The NDIS reset: Tough reforms to secure future sustainability

Ahead of the upcoming federal budget, the Hon. Mark Butler announced at the National Press Club today, a series of significant changes to the NDIS, which will impact participants and providers.

Minister Butler emphasised the importance of the NDIS to Australia and the community but stated that the NDIS is currently financially unsustainable, and efforts made to reduce growth have not worked. The poor structural design of the NDIS was blamed. 

“Right now, the NDIS costs too much and is growing too fast, put alongside any comparable Government program. 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. We can’t afford for the NDIS to continue growing at its present rate. But far more importantly, we can’t afford for the NDIS to fail.”

“I want to be honest with people; this will have a material impact on participant plans.  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.”

The Minister also signalled a new tranche of legislative measures that will impact providers.  These changes are designed to improve the quality of supports and fraud controls over the scheme.  

• Enrolling all providers in a digital payments system – this echoes legislation that was passed two weeks ago “NDIS Integrity and Safeguarding” bill.   This measure will require all invoicing and claims to include “visibility of evidence” and target systemic fraud and claiming compliance.
• Expand categories of mandatory registration to include higher risk categories - personal care, daily living supports and supports provided in closed settings.
• Commissioning SIL, Support Coordination and Plan Management - establishing a panel of providers that participants can choose from for these services, rather than the open, unregistered market.   The intention is to commission a panel of plan management providers, commission a new, more efficient support coordination function and commence consultation and design of a commissioning approach for SIL services.  This will address issues with fraud, quality and integrity of support delivery, while also considering provider viability.

There was no discussion of pricing, other than a brief mention that deeper reforms were in progress which included differentiated pricing for registered and unregistered providers.  

The Department Health, Disability and Aging will commence consultation on differentiated pricing for unregistered providers delivering social, civic and community participation, capacity building daily activities and assisted daily living.  

The Department briefing also outlines that responsibility for pricing decisions will be transferred to the Minister for Disability and NDIS.

 What does this mean for participants? 

We anticipate that these announcements will be very distressing and confusing for NDIS participants, as these announcements directly impact scheme eligibility and funded supports, while providing no specifics around which participant cohorts will be affected, and little detail on how, when or why these changes will be implemented.  It is worth remembering that legislation to enact many changes must pass Parliament, so this will be in the media for some weeks, and the actual implementation is likely to change.  

Participants are likely to experience:

• More restrictive processes around plan reviews and plan changes and budgeting– these measures directly target unscheduled plan reviews, will end plan rollovers and stop unspent funds from being rolled over.
• Real cuts to current and future funded plan supports for Community Participation.  The Minister clearly stated that there should be no cuts to essential supports, such as personal care, transport etc.  However, advice issued by Department Health, Disability and Aging, states they plan to “strengthen guidance around what is reasonable and necessary.”
• Participants may find they are no longer eligible for the NDIS – the scheme is proposing to introduce standardised evidence based assessments of a person’s functional capacity, which will be used to determine access to the NDIS.  This means the current eligibility pathways, which use diagnostic lists of eligible conditions, will be removed.
• We note that New Framework planning has been delayed until 1 April 2027, so this will allow more time for the NDIA to consult, test proposed rules and processes and communicate with participants about the changes. 

 What does this mean for providers? 

Many providers have been struggling to run a financially sustainable NDIS business, and there was no relief offered today for providers on that front.  The proposed cuts to the number of NDIS participants, and Community Participation funding will reduce overall service demand for these supports.  As the government re-designs the financial and safeguarding integrity of the scheme, this will result in more compliance and operational impacts for providers.

• Most providers will need to participate in an enrolment system that will require a minimum basic level of identifiable information about NDIS service provision.
• Prepare to upgrade billing systems (digital invoicing and evidence trails, payments at point of service) and face deeper auditing and screening of governance, operations and staff.  
• If you are a provider of community participation supports, prepare and anticipate sudden or changed reductions in funding for participants.  This is an opportunity to review your community participation services and consider the engagement quality and outcomes that your services are providing.  Opportunities from the New Inclusive Communities Fund ($200m) may provide alternatives and offer innovative approaches not currently available through NDIS plan funding.
• If you are a support coordinator, plan manager or SIL provider, stay tuned for information on significant procurement changes for these services – while the Minister stated that these services will move to a commissioning arrangement, there was little detail in the address on how this would be implemented, or any indication of impacts on fees/ revenue.  This was noted to be a measure to combat fraud, while implementing controls that addressed conflict of interest and service quality.  Key dates are outlined below.

 What’s next? 

The Minister will introduce legislation to support these proposed changes when Parliament returns.

• The legislation relating to billing systems, has already passed.
• Legislation to support other measures will be announced shortly.

Key timelines published today include:

• Consultation on commissioning home and living supports will begin in July 2026.
• NDIS claims and payment systems will begin from July 2026 and be rolled out by 2030.
• New plan management approach will be implemented from 1 October 2027, beginning with a 6mth transition period.
• Newly commissioned Support Coordination function will begin from 1 July 2028.
• NDIS QSC reforms will be introduced over next 18 months.
• Expansion of provider registration will commence from July 2027, rolled out by 2030.

If you are concerned about what this may mean for your business, or want to understand how you can navigate these changes, talk to your RSM advisor or ask our NDIS specialist team how they can help.