TL;DR
- Labor secured a crucial tax deal with the Greens in June 2026, but analysts warn it may come at the expense of NDIS reform [1].
- The NDIS cuts target $36 billion in savings — the largest single budget measure in the 2026–27 Federal Budget [2].
- Political capital spent on the tax deal could weaken Labor's ability to negotiate controversial NDIS changes through the Senate crossbench [1].
- The Grattan Institute supports the reform direction but warns of implementation risks if the government rushes to meet savings targets [3].
- The tension highlights a broader challenge: reforming the NDIS requires political capital that is finite and currently being spent elsewhere.
The Tax Deal: What Labor Won
In late June 2026, the Albanese government secured a deal with the Greens on its tax package — a legislative victory that delivers on key election commitments and stabilises the government's budget narrative [1].
The Greens extracted concessions in exchange for their support, as is standard in Australian minority government politics. But The Guardian's political analysis suggests the deal may carry a hidden cost: it consumes political goodwill that Labor needs for the far more contentious NDIS reforms [1].
Josh Butler reported:
"Labor's tax deal with the Greens is a crucial win — but its NDIS changes could pay the price."
— The Guardian, 24 June 2026 [1]
In Australian politics, every negotiation with the Senate crossbench is a trade. The Greens have a finite appetite for compromise, and if they have already spent their political capital on tax changes, they may be less willing to support — or less willing to moderate their criticism of — the NDIS Bill.
The NDIS Price Tag: $36 Billion in Cuts
To understand why the NDIS reforms are so politically difficult, consider the numbers.
The 2026–27 Federal Budget unveiled $36 billion in NDIS savings over the forward estimates — the single largest budget measure [2]. The scheme currently costs more than $50 billion annually and has been growing at over 10% per year [3].
The savings are to be achieved through:
- Tighter eligibility (projected to remove 241,000 participants over four years) [4]
- Fewer plan reassessments (each reassessment typically increases plan costs by ~20%) [3]
- 20% cuts to social and community participation [3]
- Direct government commissioning of support coordinators and plan managers [3]
- Enhanced fraud and compliance measures [3]
These are not minor technical adjustments. They represent a fundamental restructuring of the NDIS — and they affect hundreds of thousands of voters, many of whom are organised, vocal, and politically engaged through peak disability bodies.
The Trade-Off: Political Capital Is Finite
Political scientists often describe "political capital" as a finite resource: every legislative win consumes some of it. Labor's tax deal is a legitimate policy achievement, but it may leave the government with less room to manoeuvre on the NDIS.
There are three specific risks:
1. Greens cooperation on NDIS moderations If the Greens have already negotiated hard on tax, they may resist further compromises on NDIS — or demand even more concessions than they otherwise would have. This could force Labor to accept amendments it would prefer to avoid, or to water down its savings targets.
2. Crossbench narrative alignment The teal independents and other crossbench senators have been vocal critics of the NDIS cuts. If the government is seen as having "spent" its reform mandate on tax changes, the crossbench may be emboldened to block or delay the NDIS Bill.
3. Public perception Voters may view the tax deal and NDIS cuts as part of the same equation: who is Labor really fighting for? If the tax changes benefit one group while the NDIS cuts hurt another, the government risks a narrative of inequity that is politically damaging.
Why the Senate Crossbench Matters
Australia's Senate is designed to be a house of review, and in recent years the crossbench has wielded genuine legislative power. The current Senate requires Labor to negotiate with either the Coalition (unlikely on this Bill) or the Greens plus at least one other crossbencher.
The Greens have already shown themselves willing to challenge the NDIS reforms. In tandem with disability advocates, they have pressured the government to extend the parliamentary inquiry — a delay that, while minor, signals their intent to scrutinise the Bill closely [5].
The risk for Labor is not that the NDIS Bill fails entirely — the government should have the numbers eventually — but that it is amended so heavily that the $36 billion savings target becomes unachievable. If that happens, the government's entire budget strategy unravels.
Grattan's Verdict: Reform Is Right, But Risky
The Grattan Institute — one of Australia's most influential independent policy bodies — has given the NDIS reform package qualified support [3].
