Prime Minister Anthony Albanese met state and territory leaders in Canberra on Wednesday, with the future of the National Disability Insurance Scheme and state funding on the table.
The cost of the NDIS is growing at an unsustainable 14 per cent and the federal government wants to contain the growth to eight per cent.
Without action it could start to erode other parts of the federal budget, the forecast for which will be updated in the mid-year review next week.
As an initial response to the NDIS review, national cabinet agreed to adjust state and territory contribution escalation rates, increasing from four per cent to be in line with actual scheme growth, capped at eight per cent.
The Commonwealth will pay the remainder of scheme costs growth, starting from July 2028.
The leaders also agreed to jointly design additional "foundational supports".
National cabinet also agreed to extend the GST "no worse off guarantee" in its current form for three years from 2027/28.
This will ensure GST proceeds are shared fairly and equitably, providing funding certainty for states.The former coalition government struck the "no worse off" guarantee with the states in 2018 after a deal was made with Western Australia over the GST carve-up.
The deal was due to expire in 2026/27.
WA had agreed to surrender 30 per cent of its GST to the other states, which its premier Roger Cook said had so far delivered over $13 billion to the other states.
The leaders also agreed to a further $1.2 billion package of Strengthening Medicare measures to take pressure off hospitals.
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