Proposed changes to the NDIS form part of a major savings measure designed to tip $36.2bn back into the federal budget over the next four years. Photograph: Asanka Ratnayake/Getty ImagesView image in fullscreenProposed changes to the NDIS form part of a major savings measure designed to tip $36.2bn back into the federal budget over the next four years. Photograph: Asanka Ratnayake/Getty ImagesExplainerNDIS cuts could leave some participants with a funding gap. How will the changes affect you?Proposals also grant the health minister power to change disability support rules without state or territory approval. Here’s what you need to know
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Funding for some services within the National Disability Insurance Scheme will be slashed – even in cases where participants could be left with a funding gap – as part of a sweeping proposal to drastically curb the scheme’s annual growth.
The proposed changes, revealed on Thursday, will also grant the health minister, Mark Butler, god-like powers to reduce overall funding for support categories, determine pricing guides and caps for services and support, and the ability to change NDIS rules without state and territory approval for the first 12 months.
2:36Why was the NDIS so severely cut? And your other 2026 federal budget questions answered – videoThe changes form part of a major savings measure designed to tip $36.2bn back into the federal budget over the next four years.
As we peel back hundreds of pages of legislation and accompanying explanatory documents, here’s what you need to know.
Starting with one of its most contentious proposals, Labor’s plan will establish a legal framework to determine who can, and cannot, access the NDIS.
Butler said this will be focused on limiting scheme entry to people with “substantially reduced functional capacity”, which will be determined by a standardised, evidence-based tool.
The bill will also clarify the meaning of permanence and only grant participants access to the NDIS if they can first show they have exhausted “all appropriate” treatment options.
Finally, it will include more detail on how NDIS eligibility may be limited for individuals already accessing support from other mainstream services.
For example, if a person is receiving workers compensation or motor vehicle accident scheme support, they may not be eligible for the NDIS.
As foreshadowed by Butler, the legislation will rework plan reassessments – when a participant requests additional funding for their NDIS plan because of unexpected or unbudgeted costs. The proposed changes will narrow such requests to moments of “significant and ongoing” change to participants’ needs.
The NDIS determines support funding on a “reasonable and necessary” basis, but the bill will add sustainability and equity to funding considerations.
Plans will be suspended if reasonable attempts to contact a participant go unanswered. Plans can be revoked entirely if a participant cannot be contacted after being suspended for at least 90 days.
Basic registration details will be required for a number of NDIS providers. The National Disability Insurance Agency will be given new monitoring and investigation powers to deal with any wrongdoing but will need to undertake risk assessments before approaching participants.
Payments made to participants who have not kept appropriate records can be raised by the NDIA as debts. Providers without records could be handed a civil penalty.
NDIS supports will need to be claimed within 90 days of delivery, reduced from two years.
Automation for processing claims and payments will be allowed.
While some specific changes to the NDIS are yet to be determined, the proposal will expand the health minister’s powers considerably.
Read moreOne of those changes includes the ability to reduce funding for whole groups of supports. There are four main funding groups within a participant’s budget: core, capacity building, capital and recurring.
Core supports include personal care and transport, capacity building includes therapies and work programs, and capital supports include home modifications and assistive technology.
Last month, Butler flagged he intended to claw back funding for social and community participation activities (within the capacity building funding pool) because it had grown “substantially bigger”. Daily activities (also within capacity building funding) are also on the downsizing list.
The minister will also have final say over maximum prices for NDIS supports and services.
Finally, the bill includes a 12-month “Henry VIII” clause to give the minister sweeping powers to directly change NDIS laws without needing the support of states and territories.
While the government has talked up its focus on returning the NDIS back to its “original intent”, there’s no doubt the scheme’s fast-growing cost is the government’s main priority.
In the bill’s explanatory document, there is also a suggestion the funding reduction could result in a funding gap for some participants.
“To improve consistency and equity across the scheme, the application of ‘reasonable and necessary supports’ must link to consideration of what is reasonable for the scheme to fund,” it said.
“This means funding for some NDIS supports may be less than the actual cost of providing or acquiring the support.”
The federal budget papers revealed the government hopes to save $36.2bn from the changes, and limit the scheme’s growth to an average 3.6% until 2030.
The bill has been introduced to parliament but it will be sent to an inquiry due to report back in June. It will hold at least two public hearings.
At a press conference on Thursday, Butler suggested many of the details were still being worked through and would be consulted on with the technical advisory group – members of which will be chosen by the minister and the NDIA, and will include people with lived experience of disability.
As for the questions around a potential payment gap for some supports, Butler provided a cryptic response.
“There’ll be quite differentiated pricing in place. What we’re doing is providing the minister with the power to implement that, and that will become clear as we develop the detail over time,” he said.
