The government plans to tighten NDIS eligibility. Here’s what’s likely to change

Amid the noise and spectacle of budget week, one significant policy change has slipped largely under the radar. Health Minister Mark Butler introduced changes that, if passed by parliament, will tighten access to the National Disability Insurance Scheme (NDIS).

The legislation also grants the minister new powers to cut participant funding and expand the use of automated decision-making.

The changes follow last month’s announcement that the government intends to strip A$36 billion from the scheme by 2030. This would cut participant numbers by 160,000.

These reforms mark a shift in the philosophy of the scheme. Once framed around individual rights, choice and control, the scheme is being redesigned to ration support and reduce expenditure.

The full impacts of these changes will emerge over the coming years, but the shift in priorities is already clear. So what are the proposed changes and what impact might they have?

Strong focus on financial sustainability

The new legislation includes a series of changes the government argues are necessary to achieve budgetary sustainability.

The changes emphasise financial sustainability, while removing references to United Nations disability rights principles centred on personalised support, choice and independence.

A key reform is the new power given to the minister to cut funding across entire categories of support without needing to pass new legislation. Under the changes, the minister would be able to set a percentage reduction for specific types of supports across whole groups.

This could mean, for example, cutting capacity-building supports for skills such as managing emotions or finding a job by 80%.

While the law says participant safety must be considered, it’s difficult to see how broad funding cuts across entire support categories could be made without serious risks.

Under the changes, a person’s funding may not be enough to cover supports considered “reasonable and necessary”. This is a significant change from the scheme’s original design, which guaranteed funding for supports included in individual plans.

A new definition of ‘functional capacity’

A new eligibility test will be introduced, shifting the focus from medical diagnosis to “functional capacity”.

For the first time, functional capacity will be defined as a person’s ability to carry out an activity without help from others, assistive technology, or home modifications.

There is a requirement that functional capacity be assessed without reference to the person’s environment and personal circumstances.

This means eligibility will focus on what someone can do in isolation, rather than what they can do in the real world with the supports they do or don’t have.

A tighter definition of ‘permanent’ disability

The government has spoken about returning the scheme to its original intent. It argues there are more participants than were originally intended and it should focus on supporting people with significant and permanent disability.

The new legislation proposes to tighten the definition of what it means to have a “permanent” disability. Permanence has always depended on whether treatment could improve an impairment, but the new rules tighten what counts as having exhausted appropriate treatment options.

Under the new rules, an impairment will only be considered permanent if further treatment is unlikely to “materially improve, reverse, or alleviate the impact of […] the impairment”.

“Alleviate” sets a low bar, as even small improvements could be enough to suggest a condition is not permanent. For example, a treatment that leads to a small improvement in mobility could be used to argue an impairment is not permanent.

You must have exhausted all treatment options

The new eligibility test assumes treatment is accessible. An applicant must have tried all treatments commonly available in Australia, regardless of whether they can afford them or the availability of treatments where they live.

However, people with disability, particularly those from disadvantaged backgrounds, can face significant barriers accessing health services.

It’s unclear how agency staff without medical qualifications will make judgements about which treatments are appropriate in individual cases.

It won’t cover overlapping conditions

Support planning will change so a person’s situation is no longer considered holistically.

Where a person has needs arising from multiple impairments, supports will only be funded for the impairment that meets the eligibility threshold for the scheme.

Funding won’t cover the combined or overlapping impacts of those conditions on daily functioning.

In practice, this might mean a person with both attention-deficit hyperactivity disorder (ADHD) and an acquired brain injury may only receive NDIS support for the acquired brain injury, even if both conditions affect their daily life.

They would need to show that impairment resulting from the brain injury alone meets the stricter test for reduced functional capacity and permanence.

The National Disability Insurance Agency (NDIA) would not need to take into account how the person’s ADHD contributes to their overall disability or support needs if it doesn’t independently meet the scheme’s eligibility requirements.

Towards more automation

The legislative changes sit alongside a wider set of reforms that will transform the scheme without needing parliamentary approval. Among them are a new eligibility test and the removal of diagnostic lists.

The government has indicated the eligibility process will become more “standardised”. This language often signals a greater role for algorithms and automation.

A new section of the legislation paves the way for expanded use of computer programs. This has stoked concerns that automation will stand in for professional judgement in access decisions.

Current processes already lack safeguards when decisions put participants at risk – for example, where funding is insufficient to provide safe ratios of care. Automating funding decisions risks amplifying such harms across the system.

Read more: First Robodebt, now NDIS and aged care: how computers still decide who gets care

What happens next

Labor is likely to receive the support it needs from the Coalition to pass the bulk of changes.

For now, the reforms have been referred to a Senate committee due to report by June 16. This leaves just 11 non-sitting days for scrutiny of the bill.

Greens Senator Jordon Steele-John described the process as “outrageous” because of the limited time affected people and organisations have to respond.

The government says it’s seeking to restore the scheme’s social licence so it remains politically and financially sustainable. Yet a social licence depends on genuine engagement with those most affected.

Given the scale of these changes, it’s essential that people with disability and their families have a meaningful say in what comes next.