At least 160,000 people are expected to lose access to the National Disability Insurance Scheme under sweeping reforms designed to curb costs.
The Federal Government says the changes will save about $55 billion by 2030, slowing the scheme’s growth from a projected $70 billion annual cost while tightening eligibility and reducing average plan spending.
Under the overhaul, access to the NDIS will shift away from diagnosis-based entry, with new standardised assessments to determine eligibility based on functional capacity. Participant numbers are expected to fall from around 760,000 to 600,000 by the end of the decade as a result of both reducing new participants coming in to the program, and removing current participants from the scheme.
The Minister has confirmed that everyone currently on the NDIS will be reassessed under the new assessment tool once it is in place.
Those no longer eligible will be redirected to alternative “foundational supports”, which are yet to be fully defined, other than the determination that these services will be provided by state governments. Any disability support services will need to be re-established in NSW, where all such services were dismantled following the introduction of the NDIS in 2013. Other states, such as Queensland, have maintained disability support for those not eligible for the NDIS.
Health Minister Mark Butler said the changes were necessary to ensure the long-term sustainability of the scheme.
“It’s a hard decision, but it’s the responsible, right decision for us to take as a government, because we cannot see this scheme continue on its current path,” he said.
“It will be unsustainable from a taxpayer point of view, but much more importantly, its community support.”
The reforms form part of a broader plan to “secure the NDIS for future generations”, including tighter plan controls, reduced growth in participant budgets, and expanded measures to combat fraud and non-compliance.
In his address to the National Press Club unveiling the changes, Butler made much of the essential element of choice and flexibility still being central to the design of the NDIS. But in regional areas, where services are often thinner and alternatives more limited, the changes are already raising alarm.
Penny Lamaro, CEO of local disability services company Ascent Group, said the scale and pace of the reforms risk leaving vulnerable people behind.
“There is no question the system needs to be sustainable, but sustainability cannot come at the cost of the people it was designed to support,” she said.
“Right now, the burden of these changes is falling squarely on participants and their families.”
She raised concerns about the introduction of “foundational supports”, warning the system is not yet ready to absorb people exiting the NDIS.
“We are being asked to rely on a new system that doesn’t yet exist in any meaningful way,” she said.
“There is a real risk that people will fall through the gaps during this transition, and historically, it is regional communities like ours that feel those gaps the most.”
The reforms also aim to reduce the average cost of participant plans from $31,000 to $26,000 per year, alongside stricter controls on service providers and mandatory registration requirements. Services such as plan management and social inclusion services (such as taking people to appointments or events) will also be slashed.
Ms Lamaro said cuts to areas such as social and community participation would have immediate, real-world consequences.
“These aren’t ‘nice to have’ supports — they are what allow people to leave their homes, build relationships, learn skills, and be part of their community,” she said.
“When those supports are cut back, people don’t just lose services — they lose independence, connection, and opportunity.”
Social and community participation services are both more expensive to deliver – and the costs of have escalated dramatically with the cost of fuel in recent weeks – and more essential due to the lack of public transport and other social infrastructure in regional areas. These cuts pile on to cuts last year to travel allowances and rural loadings, and run the risk of seeing some local businesses fold.
While Ascent Group is confident of their capacity to adapt to the operational changes, Ms Lamaro said the focus must remain on participants.
“As an organisation, we will adapt — that’s our job,” she said.
“But our participants don’t have that same flexibility. They can’t absorb funding cuts or system gaps. They feel it immediately.”
Ms Lamaro said families were already under strain navigating the system and could not be expected to carry additional pressure.
“Families are already carrying a heavy load — managing plans, coordinating services, and advocating for their loved ones,” she said.
“These reforms risk shifting even more responsibility onto them without the supports to match.”
The government has indicated legislation will be introduced following the federal budget, with new eligibility rules expected to be in place by 2028, after significant consultation.
Lamaro called for careful, staged implementation of the reforms, with clear safeguards to protect those at risk.
“If we get this wrong, the consequences won’t show up in a budget line — they will show up in people’s lives,” she said.
“We need to make sure that in fixing the system, we don’t leave people behind.”
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