The Australian Labor Party is planning to cut funding for the National Disability Insurance Scheme by removing hundreds of thousands of participants [1, 2].
This overhaul represents a significant shift in how the federal government manages disability services. By moving participants to state-run supports, the government seeks to curb the rapid growth and high cost of the national program to ensure long-term fiscal sustainability.
The plan, announced in April 2026, aims to achieve approximately $35 billion [1] in savings over the next few years. To reach this target, the government intends to shift the responsibility for a large number of participants from the federal scheme to state and territory systems [2].
Reports on the scale of these removals vary. One report indicates that up to 300,000 people will be removed from the program [1]. Another report suggests that more than 160,000 people will shift off the scheme [2].
The Labor government said the move is necessary to rein in the NDIS's spending. The strategy hinges on the ability of state-run supports to absorb the participants exiting the federal system, a transition that will require coordination across different levels of government.
This restructuring marks one of the most significant changes to the NDIS since its inception. The government is prioritizing the reduction of federal expenditures by redefining the boundaries of who qualifies for national versus state-level assistance.
“The government intends to shift the responsibility for a large number of participants from the federal scheme to state and territory systems.”
The proposed cuts indicate a pivot toward a decentralized model of disability care in Australia. By shifting the financial burden to states, the federal government reduces its direct liabilities, but the success of the plan depends on whether state systems have the infrastructure and funding to maintain the quality of care for those removed from the NDIS.
