This report examines the current state of operation of the disability sector and outlines the potential impacts of National Disability Insurance Scheme (NDIS) implementation. It specifically examines the state of the operating environment, the state of the NDIS, the policy environment, disability employment and the workforce. The report finds that most disability service providers are currently under intense pressure. It identifies a range of significant challenges including providers bearing additional cost from inefficient NDIS processes, the difficulty faced in recruiting additional staff, and a lack of working capital within the sector to support the growth necessary to implement the NDIS. The report contains 12 proposals to address these challenges. These include realistic NDIS pricing that recognise the cost of providing high quality care, more employment supports within NDIS plans, further investment in sector and workforce development, increased investment in data analysis and research to underpin service development and growth, and increased local flexibility and responsiveness of decision-making in NDIS systems.