A sector under pressure: The reality for NDIS providers today
- Rachel Riley
- Apr 8
- 4 min read
The NDIS was designed to empower participants and improve service quality, but for many providers, the day-to-day reality looks very different.
According to the NDS State of the Disability Sector Report 2024:
76% of providers said that navigating the system is taking time away from actual service provision
63% feel buried under unnecessary regulations, making the system more about paperwork than people.
82% of leadership teams say they spend too much time managing policy changes, while 80% of staff report exhaustion from constant reforms.
Ongoing policy shifts, compliance demands, and funding constraints are creating operational (and financial) fatigue across the sector. Providers are spending less time on participant outcomes and more time on red tape—and they’re struggling to keep up.
The introduction of the NDIS was a groundbreaking moment in Australian disability services. Over the past decade, it has transformed the way people access supports, funding has increased, and more people than ever are receiving services. But with rapid expansion has come significant structural and financial pressures.
According to Michael Perusco, CEO of National Disability Services, the scheme has an urgent need for provider sustainability.
"With the introduction of the NDIS over the last decade, there’s been a dramatic shift in the landscape for disability services. Gone are the days of block funding paid in advance. We've moved to a model where individual funding is the norm. This has brought more funding into the sector and, crucially, more people are receiving support than ever before, including people accessing services for the first time. In that sense the NDIS truly is a groundbreaking and world-leading scheme. Providers have needed to grow and evolve and invest in more sophisticated processes and systems. Many have gone through this transformation and others are going through it now, demonstrating the ability of longstanding providers to adapt and evolve to the new operating environment.
One of the most profound changes with the NDIS is the individualised nature of the scheme. Instead of dealing with a government funder, providers have service agreements directly with individuals, giving people with disability greater choice and control. This shift means that we all — participants, providers and the government — have had to rethink our approach.
The shift to the NDIS has not been without its challenges. Workforce shortages are significant and they're not going away anytime soon. The rapid growth of unregistered providers and sole traders means that the government has limited oversight of the scheme. At the same time, as the NDIS came online, a range of previously state-based services were phased out, leaving the NDIS as the “only lifeboat in the ocean” for many people with disability. The scheme has grown faster than anyone expected, prompting urgent reforms to control funding and develop alternative support structures outside the NDIS.
I don’t think there’s any debate that the NDIS needs to be sustainable for it to continue to deliver vital supports for so many Australians. But equally, a sustainable NDIS requires sustainable, quality providers – and we can no longer take that for granted. Our own State of the Sector report and numerous benchmarking studies show that most providers are facing serious financial challenges. Many of these are providers with deep expertise, who invest in their workforce, with decades of experience in their local communities. If we lose these providers, it will be devastating for the sustainability of the NDIS and the people who rely on those quality services."
An evolving policy & regulatory landscape
The past year has seen a wave of reforms aimed at addressing systemic issues—but these changes have also added complexity for providers.
The Independent Review of the NDIS proposed 26 recommendations and 139 actions, driving major reform discussions.
Australia’s Disability Strategy 2021–2031 is being reviewed to align national policy with the evolving needs of participants and providers.
The NDIS Provider and Worker Registration Taskforce is developing new entry standards for providers, with stricter regulations expected.
In addition, 2024 has seen significant new legislation and compliance measures:
The National Disability Insurance Scheme Amendment (Getting the NDIS Back on Track No. 1) Act 2024 introduced stricter budget controls, temporary funded support lists, and early intervention pathways.
More aggressive compliance enforcement has resulted in $1.6 million in fines and thousands of civil actions against providers.
NDIS funding reductions and workforce regulation changes are top concerns among providers, with 70% citing funding cuts as their biggest worry.
While these reforms aim to improve accountability and service quality, providers fear they will add financial and operational strain, making it even harder to deliver sustainable, high-quality care.
The financial reality: Shrinking margins, rising costs, and no safety net
The numbers speak for themselves:
55.7% of providers operated at total financial loss in 2023-24 –up from the previous year of 51.4% (StewartBrown)
The NDIS pricing model isn’t keeping up—while core supports saw a 3.19% price increase in 2024, this only covered wage rises, leaving providers to absorb inflation, insurance costs, and compliance expenses.
The phase-out of the Temporary Transformation Payment (TTP) has removed a critical financial buffer, exposing providers to rising costs with no fallback.
SCHADS Award wage increases, inflation, and growing administrative costs have pushed many providers to the edge.
The result? A funding model that no longer aligns with the actual cost of service delivery—leaving providers in a high-risk financial position.
The ‘dodgy providers’ narrative
The Australian government has leaned heavily into a public narrative about ‘dodgy providers’ as a justification for increased scrutiny and funding cuts.
Most providers are compliant, ethical, and operating on thin margins—yet they are being burdened with higher costs, more audits, and frozen payments, often at the expense of service delivery. The fraud narrative is being used to justify funding reductions, but these cuts are impacting all providers, not just bad actors. And as a result, the participants they serve.
Building resilience, regaining control
As financial and regulatory pressures mount, the challenge for providers is no longer just about keeping up with change—it’s about finding ways to use it to their advantage. To regain control, build resilience, and adapt to the evolving landscape.
It starts with the right insights. In collaboration with experts from across the sector, Drova's NDIS Provider Outlook Report 2025 explores six key focus areas defining the landscape for NDIS providers in 2025—from the lens of current challenges, through to strategic opportunities and actionable solutions.
