Systemic failures within the National Disability Insurance Scheme | External submission

January 2026

IDA SUBMISSION TO THE JOINT COMMITTEE OF PUBLIC ACCOUNTS AND AUDIT

illawarradisabilityalliance.org

Submitted by: Illawarra Disability Alliance Date: 29 January 2026

About the IDA

The Illawarra Disability Alliance (IDA) is a group of NDIS registered, not-for-profit disability providers working together to deliver better outcomes for people with a disability in our community.

IDA aims are to:

Work collaboratively with people with disability, their carers, and across agencies and government to advocate for the rights of people with disability and promote inclusion.
Contribute to a strong functioning disability support network which proactively advocates for better outcomes for people with disability.
Represent the local region and support market stewardship by contributing to State and National policy discussions.
Ensure that as service providers we are well informed and supported.
Liaise with all levels of government on region specific issues (e.g., health, education, housing, NDIS, etc) in order to provide sound, timely advice that contributes to quality policy decisions.

Executive Summary

This submission draws on the direct operational experience of the members of the Illawarra Disability Alliance, registered NDIS providers in the Illawarra region, with extensive operational experience who collectively support thousands of NDIS participants and employ thousands of disability support workers.

Our consultation reveals a system that is failing both participants and quality providers through:

Systematic failure to meet service guarantees with no accountability.
Misdirected compliance efforts that focus resources on regulated and compliant registered providers while largely ignoring 94% of the provider market.
Financial unsustainability for registered providers.
Lack of operational expertise in governance and decision-making.
Unfunded quality and compliance costs.
Two years of lack of concrete actions on NDIS Review recommendations.

The fundamental issue: While government focuses increasing regulation on the 6% of registered providers, the 94% unregistered market operates without scrutiny, creating enormous risks for vulnerable participants and enabling widespread fraud.

1. NDIA PERFORMANCE AND SERVICE GUARANTEE

ISSUES

“The NDIA’s 2023-24 performance statements reported results against 19 targets across 19 performance measures… There were 5 targets reported as “Not Achieved” and an additional target with insufficient data to determine a result.”1

1.1 The Problem

The NDIA’s own performance data reveals systematic failure to meet participant service guarantees:

For example for one of the most frequently cited issues for participants and families, that of requesting an unscheduled plan review, only 26% of requests for plan re-assessment happen within the 21-day threshold (note that this is simply deciding whether to do a reassessment, not actually doing it)
Only 44% of plan changes are made within the 28-day period it is meant to take under the Participant Service Guarantee. These figures represent a decline from previous performance.
Performance data also reflects a lack of ability to measure and track participant outcomes (e.g. as reflected in this ANAO comment from Auditor General Report No.25: “The performance statements are not complete — material omission of performance information. The NDIA was unable to report a result for the performance measure: ‘Children who have benefited from the Scheme that no longer need supports’. There were no other performance measures relating to the effectiveness of early intervention supports in improving participant outcomes, which is one of the NDIA’s legislative functions, and is linked to the NDIA’s purpose in supporting participants to be more independent and engage socially and economically.”2)

1.2 Impact on Participants and Providers

When the NDIA fails to meet timelines:

Participants run out of funding and face service interruptions
Providers must fund services “on hope” that plans will be renewed
Families face months of uncertainty and stress
Providers carry 100% of financial risk for underfunded participants
Some providers are forced to exit clients they can no longer afford to support

1 Auditor-General Report No. 25 2024–25 Performance Statements Auditing in the Commonwealth — Outcomes from the 2023–24 Audit Program, p.102 2 Auditor-General Report No. 25 2024–25 Performance Statements Auditing in the Commonwealth — Outcomes from the 2023–24

Audit Program, p.104

Case Study Example: One IDA provider reported a case where the NDIA only made an offer the day before tribunal, after the family had endured months of trauma and the provider was nearly forced to exit the client due to inability to continue unfunded support.

1.3 Administrative Appeals Tribunal Data

Approximately 70% of NDIA decisions are overturned3 at the Administrative Review Tribunal (i.e. resolved by agreement or substantive finding). This indicates:

Systematic poor decision-making at the initial assessment level.
Participants and families subjected to unnecessary trauma and lengthy appeals processes.
Only those with means and capacity can access the appeals process - the most vulnerable cannot contest wrong decisions.
Evidence-based reports (often 200+ pages) are not being properly considered.

