After a critical meeting on Friday, state Health Ministers have agreed to take over responsibility for providing psycho-social supports for most children under nine, restricting the NDIS to those with severe, lifelong illness. This agreement sets the stage for significant change in the way services will be delivered.

Although details of the arrangements are yet to be announced by the Commonwealth, the new settings represent the most dramatic change to the NDIS since its formation and promise to significantly reduce the scheme’s exponential cost growth.

Currently, one in five boys under seven is on or applying for the scheme. The new arrangements will see responsibility for psycho-social supports being handed over to the states, while eligibility for the NDIS will be lifted from children under seven to those under-nine.

Speaking after the agreement, Health Minister Mark Butler said the federal government will support the arrangement with new funding dedicated to expand mental health services for young Australians in state-run settings.

“Youth mental health is a real challenge out in the community,” Butler said. “Demand for mental health supports among young people just grows year on year on year.“

“Making sure we have not just the right models of care but enough of those services available” will also be critical, Butler said. “We made a very substantial commitment of about $700 million to expand mental health services for young Australians, including what Pat McGorry calls the missing middle.”

The Minister did guarantee that the NDIS would still be available for people who need really significant psychosocial support but may not currently qualify for the scheme.

Butler said this included those currently “bumping in and out of hospital emergency departments, but just not getting enough support. This is a focus of Commonwealth and state action going forward.”

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Butler stressed building the mental health workforce was vital in both the “well-recognised, well-established clinical areas like psychology and psychiatry but also building a peer workforce”. He stressed this would be a new development, “unique among health sectors and really important for mental health”.

The Minister said it would still be some time before the new arrangements came into effect, noting “the foundational supports commitment [is] tied to the hospital funding deal. Those deals won't be completed before the latter part of this year. There's no way we could roll out a foundational support system on 1 July given that really there's no funding agreement.”

“What we were at [in the Health Minister’s meeting] was finding ways of providing an alternative source of support for families with kids under the age of nine with more mild to moderate levels of developmental delay.” Butler said.

He guaranteed this would not affect support for those children “who are really on a pathway to lifetime functional impairment”, stressing the aim of the new settings was to address the needs of “kids who need a lower acuity level of support to nudge them back on course”.