Labor outlines NDIS eligibility overhaul; about 160,000 projected to lose supports

Labor will move to tighten eligibility for the National Disability Insurance Scheme (NDIS), shifting away from diagnosis-based entry in a bid to curb costs, a change the government projects would see about 160,000 people lose supports. The package will be introduced to parliament next month alongside the federal budget.

Health and NDIS Minister Mark Butler outlined the measures in a speech to the National Press Club, saying the overhaul is aimed at bringing the scheme’s projected cost down to about $55 billion by the end of the decade, from a forecast $70 billion under current settings.

He said the scheme “costs too much and is growing too fast” and warned its survival would be at risk without action to restrain spending growth to the government’s 5 to 6 per cent target. Under the proposal, standardised assessments of functional capacity would determine eligibility rather than diagnosis alone.

Mr Butler argued a “diagnosis gateway has funnelled people onto a scheme that was never designed for them,” adding, “there’s no particular area of diagnosis that will be treated differently to others.” The new eligibility rules are yet to be determined, but initial modelling projected the number of people using the NDIS would fall from about 760,000 currently to 600,000 by the end of the decade — 300,000 fewer than current projections for the same period.

Mr Butler said an assessment tool for new applicants is expected to be operating by the start of 2028. Existing participants will be reassessed against the new test as their plans come up for renewal. People who no longer meet the national criteria would be redirected into foundational support programs run by states and territories, including previously announced initiatives such as the Thriving Kids program.

The changes are projected to save the budget $22 billion over the forward estimates and avoid a $13 billion projected blow-out over the same period. Spending growth is expected to fall below inflation to around 2 per cent a year over the forward estimates as a result of the cuts, before returning to about 5 per cent from 2030.

The government signalled further NDIS-related announcements are forthcoming ahead of the budget.