Albanese finally spends some political capital with NDIS cuts. Now comes the hard part

Finally, Prime Minister Anthony Albanese is spending some of his political capital.

Reforming the $50 billion National Disability Insurance Scheme is necessary to ensure the scheme’s long-term survival. But few people expected Health and Disability Minister Mark Butler to go this hard.

From the moment Labor won 94 seats at the 2025 election, there have been growing demands for the federal government to be more ambitious and push through progressive policies such as winding back negative gearing and capital gains tax breaks. Those tax break changes are still expected to land in the budget.

But instead of spending that capital on measures that would be politically popular, Labor has instead made one of the boldest policy changes in years, announcing major cuts to a scheme it has championed since inception under Julia Gillard.

Slowing the scheme’s annual growth to 2 per cent – from a current level of about 10 per cent – over the next four years will deliver $35 billion in savings. But there will be losers, and it may also hurt vulnerable people. That carries significant risk.

Approximately 160,000 people will be booted off the NDIS, and the roughly 600,000 people who will remain on the scheme will have their budgets cut.

The decision to cut into the scheme, steered by Butler but backed to the hilt by Albanese and the budget razor gang, faces some significant hurdles.

The first is the federal opposition, which has been sounding the alarm about the ballooning cost of the scheme for years – and failed to reform it when they were in government, while Labor campaigned against similar changes under Morrison.

Shadow NDIS spokeswoman Melissa McIntosh has been focused on the impact cuts could have on the most vulnerable, but Opposition Leader Angus Taylor has made encouraging noises about backing changes to rein in the costs.

Labor is confident that the Coalition will eventually wave the reforms through the Senate, the Greens having already dealt themselves out of negotiations.

The states and territories will not necessarily throw roadblocks in the way of the federal government, though that could change depending on how the proposed changes are received by the disability sector.

It’s politically popular for state leaders to blame Canberra, but in this instance they have already committed to spending $5 billion (out of an overall $10 billion) on “foundational supports”, including the $4 billion Thriving Kids scheme, which is designed for kids with developmental delays or autism.

The second, and far more difficult problem for Butler to navigate will be the impact on human beings – the people who use the scheme and who are either kicked off it, or who have their plan slashed.

There is every chance that, as people start to come off the scheme and lose some of their NDIS support, their stories will be seized upon by the opposition.

Anyone unfairly booted off the scheme is a potential political nightmare for the government, and the more stories emerge of this happening, the more the government’s mettle will be tested.

But for now, Labor has finally decided to spend its capital on a difficult, but necessary, reform. After all the stories of rorts and waste, there is an appetite to pare back the payments, and the changes are politically saleable.

But if mistakes are made along the way, as is likely in a scheme as big as the NDIS, then Albanese will find out just how much political capital he really has.

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