Mark Butler announces major NDIS overhaul to exclude thousands of children in bid to curb soaring costs

Young children with mild to moderate developmental delays or autism will be excluded from the National Disability Insurance Scheme (NDIS) in a significant move designed to reduce the growth of one of the budget’s biggest spending pressures.

Instead, children with mild to moderate conditions will be moved onto Thriving Kids, a program to be delivered between the Commonwealth and the states and hoped to start from mid-2027.

Health and NDIS Minister Health Butler made the announcement in his address to the National Press Club on Wednesday, in his first address on the topic since receiving the portfolio previously held by Bill Shorten.

Mr Butler said children under 15 represented nearly half of the people entering the scheme.

Additionally, 10 per cent of all 16-year-olds are also participants on the scheme, including 16 per cent of six-year-old boys.

Mr Butler said the over-representation of children on the scheme was because the NDIS had become the “only port in the storm” for children diagnosed with autism or developmental issues.

“They’re desperate, absolutely desperate, to get their children diagnosed because we’ve made it the only way they can get help and too often they have to wait for ages and pay thousands of dollars just to get that diagnosis,” he said on Wednesday.

“Families who are looking for additional supports in mainstream services can’t find them because they largely don’t exist anymore and, in that, all governments have failed them.

“The NDIS model just doesn’t suit their needs.”

While funding negotiations with the states have yet to be agreed on, Mr Butler said the Commonwealth would “step up and lead the work in designing that program because it should be a nationally consistent program”.

Mr Butler also announced the Commonwealth has earmarked $2bn of funding to assist with the rollout.

Children enrolled in the scheme prior to the Thriving Kids program’s rollout will be exempt from the changes but subject to reassessments “from time to time”.

“The systems already exist to be leveraged, to be focused. We need to look, obviously, for the gaps and focus on how to fill them, but everything we do must aim to identify needs as early as possible in a child’s life and get them and their parents the intervention that will work best for them,” Mr Butler said.

“Infant or child and maternal health systems provided by states are usually the first opportunity to make those checks.”

The announcement follows reports seven out of 10 people who joined the scheme between June 2024 and June 2025 listed autism as their main diagnosis.

Participants in the scheme, which is set to cost $64bn by 2029 and is one of the budget’s biggest pressures, have ballooned from about 410,000 to just less than 740,000 in the 2024-25 financial year.

Mr Butler also said the interim target to reduce the NDIS’ growth to 8 per cent, an aim that should be reached by next year, was “simply unsustainable”.

Instead, the growth rate would aim to “reflect unit price inflation plus growth in Australia’s population in nominal terms”, which would total to a trage of about 5 to 6 per cent, Mr Butler said.

“Unlike Medicare and aged care, which touch most Australians, the NDIS supports only around one in 40 Australians,” he said.

“Directly bringing growth under control is therefore not just a question of budget sustainability; social licence is also particularly important to such a scheme, and right now, although that licence is still strong, I do worry that it’s coming under pressure.”

Representing the states during Jim Chalmers’ Economic Reform Roundtable, NSW Treasurer Daniel Mookhey said his counterparts wanted the issue “resolved as quickly as we can”.

“We do want to get to a system in which we can do our bit to ensure that people, particularly kids, who need foundational supports get access to that,” he told the ABC.

“But equally we need reassurances around how that is sustainable from the state budget’s perspective and also to make sure that the states are indeed better off when it comes to the complex interactions between healthy funding and NDIS funding.”

Speaking ahead of Mr Butler’s address, Anthony Albanese said the NDIS was a “proud Australian creation”; however, he said it had expanded beyond initial predictions.

“It was envisaged that that would look after people and enable them to fully participate in society, it would help them and also help society, including productivity and enabling people to participate in work,” the Prime Minister said.

“It was not envisaged that in some areas, four of every 10 in the classroom would be on the NDIS … Clearly, there is a need for a discussion about that and how we deal with that.”