The federal government’s planned overhaul of the National Disability Insurance Scheme (NDIS) has copped a scathing critique from the Grattan Institute. The influential think tank labeled Labor's proposed budget cuts "blunt and inequitable," warning they are "underpinned by dubious policy logic" that will lead to "absurd" outcomes.

The Albanese government’s bill aims to curb the growth of the $50-billion-a-year scheme, which is projected to balloon to $117 billion annually within a decade. But experts argue the current strategy targets vital supports that keep vulnerable Australians connected to their communities.

Slashed Budgets for Independent Living

At the center of the backlash is a plan to slash funding for social, civic, and community participation by 50%.

These budgets fund essential life-skill development—like learning to cook, catching public transport, and joining group activities—to reduce isolation and build independence. The Grattan Institute pointed out a glaring flaw: a participant could qualify for the NDIS because of a social impairment, only to have the exact funding meant to address that need cut in half.

"The scheme would measure disability one way, but fund it another."

— The Grattan Institute

Who Bears the Brunt?

The government's own data shows these cuts will hit specific communities disproportionately. The disability groups with the highest percentage of their NDIS plans dedicated to social participation include:

Disability Group / Average % of Plan Used for Social Participation

Visually Impaired / 34%

Psychosocial Disabilities / 30%

Down Syndrome / 28%

While the government argues reducing these budgets "does not impact health and safety," the think tank warns the burden will simply shift to stressed families and informal carers.

Widening the Gap

The National Aboriginal Community Controlled Health Organisation (Naccho) also raised alarms, warning the cuts will further entrench disadvantage for Indigenous Australians who rely on these funds to maintain connection to culture and community. Naccho is demanding a "sunsetting clause" so the cuts are not made permanent without review.

The Senate committee examining the bill is due to report later this month.