Health Minister Mark Butler has said intergenerational equality is why the government will cut NDIS growth, crack down on fraud and shift millions into aged care.
The federal government has flagged a major reset of the National Disability Insurance Scheme, warning the scheme’s rapid growth and declining public confidence are forcing tough decisions that will shrink access and scale back spending.
Instead of waiting for the federal budget in May, health minister Mark Butler used his National Press Club address to highlight how the federal government reduce the scheme’s 760,000-strong participant base to around 600,000 by the end of the decade.
In this four-year ‘reset’ period, he aims for spending to grow at an average of 2% every year, returning to 5% in 2030. The goal is for the scheme to cost around $55 billion instead of more than $70 billion in 2030.
It’s a dramatic reduction from the target rate of 5 to 6% agreed by the National Cabinet. However as he highlighted, even their recent efforts to get to 8% were still hitting hurdles.
“The Scheme Actuary has recently advised Government that spending has blown out by $13 billion over the next four years.
“Left unchecked, this blowout would mean that we will not achieve the 8 per cent growth target until the end of the decade, instead of this year,” he said.
Mr Butler cast the overhaul as a matter of intergenerational fairness, saying difficult trade-offs are needed to balance support for people with disability against the rapidly rising cost of caring for an ageing population. Read his aged care announcement here.
“Right now, the NDIS costs too much and is growing too fast, put alongside any comparable government program,” Mr Butler said.
“And unless we take action to make it sustainable, it simply will not be there in the future for the Australians who need it most.”
While seven in 10 Australians still agree the NDIS played a vital role for people with a disability, he highlighted that seven in 10 also think it has become too large and struggles with dodgy providers.
“Worse still, more than six in 10 think it’s actually broken,” said Mr Butler.
Furthermore, legislative uncertainty has delayed implementation of the New Framework Planning rollout which will now commence on 1 April next year instead of July this year.
Mr Butler outlined a range of reforms to dial down costs and growth of the scheme.
Changing eligibility of the scheme
Of particular concern is eligibility into the scheme. Mr Butler said that there was currently a “diagnosis gateway” where people have been funnelled into a scheme that was never designed for them.
“The Bill I intend to introduce in the Budget sittings will allow us to introduce standardised, evidence-based assessments of a person’s functional capacity to determine access to the Scheme,” he said.
“In line with the Scheme’s original intent, access will be based upon a significant reduction in a person’s functional capacity that impacts their day-to-day living.”
They will remove the use of lists that decide on a person’s eligibility based on diagnosis alone.
“These so called ‘access lists’ were put in place to get the Scheme up and running. They were always supposed to make way for an objective assessment tool,” Mr Butler said.
The goal of focusing on functional capacity will project a fall of participants from 760,000 to around 600,000 by end of decade.
Mr Butler also explained that reports about reducing support for people with mental health conditions and psychosocial support have no basis.
“I’ve seen some coverage about mental health potentially being an area that we seek to move away from the NDIS, and there’s just no basis for these reports,” he said.
“There’s no particular area of diagnosis that will be treated differently to others. What it will mean, though, is that Australians with lower support needs… will be moved out of the scheme,” Mr Butler said.
Getting rid of ‘shonky’ operators
Mr Butler was scathing of some NDIS operators, saying they were taking advantage of participants and taxpayers.
“The NDIS has become a soft target for shonks and rorters – as well as the worst elements of organised crime,” he said.
“The fraud in the NDIS is being perpetrated by lowlifes who are scamming both the taxpayer and people with disability.
“The scale and chaotic nature of the NDIS market is distorting other parts of the care economy, and too often not providing high quality care to participants themselves.”
He said the fundamental barrier they were facing was the design of the scheme itself.
“The Fraud Fusion Taskforce we established shortly after coming to government has identified eight recurring design failures in long standing Government programs, making them susceptible to fraud – the NDIS has all eight,” Mr Butler said.
“It also identified seven fundamental building blocks for high integrity programs. The NDIS has none of them.”
He said a key driver of spending growth is that one in five plans are currently subject to an unscheduled reassessment each year.
“Often at the request of Plan Managers – who can stand to gain – not participants,” he said.
“And the average result of these reassessments is a 20 per cent increase in plan value – a large driver of spending growth.”
To get that reassessment rate down from 20% to 15%, Mr Butler plans to introduce legislation to get a grip on these drivers of scheme and plan inflation.
He will also change the categories of mandatory registration to include higher risk activities including personal care, daily living supports and supports provided in closed settings.
“This builds on existing mandatory registration requirements and the Government’s earlier decision to introduce mandatory registration for Supported Independent Living, as well as platform providers from 1 July 2026,” he said.
They will also identify a shortlist of accountable, quality providers which people can choose from.
To improve accountability, Mr Butler foreshadowed changes to how payments were claimed and managed. He highlighted how the NDIA has no visibility of evidence for 90% of claims that are made by plan managers or by providers directly.
“That’s around 600,000 claims every day without supporting evidence. And the standard of invoices that are being submitted can vary wildly,” he said.
“Worse still, the lack of integrity in the system has opened the door to the worst parts of organised crime.”
There have been reports of criminals paying cash kickbacks to participants and their families, sometimes resorting to intimidation and threats of violence.
“Enrolling providers in a digital payments system means the NDIA will be able to see evidence from every single provider and ensure that they’re paid directly,” said Mr Butler.
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Crackdown on community and social participation
Spending on community and social participation has tripled in five years from $4 billion to $12 billion. Mr Butler highlighted that spending will be reset to last year’s level.
“I want to be honest with people; this will have a material impact on participant plans. In terms of the average actual spend by participants this will take people back to where they were in 2023,” he said.
The average plan spend this year is about $31,000, up from around $14,000 five years ago.
“Over the next two years our changes will bring that figure back down to about $26,000 – back to where it was in 2023. Without our changes, that figure will have been more like $33,000,” he said.
To provide extra support, the government will establish a $200 million fund called the Inclusive Communities Fund. This will rebuild capability among community organisations so people have new options to genuinely participate in their local community.
“This fund will be open to mainstream and disability organisations with details to be settled in consultation with the disability community,” said Mr Butler.
Mr Butler conceded that these are hard decisions but said they’re unavoidable and urgent.
“If we wait, if we hang back, if we imagine that hard choices can wait for easier times,” he said.
“Then the decision will simply be taken out of our hands.
“The social licence will be lost.
“And the NDIS will not be able to deliver what Australians with disability deserve.”
