The NDIS: Bureaucracy, Big Business, and Moneypots

Part 4: Sustainable Growth and Real Diversification

This is part 4 of a 5 part series, if you're just catching up, I'd suggest beginning with our first article, Introducing Absolute Power within the NDIS.

The Mirage of Diversification

The Mirage of Diversification
The NDIS has become a focal point for inefficiency, bloated operations, and questionable practices. Many businesses thriving solely on government revenue sources are now grappling with shrinking budgets and an increasing emphasis on efficiency.

The issue lies in the mirage of diversification. A business entirely reliant on a single source of government funding cannot claim to be diversified. Regardless of how many disciplines of therapy, or assistive services they provide. This lack of true diversification exposes businesses, participants, and the broader economy to significant risks, particularly when policy shifts or funding cuts occur.

Consider the ripple effects: when a sole trader exits the system, the SMEs that outsource to them lose critical revenue. Compounded by reduced contracts and staffing cuts, these businesses face a precarious position that echoes financial contagion scenarios seen in economic crises.

The recent reductions in funding for Music and Art therapy illustrate this vulnerability. These policy shifts highlight how businesses structured heavily around singular revenue sources (ie. the government) are ill-equipped to deal with sudden policy changes. The real question isn’t whether these businesses can adapt but whether their current models are viable long-term.

Bureaucracy, Big Business, and Moneypots

The NDIS’s design has inadvertently attracted not only small-scale inefficiencies but also large-scale corporate involvement. Companies like Freedom Care Group (FCG) exemplify the challenges: unsustainable business models and questionable practices that culminate in financial instability and participant harm.

This corporate encroachment undermines the NDIS’s purpose. Instead of empowering participants, funding often flows to corporate owners and shareholders, perpetuating inefficiency. The current model rewards volume over value, with mediocrity filling the gaps left by a system that fails to prioritise quality care.

The funding flow is clear:

• Government Funding → NDIS Providers → Corporate Owners → Shareholders

This structure misaligns incentives and facilitates an environment where genuine expertise is undervalued, and resources are squandered.

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Freedom Care Group: A Case Study in Misaligned Incentives

‍The collapse of Freedom Care Group (FCG), Australia’s first ASX-listed NDIS provider, underscores the systemic risks of corporate involvement in the scheme. Relying on government contracts for 95% of its revenue, FCG pursued aggressive expansion while failing to establish financial stability. Regulatory concerns over service quality and compliance led to payment suspensions, which ultimately drove the company into administration.

With over 1,000 participants relying on FCG for care, the consequences of this collapse are far-reaching. This case highlights how corporate priorities—such as shareholder returns and growth—can misalign with the NDIS’s purpose of delivering participant-centred care.

The lesson is clear: the NDIS must prioritise sustainable, quality-focused models over volume-driven approaches that expose participants and the system to unnecessary risks.

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The Problem with Incremental Reform

Incremental reform isn’t enough. The NDIS sector now constitutes a significant portion of the Australian economy, buoying healthcare and stabilising the nation post economic flashpoints such as the high inflationary period of 2022-23. However, without meaningful reform, the system risks reaching a breaking point.

As funding pressures mount, highly leveraged businesses reliant on low gross profit margins face potential collapse. This could trigger a contagion effect, destabilising the sector and leaving participants stranded.

Attempts to clean up inefficiencies have already impacted larger entities, with ripple effects extending to the Australian Stock Exchange (ASX). These challenges demand urgent attention, not piecemeal solutions.

A Retrospective on Policy Failures

The NDIS’s systemic issues are not new. Decades of policymaking have culminated in today’s challenges. From the Howard government’s cash refunds on franking credits to the Gillard government’s rushed rollout of a $15 billion scheme (now $40 billion) without sufficient pilots, successive administrations have contributed to the inefficiencies.

A pilot-based approach could have mitigated these risks, allowing for gradual scaling and refinement. Instead, the system was launched at scale, amplifying inefficiencies and making reform politically unpalatable.

Building a Sustainable Future

The NDIS’s future depends on more than diversifying revenue streams. It requires a systemic transformation—one that aligns funding with outcomes, leverages expertise through the barbell strategy, and revisits proven community health models.

This is an opportunity to shift from a culture of waste to one of efficiency, ensuring the NDIS delivers on its promise to empower Australia’s most vulnerable with meaningful, high-quality care. It’s time for bold decisions that prioritise sustainability over short-term fixes.

Problem #5: Corporate Greed

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In the final section we summarise with Sustainability: The Foundation for NDIS Reform.

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Why This Matters:

‍Despite numerous government reports and think tank publications exploring the NDIS, truly actionable solutions have remained elusive. Recent policy changes, such as the removal of Music and Art therapists, have inadvertently harmed participant wellbeing while failing to tackle the system's fundamental inefficiencies. Often, these decisions, although presented as evidence-based, tend to reflect political convenience rather than genuine reform. The strategy of targeting smaller providers to cut costs sidesteps the larger, structural issues at the core of the program.

Over the past decade, the NDIS has evolved into a $40 Billion+ initiative. Yet, it has become synonymous with inefficiency, unethical practices, and fraud. This state of vulnerability demands immediate attention. Meaningful reform is urgently required to protect participant outcomes and safeguard taxpayer investments.

At Culture of One, we hold accountability, transparency, and ethical leadership as paramount for governments, providers, and all stakeholders involved. This series provides a comprehensive exploration of the sector’s challenges and opportunities. It’s not a quick read, but it is a necessary one for anyone committed to understanding and improving the landscape of disability care in Australia.

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