'Unsustainable': Godfather of the NDIS says states must work with Commonwealth

"Quite frankly, people with disability and their families are relying on this committee and the Parliament to ensure the future of the NDIS by passing this legislation," economist and disability reformer Bruce Bonyhady told a Senate inquiry hearing on Tuesday.

"The scheme as it is today is not sustainable - and, without sustainability, people with disability and their families have no certainty, they have no rights."

NDIS Minister Bill Shorten has pledged to get the NDIS "back on track" and rein in spiralling costs of the scheme, which is projected to blow out by $14.4 billion over the next four financial years if it is not reformed.

Professor Bonyhady, the Director of the Melbourne Disability Institute at The University of Melbourne, told the first hearing of a Senate inquiry into the government's NDIS Amendment Bill that it aligned with the recommendations of the review he co-chaired last year.

"What we recommended was that budget settings should be based on support needs, that could be undertaken at the whole of person level, and that budget should be flexible - and that's provided for in this legislation," he said.

"As we heard during the review, people with disability and their families are not at the centre of the scheme, they find the current planning processes stressful and traumatising. There's a lack of confidence. There's a lack of consistency."

Professor Bonyhady said foundational supports needed to be jointly funded by state, territory and Commonwealth governments, which must "step up and work with the disability community ... to get this right quickly".

"The need for the Commonwealth is very important here to ensure consistency across jurisdictions," he said.

"The need for the states is also obvious because they need to be built on the strengths of existing state based systems."

Historically, as the NDIS has been rolled out, some services previously funded by the states have been withdrawn.

Professor Bonyhady is known as the "godfather of the NDIS" and was instrumental in its design by the Gillard government.

He is the father of three adults sons, two of whom have disabilities and has been involved in the disability sector for more than three decades.

"I can't emphasise enough how important it is that this legislation passes, because the status quo is not an option," he told the inquiry on Tuesday.

Earlier on Tuesday, Prime Minister Anthony Albanese defended his government's plan to overhaul the NDIS and save the budget billions.

"What we're talking about here isn't something that's any reduction - it is a lowering of the projected increase in NDIS funding, which would see it unsustainable," Mr Albanese told reporters in Sydney.

"The NDIS needs to be made sustainable."

Premiers of all six states have raised concerns that the reform will lead to "worse outcomes" for people who rely on the scheme, the Sydney Morning Herald reports.

Treasurer Jim Chalmers said the federal government was "engaged with the states and territories on making sure that the NDIS can deliver for the people it was designed to serve."

"We understand that the states have raised concerns - they've raised them privately and publicly - and that's appropriate," he told reporters in Sydney.

"But our intention here is to work with the states, not against them."

Mr Chalmers said funding for the NDIS would "continue to grow quite strongly" but that "everyone - state and federal, everyone associated with the scheme - has an interest in and has a responsibility to make sure that we're getting value for money."

He said the government was talking to the states "about how we make that possible in the context of funding for the way that the NDIS has had to grow."

Mr Albanese said his government was "providing enormous support for the states with the agreement on the table to advance health and hospitals funding" along with investments in housing, education and "significant infrastructure investment, including here in Western Sydney", announced in the budget.

"We want to make sure that everyone with a disability gets the support that they need so they can fully participate in Australian society. That's the objective of the NDIS," he said.

An ACT government spokesperson said: "We encourage the Commonwealth to continue to work with the States and Territories as this significant reform to the NDIS occurs."

Greens disability rights spokesperson Jordon Steele-John said the government bill, if passed, would "make life more difficult for disabled people" and enable the National Disability Insurance Agency to make significant changes to the scheme without community consultation.

"Removing participants from the scheme to systems that don't exist, is outrageously poor planning with obviously harmful consequences," he said.

"The message from the community is clear, Labor should not cut the NDIS and this draft NDIS legislation should not pass in its current form ... Labor has made the political decision to balance its budget off the back of disabled people [by] cutting $14.4 billion from the NDIS."