Labor accused of reneging on landmark health, NDIS deal

A funding shortfall would affect the quality of hospital services nationwide, state leaders warn. (Diego Fedele/AAP PHOTOS)

The federal government is trying to short-change states and territories out of tens of billions of dollars in health funding by reneging on a historic deal, concerned premiers say.

The potential shortfall would affect the quality of hospital services across the nation, a group of state and territory leaders warned on Wednesday.

The Council for the Australian Federation, made up of all premiers and chief ministers, called on the Commonwealth to honour a previous funding agreement and boost payments for health.

The strongly worded communique followed a meeting of the leaders on Monday to discuss national reform of health and disability services.

The Commonwealth says it remains committed to making a fair contribution to hospital funding. (Dan Himbrechts/AAP PHOTOS)

National cabinet, which also includes federal representatives, agreed to long-term, system-wide changes in health funding alongside reforms to the NDIS and additional support for people with a disability in December 2023.

Under the deal, the Commonwealth committed to fund 42.5 per cent of public hospital costs by 2030 and 45 per cent by 2035.

But the federal government was now proposing to provide a share closer to 35 per cent, tens of billions of dollars short of what was needed, the state and territory leaders said.

They are worried the Albanese government will not honour the 2023 agreement, which sought to pass some responsibility for disability services back to states, including the commitment that all jurisdictions would be better off overall.

A federal government spokeswoman noted the earlier agreement was not finalised and negotiations had resumed to complete a deal for hospital funding and NDIS reforms. 

"The Commonwealth remains committed to the December 2023 national cabinet deal," she said in a statement.

"We are committed to making a fair contribution under the hospital funding agreement to give Australians better access to health services they need, when they need them and to reduce pressure on hospitals."

The most recent offer to states included an additional $20 billion over five years for public hospital funding, a $7 billion increase on the Commonwealth's last offer to states and territories, she said.

"The Commonwealth is prepared to negotiate in good faith and looks forward to discussing the offer with states," the spokeswoman said.