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.

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,........

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