This week the government unveiled plans to reduce the number of people in the National Disability Insurance Scheme (NDIS) by 160,000 over the next four years, a decision NDIS Minister Mark Butler has called “hard” but “unavoidable and urgent”.
This reduction will rely on tightening the eligibility criteria.
A new assessment tool, likely based on an algorithm, will work out how much someone’s disability affects their daily life – known as their “functional capacity”.
Under the new rules, the threshold to access NDIS support will be higher. This means the day-to-day impact of disability will need to be more severe for someone to be eligible.
So what does functional capacity actually mean, and how will it be used to work out who’s eligible? Will diagnosis still play a role? Here’s what we know – and still don’t know – about the new system.
Functional capacity is not new
The concept emerged in the mid-20th century as a way of capturing what a person with disability can do in everyday life, rather than focusing only on impairment or diagnosis.
This approach – which moves away from narrow, medicalised definitions of disability, to understand how social and environmental factors shape a person’s level of functioning – is also endorsed by the World Health Organization.
Functional capacity is already central to determining eligibility for the NDIS. To meet the threshold, a person must demonstrate their disability is both permanent and substantially reduces their capacity to carry out everyday activities. This might include taking a shower, eating and drinking, moving about, and interacting with others.
The government says the reforms move the NDIS away from the “diagnosis gateway”, meaning functional need will determine who gets support and at what level, rather than a diagnosis.
However, establishing permanence and functional capacity is still required by the legislation. In practice, this is difficult without reference to a specific diagnosis, meaning it is likely to remain a key point of assessment.
But the threshold will be higher
Tightened eligibility will make it harder for some people, particularly those with low to moderate support needs, to access funded supports.
Let’s consider an example. Currently, a child with level one autism who experiences challenges with social interaction and independent self-care skills would have a reasonable chance of accessing NDIS supports, through the early intervention pathway.
Under the new system, that child may need to demonstrate needs consistent with level three autism to be eligible. For example, they may need to demonstrate difficulties with daily routines such as dressing or eating without assistance, engaging safely in social settings, or coping with changes in routine.
Without meeting that threshold, they might instead be expected to rely on mainstream supports, such as school-based supports, or the not-yet-operational Thriving Kids program.
Some disabilities, such as deafblindness, tend to be more readily recognised as meeting the functional capacity threshold.
Other disabilities are likely to face greater scrutiny in assessment – in particular, those that are less visible, harder to quantify, or fluctuating or episodic, or such as many psychosocial disabilities. These are impairments caused by mental health conditions such as bipolar disorder, schizophrenia or post-traumatic stress disorder.
What’s coming next
The government has not detailed exactly how functional capacity will be assessed. Butler has indicated the new assessment tool will be developed over the coming months, ahead of its planned rollout from January 2028.
