THE National Disability Insurance Scheme (NDIS) is "neither driving nor affecting" the closure of Stockton Centre and other residential homes, says Newcastle state MP Tim Owen.
But the scheme's introduction on July 1 sparked a series of changes, statewide and nationally, to Australia's disability care system.
Under the state government's latest legislation, the NSW Enabling Bill 2013, disability services will be privatised by 2018.
Residential homes, such as Stockton Centre, will also be closed.
However, the closures have been in the state government's pipeline since it passed the Disability Services Act in 1993.
It proposed residential homes should eventually be redeveloped to offer modern-day disability care.
Mr Owen said the NDIS had brought these plans forward, coinciding with the scheme's rollout.
"Despite what people think, the NDIS is completely divorced from Stockton," Mr Owen said.
"For years now, no new admissions have been made to the centre.
"It's old, tired-looking and unsuitable for many people now.
"Now was the right time to move in a new direction."
During the next 18 months, the state government will provide funds to build smaller, more tailored group homes in the place of large residential homes.
Each is expected to take about six people.
This means at least 77 residences will need to be built to replace the 462 beds at Stockton Centre alone.
Land has been bought for several homes, and their construction is expected to start within a year.