The federal government conceded ground to the premiers, handing over more cash and agreeing to a slight delay in the rollout of Thriving Kids. Premiers: 1, Albo: 0.
After months of stalemate and public slanging matches between federal and state representatives, Prime Minister Anthony Albanese has conceded ground to the states and territories in order to get the National Health Reform Agreement finalised.
Despite tough talk earlier this week about his government “not being an ATM”, Mr Albanese agreed to pay the states an additional $2 billion in hospital funding, taking Commonwealth support to $25 billion over the next five years. Commonwealth funding will reach a record $219.6 billion from 2026-27 to 2030-31.
Funding is currently provided by a one-year interim public hospital funding agreement which runs out in June. The interim agreement came about because negotiations for the NRHA which was supposed to come into effect last July failed to reach a deal.
After the National Cabinet meeting in Sydney this morning, Mr Albanese said the deal was “three times more additional funding for hospitals than was agreed to under the last [NHRA] five years ago under the Morrison government”.
“The success of our Commonwealth has always been about finding common ground, and I want to thank the premiers and chief ministers for the work that we’ve done together over a long period of time, making sure that our focus is not on ourselves or on politics, but is on patients,” he said.
“This agreement represents one of the most significant national reforms in living memory. These reforms will ensure that Australians can continue to access world class health care as well as disability support.
“It prioritises investment in our precious public health system and builds on my government’s measures to strengthen Medicare.
“It is a major step forward in addressing pressures that are there on health and aged care systems as well as on the NDIS, ensuring their sustainability into the future,” he said.
Delayed rollout for Thriving Kids
States and territories asked for a delay to the Thriving Kids program as part of the deal. To ensure they have enough time to implement the program, the rollout will now begin on 1 October 2026, with full implementation by 1 January 2028.
Thriving Kids will be for children aged 8 and under enrolled in the NDIS prior to 1 January 2028 with developmental delay and/or autism with low to moderate support needs.
National Cabinet also agreed to the following disability reforms:
- Adjusting state and territory NDIS contribution escalation rates to be in line with actual scheme growth, capped at 8%, from 1 July 2028 with a review point in 2030-31.
- Working together to target annual cost increases to 5% to 6%.
- $2 billion, matched by the states, to deliver Thriving Kids, the first phase of Foundational Supports, with the Commonwealth providing $1.4 billion of its contribution to support states to help their kids thrive.
Positive response from the states
Premiers were largely positive about the NRHA agreement when questioned after the PM’s announcement.
“Today is welcome,” said Tasmanian premier Jeremy Rockliff.
“It’s one that does have significant uplift in funding and one that we can support our respective systems further going forward.”
Tasmania will receive a small state adjustment, delivering an additional $700 million to Tasmania’s public hospitals over the next five years.
“This means more funding will flow into Tasmanian hospitals, ensuring our government can continue to build a strong and sustainable health system into the future,” Mr Rockliff said.
“We have successfully advocated for a small state adjustment to recognise the diseconomies of scale and unavoidable costs associated with being a smaller state, which was a significant challenge recognised by the federal government.
“This agreement provides long-term funding certainty and ensures we can continue investing in frontline services, supporting our health workforce, and delivering better health outcomes for Tasmanians,” he said.
NSW premier Chris Minns said the deal would “go a long way” to solving his state’s shortage in aged care and disability places.
But, he said, those challenges “have been in the system for a while and an injection of funding won’t be a quick fix”.
He said there was a recognition of the pressures in today’s agreement, but it was a “combined effort” of the states and federal government to deal with rising costs.
Mr Minns was asked what the new funding deal will mean for wage negotiations with doctors and nurses in the state’s public hospital system.
He said there will “always be pressure on the wages bill”.
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“It’s the biggest proportion of state spending on any area of government spending.”
Welcome, but still not enough
Australian Medical Association federal president Dr Danielle McMullen said it was a relief to see a deal along with additional funding.
“The additional funding announced by the Prime Minister in this agreement is welcome and long overdue and it will be critical for states and territories to ensure they lift their own funding levels as well,” Dr McMullen said.
She said the AMA’s modelling suggested that it won’t be enough to stop the decline in hospital performance.
“The additional funding will make a difference, but it is unlikely to reach the 45% of total costs by 2030 the AMA has been calling for on behalf our doctors and their patients.
“We are going to have to wait to see the detail to properly assess the impact of today’s agreement. No mention was made of reaching a set percentage of Commonwealth funding, what year it will be reached, or whether the cap on growth will be scrapped to give hospitals the extra headroom they need to meet community demand,” she said.
Director of Health Policy at Catholic Health Australia, Dr Katharine Bassett, welcomed the $2 billion aimed at reducing the number of patients occupying hospital beds while waiting for aged care.
“Older Australians stuck in hospital beds because they cannot access aged care is a major system failure that affects patients, families and hospital capacity,” Dr Bassett said.
“Addressing this bottleneck is critical to ensuring hospital beds are available for acute care and older Australians receive care that best meets their needs,” she said.
Shadow minister for health and aged care Senator Anne Ruston agreed that now that the deal was done, it was time to fix the aged care crisis.
“Labor promised to put the care back in aged care, but all they’ve managed to do is put the wait in waiting list.
“Anthony Albanese said today that his focus is on patients and not politics, but this is a prime minister who is providing only 60% of the funding older Australians have been assessed as needing because he has run out of money for aged care.
“Now that hospital funding certainty has finally been secured, the Prime Minister has no excuse left. It is time for him to take responsibility and fix the aged care crisis he has created,” she said.
