NDIS Funding Cuts to Disproportionately Affect Australians with Disabilities

Proposed NDIS funding cuts for social activities would disadvantage Australians with visual impairment, psychosocial disability and Down syndrome the most, according to government analysis, with the government hoping to slash those budgets by 50% by the end of 2027.

It also forecasts the cost of the NDIS will more than double in 10 years to $117bn, representing 2.4% of GDP, unless significant changes are made to the $50bn program.

The warning signs contained in a new report by the Office of Impact Analysis (OIA) revealed the options the Department of Health considered as it looked at improve the quality and cost of the NDIS.

The health minister, Mark Butler, last week introduced changes he said were critical to achieving the national cabinet’s annual growth rate target of 5-6% in the coming years.

The federal budget papers showed the changes are expected to tip $36.2bn back into Treasury and bring the growth rate down to an average of 3.6% until 2030.

The changes would also result in around 600,000 remaining on the NDIS. There are now 774,456 on the scheme as of March 2026, an increase of 13,014 since December 2025.

The OIA’s conclusions show the move to reduce funding for social, civic and community participation (SCCP) budgets – designed to reduce isolation and build independence for NDIS participants – will impact some disability groups more significantly.

Those most affected, on average, will be people with visual impairment. The modelling showed an average of about 34% of these plans was set aside for social participation, with an average six-month budget of $13,233.

For participants with psychosocial disability, about 30% of funding is typically reserved for social activities while for those with Down syndrome, it is about 28%.

“Participants with certain primary disabilities are expected to be more affected by the reductions to SCCP funding,” the report acknowledged.

“Some disability types require limited day-to-day support for activities of daily living, but require significant support to access the community.”

The data showed around half of all NDIS participants – 393,401 – have funding for social activities. It’s expected the social budgets of more than 60,000 will be halved between October and February 2027, with the remaining participants’ budgets being slashed by the end of next year.

The report noted the benefits of social activities for giving participants a sense of belonging, increasing confidence, building skills and social networks and reducing isolation.

“However, the decision to reduce this budget was preferred over others because it does not impact the health and safety of participants,” it said.

A government spokesperson said the 50% reduction on social budgets, in addition to a 10% cut for daily activities to build a person’s capacity, was necessary to return funding to 2023 levels, adding it would not result in a reduction for all.

“This is because most participants do not use their full SCCP and CBDA [capacity building: daily activities] budget allocations,” the government spokesperson said.

People with Disability Australia’s acting chief executive, Megan Spindler-Smith, last week warned of the effects of making drastic funding cuts to the NDIS.

“It’s heartless to cut supports we need to leave the house, work and study at a time when the cost of living has dramatically increased and alternatives are simply not there,” she said.

The document also shows the Department of Health, Disability and Ageing examined several, even more drastic cost-cutting options that ultimately weren’t recommended to the government.

A blanket 10% cut in every support category for all participants, except those in support independent living and requiring 24/7 care, was considered, as was the option to freeze participant budgets at 2025-2026 levels.

The department found significant cuts to participant supports could result in a “regression” in daily living skills, elevate the risk of injury, neglect and social isolation and ability to engage in work and community activities.

“This would undermine the objectives of the NDIS, including the aim to provide reasonable and necessary supports to participants,” the report found.