Australian Government Finalizes Hospital Funding Agreement and Advances NDIS Reforms

New Public Hospital Funding and Sweeping NDIS Reforms Announced by Federal Government

The Australian federal government, in collaboration with state and territory leaders, has reached a new five-year agreement on public hospital funding, committing an additional $25 billion. This significant agreement coincides with ongoing and impending major reforms to the National Disability Insurance Scheme (NDIS), including new legislative changes, an updated assessment model, adjustments to appeal rights, and the phased introduction of the 'Thriving Kids' program. Both initiatives aim to address healthcare system pressures and manage the growth of the NDIS budget.

Public Hospital Funding Agreement

The national cabinet has endorsed a new public hospital funding agreement that will see the Commonwealth provide nearly $220 billion to states and territories over the next five years, including $25 billion in new funding.

Under the terms, the federal government's share of public hospital funding is scheduled to increase to 42.5 percent by 2030 and 45 percent by 2035.

An additional $2 billion over four years has been allocated to facilitate the discharge of elderly patients from hospitals who are awaiting residential aged care beds. The agreement also includes a target to reduce the annual growth rate for public hospital funding to 6 percent or less, down from the current 8 percent, with an initial growth cap of 10.25 percent in the first year before settling at 8 percent in the medium term.

This new agreement aims to tackle healthcare pressures while the NDIS undergoes significant structural changes, with a combined focus on sustainability and improved outcomes.

National Disability Insurance Scheme (NDIS) Reforms

The government is implementing a series of reforms to the NDIS, aimed at ensuring its long-term sustainability and refocusing the scheme.

Legislation, including the "Getting the NDIS Back on Track bill," commenced in October 2024. Key changes introduced since then 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.

The government states these changes are necessary to manage rising costs, attributing past increases to a "decade of neglect." However, advocacy organizations have reported that these adjustments have resulted in a reduction in participants' access to funding. Over the past six months, NDIS participants have reported experiencing support cuts or refusals, with some individuals requiring 24-hour care facing reductions in their support plans. Reported consequences include hospitalizations, regressions in capacity, and concerns about potential relocation to group homes or aged care facilities.

Two additional major reforms are planned for implementation:

• New Assessment Model (I-CAN): From mid-2026, the National Disability Insurance Agency (NDIA) plans to introduce the "Instrument for the Classification and Assessment of Support Needs (I-CAN)." This online tool is intended to standardize funding decisions. Advocacy groups have raised concerns regarding the tool's validation across diverse disability groups, its potential use by staff without allied health qualifications, and a reduction in human oversight. Transparency regarding the tool's funding recommendations has been requested.

• 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. This change has prompted concern, particularly among families who previously relied on successful appeals to secure additional support.

A central component of the NDIS reforms is the 'Thriving Kids' program, an alternative support pathway for some children.

• Purpose and Target Group: The program aims to support children aged eight and under with "mild to moderate developmental delay and autism" outside the NDIS, redirecting them to state government-led early intervention programs. The government's stated intention is to reduce the NDIS budget and refocus the scheme on individuals with "significant and permanent care and support needs." As of recent data, children under 15 constitute 43% of NDIS participants and receive 13% of all payments, with participants having autism or developmental delays as their primary disability representing half of the scheme's participants and 23% of total payments.

• Model Details: Developed with an advisory group and endorsed by national cabinet, the 'Thriving Kids' model outlines three stages:

  1. Identification: Delays or support needs are identified by family members, schools, or health professionals.
  2. Connection: Families are linked to support through online directories, health professionals, and resources for educators and medical practitioners.
  3. Supports:
     • Low Need Families: Directed to "parent-led approaches," such as online parenting courses, local group activities, peer support, and a potential national phone line.
     • Moderate Need Families and Children: Provided with targeted support from allied health professionals and early childhood workers, including speech, occupational, and physio therapies, delivered in community hubs, homes, or educational settings.
     • Children with Significant Permanent Disability: Those with significant permanent disability, including developmental delay or autism, will maintain eligibility for the NDIS. Existing NDIS participants before 2028 will remain on the scheme, subject to standard reassessment criteria.

• Implementation Timeline: The initial rollout of the 'Thriving Kids' program is scheduled for October 1, following a delay from a previously aimed July 1 start. Full implementation is targeted for January 2028.

• Rationale and Concerns: NDIS Minister Mark Butler stated that the model aims to empower parents in supporting their children and reintroduces a support system similar to one that predated the NDIS. Dr. Frank Oberklaid, chair of the advisory group for the model, described the existing system as "broken" for children and advocated for an approach focusing on individual differences. Concerns have been raised by advocates and experts regarding the definitions of "developmental delay" and "mild to moderate" conditions, the potential for parental burnout if parents are expected to deliver therapy, and the suitability of mainstream educational settings for all children with these disabilities.

Stakeholder Perspectives

Disability advocates have reported an increase in difficulty and confusion within the disability community, citing concerns that essential supports may be withdrawn. They also noted a perceived discrepancy between the commitments of a 2023 NDIS review and the current experiences of participants, which they report has affected trust. The NDIA acknowledges that periods of change can cause uncertainty and states it is continuing to consult with stakeholders on new processes. The government aims to lower the NDIS spending growth target from 8 percent to between 5 percent and 6 percent in the coming years.