Labor must means test the NDIS, a leading economist has demanded as the government looks to rein in the ballooning scheme.
The Albanese government is considering ways to cap annual NDIS spending growth, which currently sits above 10 per cent, to about six per cent.
Prime Minister Anthony Albanese ruled out means testing the disability program despite both the OECD and the IMF calling on the government to test the scheme.
AMP’s chief economist Shane Oliver said means testing the NDIS was crucial to limiting the size of the public sector.
“I think we probably need to look at welfare more generally, including the NDIS, but not just the NDIS to make sure that welfare spending is targeted to those who really need it,” Mr Oliver told Sky News.
“So that means more means testing as an area to look at.”
The NDIS’ costs have more than doubled since 2021 and are predicted to hit $55.1 billion in 2026-27.
One Nation leader Pauline Hanson said the scheme “will not last” without means testing as pressure builds on the government to limit the program.
“(The NDIS) is out of control and the system will not last long unless we start reining it in,” she told SkyNews.com.au earlier this month.
“You’ve got people on it who are quite well-to-do … someone’s got to pull it back in.”
She criticised the comparison made between the NDIS and Australia’s free health system – which has been used to argue against means testing.
“The NDIS is totally different … if you means test the aged care pension, why not this?” she argued.
When explaining why Labor was opposed to means testing the NDIS, Mr Albanese argued for the program being universal.
“We support the universality of the system,” the Prime Minister told The Australian Financial Review.
“Eligibility should be about people’s disability and enabling them to fully participate in society.”
Treasurer Jim Chalmers on Monday said cuts to the scheme will be “easily the most important part of the savings package that we will present on budget night”.
“The NDIS is growing too fast for Australians to afford,” Mr Chalmers told reporters.
“It’s about $49 billion this year. By the end of the forward estimates – not that far away – it’s about $62 billion.”
Labor has attempted to rein in costs by launching a separate scheme called Thriving Kids with state governments to limit the number of children on the NDIS.
Children with autism or who experience developmental delays make up about 44 per cent of the scheme’s participants.
The Thriving Kids program dedicates $4b over five years to support children aged eight and under with developmental delays or who have autism but have low-to-moderate support needs.
This program will take them off the NDIS and is a return to community-based services that were more common before the scheme.
Labor was urged to means-test the NDIS by the OECD in its 2026 Australian economic survey.
It called for the government to cap spending growth at 5 per cent annually, while urging Labor to reconsider means testing.
“Unlike cash benefits, where Australia has a good record of cost control and efficiency, the NDIS and other in-kind benefit programs are not means-tested,” the OECD said in its January report.
“Consideration could be given to revisiting that approach, given the scale of cost pressures in the NDIS and the potential for the cost of other in-kind benefit programs to balloon.”
In a 2023 report the IMF said the NDIS’ cost escalation should be brought under control.
It suggested the government investigate incorporating “progressivity” into the program with cost-sharing or means-testing, “ensuring consistent and equitable access to the NDIS”.
Calls to means test the scheme come as the Albanese government faces the nation’s debt ballooning past $1 trillion.
Australia also stares down about 10 years of deficits, inspiring many economists to demand Labor find savings where possible.