The National Disability Insurance Scheme (NDIS) has long been hailed as a revolutionary and vital scheme for Australians living with disabilities. However, in recent years, criticism of the scheme and the providers who serve it has mounted.
To understand the challenges facing the sector and the reforms needed, we spoke with Amber Crosthwaite, Lead Partner for Aged Care, Seniors Living & Disability Services at independent WA law firm, Lavan. “The NDIS is riddled with structural flaws,” says Crosthwaite. “Just 6% of providers are actually regulated, and most of those are operating at a loss. No one should be surprised that the scheme is struggling.”
Crosthwaite says the scheme has been stretched beyond its capacity. “The NDIS has been called a magic pudding—and it’s true.” She explains that when the NDIS was introduced, state, territory and local governments cut their own disability supports and de-prioritised disability interfaces with transport, health, housing and education.
“People did what people do and looked for an alternative—the NDIS. Especially parents of children with autism and developmental disabilities—of course they’re going to fight for anything that helps their kids.”
In Crosthwaite’s view, the resulting “and predictable” blowout in NDIS costs turned the scheme into a political hot potato, with few willing to acknowledge its fundamental design flaws. Instead, the “dodgy provider” narrative has taken hold, with media and government alike implying that registered providers are to blame.
The truth, Crosthwaite says, is that registered providers are the most heavily regulated and scrutinised part of the NDIS, yet they are failing before our eyes. Recent reports show that 67% of registered NDIS providers are operating at a loss, up from 47% three years ago. “This creates a very unstable environment for both providers and participants,” she says. “Many providers are being forced to make difficult choices about who they support.”
“Margins for group-based services have dropped from 4.0% to a negative 3.6% in just one year. Cash reserves, built up over decades, have gone. We need a pricing system that reflects the true costs of services. If pricing doesn’t change, we will continue to see providers leave the sector or cherry-pick participants, and the NDIS will not be able to meet the needs of people with complex disabilities.”
This financial strain, Crosthwaite explains, is compounded by an overwhelming compliance burden. “The Commission’s more aggressive stance is a clear reaction to the scrutiny it copped during the Disability Royal Commission—but it’s still an immature regulator, lacking the systems and experience to target risk effectively.”
Larger providers, with more resources and expertise, are increasingly profiling clients before accepting them to avoid an unpredictable Commission or financial losses. “Participants with complex needs often end up with smaller providers—those with less experience, fewer resources, and more exposure. And when something goes wrong, it’s those smaller providers who end up in the headlines. If the scheme were functioning as it should, these providers wouldn’t be responsible for complex cases in the first place.”
In a win for the scheme, federal, state and territory governments have agreed to implement the 2023 NDIS Review recommendation to create “foundational supports” outside the NDIS for broader disability service access. This would allow all people with disabilities, especially children, to receive essential services through mainstream settings like schools and early childhood centres, reducing reliance on high-cost NDIS items.
The federal government has already commenced implementation. Nationally, over 1,200 participants per week are receiving notifications for eligibility reassessments with many being exited from the scheme or receiving significant funding cuts. However, Crosthwaite points out that foundational supports are not yet in place in the states and territories. “There’s a roadmap in WA—but no timeline, no clarity. Meanwhile, participants and providers are stuck in limbo.” she says. Lavan is seeing a spike in pro bono requests from NDIS participants still needing support.
In Crosthwaite’s view, NDIS registered providers are under intense pressure—financially strained, buried in compliance, and increasingly short-staffed. Many are close to collapse, and if they fall, the Scheme’s ability to support people with complex disabilities goes with them.
Crosthwaite is blunt: “Fund and implement foundational supports properly. If foundational supports in WA don’t land soon, we’re going to see a wave of unmet need—and the brunt of it will fall to WA public health, education, and justice systems.” “Regulate everyone. And fix the pricing. We can’t keep asking providers to deliver complex supports below cost. Providers are failing—and people are going to get hurt.”
