Navigating the 'Thriving Kids' Policy: Shifting Developmental and Autism Supports Off the NDIS
TL;DR: The federal government's upcoming 'Thriving Kids' policy will transition children with mild-to-moderate autism and developmental delays off the NDIS and into state systems by October 2026, raising major concerns about funding gaps and over-stretched state resources.
Explaining the 'Thriving Kids' Policy Reform
The landscape of disability funding in Australia is undergoing a major restructure. Under the federal government's upcoming 'Thriving Kids' policy, children diagnosed with mild-to-moderate developmental delays or autism will no longer be eligible for funding under the National Disability Insurance Scheme (NDIS). Instead, their care, therapy, and developmental supports will be transitioned entirely to state-based mental health and community healthcare systems.
This policy reform is scheduled for rollout in October 2026. Despite the proximity of this deadline, precise operational and funding details regarding how state governments will absorb, manage, and deliver these services remain unfinalised. The federal Health Minister has unveiled these NDIS changes as part of a broader package of scheme reforms, but the proposed transition has met with widespread apprehension from clinical professionals, regional coordinators, and disability advocates who fear a significant gap in service delivery.
The Funding Realities of State vs. Federal Systems
The fundamental concern surrounding the 'Thriving Kids' policy is the vast disparity in funding and capacity between the federally managed NDIS and state-run healthcare systems. The NDIS was designed to provide individualised, flexible funding packages to participants. In contrast, state-based public healthcare systems operate on capped annual budgets and are currently grappling with severe structural deficits and staffing shortages.
This funding mismatch is particularly acute in New South Wales. Data compiled by the Royal Australian and New Zealand College of Psychiatrists (RANZCP) reveals that NSW community mental health teams currently receive the lowest state government funding per capita of any Australian state. Transferring thousands of children with developmental and behavioral needs from a federally funded scheme into a state system that is already the lowest-funded per capita in the nation presents immediate risks to service continuity.
Furthermore, the public mental health workforce in NSW has been severely depleted. In 2024, more than half of the state's public staff specialist psychiatrists resigned in protest over low pay rates and deteriorating clinical conditions. While the Industrial Relations Commission subsequently ordered the Minns state government to provide a 20 per cent pay rise to encourage their return, RANZCP NSW Branch Chair Dr. Ian Korbel noted that the public system failed to recover all of the lost clinicians. Many chose to remain in the private sector or in telehealth roles, leaving the public sector poorly equipped to handle a new influx of former NDIS participants.
Risk Factors in Shifting Mild-to-Moderate Autism off the NDIS
Psychiatric and developmental experts warn that categorizing autism and developmental delays into "mild-to-moderate" brackets to determine NDIS eligibility is clinically problematic. Without the early intervention therapies currently funded by the NDIS, children with moderate developmental delays can rapidly deteriorate, leading to severe behavioral and psychological conditions.
Professor Valsamma Eapen, a psychiatrist who led a comprehensive report on youth mental health resources, stated that current resourcing constraints mean state-based services can generally only assist children after their conditions have become severe. By removing mild-to-moderate supports from the NDIS and placing them into an over-burdened state system, the 'Thriving Kids' policy could systematically delay care. Children who could have been successfully supported with early, low-cost interventions may instead deteriorate until they require high-cost, acute hospital care.
This systemic bottleneck is already visible in the lives of families who cannot find available clinicians despite having active funding. For instance, 12-year-old Grace was granted funding for a specialised counsellor two years ago, but has still not received an appointment because local clinical waitlists are entirely full. Her mother, Jo Cockle, described the profound heartbreak of being unable to secure basic care for her children due to workforce shortages.
The Call for a Transition Pause and Detailed Planning
Given the unfinalised state of the transition plans and the clear workforce deficit, there are growing calls from independent members of parliament, such as Kooyong MP Monique Ryan, to pause rapid NDIS changes. Advocates argue that the federal government must not proceed with removing developmental supports from the NDIS until state-based health systems are fully funded, staffed, and ready to receive these vulnerable young patients.
While NSW Mental Health Minister Rose Jackson has stated that her government is investing in recruitment, training, and new clinical models to strengthen the state's mental health workforce, clinical associations maintain that these long-term recruitment efforts will not resolve the immediate specialist deficit before the October 2026 rollout.
Key Takeaways
- Impending Funding Cutoff: The 'Thriving Kids' policy will move children with mild-to-moderate autism and developmental delays off the NDIS and into state systems starting October 2026.
- State Funding Deficits: NSW community mental health teams receive the lowest state government funding per capita in Australia, making the transition of NDIS participants highly high-risk.
- Workforce Deficit: Over 50 per cent of NSW public staff specialist psychiatrists resigned in 2024; despite a subsequent 20 per cent pay rise, public sector vacancy rates remain high.
- Vicious Cycle of Delay: Shifting children to state systems where care is restricted to severe cases means early intervention is lost, leading to worsening patient health and increased acute presentations.
- Calls to Pause Reform: Parliamentary representatives and disability advocates are calling on the government to pause NDIS funding changes until state healthcare capacity is demonstrably ready.