The NDIS and the fastest-growing line in the budget

Cooper turns nine this year, and for the first time in his life his mother can leave him with someone else for an afternoon and know he will be safe. Cooper has autism and an intellectual disability significant enough that, before the National Disability Insurance Scheme reached his part of regional New South Wales in 2019, his family had almost no funded support beyond a handful of subsidised speech-therapy sessions a year — the "postcode lottery" of state disability services that came before the scheme, where the help on offer depended less on a child's needs than on which state, and which year, a family happened to live in. An NDIS plan now funds a support worker two afternoons a week, an occupational therapist, and — the change his mother describes as the one that actually altered her own life — a handful of respite nights a year that let her sleep.

Cooper is one of several hundred thousand Australians whose lives the scheme has changed since it began as a pilot in 2013. He is also, whether his family thinks of him this way or not, a small part of one of the fastest-growing lines in the entire Commonwealth budget — a program that budget papers, the Parliamentary Budget Office and the government's own independent review have all flagged as heading toward being one of the largest programs the federal government funds (approx.; Budget Paper No. 2, various editions, 2023–2025; NDIS Review, final report, December 2023). Cooper's mother does not experience the National Disability Insurance Scheme as a line in a spreadsheet. The federal Treasurer, and the state treasurers who help fund it, do. This topic is about whether both things can keep being true at once — whether a scheme that changes lives like Cooper's can keep doing that without growing so fast that it eventually crowds out everything else the government funds, or undermines the political support that keeps the scheme itself alive.

What the government did: a scheme built, scaled up, then put under a growth brake

The National Disability Insurance Scheme was legislated in 2013 under the Gillard Labor government, with support from the Coalition opposition of the day — a rare instance of a major new entitlement being built with backing from both major parties. It replaced a patchwork of state-run and Commonwealth-run disability services that a 2011 Productivity Commission inquiry had found were underfunded, inconsistent between states, and left many Australians with significant and permanent disability without any reliable support at all (Productivity Commission, Disability Care and Support, inquiry report, 2011). In its place, the NDIS created something structurally different from almost every other Commonwealth program: an individual entitlement. If a person meets the scheme's disability and age criteria, the National Disability Insurance Agency (NDIA) must fund "reasonable and necessary" supports for them, based on their assessed needs. Unlike most government spending, the NDIS is not capped by an annual budget allocation that runs out — it is demand-driven, which means its total cost is arithmetic: participants multiplied by the average cost of their plans, summed across the country, whatever that number turns out to be.

The scheme rolled out nationally between 2016 and roughly 2020, and its cost grew far beyond the original 2011 costing almost from the start. The Productivity Commission's founding design work estimated a fully rolled-out scheme would cost in the order of $13 to $14 billion a year in the dollars of the day (approx.; Productivity Commission, Disability Care and Support, 2011). Actual scheme costs blew past that figure well before the rollout was complete, and kept climbing after full national coverage was reached — reaching somewhere in the order of $30 billion a year by 2021-22 and around $40 billion or more a year by 2023-24 (approx.; Budget Paper No. 2, various editions, 2022–2024). That the scheme now costs several times its original design estimate is not, on its own, evidence of failure — a scheme built to meet assessed need was always likely to grow as more people were diagnosed, more families learned the scheme existed, and the true scale of previously unmet disability need in Australia became visible for the first time. But the scale and persistence of the overshoot is why every government since the scheme's founding, and this one in particular, has had to treat its cost trajectory as a first-order budget problem rather than a rounding error.

The previous Coalition government had also tried, and failed, to bend the scheme's cost curve. In 2021 it moved to introduce "independent assessments" — a standardised, third-party evaluation intended to replace the more variable process of individual planners and treating clinicians deciding what support a person needed. The disability community and state governments objected strongly, arguing the change was designed around cost control rather than participant need and had been developed without genuine co-design, and the policy was abandoned within months (approx.; public record of the 2021 independent assessments policy and its withdrawal). The episode matters for two reasons: it shows the scheme's cost pressure was already a live political problem well before this government took office, and it shows that reform attempts seen as imposed on the disability community rather than developed with it tend to fail quickly, a lesson visible in how differently the 2023 review process was run.

