NDIS changes: why psychosocial supports mustn’t fall through the cracks

I’m sure many of you tuned in last Wednesday to watch Health Minister the Hon. Mark Butler’s address to the National Press Club on changes to the National Disability Insurance Scheme (NDIS). 

The Minister outlined significant reforms to protect the Scheme’s long‑term sustainability, including a clear objective to reduce participant numbers from around 760,000 to 600,000 by the end of the decade. 

Following the address, Mental Health Australia outlined our initial response in a media release. We’ve provided some further analysis of the changes below. 

I want to acknowledge the significant uncertainty, stress and anxiety felt across the community and in our sector in the lead up to, and following, the announcement. We are working in an environment with a lot of uncertainty, which is inherently unsettling. We’ll continue to work with our members to understand and assess the impact of the changes over the coming weeks.

Inclusion of psychosocial disability in the NDIS 
We were reassured by Minister Butler’s clear confirmation that people with severe mental health challenges – or psychosocial disability – will continue to be supported through the NDIS. For many, these supports are life‑changing, helping people manage daily life, stay connected and maintain stability. 

Access design 
We support the move towards a focus on functional impact rather than diagnosis. However, access changes must be designed carefully with people with lived experience of psychosocial disability, their families, carers and kin – as well as the mental health and disability support sector. Implementation should also be led by professionals with psychosocial expertise.

People with psychosocial disability have specific needs, like fluctuating impairment, that are not always well captured by standardised assessment approaches. These needs must be considered from the outset. 

If we don’t get this right, we risk excluding people with genuine and significant support needs. That would undermine both fairness and equity in the NDIS.

Psychosocial support outside the NDIS
We welcome confirmation that psychosocial supports outside the NDIS remain a top priority for the Commonwealth Government, who are keen to see States and Territories come to the negotiating table as part of the next National Mental Health and Suicide Prevention Agreement. 

However, we are deeply concerned that around 160,000 people could be removed from the NDIS through proposed eligibility changes, without alternative supports yet in place. With the Government committing to limit Scheme growth to 2% in the next few years (before going back to 5% from 2030) it’s only going to be harder for people with psychosocial disability to access the NDIS. This is on top of this group already facing disproportionate barriers to NDIS access.

Nearly half a million Australians with psychosocial disability already sit outside the NDIS with no support at all. This is a longstanding and unresolved gap in our mental health system identified by the Productivity Commission in 2020 and again by governments in 2024.

Without action, this need simply shifts elsewhere – to our emergency departments, housing and justice systems and communities, with families and friends providing critical, yet often unseen, care.

With some people being diverted from the NDIS, new or expanded community‑based supports will need to be developed quickly, and at scale. 

We are keen to get clarity from governments on how the remaining $6 billion set aside by National Cabinet for Foundational Supports will be allocated, to ensure that this funding can help to fill the gap in services. 

Next steps

We’re hopeful that we’ll see a focus on psychosocial supports outside the NDIS at the September meeting of Health and Mental Health Ministers, following commitments made last year and reinforced in their February meeting this year. 

It’s crucial that people with lived experience of psychosocial disability, their families, carers and kin are involved both in the implementation of reforms within the NDIS, and in the development and scale-up of supports outside the NDIS. 

What’s now needed is firm commitments from all governments, funded action and clear timelines. 

Now is the time to both embed people with psychosocial disability in the implementation of the NDIS reforms and finally close the gap in psychosocial supports for those people in the community who are currently missing out.