NEWS & INSIGHTS
Spotlight on Government: Working together to deliver the NDIS
From its beginnings in July 2013 through the operation of trial sites, the National Disability Insurance Scheme (NDIS) has been arguably Australia’s biggest social reform since the introduction of Medicare in 1984.
It represented a fundamental difference in approach from the Commonwealth Government, transitioning from a ‘welfare-based’ system methodology, that was often delivered by charity-based organisations, to an ‘insurance-based’ model, where participants were provided choice and control for their support delivery.
SNAPSHOT OF KEY STATISTICS AT JUNE 2025
- Directly supported approximately 739,000 individuals experiencing permanent and significant disability;
- Further directly supported approximately 23,000 children who were accessing early connections (providing support for children aged under 9 years with developmental concerns, or disabilities);
- Continued to grow with an estimated 26,500 participants entering the NDIS program during the quarter ended 30 June 2025;
- Is anticipated to cost the Commonwealth Government approximately $52.3bn to fund in the 2025-26 financial year (excluding disability support pensions, and carer payments); and
- Has approximately 22,000 registered providers operating in the NDIS system, employing approximately 325,000 people.
It is little wonder that the NDIS has been subject to an intense period of scrutiny and reform over the past two to three years, with an emphasis of improving long term financial stability, and improved outcomes for participants.
In an environment of sustained political pressure to deliver reform, rising public expectations in relation to health, ageing, welfare and disability delivery, and questions about the sustainability of the scheme, it important for directors, executive management, and professional advisors operating in the NDIS environment, to understand these reforms as they impact the financial and operational viability of their NDIS providers.
WHAT IS THE NDIS AND HOW DOES IT OPERATE?
The National Disability Insurance Agency (NDIA) works with participants to create a personalised tailored plan as opposed to imposing a one size fits all model. These individual plans are focused on providing reasonable and necessary support to assist participants to achieve their desired goals.
| Focus | Detail |
| Objective |
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| Types of Support |
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| Provider Funding |
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| Pricing |
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WHAT IS THE OUTCOME?
- The participant drives decision making, including the choice of provider and how NDIS support plans are delivered, giving the participant considerable buy in and options
- As such, the Scheme results in the commercialisation of the sector, meaning NFP Providers are competing with the commercial sector
NDIS REVIEW REPORT
In late 2022, the Commonwealth Government commenced a review of the NDIS system, focused on:
- The NDIS schemes design, operations, and sustainability; and
- Building a more responsive, supportive, and sustainable market and workforce.
The NDIS Review Final Report Working together to deliver the NDIS. NDIS Review: Final Report was presented in October 2023, and made 26 recommendations, with 139 associated supporting actions, which are presented across 338 pages. Without going into detail of each recommendation and supporting action, the key themes of the NDIS Review Final Report can be said to be focused on:
| Focus | Detail |
 | The creation of a system of community based, disability specific supports to be jointly funded by Federal and State governments for people who do not meet NDIS eligibility, to relieve budgetary and application pressure off the NDIS, whilst maintaining a consistent social safety net |
 | The establishment of a more transparent, and consistent approach to NDIS eligibility, including the increased use of independent assessments to set participant budgets; |
 | The establishment of a new early intervention pathway for children under 9 years of age, that has an emphasis of providing support services in mainstream settings such as schools, and local communities |
 | Adopt a risk-based system of provider registration and regulation to improve market quality, transparency, and integrity, setting higher standards for providers, with an increased focus for the Commonwealth Government on regulation, market oversight, and stewardship |
NEW LEGISLATION
In August 2024, the Commonwealth Parliament passed the National Disability Insurance Scheme Amendment (Getting the NDIS Back on Track No. 1) Act 2024, which commenced on 3 October 2024. This Act permits the Commonwealth Government to create new rules and regulations over time to implement the NDIS Review Final Report, and represents the first step in a 5 year reform program to adopt the NDIS Review Final Report.
All providers will be required to:
- Meet increased quality and safety standards;
- Improve internal systems for complaints and incident management; and
- Participate in regular audits by the NDIS Quality and Safeguards Commission in relation to verification and certification.