1.4 No Consequences for Non-Performance

While providers face potential fines of up to $16.5 million for non-compliance, the NDIA faces no consequences for failing to meet its own service guarantees.

Recommendation 1: The NDIA be held accountable to its participant service guarantee with enforceable consequences for non-performance, comparable to those imposed on providers.

Recommendation 2: The NDIA to implement a continuous improvement learning feedback loop using tribunal overturn data to improve initial decision-making processes.

Recommendation 3: All service guarantee performance indicators should return to minimum 80% compliance within 12 months, with quarterly public reporting.

2. THE ELEPHANT IN THE ROOM: AN UNREGISTERED

MARKET

“The NDIS Commission does not have full visibility of the market it regulates.”4

2.1 The Core Problem

94% of NDIS providers are unregistered and operate without any regulatory oversight. Yet virtually all NDIA compliance and fraud prevention activity is directed at the 6% who are registered. This represents a fundamental misallocation of regulatory effort.

3 Q1 25-26 NDIA Quarterly Report p.43

4 Auditor-General Report No. 2 Effectiveness of the NDIS Quality and Safeguards Commission’s Regulatory Functions, p.19

2.2 The Risks

Compare the pair. Under the current system an unregistered provider:

A person could be a convicted criminal, have zero disability experience or qualifications etc,
Obtain an ABN,
Advertise on social media as a disability support worker,
Begin charging $70/hour to support vulnerable people with disabilities,
All with zero screening, zero training, zero accountability and reporting.

Meanwhile, registered providers must comply with:

Worker screening checks,
Working with Children checks,
Quality audits,
Regular claim compliance reviews,
Incident reporting requirements,
Restricted practice authorisation and reporting requirements,
Service agreement verification,
Shift note documentation, etc.

2.3 Where Fraud and / or Poor Outcomes Actually Occur

The “lethal combination” for fraud and / or negative participant outcomes are:

Unregistered providers, plus
Self-managed or plan-managed participants, equals
No government oversight or scrutiny

The NDIA is paying invoices to people they don’t know, for services they cannot verify.

2.4 Current Compliance Efforts Are Misdirected

Registered providers regularly receive requests to substantiate claims with shift notes, service agreements, and documentation. IDA members feel these are all reasonable expectations for any provider delivering services in the NDIS, however these are requirements that don’t exist in the unregistered market.

Real example: One provider questioned whether they were being specifically targeted, only to be told audits were “purely random.” With only 6% of the market registered, this small pool is being hit repeatedly while the vast majority operates without any scrutiny.

2.5 Safeguarding Risks

Without registration requirements:

The NDIA and Quality and Safeguards Commission don’t know who is providing supports.

Critical incident management is impossible when you don’t know who the providers are.
Unauthorised use of restricted practices, abuse, neglect, and exploitation can all go undetected.
Long-term, isolated support arrangements develop with no external oversight.
Co-dependent relationships form between workers and participants with no accountability.

Real example: An 18-year-old with no training, no screening, and no qualifications is now providing full-time care to a relative with disability - unregistered, unregulated, and unmonitored. This arrangement could continue for years with zero oversight.

2.6 Two Years of Inaction on Registration

The Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability and subsequent independent NDIS Review recommended a risk-proportionate tiered registration system for all providers. The model was developed and agreed to by government.

Recommendation 17 of the Independent Review into the NDIS: “Develop and deliver a risk-proportionate model for the visibility and regulation of all providers and workers, and strengthen the regulatory response to long-standing and emerging quality and safeguards issues.”5

That was two years ago. While it is noted that the Commission is implementing mandatory registration requirements for SIL as of 1 July 2026 the market is still moving in the wrong direction.

Recommendation 4: Implement mandatory registration for all NDIS providers immediately, with a risk-proportionate tiered system as recommended by the Royal Commission.

Recommendation 5: Redirect fraud and compliance resources to focus on the unregistered market where the actual risk lies.

Recommendation 6: Establish a clear, publicly available timeline for full implementation of the Royal Commission’s registration recommendations.

