The 2026-27 Federal Budget: A Deep Dive into the NDIS Reset

Last night, Treasurer Jim Chalmers handed down the 2026-27 Federal Budget, and if you are feeling a bit of Budget whiplash, you certainly are not alone. Now that the dust has settled, the real work begins. The Treasurer made it clear that the NDIS is entering a period of significant change. With a $37.8 billion funding reduction on the horizon and the Securing the NDIS for Future Generations Bill hitting Parliament tomorrow, we have spent the morning digging through the papers to figure out what this means for you.

The Big Picture: Mapping the Cuts

The government’s primary goal is to dramatically curtail the growth of the NDIS. By 2030, the Scheme is now projected to cost $56.5b, which is a significant drop from the $70b that was initially projected. Over the next four years, reducing the cost of the NDIS is intended to save the government $37.8b. Needless to say, that is a wild amount of money.

To give you an idea of how much these goalposts have shifted, take a look at the projected costs from this year compared to last year:

As you can see, the cost of the Scheme is projected to decline slightly over the next few years. However, this is largely due to a massive reduction in the NDIA’s operating budget, which is set to drop from $2.8b this upcoming year to just $1.6b the following year. While the amount spent on actual participant plans increases, it is only a very slight upward trend.

Funding the NDIS Reset

Minister Mark Butler is expected to table the Securing the NDIS for Future Generations Bill tomorrow. These legislative changes to the NDIS Act will be the first step in the Scheme reset. The Budget has allocated $1.7b over five years to implement these changes. Here is where that money is being directed:

• Digital Integrity:
  $358.5m over 5 years to develop a new digital payment and provider enrolment system aimed at reducing fraud and non-compliance.
• The Fraud Fusion Taskforce:
  $280.1m over 5 years to bolster the fight against fraud, including an ongoing commitment of $53m per year.
• Framework Planning:
  $270.1m is set aside for the roll-out of new framework planning due to begin in April 2027.
• Mandatory Registration:
  $182.6m over 4 years to introduce mandatory registration for high-risk providers.
• Support Coordination:
  $49.4m over 4 years to commission plan management and support coordination services.
• The Inclusive Communities Fund:
  $200m over 3 years. This was described as a secondary support system following the cut to social and community participation funding.
• Technical Advisory Group:
  $3.3m in 2026-27 to design a functional capacity assessment tool and advise on NDIS eligibility.

Foundational Supports and Thriving Kids

Since the government announced the target to reduce the number of NDIS participants from 760,000 to 600,000 by 2030, the focus has shifted toward foundational supports outside of the NDIS.

A capped amount of $10b over 5 years has been committed to these supports, shared 50-50 between the Commonwealth and the states and territories. The Thriving Kids program is the centrepiece of this transition, receiving $4b. Key initiatives under this umbrella include:

• Early Identification:
  $126.1m for Medicare-funded 3-year-old health assessments to identify developmental delays or neurodevelopmental differences early.
• Early Childhood Centres:
  $139.7m to facilitate the delivery of Thriving Kids supports within early childhood care and education centres.
• Advice and Support:
  $120.9m for a national parent advice phone line and a national autism information and advice hotline.
• Parental Empowerment:
  $99.5m for programs like Positive Partnerships and a National Digital Child Health Record to help parents support children with developmental concerns.
• Workforce Development:
  $60.8m to support training and initiatives, including a dedicated First Nations workforce.

Staffing Changes: NDIA vs. NDIS Commission

The Budget signals a significant shift in who is running the show. The NDIA operational costs are expected to drop significantly between 2026-27 and 2027-28. Consequently, the number of NDIA staff will decrease by 669 over the next financial year.

In contrast, the NDIS Commission, the regulator, is seeing an increase in funding for the immediate future. Over the next year, the NDIS Commission will gain 191 employees to conduct regulatory and compliance activities.

Miscellaneous Millions

There are several smaller allocations that catch the eye:

• $40.4m over 4 years to strengthen compliance for students with disability loading.
• $14.4m over 3 years to refine the Survey of Disability, Ageing and Carers (SDAC).
• $14.7m over 2 years to fund the NDIS Appeals Program.
• $2.4m in 2026-27 to extend the Care Together program which supports start-ups and cooperatives.

What the Experts Say

The reaction from the sector has been one of concern. People with Disability Australia (PWDA) released a statement suggesting these cuts are a political choice that could leave people without adequate alternatives. Acting CEO Megan Spindler-Smith noted that cutting supports before building the foundational systems is a risky move. You can read the full Media Release from PWDA here.

Stay Informed

We know this is a lot of data to digest. If you want to dive into the raw numbers yourself, you can find the official Budget Documents here or review the Health, Disability and Ageing Portfolio Budget Statements.

The Outcome 4 paper is the one to look for regarding the disability sector. We will be watching closely when the legislation is tabled tomorrow, so stay tuned for further updates.