Wexted Advisors believes that the NDIS Review Final Report greatly disrupts the NDIS provider sector, by directly impacting financial models, increasing compliance costs, and impacting set strategies and risk appetite / risk profiles of NDIS provider organisations. In particular, unregistered NDIA providers will be captured by new regulation and compliance.
THE CURRENT STATE OF THE NDIS SECTOR
The recent appointment of Liquidators to the parent company of Cocoon SDA Care, following the permanent ban of the company and its director from providing NDIS services / obtaining NDIS funding Cocoon SDA Care and Director permanently banned from NDIS | NDIS Quality and Safeguards Commission has provided increased public focus on the NDIS provider sector:
- It is estimated that Cocoon SDA Care owes its employees approximately $16m in entitlements, and its unsecured creditors approximately $64m.
- The collapse of Cocoon SDA Care can be said to have been a fate complete when the NDIA froze NDIS funding whilst undertaking an audit of the company’s claims. It has been reported that at the time of the NDIA audit, the company was owed approximately $9.1m from 13,820 NDIS claims, and a further $1.5m from other invoices.
- Anecdotally, through our relationships across professional advisors, Wexted Advisors understands that the frequency, and length of time NDIS providers are experiencing NDIA audits and funding freezes are increasing in incidence and the length of time to resolve.
NDIS providers should assess the available options for directors undergoing an extended audit program or funding freeze, including the availability of the Safe Harbour Regime.
CURRENT CHALLENGES
The extent of media interest in changes to the Scheme, alongside the emergence of more sophisticated and well capitalised NFP Groups could mean that the sector will consolidate around a smaller number of more targeted and focussed services, provided by a smaller number of well capitalised providers.
Wexted have observed an increased incidence of NDIS providers entering some form of external administration, but more relevantly, we see a broader financial pressure impacting the NDIS provider sector. From our review of the NDS State of the Disability Sector Report:
| Focus | Detail |
| Operating Losses | In the Report, approximately 34% of providers incurred an operating loss, and approximately 18% broke even. The financial model of many NDIS providers probably requires a strategic rethink, in particular this is relevant for small and medium sized NDIS providers |
| Profitability of Services | In the Report, approximately 69% of providers raised concerns about the pricing of services compared to the cost of delivering services. Businesses in all sectors and industries are experiencing increasing wage costs, insurance costs, energy costs, and general administration costs of compliance for operating. If NDIS providers are unable to charge more than the NDIS price limits to cover these increasing costs, more providers will be forced into external administration or forced to rationalize through consolidation (mergers and acquisitions). This result may be counter intuitive to the Commonwealth Government’s goal for the NDIS to empower and provide choice to NDIS participants; |
| Tax Debt | The accumulation of unpaid tax debt owed to the Australian Taxation Office (ATO) is a concern for the financial viability of many NDIS providers. The payment system in the NDIA environment can at times lead to delayed payments, in conjunction with the increase in operating costs faced by many NDIS providers, it is easy to see why many NDIS providers fall in arrears with the ATO. We have observed that the ATO is much more active in pursuing unpaid tax debts through a variety of enforcement tools including but not limited to: issuing Director Penalty Notices, issuing Garnishee Notices to financial institutions and customers, reporting unpaid tax debt to creditor reporting bureaus, and initiating Wind Up applications against companies. NDIS providers with a significant tax debt should seek advice to understand their options for undertaking a formal administration to restructure their organisation’s affairs. |
RELATED ARTICLES
Wexted Advisors are experienced in and committed to the NFP and Charity Sector. See some of our recent articles below:
Diversions: I’ve had it for ages doctor but its started changing colour!
We often confuse the causes of insolvency and failure in a business; with the symptoms we should see. Causes are generally controllable, symptoms are not, but they are identifiable, does early identification mean early treatment?
The Turnaround Podcast: New Leaders on NFPs, private health and charity sectors
Chris Sequeira, Rebecca Wilson, and Chris Johnson dive into the NFP sector: reviewing healthcare and hospitals, charities, regional challenges and the impact of decreased government funding.
Not for Profits: Insolvent Trading and the Safe Harbour regime
The Australian Charities and Not for Profits Commission Act and its related Governance Standards impose different requirements to the Corporations Act. Are NFP directors eligible for Safe Harbour Protection?
Published 17th September 2025
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