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.

ACT reactions: Labor government and Opposition

ACT Chief Minister Andrew Barr said the Territory would benefit significantly from new funding arrangements.

“The ACT Government welcomes the agreement that has been reached at National Cabinet today on the health and National Disability Insurance Scheme (NDIS) reforms,” he said.

“We are pleased the Commonwealth has acknowledged the pressure in meeting our future hospital and public health demands, particularly for a smaller jurisdiction like the ACT where it costs more to run a health system.

“As part of the agreement today, the ACT is forecasted to receive from the Commonwealth $4.1 billion over five years to 2030-31. This includes an additional $557 million in public hospital funding and a significant uplift of $150 million over the next two years to address the challenges smaller jurisdictions face delivering health services, while more permanent arrangements are concluded.”

However, the Canberra Liberals said that Labor governments were short-changing ACT Health. Party leader Mark Parton MLA, the shadow health minister, said:

“The Canberra Liberals acknowledge the additional health funding identified for the ACT in today’s National Cabinet announcement, but Canberrans deserve to see the fine print before celebrating.

“While ACT Labor will rush to declare a win, the reality is that the reported $557 million over five years equates to around $111 million per year, barely a drop in the bucket when the Territory lost more than half a billion dollars last year to interest expenses alone.

“Canberrans need transparency on the year-by-year funding schedule, and proof this agreement will actually strengthen frontline health services, rather than continuing the long-running cost-shifting blame game between governments.

“There are serious concerns that by the third year of this deal, the additional funding may not even cover public service wage increases under the next enterprise agreement, leaving ACT Health no better off, and patients no better served.

“The ACT Health Minister must explain how this funding will genuinely improve emergency wait times, surgery backlogs, and workforce pressures, not just prop up a struggling budget.

“The Minister has already admitted Tuesday this week on local radio she only re-engaged in negotiations after returning from leave, saying: ‘I’ve been involved in discussions. Just yesterday, when I got back, I think things are now moving quite quickly.’

“Canberrans expect their Health Minister to be fighting every day for a better deal, not turning up late once decisions are already being locked in. 

“After years of Labor control, ACT Health remains under pressure not just from funding shortfalls, but from deep inefficiencies, rising costs, and poor financial management, leaving patients facing longer waits, staff shortages, and growing uncertainty about the system’s future.

“It’s now the responsibility on the ACT Government to now find efficiency in health delivery. Simply spending more money won’t address the underlying cost pressures that are ravaging the ACT budget.

“The Canberra Liberals will hold ACT Labor accountable to ensure this deal delivers real improvements, not more spin, more debt, and more excuses.”

Other state reactions

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.”