Grattan's analysis agrees that cost growth is unsustainable, that a functional capacity approach to eligibility is sensible, and that foundational supports outside the NDIS are overdue. But it has repeatedly warned that hitting savings targets while missing the point is a real danger:
"There is a risk of hitting the growth target while missing the point: relying on blunt cost reductions that worsen outcomes for participants while underlying design issues take more time to resolve."
— Grattan Institute, April 2026 [3]
In other words: the government needs political capital not just to pass the Bill, but to implement it well. Cutting 241,000 participants without proper transitional supports, or reducing social participation funding without building inclusive community alternatives, would undermine the very purpose of the NDIS — and erode public trust in the process.
Just 42% of Australians already believe the NDIS offers value for money, compared to 79% for Medicare [3]. That is a fragile social licence. Politically driven cuts that are perceived as unfair could damage it further.
What This Means for Participants
For NDIS participants and families, the tax-deal-versus-NDIS dynamic is abstract but consequential. Here is why it matters:
- Savings targets drive policy detail: If the government's political capital is depleted, it may rush NDIS implementation to hit budget deadlines — cutting corners on transitional supports or the foundational supports system.
- Senate amendments could protect participants: A weakened Labor position in the Senate might sound bad for the government, but it could result in a better Bill for participants — with stronger safeguards, slower transition timelines, and more funding for alternative supports.
- Advocacy timing: If you are engaged in NDIS advocacy, the next six months are critical. The Senate will debate amendments in late 2026, and crossbench senators will be most responsive to lobbying before deals are finalised.
FAQ
Q: What was Labor's tax deal with the Greens? The specific terms were not fully detailed in public reporting, but The Guardian described it as a "crucial win" for the government — suggesting Labor secured passage of significant tax measures in exchange for Greens concessions on other policies [1].
Q: Will the tax deal stop NDIS reform? No. The NDIS Bill will almost certainly pass in some form. The question is whether it passes with the $36 billion savings intact, or whether Senate negotiations force Labor to accept less ambitious cuts [1][2].
Q: Why is the Senate crossbench so powerful on NDIS? Because Labor does not have a Senate majority. It needs either Coalition support (unlikely) or Greens-plus-crossbench support to pass legislation. The Greens have already shown they will use this leverage [5].
Q: What happens if the $36 billion target is not met? The government's budget strategy relies on NDIS savings to fund other priorities. If the Senate forces substantial amendments, Treasurer Jim Chalmers may need to find alternative savings or accept a larger budget deficit [2].
Q: How can participants influence the Senate debate? Contact your state senators — particularly Greens and crossbench senators — and share your story. Peak disability bodies are also coordinating collective advocacy campaigns ahead of the Senate vote in late 2026 [5].
References
[1] The Guardian, "Labor's tax deal with the Greens is a crucial win – but its NDIS changes could pay the price," 24 June 2026. By Josh Butler. Available at: https://www.theguardian.com/australia-news/2026/jun/24/labor-tax-deal-greens-ndis-changes-price
[2] The Guardian, "Huge cuts to NDIS aim to save more than $36bn in budget's largest single measure," 11 May 2026. By Sarah Basford Canales. Available at: https://www.theguardian.com/australia-news/2026/may/11/huge-cuts-to-ndis-aim-to-save-more-than-36bn-in-budgets-largest-single-measure
[3] Grattan Institute, "The NDIS reform package is a step forward," 22 April 2026. Available at: https://grattan.edu.au/news/the-ndis-reform-package-is-a-step-forward/
[4] The Guardian, "New NDIS eligibility rules will cut 241,000 participants from scheme in four years," 28 May 2026. By Dan Jervis-Bardy. Available at: https://www.theguardian.com/australia-news/2026/may/28/new-ndis-eligibility-rules-will-cut-241000-participants-from-scheme-in-four-years
[5] ABC News, "'Ridiculous and disrespectful': Inquiry into NDIS cuts extended," 23 June 2026. By Nas Campanella and Evan Young. Available at: https://www.abc.net.au/news/2026-06-23/inquiry-into-ndis-cuts-extended/103462158