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The Albanese government has announced it will make “unavoidable and urgent” cuts to reduce the cost of the national disability insurance scheme by the decade’s end.

The move follows a series of changes already under way to bring the bottom line of the scheme, which supports about 760,000 Australians with disabilities, under control.

Here’s what you need to know.

How will the NDIS change?

The health minister, Mark Butler, on Wednesday said he will make “hard” decisions to drastically cut the NDIS’s yearly growth to 2% each year until 2030.

As part of his plan to lower the number of people on the scheme to 600,000 in four years – down from 760,000 – Butler said there would be changes to eligibility.

The government will introduce a bill during the May budget week to bring in “standardised evidence-based assessments of a person’s functional capacity” to determine whether they should be given access to the NDIS. All participants will have to undergo this new test when it comes into effect by 2028.

Butler said: “Access will be based upon a significant reduction in a person’s functional capacity that impacts their day-to-day living. It will also remove the use of the lists that currently decide a participant’s eligibility based on diagnosis alone.”

Other savings measures include:

• Reducing the overall budget for third-party plan managers by 30%.

• Capping the overall cost for social and community participation programs to 2023 levels. This is expected to reduce the average participant’s yearly cap from $31,000 to $26,000.

• Expanding mandatory registration of service providers to include those offering support in high-risk activities, personal care, daily living supports and supports provided in closed settings.

• Enrolling all providers in a digital payment system to ensure oversight of evidence for each provision of care or item.

• Cutting down the number of unscheduled plan reassessments to curb a participant’s budget inflation.

Why is the Albanese government reducing the NDIS’s growth?

As Butler mentioned, the NDIS has been growing at a consistently high rate since its full introduction in July 2020. According to the Grattan Institute, its average annual growth rate between 2020 and 2024 reached 24%.

The NDIS costs around $50bn and is projected to rise to $70bn by 2030. According to the mid-year economic financial outlook in December, the NDIS is growing faster than the cost of hospitals, childcare subsidies, defence and medical benefits over the next decade.

“We can’t afford for the NDIS to continue growing at its present rate. But far more importantly, we can’t afford for the NDIS to fail,” Butler said.

In 2023, national cabinet agreed to an 8% growth rate target by 2025-26 but it was reduced again to 5 or 6% in January.

On Wednesday, Butler announced his changes would limit growth to 2% each year between now and 2030 before the NDIS would return to a 5% growth rate.

Will my access to the NDIS be cut?

Butler said he would introduce legislation in May to bring in a standardised evidence-based assessment to determine who gets to access the NDIS. These changes, Butler said, would begin to come into effect from 2028.

The minister also flagged those with “lower support needs or higher functional capacity” will be moved off the scheme.

“What I tried to say in my speech is I want to get away from the diagnosis list, the diagnosis gateway. We need to return the scheme back to a question of functional capacity. That’s what it was built on, the idea of people with significantly reduced functional capacity that impacts their day-to-day living needs,” he said.

“There’s no particular area of diagnosis that will be treated differently to others.”

The NDIS minister, Jenny McAllister, told the ABC the scheme is designed for “people with permanent and significant disability” but said that definition has never really been defined, leading to a much higher uptake than envisaged.

While the bill has yet to be released, it’s likely a new evidence-based assessment will take some time to be introduced. Butler said the changes would be informed by “genuine and respectful work with the states, and with the [disability] community”.

It’s not clear whether there will be any changes to the review process regarding department decisions on eligibility.

How else is the NDIS changing?

Besides the overhaul announced by Butler on Wednesday, changes to the NDIS were already on the way.

From July, it will be mandatory for service providers offering supported independent living accommodation packages to undergo regular reporting, independent audits and worker screening checks.

The Thriving Kids program will also transition children under nine with autism and developmental delays from the NDIS to programs jointly run by the commonwealth, state and territory services. It begins in October and is expected to be fully operational by January 2028.

Butler also announced the new framework planning tool will roll out from 1 April 2026 instead of July. It will introduce mandatory support needs assessments, more flexible budgets and longer-lasting plans.