Australia’s National Disability Insurance Scheme (NDIS) has become a cornerstone of financial support for many, contributing to a broader trend where over half of Australians now depend on government payments as their primary income source.
This reliance, driven by ballooning costs in disability support, aged care, and childcare, has pushed government spending to its highest level since World War II, raising concerns about economic sustainability and a deepening culture of dependency.
The NDIS, costing $52 billion annually, is the biggest driver of this spending surge. According to a recent report by the Centre for Independent Studies (CIS), Australia’s expenditure on disability support, including the NDIS, disability pensions, and carer payments, exceeds $90 billion a year – more than the budgets for the age pension, defence, aged care, or Medicare.
The scheme’s costs have consistently blown out projections, making Australia one of the world’s highest spenders on disability support. CIS senior fellow Robert Carling described the NDIS as the “chief culprit” behind the government’s spending blowouts, noting that its unchecked growth is straining public finances while speaking to AFR.
This reliance on government support extends beyond the NDIS. The CIS report highlights that more than 50% of voters now depend on public-sector wages, welfare benefits, or subsidies for most of their income.
Total government spending has climbed to 39% of GDP, a post-war high, up from 34–35% before the 2008 global financial crisis. This escalation is driven not only by the NDIS but also by rapid increases in childcare subsidies (which have more than doubled to $14 billion annually since 2018) and aged care programs.
These costs, combined with rising public debt interest, are projected to grow by nearly 10% a year for the next decade, putting pressure on the federal budget.
The growing dependence on government support has sparked debate about its economic and social implications. Carling warns of a “culture of dependency and entitlement” that makes it politically challenging to rein in spending.
Federal Treasury has advised Treasurer Jim Chalmers that spending cuts and tax increases are needed to ensure budget sustainability, a topic set to dominate his upcoming Economic Reform Roundtable in August. Independent MP Allegra Spender echoed these concerns, telling Sky News Australia that the NDIS system is “still not working” and requires urgent reform to address its inefficiencies.
The NDIS’s challenges are compounded by delays in planned reforms.
The federal government is struggling to secure state agreement to shift more responsibility for children with developmental delays to health and education systems, further inflating costs. Meanwhile, the broader trend of government-funded jobs, particularly in non-market sectors like healthcare, education, and public administration, is dragging down labour productivity, according to the Department of Employment.
Four in five jobs created in the past two years have been in these sectors, which are heavily influenced by government spending and regulation.
While the NDIS provides critical support for Australians with disabilities, its runaway costs and the broader reliance on government income raise tough questions about affordability and long-term economic health.
As Chalmers prepares to tackle these issues at the reform roundtable, the challenge will be balancing the needs of those who depend on these services with the imperative to curb unsustainable spending.
Without meaningful reform, Australia risks entrenching a system where dependency on government support continues to grow, potentially at the expense of productivity and economic resilience.
