Government to crack down on NDIS provider fraud amid warning scheme will soon cost $50bn annually

The federal government is creating a “fraud fusion taskforce” to try to claw back nearly $300m from national disability insurance scheme providers, amid warnings the NDIS could cost more than $50bn annually within four years.

The new body, which will replace the existing NDIS fraud taskforce, will target “fraud and serious non-compliance” with the help of law enforcement, regulatory and intelligence agencies.

Tuesday’s budget earmarks $126m over four years to set up the new taskforce but predicts this will be eclipsed by the amount recovered from NDIS providers, estimated in the budget to total $291.5m. That means the measure should deliver $165m after the costs of the taskforce are taken into account.

The budget papers show NDIS costs will increase by 14% a year over the next decade, driven by the growth in the number of participants and average support costs.

The total cost of federal, state and territory funding for the NDIS is expected to increase from $35bn this year to $52bn in 2025-26.

The government has ordered a review into the program’s design, operations and sustainability, raising the possibility of future sweeping changes.

The treasurer, Jim Chalmers, said the review was needed “because the spending trajectory right now is putting incredible pressure on the budget”.

In an interview with ABC TV on Tuesday night, Chalmers said the Labor government did not see the NDIS “as the source of savings for the sake of it”.

Labor created the NDIS and wanted it to “endure and survive”, he said, but added that “every dollar needs to get value for money”.

The minister for the NDIS and government services, Bill Shorten, said the government was acting on its promise “to get the NDIS back on track”.

“Labor’s announcement of a cross-agency fraud fusion taskforce will help defend the scheme from crooks and help deliver our pledge to crack down on NDIS fraudsters,” he said.

Shorten said the government had worked with states and territories to improve National Disability Insurance Agency administrative processes “to ensure that people with disability do not languish in hospital unnecessarily”.

The budget funds an extra 380 permanent staff for the NDIA, and $6m for an alternative dispute resolution pilot aiming to help people with disability resolve complaints over NDIS decisions more quickly.

The NDIS provider fraud crackdown is one of a number of measures the Albanese government is pursuing to regain modest amounts of revenue as it leaves the expensive stage-three income tax cuts in place, for now at least.

The government says its major measures to improve the budget bottom line will deliver more than $18bn over four years, with the biggest measure being $4.7bn from overhauling infrastructure spending.

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Across the public service, Labor expects to raise $3.6bn in savings from curbing advertising, travel and legal expenses and external labour costs – a perennial target for governments looking for ways to save money.

The extension of the Australian Taxation Office’s tax avoidance taskforce is expected to raise $1.7bn. This will target “new priority areas of observed business tax risks, complementing the ongoing focus on multinational enterprises and large public and private businesses”.

Other ATO schemes targeting the “shadow economy” and personal income tax compliance will also be extended.

Labor aims to claw back more funds from multinational corporations.

The government expects to raise $715m over the budget cycle by changing Australia’s thin capitalisation rules “to address risks to the corporate tax base arising from the use of excessive debt deductions”. This will apply to income years from 1 July 2023.

Foreign investors will also be slugged more. The government plans to raise $457m over four years by increasing foreign investment fees and fines for breaches.

The fees for all foreign investment applications doubled in late July, and the maximum fines for breaches of residential land rules are due to double in January.