Butler unveils NDIS overhaul: digital payments, provider panel and no means testing

Health Minister Mark Butler has unveiled sweeping reforms to the $50 billion National Disability Insurance Scheme, using a pre-budget address at the National Press Club to promise a crackdown on fraud, tighter oversight of providers and a shift to digital payments.

He flagged changes to aged care alongside the NDIS overhaul. Butler said the measures were designed to stop rorting without targeting people with disability.

“When we talk about fraud in the NDIS, we’re not talking about people with disability,” he said, characterising offenders as “low lives who are scamming both the taxpayer, but more importantly, people with a disability.” Under the plan, 90 per cent of all payments would go to registered providers, and a new digital payment system would require recipients to declare themselves, enabling data to be cross-checked between government agencies.

The minister said the reforms would move the scheme away from what he called a “let it rip” market that had grown with little oversight. Providers would have to apply and demonstrate compliance with performance standards to join a panel. Participants would retain “choice and control,” he said, selecting from approved providers rather than being assigned a single provider.

“There will be still choice and control, but it won’t be this free-for-all market that has developed over the last 10 years,” Butler said. Amid speculation ahead of the speech, Butler ruled out means testing and co-contributions as part of the overhaul.

He said universal access was fundamental to a scheme for lifelong supports and argued that most people who need such supports have limited financial means, so means testing “wouldn’t deliver much anyway.” He also outlined a shift to an eligibility test based on functional capacity rather than diagnosis.

Butler said most people currently on the scheme with psychosocial disability and serious mental health needs would remain eligible, noting it is not easy to qualify on mental health grounds. He added there was likely unmet need outside the scheme, identified in discussions with states and territories, and said this would be addressed in negotiations next year under mental health and suicide prevention agreements.

The government has previously raised hopes of reducing annual NDIS spending growth to about 5 per cent, down from more than 20 per cent when Labor came to power in 2022. Butler said the plan includes sweeping cuts over the next four years to restrain costs while maintaining the scheme’s core principles.

Further detail on psychosocial supports will form part of next year’s talks with states and territories, Butler said, as the government works to keep the scheme sustainable while preserving participant choice and access.