The Grattan Institute has released a blueprint for how to rein in the skyrocketing costs of the NDIS while still supporting people with disability. Here’s how.
A new Grattan Institute report has found the scheme costs must be reined in, as it’s grown too big and too fast to be sustainable.
Released late on Sunday, the Grattan Institute report Saving the NDIS: How to rebalance disability services to get better results is a blueprint of how disabled Australians can get the help they need.
Many people with disability say they benefit from the NDIS, “reporting major improvements in their daily living, relationships, health, well-being, social and civic participation, and choice and control,” the report said.
However, it comes at an eye watering cost. The NDIS is one of the one of the biggest pressures on the federal budget. It cost nearly $42 billion in 2023-24 and is expected to cost more than $58 billion by 2028.
“The NDIS is under threat from spiralling costs, with indications that the social contract on which it depends is beginning to fray. The NDIS today has significant problems that governments must address to make the scheme sustainable,” the authors wrote.
Despite these costs, the authors said most disabled Australians don’t qualify for the NDIS and there isn’t much other support.
“The problem is the NDIS has become the only game in town: you either get an NDIS package, or you get minimal mainstream services,” said report lead author and Grattan Institute Disability Program Director, Dr Sam Bennett.
The NDIS was worth saving; the Institute said. But there needed to be major reforms to make that happen.
“Getting necessary reforms embedded is achievable during the current term of federal government, needn’t mean spending more overall, and will yield benefits for our economy, our prosperity, and our diverse society,” they wrote.
Here are their key recommendations.
The NDIS needs firmer boundaries.
Current criteria are vague and complex to administer, the Grattan Institute found. There needs to be strengthened eligibility criteria for when an impairment is considered permanent, and consideration of whether the NDIS is the most appropriate service for an applicant’s needs.
They also need to remove diagnosis-based access lists. These lists meant certain diagnoses were fast-tracked for entry, and meant applicants have very different eligibility experiences and determinations. They’ve also contributed to higher-than-expected numbers of people in the NDIS.
For example, children with autism. Autism accounts for 29% of people on the NDIS and a lack of other service options may have also contributed to higher-than-expected numbers of diagnoses.
“Recent research indicates that the roll-out of the NDIS from 2013 to 2021 resulted in a total reported child autism prevalence that was 32% higher compared to what child autism rates would have been if the NDIS had not been introduced. Strikingly, this research points to the NDIS being responsible for almost half (47%) of new diagnoses since 2013 among children aged up to 14,” the authors wrote.
By removing the lists, it becomes the requirement that functional capacity, not diagnosis is the main consideration for eligibility.
The institute also recommended early intervention requirements to be removed, “so that eligible people, especially children with developmental delay or disability, get access to evidence-based, early intervention delivered more effectively and efficiently as targeted foundational supports”.
They should improve claims management to make NDIS plans fairer
The authors recommended expediting NDIS rule changes to support the adoption of a new needs assessment and budget setting process by July 2026, to incorporate an assessment of function.
They suggested more people should have the freedom to plan support from a wider range of places, including from disabled people’s organisations, and give people a way to use their NDIS funds more creatively and flexibly.
“The evidence is clear that the most successful individualised funding schemes enable people to be creative and flexible, and make their own decisions day-to-day about how they are supported,” they wrote.
They also highlighted the importance of innovation and flexible funding, particularly for those with profound disability who need extensive, high-cost help. About 40% of NDIS costs cover supports for about 7% of people in the NDIS.
“The average payment to someone who has a profound disability and needs Supported Independent Living (SIL) funding for supports at home is $430,500 per year, as of 31 March, 2025. Since 2023, total payments to people with SIL funding has increased by 19% per year on average, and the number of people getting SIL funding has increased by 8% per year on average,” they wrote.
“There are better and cheaper alternatives to group homes, but they are not widely available, in part because NDIS policies are too rigid and its funding too inflexible.”
One alternative which is working well overseas is called Individualised Living Arrangements (ILAs).
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“Recent research that also indicates that ILAs can cost between 9% and 45% less per person, per year than a comparable group home arrangement,” the report said.
“This research indicates that government could achieve a saving of about $260 million over five years if 500 more people each year chose to be supported in these arrangements rather than in group homes.”
Use the NDIS budget to fully fund foundational supports
The federal government and the states and territories agreed to a 50/50 funding split for foundational supports however, it’s not yet clear how that will be met. These tier two supports are tied up with public hospital negotiations.
However, the Grattan Institute said this shouldn’t be so.
“It is unrealistic and unnecessary for progress on foundational supports to be tied to negotiations on new matched funding from federal and state and territory governments,” the authors wrote.
The Grattan Institute report suggests a modest proportion of individualised funding should be transitioned into a new, ambitious tier of foundational supports that should be delivered within existing government contributions to the NDIS.
This would be particularly targeted at children with developmental delay or disability where they live, learn, and play in line with early childhood intervention best practices.
Targeted foundational supports for people with psychosocial disability should integrate with existing government services to support their recovery.
“It is possible to make a serious investment in foundational supports without governments having to find new money. This would meet the needs of a wider population of disabled Australians, while continuing to fund a more targeted system of individualised funding for those who need it most,” the report said.
For most children with disability, targeted foundational supports should replace individualised funding.
“Replacing early intervention in the NDIS with targeted foundational supports will enable governments to provide better quality early intervention to a larger group of children within the same funding amount,” they wrote.
Improve government accountability for all disability services
Finally, the Grattan Institute recommended creating a new National Disability Agreement “to provide a whole-of-system view of disability funding responsibilities and the role of mainstream services, brought up to date to reflect responsibilities for general and targeted foundational supports,” they wrote.
This would enable the NDIA to operate more effectively as an insurer and establish a system-wide Sustainability Roadmap covering all services under the new Agreement.
Multi-lateral governance arrangements in each jurisdiction will help make the NDIS more sustainable and complement existing services to meet local needs.
“A new National Disability Agreement is needed to formalise roles and responsibilities, strengthen accountability, and ensure that the significant public investment in the NDIS delivers the best possible results within existing budget settings,” they wrote.
The blueprint estimates NDIS payments could reduce by about $12 billion over the next 10 years. Further savings of $34 billion over the same period could also be found by not requiring new money to fund foundational supports.
“Saving the NDIS is not a question of spending more money – our analysis shows the problem lies in how existing funding is allocated,” said Dr Bennett.
“The NDIS is a vital part of Australia’s social fabric. It must be saved. Our report shows how.”