The federal government has rejected calls for an independent watchdog to oversee the National Disability Insurance Scheme, as Labor moves closer to securing parliamentary approval for its sweeping reforms to the $50 billion program.
The proposal for an independent inspector-general was put forward by Aruma chief executive Martin Laverty, one of the architects of the NDIS, who argued that the scheme needed an independent body capable of scrutinising government decisions and identifying problems across the disability system.
Laverty said the role could operate in a similar way to the Office of the Inspector-General of Aged Care, which was established in 2023 following a recommendation from the Royal Commission into Aged Care Quality and Safety.
The Inspector-General of Aged Care is an independent statutory agency responsible for overseeing the administration, regulation and funding of the aged care system, reporting to both the responsible minister and Parliament. It reviews system-wide problems, examines complaints management and can publicly recommend changes to government.
Laverty said a comparable body was needed for disability services, particularly as the NDIS undergoes one of the most significant transformations in its history.
“The disability system needs a permanent co-ordinator with statutory independence to hold governments to account, call out system problems and recommend improvements,” he said.
He argued that an independent steward could help address fragmentation between the NDIS, federal agencies and state and territory services, while providing participants with greater confidence that decisions affecting their supports were subject to independent scrutiny.
Laverty also called for an appeals mechanism as the government moves towards greater use of automation in the scheme.
The proposed legislation would allow the National Disability Insurance Agency to use automated decision-making for some administrative actions, including decisions relating to the payment or rejection of claims and certain plan approvals. The Minister for the NDIS would also have the ability to authorise additional administrative actions for computer-based decision-making.
Laverty warned that technology could make administration more efficient, but argued participants must retain a meaningful avenue to challenge decisions that are wrong.
“The AI gold rush is leaving people with disabilities behind,” he said at the National Press Club.
Health Minister Mark Butler has rejected the need for another independent body, arguing that adding another layer of bureaucracy is not the answer to the NDIS’s problems.
The government’s position comes as Labor and the Coalition close in on an agreement that is expected to allow the government’s NDIS legislation to pass Parliament during the current sitting fortnight.
The legislation is designed to significantly slow the growth of the scheme and reduce expenditure by an estimated $38 billion over four years. The government says the reforms are necessary to put the NDIS on a sustainable footing, tackle fraud and ensure it remains focused on people with permanent and significant disability.
When the reforms were announced in April, the government said it was aiming to reduce participant numbers to about 600,000 by the end of the decade, roughly 160,000 fewer than the number then expected.
However, subsequent departmental modelling tabled in the Senate indicated that the number of people expected to leave the scheme could be considerably higher. The modelling forecasts that 241,000 people who were on the NDIS before January 2028 would no longer be receiving NDIS supports by mid-2031.
The reforms would introduce tighter eligibility requirements, including a greater emphasis on functional capacity rather than diagnosis, while changing the way participants’ plans are developed and funded.
The legislation also gives the government new powers around pricing and administrative decision-making. Parliament’s Bills Digest noted that the Human Rights Committee had raised concerns that the changes could restrict access to the NDIS and reduce the availability of supports, particularly if suitable alternatives were not available.
That question of what happens outside the NDIS has become one of the central concerns surrounding the reforms.
The government plans to move some children with developmental delay and low to moderate support needs, including some children with autism, into the new Thriving Kids program. State and territory governments are also expected to play a greater role in providing disability supports outside the NDIS.
But disability organisations have warned that alternative services need to be established before people are moved away from the scheme.
Women with Disabilities Australia chief executive Sophie Cusworth has argued that reducing NDIS support without sufficient alternatives risks transferring responsibility to families, health services and unpaid carers.
The Australian Human Rights Commission has also called on Labor to pause the reforms, arguing that the government has not adequately demonstrated that alternative supports will be available to people who leave the scheme.
The debate over independent oversight therefore comes at a particularly significant point for the NDIS.
The scheme already has regulatory and accountability bodies, including the NDIS Quality and Safeguards Commission, while the Commonwealth Ombudsman and other parliamentary and integrity bodies can scrutinise aspects of its administration. New legislation passed earlier this year has also expanded the powers of the NDIS Quality and Safeguards Commission.
Laverty’s argument is that these arrangements do not provide the same system-wide independent oversight that now exists in aged care.
The distinction is important. An inspector-general would not necessarily replace the existing regulator or investigate individual complaints. The aged care model instead provides an independent body with a broad mandate to examine how the system is being administered, regulated and funded, identify systemic failures and report publicly on what needs to change.
Laverty said establishing an equivalent body for disability services would cost around $6 million a year, a relatively small amount compared with the NDIS’s annual expenditure.
For Labor, however, the immediate priority is getting its overhaul through Parliament and beginning the process of bringing the scheme’s growth under control.
With the Coalition expected to support the legislation and the Greens opposed to the broader overhaul, the government’s proposed changes appear increasingly likely to become law.
That leaves the question of who will scrutinise the transformation once it begins.
As the NDIS moves towards tighter eligibility, new planning arrangements and greater use of automated decision-making, calls for an independent umpire are unlikely to disappear simply because the legislation passes.
The government’s answer, for now, is that the existing system of regulation and parliamentary accountability is sufficient.
Laverty’s argument is that a scheme undergoing such profound change needs an independent body capable of looking across the entire system and, when necessary, telling the government that it has got something wrong.
