Australia is moving ahead with one of the biggest changes to the National Disability Insurance Scheme (NDIS), after the Senate approved a major reform package backed by both Labor and the Coalition.

The reforms are aimed at slowing the rapid growth of the scheme, strengthening safeguards and changing how people qualify for NDIS support.

The NDIS currently supports more than 770,000 Australians and costs the federal budget around $50 billion a year. Government modelling estimates the reforms could deliver approximately $37.8 billion in savings over four years.

One of the biggest changes is a proposed shift towards assessing eligibility based more heavily on functional capacity and a person’s actual support needs, rather than relying primarily on a medical diagnosis.

The government has also set a long-term target of reducing participant numbers from roughly 760,000 to about 600,000 by 2030. Modelling suggests around 240,000 existing participants could eventually transition out of the NDIS, while others who might previously have entered the scheme could instead receive support through mainstream or state-based programs.

Funding arrangements are also being tightened. The reforms include changes to planning and the definition of reasonable and necessary supports, with some categories facing significant reductions.

At the same time, the legislation introduces tougher measures against fraud and unethical provider practices, including new criminal and civil penalties for kickbacks and stronger whistleblower protections.

The package includes 63 government amendments, negotiated during the parliamentary process, including additional protections for participants with very high support needs.

Supporters argue the changes are necessary to ensure the NDIS remains financially viable for people with significant disabilities.

Critics, however, fear the transition could leave vulnerable Australians without adequate support if alternative programs are not ready.

Some major changes are scheduled to begin progressively from 2027, with new eligibility boundaries applying from January 2028.