This government's specific response began in April 2023, when National Cabinet — the Prime Minister and the state and territory leaders, who jointly fund the scheme — agreed to a target of moderating NDIS cost growth to 8 per cent a year by 1 July 2026, down from a growth rate that had been running considerably higher, at times well into double digits and in some years past 20 per cent (approx.; National Cabinet communiqué, 3 April 2023). Alongside the target, the government commissioned an independent review of the scheme, co-chaired by disability policy figures Bruce Bonyhady and Lisa Paul, which reported in December 2023 under the title "Working Together to Deliver the NDIS." The review made 26 recommendations aimed at making the scheme more consistent, better targeted and financially sustainable, while explicitly reaffirming it should remain a needs-based entitlement rather than a capped, rationed program (NDIS Review, final report, December 2023). The government then legislated the first tranche of reform in 2024, through the National Disability Insurance Scheme Amendment (Getting the NDIS Back on Track No. 1) Act 2024, which introduced a defined list of what counts as an "NDIS support," a more structured needs-assessment process for setting plan budgets, and stronger powers for the NDIA to manage plan variations and pursue non-compliant claims. National Cabinet separately agreed, in principle, to build a new layer of "foundational supports" outside the NDIS — funded jointly by the Commonwealth and the states — for people with disability who do not meet the scheme's threshold but still need help, intended to relieve some of the pressure that had been pushing people toward NDIS eligibility as the only door available (National Cabinet communiqué, 2023–2024, approx.).

The evidence: a program outgrowing everything around it

The clearest way to test whether the NDIS is on a sustainable trajectory is to compare how fast it has grown against how fast the economy funding it has grown, and against how large it is projected to become if that gap persists. On both counts, the scheme stands apart from almost every other line in the federal budget. Annual scheme costs rose from roughly $22 billion in 2019-20, the year national rollout was substantially completed, to somewhere in the order of $40 billion or more by 2023-24 — an increase of well over 80 per cent in four years, at a time nominal GDP, the size of the whole Australian economy in dollar terms, grew by roughly a third over the same period (approx.; Budget Paper No. 2, various editions, 2020–2024; Australian Bureau of Statistics, National Accounts, various releases, approx.). Budget papers for 2025-26 put annual scheme costs above $50 billion (approx.; Budget Paper No. 2, 2025-26, approx.), and both Treasury and the Parliamentary Budget Office have separately flagged that, absent the reforms working as intended, the scheme's trajectory could reach somewhere in the order of $90 billion to $100 billion a year by the early 2030s — a scale that would put it in the same order of magnitude as some of the largest existing Commonwealth programs, including Medicare and the Age Pension (approx.; Parliamentary Budget Office, NDIS costing and fiscal risk analysis, 2023–2024; Treasury, Intergenerational Report 2023, August 2023). Put another way, the Commonwealth's other major open-ended health program, the Medicare Benefits Schedule, cost in the order of $30 billion or so a year in rebates across roughly the same period (approx.; Budget Paper No. 2, various editions) — meaning a scheme that did not exist before 2013 had, within about a decade, already grown to cost more than the four-decade-old Medicare rebate system, and was still growing faster.

Participant numbers tell a similar story from a different angle. The scheme had roughly 650,000 active participants by the mid-2020s, up from around 460,000 when national rollout was declared substantially complete in 2020 (approx.; NDIA Quarterly Report, various editions, 2020–2025). Some pre-reform projections had participant numbers climbing past a million by the early 2030s if growth continued unmoderated (approx.; NDIS Review, final report, December 2023). Critically, rising participant numbers are only part of the cost story: the NDIS Review and successive NDIA quarterly reports also found that average package costs per participant — how much the typical plan is worth — had themselves been rising faster than inflation or wage growth in many years, meaning the scheme was not just serving more people, it was spending more on each of them, for reasons that included plan design, provider pricing and inconsistent needs assessment as much as clinical need (approx.; NDIS Review, final report, December 2023).

The funding arrangement matters for where the fiscal risk actually lands. Under the scheme's original intergovernmental funding agreement, state and territory contributions are largely fixed or indexed to a set formula, while the Commonwealth effectively underwrites most of the cost growth above that base — meaning that when the scheme grows faster than expected, the overwhelming majority of the extra bill falls on the federal budget, not the states that jointly govern the scheme alongside the Commonwealth (approx.; National Disability Insurance Scheme, Intergovernmental Agreement, as amended). That asymmetry is part of why the 8 per cent target was negotiated at National Cabinet rather than announced unilaterally by Canberra: the states have a direct interest in the scheme's design and eligibility settings, but a much smaller direct interest in whether its growth rate is bent, because Commonwealth taxpayers carry most of the consequence either way.

An entitlement that grows faster than the economy funding it is not sustainable by definition — the only real questions are how fast the reckoning arrives, and who ends up paying for it.

Independent scrutiny of the scheme's cost base has also pointed to problems beyond simple volume growth. The government established the NDIS Fraud Fusion Taskforce in 2022, bringing together the NDIA, the Australian Federal Police and several other agencies, after growing evidence that a meaningful, though not precisely quantified, share of scheme spending was being lost to fraudulent claims, non-compliant billing and price gouging by some providers in poorly regulated segments of the market (approx.; NDIS Fraud Fusion Taskforce, public reporting, 2022–2024). The NDIS Review separately found that "thin markets" — regional and remote areas, and specialised support categories, where too few providers compete for participants' funding — allowed some providers to charge close to the NDIA's maximum price caps as a default rather than a ceiling, inflating the cost of care without necessarily improving its quality (approx.; NDIS Review, final report, December 2023). None of this suggests the scheme is dominated by rorting — the overwhelming majority of its cost is legitimate support delivered to eligible participants — but it does mean part of the growth the 8 per cent target is trying to bend is not the "good" growth of catching up on unmet need, and reform aimed only at eligibility and plan size will not fully reach it.

