NDIS providers who allow participants to be harmed under their watch will face fines of more than $15 million as the government continues its mission to weed dodgy operators out of the disability support system.
Outgoing minister Bill Shorten unveiled the second tranche of NDIS reforms on Monday, following earlier measures limiting the scheme's cost ballooning out of control.
Providers currently face a maximum fine of $400,000 when a participant is hurt or injured under their care, bringing it in line with penalties for harming a worker.
The new legislation will also allow the NDIS watchdog to refer unscrupulous providers for criminal prosecution if, for example, they flout registration requirements.
Mr Shorten said it would strengthen deterrence and compliance powers for the NDIS Quality and Safeguards Commission and ensure better service quality and safety for participants.
"These changes are well overdue to ensure the watchdog has the powers it needs to keep dodgy providers out of the NDIS for good," Mr Shorten said.
Stronger information gathering powers will also give the commission better ability to monitor providers and ensure they are complying with requirements.
In addition, it will be given broader scope to ban people operating in other areas of the NDIS, including auditing and consulting.
The new measures were recommended by the independent NDIS review, which called for the watchdog's powers to be strengthened.
"The changes will increase the transparency and accountability of providers and expand banning powers, which currently only relate to providers, so they can be applied to bad actors who are operating in all areas of the NDIS," Mr Shorten said.
"It will deliver strong measures to deter aggressive commercial practice by providers that exploits NDIS participants and erodes scheme sustainability."
Consultation on the draft legislation will begin immediately.
Mr Shorten said the government was determined to work closely with the states and territories and the disability sector to ensure the reforms made good on their promise of improving participants' safety and experience of the scheme.
Some disability advocates were scathing of the government for what they saw as inadequate consultation during the first stage of the NDIS reforms.
