Health Minister Mark Butler (pictured) has announced what is likely the biggest reset of the National Disability Insurance Scheme (NDIS) since its inception — slashing costs, tightening eligibility, cracking down on fraud and warning that without urgent reform, the $50 billion-plus scheme "will not be there in the future for the Australians who need it most."
Delivering an address at the National Press Club in Canberra today, Butler unveiled a sweeping plan built on what he called "four pillars": fighting fraud and stopping rorts, slowing rapid cost increases, clearer eligibility requirements and delivering quality services to participants.
Under the plan, the NDIS will cost around $55 billion in 2030, rather than more than $70 billion on the current trajectory. On the government's forward estimates, spending will grow at an average of just 2 per cent a year, before returning to 5 per cent growth from 2030.
A hard cap will be placed on social and community participation costs. This stream alone has tripled in five years — from $4 billion to more than $12 billion — and was on track to hit $20 billion by decade's end. Butler said the government will "reset the total cost of social and community participation back to where it was last year and prevent any further runaway growth." Average plan spend will be pulled back from about $31,000 this year to around $26,000 over two years.
The NDIS was originally intended to support around 410,000 people. Today it supports 760,000. Initial modelling will see that number fall to around 600,000 by the end of the decade, instead of growing past 900,000.
Butler will introduce a Bill during the Budget sittings to implement immediate controls, including new functional-capacity eligibility assessments and the removal of so-called "access lists."
Spending on the third parties who manage the majority of NDIS plans and claims will be cut by 30 per cent.
In a separate but related move, the government will roll back the Howard-era higher private health insurance rebate for Australians aged over 65, diverting the funding into aged care.
Butler used sharp language to describe the fraudsters and scammers abusing the system.
"Part of the challenge we face is that the NDIS has become a soft target for shonks and rorters – as well as the worst elements of organised crime," he said, stressing that fraud "is being perpetrated by lowlifes who are scamming both the taxpayer and people with disability" — not participants themselves.
The minister pointed to alarming findings from the Australian Criminal Intelligence Commission, which told a review into NDIS integrity that "criminals are paying cash kickbacks to participants and their families, and sometimes resorting to intimidation and threats of violence towards vulnerable people." Large cash withdrawals, asset purchases and fraudulent financial transactions were common, the ACIC said, including efforts to obscure the origin of NDIS funds.
The scale of the integrity gap is staggering. Butler revealed the National Disability Insurance Agency currently has "no visibility of evidence for 90% of claims that are made by plan managers or by providers directly" — roughly 600,000 claims every day without supporting evidence.
That matches a growing body of public reporting, with a government taskforce estimating up to 10 per cent of claims — around $5 billion a year — are "inappropriate, mischievous or outright criminal", and the NDIS Quality and Safeguards Commission issuing a record 281 banning orders in 2025, up from just 55 in 2022.
The government will expand categories of mandatory registration to cover higher-risk activities — personal care, daily living supports, and supports provided in closed settings — and will enrol providers in a digital payments system so the NDIA "will be able to see evidence from every single provider and ensure that they're paid directly."
Butler was blunt about why the existing market hadn't worked. "Under the market set up by the Coalition, you need more ID to get into a licensed club than to be an NDIS provider," he said. "That will change."
Butler used the speech to concede the government's existing reform effort is falling short.
The Scheme Actuary has advised Government that spending has blown out by $13 billion over the next four years. Without intervention, Butler said, the 8 per cent growth target agreed by National Cabinet in 2023 won't be hit until the end of the decade — rather than this year.
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Earlier this year, National Cabinet agreed a tougher target of 5–6 per cent or lower. The scheme is currently growing at more than 10 per cent.
Butler's diagnosis of why control measures keep failing was unusually candid. The Fraud Fusion Taskforce had identified eight recurring design failures in long-standing government programs that make them susceptible to fraud — "the NDIS has all eight." It also identified seven building blocks for high-integrity programs. The NDIS, Butler said, "has none of them."
Decisions in the Federal Court and Administrative Review Tribunal have further restricted the NDIA's ability to implement changes. The New Framework Planning rollout — previously slated for July this year — will now be pushed back to 1 April next year.
One specific driver is being singled out: unscheduled plan reassessments. 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." The average result is a 20 per cent bump in plan value. The NDIA had committed to getting that rate down from 20 to 15 per cent and, Butler conceded, "hasn't been able to deliver that."
Coming legislation will address those drivers directly. "These cost blowouts simply cannot continue," Butler said. "When Parliament returns, I will introduce legislation to get a grip on these drivers of scheme and plan inflation. This is simply good management, long overdue."
Butler cited updated Talbot Mills research showing community confidence in the scheme continues to slide. While 7 in 10 Australians still agree the NDIS plays a vital role for people with a disability, 7 in 10 also think "it's gotten too large and struggles with dodgy providers". More than 6 in 10 believe the scheme is "actually 'broken'".
"I know this dramatic shift in community sentiment is as troubling to disability advocates and NDIS participants as it is to the Government," Butler said.
To rebuild genuine community options outside the scheme, the government will establish a $200 million Inclusive Communities Fund, open to mainstream and disability organisations, to rebuild capability among community groups that have "withered away" under the NDIS market.
A further $6 billion already allocated by National Cabinet will be directed to "Foundational Supports" — state-delivered programs for people with less significant needs who would no longer qualify for the NDIS.
The human cost of cuts has already been in sharp focus. The recent collapse of the AEIOU Foundation — which ran 11 early-intervention centres for children with autism across Queensland, Adelaide and Canberra — has left hundreds of families scrambling after parents and staff blamed the closure on NDIS package cuts of up to 60 per cent.
Butler's speech implicitly acknowledges that bind. The 'Thriving Kids' reform announced last year will now be extended, with the scheme returning to its "original intent" of supporting people with "significant and permanent disability".
For the insurance industry — which has long watched the NDIS as both a risk and a parallel public-scheme benchmark — the reforms represent the most significant intervention in disability insurance since the scheme's launch 13 years ago.
Butler framed the overhaul in unusually personal terms. "The NDIS is one of Australia's great human rights achievements," he said. "It is a great Labor reform. We want every Australian to be proud of it… But every story about a dodgy provider rorting the system eats away at that. Every example of taxpayer money wasted on fraud erodes trust."
"That's why these reforms are about much more than Budget savings. This is about saving the NDIS itself."
His closing message to anyone hoping the hard calls could be delayed was pointed. "If we wait, if we hang back, if we imagine that hard choices can wait for easier times… the decision will simply be taken out of our hands. The social licence will be lost."
Legislation on the immediate controls will be introduced during the Budget sittings, with the government seeking support from the Opposition and the states — who, Butler noted, "now have much greater funding responsibility for the Scheme after this year's National Cabinet."
The message to providers, plan managers and intermediaries is unambiguous: the NDIS is no longer going to be, in Butler's words, "an ATM for shonks, grifters, fraudsters and crooks."
