Australia's NDIS Overhaul: New $4 Billion 'Thriving Kids' Program and Hospital Funding Reforms

The Australian government is implementing significant reforms to the National Disability Insurance Scheme (NDIS) and public hospital funding, including a new $4 billion program called Thriving Kids that will transition some children from the NDIS to state-run support services.

These changes are part of efforts to manage the growth of the NDIS budget, which is projected to cost over $50 billion in the current financial year, and to secure a new five-year hospital funding agreement with states and territories.

NDIS Reform and Cost Management

Participant Numbers and Projections

The NDIS was originally intended to support approximately 410,000 participants. There are currently over 750,000 participants on the scheme. Government modeling projects the number will reduce to around 600,000 by the end of the decade, rather than growing to over 900,000. Health Minister Mark Butler stated this projection would suggest approximately 160,000 people will transition out of the scheme once new eligibility rules take effect.

The Productivity Commission had earlier projected 550,000 participants by the end of the decade.

Children under 15 constitute 43% of more than 717,000 NDIS participants, receiving 13% of all payments.

Participants with autism or developmental delay as their primary disability represent half of the scheme's participants but account for 23% of total payments. Autism accounts for 40% of primary diagnoses among NDIS participants of all ages, and developmental delay accounts for 11%.

The scheme's yearly growth rate decreased from 22% in 2022 to 10.1%, with the government aiming for a further reduction to between 5% and 6%.

Legislative Changes

Legislation including the "Getting the NDIS Back on Track bill" commenced in October 2024. Key changes implemented include:

• New definitions for fundable supports
• Funding caps for certain therapies
• Limits on travel costs for allied health workers
• Implementation of "funding periods" for spending allocations

New eligibility rules are being developed. The health minister stated that new eligibility rules could result in autistic adults being removed from the scheme based on their support needs.

Planned Reforms for 2026

Two additional major reforms are slated for implementation in 2026:

New Assessment Model (I-CAN): From mid-2026, the National Disability Insurance Agency (NDIA) plans to roll out the "Instrument for the Classification and Assessment of Support Needs (I-CAN)," an online tool for determining support plans. Concerns have been raised by advocates regarding the tool's validation across diverse disability groups, its potential use by staff without allied health qualifications, and a reduction in human oversight.

Changes to Appeal Rights: In most cases, the Administrative Review Tribunal (ART), the final appeal body for NDIS participants, will no longer be able to alter a person's plan to increase funding.

Thriving Kids Program

Overview

The Thriving Kids program is a $4 billion initiative that will replace NDIS support for children under nine years old who have been assessed as having "mild to moderate" developmental delays and autism. The program aims to identify support needs early and provide a baseline level of support that can be escalated if required.

The program was recommended by an advisory group chaired by paediatrician Frank Oberklaid and has received endorsement from national cabinet.

Eligibility

Children with severe, permanent disability, including developmental delay and autism, will remain eligible for the NDIS, subject to standard reassessments. Existing NDIS participants before 2028 will remain on the scheme, subject to standard reassessment criteria.

Implementation Timeline

States and territories requested the delay from July to October, citing readiness concerns.

Program Structure

States and territories will run their own versions of Thriving Kids based on a national model. The program consists of three stages:

Stage One: Identification — Delays or support needs can be identified by family members, schools, or health professionals.

Stage Two: Connection — Families will be linked to appropriate support through online directories, access to health professionals aligned with Thriving Kids, and resources for educators and medical practitioners.

Stage Three: Supports — Supports are categorized based on need:

• Low Need Families: Directed towards parent-led approaches, including online parenting courses, local group activities, peer support, and a potential national phone line
• Moderate Need Families: Targeted support from allied health professionals and early childhood workers, including speech, occupational, and physio therapies delivered in community hubs, homes, or educational settings
• Low to Moderate Need Families: Access supports from both low and moderate need categories

Workforce Concerns

Allied health groups have expressed concerns about the capacity of existing sectors, especially in regional and rural areas, to deliver services. Occupational Therapy Australia estimated that in 2024-25, 60-70% of registered occupational therapists worked privately, predominantly in metropolitan areas.

