Submission 3321 — Name Withheld — NDIS Future Generations Bill | External submission

Submission  on  the  National   Disability  Insurance  Scheme

Amendment (Securing the NDIS for Future Generations) Bill 2026

Economic Impacts, Regional Effects, and Net Fiscal Cost

Purpose of this submission This submission addresses the proposed reductions to the National Disability Insurance Scheme (NDIS) from an economic and fiscal perspective, with particular attention to regional Australia. It demonstrates that:

The NDIS is a significant contributor to GDP
NDIS expenditure generates exceptionally high tax returns
The net cost to government after tax recapture is substantially lower than headline budget figures
Cuts to the NDIS risk negative GDP, employment, and fiscal outcomes, especially in regional communities
Cuts to the NDIS are harmful to the small business community in Regional Australia
Cuts to the NDIS will reduce the provision of Allied Health Services in regional Australia
Cuts to the NDIS will harm other government systems

The NDIS as a contributor to GDP A conservative estimate places the NDIS fiscal multiplier at approximately 2.25, meaning each $1 of spending generates around $2.25 in economic activity. [percapita.org.au]

This translates into tens of billions of dollars in annual GDP contribution (for example, approximately $52.4 billion in 2020–21), positioning the NDIS as one of the more economically impactful areas of government expenditure. [percapita.org.au]

The strength of the NDIS multiplier is driven by several structural characteristics that differentiate it from other forms of public spending:

High labour intensity

NDIS expenditure is predominantly directed toward human services, including support workers, therapists, and allied health professionals. A large proportion of funding becomes wages rather than capital expenditure

Wages are typically fully spent within the domestic economy, generating further rounds of consumption. This creates strong secondary and tertiary economic effects (retail, housing, services). In economic terms, this results in a high marginal propensity to consume, which amplifies GDP outcomes.

Localised service delivery

NDIS services must be delivered where participants  live.  Spending  is geographically

dispersed across communities,  including  regional and remote  areas. Funds are  not

concentrated in capital cities or large firms. Economic activity is embedded in local economies,

supporting  small  businesses and  regional employment.  This  localisation  significantly

increases the regional economic multiplier, as money circulates within the same community multiple times before leaking out.

Minimal import leakage

Unlike sectors such as defence or large infrastructure projects, NDIS spending has very low reliance on imported goods or offshore supply chains. The majority of expenditure is on domestic labour and locally supplied services. This ensures that a greater proportion of each dollar remains within the Australian economy, directly contributing to GDP rather than flowing overseas.

Broader economic interpretation

Taken together, these characteristics mean that NDIS expenditure functions less like its named Budget function (Welfare) and more like a form of targeted economic stimulus, particularly in regional economies. Purchasing power is in the hands of local participants who through choice inject income to local small businesses. It generates high employment per dollar spent (approx. 10,200 jobs per $1 Billion spent), and it produces strong tax recapture through wages and consumption.

Accordingly, the economic contribution of the NDIS should be understood not only in terms of social outcomes, but also as a material driver of economic activity, employment, and fiscal recycling within the Australian economy.

Summary

The NDIS should not be assessed solely through its classification as a welfare expenditure, but rather as a structurally efficient form of economic investment. Its combination of high labour intensity, strong localised spending, and minimal import leakage produces a multiplier effect that is both robust and geographically inclusive. This results in sustained economic activity, particularly in regional and remote communities where alternative sources of growth are limited.

Importantly, the scheme delivers a dual dividend. It improves social outcomes for participants while simultaneously driving employment, business formation, and fiscal recirculation. The high proportion of expenditure flowing into wages ensures that a significant share of funding is quickly reinvested into the domestic economy, generating successive rounds of economic activity and supporting government revenue through taxation.

In this context, reductions in NDIS expenditure should be understood not only as a contraction in social support, but also as a direct withdrawal of economic stimulus—particularly from regional economies that are disproportionately reliant on this spending. Accordingly, policy decisions relating to the NDIS should incorporate both social and economic considerations, recognising the scheme as a material contributor to GDP, employment, and the broader resilience of the Australian economy.

