Australian states warn NDIS overhaul could push people into hospitals

Australian states and territories have warned Prime Minister Anthony Albanese’s government that proposed changes to the National Disability Insurance Scheme (NDIS) could push people with disability into hospitals or other inappropriate settings by 2031. The warning was made in a joint submission to a Senate inquiry uploaded on Thursday, May 23. Officials said state and territory systems are not positioned to replace services for people who may be moved off the scheme.

The submission said more than 240,000 participants are expected to be shifted out of the NDIS in the four years after new eligibility rules take effect in 2028, based on government modelling. State and territory disability ministers said they support efforts to curb growth in the program but argued that changes should not come at the expense of participant safety, wellbeing, and life outcomes.

The Albanese government’s bill is intended to curb the annual growth of the roughly A$50 billion-a-year scheme by first reducing budgets and then tightening who can access the NDIS from 2028. Ministers for the states and territories said they were not “meaningfully consulted” on the proposals and raised concerns about the scope of unilateral powers for the federal NDIS minister, which they said could weaken shared governance.

States cite gaps in alternative supports

In their submission, ministers criticised the absence of “clearly defined alternative supports” for people who might be exited from the NDIS. They warned of unmet needs and the risk of cost-shifting to state and territory systems, including health, education and justice, which they said are already strained.

Officials said those systems are not equipped for a sharp increase in demand and cannot provide “like-for-like” services comparable to NDIS supports. The submission said states and territories had made no agreement to deliver equivalent services to people who are exited from the scheme.

Senate inquiry and timeline for legislation

The Senate committee examining the legislation is due to deliver recommendations next week. The inquiry has also been told that planned 50% cuts to social and community participation budgets could increase isolation, segregation and create unsafe situations for NDIS participants.

Federal Health Minister Mark Butler said the government’s plan is designed to get the NDIS “back on track” and secure it for the long term, while keeping people with disability at its centre. He said he hopes the legislation can pass before parliament rises for the winter break on July 2.

Lawmakers will watch whether the committee recommends changes to consultation requirements, governance, or the design of alternative supports before the government seeks final passage of the bill.