Hospital funding impasse ends in last-minute $25b deal

Andrew Brown and Tess Ikonomou | January 30, 2026

States and territories will get more funding for public hospitals from the federal government after an eleventh-hour deal was reached.

Jurisdictions will get $25 billion extra in Commonwealth funding for hospitals, following a meeting of national cabinet on Friday.

Anthony Albanese said the five-year deal, which will come into effect from July, will see more than $219 billion provided, which is triple the amount previously given to jurisdictions under the last agreement.

It’s $2 billion more than what the prime minister earlier put on the table to premiers and chief ministers when renegotiating hospital funding arrangements.

“It is a major step forward in addressing the pressures that are there on our health and aged care systems, as well as on the NDIS, ensuring their sustainability into the future,” Mr Albanese told reporters in Sydney on Friday.

“Under our federation system, what that requires is for the Commonwealth, together with states and territories, to work together in the interests of the respective states, but also in the national interest.

“That is what we have been provided for with this agreement.”

The national cabinet meeting was the last chance for federal, state and territory leaders to agree to hospital funding measures before the current arrangements lapsed.

While it wasn’t due to expire until the end of June, an impending election in South Australia in march meant that government would go into caretaker mode and negotiations could not be carried out with all jurisdictions.

The Albanese government in December had offered $23 billion for public hospitals across five years, including $2 billion to help states manage elderly patients languishing in hospitals while they wait for aged care beds.

States and territories had insisted the federal government stick to a 2023 agreement that the Commonwealth would increase its share of public hospital funding to 42.5 per cent by 2030 and 45 per cent by 2035.

The government had offered greater hospital funding in exchange for states and territories picking up more of the cost of disability services such as the NDIS.

NSW Premier Chris Minns said the extra funding would help to alleviate pressures on hospitals from an aging population.

“We’ve got an aging cohort, so as as much as the system is stretched today, we can expect even further problems in the future,” he told reporters.

“But we’re very grateful that we’ve got this agreement today.”

Queensland Premier David Crisafulli had previously called for a better deal from the federal government, but said the agreement was a good move.

“If you’re asking me whether or not I would have liked to have seen more, of course, and if you’re asking whether or not we’re going to fight for more in the future, you bet. But we’ve taken a really big step forward today,” he said.

“The willingness for the federal government to say that is an important issue, combined with the extra funding today shows a willingness to work together.”

The prime minister said the funding deal would help provide improved health outcomes.

“We need to get older longer stay patients out of hospital rooms and into dedicated care, and the aged care reforms will assist with that,” he said.

“This funding deal is about a better deal for Australians about better health care, about strengthening Medicare.”