Employment and regional economic effects National employment impact

The NDIS directly employs over 270,000 people across more than 20 occupations. The scheme also supports substantial indirect employment across supply chains Economic modelling indicates that funding changes translate into employment outcomes, with around 10,200 jobs affected per $1 billion of funding change [percapita.org.au] Taken together, this places the NDIS among the most employment-intensive areas of government expenditure in Australia.

The employment impact  of the NDIS  is  structurally amplified  in regional economies,

particularly in areas dominated by tourism and agriculture, where economic activity is highly seasonal.

Counter-cyclical employment stabiliser

Tourism and agriculture  typically experience  significant seasonal fluctuations  in labour

demand and income. In contrast, NDIS funding is ongoing and demand-driven, providing year round employment stability. This creates a counter-cyclical effect, where NDIS jobs sustain local economies during off-peak periods. In many regions, this stabilisation effect is critical in maintaining workforce participation and reducing reliance on income support during seasonal downturns.

Supports viability of small businesses

Regional economies are dominated by small, locally owned businesses and sole traders. NDIS spending flows directly into these businesses (e.g. support workers, allied health, transport providers, accommodation modifications). Because services must be delivered locally, spending is retained within the community rather than leaking to metropolitan centres. For small business communities exposed to seasonal swings (e.g. tourism operators or farm related services), NDIS-derived income provides a stable revenue base that smooths cash flow volatility.

Workforce retention in regional areas

Seasonal industries often struggle with labour retention outside peak periods. The NDIS creates permanent, locally embedded roles (care workers, therapists, coordinators). This supports a more stable and skilled workforce base, reducing out-migration to metropolitan areas. In effect, the NDIS helps anchor workers in regions that would otherwise experience cyclical employment loss.

Local economic multiplier effects

NDIS income  is predominantly spent on wages and local services, which amplifies  its

economic impact. In regional settings, where alternative economic drivers are limited, this produces a disproportionately strong multiplier effect. This includes indirect benefits to hospitality, retail, transport, and housing markets. Because tourism and agriculture incomes are often volatile, the NDIS introduces a reliable economic input that underpins broader community activity.

Summary

In regional economies—particularly those reliant on tourism and agriculture—the NDIS is not just a social program. It functions as a structural stabiliser of the local economy, by:

Smoothing seasonal income cycles
Supporting the viability of small businesses
Retaining workforce capacity
Sustaining broader economic activity As a result, the NDIS operates as a foundational employment engine in many regional communities, with impacts that extend well beyond direct service provision.

Tax return and Net Fiscal cost of the NDIS There is a concept that the NDIS is just a budget expenditure item, a cost, However this view is wrong in the simplest terms. The NDIS has shown the generate $2.25 per every $1 spent. This is money moving through the economy. If we look how this money is used and invested, we must also understand that there is taxation points in the economy. As the media always puts it “we are taxed to death”, so there must be a taxation point for NDIS funds as well. The NDIS funding generates tax revenue through:

PAYG from a large workforce including taxation on superannuation payments
GST and Excise from consumption
Company tax from providers
Reduced welfare as carers and participants enter employment Evidence indicates:
Around 30–40% of generated economic activity is returned to government as tax [percapita.org.au]
This equates to ~$0.60–$0.90 returned per $1 of NDIS spending once multiplier effects are considered [percapita.org.au] Given the evidence clearly shows the NDIS is generating a significant tax return for the government, what is the net fiscal cost of the NDIS (after tax return)? When tax recapture is considered, the true net cost is materially lower than headline spend. Estimates suggest ~$0.10 - $0.40 cents per dollar net fiscal cost after tax recycling [percapita.org.au] Assessing the NDIS purely on gross expenditure materially understates its fiscal efficiency. Additionally, the figured noted for reduction of NDIS cost, cannot be interpreted as a budget saving, because it simplistically ignores the tax recapture/net fiscal cost of the NDIS. It is also ignoring the likely cost impacts on other parts of the system. The needs of participants will not go away, they will just be born as costs in other less efficient systems, not designed to service the needs of people with disability.

