New Labor laws aim to slash $38 billion in spending through tighter eligibility and ministerial budget powers
Updated ,first published
Labour’s new laws limiting who can access the National Disability Insurance Scheme will give the minister responsible broad powers to make blanket cuts to budgets or therapies and enable automated decision-making in efforts to cut spending by $38 billion over four years.
The bill restricting who can take part in the $56 billion NDIS, introduced by Health Secretary Mark Butler on Thursday, will require people to have exhausted all other treatment options before being considered permanently disabled to qualify for the programme.
Broad ministerial powers will allow Butler to immediately pause certain parts of the plan if costs start to rise, but the minister reassured participants that any automation would be carefully considered and focused on administrative tasks as he sought to allay fears of a “Robodebt” scenario.
These laws are vital for the government to deliver on the NDIS overhaul and recoup around $170 billion over ten years. More than half of the $64 billion in savings put into the budget on Tuesday assumes NDIS availability and spending will be cut significantly over four years.
But Labour’s plans were immediately disrupted on Thursday when the Senate sent the bill to an inquiry, which is due to be reported by June, with the Greens declaring it “one of the most dangerous pieces of legislation our government has put forward in relation to disabled people”.
“This new bill introduces huge and significant changes to the NDIS that will make life harder for disabled people across the country,” Greens disability spokesman Jordon Steele-John said.
“It also gives the minister huge new powers that they don’t have today to make major changes to the supports that are currently available to people with disabilities and our families. And they can make those decisions sitting behind a desk in Canberra without ever having to talk to you.”
The government will need the Coalition’s support to pass the bill.
“The Coalition will carefully review the bill and consult with the disability community through the Senate investigation, which I think is an important part of the process,” spokeswoman Melissa McIntosh said.
The NDIS booms have eroded Labor’s profitability as broad eligibility criteria, lax regulations and unclear legal definitions have allowed the program’s costs to rise by more than 10 per cent a year. The overhaul aims to return the facility to its original purpose, allowing it to grow by 5 percent in the future.
“The NDIS was intended to operate as a targeted, insurance-based program for people with permanent and serious disabilities,” the bill’s explanatory document published on Thursday said.
“It is not intended to operate as an unlimited source of funding for all disability-related needs or to be used to address supports that would be more appropriately provided by other service systems.”
Up to 300,000 people will be removed from the program when eligibility changes come from January 2028. Tuesday’s budget documents show annual NDIS funding will backtrack to $55 billion once the changes are introduced, then return to $56.2 billion in 2029-30.
New laws reveal first steps of eligibility changes
The bill clarifies that a person’s “functional capacity” is assessed based on whether they can perform an activity without the assistance of other people, technology or modifications; It does not take into account personal circumstances such as financial means or living arrangements.
It also clarifies how “persistent impairments” are defined, saying that someone must have explored all other appropriate treatments before accessing the program.
“If there is another treatment that would materially improve, reverse or alleviate the effect, the impairment cannot be found to be permanent,” the statement says. “To be found permanent, the person’s disorder or disorders are likely to persist throughout the person’s life.”
The legislation will tighten compliance with the NDIS if there are other supports or services that may meet someone’s needs. These include whether someone can access workers’ compensation or motor vehicle accident compensation plans, affecting an estimated 8,000 participants.
“This plan was never set up to replace health care, rehabilitation and other treatments that could potentially prevent lifelong disability, so we will be putting in place rules that will make that clearer,” Butler said Thursday.
“For example, we will not require people with profound hearing loss to receive cochlear implants. There will be exceptions to treatment and the details of this will be developed.”
The legislation will also confirm that people can only access NDIS support for needs that arise directly from their disability. This means, for example, that a person with cerebral palsy using the scheme will not be able to receive support for ADHD or dyslexia.
These changes, along with court and tribunal decisions that have expanded the scope of the NDIS, will override automatic “access lists” that currently guarantee people can enter the program with diagnoses such as level two or three autism.
A technical advisory group will advise the government on appropriate thresholds and assessments for eligibility and will be informed by community consultation.
Broad powers give minister control over spending
Thursday’s legislation also gives the minister new powers to make sharp cuts to certain parts of the NDIS, limiting how much money is allocated or how many support can be accessed.
“These determinations do not apply on a ‘plan basis’ basis, but rather have the effect of reducing funding for specific support groups across the programme,” the statement said.
The measure is designed to allow the minister to “directly manage the financial sustainability of the programme”, with the result that any changes to people’s finances will not be subject to merits reviews.
Butler said last month he would use his power to allocate people’s social and community engagement budgets, which would triple to $12 billion in five years. It will reset that funding to 2023 levels to quickly cut spending.
“I also plan to reset therapy budgets, which would mean going from about 71 or 72 hours of therapy per year on average to about 68 hours of therapy per year,” he said Thursday.
The minister will have the power to set prices rather than the National Disability Insurance Agency, and Butler plans to pay registered providers more than unregistered providers for the same service.
Anti-fraud laws will allow for new fines and give the National Disability Insurance Corporation the power to investigate criminal activity. Providers and participants will be required to maintain records for certain periods of time and submit requests within 90 days of support being provided.
It also makes possible other changes Butler announced last month; for example, restricting unplanned plan reassessments, a key driver of NDIS inflation, and moving to a system where the government decides which plan managers can use.
Natassia Chrysanthos is a Federal Political Correspondent. He has previously reported on immigration, health, social issues and the NDIS from Parliament House in Canberra.Connect with: X or email.
