Shorten said a nationwide lack of government services for disabled people was funnelling participants to the scheme when it was originally designed for those with “profound and severe impairments”.

“I don’t accept the assumption that the primary issue … is the cost,” he told reporters in Canberra.

“The National Disability Insurance Scheme isn’t working as it was intended to.”

Shorten said the scheme was in danger of becoming the “only lifeboat in the ocean” and it wasn’t fair to blame people for trying to get support for their families.

“What we need to do is create, more generally, a disability inclusive Australia,” he said.

Asked if future funding agreements should be shared more equally between the state and federal governments, Shorten said it was an issue for the prime minister and premiers to discuss.

He acknowledged some service providers were charging NDIS participants excessive fees and in some cases, treating people as an “ATM”.

The disability scheme is set to be one of the federl budget’s biggest expenses, with projections showing the NDIS will cost more than $50 billion by 2025/26 – more than the annual cost of Medicare.

A review of the scheme was ordered in October last year to rein in spending.

Meanwhile, a new report commissioned by National Disability Services found millions of Australians were unable to access disability services.

Ninety per cent of people with a disability who weren’t on individualised NDIS funding plans could not access services.

About four million people with a disability did not have an individualised package, instead relying on disability services provided by state and territory governments, community organisations, or not-for-profits, also known as tier two services.

The report found without proper tier two services, people with disabilities were more likely to need funding packages or increased NDIS support.

National Disability Services chief executive Laurie Leigh said more funding was needed to ensure the service’s longevity.

“A lack of so-called tier two supports has created an ‘NDIS or bust’ situation for people with disability needing assistance,” she said.

Tier two funding accounts for less than one per cent of investment in disability supports.

Leigh said more funding was needed for tier-two support services to take pressure off the system.