Summary

The NDIS is not simply a budget cost—it is a partially self-funding economic investment. Once tax recapture is considered (PAYG, GST, company tax, and reduced welfare), the net fiscal cost is materially lower than headline spend—potentially as low as $0.10 to $0.40 per dollar.

As a result, treating NDIS reductions as “savings” is misleading. Cutting expenditure reduces economic activity, lowers tax receipts, and shifts costs to less efficient systems.

Policy decisions should therefore focus on net fiscal impact, not gross outlays—recognising the NDIS as both a social necessity and a comparatively efficient driver of economic activity and revenue recycling.

Expansion of allied health services in regional areas Market creation effect of the NDIS The NDIS has fundamentally reshaped the supply of allied health services by:

Creating a stable funding stream
Improving price certainty and demand visibility
Enabling providers to expand into previously unviable locations As a result, Allied health services have expanded beyond metropolitan areas. New practices have opened or expanded to regional towns. Workforce participation in allied health has increased Addressing historic regional undersupply Prior to the NDIS, many regional areas experienced:
Limited access to therapy services
Long wait times
Requirement to travel to metropolitan centres NDIS funding has supported local delivery of physiotherapy, occupational therapy, speech

therapy, psychology. It has Increased service frequency and continuity. It has reduced travel

barriers for participants. Spillover benefits to populations A key but under-recognised impact is that the expansion of allied health services driven by the non‑NDIS NDIS also benefits individuals not on the scheme. More practitioners in a region increases availability for:

Private patients
Medicare-funded clients
Aged care residents This is important, because while these potential clients were there before the NDIS started, it wasn’t until the NDIS rolled out and allied health providers moved into regional areas could this need be serviced. Essentially, people health care needs would go unmet until such time it deteriorated to a point it had to be serviced by other systems, at a significantly higher cost. An example is for elderly patients and occupational therapists. The NDIS rollout, which has enabled occupational therapists to provide service in regional areas will allow our aging population to access supports that increased the likelihood of maintaining their physical health and capacity for self-care. Thus, reducing the burden on our aged care system. Clinics established on NDIS demand, due to reliable, consistent base income can invest to offer broader services, allowing it to maintain viable patient volumes. Without NDIS demand, many regional services would not be financially sustainable. This in turn will impact regional Australians not on the NDIS, who will lose access to services. Many of these people will then interact with other government systems at a far higher cost point, Workforce attraction and retention The NDIS supports stable employment for allied health professionals. Critically it allows for

career pathways outside metropolitan areas, which has increased the likelihood of

practitioners relocating to or staying in regional communities. This is important because much of regional Australia has been defunded over the last 50 years with the systematic removal of government departments and services. This has included the reduction of Allied Health services in regional communities. The NDIS has facilitated an investment in regional Australia.

System-wide health benefits

Spillover Effects of NDIS Investment

The  benefits  of NDIS funding extend  well beyond  individual  participants, generating

measurable system-wide efficiencies and broader economic gains.

Reduced Pressure on Hospital Systems

NDIS-funded supports, particularly in-home care, community supports, and post-acute rehabilitation, directly reduce reliance on hospital services. Avoidable admissions and readmissions: When individuals have access to ongoing disability supports, they are less likely to deteriorate to the point of requiring acute hospital care. Adequate disability funding enables hospitals to discharge patients earlier into supported environments, reducing bed-blocking and improving system flow.

