The watchdog for the National Disability Insurance Scheme (NDIS) says criminal rorting of the social service is even worse than previously feared.

In 2022, Michael Phelan, then the Australian Criminal Intelligence Commission chief, warned as much as a fifth of disability funding in the NDIS was being abused by organised crime groups, prompting a government crackdown.

The NDIS has cost an estimated $44 billion this financial year, meaning at least $8 billion worth of funding intended for people with disability is allegedly being abused by crime syndicates.

Mr Phelan said since taking on the job as acting commissioner of the NDIS Quality and Safeguards Commission, he had learned criminal influence was possibly worse than he thought.

“I certainly made those comments in 2022, in my position as head of the crime commission, and to be perfectly honest I haven’t stepped back from that position,” Mr Phelan said.

“When I made that assessment, we didn’t have perfect information before us, we only had what we got from the intelligence inside the commission … now I’ve been involved with working in the NDIS, it is arguable I was a little conservative — particularly with some of the things that have been happening.”

The NDIS is one of the most expensive items on the federal government’s books, and could become unsustainably expensive unless the government can find a way to contain its rising costs.

NDIS Minister Bill Shorten announced as part of last week’s federal budget that the government would change how people’s support packages are topped up when they hit their limits, concerned that some providers were advising clients to spend their money and then seek “automatic” top ups.

Mr Phelan said that intra-plan inflation was a “massive problem”, and must be driven from the system.

“That requires not a lot of work to drive that out, plan providers in particular need to remember who they’re responsible for, they’re there to provide a service for the participant, not to enrich themselves and not to do dodgy practices,” he said.

‘Modern intelligence’ funding to root out crooks

$160 million was also committed in the budget to stepping up the NDIS Quality and Safeguards Commission’s capabilities.

The government hopes its reforms and provider crackdowns will save the government $14.4 billion of expected growth in NDIS expenses over the next four years. 

Mr Shorten said the changes were overdue.

“There will be much-needed improvements, needed for really the last 10 years to be able to have modern forms of investigating and monitoring to make sure that some people, some service providers, are not ripping off people with disability and the taxpayer,” Mr Shorten said.

Mr Phelan said the regulator has been trying to do its job with “1990s data” and databases that did not match up.

He said modern intelligence techniques would allow the agency to get ahead of problems “before they become problems”.