National Disability Insurance Scheme and Aged Care Reform

The Hon. Mark Butler MP addressed the National Press Club on 22 April 2026 to announce a comprehensive reform package for the National Disability Insurance Scheme (NDIS) and an Aged Care investment package to be delivered through the 2026/27 Federal Budget.

The NDIS reforms are structured around four pillars: combating fraud, controlling cost growth, revising eligibility criteria, and improving service quality.

Legislation addressing immediate cost controls will be introduced during the next parliamentary sitting week, scheduled for Budget week. The NDIS was originally designed to support approximately 410,000 participants. Current enrolment stands at 760,000, with projections indicating growth to over 900,000 by 2030 in the absence of reform. The Government has attributed a portion of this expansion to the use of diagnosis-based access lists, which were intended as a temporary mechanism when the scheme was first established.

Minister Butler has also flagged that the rollout of the New Framework Planning, agreed to by all governments in principle, will be pushed back to July 2027, instead of the initial date of April 2026.

NDIS Reforms

The Government’s NDIS reform package is structured around four pillars, to be delivered through a combination of Budget measures and legislation introduced in the Budget parliamentary session. Together, these measures are intended to reduce projected scheme expenditure from over $70 billion to approximately $55 billion by 2030, while maintaining annual growth in scheme funding.

1. Fraud and Integrity

The Government has identified significant integrity failures within the NDIS payment and provider systems, with structural design deficiencies enabling both opportunistic fraud and organised criminal activity. Immediate measures will address the near-total absence of claims evidence visibility, introduce a digital payments system to bring all transactions within a verifiable framework, and expand mandatory provider registration to higher-risk service categories.

The National Disability Insurance Agency (NDIA) currently has no visibility over evidence supporting approximately 90 per cent of claims submitted by plan managers or providers directly. This equates to approximately 600,000 claims per day processed without supporting documentation. The Government will implement a digital payments system requiring enrolled providers to submit supporting evidence for all claims. Providers will be paid directly through this system, removing intermediary payment pathways that have been identified as points of vulnerability.

The Government will expand categories of mandatory provider registration to include higher-risk service activities. Activities to be subject to mandatory registration include:

• Personal care
• Daily living supports
• Supports provided in closed settings

This builds on existing mandatory registration requirements and the Government’s earlier decision to mandate registration for Supported Independent Living providers and platform providers from 1 July 2026.

2. Cost Control

Expenditure growth across several NDIS support categories has exceeded sustainable levels, with social and community participation spending tripling over five years. The Government will implement a package of measures to reset and control costs across these categories, including changes to participant plan allocations, a reduction in intermediary spending, and legislative controls on unscheduled plan reassessments.

Expenditure on social and community participation supports has increased from $4 billion per year five years ago to $12 billion in the current financial year. Without intervention, this stream is projected to reach $20 billion by the end of the decade.  The Government will reset total expenditure in this category to where it was last year and implement controls to prevent further unmanaged growth.

Inclusive Communities

A $200 million Inclusive Communities Fund will be established to rebuild the capacity of community organisations to provide genuine local participation opportunities. The fund will be open to both mainstream and disability-focused organisations.

Design details will be finalised in consultation with the disability community. Plan Manager and Intermediary Spending Expenditure on plan managers and other scheme intermediaries will be reduced by 30 per cent. The current open-market model for plan management will be replaced with a government-identified shortlist of registered, accountable providers from which participants may choose. This change is intended to improve service quality and reduce the incidence of providers prioritising volume of plans over quality of service.

One in five NDIS plans are currently subject to an unscheduled reassessment each year, with reassessments frequently initiated by plan managers rather than participants. The average outcome of these reassessments is a 20 per cent increase in plan value, representing a significant driver of scheme expenditure growth. Legislation to be introduced in the Budget parliamentary sitting week will address unscheduled reassessments and other identified drivers of plan and scheme inflation.

3. Eligibility

Legislation introduced will look to establish standardised, evidence-based functional capacity assessments as the basis for scheme access. Under the revised framework:

• Access will be determined by a significant and permanent reduction in functional capacity that impacts day-to-day living
• Diagnosis-based access lists will be removed
• Eligibility will no longer be determined by diagnosis alone

Diagnosis-based access lists were implemented as a transitional mechanism at scheme establishment and were always intended to be replaced by an objective assessment tool. The detailed design of the new assessment framework will be developed over the coming months through a Technical Advisory Group, in consultation with members of the disability community and state and territory governments.

Individuals who do not meet revised eligibility criteria will be directed to Foundational Supports, a suite of community-based services for Australians with less significant support needs. National Cabinet has previously allocated $6 billion to Foundational Supports. The Government will work with states and territories to establish these services, drawing on the model established through the Thriving Kids reform.

4. Service Quality

The Government has committed to co-designing deeper reforms with the disability community under the principle of “Nothing about us, without us.” Areas identified for consultation include:

• Design and implementation of the Inclusive Communities Fund
• Commissioning arrangements for Supported Independent Living, plan management and support coordination
• Differentiated pricing arrangements Ongoing implementation of New Framework Planning

Aged Care Announcement

The Australian Government has announced a $3 billion aged care investment package as part of the 2026/27 Federal Budget. The package addresses projected growth in demand for aged care services driven by demographic change, with the number of Australians aged 80 and older forecast to increase by more than 300,000 over the next four years.

Measures include funding for new residential aged care beds, specialist dementia care infrastructure, and changes to personal care support costs under the Support at Home Program. The Government will also redirect funding from the private health insurance rebate for Australians over 65 to partially offset the cost of these investments.

Residential Aged Care Beds

The Government will direct funding toward the construction of new residential aged care beds, with a specific focus on accommodation for supported residents — those with limited financial means. This builds on measures introduced in the Government’s first term that provided construction incentives for beds serving residents with the financial capacity to contribute to accommodation costs.

The funding responds to an independent review of aged care accommodation funding received by the Government. The 2026/27 Budget represents a first response to that review, with recommendations relating to capital assistance for providers under ongoing consideration. Minister for Aged Care and Seniors Sam Rae will lead further consultation with the sector on those outstanding recommendations.

The announced investment is projected to support the construction of an additional 5,000 beds per year.

Dementia Care

The Government will invest over $200 million to establish 20 additional Specialist Dementia Care units, and expand the Hospital to Aged Care Dementia Support Program, supporting older Australians with high-level dementia to transition from hospital settings into residential aged care

Support at Home Program

The Support at Home Program has delivered improvements in package availability, quality and wait times since its introduction. Following community feedback regarding the cost of basic personal care activities, the Government will invest approximately $1 billion to make the following supports available free of charge under the program:

• Showering
• Continence management
• Dressing

These activities will be treated on the same basis as clinical care under the revised program structure.

Private Health Insurance Rebate Adjustment

The Government will reduce the private health insurance rebate for Australians aged 65 and older to the standard rate applicable to all other Australians. The higher rebate for this age group was introduced in 2004 and has not previously been revised.

The Government has framed this change as a matter of intergenerational equity, noting that two households on equivalent incomes currently receive different levels of government support based solely on the age of the insured. Savings generated by this adjustment will be redirected into aged care funding.

Further Information

For more information, please contact Hawker Britton’s Partner Emma Webster at [email protected]

Additional Occasional Papers published by Hawker Britton are available here.