Research  indicates  that delays  in support arrangements can prolong  hospital  stays,

highlighting the importance of timely disability supports. [pmc.ncbi.nlm.nih.gov]. International evidence (e.g., Medicaid expansion) shows that expanding access to funded care reduces the burden of uncompensated hospital treatment and relieves financial and operational stress on hospitals. [jamanetwork.com]. The reality is NDIS expenditure effectively substitutes for higher-cost hospital expenditure, freeing capacity for acute and emergency care across the entire population.

Earlier Intervention and Improved Long-Term Outcomes

The NDIS is structured around an “insurance model,” where early and appropriate investment reduces future costs and improves outcomes over time. Such examples are

Early childhood intervention: Evidence-based early intervention (e.g., therapy for developmental delay or autism) improves functional capacity, reducing the need for intensive supports later in life. [dataresear…dis.gov.au]
Prevention of condition escalation: Timely supports prevent secondary complications (e.g., mental health deterioration, mobility decline), which are significantly more expensive to treat once established.
Lifetime cost reduction: While some benefits are difficult to quantify in the short term, modelling frameworks recognise that early supports generate long-term savings across health, welfare, and justice systems. [ndisreview.gov.au]

Improved Population Health and Workforce Productivity

The benefit of disability supports extend well beyond individual participants, flowing through to families, carers, employers, and the broader economy. When participants experience improved functional capacity, they are more able to engage in education and employment, increasing their independence and economic contribution. At the same time, formal supports reduce reliance on informal care, enabling family members—who would otherwise be out of the workforce—to re-enter employment. This dual effect lifts overall labour force participation,

strengthens household economic  resilience. More  broadly, improved health outcomes

translate into higher productivity, reduced absenteeism, and better long-term economic engagement. Evidence from comparable health system expansions shows that improved

access  to care  is associated  with  better  population  health and lower  mortality  risk.

[jamanetwork.com]

These impacts are amplified by spillover effects, where benefits extend beyond the directly targeted individuals. Health and social interventions often create positive externalities— shifting behaviours across households and communities, such as increased uptake of preventive care or stronger engagement with support services more generally. As a result, the economic impact of disability funding compounds over time, supporting not only participants but also broader system performance. In this context, NDIS spending should be viewed as an economic enabler: it supports employment growth within the care sector, unlocks workforce participation elsewhere in the economy, and contributes to stronger human capital outcomes across the population. [povertyactionlab.org]

Summary

NDIS funding supports broader health system capacity, not just individual participants. Significant cuts to the NDIS will not save money, it will however trade small, early investments for high-cost interventions later.

Conclusion The NDIS delivers a dual dividend: it improves outcomes for people with disability while simultaneously strengthening the economy. Reducing funding does not simply lower government outlays—it withdraws productive investment from one of the most economically efficient areas of public spending. The impacts of the changes in this legislation will cause the following impacts

Contraction in GDP and economic activity
Significant employment losses
Reduced tax revenue (lower fiscal recycling)
Disproportionate impact on regional economies
Loss of economic stabilisation effects
Contraction is service capacity (Allied Health & Care markets)
Cost shifting to higher-cost systems
Lower labour force participation The cuts proposed in the scheme amendment create a compound economic risk, not a simple fiscal saving. They simultaneously reduce GDP, employment, tax revenue and regional resilience, while increasing demand on higher-cost government systems.

The net effect is a weakening of both economic performance and fiscal sustainability.

Key sources

•  Per Capita, False Economy: Economic benefits of the NDIS   [percapita.org.au]

•  AFDO,  Economic  benefits  of  the NDIS  and  consequences  of  cost-cutting

[afdo.org.au]

•   Productivity Commission, NDIS Costs Study Report  [pc.gov.au]

Planning with care complexity [pmc.ncbi.nlm.nih.gov]
Early interventions and high-volume cohorts [dataresear…dis.gov.au]
NDIS Review – Costs, Benefits and Frameworks – Taylor Fry [ndisreview.gov.au] • Understanding the role and importance of spillover effects [povertyactionlab.org]
The Benefits of Medicaid Expansion [jamanetwork.com]