The Federal Government has announced a significant reset of the National Disability Insurance Scheme (NDIS), with wide-ranging changes expected to reshape access, supports and system design over the coming years. These reforms signal a shift not only in how the Scheme operates, but in how people with disability, including those with psychosocial disability, engage with support systems more broadly.

In an address to the National Press Club on 22 April 2026, Minister for Health, Ageing, Disability and the NDIS, the Hon. Mark Butler MP, outlined a major reform package for the National Disability Insurance Scheme (NDIS).

See our Media Release: No exit without a safety net

NDIS Reforms

The NDIS reforms will be delivered through four pillars:

1. 1. Fighting fraud and stopping rorts
   2. Slowing rapid costs increases
   3. Clearer eligibility requirements
   4. Delivering quality services and support to participants.

The Australian Government has provided a factsheet, Securing the NDIS for future generations, which provides information on changes and timeframes.

What are the changes?

1. Returning the NDIS to its original intent – to support people with permanent and significant disability through a new functional-capacity model.
• The functional-capacity model will be based on assessing a significant reduction in a person’s functional capacity that impacts their day-to-day living.
• Introduce standardised, evidence-based assessments of a person’s functional capacity to determine access to the NDIS.
• Remove specified diagnoses as the means of entry to the NDIS.
• End plan rollovers and stop unspent funds being used to ensure plans align with reasonable and necessary decision-making.
• Tighten the criteria around unscheduled reassessment requests, however, ensuring people with significant changes in support needs can still request plan variations.

2. This will see 160,000 current participants exit the NDIS. This will mean circa 300,000 are expected to be diverted away from the NDIS over four years, not just those currently in the scheme who may lose eligibility.

The NDIS was originally designed to support approximately 410,000 participants. Current participation stands at 760,000, with projections indicating growth to over 900,000 by 2030 in the absence of reform. The Government has attributed a portion of this expansion to the use of diagnosis-based access lists, which were intended as a temporary mechanism when the scheme was first established.

For the community mental health sector, these changes reinforce existing concerns around access for people with psychosocial disability, who already face significant barriers to entry and declining approval rates.

3. NDIS scheme growth has been progressively reset, falling from around 22% in 2022 to approximately 10% in 2024. The Government has committed to further reducing growth to 5–6% over the medium term, with a short-term “reset period” delivering average growth of around 2% over the next four years. These measures are projected to reduce NDIS expenditure by approximately $15 billion over the forward estimates to 2030.

4. For new entrants to the scheme, eligibility requirements will be tightened based on functional impairment rather than diagnosis, with all current participants subject to reassessment over time.

5. Average plans will be cut by $5,000 by reducing social, civic and community participation and capacity-building daily activities and reinvesting some of that into a new $200m Inclusive Community Fund, noting social and community participation spending tripled over five years but is often used to cross-subsidise underfunded personal care activities.

6. The Government will expand categories of mandatory provider registration to include higher-risk service activities, to be subject to mandatory registration, including:

• Personal care
• Daily living supports
• Supports provided in closed settings

This builds on existing mandatory registration requirements and the Government’s earlier decision to mandate registration for Supported Independent Living providers and platform providers from 1 July 2026.

7. The government has identified that 90% of transactions are currently unchecked, and so along with the expansion of mandatory registration for service providers, a new digital payment system will be established. The Government will introduce a digital payments system under which enrolled providers must submit evidence for all claims. Payments will be made directly to providers through this system, eliminating intermediary payment arrangements identified as high risk.

Increasing mandatory registration for service providers and the digital payments system have been deemed two key initiatives to combat fraud and maintain integrity in the system.

NDIS Review and Final Report

The NDIS Review Final Report identified four key groups for targeted foundational supports to address gaps in the disability support ecosystem and improve outcomes for those ineligible for individualised NDIS budgets. These groups are:

1. Children with Disability or Developmental Concerns (Thriving Kids)
2. People with Psychosocial Disability (next to be established)
3. Adolescents and Young Adults (Aged 9–21)
4. First Nations People with Disability

These targeted supports are part of a broader strategy to:

• Reduce inequity between NDIS participants and those outside the scheme.
• Improve inclusion, accessibility, and outcomes.
• Ensure sustainability of the NDIS by strengthening the broader disability support ecosystem.

Our POSITION

MHCC is calling on the Federal Government to:

• Protect continuity of support for existing participants until a rebuilt system is established and fully operational.
• Take urgent action with state and territory governments to develop and deliver psychosocial supports through Foundational Supports for people outside the NDIS.
• Ensure any new system is co-designed with people with lived experience, carers and the mental health sector.

MHCC stands ready to work with governments to achieve reform that is both fiscally responsible and socially just. Reform must strengthen the mental health service system as a whole. Psychosocial disability supports are not optional add-ons – they are essential to enabling people to live well in the community.

Next Steps

For Government

For MHCC

• MHCC and NDS will release a joint position statement on Foundational Supports for people with psychosocial support needs in NSW.
• MHCC will continue to lead discussions with DCJ/NSW Health and NDS on the development of Psychosocial Supports through the avenue of Foundational Supports.