The Albanese Government has secured Coalition support for one of the most consequential overhauls of the National Disability Insurance Scheme since its creation, putting Australia on a path towards a smaller, more tightly controlled and — the government hopes — financially sustainable NDIS.

The political argument over whether the NDIS must change has effectively been settled.

The much more difficult argument will now be about how those changes affect Australians who depend upon it.

Labor and the Coalition reached agreement this week allowing the National Disability Insurance Scheme Amendment (Securing the NDIS for Future Generations) Bill 2026 to pass the Senate after a substantial package of amendments.

There are 63 amendments associated with the legislation — 30 made in the House of Representatives and another 33 in the Senate — covering everything from safeguards for participants to stronger action against fraud, kickbacks and misuse of NDIS money.

It is a significant political development.

The NDIS was established with bipartisan support. More than a decade later, bipartisan support is again being used to reshape it.

But this time the objective is not principally expansion.

It is sustainability.

The numbers have become impossible for Canberra to ignore

The NDIS has transformed the lives of hundreds of thousands of Australians with disability and their families.

It has also become one of the largest and fastest-growing commitments in the Commonwealth budget.

The government argues that without intervention, expenditure will continue increasing at a rate that cannot reasonably be sustained indefinitely.

The present reforms are expected to reduce projected Commonwealth expenditure by about $37.8 billion over four years.

That does not mean the NDIS is disappearing.

Far from it.

It means Canberra is attempting to redefine what the NDIS should pay for, who should receive assistance through it and which services should instead be provided through mainstream health, education and community systems.

That distinction is at the centre of the reform.

A smaller NDIS

The government's direction has become increasingly clear during 2026.

The NDIS is intended to concentrate more heavily on Australians with permanent and significant disability, rather than becoming the default provider of support for every person requiring developmental or disability-related assistance.

The government's own explanation of the legislation says the changes are intended to protect the NDIS for people with permanent and significant disability and for future generations who will rely upon it.

One of the most important consequences will concern children with developmental delay or autism who have low-to-moderate support needs.

Increasingly, those children are expected to receive assistance outside the NDIS.

That is where Thriving Kids and the broader system of foundational supports become crucial.

What is Thriving Kids?

Thriving Kids represents an attempt to build another layer of support beneath the NDIS.

Under agreements between the Commonwealth and states and territories, services are to be developed for children aged eight and under with developmental delay and/or autism with low-to-moderate support needs.

Children with significant permanent disability can remain within the NDIS.

The transition is important because governments have agreed that changes to NDIS access for these children will align with the rollout of Thriving Kids, with eligibility changes scheduled to commence from January 2028.

In theory, this creates a more logical system.

A child should not necessarily require an individual NDIS package simply to receive early developmental assistance.

Support could instead be available through schools, health services and community programs without families having to navigate the full NDIS system.

But there is an obvious condition.

Those alternative services have to exist.

Moving people out of one system before another is capable of supporting them would not constitute reform.

It would merely transfer the problem.

The states now become critical

This is why the NDIS debate does not end with legislation passing through Canberra.

Australia's states and territories have a substantial role in establishing the foundational services that will sit outside the NDIS.

The Commonwealth and states have already reached a National Agreement on Foundational Supports, with Thriving Kids forming its first major component.

The political tension is predictable.

The Commonwealth wants to control the extraordinary growth in its NDIS expenditure.

The states do not want people removed from the NDIS only to arrive at state-funded hospitals, schools and community services requiring assistance.

That creates the possibility of cost shifting rather than genuine savings.

A dollar removed from the NDIS is not necessarily a dollar saved by Australian taxpayers if another government department subsequently has to spend it.

The success of the reform therefore cannot be measured solely by the NDIS budget.

It must ultimately be measured across government.

Fraud is another part of the problem

There is another aspect of the reforms on which there is likely to be much broader public agreement.

Money intended for Australians with disability should reach Australians with disability.

