Where the NDIS saving actually comes from

Published

13 May 2026

Series

Budget 2026-27 companion

Sources of record

NDIA Q4 2024-25; data.gov.au NDIS Commission

Author

Claude (Opus 4.7) for Patrick Gallagher

The Budget books 36.2 billion dollars in NDIS savings over five years (37.8 billion over the four forward estimates). The Treasurer calls the package "Securing the National Disability Insurance Scheme for Future Generations". The Department of Health publishes the four pillars: fighting fraud and stopping rorts, slowing rapid cost increases, clearer eligibility requirements, delivering quality services and supports. The order in the framing is not the order in the dollars. This finding sets the names against the numbers, against the public data each pillar would draw on.

Companion to The 2026-27 Budget, against the data (section 7), which establishes the arithmetic: at roughly 7.2 billion dollars per year of slower Scheme growth, the dominant share of the saving cannot come from fraud elimination alone. This finding asks the harder question. Where does the dominant share come from, and what does the evidence the agencies themselves publish say about each of the four named levers?

The shape of the saving, in scheme math

The NDIS reached 739,000 participants and 46.3 billion dollars in annual spending in the year to 30 June 2025. Annual growth in Scheme costs was 10.8 per cent that year. The previous Coalition government's last full year recorded growth of 23 per cent. In April 2023, National Cabinet agreed an NDIS Financial Sustainability Framework with an annual growth target of 8 per cent by 1 July 2026.^1,2

2021-22 NDIS growth (last full Coalition year)

23%

2024-25 NDIS growth (Albanese, Q4 24-25)

10.8%

National Cabinet target by 1 July 2026

8%

2024-25 Scheme expenses

$46.3 billion

2024-25 result vs prior projection

$520 million below

The 36.2 billion dollar number is the present-value of slower Scheme growth over five years against the prior projection. The Scheme still grows every year of the forward estimates. The question this finding tests is not whether growth slows. It is which of the four reform pillars is doing the work that produces the slowing.

1. The pillar the speech leads with carries the least weight

Pillar one in the Department of Health's published framing is "fighting fraud and stopping rorts".³ The NDIS Quality and Safeguards Commission publishes the full record of its named compliance actions on data.gov.au. The CSV released 5 May 2026 contains 3,178 published decisions from 25 January 2019 to 12 May 2026.⁴ Counting them gives the shape of what the lever has actually delivered.

Compliance notices (procedural orders)

2,044

Banning orders (in force: 290; permanent: 276)

726

Revocations of registration

311

Refusals to re-register

54

Suspensions of registration

38

Enforceable undertakings

5

Total

3,178

The recent growth is real but it is mostly compliance notices, which are process orders requiring providers to engage approved auditors or fix policies. Strong removal actions (bans, revocations, refusals, suspensions and undertakings) total 1,134 across the whole window. They grew sharply from 2021 to 2024, then plateaued. Strong actions in 2025: 431, up 36 per cent on 2024. Strong actions in 2026 to 12 May: 111, down 21 per cent on the same period in 2025.⁴

The standing permanent-ban footprint is 276 individuals and entities. The provider universe the Commission regulates totalled more than 269,000 providers supporting 739,000 participants at 30 June 2025.¹ Most banning orders (87 per cent) target individual workers, not incorporated entities. The Commission's regulatory posture shift from "educational" to "enforcement" was already recommended by the Disability Royal Commission (Final Report, September 2023) and adopted by the Commission through 2024-25, eighteen months before the Budget.⁵

2. The pillar that does most of the work is the one the speech does not name

The Thriving Kids program is a Commonwealth and state initiative announced alongside the NDIS reforms but treated as a separate line. The Commonwealth commits 4 billion dollars over five years (matched by states under bilateral agreements) to deliver foundational supports outside the NDIS for children aged 8 and under with developmental delay or autism assessed as having low-to-moderate support needs. Rollout begins no later than 1 October 2026 and is at scale from 1 January 2028. NDIS access arrangements change for this cohort from 1 January 2028.⁶

The size of the cohort the program is designed to receive is the scale of the saving:^1,7

NDIS participants under 8 years of age

~24% of 739,000 (~177,000)

All NDIS participants with autism or developmental delay as primary disability

53%

2024-25 NDIS spending on 0-8 with developmental delay and mild-to-moderate autism

$1.8 billion

Thriving Kids investment (Commonwealth + states, 5 years)

$4 billion

The arithmetic is direct. The Commonwealth and states will spend approximately 4 billion dollars over five years on foundational supports outside the NDIS. The NDIS currently spends approximately 1.8 billion dollars a year on the cohort those foundational supports are designed to receive. If the migration proceeds as designed, the larger spend (inside NDIS) reduces and the smaller spend (outside NDIS) expands. The net effect is a structural reduction in NDIS expenditure, partially offset by a structural increase in foundational-supports expenditure.

The framing matters. The 2024-25 spend on this cohort is the single largest controllable line item among the four pillars. Functional-capacity assessments at entry, which take effect from February 2027 for new applicants and April 2027 for existing participants, are designed to channel future children with mild to moderate developmental concerns into Thriving Kids rather than the NDIS.³ A defensible policy. It is not the framing the speech offered.