How Australia's approach compares with what was first modelled, and with other countries

Part of what makes the NDIS unusually hard to benchmark is that there is no close overseas equivalent to compare it against. New Zealand's Accident Compensation Corporation covers injury, not disability broadly, and is funded by a dedicated levy rather than general revenue. The United Kingdom and Canada both provide disability support mainly through means-tested welfare payments and capped local-government social-care budgets, not an individual, needs-based entitlement funded nationally and free of an annual spending cap (approx.; OECD and comparative disability-policy literature, various, approx.). Australia's scheme is, by international standards, unusually generous in principle and unusually exposed to open-ended cost growth in practice — a genuine policy trade-off rather than a design flaw, but one that means the normal budget discipline that comes from a fixed annual allocation, the kind that constrains most other Commonwealth programs including Medicare's schedule of rebates, simply does not apply to the NDIS in the same way. That is precisely why an administrative growth target, rather than a legislated spending cap, is the tool the government has reached for: a hard dollar cap would collide directly with the entitlement model the scheme was built on, and no government of either major party has proposed one.

Participant experience as its own kind of evidence

The scheme's cost data is not the only evidence worth weighing, because how the scheme feels to the people inside it is itself a signal about whether the growth is buying what it should. The NDIS Review documented long-running problems with plan-approval wait times, high staff turnover among NDIA planners, and a "please explain" culture in which participants had to justify already-approved supports repeatedly rather than receiving a plan they could rely on for its full duration (approx.; NDIS Review, final report, December 2023). Complaints to the Commonwealth Ombudsman about the scheme rose over the years following full rollout, and participant satisfaction surveys commissioned by the NDIA itself showed a meaningful share of participants reporting the planning process left them confused about what they were entitled to (approx.; NDIA participant outcomes and satisfaction surveys, various editions). None of this is captured in the dollar figures, but it matters for the sustainability question: a scheme that is expensive and also difficult to navigate is paying an administrative cost on top of its support cost, without necessarily buying better outcomes for the extra money — and it is exactly the kind of inefficiency the 2024 reforms, with their more structured needs-assessment framework, are aimed at reducing, though it is too early in their rollout to say whether they have.

The critique: a brake, not a reverse gear

The single most important fact about the 8 per cent target is what it does not do. It does not cap the scheme's total cost, and it does not shrink it — it only slows the rate at which it keeps getting larger. Even if held precisely at 8 per cent a year indefinitely, simple compounding means the scheme's cost would roughly double in a little over nine years, a trajectory that would still see it comfortably outgrow nominal GDP, which has averaged in the order of 5 per cent a year in recent years (approx.; Australian Bureau of Statistics, National Accounts, various releases). A target that keeps a program growing faster than the economy funding it is real progress against a growth rate that was running two or three times as fast — but it is a brake, not a reverse gear, and the scheme keeps consuming a larger share of the national income even in the reform scenario the government is aiming for.

The reforms also carry a genuine risk of shifting costs rather than eliminating them. Disability advocates and several state governments have separately warned that tightening what counts as an "NDIS support," and moving to more standardised needs assessments, could push some costs of care onto mainstream services the reform was never meant to touch — public hospitals, the justice system, out-of-home care for children, and informal, unpaid family care that does not show up in any budget line at all (approx.; various state government and disability-sector submissions to the NDIS Review process, 2023). The "foundational supports" layer that National Cabinet agreed in principle was meant to be the safety net that stops this cost-shifting from happening, giving people who do not meet NDIS eligibility somewhere else to turn. But by the time the Getting the NDIS Back on Track Act had passed, detailed funding and delivery arrangements for foundational supports between the Commonwealth and the states had not been fully settled — meaning the reform most directly aimed at cutting NDIS growth was moving faster than the reform meant to catch the people it might leave behind (approx.; National Cabinet communiqué and subsequent Commonwealth–state negotiations, 2023–2025).

