National Cabinet has reached a landmark agreement to deliver record levels of funding for state and territory hospitals while implementing significant reforms aimed at securing the long-term sustainability of the National Disability Insurance Scheme (NDIS).
Meeting in Sydney today, leaders from the Commonwealth, states and territories reaffirmed a shared commitment to ensuring Australians continue to have access to world-class health care and disability support services. The agreement prioritises investment in the public health system and builds on existing Commonwealth measures to strengthen Medicare.
Record investment in public hospitals
As part of the deal, the Commonwealth will provide an additional $25 billion in funding for public hospitals, marking a major boost to the health system. This represents three times more additional funding than under the previous five-year agreement.
Total Commonwealth funding for state-run public hospitals is set to reach a record $219.6 billion between 2026–27 and 2030–31. This includes $24.4 billion to cover the Commonwealth share of estimated hospital activity through the National Health Reform Agreement base funding, as well as more than $600 million in further targeted investment in the public hospital system.
The agreement is designed to address mounting pressures across hospitals, aged care and the NDIS, while ensuring these essential services remain sustainable into the future.
The Commonwealth will also continue measures aimed at easing pressure on hospitals, including the rollout of 137 Medicare Urgent Care Clinics, expanded bulk-billing incentives, 92 Medicare Mental Health Clinics, 1800MEDICARE, cheaper medicines, and ongoing reforms to improve aged care services.
Securing the future of the NDIS
National Cabinet also acknowledged the need for continued reform of the NDIS to ensure it remains sustainable while delivering life-changing support for Australians with disability.
Leaders agreed to a series of additional reforms, including adjusting state and territory NDIS contribution escalation rates to align with actual scheme growth, capped at 8 per cent from 1 July 2028, with a review scheduled for 2030–31. Governments will also work together to target annual cost growth of 5 to 6 per cent.
A key element of the reforms is the introduction of Thriving Kids, the first phase of Foundational Supports. The program will receive $2 billion in funding, matched by states and territories, with the Commonwealth contributing $1.4 billion of its share to support early intervention and help children thrive.
The national model for Thriving Kids has been informed by expert advice and a parliamentary inquiry, as well as extensive consultation with parents, health professionals, disability advocates, educators and state governments.
To allow sufficient time for implementation, the rollout of Thriving Kids will commence on 1 October 2026, with full implementation by 1 January 2028.
Children with permanent and significant disability — including those with developmental delay and/or autism requiring high levels of support — will remain eligible for the NDIS. From October 2026, children with developmental delay and/or autism with low to moderate support needs will begin accessing support through Thriving Kids.
Children aged eight and under who are enrolled in the NDIS prior to 1 January 2028 will continue to be assessed under the existing reassessment criteria.
Broader health system reform
The National Health Reform Agreement Addendum goes beyond hospital funding, embedding reforms aimed at making Australia’s health system more effective, efficient and equitable.
National Cabinet said Australia already has world-leading health and disability support services, and the decisions taken today will further strengthen the health system while securing the future of the NDIS for generations to come.