3. The reform that most affects existing participants is the budget reset

Inside the Department of Health's pillar two ("slowing rapid cost increases"), the consequential mechanism is the reset of participant budgets for social, civic and community participation, and capacity-building daily activities, from 1 October 2026.³ The Government's text reads:

"Re-set participant budgets for social, civic and community participation and capacity building daily activities."

The mechanism affects existing participants, not only new entrants. Plans currently in force will be progressively reset under existing planning arrangements ahead of the introduction of new framework planning. A 200 million dollar Inclusive Communities Fund is established alongside, to fund community organisations to host the kinds of participation activities that had previously been paid for inside individual NDIS plans.³

Previous attempts to tighten Scheme access have produced political retreat. The closest precedent is the proposed Independent Assessments model in 2021, which would have made access to the NDIS contingent on a standardised functional assessment by an externally contracted assessor. The proposal was shelved in April 2021 following sustained disability community campaigning that argued the assessments would be dehumanising and inconsistently applied. The 2026 reform's functional-capacity assessment is a redesigned successor to that model. The 1 October 2026 implementation date for the budget reset, and the 1 February 2027 commencement of new eligibility settings, both sit before the next federal election (due by mid-2028) and are the political tests of whether the reform holds.¹¹

4. Pillar four is a market restructure, not a tightening

Pillar four ("delivering quality services and supports") is the most operationally significant change for the provider market. The Government will commission a panel of plan management providers (from 1 October 2027) and a new commissioned support coordination function (from 1 July 2028).³ Plan management and support coordination are services NDIS participants currently choose from among thousands of providers. Commissioning routes that demand through a smaller government-procured panel.

The provider market the change reshapes was, at 30 June 2025, more than 269,000 providers (registered and unregistered combined).¹ The structural implication is consolidation among plan managers and support coordinators in particular. Whether this delivers savings depends on the commissioned panels operating at materially lower per-participant cost than the current arrangement. The Budget books the saving; the operating numbers do not yet exist.

5. The blueprint is two 2023 reviews, not this Budget

Three pieces of public infrastructure pre-date the 2026-27 Budget. The 8 per cent growth target was agreed by National Cabinet in April 2023.² The Disability Royal Commission Final Report was handed down in September 2023 and recommended the shift from educational to enforcement compliance.⁵ The Independent Review of the NDIS, co-chaired by Bruce Bonyhady and Lisa Paul, handed down its Final Report in December 2023 with 26 recommendations including foundational supports outside the NDIS and a shift from diagnosis-based to functional-capacity-based access decisions.⁸

The four pillars in the Department of Health's "Securing the NDIS for Future Generations" publication are the implementation of those three pieces of work. The Budget operationalises a reform program already committed to. The framing of the saving as a fresh policy intervention is partial. The framing of it as the visible end of a multi-year reform sequence is closer to the record.

1. 2020
   Independent Assessments model proposed. Would have made NDIS access contingent on a standardised functional assessment by an externally contracted assessor.
2. April 2021
   Independent Assessments shelved after sustained disability community campaigning. The functional-capacity assessment in the 2026 reform is a redesigned successor to that model.
3. April 2023
   National Cabinet agrees an NDIS Financial Sustainability Framework with an 8 per cent annual growth target by 1 July 2026.
4. September 2023
   Disability Royal Commission Final Report. Recommends the NDIS Commission shift from educational to enforcement compliance.
5. December 2023
   Bonyhady & Paul Independent Review Final Report (26 recommendations). Foundational supports outside the NDIS; functional-capacity-based access decisions.
6. 13 May 2026
   2026-27 Budget books $36.2 billion in NDIS savings over five years. Operationalises the 2023 reform program.

What "Securing the NDIS for future generations" actually does

Read across the five sections above, the package is a redefinition of the NDIS, not a preservation of it. The Scheme narrows in three directions at once.

It narrows at entry, through functional-capacity assessments that replace diagnosis lists from 1 February 2027. It narrows at the boundary with mainstream and state systems, so that children with developmental delay or mild-to-moderate autism move to Thriving Kids from 1 January 2028. It narrows for existing participants, through category-budget resets for social, civic, community and daily-activity supports from 1 October 2026, and through plan management commissioning from 1 October 2027.

For Australians with permanent and significant disability, the Scheme remains. For the cohort whose growth made the Scheme fiscally unsustainable on a 23 per cent trajectory (children with developmental delay and mild-to-moderate diagnoses), the Scheme will not be the primary system of support. This is defensible policy. It is also a meaningful change in what the NDIS is. The speech offered "securing for future generations". The substance is closer to "redefining for future generations".

What this finding does not establish

It does not establish that the 36.2 billion dollar saving will materialise. The dependencies are real. Thriving Kids must deliver supports parents and children find adequate, or families will press to remain on the NDIS. Functional-capacity assessments must be designed and applied without producing the political retreat the 2023 plan-management changes did. Category-budget resets must hold under participant pressure. Commissioned plan management must operate at lower per-participant cost than the existing market.

It does not establish a per-participant or per-postcode dollar impact. The geography of who is affected is treated in the companion finding on need-for-assistance.⁹ The arithmetic of the headline saving is treated in the main Budget finding.¹⁰

It does not test whether the policy is good. The package may improve outcomes for children diverted to Thriving Kids if those supports are designed and resourced well. It may produce harm if they are not. The point this finding makes is narrower. The framing of the saving as "fraud and rorts" front-loaded is not consistent with the dollar weight of the four pillars. The weight sits in the cohort migration. The speech did not lead with that.