The Ministry of Education's special education policy (commonly referred to as SE2000) has been progressively implemented since 1996. Although it is a funding rather than a professional-practice policy, it has had some negative and unintended consequences for the practice of educational psychology, for special education and it is suggested, for education generally. This paper explores the development, implementation and adaptations of SE2000, and the practical outcomes for children with special education needs. Through day-to-day and perhaps unquestioned use by educators (e.g. we now comfortably talk about "ORS" and "SLS" pupils); SE2000 has become legitimised as a de facto diagnostic framework. It will be argued that it conforms rather more to a layperson's understandings of special education taxonomies with all of the distortions and misunderstandings that this creates, than to a scientifically rigorous framework. SE2000 is well overdue for a scholarly review but the Ministry of Education (and it must be acknowledged both major political parties) have been reluctant to authorise or accept the need for a functional analysis of the professional activities that are supported by the policy, and the corresponding outcomes of it. The fact that the number of adaptations and additions to SE2000 (often referred to as "Initiatives") has steadily grown over the years, suggests that the basic framework is inherently flawed. It will be argued that any attempt to validate such taxonomies is probably doomed to fail and that children would be better served by a needs-based rather than a category-based funding arrangement.