5 Bruce Bonyhady AM, Lisa Paul AO PSM, Working together to deliver the NDIS: Independent Review into the National Disability Insurance

Scheme, 2023, p. 215, available from https://www.ndisreview.gov.au/sites/default/files/resource/download/working-together-ndis-review-final

report.pdf

Recommendation 7: Until full registration is implemented, establish enhanced monitoring mechanisms for payments to unregistered providers, particularly in self-managed arrangements.

3. FINANCIAL SUSTAINABILITY AND PRICING

3.1 The Economics Don’t Work

Recent analysis by the disability sector (Ability Roundtable) reveals:

NDIA cost model assumes $70.23/hour for service delivery
Actual cost for registered providers to deliver compliant services: $77.24/hour
Gap: $7.00/hour

Every hour of service delivered by a registered provider is being delivered at a loss.

3.2 Drivers of Unsustainability

Registered providers face increasing costs from:

Compliance requirements:
- Quality audits (example: $12,000 plus HR costs for one mid-sized provider),
- Incident reporting systems,
- Worker screening and checks,
- Policy and procedure development and maintenance,
- Risk management software and systems.
Unfunded work:
- Service agreement preparation,
- Plan review participation,
- Family meetings and coordination,
- Travel time between participants,
- Documentation requirements,
- Professional development and training,
- Supervision and practice leadership.
Labour costs:
- Award wages increasing faster than NDIA price adjustments,
- Workers compensation insurance rising significantly,
- NSW Portable Long Service Leave Scheme commencement,
- Superannuation obligations.

3.3 Operating at a Loss

Every provider in our consultation confirmed they are operating at a loss from service delivery. Organizations showing positive balance sheets are only doing so through:

Asset sales,
Mergers and acquisitions,
Diversification of income streams.

This is not sustainable. The operational model for NDIS service delivery is fundamentally broken for registered providers.

3.4 Why Would You Register?

The incentive structure to encourage unregistered providers is clear:

Registration costs money,
Compliance costs money,
Quality systems cost money,
The price doesn’t cover these costs,
Unregistered providers avoid all these cost overheads and charge the same rate and thus will continue to increase under the present settings.

Recommendation 8: Establish independent pricing that reflects the true cost of delivering quality, compliant services by registered providers.

Recommendation 9: Fund quality audits for registered providers (as was done historically under DSS grant programs for HACC services).

Recommendation 10: Introduce differential pricing that recognizes and rewards registration and quality compliance.

4. UNFUNDED COMPLEX SERVICES

4.1 Services That Lose Money

IDA providers report that certain service types, notably Behaviour Support and Support Coordination, to be delivered properly, involve significant unfunded complexity:

Behaviour Support:

Requires extensive assessment and planning,
Team meetings and collaboration to successfully support recommendations,
Unpaid consultation time,
Ongoing monitoring and adjustment of strategies,
Focus on reactive restrictive strategies is prioritised by the system presently to the detriment of proactive positive strategies,
Crisis response and availability.

Support Coordination:

Critical to participant choice and control,
Requires deep knowledge of systems and services,
Relationship building and advocacy,
Crisis support,
Significantly underfunded for the role performed,

These services are essential but financially unviable, leading to market failure in areas of highest need.

Recommendation 11: Conduct urgent review of pricing for behaviour support and support coordination services to ensure viability.

5. GOVERNANCE AND DECISION-MAKING

5.1 NDIA Board Composition

Current NDIA Board membership shows:

High-profile people with disabilities, predominantly with physical disabilities
Academic backgrounds.
No representation of people with intellectual disability or autism - who represent the vast majority of NDIS participants accessing core supports.
No operational experience in disability service delivery.

5.2 Impact of Governance Gaps

Without operational expertise:

Board members don’t understand the impact of their decisions on the service system.
Policy changes are implemented without warning or consultation (example: funding period changes).
No understanding of how decisions affect provider viability.
Disconnect between policy intent and operational reality.

5.3 Departmental and Agency Culture

Concerns raised about public service culture:

Lack of frank and fearless advice.
Evidence not being properly considered in decision-making.
“Tell them what they want to hear” culture.
200-page evidence reports ignored or unread.
Treasury-driven agenda prioritizing savings over participant outcomes.

Recommendation 12: Require representation of operational disability service delivery experience as a mandatory skill set for NDIA Board appointments.

