Parliament has passed the largest contraction of the NDIS since its creation. The amendments improve the bill, but budgets will shrink and eligibility tighten before foundational supports are operating.
The Senate passed the largest contraction of the National Disability Insurance Scheme since its creation on Tuesday night, by 28 votes to 12, after the government tabled 63 amendments hours before the vote. The House agreed to those amendments on Wednesday. The amendments are real improvements. They do not touch the problem at the centre of the package.
How we got here
The NDIS was built on a proposition the Productivity Commission put plainly in 2011: that disability support in Australia was underfunded, unfair and inefficient, and that the way to fix it was to give people an individual entitlement rather than leave them queueing for whatever a state government happened to have funded that year.
At the time the Commonwealth was contributing about $2.3 billion to disability services and the states about $4.7 billion. The commission proposed something structurally different: an individually assessed, demand-driven entitlement, costed on insurance principles, in which what a person received followed from what they needed rather than from what remained in the appropriation.
That design worked, in the sense that it did what its architects intended. It also cost more than they projected, and grew faster than the economy. By 2019 the Tune review was recommending administrative repairs. In 2021 the agency’s attempt to introduce compulsory independent assessments collapsed under sector opposition. In 2023 the independent review led by Bruce Bonyhady and Lisa Paul delivered 26 recommendations, the Disability Royal Commission delivered 222, and National Cabinet agreed to hold scheme growth to 8 per cent a year.
The review’s central finding was that the NDIS had become, in its own phrase, the only lifeboat in the ocean: the sole source of publicly funded disability support, because everything around it had thinned out. Its answer was foundational supports, a tier of services outside the scheme for the roughly nine in ten Australians with disability who are not participants.
The 2024 Act made the first structural changes, defining in legislation what the scheme funds. The bill that passed on Tuesday is the second and larger instalment.
What the government proposed
Announced in April and legislated from 14 May, the package is designed to save $37.8 billion by the end of the decade. Three mechanisms carry most of that.
The first is a new ministerial power to make support determinations, instruments that reduce funding for whole categories of support across every participant who receives them, regardless of individual circumstance. The first application is already scheduled: participant budgets for social, civic and community participation, and for capacity building in daily activities, will be progressively adjusted from 1 October 2026.
The second is a change to eligibility. From 1 January 2028, access will turn on standardised assessment of functional capacity rather than on diagnosis alone. In principle this is the right move, and it is what comparable systems overseas do. Two people with the same functional limitations should not be treated differently because of the label attached to their condition.
The third is a tightening of what counts as permanent and significant disability, together with a substantial package of fraud and integrity measures.
What was agreed
The parliamentary story of the last three months is instructive. The sector was given two weeks to make submissions on a 109-page bill. In June the Greens traded an eight-week extension of the inquiry for a set of amendments, then announced they would oppose the bill anyway. Those amendments built what the Greens called a ‘firewall’: support determinations cannot be used to cut daily living, transport, consumables, assistive technology or home modifications. The ministerial power was confined to social, community and civic participation.
The Senate committee reported on 14 August recommending the bill pass. Four days later the government tabled 63 further amendments, and the bill passed the same night.
The amendments are not cosmetic. Participants requiring continuous 24-hour care gain an escalation pathway, allowing them to seek a plan variation and to challenge ministerial decisions affecting their funding. The operation of support determinations is clarified, including who they apply to. New aggravated integrity offences cover obtaining funds by deception, providing false information, abuse of position as a participant’s nominee and intentional destruction of records. Plan management arrangements are separated from the delivery of other supports, with conflicts of interest to be managed under agreement with the agency.
What secured passage, however, was not any of this. It was a deal with the Coalition, which removed the need for crossbench votes. The Coalition’s price was unrelated to disability: the removal of a negative gearing measure affecting divorcees and widows. The parliamentary leverage that the disability community had spent three months building evaporated in an afternoon, and the final bargain was struck over a matter that has nothing to do with the NDIS.
What the compromises do, and what they leave alone
Take the firewall first. It is a genuine protection, and it removes the possibility of a minister cutting the supports people rely on to wash, eat, get to medical appointments and get to work. It is also worth being precise about what it protects. It ring-fences categories, not people, and it leaves exposed the one category where the government had already announced it intended to cut. The October adjustment to social, civic and community participation budgets proceeds exactly as planned. A protection that permits the cut its author intended is a constraint on future ministers rather than on this one.
