The 2026-27 Federal Budget has been presented as a reform Budget, and from the perspective of physiotherapy there are reasons to welcome that direction. There are meaningful commitments in this package, and it is important to recognise them. At the same time, this Budget is better understood as a cautious step forward than a full response to the pressures building across Australia’s health system. It reflects a Government trying to balance reform ambitions with a tight fiscal environment, and the result is a Budget that manages pressure in several areas without yet delivering the deeper structural change needed to build a more preventive, integrated and sustainable system.
For a quicker wrap up, check out my video on the Budget takeaways or head straight to the comments for individual wrap ups.
Veterans' health
The strongest positive outcome for physiotherapy is in veterans’ health. The reset of allied health funding through the Department of Veterans’ Affairs (DVA) is a significant and long overdue recognition that rebate settings need to reflect the real cost and value of care. The increase in standard physiotherapy consultation fees from $75.10 to $110 from 1 July 2027, alongside simpler referral pathways and more flexible funding arrangements, is a practical reform that should improve service viability and support better access for veterans. This is exactly the kind of policy shift that shows what is possible when funding settings are brought closer into line with value-based care.
We should also be candid about where questions remain. The new $5,000 annual allied health entitlement for Veteran Card holders is positive in principle, and it signals a welcome effort to improve flexibility and access. We spoke with DVA yesterday to express our concerns and there were some interesting takeaways from the meeting.
Dental, optical, hearing and costs for travel to get to appointments will not fall under the cap, though a broad range of allied health services do fall within it, including physiotherapy and psychology. We raised concerns that including psychological supports in this cap risks forcing veterans to choose between their physical and mental health needs. Our colleagues from the psychology peak bodies indicated that they strongly shared these concerns.
The Department’s modelling showed 9 in 10 veterans currently average a yearly spend of approximately $3000 and are expected to remain within the new cap, even with the increased pricing.
The coming 12 months will showcase the detail required on how that cap will operate in practice and what it will mean for patients with higher needs, continuity of care and practitioner participation – all of which the Department has signalled will be decided through significant consultation with the sector.
Good reform depends not only on headline funding, but also on the practical rules that determine whether people can access the right care at the right time.
Strengthening Medicare
That broader question of practical reform runs through the rest of the Budget. Much of the new health spending is concentrated in familiar programs and existing delivery models. The Government has continued to invest in Medicare, urgent care, digital health, aged care, disability reform and selected priority populations. Those are all important areas. But taken together, the package still does more to reinforce current structures than to reshape them. For a health system facing rising chronic disease, growing multimorbidity, workforce pressure and avoidable hospital demand, that matters.
One example is the Strengthening Medicare package. The investment in bulk billing, Medicare Urgent Care Clinics and digital infrastructure reflects a continued focus on access and affordability, and that is welcome. But the model remains heavily GP-centred. Physiotherapists and other allied health professionals continue to be acknowledged more often in principle than in funding design. In urgent care particularly, this is a missed opportunity. Musculoskeletal conditions are a common reason people seek timely care, yet there is still limited formal integration of physiotherapy into the very settings intended to provide faster treatment closer to home.
This matters because the case for physiotherapy extends beyond advocacy for the profession. It is a system reform argument. Earlier access to physiotherapy can reduce pain, improve function, prevent deterioration, support recovery and in many cases help people avoid more costly interventions later. That is true in primary care, in rehabilitation, in aged care, in disability and in chronic disease management. When physiotherapy is overlooked in reform design, the result is not only a missed opportunity for the profession; it is missed value for patients and for the health system as a whole.
NDIS
The Budget’s approach to the NDIS makes this tension particularly clear. The Government’s focus on sustainability, payment integrity and more consistent planning is understandable, and there are elements of the reform direction the APA supports in principle. But the scale of savings being pursued, and the ongoing tightening of scheme boundaries, raise an important question: where will unmet need go if replacement supports are not available, clear and adequately funded? Without careful implementation, the pressure does not disappear. It shifts into families, community services, mainstream health and other parts of the system that are already under strain.