The 2024 reforms also landed on top of a scheme many participants already found difficult to use, and there is a real risk that a more structured, standardised needs-assessment process — built primarily to make growth more predictable for budget purposes — adds another layer of process to a system whose participants had already told the government's own review they found opaque and exhausting to deal with. A cost-control reform that succeeds on the budget papers but increases the time and paperwork a family like Cooper's has to spend justifying support that has not changed would be a hollow win: it would show up as bent growth in the statistics while making the scheme worse, not better, for the people it exists to serve. Disability advocates have pressed this concern directly in submissions on the 2024 legislation, and it is a fair one; whether the NDIA's implementation avoids it is a test the reforms have not yet had time to pass or fail (approx.; disability-sector submissions on the National Disability Insurance Scheme Amendment Bill 2024).

There is a harder, more structural critique underneath both of these points. The NDIS was designed from the outset as an uncapped, demand-driven entitlement — a deliberate choice, made in 2013 with cross-party support, to remove disability support from the annual budget-bargaining process that governs almost everything else the Commonwealth funds. That design is precisely what gives the scheme its moral force: a family like Cooper's is not competing against other worthy causes for a fixed pool of money each year. It is also precisely what makes an 8 per cent administrative target hard to enforce with the same certainty as a capped budget line, because the lever available to the government is not a dollar figure it controls directly, but a set of eligibility rules, assessment processes and price caps that determine what an uncapped entitlement adds up to in practice. Whether those levers can reliably hold growth to 8 per cent, year after year, through the ordinary pressure of a growing and ageing population and a political system in which cutting individual participants' support is genuinely difficult, is a question the reforms are still being tested against rather than one they have already answered.

The scheme's growth also does not sit in isolation. The NDIS is one of five Commonwealth spending categories — alongside health, aged care, defence and interest on debt — that Treasury's own Intergenerational Report identifies as growing faster than the economy across the next four decades, a pattern examined in full in this site's companion audit of the wider spending trend (Treasury, Intergenerational Report 2023, August 2023). Even a successfully moderated NDIS, growing "only" at 8 per cent a year rather than 15 or 20 per cent, remains the fastest-growing of the five — meaning that on the government's own numbers, holding the target is necessary to protect the rest of the budget, but is not, by itself, sufficient to stop the overall spending base from continuing to outgrow the revenue base that has to fund it.

The 8 per cent target does not shrink the National Disability Insurance Scheme. It only slows how fast it keeps getting bigger.

What the government got right — and the honest caveats

Credit is due in specific, checkable places. National Cabinet's 8 per cent target, agreed in April 2023, was the first time any Australian government had put an explicit, numerical ceiling on the scheme's growth rate — a genuinely harder political act than simply promising to "look at costs," which had been the pattern under successive governments before this one. Commissioning an independent review led by figures with long records in disability policy, rather than an internal Treasury exercise or no review at all, gave the sustainability question a level of legitimacy and sector buy-in that made the subsequent legislation possible; disability advocacy groups broadly welcomed the review's framing, which explicitly protected the scheme's status as a needs-based entitlement rather than treating any scrutiny of cost as an attack on participants. And there are early, though not yet conclusive, signs that growth has moderated since the target was set, with NDIA reporting suggesting annual cost growth easing from the high teens and beyond toward figures closer to, if still somewhat above, the 8 per cent goal (approx.; NDIA Quarterly Report, various editions, 2024–2025) — real evidence, even if not yet proof over a long enough run of years, that the brake is having some effect.

It is also fair, in keeping with this site's standard of separating what a government causes from what it inherits, to say plainly that this government did not create the scheme's underlying cost trajectory. The NDIS was legislated in 2013 under a different government, and its national rollout — the period when costs first blew well past the original 2011 costing — was substantially completed under the Coalition government that held office from 2013 to 2022, which also failed to arrest the growth rate despite years of budget-paper warnings. Some of the scheme's growth, too, is not a policy failure by any government but simply the arithmetic of a country finally providing support to people who had none before — better autism diagnosis rates among young children, families who had never previously sought help learning the scheme exists, and the closing of a genuine historical gap in disability support that the 2011 Productivity Commission inquiry documented in detail. None of that changes the fiscal arithmetic the 8 per cent target is trying to manage, but it is a legitimate part of why the scheme grew as fast as it did, and it is a case this government has been reasonably careful, in its public framing, not to blur into a simple story of waste.

One caveat worth stating plainly concerns the scheme's boundary with the rest of the social-support system. The NDIS generally only accepts new participants before they turn 65, after which age-related support shifts to the aged-care system, examined in a companion audit on this site — a boundary that was always going to be contested as Australia's population ages, since the two systems fund broadly similar kinds of support through very differently structured programs. Reform that tightens NDIS eligibility without a matching, well-funded aged-care and foundational-supports system on the other side of that boundary risks solving a Commonwealth budget problem by relocating it to a part of the system that is, on the evidence examined in this site's aged-care audit, already under its own significant strain. This is not a criticism unique to the current reforms — the boundary has been contested since the scheme's design in 2011 — but it is a genuine, still-unresolved seam in the government's cost-control strategy, not a solved problem.