The escalation pathway is the same shape. It addresses the sharpest edge of the reform, which is the prospect of someone needing round-the-clock support losing it through an instrument aimed at a whole category. That matters, and the people it protects are the people with least capacity to absorb harm. It operates case by case, on application, which means it will be exercised by those who know it exists and can navigate it. It does not alter the aggregate the package is designed to deliver.
The integrity provisions are the least contentious part of the bill and probably the most overdue. Very large numbers of providers operate outside the registration system, because registration was never compulsory for most supports, and the quality regulator’s reach stops where registration stops. Tougher offences are worth having. They are not a substitute for fixing the architecture that created the exposure.
The problem nobody amended
The reform’s difficulty is not its diagnosis. Planning outcomes have varied indefensibly between people with comparable need. Diagnostic eligibility has produced anomalies no principle can justify. Expenditure growth on the previous trajectory was not indefinitely fundable. A government confronting that evidence and doing nothing would be indefensible.
The difficulty is sequence. Budgets are adjusted from October this year. Eligibility narrows from January 2028. Foundational supports, the system meant to receive the people the scheme no longer serves, does not exist in any operational form. Mark Butler conceded as much on Tuesday, acknowledging substantial work still to be done on foundational supports for children over eight and for adults who will leave the scheme. The states and territories have committed to a jointly agreed investment; the Senate committee’s interim report in June found it necessary to recommend that they honour it.
This is the oldest pattern in Australian disability administration, and it has a history worth knowing. When the disability institutions closed from the 1980s, a major, if dysfunctional, service modality was dismantled before an alternative care system was in place, and the consequences were absorbed by families, invisibly and without recompense.
The pre-NDIS state systems rationed through queues: the Victorian auditor-general found 1,370 people waiting for supported accommodation in 2008 and 1,439 waiting for an individual support package in 2011, with some waiting five years or more. The NDIS was created to end exactly that. Moving money out before the alternative is operating is how a queue is recreated, whatever the intention.
There is a second structural point. Australian governments have rarely committed to individual entitlements, and the NDIS was a deliberate exception. What this bill does is reintroduce aggregate fiscal control into an individually assessed entitlement while keeping the language of entitlement intact.
The mechanism is a ministerial instrument, subject to parliamentary disallowance, which sounds like a safeguard and is a thin one: disallowance is rarely exercised and cannot be applied selectively. The assessment framework that will decide eligibility from 2028 is not disallowable at all, and its variables and weightings have not been published. Discretion has not been reduced by any of this. It has moved from the planner’s office into instruments and rules, where it is harder to see and much harder to contest.
What to watch
Three things will determine whether this reform is remembered as repair or as retrenchment, and none of them was settled on Tuesday.
The first is the October support determination: its actual scale, and whether the government publishes distributional modelling showing who bears it. The second is the assessment framework for 2028. If its content, derivation and modelled effects are published before commencement, the reform can be argued about on the evidence. If they are not, participants will be told they are ineligible on grounds they cannot examine. The third is foundational supports: not the commitments, which exist, but commissioned services with funding attached, operating before January 2028 rather than after it.
Jordan Steele-John called this the end of the NDIS as it was promised. That overstates it. The scheme remains, and for people with permanent and significant disability it will continue to do what nothing before it did.
What has changed is the basis on which it operates. An entitlement that can be reduced by ministerial instrument, and entered only through an assessment nobody outside government has seen, is a different kind of promise from the one made in 2013.
Whether it is a promise worth having depends entirely on what governments do in the 18 months before the new eligibility rules commence. On the record of the past three months, that is not a comfortable thought.
Tom Keating
Dr Tom Keating is a Melbourne based writer and researcher. He is a former senior executive in health and human services in Victoria and a former senior academic with appointments in various Australian and overseas universities. He played a major role in the reform of disability services in Victoria in the 1980s and 90s. His book, The Evolution of Intellectual Disability Policy and Administration in Victoria: From Care and Custody to Citizenship is forthcoming (De Gruyter Brill, 2026).