Recommendation 13: Ensure NDIA Board composition reflects the diversity of disability types accessing the scheme, particularly intellectual disability and autism.

Recommendation 14: Implement mandatory consideration and response to evidence-based reports in decision-making processes.

6. QUALITY AND SAFEGUARDS COMMISSION

“The Commission does not have quality assurance processes for compliance activities, including investigations. In the absence of quality assurance processes and up-to-date policies the Commission is unable to assesses its effectiveness in detecting and addressing non-compliance.”6

6.1 Late to the Party

The Quality and Safeguards Commission’s incident response is reported as often reactive rather than proactive, arriving after harm has occurred.

6.2 Limited Jurisdiction

Providers report making complaints about concerning practices, only to receive responses that matters are

Recommendation 15: Enhance Quality and Safeguards Commission powers to act on concerns about unregistered providers.

Recommendation 16: Establish national worker exclusion register accessible to all providers.

Recommendation 17: Require the Commission to publicly report on outcomes of complaints and investigations.

7. PLAN MANAGEMENT AND SYSTEM PRESSURES

7.1 Who Really Runs the NDIS?

Beyond the planners themselves, two groups effectively have a tremendous impact on and control over the resource allocation in the NDIS:

Occupational Therapists - who write reports the NDIA won’t act without.
Plan Managers - who decide what gets paid.

This places enormous responsibility on these parts of the system.

7.2 Risk Transfer

Plan managers particularly now carry tremendous risk and responsibility:

Responsibility for verifying provider legitimacy,
Risk of approving fraudulent claims,
Expectation to monitor service quality,
All while being paid “absolutely bugger all” (in the words of one PM provider).

This risk transferred to the private sector allows the NDIA to abdicate its responsibilities. Recommendation 18: Review plan manager responsibilities, remuneration, and risk allocation to ensure sustainability of this critical function.

8. THE BROADER CONTEXT

8.1 Endless Reviews, No Action

The sector is experiencing consultation fatigue:

Multiple inquiries and reviews.
Same issues raised repeatedly.
Submissions developed with significant effort.
No visible outcomes or implementation of recommended strategies.
Implementation of strategies that were not part of any consultative processes.

8.2 Comparison to Other Sectors

Aged Care in-home community supports: Approximately $110/hour The differential between aged care and disability support pricing raises questions about the relative value placed on these services.

8.3 Market Exit Risk

The current environment is driving quality NDIS providers toward:

Market exit.
Service reduction.
Geographic withdrawal.
Refusal of complex participants.
Diversification into other sectors (contracting NDIS services).

This creates a quality death spiral where the most vulnerable participants lose access to quality supports.

CONCLUSION

The NDIS was designed as an entitlement scheme to support the reasonable and necessary support needs of our most vulnerable community members. The current administration is failing both participants and the quality providers who support them.

The key issue is simple: Government is applying increasing regulation and compliance burden to the 6% of providers who are already regulated, audited, and accountable, while 94% of the market operates without any oversight whatsoever.

Until this fundamental issue is addressed:

Registered providers will continue to contract and unregistered service delivery will continue to grow.
Fraud will continue unchecked.
Vulnerable participants will remain at risk.
Quality providers will continue to subsidize the scheme through operational losses.
The two-tier market will persist with perverse incentives favouring low-quality, high risk, unregistered and unaccountable service provision.

The solutions are known. The Royal Commission provided a roadmap. What is lacking is implementation and accountability.

The Illawarra Disability Alliance calls on the Committee to:

Hold the NDIA accountable to its own service guarantees.
Implement a risk proportionate registration model for all NDIS providers.
Fix the pricing to enable sustainable quality service delivery.
Ensure NDIS governance includes operational expertise and representative disability experience.
Redirect compliance efforts to where the risk actually lies.
Implement the NDIS Review Report recommendations without further delay.

The NDIS is too important to too many Australians for this dysfunction to continue. The time for reports and reviews has passed. The time for action is now.

CONTACT

The Illawarra Disability Alliance would welcome the opportunity to appear before the committee to discuss the information presented in this submission.

Please contact: Edward Birt Senior Policy Specialist, Community Industry Group Illawarra Disability Alliance Secretariat redacted redacted

Edward Birt

Senior Policy Specialist

redacted redacted illawarradisabilityalliance.org