NDIS Reform 2026: Inside the $37.8B Budget Reset

NDIS Trust Index Research

Published 04 June 2026

About this article: This is an original analysis from the NDIS Trust Index team. Data current as of June 2026.

The NDIS turns thirteen years old this year, supports more than 660,000 Australians, and now stands as the second largest single line item in the federal budget after the age pension. On 12 May 2026, Treasurer Jim Chalmers and Disability Minister Mark Butler used the budget to announce the most consequential reset of the scheme since it launched in 2013. Spending growth will be slashed by $37.8 billion over four years. Up to 160,000 participants will leave the scheme. The average plan will be cut by $5,000 within two years. And for the first time in the scheme's history, an entire cohort of children with developmental delay will be moved out of the NDIS and into state-run services.

This article explains what the reforms are, why the government says they are necessary, what they mean for participants and providers, and how the reforms intersect with what we already see in the data: rising enforcement, geographic hotspots, and a register that still includes thousands of operators with no meaningful public presence.

Why the NDIS matters

The NDIS pays for the daily personal supports, therapies, equipment, transport, accommodation and life-skills training that allow Australians with significant disability to live independently. 26,468 providers are currently registered with the NDIS Quality and Safeguards Commission to deliver these supports across every state and territory. They range from large national organisations employing thousands of workers to sole traders providing a single service in a single suburb. Total scheme expenditure in 2025-26 is $53.8 billion, projected to reach $56.2 billion by 2029-30 under the new growth trajectory.

The scheme matters because the alternative is what existed before 2013: a fragmented patchwork of state and territory disability services that varied by postcode, by diagnosis, and by the strength of a family's advocacy. The NDIS replaced that lottery with an individualised funding entitlement. For 660,000 participants and the families and workers around them, the scheme is not a line item. It is the difference between a contained life and an unlived one.

Why the government says reform is necessary

Spending growth has been the central issue. Under prior settings, the scheme was growing at roughly 10 per cent per year. The Productivity Commission, the NDIS Actuary and successive Treasurers have warned that a 10 per cent compounding annual growth rate is not sustainable for any single program in the federal budget. The government's stated target is to bring growth down to around 5 per cent.

A second concern is provider integrity. The NDIS Commission's compliance and enforcement workload has expanded at an extraordinary pace. In 2019 the Commission issued fewer than 20 enforcement actions across the entire country. By 2025 the figure had passed 1,500. In the first five months of 2026 the Commission already exceeded 920 actions, on pace for the largest enforcement year in the scheme's history. We have analysed this growth in detail in The enforcement surge. The pattern is unambiguous: more compliance notices, more banning orders, more revocations, more refusals to re-register, year on year.

Banning orders are the most serious personal sanction the Commission can impose. They prevent an individual from providing any NDIS support, ever, regardless of which company they register through next. The Commission has now issued more than 720 of them, with the rate climbing sharply since 2024. Our register of banned NDIS workers sets out the scale and pace of this action. The growth in this single category alone signals a regulator that no longer believes the integrity problem will resolve itself.

The third concern is structural. Around 79 per cent of registered providers have no meaningful public presence: no website, a website that no longer responds, or a website with no disability service content. We mapped this baseline in Ghost providers. Many of these operators are sole traders or very small businesses with minimal overhead, which is not in itself a problem. But the same data shows clusters of low-transparency providers in specific postcodes, often the same postcodes that draw most of the Commission's enforcement attention. We mapped those concentrations in The hotspots and again in Payment hotspots.

What the reforms actually change

The reform package is delivered through the NDIS Amendment (Securing the NDIS for Future Generations) Bill 2026. It works across four pillars: tighter eligibility, reduced plan budgets in specific support categories, a new program for children moved out of the NDIS, and commissioned services for plan management and support coordination.

1. Tighter eligibility

Access to the NDIS will be determined by standardised, evidence-based functional capacity assessments. These assessments measure what a person can and cannot do across daily tasks, communication, mobility, and self-care, using a consistent methodology applied by independent assessors. The shift moves the access decision away from the variation that has built up across diagnoses and treating clinicians, toward a uniform threshold. The government's modelling projects that roughly 160,000 people who would have entered or remained on the scheme under previous settings will not meet the new eligibility standard over four years.

2. Reduced plan budgets in two categories

Two budget categories take direct cuts. Social, civic and community participation supports are reduced by 50 per cent. Capacity building daily activity allocations are reduced by 10 per cent. The other components of a plan, including core supports for daily personal activities and assistive products, are not subject to these cuts. The first reductions are scheduled to take effect from October 2026.

3. Thriving Kids replaces NDIS access for under-eights

A new $4 billion program called Thriving Kids replaces NDIS access for children aged eight and under with developmental delay or autism with low to moderate support needs. The funding is split equally between the Commonwealth and the states, and services will be delivered through state systems rather than the NDIS. Children with higher support needs will continue to enter the NDIS in the usual way. The change targets the cohort that has grown fastest within the scheme since 2018 and has generated significant downstream provider growth in early intervention.

