Budget 2026-27 analysis: urgent care, public dental, Aboriginal and Torres Strait Islander health

Introduction by Croakey: As health policy analyst Charles Maskell-Knight notes a number of important policy decisions for the Health, Disability and Ageing portfolio were announced in the weeks before the Federal Budget, including increased spending on aged care funded by savings in NDIS and private health insurance subsidies, and the permanent establishment of Urgent Care Clinics.

His forensic analysis of the Budget papers reveals questions about budget savings, a decline in real funding for public dental, no real increase in funding for Aboriginal and Torres Strait Islander health services and little overall growth in health spending given inflationary trends and demographic growth.

Charles Maskell-Knight writes:

According to Budget Paper 2, total gross new spending in the Health, Disability and Ageing portfolio resulting in policy decisions since the Mid-Year Economic and Fiscal Outlook amounted to $10.9 billion.

Of this, $5.3 billion over the four years 2026-27 to 2029-30 was due to decisions to list new medicines on the PBS.

As I have written before, if Government policy is to maintain the PBS as an up-to-date formulary of cost-effective medicines, decisions to add new medicines should not be regarded as new policy decisions.

Leaving aside PBS listings, gross additional spending in the portfolio announced in the Budget amounted to $5.5 billion over the four years.

Much of this additional spending related to decisions already announced, such as Urgent Care Clinics.

In relation to Aged Care, Budget Paper 2 stated that “the Government has also provisioned $1.1 billion to be held in the Contingency Reserve for future spending to increase the Accommodation Supplement and introduce an additional payment for high supported resident ratios, subject to finalising implementation details.”

Savings decisions announced in the portfolio in the Budget totalled $41.8 billion, including $36.6 billion from NDIS and $3.0 billion from reduced private health insurance rebates for older Australian, both previously announced.

The balance of $2.2 billion came from the innocuously named “Reinvesting in Health, Disability and Ageing programs.”

Budget Paper 2 described this measure as “the Government has identified a further [$2.2 billion over four years from 2026-27] from health, disability and ageing programs which will be reinvested in new or expanded health, disability and ageing services.”

The Department of Health, Disability and Ageing budget pack doesn’t mention the savings, nor does Minister Butler’s media release.

I foresee some pointed questions on this at Senate estimates.

Aboriginal and Torres Strait Islander Health Services

The 2026 Report on Government Services also showed that Commonwealth spending on Aboriginal and Torres Strait Islander health services in constant 2024 dollars was almost the same in 2024-25 ($981 million) as in 2022-23 ($980.6 million).

While this Budget includes a number of minor new policy announcements, total spending on Indigenous health services is essentially flat into the future.

This is not how to Close the Gap, as Senator Lidia Thorpe has already noted.

She has said while she welcomes “the government finally acting to exempt Stolen Generations redress payments from residential aged care means testing”, she sees the Budget as another missed opportunity to “properly invest in healing and self-determined solutions led by our people, or measures to prevent our people being criminalised and harmed.”

Public dental funding

In past Budget analyses I have written about the ongoing renewal of the agreement under which the Commonwealth contributes to public dental services operated by state and territory governments.

The agreement provides continued funding following the expiry of a three-year agreement in 2014-15, and it has now been extended for one or two years over a half a dozen times.

The amount of funding has been frozen for most of that time, meaning the actual assistance provided to the States and Territories has declined in real terms.

In its response to the Senate inquiry into dental services almost three years ago the Federal Government said that: “Governments are working together to progress dental reform priorities including long-term funding options which would offer funding stability, enhance service accessibility, and assist state and territory governments in achieving oral health outcomes by means of improved service design, implementation, and workforce recruitment and retention”.

People expecting major policy reform will be disappointed: the Budget only included yet another roll-over of the current level of funding, but in perpetuity rather than one year at a time.

The 2026 Productivity Commission Report on Government Services shows median waiting time for a first visit to a public dental service ranging from between six months and seven months in three jurisdictions, through to a year or eighteen months, almost three years, and up to a maximum of three years and seven months in Tasmania.

In every jurisdiction 10 percent of people waited a year or more, up to six years in Tasmania.

Health Budget aggregates

The following table drawn from Budget statement 6 shows aggregate spending on the health function rather than the Health, Disability and Ageing portfolio for the 2026-27 Budget, and how it has changed relative to the 2025-26 Budget.

Several points are worth noting:

• The reduction in Medical services and benefits is due to the private health insurance premium rebates which are classified under this heading.
• The growth in Assistance to the states for public hospitals reflects the final National Health Reform Agreement deal reached with the states earlier this year.
• The growth in Health services reflects increases in a wide range of areas, including increased spending on medical research, vaccines, and health protection.
• Spending on Aboriginal and Torres Strait Islander health has increased by a total of $106 million across four years.

Overall, health expenditure is forecast to grow by an annual average of about four percent over the forward estimates – and this is a conservative estimate as it excludes the cost of inevitable new PBS listings.

However, given current levels of inflation and underlying demographic pressures from ageing, growth at this level is probably not addressing underlying demand.

This article was originally published by Croakey Health Media on May 13, 2026.

Charles Maskell-Knight PSM was a senior public servant in the Commonwealth Department of Health for over 25 years before retiring in 2021. He worked as a senior adviser to the Aged Care Royal Commission in 2019-20. He is a member of Croakey Health Media.