The federal government is pressing ahead with plans to reduce the cost of the National Disability Insurance Scheme (NDIS), which it forecasts will double in ten years without intervention. A government analysis has revealed that Australians with visual impairment, psychosocial disability, and Down’s syndrome will be disproportionately affected by the proposed cuts.
Proposed Cuts and Their Impact
The government aims to slash social, civic, and community participation (SCCP) budgets by 50% by the end of 2027. These budgets are designed to reduce isolation and build independence for NDIS participants. The Office of Impact Analysis (OIA) report warns that those with visual impairment will be hit hardest, with an average of 34% of their plans allocated to social participation, equating to a six-month budget of $13,233. For participants with psychosocial disability, about 30% of funding typically goes to social activities, while for those with Down’s syndrome, it is approximately 28%.
The report acknowledges that some disability types require limited day-to-day support but need significant assistance to access the community. Data shows that around half of all NDIS participants—393,401 individuals—have funding for social activities. The government expects to halve the social budgets of more than 60,000 participants between October and February 2027, with remaining participants facing cuts by the end of next year.
Government Justification
A government spokesperson stated that the 50% reduction on social budgets, along with a 10% cut for daily activities to build capacity, is necessary to return funding to 2023 levels. They added that most participants do not use their full SCCP and capacity building budgets, so the cuts may not affect everyone. However, the report highlights that social activities provide a sense of belonging, increase confidence, build skills and social networks, and reduce isolation. The government chose to reduce this budget because it does not impact health and safety.
Broader Financial Context
The NDIS currently costs $50 billion annually, and without changes, it is projected to reach $117 billion, or 2.4% of GDP, within a decade. Health Minister Mark Butler introduced changes aimed at achieving a national cabinet target of 5-6% annual growth. Federal budget papers indicate that these changes should save $36.2 billion and bring growth down to an average of 3.6% until 2030. The number of participants is expected to drop to around 600,000 from the current 774,456 as of March 2026.
Advocacy and Concerns
Megan Spindler-Smith, acting chief executive of People with Disability Australia, condemned the cuts as heartless, especially given the rising cost of living. She stressed that supports needed to leave the house, work, and study are being cut without alternatives. The OIA report also considered more drastic options, such as a blanket 10% cut across all support categories or freezing budgets at 2025-2026 levels, but these were not recommended. The department warned that significant cuts could lead to regression in daily living skills, increased risk of injury, neglect, social isolation, and reduced ability to work and engage in community activities, undermining the NDIS’s objectives.
