Two budgets, one care economy

The Commonwealth is redesigning the system, not just topping it up

The federal budget was pitched as securing the future of the universal care system, meaning Medicare, the PBS, aged care and the NDIS.¹ Most of the decisions that matter are about redesign, not extra money. One number makes the point. The papers flag about $2.7 billion in existing health, disability and ageing programs to be wound back over five years and the money sent elsewhere, and they do not yet name the programs.² New investment and net new money are not the same thing.

Aged care

The new Aged Care Act and the Support at Home program started on 1 November 2025. This budget puts $3.7 billion behind them. There are more beds and more packages. Personal care like showering, dressing and continence support becomes free alongside clinical care. Five thousand extra beds a year go mostly to people who cannot fund their own place, and the end-of-life pathway widens.³ In-home capacity keeps growing. The Government plans to release 63,000 more Support at Home places by 30 June 2026, on top of 20,000 home care packages brought forward before the reforms, worth $947.8 million over two years.⁴ The entitlements are set. Whether assessment, workforce and wait times can keep up with them is the key question for providers.

The NDIS

This is the sharpest part of the budget. The reforms are projected to slow scheme growth by $37.8 billion over four years. Spending still rises every year and reaches an estimated $56.5 billion in 2026-27, but the curve is being bent down.⁵ New framework planning starts on 1 April 2027. High-risk providers will have to register. A $200 million Inclusive Communities Fund is meant to rebuild the community participation supports the scheme used to fund directly. About 160,000 participants are expected to leave the scheme nationally by 2030, and children’s eligibility changes are flagged for January 2028.⁶ The reform works only if something catches the people who move out. That something is the next two programs outlined below.

Foundational Supports

Foundational Supports is meant to be the landing pad for people outside the NDIS. It is $3 billion from the Commonwealth, matched by the states and territories. The budget papers call it “Foundational Supports outside the NDIS” and say almost nothing else about what it covers. Psychosocial supports are next in the design queue.⁷ So a sector being asked to receive people leaving the NDIS now has a program with no settled design and funding that depends on the states agreeing to pay their half. That is not the certainty participants need.

Thriving Kids

Thriving Kids is the early-childhood version of the same idea. It changes how Australia supports children aged eight and under who have developmental delay, autism or lower-level needs. The total is $4 billion over five years, half from the Commonwealth and half state-matched, with $1.4 billion going to the states and territories to run services. It adds a Medicare Healthy Kids Check at age three and a National Digital Child Health Record.⁸ The point is to give a child earlier, lighter support before they ever need the NDIS. For that to work, Thriving Kids has to be running well before eligibility tightens in 2028, and it is still being designed.

The Children and Family Support Program

From 1 July 2027, several existing family programs fold into one national Children and Family Support Program worth $171.7 million, built around prevention and early intervention.⁹ Merging programs can be sound policy. It can also drop organisations off a funding cliff. The ones at risk run family preservation and community-connector work right now, and they stay at risk unless someone protects their funding through the changeover. The sector has said so, loudly.

Health and early learning

On health, the big number is $25 billion in extra Commonwealth funding for public hospitals under the 2026 to 2031 National Health Reform Agreement Addendum. That is roughly three times the extra funding in the last five-year deal. Medicare Urgent Care Clinics become permanent. The National Mental Health and Suicide Prevention Agreement gets a one-year extension to 30 June 2027.¹⁰ Early learning has no new universal-childcare package. It does have the Three Day Guarantee, which started on 5 January 2026. Every family that qualifies for the Child Care Subsidy now gets at least 72 hours of subsidised care a fortnight no matter how much they work or study, and families caring for First Nations children can get up to 100 hours. Paid parental leave reaches a full six months from 1 July 2026.¹¹ None of this is a single new program. It is the next layer of a system being stitched together around early help.

Queensland chose discipline, and a smaller hand in care

Queensland's 2026 budget runs on a different idea. Repair the books and add no new taxes. The Government forecasts a surplus in 2029-30 and debt about $73.5 billion below what it says it inherited, with no new or higher taxes. The cost-of-living package lifts the Back to School Boost to $150, writes the 50-cent public transport fare into law, hands out Play On! sport vouchers, freezes South East Queensland bulkwater prices for two years and passes Ergon’s lower power prices straight through to customers.¹²

