The NDIS isn't being slashed — here's what's happening
Spending goes up every year — growth slowing from 15% to 8%. Plus a new $5B Foundational Supports tier outside NDIS.
NDIS & Foundational Supports — demystified
Does this affect me?
If you've got an active NDIS plan or you're a parent of a kid on a plan — yes, but not immediately. Plans aren't being cut today. The tighter rules kick in at your next plan review, from April 2027 onwards. If you have a child with milder needs (autism level 1, for example), the support pathway may shift from individual NDIS plans into a new layer called Foundational Supports.
Quick test:
- Have an active NDIS plan right now? Nothing changes overnight — you keep your funded supports until your next plan review.
- Parent of a child on the NDIS with mild-to-moderate needs? Your child may move to Foundational Supports / Thriving Kids when the new system rolls out (April 2027+).
- Get the Disability Support Pension (DSP), Carer Payment, or Carer Allowance? All separate, all unchanged.
- New entrant with permanent significant disability? Standard NDIS pathway — just with a more standardised assessment.
- Run a small allied-health practice billing NDIS? Service mix may shift — winners pivot fast, losers don't.
TL;DR
The NDIS is not being cut. Total scheme spending goes up every year — just slower than the unconstrained actuarial trajectory. The $37.8 billion over 4 years is savings against a runaway forecast, not money pulled out of today's plans. Some of those savings get redirected into a new $5 billion Foundational Supports layer (sits outside the NDIS, co-funded with the states, designed especially for kids with milder needs).
If you've got an active NDIS plan today, nothing changes overnight. Tighter assessment criteria bite at plan reviews and new entrants from April 2027 onwards, with phase-in. The genuine debate isn't "are they cutting NDIS" (they aren't). It's "will Foundational Supports actually deliver" — which is a delivery / state co-funding question, not a budget-line one.
Jargon decoder:
- NDIS = National Disability Insurance Scheme — federal program funding individualised support plans for people with permanent significant disability.
- Plan / plan review = your NDIS funding gets reset annually-ish via a plan review; the new assessment rules kick in there.
- Foundational Supports = a brand-new layer of services sitting outside the NDIS, co-funded with state governments. Aimed at lower-intensity needs.
- Thriving Kids = the kids' arm of Foundational Supports — school, community, and allied-health based.
- Functional capacity assessment = the standard test used to work out what supports you need, becoming the same tool across the board from April 2027.
- DSP = Disability Support Pension — a separate income payment from Centrelink, not affected by these NDIS changes.
What's NOT changing
| Item | Status |
|---|---|
| Existing NDIS participants with active plans | Continue to receive funded supports |
| Total NDIS payments | Still growing year-on-year (just slower than the unconstrained projection) |
| Eligibility for permanent significant disability | Unchanged at law level |
| Medicare, hospital, and aged care funding | Separate, not affected by NDIS changes |
| Disability Support Pension (DSP) | Unchanged |
| Carer Allowance and Carer Payment | Unchanged |
What IS changing
The $37.8B figure
Savings are measured against the actuarial growth trajectory with no reform. The NDIS actuary had scheme spending growing by $13.9B over 5 years if nothing changed; the savings measures redirect that growth.
It's a slower rate of growth, not a cut to today's payments. Every year the NDIS pays out more than the year before — just less than it would have without these changes.
New Framework Planning (from April 2027)
- Standardised functional capacity assessments — same tool across all participants.
- Tighter reassessment criteria.
- Plan inclusion criteria pulled closer to disability-related need (not general life support).
Foundational Supports ($5B package)
- A new tier of services sitting outside the NDIS.
- Targets people with lower-intensity needs (particularly kids) who currently sit inside the NDIS but could be better served in a community, school or health setting.
- Co-funded with states — Commonwealth ~$2B, states match ~$3B.
- Thriving Kids sits inside Foundational Supports — kids, often below NDIS age.
State contribution cap
- States' NDIS contribution growth capped at 8% per year from 1 July 2028.
Key dates
| Event | Date |
|---|---|
| New Framework Planning commences | April 2027 |
| State 8% escalation cap commences | 1 July 2028 |
| Foundational Supports rollout | Phased over forward estimates |
What this looks like for participants
Current participant with a stable plan
- Nothing changes overnight.
- At your next plan review the new standardised functional capacity assessment may apply.
- Reassessment is tighter, but the legislative entitlement for permanent significant disability is unchanged.
Child with mild-to-moderate support needs
- Today: may have a small NDIS plan.
- Future: more likely to get support through Foundational Supports / Thriving Kids — school-based, community-based, allied health.
- Goal: faster access, less paperwork, no need to qualify under NDIS criteria.
New entrant with permanent significant disability
- Standard NDIS pathway, just with a more standardised assessment.
Provider economics
- Some providers cop revenue pressure as plan values tighten.
- Foundational Supports opens new state-funded contracts in parallel.
Worked example — Mia, 6, autism level 1 (mild)
Today: NDIS plan worth ~$10,000/yr for early intervention — speech therapy, OT.
Future (Foundational Supports / Thriving Kids):
- Same services via school, community allied health, GP-referred pathways.
- Funded by Commonwealth + State directly, not through an individualised NDIS plan.
- Goal: same level of support (or better), faster access, no plan-management overhead.
Whether it lands or flops depends on state co-funding actually showing up and the services reaching her. The design's plausible; the risk is delivery.
Worked example — Daniel, 34, cerebral palsy, level 2 supports
- Active NDIS plan worth ~$85,000/yr — PCA hours, transport, allied health, equipment.
- April 2027 plan review: new standardised functional capacity assessment kicks in.
