NDIS Cost Growth Cap
News of an NDIS Financial Sustainability Framework that landed in May has had many people dependent on NDIS funding concerned about what this will look like for both providers and participants as it is rolled out.
The NDIS growth cap means that the Australian federal government has proposed that growth to the National Disability Insurance Scheme will be limited to 8% per year as of 1st July 2026. The government has also allocated $720 million of investment funds towards improving the National Disability Insurance Agency (NDIA).
As concerning as a growth cap sounds, the idea behind it is a little more complex than meets the eye. Although, even with the growth cap, the new NDIS budget is still the quickest growing item on the agenda, it will require cracking down on fraud and other unnecessary spending within the scheme. These initiatives aim to ensure every single dollar allocated goes towards the best interests and support of everyone eligible under the NDIS.
What is the NDIS cost growth cap?
With the recent NDIS Reboot in motion, the federal government revealed a pivotal development in May that the budget for the National Disability Insurance Scheme is to be capped at 8% growth per year from 2026. The current NDIS growth stands at around 14% a year, so this would be equal to around $74 billion worth of savings over the next 10 years.
According to the NDIS Minister Bill Shorten, the reasoning of this cost growth cap is to ensure the sustainability of NDIS funding, and to secure life-changing support for Australians living with a disability well into the future. It will also help to maintain broad public support. As it stands, the growth of the NDIS has surpassed the spending of Medicare and is therefore unable to withstand the rate of growth it is currently facing.
As well as the announcement of the cost growth cap, the government plans to counter-balance this new budget with $720 million of investments into the NDIA over the next four years. The goal is to elevate the capability, capacity and support systems the agency provides for participants.
There are 10 key initiatives that they aim to address that is believed will help them to stick within the allocated budget while providing solutions to issues the scheme has previously faced:
- Better decision making processes and planner capability for participants with specialised needs.
- Transitioning towards fewer plan reviews and long term plans.
- Improving the approach to lifetime planning and flexibility within individuals plans.
- Better budgeting support for participants and holding plan managers, support coordinators and providers accountable.
- Improving access to supports in remote and First Nations communities.
- Trialling incentivised and blended payments for providers to innovate service delivery and achieve better outcomes.
- Establishing an expert advisory panel for better access to proven evidence-based assistive technology and other supports.
- Implementing preferred provider arrangements to leverage buying power of the NDIS.
- Strengthening guidelines for planners and providing clear minimum standards of evidence for assistance with daily living.
- Cracking down on fraud and non-compliance by allocating 200 staff members in addition to the Fraud Fusion Taskforce to develop business cases.
The aim of this additional funding is to improve the current NDIA workforce so that cuts can be allocated in the right places. This approach ensures the scheme can withstand the growth without challenging the support it offers to participants, as well as contributing to the scheme’s long-term viability and ensuring its sustainability for future generations.
Concerns about the NDIS cost growth cap
The NDIS was originally established as an uncapped, demand-driven scheme, so capping the spending will produce some challenges. As is common with any policy changes, it has been met with some apprehension from the disability community. Acknowledging these concerns is important so that we can proactively address them and make sure we mitigate their potential impact.
Some of the worries that face providers and participants include:
- Making it harder for new participants to prove the need for support.
- The possibility of reduced demand due to exclusionary eligibility policy.
- Diminished quality of service if providers are squeezed financially to produce the same outcomes.
- Smaller budgets for participants, leaving them to make cuts to their supports.
Benefits of the NDIS reform
We are all aware that the continuity of support services is essential for the disability community in Australia and to achieve that, we need an NDIS that is financially sustainable while meeting the needs of participants. As long as the growth cap is carried out with participants’ needs at the heart of the decision making process, and crack downs on fraud and overcharging are sufficiently monitored, then we will continue to have faith in the system.
At Maple Community Services, we stand in solidarity with our participants and will continue to be transparent with information about the NDIS reform as it arises. Read more about the NDIS reboot and what this means for both providers and participants in our recent article.