The state touches the care economy in three places. Housing is the most direct. More than $1 billion has been added to the social and community housing build, taking it to a record $5.7 billion behind 6,500 homes now under construction, with a target of 53,500 by 2044.¹³ Health runs through the $18.5 billion Hospital Rescue Plan, which promises more than 2,600 new beds, three new hospitals and ten expansions. That sits inside the $33.1 billion health budget set in 2025-26 and a plan to add 46,000 health workers by 2032.¹⁴ The third place is the Department of Families, Seniors, Disability Services and Child Safety, a $3.62 billion portfolio in 2025-26. It carries child-safety reform, the domestic and family violence response and Queensland’s share of the NDIS, which runs to about $2.5 billion.¹⁵

Where the two budgets meet, and where the risk is

The most important parts of these two budgets are the places where one needs the other. Three of the Commonwealth’s headline reforms are only half-paid-for in Canberra.

• Foundational Supports: $3b from the Commonwealth, matched by the states. The design and coverage are not settled.
• Thriving Kids: $4b total, half Commonwealth and half state-delivered. It must be running before NDIS eligibility tightens in 2028.
• NHRA public hospitals: $25b in new Commonwealth funding flows through agreements the states have to sign and deliver.

Queensland's 2026 budget does not say how the state will pay for its half of Foundational Supports or Thriving Kids. Its whole framing leans the other way, toward holding spending down. That is the gap to watch this year. The Commonwealth has set the clock. Framework planning starts in April 2027. The family-support transition lands in July 2027. Eligibility changes begin in 2028. Each date assumes the state systems are ready to take people in. When the matching money, the workforce or the service design runs late, the people who fall through are the ones the reforms were built to protect. A three-year-old waiting for early help. An adult told they no longer qualify for the NDIS. A family stuck in the space between two programs.

What this means for children and families caught in the transition

Australia has done this before. When the NDIS was built, three Commonwealth community mental health programs were folded into it: Personal Helpers and Mentors, Partners in Recovery, and Day to Day Living. The funding followed people into the scheme. The problem was that many of those people were never found eligible for it. Advocates warned at the time that the old programs should not be switched off until every client had an approved NDIS plan or another service to move to.¹⁶ They were switched off anyway. A decade on, around 130,000 adults with significant psychosocial disability get no help from either the NDIS or the mental health system, and that gap pushes people toward homelessness and hospital.¹⁷ Foundational Supports, the $3 billion program in this budget, exists mostly to rebuild what that transition pulled apart.

Now the same machinery is pointed at young children. Children under fifteen make up almost half of all NDIS participants. Half of new entrants are under nine. One in ten six-year-olds is on the scheme.¹⁸ From October 2026, Thriving Kids starts taking over support for children aged eight and under who have developmental delay or autism and lower-level needs, and from January 2028 those children stop entering the NDIS.¹⁹ A very large group of families is being moved off an individual funding package and onto a state-run, community-based model.

The idea is not the problem. Earlier, more mainstream support for a three-year-old is good practice. The handover is the problem. “Low to moderate” is a soft line, and families have watched assessment thresholds move quietly before.²⁰ Before the NDIS, the states ran early childhood disability services, and what they produced was a postcode lottery, where one child got a speech pathologist and another an hour up the highway waited.²¹ Thriving Kids hands delivery back to the states. If it is not built and staffed before NDIS funding is withdrawn, the gap reopens in the exact place it opened last time.

For a family, that gap is specific. A parent who learns about the change from a social media post instead of a letter. A regional family whose therapist stops making the drive because the new price will not cover the fuel.²² A four-year-old whose therapy stops for six months while two governments workout who pays. The December 2025 parliamentary inquiry into these changes was called No Child Left Behind, and it asked for real co-design and real safeguards before anyone is moved.²³ The children who lose most in a transition are not the ones with sharp-elbowed advocates and thick folders of reports. They are the ones whose families do not find out the rules changed until the support stops.

What this means for organisations in the care economy

Three things follow for providers, peak bodies and commissioners. Transition risk is now the main planning question. Every big reform here has a hand-off date, and no one has guaranteed that services keep running through the hand-off. Thriving Kids, the Children and Family Support Program and Foundational Supports all reward organisations that can show what changed for a person, not just how many sessions they billed. And the $2.7 billion being wound back is a reason to read your current Commonwealth contracts now rather than assume they roll over.

This is not only a funding story. The care economy works when an older person, a child, someone with disability and the worker beside them are treated as the reason the system exists rather than its cost. Budgets set priorities. They do not deliver care. The decisions that turn these numbers into better support, or into gaps, get made over the next year, mostly in intergovernmental agreements and service specifications that never reach the news.