4. Commissioned plan management and support coordination

The government will commission plan management and support coordination services rather than allowing participants to choose any registered provider. A consultation will also run on a commissioning approach for home and living supports for participants in Supported Independent Living. These are the categories that have attracted the most compliance attention and the highest concentration of small, recently registered operators. Commissioning gives the government direct contractual leverage over price and quality.

What this means for participants

For most existing participants the impact will be gradual and category-specific. A participant whose plan is heavily weighted toward social and community participation will see a meaningful reduction. A participant whose plan is dominated by core supports for personal care will see less change. Families of young children currently in early intervention should expect a transition into the new Thriving Kids program, with services delivered through state health and education systems.

For people considering applying to the NDIS, the eligibility bar has moved. The functional capacity assessment is now the primary gateway, and the threshold has tightened. Disability advocates including the Queenslanders with Disability Network and People with Disability Australia have raised concerns that the changes will push some Australians off the NDIS toward mainstream services that, in many regions, do not yet exist at the scale required. The government has responded that Thriving Kids and a parallel expansion of foundational supports will fill the gap. The next two years will determine whether that is true in practice.

If you currently work with a provider and want to verify their compliance status before or during these changes, our provider check guide walks through how to use both the Commission's public register and the cross-references we maintain. Our participant guide covers how to read a Trust Index score, what the red flags mean, and how to compare providers in your suburb.

What this means for providers

Plan management and support coordination operators face the most direct exposure. The shift to commissioned services means government will set the terms rather than each participant choosing the cheapest available provider. Providers who have built their business on volume will need to compete on quality measures the government can audit. Providers with strong compliance records and transparent operations will find this easier than providers without.

SIL providers face a parallel consultation. Supported Independent Living is the most expensive category of NDIS support and the one with the highest concentration of complaints. The consultation will look at whether commissioning, with price controls and quality requirements, should replace the current arrangement. Providers in this category should engage early.

For providers in social and community participation, the 50 per cent budget cut will compress demand. Some operators will not survive. Our phoenix watch list tracks providers whose ABN has been cancelled and later reinstated, a pattern that often precedes consolidation events like the one now beginning.

For all providers, the message from the Commission is clear: the enforcement intensity that built up between 2023 and 2026 is not a phase. The Commission's data capability now flags suspicious patterns automatically through ABN, ASIC and payment cross-references. Our provider guide explains how the Trust Index scores work and what an operator can do to lift their score before a regulator looks closely.

Where the impact will land hardest

The geographic distribution of NDIS spending is uneven, and so is the geographic distribution of the providers most likely to be affected by these reforms. Outer suburban areas with high participant populations and large numbers of small, recently registered operators have been the focus of Commission enforcement and will be the focus of the reform's compliance dividend.

In Sydney, the cluster runs through south-western suburbs: postcodes 2200 Bankstown, 2170 Liverpool, 2168 Miller, 2165 Fairfield, and 2161 Guildford. These postcodes appear repeatedly in the Commission's compliance register. The Canterbury-Bankstown LGA contains a disproportionate concentration of low-scoring providers relative to its share of registered operators. Liverpool and Fairfield sit in the same cluster.

In Melbourne, the equivalent corridor runs through the western and northern growth fringe: postcodes 3029 Hoppers Crossing, 3030 Werribee, 3064 Craigieburn and 3023 Burnside. The Hume and Casey LGAs follow the same pattern. In Brisbane, postcode 4300 Springfield stands out. In Perth, 6107 Cannington and 6112 Armadale.

None of these areas are problems in themselves. They are growth corridors with high participant populations and the small-provider market structure that follows. They are also the postcodes where commissioned plan management and tighter eligibility will reshape the local provider economy fastest. Participants in these areas should expect the most visible change in the next 12 months.

Where the data ends and the politics begins

The reform package is the largest fiscal reset of the NDIS since the scheme launched. The Productivity Commission has called for slower growth for years. The Actuary has warned every annual report for half a decade. The Commission's enforcement data shows a regulator that has stopped waiting for the integrity problem to self-correct. From a purely fiscal lens, the package answers questions that policymakers have been asking since 2019.

From a participant lens, the questions look different. What happens to the 160,000 people who no longer meet eligibility? Will foundational supports and Thriving Kids actually arrive at the scale and quality required? Will the savings come from waste or from people who genuinely needed support? These questions are not answered by the budget papers. They will be answered, or not, by the next two years of implementation.

Our role is to keep the data honest. The NDIS Provider Trust Index ranks every registered provider on objective, public-source measures of business legitimacy, transparency, regulatory standing, market signals, and integrity. The compliance section tracks every enforcement action the Commission publishes. The research section sets out what the data shows. Use these tools to verify any provider you are considering, in any suburb, before or during the changes.