The Albanese government is forging ahead with planned changes to the NDIS, including plans to curb the amount participants can claim in budget top-ups, amid a looming fight with state and territory leaders over who should pay for disability services.
The NDIS minister, Bill Shorten, will introduce a new bill on Wednesday morning as part of the government’s first tranche of reforms to return the scheme to its original intent of supporting Australians with permanent disability and tackle issues with its ballooning costs.
The changes will allow the government to tweak NDIS rules to target plan inflation – where participants request more funds for supports than originally budgeted for – along with clarifying the two pathways for entry to the scheme, and what items and supports can be funded by participants.
It will also strengthen the NDIS watchdog’s powers to crack down on dodgy auditors.
The bill marks the federal government’s initial legislative response to the NDIS review, which recommended the scheme shift its focus to providing supports for those with a functional impairment, rather than a focus on those with a diagnosis.
Shorten said the changes were “evolution, not revolution” and would ensure the crucial support service would be maintained.
“This is not a fait accompli, we think this reflects honestly what needs to be done,” he said. “If people have got real issues to raise, we will listen to them and will reflect it in the bill in the coming weeks and months.”
Interplan inflation, where a participant outspends an improved budget and requests further funding, will be addressed by changing the way a plan is budgeted. The new framework will remove itemised budgets, replacing it with flexible supports and stated supports.
Rules outlining what can be funded under the scheme will also be clarified. The bill’s explanatory memorandum will outline NDIS budgets cannot be used, for example, on holidays, groceries, online gambling, cosmetics, perfume or bills.
The transition for some participants is expected to occur over the next 12 to 18 months.
It comes as the latest projections show the annual cost will grow from $35.2bn in 2022-23 to more than $50bn in 2025-26. It is expected the NDIS could push past $90bn a year within a decade.
The NDIS review, released in December, was tasked with looking at the fast-rising dollar figure, and how to restore trust and confidence in the scheme among the community.
It recommended those with less severe disabilities, based on comprehensive needs-based assessments, transition from the NDIS scheme to state and territory disability services, referred to as foundational supports.
But state and territory leaders are concerned they will be left with the bill, and have warned there hasn’t been enough consultation on the changes to who can access the scheme and who will be transitioned to rely on foundational supports.
On Monday the premiers and chief ministers wrote to the federal government to delay any legislation until further consultation be done.
The NSW premier, Chris Minns, said on Tuesday the concerns over access, changes to service delivery and the fiscal implications were “unanimous” among the leaders.
“If at the end of the day, the commonwealth charges full steam ahead, a lot of people will be off the NDIS programs and they will be tumbled into state services,” Minns said. “I want to make sure that we catch them, and we can only do that if we can quantify how much this will ultimately cost.”
A Victorian government spokesperson said on Tuesday: “The changes that are now being proposed go further than what was agreed by national cabinet and we believe will have a damaging impact on the NDIS and those who rely on it.”
Wednesday’s bill is not expected to outline any changes to foundational supports provided outside the NDIS.
In December Anthony Albanese struck a $10.5bn deal with the states and territories to split the cost of disability services outside the NDIS in return for granting them a further three years of GST funding.
The three-year extension of the GST “no worse off” guarantee, which compensates states and territories for GST shortfalls, from 2027-28 would cost $3.5bn each year.
The deal was struck in return for agreement with the states and territories to finance additional disability services outside the NDIS program on a 50-50 funding model in order to meet an agreed growth rate cap of 8% from 2026.