A major rift has formed between Australia's state and federal governments over the National Disability Insurance Scheme (NDIS). In a stinging joint submission to a Senate inquiry, state and territory disability ministers accused the Albanese government of breaching national cabinet commitments, warning that rushing the reforms puts vulnerable people at risk.

The backlash comes as the three-day Senate inquiry concludes, having received over 4,000 public submissions from an anxious disability sector.

The Core of the Dispute

The federal government’s proposed legislation aims to curb the growth of the $50 billion scheme, which is expanding at 11.3% annually. The overhaul is projected to save $36 billion over the next four years by restricting access and transitioning roughly 300,000 participants off the scheme.

However, state ministers argue the Commonwealth is prioritizing budget cuts over safety.

Key Concerns Raised by the States:

  • No Alternative Care: Projected participant exits are not matched by clearly defined alternative supports.
  • Hospital Pressures: Without alternative services, people with disability risk ending up stranded in hospitals or inappropriate care settings.
  • Power Concentrated: States criticized a proposal to grant the federal NDIS minister sweeping new powers, demanding effective co-governance instead.

"The pace of reform, focused heavily on expenditure constraint, without a clearly defined broader ecosystem and with limited consultation, creates a significant risk of fragmented service delivery." — Extract from the State and Territory Joint Submission

The "Foundational Supports" Vacuum

When the NDIS began, states shut down their own legacy disability services. Under recent review recommendations, they agreed to build "foundational supports" (lower-touch services outside the NDIS).

This includes the Thriving Kids model, designed to divert children under nine with low-to-moderate developmental delays or autism away from the NDIS.

  • Target Demographic - Children under 9 with low-to-moderate support needs
  • First Phase Launch - Scheduled for October
  • State Progress - Victoria is the first to announce specific details

Government Stands Firm Amid Backlash

Despite the pushback, the federal government wants the bill passed before the upcoming winter parliamentary break. It faces stiff opposition from both the Coalition and the Greens.

NDIS Minister Mark Butler stated the government is watching the inquiry but maintained the overhaul was carefully planned. A government spokesperson noted that national cabinet previously agreed to cap annual growth at 5 to 6 per cent, and that the bill simply progresses that work.

Coalition NDIS spokesperson Melissa McIntosh urged caution, stating, "The NDIS must be sustainable but in the rush of cutting expenditure, we cannot forget that there are human lives at the other end."

The Senate inquiry is scheduled to deliver its official report next week.