In what’s likely to become a controversial report, the Grattan Institute’s delivered a stark warning: the National Disability Insurance Scheme is at risk of becoming unsustainable unless urgent changes are made.

In a major report released today the respected think tank has called for a fundamental rethink of how disability supports are delivered in Australia — including stronger boundaries around who the NDIS is for, a radical shift in how supports are delivered, and a new National Disability Agreement to unite fractured systems.

“More spending hasn’t delivered better results,” the report concludes, warning that while the NDIS now serves nearly 650,000 people, it excludes most Australians with disability, and too much of the scheme’s funding is going to people whose needs might be better met elsewhere.

Without new money, Grattan argues governments can make the scheme more sustainable — and more effective — by building a strong, non-NDIS support system outside the scheme’s core. This means fully funding “foundational supports” using existing NDIS contributions, not new investment.

The analysis will be welcomed by the federal government, which has promised to moderate NDIS growth to 8% per year by 2026 but is facing increasing flack as it begins to implement cuts as changes have sparked concern among service providers, participants, and advocacy groups.

The Budget projects nearly $1 billion in immediate savings from the NDIS for the upcoming financial year and measures already announced reflect the government's efforts to curb the rapid growth of the NDIS.

With no changes to the scheme, this is projected to cost $52.3 billion in 2025–26 and up to $63.4 billion by 2028–29. While aimed at ensuring the scheme's sustainability, the changes have prompted calls for greater transparency and the establishment of robust alternative support systems to prevent vulnerable individuals from falling through the cracks.

According to Grattan, however, even these measures will not be enough. Without structural change, costs will continue spiralling toward $58 billion a year by 2028, risking the sustainability of the scheme for those who truly need it.

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Grattan’s plan to shift billions — and help more disabled Australians.

At the heart of Grattan’s proposal is a call to rebalance the system: tighten NDIS access, reform how budgets are set, and shift funds into broader foundational supports that catch people before they fall through the cracks.

Four major recommendations drive the report:

Clarify access: End automatic eligibility based on diagnosis, remove early intervention requirements from the NDIS Act, and replace them with targeted, evidence-based services outside the scheme.

Reform planning: Introduce a consistent assessment of functional needs to set fairer budgets and allow participants to plan with support from peer-led organisations, not just the NDIA.

Fund foundational supports now: Deliver targeted help — particularly for children with developmental delay and people with psychosocial disability — from within the existing budget. This would avoid reliance on future top-ups and ensure broader reach.

Build system-wide accountability: A new National Disability Agreement should define how governments work together and jointly commission services — especially those missing outside the NDIS.

If implemented, Grattan estimates the plan would reduce projected NDIS payments by $12 billion over 10 years and save a further $34 billion by avoiding the need for new foundational support funding. Growth could be brought down to below 7.5% by 2034, compared to the current unsustainable trajectory.

But the report also sounds a warning: unless governments act now — and act together — they risk entrenching a two-tiered system, with inadequate support for most Australians with disability and cost blowouts for those inside the scheme.

These have included a reduction in travel reimbursements which has particularly impacted service delivery in rural and remote areas. There has also been an increase in reassessment letters sent to NDIS participants, leading to some individuals losing access to the scheme. Health professionals report that essential supports, including nutrition and therapy services, are being denied.

Delays in Implementing Foundational Supports: The rollout of "foundational supports," intended to provide services for individuals no longer eligible for the NDIS, has been delayed until at least December 2025. This postponement has left some individuals without necessary support during the transition period . theaustralian.com.au +1 cyda.org.au +1

With the foundational supports rollout delayed until at least December 2025, the clock is ticking. The NDIS can be saved, Grattan insists, but only if leaders stop tinkering at the edges and start reshaping the system’s core.