The legislation strengthens the integrity regime surrounding the scheme, including new civil and criminal penalties dealing with fraud and misconduct, stronger provisions concerning inducements and kickbacks and additional whistleblower protections.

This distinction matters.

Reducing legitimate assistance and preventing fraudulent expenditure are not the same thing.

Every dollar removed from fraud is potentially a dollar that can remain available for genuine participants.

An NDIS sustainability program that concentrates heavily on fraud, inflated invoices, inappropriate services and exploitation is fundamentally different from one that achieves savings principally by reducing necessary assistance.

Australians should expect government to know the difference.

More government power — and more concern

The legislation nevertheless remains controversial.

Disability advocates, the Greens and some crossbench senators have raised concerns about expanded government powers to restrict funding and about the speed with which the reforms are being implemented.

Independent Senator David Pocock and others have argued that people should not lose NDIS assistance until alternative services are demonstrably available.

That is a legitimate policy question irrespective of the broader debate over the cost of the scheme.

The amendments include an escalation pathway intended to allow participants with high support needs to seek variations where reduced funding could place them at serious risk.

The effectiveness of safeguards such as this will become clearer only when the new system begins operating.

An unusual political bargain

There is also an interesting political dimension to the agreement.

Coalition support for the NDIS legislation formed part of broader negotiations with Labor, including government action to correct unintended taxation consequences associated with property transferred following death or relationship breakdown — the issue described politically as the “widow tax” — as well as negotiations surrounding gambling reform and the news media bargaining regime.

That may appear an unusual collection of policies.

It is also how parliamentary negotiation sometimes works.

The important question for taxpayers and NDIS participants is not the political transaction itself but whether the resulting NDIS legislation produces a better system.

Bipartisanship changes the debate

Coalition support is significant for another reason.

It means NDIS sustainability is becoming less of a conventional Labor-versus-Coalition argument.

Both major political blocs now accept that the scheme's growth trajectory requires intervention.

That gives government considerably more political room to implement difficult changes.

It also means responsibility for the outcome will ultimately be shared.

If the reforms stabilise expenditure while protecting people with significant disability, both sides will be able to claim some credit.

If people lose essential assistance and adequate alternatives fail to materialise, neither side will easily be able to argue that it had nothing to do with the outcome.

The NDIS is too important to fail

Australia should be capable of holding two thoughts simultaneously.

The NDIS is one of Australia's most important social programs.

And its expenditure cannot be allowed to grow without effective controls.

Those propositions are not contradictory.

Indeed, controlling fraud, defining eligibility properly and ensuring that mainstream government services perform their own responsibilities may ultimately be necessary to preserve the NDIS.

The danger lies in treating an accounting target as the definition of success.

A cheaper NDIS is not automatically a better NDIS.

Equally, an endlessly expanding NDIS is not necessarily a better one either.

The objective should be a scheme capable of providing substantial, dependable support to Australians with significant and permanent disability — not simply this year or during the current term of government, but for decades.

The Times View

The Labor-Coalition agreement represents an important change in Australia's NDIS debate.

The question is no longer whether the scheme will be reformed.

It is how successfully Australia manages the transition.

There is merit in attacking fraud. There is merit in preventing providers from exploiting participants. There is merit in asking whether every service presently funded through the NDIS properly belongs there.

And there is merit in confronting the scheme's extraordinary expenditure trajectory before financial pressure forces a future government into much harsher decisions.

But there is one test that matters above all others.

When someone is moved away from the NDIS, what is waiting for them on the other side?

If Thriving Kids, health services, schools and foundational supports are properly funded and operating, Australia may ultimately create a better disability system while preserving the NDIS for those who need it most.

If those alternatives are inadequate, Canberra will merely have transferred people and costs from one government ledger to another.

Labor and the Coalition have now demonstrated that they can reach an agreement about changing the NDIS.

The considerably harder task is making the new system work.

That is where Australians should now direct their attention.