What exactly is "integrity leakage"?

It is a broad term used by NDIS officials to describe money that is not spent according to scheme rules. This includes deliberate criminal fraud and "rorting" by providers, but it also covers "inadvertent non-compliance," where participants or providers make honest mistakes or administrative errors when claiming funds.

How much of the $3.7 billion is specifically due to fraud?

Officials testified that there is currently no statistically valid way to separate the exact amount of fraud from the total leakage figure. The agency measures the broad loss rather than maintaining a specific "fraud-only" percentage, though over 600 active investigations are currently underway.

Why is the NDIS considered a target for organized crime?

The Australian Criminal Intelligence Commission stated that high-level crime groups view government programs like the NDIS as a low-risk "business model." They exploit the high volume of unverified claims to generate capital, which is then often recycled into other criminal ventures.

What are the most common ways funds are misused?

Bureaucrats identified several key red flags, including providers charging for services that were never actually delivered, billing for expensive weekend rates when work was performed on weekdays, and the "rapid drawdown" of a participant's annual budget at a speed inconsistent with realistic service delivery.

How is the government planning to reduce these losses?

Beyond the work of the Fraud Fusion Taskforce, the government has proposed a massive overhaul aimed at saving $22 billion over four years. This includes shifting from a "reactive" to a "preventative" stance, increasing resource enforcement, and potentially removing up to 160,000 participants from the scheme to ensure sustainability.

Does this report suggest the NDIS is failing its participants?

While the figures show significant financial loss, the inquiry emphasized that the majority of the 760,000 participants and their providers are acting in good faith. The focus of the probe is to fix design flaws and "rushed" implementation mistakes to ensure the funds actually reach those who need them most.

NDIS Integrity Chief John Dardo reveals $3.7 billion in annual "integrity leakage" amid federal fraud probe

Written by Heidi Cuthbert Published May. 1 2026Last Updated May. 1 2026

The National Disability Insurance Scheme (NDIS) saw approximately $3.7 billion in funds improperly distributed last financial year, according to testimony from the scheme's integrity transformation chief, John Dardo.

Speaking before a parliamentary inquiry, Mr. Dardo revealed that "integrity leakage", a metric encompassing both criminal fraud and accidental non-compliance, accounted for 8.3% of the $45 billion in total payments.

The executive warned that these losses stem from a rushed initial rollout and a failure by the government to apply historical lessons from previous program failures to the NDIS framework.

The hearing, initiated by NDIS Minister Jenny McAllister, highlights systemic vulnerabilities as the scheme’s projected costs climb toward $50 billion this year.

While officials clarified that the majority of the 760,000 participants and their providers operate honestly, the Australian Criminal Intelligence Commission noted that organized crime syndicates are increasingly embedding themselves in the program to fund broader illegal activities.

Common rorts identified include charging weekend rates for weekday services and the rapid, suspicious drawdown of individual budgets.

In response to these pressures, a Fraud Fusion Taskforce has already triggered 25 successful prosecutions and the removal of over 2,500 providers.

This crackdown aligns with a broader federal overhaul intended to save $22 billion over the next four years by tightening eligibility and enforcement.

Critics within the agency noted that administrative errors were exacerbated by unverified claims and a lack of preventative resources.

The parliamentary committee is expected to deliver its final recommendations on resolving these structural weaknesses by July 2.