An urgent agreement on public hospital funding has been reached between the federal government and the states and territories.

Prime Minister Anthony Albanese revealed the breakthrough after a national cabinet meeting on Friday that included premiers and chief ministers.

This new five-year plan, set to begin in July, involves the federal government committing an additional $25 billion to the public hospital system.

Albanese highlighted that over the five-year duration, public hospitals will receive more than $219 billion, a figure that triples the funding from the previous deal.

“This marks a significant advancement in tackling the challenges facing our health and aged care systems, as well as the NDIS, ensuring their long-term sustainability,” Albanese stated in Sydney on Friday, referring to the National Disability Insurance Scheme.

“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.”

Minns, Crisafulli welcome last-minute deal

Current funding arrangements run out at the end of June, but South Australia’s election in March meant Friday’s meeting was the last chance a deal could be struck before that state’s government went into caretaker mode, putting negotiations between states on hold.

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 have 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 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.”

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