The NDIS has become the Gordian Knot of Australian public policy. Everyone at the roundtable last week agreed it’s unsustainable in its current form, but agreeing how to rein in spending will be a whole lot harder.
Minister Butler’s announcement of the Thriving Kids initiative is a move in the right direction, but it’s a single thread in a tangled ball of string. When you only pull one thread in a tangle, the rest of the knot tightens with unanticipated and always politically uncomfortable consequences.
This is not a system with one broken part. It’s a complex tangle of eligibility creep, opportunistic providers, diagnosis-driven funding, undercooked systems, inconsistent oversight with some fraud thrown in. Reforming just one part, no matter how well-intentioned, leaves the rest to fester. Every action taken to fix one issue nudges another out of alignment.
The OODA loop: Observe, Orient, Decide, Act, is built for this kind of problem. However, it will not be a single elegant cycle spinning at the centre of government. Rather, it requires dozens of loops running simultaneously, each targeting a separate piece of the mess, but in alignment with the objectives and activity going on in other loops.
Reforming the NDIS means defining the core issues to be addressed, managing priorities, ripping apart compounding complexity, and tackling the revealed challenges transparently, and one at a time.
The NDIS was created to support people with profound and permanent impairments. That mission is too important to be lost in mission creep and misallocated funds.
Observe: See the system, not Just the symptoms
The blowout in costs has become impossible to ignore. Nearly 10% growth year on year, with a target now of 4 to 6%. The Thriving Kids pivot aims to rehouse children with mild developmental needs in a different support stream. It addresses one of the most visible distortions, but it’s just the tip. It is also relocating those with mild learning challenges back to the states, who abrogated their responsibilities when the NDIS funding pool was opened for business.
Over the last few years, eligibility rules have stretched beyond recognition, plan managers are profiting with minimal oversight, administration systems are still working like it’s 2008, and there is enough friction between state and federal responsibilities to make any real-time response slow and clumsy. Fraud may not be rampant, but it’s visible enough to damage public trust.
Orient: Understand the performance barriers, drivers, and objectives
We are dealing with a big system in urgent need of a tune-up. To do the job properly, it must be broken into the component parts, and given the ability to evolve. Trying to reform the NDIS in one go is like jumping off a cliff and trying to build a glider before you hit the bottom.
Each major component: eligibility, fraud controls, provider oversight, participant experience, administration architecture and processes needs its own OODA loop. That will be how you handle complexity, not by centralising decision-making, but by decentralising learning.
The political reality is that every decision will create losers. Some of those will be legitimate cases who fall between the cracks. Others will be families who have relied on NDIS support, but whose circumstances were never quite aligned with the original intent of the scheme. Still others will be those who learned how to play the system.
The danger lies in pretending there are no trade-offs. You can’t trim billions without someone yelling. But you can explain why you’re doing it, and who benefits when the system works better.
Decide: Trade political safety for effectiveness
Reform doesn’t have to be elegant. It has to work.
The launch of Thriving Kids should be treated as a testbed, not a destination. Start small, measure obsessively, and be prepared to change course. At the same time, the government should quietly empower an oversight taskforce with real teeth. It must be able to audit, freeze funding, publish outcomes, and prosecute where necessary.
Eligibility needs rethinking. Not through the lens of diagnosis alone, but through function and long-term need. Payment structures must reward value, not volume. Plan management should be transparent, capped, and linked to performance.
The back-end co-ordinating processes must talk to each other in real time, not through some bureaucratic or political committee which obscures and compromises outcomes, as well as being friction in the system. Each decision here needs to trigger a loop. Decide. Test. Measure. Refine. Then decide again.
Act: Move with purpose and learn
Forget big-bang reforms. Focus on sequencing. Stabilise the pressure points. Target the areas with the fastest runaway costs. Act on what you’ve learned, not what the headlines say.
When those making the changes act, they need to ‘own’ the story and tell it creatively. Don’t let it be told by those who feel short-changed. Make the case publicly and repeatedly: this isn’t about austerity. It’s about protecting the integrity of something Australia needs for the long haul.
Jeff Bezos uses the analogy of ‘batwing’ doors. For some, and probably most decisions, you can move ahead, and if it looks good keep going, but if it looks dodgy, back away through the batwings. Only a few decisions will be ones that are not able to be reversed. Public institutions are lousy at admitting error, explaining the reasons, and moving ahead in a slightly different path. To properly ensure public trust in the NDIS, they need to get better at it.
Rinse and repeat. Treat Reform as a process of continuous improvement, not a political slogan
Reform is not a one-shot fix. It’s a process of continuous adaptation and learning.
Nested loops allow the system to flex and adjust without collapsing. The eligibility loop refines definitions as new cases emerge. The provider loop weeds out inefficiencies. The fraud loop works in real time to prevent erosion of trust as well as preventing funding being misused. The IT loop upgrades infrastructure to handle the load. The communications loop ensures the public stays informed and supportive.
These loops aren’t hierarchical. They’re interdependent. If one fails, the pressure leaks into the others, which is why each loop needs autonomy, clear reporting lines, and real decision-making power.
The NDIS funding problem will not be solved with a single grand plan. It must be outpaced by a smarter system of reform. That means moving faster than the problems emerge. Responding in weeks, not years. Watching data and acting, not waiting for headlines and doing a review.
This is a race against complexity, not ideology. If we get it right, the prize isn’t just a healthier budget, it’s a fairer, more sustainable system for Australians who genuinely rely on it.
I wonder what the chances of that happening are?
I suspect the can will be repackaged, and kicked down the road, again
Perhaps the hardest bit will be political resilience and determination to deliver the original objective of assisting Australians with profound and permanent disability.
