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The federal government will give the states and territories $3.5 billion a year in greater GST payments for another three years in a national cabinet deal that also boosts funding for public hospitals and eases pressure on the National Disability Insurance Scheme.
The agreement extends a costly federal pledge on the GST until at least 2031 by loading more spending onto the federal budget in order to settle angry disputes with the premiers over cuts to state revenue.
The prime minister, the premiers and chief ministers arrive for the press conference after national cabinet. Credit: Alex Ellinghausen
Premiers emerged from the national cabinet meeting in Canberra with confidence their budgets would be better off in net terms after they agreed to spend more on disability care to help people who might not qualify for the NDIS.
Prime Minister Anthony Albanese also promised to fund more “urgent care clinics” as part of a $1.2 billion outlay, saying this would ease pressure on state hospitals because the GP services could help families who would otherwise wait for hours at emergency departments.
Albanese got the NDIS agreement across the line by saying the federal government would pay half the cost of the new “foundational supports” the states and territories would set up for people with disabilities. The federal government will also cap the cost for the states and territories.
While the states and territories will have to pay for some of the disability services – likely to include help at community health centres and schools – they can commit to the spending in the knowledge they will be better off from the boost in hospital funding and additional GST payments.
Albanese went to the last election with a promise to work with the states on health but never agreed to scrap the previous government’s 6.5 per cent cap on annual increases in federal outlays on public hospitals.
This changed at the national cabinet meeting on Wednesday morning when Albanese agreed to replace the 6.5 per cent cap with a higher cumulative cap over the five years to 2030 as well as a “catch up” payment in the first year of the new arrangement.
The joint statement after the meeting said this was a “more generous approach” but did not say how much it would cost the federal budget.
Federal outlays on state healthcare, principally hospitals, were forecast to rise from $30.5 billion in fiscal 2025 to $32.2 billion in 2026 before the new agreement.
“We are taking immediate action to take pressure off hospitals through further strengthening Medicare, but we are also locking in long-term structural health reform,” Albanese said at a press conference with the premiers and chief ministers in Parliament House.
Victorian premier Jacinta Allan said the result on GST delivered more certainty for the state budget to allow more spending on public services.
NSW premier Chris Minns said the deal gave states certainty.
“If you look at the NDIS, the GST, if you look at changes to health reform, I think we have
achieved more in the last two days than many thought would be possible,” he said.
“And it gives the states certainty in relation to the GST and the health system so we can tackle
challenges in the NDIS, and that is a breakthrough that first ministers and previous prime ministers have been aiming for over a decade.”
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