States have won a temporary extension to GST top-up payments and hospital funding boost, as the federal government seeks to share the burden of disability spending.
Prime Minister Anthony Albanese met state and territory leaders in Canberra on Wednesday, with the future of the National Disability Insurance Scheme and state funding top of the agenda.
The cost of the NDIS is rising at an unsustainable 14 per cent and the federal government wants to contain the growth to eight per cent.
Without action it could start to erode other parts of the federal budget, the forecast for which will be updated in the mid-year review next week.
"What we want to do is to make sure ... those people who need that (NDIS) support continue to get it," Mr Albanese told reporters.
As an initial response to the NDIS review, national cabinet agreed to adjust state and territory contribution escalation rates, increasing from four per cent to be in line with actual scheme growth, capped at eight per cent.
The Commonwealth will pay the remainder of scheme costs growth, starting from July 2028.
The leaders also agreed to jointly design additional "foundational supports", which could be delivered by the states through childcare centres or schools.
The review of the NDIS is due to be released on Thursday, with minister Bill Shorten outlining the government's response in a National Press Club address.
National cabinet also agreed to extend the GST "no worse off guarantee" in its current form for three years from 2027/28.
This will ensure GST proceeds are shared fairly and equitably, providing funding certainty for states.
Victorian Premier Jacinta Allan said the extension would provide her jurisdiction with ongoing budget certainty.
"Not having that extension of the GST arrangements would have not just have been a hit to our budget, it would have also been a real issue in terms of the number of teachers and nurses we can employ and engage in our schools and hospitals," she said.
The former coalition government struck the "no worse off" guarantee with the states in 2018 after a deal was made with Western Australia over the GST carve-up.
The deal was due to expire in 2026-27.
The leaders also agreed to a further $1.2 billion package of Strengthening Medicare measures to take pressure off hospitals.
It will include more urgent care clinics and support for older Australians, as well as regulation changes.
The federal government pledged to boost National Health Reform Agreement contributions to 45 per cent over a maximum of a 10-year glide path from July 2025, with an achievement of 42.5 per cent before 2030. The premiers endorsed the current 6.5 per cent funding cap in the agreement being replaced by a more generous approach that applies a cumulative cap over the period 2025-2030 and includes a first year "catch up" growth premium.
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