Huge cuts to national disability insurance scheme aim to save more than $36bn in budget’s largest single measure

The government expects to recoup $36.2bn by curbing the national disability insurance scheme’s growth over the next four years as it looks to return to the NDIS’s “original purpose” of supporting people with “significant and permanent disability”.

The treasurer, Jim Chalmers, said the budget’s savings package amounted to genuine economic reform, beyond the “usual nips and tucks”.

“It is all about saving the NDIS from itself,” he said on Tuesday.

“It’s all about making sure that we can continue to provide [the] levels of support people need and deserve in a way the country can afford.”

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The budget papers show changes to limit who can access the NDIS – which supports more than 760,000 Australians with disabilities – will reduce participant payments by at least $37.8bn until 2030.

The health minister, Mark Butler, announced last month he would introduce drastic changes to bring down the scheme’s growth to 2% every year until the end of the decade to prevent its budget soaring past the $100bn-a-year mark by the mid-2030s.

The budget papers show the plan to reduce the NDIS’s growth is by far the budget’s single largest savings measure.

The National Disability Insurance Agency, which runs the scheme, also faces cuts, with its headcount reduced by 669 in the next financial year to 9,840.

But the NDIS Quality and Safeguards Commission will gain almost 200 more staff as the government widens registration requirements for providers.

The budget papers show the government expects payments made to participants to plateau at between $53bn and $54bn a year until 2030 while employee benefits will halve from 2027-28.

Butler will introduce legislation this week to begin his overhaul of the scheme. It’s expected to focus on limiting the number of unscheduled reassessments, which the minister said had been a “major driver” of spending growth in recent years.

The scheme’s cost grew by more than 10.3% last year and it had been on track to cost $63bn by 2028-29. Without changes, it had been projected to support more than 1 million participants by 2033 and to cost $95.8bn in 2034-35.

“The NDIS costs too much and is growing too fast, put alongside any comparable government program,” Butler said last month.

“And unless we take action to make it sustainable, it simply will not be there in the future for the Australians who need it most.”

He said the eligibility changes would reduce the number of people using the scheme to about 600,000 by 2030, down from forecasts of 900,000 participants.

A new standardised assessment tool to determine a person’s NDIS access will be in place from 1 January 2028.

“These are hard decisions – but they’re unavoidable and urgent,” Butler said.

Programs outside the NDIS for those no longer eligible will receive $3bn over the next five years from the federal government, a figure to be matched by states and territories.

The Thriving Kids program for children under nine with autism and developmental delays will begin rolling out from October and is expected to be fully operational from January 2028.