Mark Butler details huge NDIS ‘reset’ that will cut off 160,000 people from receiving support by 2030

About 160,000 people receiving support from the National Disability Insurance Scheme will lose it by 2030, under a major reset of the massive taxpayer-funded program.

Health Minister Mark Butler detailed an overhaul of the NDIS that means it will still grow in dollar terms each year, but at a rate lower than inflation in the immediate future.

A dramatic shift in community sentiment about the NDIS — with seven in 10 people saying it had grown too large and struggled with dodgy providers, and six in 10 saying it was broken — meant it was rapidly losing its social license.

“It’s more than a source of support for people with disability, it’s a source of pride,” Mr Butler told the National Press Club as he laid out the case for change.

“But every story about a dodgy provider rorting the system eats away at that. Every example of taxpayer money wasted on fraud erodes trust.

“That’s why these reforms are about much more than Budget savings. This is about saving the NDIS itself.”

The scheme costs $52 billion this year, with 760,000 participants, and was slated to grow to $70 billion and 900,000 participants by 2030.

Mr Butler said the changes would pare this back to $55 billion and 600,000 people supported.

“But once that reset is done — and it’s absolutely the right reset, I’m convinced of that — then of course the scheme will continue to grow in an appropriate way, like other social programs,” he said, flagging a 5 per cent growth rate in the medium term, in line with Medicare or childcare.

He wants to pass legislation for some immediate changes by the end of June.

An overhaul of eligibility for the scheme will be worked on in concert with the sector, with the new system to start from January 2028.

These ambitious timelines will need the Coalition’s backing.

Shadow NDIS minister Melissa McIntosh didn’t provide much certainty on that front.

The Coalition “supports sensible reforms to stop the fraud, rorts and waste in the NDIS” and would work with the Government tackling that, she said, but was icier on plans to tighten eligibility.

“Exactly how bad is Australia’s budget that the only solution left is to go after our most vulnerable Australians?” she said.

“Right now, 761,000 people with disability who receive supports through the NDIS are worried about being reassessed for eligibility to get vital and often life-saving supports.”

The sweeping changes were cautiously welcomed across the disability community, but there was still massive uncertainty about key changes to be worked through over the next 18 months.

“You can’t close the door until you’ve opened the new door,” Disability Advocacy Network Australia chief executive Emma Bennison said.

Eligibility for the scheme will shift from “access lists” of diagnoses, which Mr Butler said were only ever intended to be temporary, to being based on whether a person has a significant reduction in their functional capacity that impacts their day-to-day living.

All current participants will be reassessed using this new criteria when their plans are up for renewal from 2028 onwards.

Megan Spindler-Smith, the acting chief executive of People with Disability Australia, said it would be naive to suggest this meant anything other than people with autism or psychosocial disabilities being disproportionately affected.

“I don’t say that to scaremonger. I say that because you just have to think about it logically: if you’re looking at functional capacity, those are the people who are likely to fall through the cracks,” she said.

However, Autism Association Australia head Nicole Rogerson said she wasn’t ready to panic yet, although she was worried that the States wouldn’t step up and fund other supports and services outside the NDIS despite agreeing to.

“I don’t think this is as clear sailing as maybe the minister made it out today,” she said.

“We have to work with the government to make sure that whether we’re moving these children between the schemes in the States or between the NDIS, that we’re not inadvertently missing giving appropriate supports to lots of those kids in the middle.”

Allan Fels, chair of Mind Australia and a former head fo the National Mental Health Commission, said the government’s plan was “necessary and sensible”.

“We need to cut the growth in the scheme while continuing to protect the vulnerable,” he said.

Funding under the social and community participation stream will be cut significantly, bringing it back to an average of $26,000 per person by 2028, or about $7000 below where it would be if left unchecked.

Mr Butler acknowledged that while some people would be able to readjust other funding in their plans to cover the shortfall, it would have an impact for others.

“We haven’t done that lightly, but an area that has tripled in the last five years alone, and is projected to grow to $20 billion in itself, is not something we think we can continue to sustain,” he said.

A $200 million Inclusive Communities Fund will be used to rebuild capability in community organisations to step in and offer the types of programs that have been funded under this part of the NDIS.

The States and Territories are also expected to stump up $6 billion for “foundational supports”, including Thriving Kids for children aged under nine with mild autism, that would help people not eligible for the NDIS.

These would resurrect State-level services that were slashed when the NDIS was established.

Mr Butler was adamant they would honour the 2023 national cabinet deal that saw them agree in exchange for more Commonwealth cash for hospitals and GST payments, despite Queensland already refusing to sign up for Thriving Kids and other premiers making unhappy noises about cost shifting.

“They all signed on to what is a package deal. It wasn’t a buffet that they can pick and choose from,” Mr Butler said.

Mandatory registration for providers will be expanded to include personal care, daily living supports, and supports provided in closed settings, which the Government has deemed “higher-risk activities” where quality services must be assured.

There will be a shift across the board to traceable digital payments, a tightening of unscheduled assessments, a 30 per cent cut in spending on intermediaries who manage people’s plans, and a new shortlist of accountable, quality providers for these third-party managers established for people to choose from.

A similar shortlist system will be set up for supported independent living and support coordination providers.

Martin Laverty, one of the NDIS architects who now heads up the nation’s largest provider of disability accommodation, non-profit Aruma, said the changes were long overdue and would improve standards.

“To hear a government commitment that preserves the scheme for those with the most significant and permanent disabilities, whilst setting up the potential for mild to moderate disability programs outside of the NDIS — that’s what the Productivity Commission planned 15 years ago,” he said.

“Many people with disabilities for the next period will be uncertain what these changes mean to them, and the opportunity for the disability community to shape the legislation will bring that clarity around who the scheme is for.”