The Turnbull government dropped its plans to increase the Medicare levy to fund disability services because "there was no prospect" of getting the measure passed in parliament.
Treasurer Scott Morrison on Thursday announced the government would not increase the Medicare levy by 0.5 per cent to 2.5 per cent to fund the National Disability Insurance Scheme because the increase could be covered by better-than-expected budget revenue.
Social Services Minister Dan Tehan says the government had thought the levy would get support across parliament, but couldn't negotiate the outcome
"Fortunately, due to our great economic management we've been able to turn that around ... and we are absolutely committed that part of that money goes into ensuring the NDIS will be fully funded," he told ABC radio.
Finance Minister Mathias Cormann acknowledged the government had not put the measure to a vote in parliament.
"We could have spent months and months wasting time," he told Sky News.
"We knew the Labor Party was opposed, we knew that the Greens were opposed, we knew that One Nation was opposed. So there was no prospect of getting it through the parliament."
Funding would be set aside in the same way as pensions, defence spending and Medicare funding, Mr Tehan said.
Liberal frontbencher Christopher Pyne dismissed speculation a funding gap for the scheme would be greater than $7 billion.
"The treasurer made it quite clear there is no gap, that we actually have the revenue," he told the Nine Network on Monday.
Mr Morrison has insisted funding for the scheme is guaranteed for the "next 10 years and beyond".
But disability advocates are anxious about the future of the NDIS and say the decision kicks the can down the road in terms of long-term funding, forcing them to beg cap-in-hand before each federal budget.
Prime Minister Malcolm Turnbull, who returned to Australia from Europe on Thursday, sought to assure the disability services sector it could be confident of ongoing funding.
Australian Associated Press