Finance Minister Bill English has confirmed the Government will set up a national voucher system to fund services for people with disabilities - saying it will give them more say over their care.
The Government has been trialling the programme, Enabling Good Lives, in Waikato and Christchurch.
This is where money goes to people with disabilities, or their families, to buy support from service providers of their choice.
Mr English told Parliament today that the disability sector had "broadly welcomed" Enabling Good Lives and the success of a similar voucher system in Australia, showed New Zealand needed one too.
"And the reason why, is because it gives them (people with disabilities) some choices," Mr English said.
But the Labour Party was worried greater privatisation would hamper the delivery of social services.
Its social development spokesperson Carmel Sepuloni questioned whether greater contracting out would harm social services.
This week a draft Productivity Commission report on effective social services recommended users be given a greater say in the services they receive, while government departments should take a step back.
It also recommended much more decentralised services, including possible competing insurance-based systems such as ACC.