Updated May 14, 2026 — 6:04pm,first published 4:00pm
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Labor’s new laws to limit who can access the National Disability Insurance Scheme will give the responsible minister sweeping powers to make mass cuts to budgets or therapies and enable automated decision-making, in efforts to cut spending by $38 billion in four years.
Health Minister Mark Butler’s bill to restrict who can join the $56 billion NDIS, introduced to parliament on Thursday, will require people to have exhausted all other treatment options before they are considered permanently impaired to enter the scheme.
Mark Butler during a press conference at Parliament House in Canberra on Thursday.Alex Ellinghausen/image digitally tinted
Broad ministerial powers will allow Butler to put an instant brake on certain parts of the scheme if costs start spiralling, but the minister assured participants that any automation would be carefully considered and focus on administrative tasks, as he sought to allay fears of a “robo-debt” scenario.
These laws are crucial for the government to action its NDIS overhaul and recoup about $170 billion in a decade. More than half the $64 billion savings banked in Tuesday’s budget assume NDIS eligibility and spending will be drastically curtailed within four years.
But Labor’s plans immediately hit a hurdle on Thursday when the Senate sent the bill to an inquiry, due to report by June, and the Greens declared it “one of the most dangerous pieces of legislation that has ever been put forward by our government in relation to disabled people”.
“This new bill makes massive, significant changes to the NDIS that will make life harder for disabled people across the country,” said Greens disability spokesman Jordon Steele-John.
“It also grants the minister vast new powers, which they do not have today, to make massive changes to the supports that disabled people and our families have in place right now. And they can make those decisions while 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 review the bill carefully and consult with the disability community through the Senate inquiry, which I think is an important part of the process,” said spokeswoman Melissa McIntosh.
NDIS blowouts have eroded Labor’s bottom line as wide eligibility criteria, loose regulation and vague legal definitions have allowed the scheme’s costs to grow by more than 10 per cent a year. The overhaul aims to restore it to its original purpose so it grows at 5 per cent in future.
“The NDIS was intended to operate as a targeted, insurance-based scheme for people with permanent and significant disability,” said the bill’s explanatory document, published on Thursday.
“It is not intended to operate as an unconstrained funding source for all disability-related needs, nor should it 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 scheme when eligibility changes come in from January 2028. Tuesday’s budget papers show annual NDIS funding will go backwards to $55 billion as changes roll out, before returning to $56.2 billion in 2029-30.
New laws reveal first steps to eligibility changes
The bill clarifies that someone’s “functional capacity” is assessed on whether they can perform an activity without help from other people, technology or modifications – it does not consider personal circumstances, such as their financial means or living arrangements.
It also clarifies how “permanent impairments” are defined, saying someone must have explored all other appropriate treatments before accessing the scheme.
“An impairment cannot be found to be permanent if there is any other treatment which is likely to materially improve, reverse, or alleviate the impact,” the explanation says. “To be found permanent, the person’s impairment or impairments are likely to persist for the person’s lifetime.”
The laws will tighten eligibility for the NDIS if there are other supports or services that could meet someone’s needs. These include if someone can access workers compensation or motor vehicle accident compensation schemes, affecting an estimated 8000 participants.
“This scheme was never set up to become a substitute for health and rehabilitation and other treatment that could potentially prevent lifelong disability, so we will put in place rules that that make that much clearer,” Butler said on Thursday.
“We won’t, for example, require people with profound hearing loss to receive a cochlear implant. There will be exceptions to that question of treatment, and the detail of that will be developed.”
The laws will also confirm people can access NDIS support only for needs that arise directly from their qualifying impairment. This means that someone with cerebral palsy using the scheme, for example, cannot get support for ADHD or dyslexia.
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These changes will override court and tribunal decisions that have expanded the NDIS’ scope, as well as the automatic “access lists” that currently guarantee people can enter the scheme with diagnoses such as level two or three autism.
A technical advisory group will give the government advice on the appropriate thresholds and assessments for eligibility, and it will be informed by community consultation.
Sweeping powers give minister control over spending
Thursday’s laws also give the minister new powers to make blunt cuts that limit either how much money is allocated, or how many supports can be accessed, in certain sections of the NDIS.
“These determinations are not applied on a ‘plan-by-plan’ basis, but rather have the effect of reducing the funding for certain groups of supports across the scheme,” the explanation said.
This measure is designed to allow the minister to “directly manage the financial sustainability of the scheme”, and any changes to people’s funding as a result will not be subject to merits reviews.
Butler last month said he would use this power to cull people’s social and community participation budgets, which tripled to $12 billion in five years. He will reset this funding at 2023 levels to quickly cut spending.
“I also intend to reset the therapy budgets, which on average, will mean … a shift from around 71 or 72 hours of therapy a year, down to about 68 hours of therapy per year,” he said on Thursday.
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The minister will gain powers to set prices, instead of the National Disability Insurance Agency, and Butler plans to pay registered providers more for the same service than unregistered providers.
Laws tackling fraud will enable new civil penalties and give the National Disability Insurance Agency powers to investigate criminal activity. Providers and participants will have to keep records for specified periods of time, and make claims within 90 days of a support being provided.
They also enable other changes Butler announced last month, such as clamping down on unscheduled plan reassessments that have been a key driver of NDIS inflation, and moving to a system where the government decides what plan managers people can use.
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Natassia Chrysanthos is Federal Political Correspondent. She has previously reported on immigration, health, social issues and the NDIS from Parliament House in Canberra.Connect via X or email.From our partners