Whaikaha, the Ministry of Disabled People, will be restructured - losing responsibility for delivering support services and the move to a new approach put on hold.
The government has announced the move after a critical review, which says the ministry is not set up to effectively manage the scale and nature of its funding and has inadequate budget controls.
The ministry will become a standalone - no longer sharing back-office functions with the Ministry of Social Development (MSD) - tasked with strategic policy advice, advocacy and monitoring. The transfer will be managed by a taskforce, and the move to a standalone agency will be done through an Order in Council in October.
All support services will be moved to MSD, with the rollout of the Enabling Good Lives approach put on hold "to make sure access to support is fair and based on need, not location".
Funding levels for residential facility based care will also be kept at current levels, with no increases to keep up with inflation. The government will also bring back indicative budgets and monitoring of Needs Assessment and Service Coordination organisations.
Social Development Minister Louise Upston. Photo: RNZ / Samuel Rillstone
In a statement, Minister for Disability Issues Louise Upston said the shift of support service delivery to MSD was "significant but necessary".
"MSD has the controls and capability already in place to better manage this funding. This will also solve the conflict of the Ministry of Disabled People - Whaikaha having both advocacy and service provision roles, making it a representative and powerful voice in government for disabled New Zealanders."
She said the government was committed to supporting disabled people, "which is why we provided a record $1.1 billion funding boost to disability support services in this year's Budget".
During a media briefing on Thursday, the minister couldn't rule out job cuts, saying: "A large number of people will be in the new ministry or in the Disability Support service and those details will be worked through at pace."
It would be "disappointing" if people lost their jobs but that was not the intention of the restructure, she said.
Upston stressed no policy decisions would be made overnight and the disability community would need to be involved.
"We won't be making any decisions regarding eligibility criteria for flexible funding until later this year after consulting with the disability community," Upston said.
"Their voice and insights will be so important in getting this right."
She said she was very aware of the impact of changes to the flexibility funding in March and how distressing they were.
"That will never happen again under my watch. ...We will consult with the disabled community to ensure any changes that additional funding we have put in gets to those with highest needs."
How did we get here?
Changes to the way disability services were funded were rolled out in March with little notice and announced via the ministry's social media, not long into the coalition's term.
The moves were a surprise to those using the services, and community groups rallied in opposition to them, and then-minister Penny Simmonds admitted inadequate communication.
She had said the changes were the result of cost overruns at the ministry.
Cabinet then put a closer lens over changes at the ministry, and Simmonds was later dumped from the portfolio.
About a quarter of New Zealanders has some sort of disability. Disabled people often make heavy use of the health system but the constraints placed on disabled people by society extend far beyond health to things like employment, housing, transport, education and more.
Whaikaha Ministry of Disabled People chief executive Paula Tesoriero Photo: RNZ / Samuel Rillstone
The creation of the ministry, Whaikaha, was announced by the then-Labour government in 2021, promising it would be a single point of contact for disabled people.
The government also promised a nationwide rollout of the Enabling Good Lives approach to disability support services, which focuses on giving disabled people more choice in how they can spend the funding allocated to them. However, the portfolio changed hands a few times and funding for that approach has long been a concern.
Those decisions followed the Heather-Simpson-led Health and Disability review which, despite its name, failed to meaningfully consult disabled people, and barely mentioned or examined disability, accessibility, or related support services.
Disability was not even mentioned separately until page 150.
Advocacy groups had for decades been calling for support to be shifted out of the health system, saying disability was not solely a health issue - and disabled people were often being passed between government departments, with different levels of support based arbitrarily on the cause of a disability rather than need.
The huge disparity between the support offered to disabled people through ACC, compared to those who access it through DHBs, has also been a major concern.
ACC has also been shown to be biased against women, Māori and Pasifika, and disabled people who needed help because of an injury had to juggle the ACC and welfare systems at the same time.