Recommendations for improving NDIS regulation and administrative burden | External submission

National Disability Services (NDS) Joint Committee on Public Accounts and Audit Responses to Questions on Notice Public hearing: 15 May 2026

Overview

These responses build on NDS’s submission and evidence to the Committee. They reflect consistent feedback from providers on how NDIS administration is operating in practice, particularly across market stewardship, regulatory administration and reform implementation.

Our evidence to the Committee emphasised that the key issue is not policy intent, but implementation, specifically the absence of clear accountability, coordinated decision-making and early intervention across the system.

These responses are provided on behalf of National Disability Services following the Committee’s public hearing of 15 May 2026 and responds to further questions received on notice on 29 May 2026.

Questions on Notice

1. What proportion of provider resources is spent on compliance and

administrative requirements?

NDS members consistently report that compliance and administrative requirements represent a material and increasing component of provider operating costs, although the proportion varies depending on service type, size, and complexity of supports delivered.

Evidence from NDS member engagement and sector surveys indicates that providers are required to maintain significant internal capability across:

quality and safeguarding systems.

audit preparation and certification requirements.

reporting and documentation.
billing, claims and payment compliance.
workforce screening and regulatory compliance.

These functions are not ancillary; they are core operational requirements under current regulatory settings.

Available sector data sources, including the NDS State of the Disability Sector report and Ability Roundtable analysis, indicate that:

compliance and administration costs represent a substantial share of provider overheads, particularly for providers delivering complex or higher risk supports.
these costs have increased over time, reflecting expanded regulatory requirements and administrative complexity.
the burden is not proportionate across the market, with registered providers and those delivering more complex supports carrying significantly higher compliance costs.

Estimating the costs that providers incur to meet administrative and compliance requirements is difficult as they are often spread across various organisation functions such as governance, HR, training, finance, frontline staff and supervisors.

Ability Roundtable benchmarking data estimates that direct quality compliance costs alone represented approximately 1.6 per cent (on average) of operating expenses in 2024–25.

Across the benchmark providers also report operational overhead costs of $7.20/per hour, which include supervision, administration, and area management costs but also casual loadings and overtime.

Additionally, disability support workers and frontline leaders undertake administrative and quality related activities. Ability Roundtable benchmarking estimated that up to 10 per cent of frontline leader time is taken up with unbillable administrative and quality-related activities.

These are costs not incurred by unregistered providers.

Further, 81 per cent respondents to the 2025 NDS State of the Disability Sector survey either strongly disagreed or disagreed that systems in the NDIS are working well, while 60 per cent either strongly agreed or agreed that there were too many unnecessary rules that their organisations must follow.

This indicates that administrative complexity is being experienced as a system-level issue rather than isolated provider concern.

A key issue is not simply the level of effort, but its alignment with risk and outcomes. Providers report that substantial resources are directed toward:

documentation and audit processes that do not clearly improve participant outcomes.
responding to inconsistent or unclear regulatory expectations.
duplicative administrative requirements across agencies and systems.

This results in resources being diverted away from:

direct service delivery.
workforce capability.
quality improvement and innovation.

For providers operating on tight margins, particularly in thin markets or complex service types, this has a direct impact on sustainability and service availability.

2. Would you have any recommendations to the Government on how we can

remove unnecessary red tape from the NDIS?

NDS supports strong integrity and safeguarding arrangements. The focus should be on removing unnecessary red tape while strengthening outcomes-focused and risk-proportionate regulation.

Based on member evidence, there are four priority areas for reform:

1. Implement genuinely risk-proportionate regulation

Current regulatory settings apply a relatively uniform level of compliance across providers, regardless of:

service risk.

participant complexity.
provider capability and track record.

This results in disproportionate burden on providers delivering higher risk supports, while large parts of the market remain subject to limited oversight.

A more effective approach would:

differentiate regulatory effort based on risk.
reduce compliance burden for low-risk providers.
concentrate oversight where safeguarding risk is greatest.

This would improve both efficiency and effectiveness.

2. Improve consistency and transparency in regulatory requirements

Providers report significant variation in:

audit interpretation.
regulatory guidance.
compliance expectations.

This inconsistency drives unnecessary administrative effort and uncertainty.

Practical improvements include:

clearer and more accessible guidance on requirements.
stronger alignment across auditors and regulators.
greater transparency on audit priorities and interpretation.
feedback processes focused on improvement, not just compliance.

3. Reduce duplication and streamline administrative processes

Providers are often required to meet overlapping requirements across:

NDIA processes.

NDIS Commission regulation.

departmental or policy requirements.

This leads to duplication in:

documentation.
reporting.
audit preparation.

Reducing duplication and aligning requirements across agencies would directly reduce administrative burden without reducing visibility, assurance or participant safeguards.

4. Align pricing with regulatory and administrative requirements

There is currently a misalignment between:

the level of regulatory and compliance obligation.
the pricing framework that funds service delivery.

For providers delivering complex supports, this means that:

compliance costs are effectively absorbed without recognition in pricing.
investment in quality and capability is discouraged.
providers may reduce service scope or exit higher-risk areas.

Ensuring that pricing reflects the real cost of meeting regulatory requirements would:

support provider sustainability.
reduce perverse incentives.
enable compliance to be delivered without undermining service capacity.

Conclusion

NDS’s evidence to the Committee is that the issue is not the presence of regulation itself, but how it is implemented in practice. The objective is not deregulation, but more effective regulation that targets risk and supports quality outcomes.

Reducing unnecessary red tape requires:

clearer accountability.
better alignment between regulation, pricing and market stewardship.
a stronger focus on outcomes rather than process.
clear, transparent and accessible escalation processes to deal with issues as they arise.

This will allow providers to direct more resources toward participant supports, while maintaining strong safeguards and integrity across the Scheme.

NDS thanks the Committee for its consideration of these responses and would welcome the opportunity to engage further with the Committee as the inquiry progresses.

Contact

Michael Perusco

Chief Executive Officer

National Disability Services

Michael.perusco@nds.org.au