Michelle Oliver, Chief Occupational Therapist at Occupational Therapy Australia, stated that if funding and commissioning models do not adequately support children's access to critical services, pressure could shift back to families, schools, and the health system.

Kathryn McKinley, national president of Speech Pathology Australia, advocated for a new Medicare item for children under nine and a voucher system to enable families to access private speech pathology services.

The Australian Education Union stated that Thriving Kids must include provisions for additional staff to manage increased administrative load.

Community Hub Model

Community centers in Victoria, such as the Our Place hub in Frankston North, provide integrated services for families and children, including:

• Early intervention playgroups
• Occupational and speech therapy
• Maternal and child health services
• Mental health support
• NDIS assistance

According to a survey of Our Place clients:

• Child health appointment attendance was near 100%
• Referrals to services increased by 79% from the previous year
• 70% of parents reported increased confidence in assisting their child
• 81% agreed their child was well-supported for school readiness

Hospital Funding Agreement

Key Components

The federal government has proposed $23 billion in new funding for public hospitals as part of a five-year agreement. The Commonwealth will provide nearly $220 billion to states and territories over five years starting from July 2026.

The agreement includes:

• Increasing the federal share of hospital funding to 42.5% by 2030 and 45% by 2035
• An annual growth target of 6% or less for public hospital funding, reducing from the current 8% target
• An initial growth cap of 10.25% in the first year, settling at 8% in the medium term

Elderly Discharge Funding

An additional $2 billion over four years has been allocated to expedite the discharge of elderly patients from hospitals who are awaiting aged care facility beds. Current estimates indicate over 3,000 individuals are in this situation.

NDIS Processing Delays

Plan Change Requests

Internal documents indicate that tens of thousands of requests for participant plan changes and essential equipment have exceeded the 28-day target processing time.

Freedom of information documents reveal that 20,475 out of 34,121 active requests for plan changes in mid-2025 had taken between 22 and 111 days to process. More than 800 of these requests had been active for 112 days or longer. Minor plan adjustment requests saw the number of open requests triple to 14,000 in the last quarter of 2024-25 compared to the previous quarter.

Agency Response

The NDIA reported that it has increased staff by 1,000, leading to a 38% reduction in plan change requests on hand since September 2024. The median completion time for a plan change decreased from 66 days in December 2024 to 42 days.

Participant Impacts

Reports indicate that over the past six months, numerous NDIS participants have reported experiencing support cuts or refusals. Reported consequences include hospitalizations, regressions in capacity, and significant distress.

Data from the Australian Neurodivergent Parents Association indicates that children with developmental delay are being removed from the NDIS faster than they are admitted. Exits rose from 7,270 in 2023 to 40,900 in 2025.

Developmental delay participants peaked at 88,112 in March 2025, then fell to 70,602 by December 2025.

An NDIA spokesperson stated there have been no changes to access criteria for children or eligibility assessment.

Stakeholder Perspectives

Expert Concerns

David Trembath, head of autism research at the Kids Research Institute Australia, stated that while Thriving Kids has potential, he is concerned that children with "moderate" needs might not receive adequate support. He noted that support needs can fluctuate based on environment and are difficult to categorize.

Clare Gibellini, an autistic advocate, expressed concern that assessment processes might not accurately capture the support needs of children who mask their autistic traits in unfamiliar situations. She also stated that many in the autistic community are uncomfortable with labels like "mild," "moderate," and "severe" autism.

Parent Perspectives

Alice Tran, mother of two children currently receiving NDIS support, stated that her children require constant supervision and that group therapies proposed under Thriving Kids would not work for them.

Government Official Statements

NSW Premier Chris Minns acknowledged the need for an affordable program but warned that equivalent care may not be provided by the state system.

Health Minister Mark Butler said the projected reduction to 600,000 participants would suggest approximately 160,000 people will transition out of the scheme once the new eligibility rules take effect.

A government spokesperson stated that the Commonwealth, states, and territories are finalizing national and local services for Thriving Kids. State and territory governments will deliver child development assessments, parenting supports, local navigation, targeted supports, and workforce readiness measures.