National Cabinet Showdown Looms Over Disability Funding and Thriving Kids Program

SYDNEY — A crucial National Cabinet meeting scheduled for Friday, 30 January 2026 has become a focal point in a widening political battle over how Australia funds health care and disability support — particularly services for young children with developmental needs.

Prime Minister Anthony Albanese has called state and territory leaders together in Sydney in a last-ditch attempt to secure agreement on a long-delayed five-year funding deal for public hospitals. At stake is an offer that would see the Commonwealth provide more than $23 billion in extra funding over five years — but only if states also agree on changes to disability services that have deeply divided governments.

What’s at the Heart of the Dispute

The federal government’s offer seeks to:

• Significantly lift its share of public hospital funding to address ‌pressure on emergency departments and reduce ambulance ramping.

• Tie that deal to states’ agreement to take on responsibility for some disability supports currently delivered through the National Disability Insurance Scheme (NDIS).

• Back a new early support program called Thriving Kids, aimed at children with mild to moderate developmental delays or autism, outside the NDIS.

The federal Department of Health, Disability and Ageing explains that “Thriving Kids will focus on identifying developmental concerns earlier and establishing a national system of supports for children aged 0–8 with developmental delay and low to moderate support needs and their families.”

Under the government’s plan, children with permanent and significant disability will continue to receive funded support through the NDIS, while those with lower needs would access services under Thriving Kids.

States Push Back

State and territory leaders have been resoundingly critical of the federal proposal, arguing it:

• Doesn’t go far enough to meet the rising costs of health care and hospital operations. Many premiers say the extra $23 billion still leaves significant gaps.

• Represents a shift in responsibilities without appropriate funding and detailed implementation plans — particularly for disability services currently under the NDIS.

• Leaves many unresolved questions about workforce, service delivery and long-term support pathways for families.

The standoff dates back to a 2023 National Cabinet agreement that envisaged broader “foundational supports” to supplement the NDIS. However, negotiations have repeatedly stalled amid deep mistrust over responsibilities and costs.

What This Means for Families and the Disability Sector

Advocates warn that uncertainty over the funding deal could have real effects on service delivery for families waiting for early intervention supports, particularly for children with autism or developmental needs. While the government plans to launch Thriving Kids from 1 July 2026, states have not yet signed on to formal agreements setting out how the program will operate locally.

Supporters of the new program say it could improve access to early, community-based services through health, schools and local hubs — reducing reliance on the NDIS for children who don’t require intensive long-term support.

However, disability organisations have also raised concerns about:

• Recurring tensions between federal and state governments delaying implementation;

• Clarity of pathways into future NDIS support for children who may need it later; and

• Equity of services across regions and disability types.

  
  

A Pivotal Week for Disability Policy

With the interim hospital funding agreement set to expire mid-year, pressure is mounting on both sides to reach a deal. Unless states and territories agree on the combined hospital–disability funding package, public hospitals could face ongoing uncertainty and community services risks loom larger.

The National Cabinet meeting this Friday could determine whether a historic reform to early disability support is realised — or delayed yet again amid one of the most complex federal–state negotiations in recent memory.