A new report by the Grattan Institute argues that Australia’s NDIS has become too large, too costly, and too narrowly focused — and calls for a major rebalancing of disability supports to ensure better outcomes for more people, without increasing total government spending.

The Problem: NDIS Growth Is Outpacing Need

The NDIS has expanded rapidly, with expenditure soaring in recent years. Although growth has slowed recently, the reported pace remains well above what experts consider sustainable. With costs running into tens of billions, the current model — where nearly all supports come via individualised NDIS packages — places extreme pressure on public budgets and risks limiting access for those with unmet needs.

One glaring example: last year approximately 66,000 people with psychosocial disability received NDIS funding — but Grattan estimates over 130,000 additional adults with significant psychosocial disability are left without support from the NDIS or any equivalent system. For many of these people, lack of support can mean homelessness, repeated hospitalisation, social isolation, or crisis situations.

The Proposal: Foundational Supports Plus Targeted Individual Funding

To fix this imbalance, Grattan proposes establishing a new tier of “foundational supports” — publicly funded, community-based disability supports that exist outside individualised NDIS packages. These supports would be available to people who do not qualify for full NDIS funding but still need regular assistance, particularly those with psychosocial disabilities or lower-intensity support needs.

Under the plan:

• The most intensive, long-term individualised funding would remain for people with severe or lifelong disability.
• A portion of existing NDIS funds — a modest share — would be redirected to fund foundational supports.
• Regional bodies such as Primary Health Networks (PHNs) would commission and coordinate foundational supports locally, ensuring national consistency but local delivery.
• Both Commonwealth and state/territory governments would share responsibility for delivering these supports, backed by a clear National Disability Agreement to clarify roles and funding.

This rebalancing would allow many more people to access consistent supports — without requiring extra budget outlay — simply by using existing funding more efficiently.

Benefits: Better Coverage, Less Pressure, More Sustainability

Grattan argues this restructured approach would deliver multiple outcomes:

• Provide support to tens of thousands of people currently excluded — especially adults with psychosocial disabilities — reducing their risk of crisis, isolation, homelessness or hospital use.
• Relieve pressure on the NDIS by diverting people with lower-level needs to more appropriate, lower-cost supports.
• Improve overall sustainability of the scheme by moderating growth — Grattan estimates potential savings of around AU$12 billion over the next decade, plus additional savings by avoiding the need for new funding pools for foundational supports.
• Enhance fairness and equity, by ensuring access is not a “postcode lottery” but based on need and availability of support services.

What Needs to Happen: Policy, Coordination and Commitment

Implementing this plan would require strong cooperation between federal, state, and territory governments. Key steps include agreeing on a National Disability Agreement, redirecting a portion of NDIS funds, establishing commissioning roles through PHNs or equivalent bodies, and building a nationwide network of community-based supports.

Moreover, the shift demands political resolve: the willingness to change long-standing assumptions about how disability supports are delivered, and to prioritize prevention, inclusion and community-based care as much as individualised funding.