rising costs, including higher participant numbers, increasing average package costs, growth in supported independent living arrangements, workforce shortages, and inflation.

The Albanese government has set a target of reducing annual NDIS spending growth to below 8 percent by 2026.

The reforms are expected to face scrutiny from disability advocates, providers, and opposition parties as debate continues over the future direction of the scheme.