- His permanent significant disability still qualifies, supports continue.
- Plan structure may tighten on line items where the disability-related need is weakest (general life support that overlaps with mainstream services).
- Net: same legislative entitlement, tighter line-by-line scrutiny on what's in scope.
Worked example — Provider economics (small allied health practice)
- 70% of revenue from NDIS plan-funded clients.
- Some clients (lower-intensity kids) shift to Foundational Supports — funded through state contracts instead of individual plans.
- Practice has to win state-funded contracts to replace that revenue — different procurement, different cashflow, different overhead.
- Winners: providers that pivot fast and run multiple revenue streams. Losers: providers leaning entirely on individualised NDIS billing.
Myths vs reality
Myth 1: "NDIS is being slashed" — FALSE
Total NDIS payments still grow every year. The $37.8B figure is savings against the unconstrained growth trajectory, not a cut to existing payments. Year on year, NDIS spending still goes up.
Myth 2: "Current participants will lose their plans" — FALSE
Existing participants keep their funded supports. The tightening applies to new entrants and plan reviews, phased in. No retrospective cancellation of active plans.
Myth 3: "Foundational Supports will leave kids worse off" — CONTESTED
A genuine debate, not a myth. Advocates worry that moving kids off individualised NDIS plans into state-co-funded service models could mean less flexibility, longer waits and patchy state delivery. The government argues schools and community delivery will be faster and less bureaucratic. Implementation decides who's right.
Myth 4: "It's just shifting cost to the states" — PARTLY TRUE
Foundational Supports is explicitly co-funded — Commonwealth ~$2B, states ~$3B. National Cabinet signed off on it. States pick up more delivery; whether that's "cost shifting" or "service rebalancing" depends on which side of the table you sit at.
Myth 5: "The DSP is being cut" — FALSE
The Disability Support Pension is a separate income payment, unchanged by NDIS reform. NDIS funds services; DSP is means-tested income.
Myth 6: "Disability advocates support all the changes" — MIXED
Some peak bodies back the rebalancing principle while pushing back on implementation. Others oppose the savings framing outright. CYDA, PWDA and Disability Australia all have nuanced positions — read their material directly.
Myth 7: "Foundational Supports replaces NDIS" — FALSE
Foundational Supports is an extra layer, not a replacement. NDIS continues for people with permanent significant disability who need individualised supports. Foundational Supports handles lower-intensity and earlier-intervention cases.
Myth 8: "Provider rates are being cut" — DEPENDS
Some service categories cop pricing adjustments. Others grow. Each provider's outcome depends on service mix. Treasury hasn't published an across-the-board cut.
Myth 9: "The state 8% cap means states will walk" — UNLIKELY
The cap was agreed at National Cabinet. States keep delivery flexibility within it. Tension during rollout is likely, but the framework is mutually agreed.
Myth 10: "Means-tested NDIS is coming" — FALSE
The NDIS stays entitlement-based, not means-tested. None of the announced reforms bring in means testing.
But what if...
...my child's plan comes up for review in mid-2027 — will it get cut? Maybe trimmed, not cut. The new standardised functional capacity assessment will apply, and line items where the disability-related need is weakest may tighten. The legislative entitlement for permanent significant disability is unchanged. Check the NDIS participant portal at ndis.gov.au/participants closer to your review date for the updated assessment process.
...my kid has autism level 1 — are they being kicked off the NDIS? Possibly moved across to Foundational Supports / Thriving Kids, not cut adrift. The goal is to deliver speech, OT, and early intervention via school and community pathways instead of individual plans — faster access, less paperwork. Whether the new system actually delivers that depends on state co-funding showing up. Worth tracking your state's rollout.
...I'm on the DSP — is my payment being cut? No. The Disability Support Pension is a Centrelink income payment, completely separate from the NDIS. Unchanged. Same for Carer Payment and Carer Allowance.
...I'm waiting on a new NDIS plan — what changes for me? The standard NDIS pathway still applies for permanent significant disability. The assessment tool becomes more standardised from April 2027. Treat this as a process change, not a gate. Services Australia and the NDIA run the eligibility test the same as today until then.
...I run a small allied-health practice billing through NDIS plans — am I about to lose income? Depends on your client mix. If a chunk of your clients are kids with mild needs who shift to Foundational Supports, you'll need to win state-funded contracts rather than individual plan billing — different procurement, different cashflow. Practices that diversify early do better.
...could "means testing" be coming in next? Not from this Budget. None of the announced reforms bring means testing into the NDIS. It remains entitlement-based.
Where genuine debate lives
- Will states actually fund Foundational Supports delivery properly? Biggest single risk.
- Rollout timeline for new functional capacity assessments — the disability workforce is already stretched.
- Provider revenue hit during the transition — small allied health practices most exposed.
- Do kids moved off NDIS plans actually get equivalent support through Foundational Supports? No guarantees on quality.
- Plan values not keeping up with inflation — real buying power has dropped; the reforms don't fix this directly.
A useful filter
When you see an NDIS claim:
- Current participants or new entrants? Current plans keep going.
- Is the dollar figure a cut to today's payments, or a change in growth rate? Almost always the latter.
- Is Foundational Supports being mashed in with NDIS? Separate but related.
- "Cut" or "redirect"? Most of the changes redirect savings into other supports.
Sources
- Theme 05 — Care and Opportunity
- Budget Paper 1, Statement 4: Tax reform & spending
- BP2 Measures Index — Care portfolio
- NDIS actuary scheme projections (publicly available via NDIS.gov.au and NDIS Quarterly Reports)
- DSS Foundational Supports announcements (dss.gov.au)