Chalmers urges states to back NDIS overhaul as premiers warn of funding strain
Treasurer Jim Chalmers has urged his state and territory counterparts to back looming reforms to the National Disability Insurance Scheme, arguing the overhaul will ease pressure on their budgets even as premiers warn they cannot afford to fill gaps left by the changes.
As part of measures to reduce NDIS spending, about 160,000 people are slated to move off the scheme by 2030 and into state-run support systems. In a letter sent on Thursday, Chalmers told state and territory treasurers the reforms were necessary, warning that without changes the scheme’s costs would continue to rise sharply.
“We all have a stake in reforming the NDIS so it can provide the level of care that people need and for our governments to be able to sustainably fund the scheme,” he wrote, adding that governments shared an interest in “securing the future of the scheme” and its social licence.
The federal government says the changes would deliver more than $2.8 billion in combined state savings over the next four years. According to figures cited by Chalmers, NSW would save about $890 million, Victoria $720 million, Queensland $580 million and Western Australia $300 million.
He also noted states and territories agreed earlier this year to lift their NDIS contribution escalation rates in line with actual scheme growth in return for sharing in $25 billion of federal funding for public hospitals. Chalmers said the NDIS still cost too much compared with other social programs and was growing too fast.
NSW Premier Chris Minns said his state could not afford to ramp up supports to offset federal changes to the scheme. “We have to be really frank with people, we can’t offer at the state level the kinds of services that are being rolled out at the NDIS,” he told ABC TV, citing existing responsibilities for hospitals, education and housing.
“I don’t want to make the same mistakes that were initiated over 10 years ago when the NDIS was created.” David Cullen, the scheme’s top economic adviser from 2016 to 2022, urged premiers to support the overhaul, arguing it would leave states better off over time.
“If it doesn’t change, the NDIS is going to cost them more and more as the years go by,” he said, adding that expanding disability supports outside the NDIS would still cost states but less than staying on the current trajectory. “It’s in the interests of the states to build those supports.” Disability advocates have warned about gaps in services for people moved off the scheme.
Australian Autism Alliance co-chair Jenny Karavolos said autistic people often slipped through the cracks before the NDIS and argued new support systems would need to be built. Chalmers said the Commonwealth was committed to working with the states and territories on implementing the reforms.