Almost unnoticed, the federal government has quietly pushed a Bill into parliament that will transform the NDIS as we know it.

Make no mistake – this Bill is about containing costs. And for good reason.

The spiralling cost growth of the NDIS – the National Disability Insurance Scheme – threatens its very existence. Doing nothing will only quicken its demise; moderating how much the NDIS grows year on year is essential to keeping this remarkable scheme going well into the future.

NDIS 2.0 will be better than Mark 1. It could finally banish the existential threat of uncontained cost growth, introduce consistency in the amount of funding each person gets and what they can spend it on, and ensure that only the people that need it will stay on the scheme for life.

Who can join the scheme, how long they can stay in it, and what they can spend their funding on could all be different as soon as June, if the Bill is passed.

The Bill more clearly defines the two categories of Australians the NDIS is designed to help: those who join through the scheme’s early intervention pathway, and those who join by meeting the eligibility criteria of permanent and severe disability. These categories already exist, but they don’t work the way they should.

A young child with developmental delay and an adult with a recently acquired spinal cord injury need very different things from the NDIS. Evidence-based therapies that foster the child’s development and minimise long-term impacts of a diagnosis justify a short-term funding plan with a fixed budget. By contrast, an adult with a spinal cord injury needs a much more individualised plan that helps them maximise their independence and pursue their long-term goals.

Under the Bill, people who join the NDIS as early intervention candidates, particularly children with autism or developmental delay and adults with episodic psychosocial disability (disabilities arising from severe mental illness), will have shorter-term plans that allow the agency to see if early intervention is working and reassess their need to be in the scheme.

The Bill also puts an end to the absurd situation where people can ignore correspondence from the agency and stay on the NDIS without being reassessed to see if they still need it.

People with lifelong disability, such as spinal cord injury or intellectual disabilities, could get plans that last up to five years if the Bill is passed, as opposed to one year under NDIS Mark 1. Longer-term plans for people with lifelong disability makes sense, not only because it is pointless to ask people to continually prove they still have a spinal cord injury or intellectual disability, but also because the cost of plans tends to go up every time they are replaced. So, increasing the length of plans for people whose needs are stable could help moderate the scheme’s cost growth.

The Bill performs a sleight of hand with a foundational concept of the 10-year-old NDIS: although the words ‘reasonable and necessary’ persist, they now refer to something else.

If the Bill is passed, the level of funding a person gets in their NDIS budget will be ‘reasonable and necessary’, not the individual supports they are funded for. In other words, reasonable and necessary will now refer to your personal spending cap. How you spend the money will be (mostly) up to you.

The Bill also turns the funding process on its head. Currently, people in the NDIS request a set of supports, and the agency gives them funding for those services (e.g. 20 hours of physiotherapy and the cost of an item of assistive technology). In NDIS 2.0, if you’re in the scheme, you’ll get a budget upfront, based on numerous variables that are yet to be decided but could include disability type, functional limitation, and family support.

It means the agency can more easily add up the cost of all NDIS plans to better keep them in line with the government’s 8 per cent growth target, rather than relying on thousands of tiny accounting decisions about individual budgets made by junior bureaucrats who can’t see the big picture.

Once you have your funding, you’re free to spend it as you please – so long as you’re spending it on ‘NDIS supports’.

NDIS supports is a new term, and it does two things: it expands the list of things you can’t buy with NDIS funding (including perfume, online gambling, and whitegoods), and it gives the agency a clearer definition to determine what the NDIS will fund. This means that anything left over should be picked up by non-NDIS-funded disability services, or individuals.

This Bill contains good measures for people with disability. Although the agency has more power to cap plan funding upfront and limit the kinds of services that are ‘NDIS supports’, the Bill gives people in the scheme greater freedom to use their funding flexibly once agreed in the best way possible for them. Once the agency has given you a ‘reasonable and necessary’ budget, you can decide how to use it to best fit your life and your goals. Less time spent on unnecessary bureaucracy is a win for everyone.

But the biggest gains are at the macro level. Establishing more consistent and fair funding, with clearer spending rules, beats the hardwired inconsistency, adversarial decision-making, and uncontrolled cost growth of NDIS 1.0.

And a sustainable NDIS means more Australians with disability get the help they need, today and tomorrow.

Sam Bennett

Disability Program Director
Dr Sam Bennett joined the Grattan Institute as its inaugural Disability Program Director in September 2023. Sam has worked on disability, aged care, and health reforms at a national level for over fifteen years. In his previous role, he led the Policy, Advice and Research Division of the National Disability Insurance Agency, where he shaped and delivered national policy, and implemented the Agency’s Research Strategy.

Hannah Orban

Hannah Orban is an Associate in Grattan’s Disability Program. Hannah advocates for the equality of people with disability through evidence-based public policy that is led by the disability community. She brings her experience as a sibling to people with disabilities to her work, as well as her professional experience in the government and non-profit sectors.