NDIS growth reset: Minister signals major shift toward “Thriving Kids” and sustainability

Federal Minister for Disability and the NDIS Mark Butler has flagged a significant new phase of reform aimed at slowing the growth of the National Disability Insurance Scheme, arguing the system has “got off the tracks” and must return to its original purpose.

In a wide-ranging interview with Sunday Agenda host Andrew Clennell on 1 February, Butler confirmed that state and territory governments have now agreed in principle to reduce annual NDIS growth to around five to six per cent over coming years, down from the eight per cent target set in 2023.

The scheme, he said, was previously expanding at an “unbearable” rate.

“When we came to Government a few years ago, the NDIS was growing at 22 per cent per year, really putting an unbearable strain on the budget,” Butler said.

He argued that rapid expansion was not only crowding out other public spending but also stretching Australia’s social care workforce.

Rising numbers of children entering the scheme

A major driver of the government’s reform agenda is the increasing number of young children, particularly boys, entering the NDIS.

Butler pointed to figures showing one in six boys aged five to seven are now participants, rising to one in four in some parts of the country.

“Obviously, that was not the intention… We can’t have that number of young boys on a scheme designed for permanent and significant disability,” he said.

The Minister expressed concern about what this trend means for children’s long-term development and schooling, noting that schools are increasingly inundated with therapists providing one-on-one support during the school day.

“We know it’s interrupting their ability to engage in learning activities at schools,” he said.

Thriving Kids: A new alternative pathway

Butler outlined the government’s vision for a new early support model known as Thriving Kids, designed to provide accessible help for children with mild to moderate needs without forcing families into the NDIS.

“Children with more mild to moderate support needs should be on a broad-based, easy-to-access, largely free-of-charge program,” he said.

The Minister criticised the current system for requiring parents to wait long periods for diagnoses, often at significant personal cost, simply to access supports.

“That doesn’t require their parents to wait for ages to get a diagnosis they’ve probably had to pay thousands and thousands of dollars for,” he said.

He noted that the Thriving Kids proposal has been shaped by an advisory group led by respected paediatrician Professor Frank Oberklaid, alongside a parliamentary inquiry co-chaired by Dr Mike Freelander and Dr Monique Ryan.

Budget savings promised, but not yet quantified

Pressed repeatedly by Clennell on how much the reforms would save the Commonwealth budget over five years, Butler declined to provide figures, saying decisions would be made through the formal budget process.

“We haven’t made budgetary decisions about that yet,” he said.

However, he confirmed that lowering growth to five or six per cent would deliver “significant savings” while restoring the scheme’s sustainability.

States increase contributions from 2028

A key element of the new agreement is that states will increase their funding contributions to the NDIS from 2028, addressing what Butler described as an unfair imbalance in cost-sharing.

Originally intended as a 50-50 partnership, the Commonwealth now funds around three quarters of the scheme.

“While the scheme was growing at 22 per cent, states were only contributing four per cent growth… the Commonwealth taxpayer was bearing the vast bulk of the brunt,” Butler said.

He argued that requiring states to carry more responsibility ensures they also have “skin in the game” when it comes to controlling long-term growth.

“Nothing about the disability community without the disability community”

Despite his blunt assessment that the scheme has become unsustainable, Butler stressed that reforms will be co-designed with people with disability and their advocates.

“That’s a core design element… we do nothing about the disability community without the disability community,” he said.

He acknowledged that reducing growth further will be difficult and will take time, involving complex rule changes and consultation.

A turning point for the NDIS

The interview signals a clear direction: the Albanese Government is preparing to reshape the boundaries of the NDIS, particularly for children, while building alternative systems of early intervention outside the scheme.

For participants and families, the coming months will be critical as Thriving Kids develops and as governments begin negotiating what “sustainability” will mean in practice.

The challenge will be whether growth targets can be met without narrowing access for those who genuinely need lifelong disability supports – and whether new programs can deliver on promises of easier, fairer help for children before they reach crisis point.