The Australian government has proposed reducing social, civic and community participation budgets within the National Disability Insurance Scheme by 50% by the end of 2027, a change expected to disadvantage participants with visual impairment, psychosocial disability and Down's syndrome the most. The proposal forms part of a broader package introduced by Health Minister Mark Butler aimed at meeting the national cabinet's annual NDIS growth rate target of 5–6% in the coming years.

The NDIS currently costs $50 billion and is forecast to more than double over 10 years to $117 billion, representing 2.4% of GDP. Federal budget papers showed the changes are expected to return $36.2 billion to the Treasury and reduce the NDIS growth rate to an average of 3.6% until 2030. The proposed changes would result in around 600,000 people remaining on the scheme. As of March 2026, there were 774,456 people on the NDIS, an increase of 13,014 since December 2025.

More than 60,000 participants' social budgets are expected to be halved between October and February 2027, with the remaining participants' social budgets expected to be reduced by the end of next year. Around half of all NDIS participants, or 393,401 people, have funding for social activities.

A report by the Office of Impact Analysis revealed the options the Department of Health considered to improve the quality and cost of the NDIS. Modeling showed that on average 34% of plans for participants with visual impairment is set aside for social participation, with a six-month budget of $13,233. About 30% of funding for participants with psychosocial disability and 28% of funding for those with Down's syndrome is typically reserved for social activities.

The report stated: "Participants with certain primary disabilities are expected to be more affected by the reductions to SCCP funding. Some disability types require limited day-to-day support for activities of daily living, but require substantial support to access the community."

The Department of Health, Disability and Ageing also examined a blanket 10% cut in every support category for all participants except those in supported independent living and those requiring 24/7 care, as well as an option to freeze participant budgets at 2025–2026 levels. The department found that deep cuts to participant supports could lead to regression in daily living skills, elevated risk of injury, neglect, social isolation and reduced ability to engage in work and community activities. "This would undermine the objectives of the NDIS, including the aim to provide reasonable and necessary supports to participants," the report said.

A government spokesperson said the 50% reduction in social budgets, together with a 10% cut for capacity-building daily activities, was necessary to return funding to 2023 levels and would not reduce budgets for all participants. "This is because most participants do not use their full SCCP and CBDA [capacity building: daily activities] budget allocations," the spokesperson said.

Megan Spindler-Smith, acting chief executive of People with Disability Australia, criticized the proposal. "It's heartless to cut supports we need to leave the house, work and study at a time when the cost of living has dramatically increased and alternatives are simply not there," she said.