New laws allow children to be removed from NDIS once reboot is ready

The National Disability Insurance Agency will be able to remove children from the scheme if satisfied by evidence that early interventions have been successful, under new powers NDIS Minister Bill Shorten is seeking to reform the $42 billion program.

An explanatory note attached to the legislation on Wednesday said the agency that runs the NDIS currently had no ability to check with families if the supports accessed by 70,000 children with developmental delays were working or still necessary, or if the child still needed early intervention.

NDIS Minister Bill Shorten introducing the legislation on Wednesday.Credit: Alex Ellinghausen

“This amendment enables the agency to check progress and update plans and funding accordingly. In some cases, this may result in an assessment that early intervention has been successful and the person no longer requires support from the NDIS,” it said.

While the specifics of the power still need to be designed and sent for consultation, it sets up a structure for Shorten to address one of the major financial pinch points facing the scheme – the higher-than-forecast number of children who have joined with developmental delays and stayed on it for longer than expected.

The scheme’s second structural problem is plan inflation, which means people’s budgets increase above indexation each year; the average NDIS participant budget grew at an annualised rate of 14.4 per cent in the second half of 2023.

Shorten introduced new laws on Wednesday addressing both issues, promising they would be the first step in reforms that will deliver a more consistent and equitable scheme.

“I can only imagine that there will be some anxiety about the changes within the disability sector,” he said.

“But the NDIS is not working the way it should and is not working well for many people. This is our chance to make it right. If you have a significant and permanent disability, which has quite an impact on your functioning, you will be in the scheme.

“If you have a developmental delay, which could be supported by another means of support other than an individual package, you will get what you need.”

The package of new laws responds to last year’s NDIS review, which said the scheme needed to return to its original purpose of providing for Australians with permanent disabilities, while state and territories must step up their offerings for people with less intense needs.

Under the reboot, people will have to complete a needs-based assessment and their budgets will be calculated with a new methodology. All 646,000 NDIS participants will move to those “new framework plans” within five years, although there is scope in the legislation to change that timeline.

In a major reform to reduce plan inflation, people will then receive a capped budget that lasts up to five years but has strict limits on how much funding can be spent annually, with the money released in intervals.

The new laws will also enable the government to create an explicit list of NDIS supports that are “in or out”, which will narrow the scope of support that the Commonwealth is obliged to provide.

That list will soon be designed with people with disabilities and state and territory governments. But the document said it would exclude things such as holidays, groceries, utility bill payments, online gambling, perfume, cosmetics, standard household appliances and white goods.

The agency will be able to take over someone’s plan if it suspects they are mismanaging their spending, while in a separate reform, participants will be issued a written note when they enter the NDIS that specifies why they are receiving support: for a disability, early intervention, or both.

This will have no immediate effect on how participants get support, but it creates a structure for five years’ time when children with developmental difficulties will be funnelled out of the NDIS and into a separate early intervention pathway once the new system being worked out with the states is ready.

That system will be “designed specifically to support children and their families who would benefit from early intervention to improve lifetime outcomes”, the document said.

Another new provision will allow the agency to request information from people to reconsider whether they should be on the scheme. “Currently, there is no ability for the CEO to request information for the purposes of considering the revocation of a person’s status as a participant,” the document said.

It said this was particularly important when it came to children who receive funding for early intervention because the concept assumes a benefit from treatment and that the support required will change over time.

Former agency board member Martin Laverty said it was a wise amendment. “When the NDIS was started 10 years ago, we should have given the NDIA the ability to gather all the information it needs to make sure supports are effective and essential. The bill is simply correcting a mistake from then,” he said.

He also said the laws would stop the NDIS funding products and services that were never intended. “This is getting at price gouging, fraud and junk services that no person who supports the NDIS wants to see continue.”

Shorten promised all changes would be better for participants. He promised to co-design them with people with a disability as well as state and territory governments, which escalated their concerns about his plans this week. “There remains an enormous amount of work to do together to implement the reforms,” he said.

“[The scheme] cannot keep growing at the same rate it is now. It can and will keep growing, just not at the 16 per cent it has in the last few years.”

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