Budget 2026
The 2026 Federal Budget and the NDIS
The 2026-27 budget confirmed the funding framework behind the April 2026 NDIS reforms — $36.2 billion in four-year savings, $3 billion for foundational supports, and a confirmed October 2026 start date for Thriving Kids. Here's what the numbers mean for your situation.
Budget confirmed: 12 May 2026
$36.2bn
4-year savings
$3bn
Foundational supports
$4bn
Thriving Kids
Oct 2026
Thriving Kids start
Updated 12 May 2026 from the 2026-27 federal budget papers.
What the budget confirmed
Confirmed funding items
$36.2bn in 4-year savings
Driven by a $37.8bn reduction in participant payment forecasts and a participant target reduction from ~760,000 to 600,000 by 2030.
$3bn foundational supports (Commonwealth)
New money for the support tier below NDIS. States must match funding under bilateral agreements — adequacy varies by state.
$4bn Thriving Kids — starts October 2026
Joint Commonwealth/state investment. Children under 9 on NDIS ECEI pathways transition to state-run early intervention from October 2026.
$200m Inclusive Communities Fund
Community participation and social inclusion funding for people with disability, including those transitioning off the NDIS. Access details still being finalised.
NDIS Commission +191 staff
Enforcement and participant protection is being resourced up during the transition period.
NDIA −669 staff
Agency operating budget falls from $2.39bn (2025-26) to $1.47bn (2027-28) — a sharp trough — before partially recovering to $1.60bn by 2029-30. The agency is funded to execute the transition in 2026-27, then sized down significantly. Contact centre, plan reviews, and wait times will feel this.
What this signals
The NDIA is no longer measured on participant outcomes
The NDIA's primary performance measure has changed. Program 1.1's key indicator was the participant social and community engagement rate — last rated at 43%, flagged as at risk. That has been replaced with the annualised growth rate of the NDIS.
No target number is attached. The PBS states that the NDIA will report whatever growth rate the actuary publishes — a reporting commitment, not a goal. The agency is now formally accountable for cost trajectory. There is no equivalent accountability for participant outcomes.
How state funding flows are changing
State cash contributions are increasing — from $12.1 billion in 2025-26 to $14.4 billion by 2029-30. States are putting in more money, not less.
What's changing is how it's delivered. States currently provide approximately $990 million of NDIS services in-kind — meaning they deliver the service directly. That drops to $528 million in 2026-27, then zero from 2027-28. From that point, states contribute cash and participants purchase those services through their plan funding from private providers.
For participants: services that previously came directly from state agencies will need to be line items in your plan from 2027-28. If your current plan doesn't account for them, your funding may be short. Raise it with your LAC or planner before your next review.
For providers: services previously delivered by state agencies move to the open market from 2027-28.
What this means for participants
Your plan does not change on budget night. NDIS plans continue under current rules. What the budget confirms is the pace and scale of transition over the next 2-4 years.
The foundational tier is funded at a workable level — provided states match. Children on ECEI pathways face transition by October 2026. From 2027-28, some services currently delivered by state agencies will need to come through your plan funding instead — if your plan doesn't account for them, your budget may be short.
Expect slower NDIA administration through this period. Operating costs fall sharply in 2027-28 as the agency downsizes post-transition. Plan reviews and contact centre response times will be affected.
What this means for providers
The $3 billion foundational tier allocation is large enough to create genuine business opportunity — but volume and viability depend on state bilateral agreements and how pricing is structured. Providers serving psychosocial, ADHD, and ECEI cohorts should move quickly on foundational tier positioning.
The budget commits to releasing updated Pricing Arrangements and Price Limits (PAPL) for 2026-27 — including across forward estimates. Providers should watch for the release date and factor into planning cycles.
The NDIS Commission staffing increase signals heightened compliance attention during the transition. The NDIA operating budget reduction means administrative delays are likely — build that into your plan management and claims workflows.
Check your personal exposure now.
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Start the check →Frequently asked
How much is the budget cutting from the NDIS?
The 2026-27 budget projects $36.2 billion in NDIS savings over four years, driven by a $37.8 billion reduction in participant payment forecasts. This is achieved through tighter eligibility, the transition of around 160,000 participants to the new foundational support tier, and a participant number target reduction from approximately 760,000 today to 600,000 by 2030.
How much funding does the foundational support tier get?
The Commonwealth has committed $3 billion for foundational supports — the new tier below the NDIS. States still need to match that funding under bilateral agreements. How much foundational support is actually available in your state depends on whether those agreements are finalised and at what level.
What is Thriving Kids and when does it start?
Thriving Kids is the early intervention program replacing NDIS ECEI pathways for children under 9. It received a $4 billion joint Commonwealth/state investment in the budget, with a confirmed start date of October 2026. South Australia already has an operational pilot; other states are expected to follow before the October cutover.
Does the budget affect when the NDIS changes take effect?
The functional capacity assessment tool — which triggers the new eligibility framework — is still expected to be operational by 2028. No change to that timeline. The exception is Thriving Kids (October 2026) and legislation on unscheduled reassessments expected this week.
What is the Inclusive Communities Fund?
The $200 million Inclusive Communities Fund was announced in the budget — it wasn't widely anticipated beforehand. It's aimed at community participation and social inclusion for people with disability, including those who transition off the NDIS. How it's accessed is still being worked through.
Related
Information current as of 12 May 2026, based on the 2026-27 federal budget papers and Minister Butler's media release. General information only — not financial or legal advice. Full disclaimer