The Albanese government has committed to major cuts to the National Disability Insurance Scheme, as Treasurer Jim Chalmers warns it is becoming too expensive for the government.

Chalmers on Monday confirmed NDIS reform will be the 'single biggest source of savings in the budget', with the federal government aiming to reduce the scheme's annual growth from 10 per cent to between 5 and 6 per cent.

'The NDIS has become easily the most important part of the savings package that we will present on budget night,' Chalmers said.

The scheme is set to cost about $49 billion this financial year and is now more expensive than Medicare. It is also not far off matching spending on defence, with costs on track to reach $62 billion by 2028–29.

'The NDIS is growing too fast for Australians to afford,' Chalmers said.

'Even the biggest supporters of the NDIS would acknowledge that the growth in spending on the NDIS is beyond what Australians can afford.'

Chalmers warned that rising expenses were putting the program's long‑term future at risk.

'Our highest priority in the NDIS is providing a high standard of support and care, and that means we need to be able to pay for it,' he said.

'When we came to office, the NDIS was out of control, and it had strayed a long way from its original intended purpose.'

NDIS Minister Mark Butler is expected to reveal further details in a major speech at the National Press Club on Wednesday.

Established a decade ago by Labor, the NDIS was designed to assist people with major disabilities. 

However, growing numbers of participants with autism, ADHD, anxiety and depression have sent costs soaring.

Widespread fraud has also impacted the scheme, with public support faltering.

In 2024, the scheme's head of fraud and integrity, John Dardo, revealed that around $2 billion is being wrongfully spent on everything from luxury holidays to mortgages and flashy cars.

Dardo also revealed that organised crime groups had infiltrated the NDIS by setting up dodgy provider businesses or posing as support coordinators.

'These are not genuine providers, these are people who should not be in business, these are not people that should be allowed near government schemes of any kind, and they're in partnership in some cases with health professionals, who we've already taken down or are in the process of taking down.'

'Examples just in the last week include a $20,000 holiday, a $10,000 holiday,' he said at the time.

'Fortunately, when we approached them, they agreed to repay the money. But we have other participants who cease contact and refuse to engage.'

In one case of fraud, a man on a $480,000 annual plan was receiving $40,000 a month - double what he actually needed for medical care - and using the rest to pay off his mortgage.

'We're not talking dozens or hundreds of participants - we're talking significantly higher. These are providers putting people in harm's way just to commoditise them and their plans,' he said.

He said he spoke to a participant who would meet their provider at an ATM to collect payments that were then used to buy drugs.

'I have spoken very recently to a participant who would meet the [NDIS] provider at the ATM, the provider would withdraw cash, and provide that cash to the participant for her to source illicit substances.'

Dr Nick Coatsworth, one of the country's most respected doctors, told Daily Mail that funding for the NDIS needed to be diverted.

'NDIS spending now is more than Medicare. It's more than aged care.'

'The generous funding of the NDIS is taking staff away from health and aged care, would be the most obvious reason,' he said.

Coatsworth said that among the budget's top five costs—health, aged care, defence and interest payments—those areas benefit 26 million Australians, while the NDIS serves just 800,000 participants.

'When are we going to transfer some of that NDIS funding into people who have paid taxes all their lives and are stuck now in your public hospitals?' Coatsworth asked at an AFR summit.