A new report reveals that Australia’s NDIS is falling short for many adults living with psychosocial disability, leaving more than 130,000 people without the support they need — even as the scheme spends billions annually on mental-health–related supports.

Support Gap Is Large and Growing

Despite nearly A$6 billion spent last year on 66,000 participants with psychosocial disability, a majority of adults with significant psychosocial needs receive no help — neither through NDIS nor through other mental-health provision.

That means a substantial portion of the population with serious mental-health impacts — including functional impairments, difficulty with daily living, social isolation or housing instability — are effectively excluded from the support system. The absence of appropriate, accessible support increases the risk of homelessness, hospitalization, and escalating crisis, the report warns.

Evidence of Inequity and Unmet Need

According to the analysis, outcome indicators show severe systemic inequities: the number of people with psychosocial disability within the NDIS remains roughly stable at around 65,000 — about 9% of all participants — but eligibility rates are much lower for this group than for other disabilities.

Moreover, the system shows what many advocates call a “postcode lottery.” Access to psychosocial supports outside the NDIS — through state or community-based mental-health services — varies dramatically depending on location. In many areas, such supports are underfunded or virtually non-existent, leaving people with significant needs without recourse.

Why So Many Are Left Out

One major issue is that the NDIS remains oriented toward individuals with high-support needs requiring intensive, individually funded packages. The funding is heavily concentrated: people who do receive support typically have large packages — on average around A$87,000–A$89,000 per year.

This concentration means that many with psychosocial disability who may need lower-intensity, recovery-focused supports — such as outreach, community connection, housing support, or social participation services — do not qualify for or are not offered appropriate funding. The current model misses whole segments of the population whose needs are serious but don’t fit the high-support package threshold.

What Experts Suggest: A Dual-Tier Support Model

The Grattan Institute argues for a broader, more inclusive approach: establishing a National Psychosocial Disability Program that operates outside the NDIS, funded from within the existing disability budget. This program would provide non-individualised, recovery-oriented supports to those who currently miss out — effectively bridging the gap between NDIS-eligible participants and people with unmet needs.

Such supports could include structured community-based services, individual support facilitation, social inclusion programs, housing and tenancy supports, and other recovery-focused interventions. The idea is to complement, not replace, the NDIS — ensuring that no one with significant psychosocial disability falls through the cracks.

The Stakes: Why This Matters

The consequences of leaving people without support are severe. Those without adequate psychosocial support face higher risks of hospitalisation, homelessness, involvement with emergency or justice systems, and poor long-term health and social outcomes.

Moreover, the inefficiency of the current system — providing intensive packages to a relatively small number while leaving many without any support — may not be sustainable or effective in improving overall wellbeing across the population. Experts argue that redirecting some of the existing expenditure into a more inclusive model could yield better outcomes without requiring additional funding.

Looking Ahead: Calls for Reform

As attention turns to the ongoing pricing review and reform discussions within the NDIS and mental-health spheres, advocates and policy experts are urging governments to act. The proposed dual-system support model could spread access to psychosocial support more equitably and deliver better long-term results — for individuals, communities, and the broader public system.

The report’s message is clear: Australia must stop leaving its most vulnerable behind. Without reform, thousands more people with significant psychosocial disabilities will continue to miss out — with consequences that weigh heavily on them, and on society as a whole.