Details of the NDIS legislative bill were also released yesterday afternoon, and the APA is now working through the detail to understand what it means for physiotherapy, particularly in relation to capacity building supports and daily activities. While the reform process is already well advanced, our focus will remain on identifying the practical implications for members and participants, engaging where opportunities remain, and keeping members informed as further detail emerges.
A key element of the proposed NDIS legislation is a 10 per cent reduction in the overall funding envelope for capacity-building daily activity supports. Importantly, this is a reduction to the total funding pool, not an automatic cut to individual pricing limits.
What this means for physiotherapy in practice is not yet clear. Any changes to pricing limits will be determined through the Annual Pricing Review and how the reforms are implemented.
Thriving Kids
The same ‘shifting-the-pressure’ principle applies to Foundational Supports and the Thriving Kids program. While there is strong policy intent around earlier identification, clearer pathways and developmental supports for children with low to moderate needs, the early signs from jurisdictions like NSW point to significant implementation risk. This reflects a broader shift, with the Commonwealth setting the framework but largely devolving delivery to the states and territories, where design choices are already pointing to constrained models and a tilt toward larger providers.
If implemented well, these reforms could strengthen early intervention and reduce longer-term pressure on the NDIS. However, outcomes will hinge on how states operationalise the model – including service scope, pricing limits, workforce access and the role of private providers. There is clear risk that commissioning models overly reliant on large not-for-profit providers will not generate the workforce needed at scale, and could instead distort existing markets and displace existing capacity in metropolitan markets, while failing to build sustainable supply in rural and regional areas.
Early signals from NSW’s evolving approach suggest there may be challenges in striking this balance, particularly where delivery models narrow or favour larger providers. As other jurisdictions work through their approach, ensuring physiotherapy is embedded early in design and commissioning decisions will be critical to maintaining access, choice and system capacity.
Aged care
Aged care is another area where the Budget contains welcome investment but incomplete reform. Funding to expand capacity, improve provider viability and continue work on Support at Home is important, particularly as the system responds to a growing and ageing population. Yet again, the practical questions matter. Uncertainty around pricing, assessment processes and access pathways will shape whether older Australians receive timely, needs-based care. For the APA, this is where physiotherapy’s role in reablement, mobility, falls prevention and functional independence must be more clearly recognised. More aged care funding alone will not deliver better outcomes if the workforce and care model are not aligned to what people actually need.
Women's and First Nations health
There are also targeted investments that deserve acknowledgement. Continued support for endometriosis and pelvic pain clinics is a positive development and reflects a growing recognition of women’s health needs in areas where multidisciplinary care, including physiotherapy, can make a real difference. Investment in Aboriginal and Torres Strait Islander health through Closing the Gap measures and the National Health Reform Agreement Addendum is also important. While these measures do not create dedicated physiotherapy funding lines, they do create opportunities to strengthen culturally safe, community-designed multidisciplinary models where physiotherapy can play a more meaningful role.
Preventive and private health
What remains missing, however, is a stronger national reform story about prevention and rehabilitation. Preventive health investment in this Budget is fragmented across several programs rather than framed as a coherent agenda. Private health insurance settings are being modernised, but not in a way that meaningfully expands prevention-focused care or non-hospital pathways. Multidisciplinary care continues to be endorsed rhetorically more than operationally. These are not small omissions. They go to the heart of whether Australia is serious about reducing future demand, improving functional outcomes and getting better value from every health dollar spent.
So the right reading of this Budget is both positive and clear-eyed. It includes steps the APA can welcome, especially for veterans’ health, women’s health and some targeted areas of reform. But it also reinforces the need for continued advocacy, particularly in the disability sector. If we want a health system that intervenes earlier, uses the full capability of its workforce and reduces pressure rather than simply moving it around, then physiotherapy must be embedded more deliberately in reform design. That is the challenge beyond this Budget, and it is where the APA will keep making the case: for a system that values prevention, function, recovery and multidisciplinary care not just in principle, but in policy and practice.
As we stated in our media release on Tuesday night, this Budget is a step forward, but deeper reform is still needed.
Check out the comments below for in-depth breakdowns of each key area.
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