Prime Minister Anthony Albanese met with state premiers in a national cabinet meeting to continue negotiations regarding health funding across Australia. This discussion marks another chapter in the ongoing dialogue between the Commonwealth and state governments over the financial support of public hospitals.
In 2011, the then-prime minister Julia Gillard established a national health reform agreement with states and territories, which stipulated that the Commonwealth would cover 45 percent of public hospital costs starting from July 2014. This agreement laid the foundation for future funding discussions, though subsequent administrations have faced challenges in adhering to these commitments.
In 2018, former Prime Minister Malcolm Turnbull proposed an additional $30 billion aimed at ensuring that states and territories received the promised 45 percent of hospital funding. Despite this effort, leaders from various states and territories expressed that more financial resources were necessary and pushed for a 50-50 funding arrangement.
During the early months of the COVID-19 pandemic in 2020, a significant five-year funding deal was negotiated under then-Prime Minister Scott Morrison, amounting to $131.4 billion. This agreement aimed to stabilize hospital funding amid the health crisis, but the underlying issues surrounding funding levels remained a point of contention.
In 2023, Prime Minister Albanese further addressed the funding dilemma by proposing a plan to provide $23 billion in Goods and Services Tax (GST) payments and hospital funding by 2030. This proposal included a stipulation that states would need to contribute more towards the National Disability Insurance Scheme (NDIS). Under this plan, hospital funding from the Commonwealth would decrease to 42.5 percent by 2030, with a commitment to restore it to 45 percent by 2035.
As negotiations continue, a 12-month extension of the current hospital funding arrangement was signed in February 2025. This extension allows both the Commonwealth and state governments to engage in further discussions on establishing a multi-year funding pact that could address the ongoing financial concerns related to public health services across Australia.
The outcome of these negotiations will be crucial for the future of Australia’s healthcare system, impacting the level of care that hospitals can provide and the financial sustainability of the NDIS. As discussions progress, the focus remains on achieving a funding model that meets the needs of both the states and the federal government.
