Albanese government to overhaul NDIS and remove kids with autism in plans to cut growth of scheme

Children with mild autism and developmental delays will be removed from the ballooning NDIS and placed in a new capped program, as the Federal Government tries to rein in cost blowouts.

Health Minister Mark Butler on Wednesday announced as part of an overhaul “tens and tens of thousands” of Australian kids will be pulled out of the system and placed in a “Thriving Kids” initiative.

It will allow for specialised education programs and foundational supports, which will be funded equally by the States and the Commonwealth.

Mr Butler said the Federal Government would be responsible for the program and would lead it with a $2 billion investment.

Mr Butler said including autistic children in the NDIS was driving unsustainable cost blowouts and leaving them in a system that wasn’t designed for them — but was not “the only port in the storm”.

He told a National Press Club address the scheme was designed for permanent disability and children with moderate needs were being “overserviced” under it.

“I know this will be hard for some parents to hear and I don’t say it lightly, but we do need … to create a better system that will enable our children to thrive,” he said.

“Young children with more mild and moderate levels of developmental delay or autism are on a scheme, frankly, because there’s nothing else.

“Over the coming months, we will work with the community to design a system to support ‘Thriving Kids’ and how best to invest the Commonwealth’s $2 billion provision.

“States are obviously going to be key partners, having committed to share funding equally.

“They hold so many of these levers but so will service providers and importantly, parents themselves.

“We’re keen to step up and lead the work in designing that program, because it should be a nationally consistent program.”

He said it did not mean everyone with autism would be removed from the scheme and it was still intended those with permanent and significantly disabling autism would remain with the NDIS.

Mr Butler said he would consult and work with providers and parents to come up with a more adequate model, with an aim for the “Thriving Kids” program to begin in July.

“The ramp up of services and supports will be completed over the following 12 months, when access changes to the NDIS will take effect in mid 2027,” he said.

Mr Butler said while health programs like Medicare, the PBS and NDIS make Australian lives better, they can “operate on a set and forget basis”.

“They all require constant vigilance to ensure that they are delivering for Australians who need them, but also represent value for money for taxpayers who fund them,” he said.

“That approach will be the approach that will guide how we secure the future of Australia’s NDIS.”

He will also look to schools to play a more “coordinated role” in supporting children with a range of needs, including ADHD and autism and explore creating a national online information service for parents — similar to one announced earlier this year for Medicare.

Mr Butler also said the Government was eyeing an ambitious target of keeping NDIS cost growth to between five and six per cent per year.

In 2023, the National Cabinet agreed to get growth down to 8 per cent as an “interim target” by 2026, but it’s been a struggle.

Though Mr Butler acknowledged some “promising signs” of reducing the growth, he admitted everything “needs to go right to avoid us slipping off that target”.

“Reforms to plan budgets and inflation are starting to work, but growth in new participant numbers remains high,” he said.

“Last week’s quarterly report from the agency revealed 12 per cent growth in participant numbers in 2024-25 — much higher than the previous year, reminding us that there is still much to do even to achieve that eight per cent target.”

“But 8 per cent growth is simply unsustainable in the medium- to long-term.

“I’m determined to pursue that next wave of reform.

“The scheme is now pretty much fully rolled out, so growth should really reflect unit price inflation plus growth in Australia’s population.

“In nominal terms, that would hover around 4 or 5 per cent on top of that.

“On top of that, we should allow an inflator that reflects the aging of participants in the scheme, which might add up to another one per cent.”

It comes after a Productivity Commission report in 2017 had suggested that a growth rate of about 4 per cent would be appropriate after the scheme was fully rolled out in 2020.