A tax on sugary drinks and a sweeping overhaul of Australia’s health system have been put squarely on the federal budget agenda, as doctors warn preventable disease is pushing hospitals towards breaking point.
The Australian Medical Association (AMA) has unveiled its 2026–27 pre-budget submission, calling for a national tax on sugar-sweetened beverages alongside billions in funding to reform general practice, public hospitals, private health insurance and the medical workforce.
The peak medical body said obesity had now overtaken tobacco as the leading risk factor for disease burden in Australia and argued a levy on sugary drinks was one of the simplest ways to curb the trend.
AMA president Danielle McMullen said the policy was backed by global evidence.
“More than 130 jurisdictions around the world have introduced a tax on sugar-sweetened beverages and seen clear reductions in sugar consumption,” Dr McMullen said.
“Australia is now an outlier, and we can’t keep putting this off while preventable disease keeps climbing. A sugar-sweetened beverage tax is simple, effective and long overdue.”
Under the proposal, selected sugary drinks would be taxed at 50 cents per 100 grams of sugar, lifting the price of a typical 375ml can of soft drink by about 20 cents.
Australians consume more than 2.4 billion litres of sugary drinks each year, enough to fill 960 Olympic-sized swimming pools.
The AMA said modelling shows the tax would cut sugar intake by about 2kg per person annually and raise about $3.6bn over four years while encouraging manufacturers to reformulate products.
“We can’t keep pretending the health system can absorb all the consequences of preventable disease, it can’t,” Dr McMullen said.
“This is a straightforward, evidence-based policy that improves health outcomes and delivers significant budget savings. If we’re serious about a sustainable health system, we must take prevention seriously.
She said it was difficult to argue against a measure that improved health outcomes, reduced costs, and was already proven to work overseas.
“We can’t keep kicking this can down the road, especially when that can contains about 12 teaspoons of sugar,” Dr McMullen said.
$4.9 billion GP overhaul proposed
Beyond prevention, the submission calls for a $4.9bn investment over four years to transform how general practice is funded.
The AMA wants to replace the decades-old Medicare consultation structure with a new seven-tier system ranging from short visits to consultations lasting more than an hour, aiming to remove financial disincentives for longer appointments for complex and chronic conditions.
The doctors’ group also wants the Workforce Incentive Program uncapped so practices can hire more nurses and allied health staff and after-hours definitions to be aligned to improve evening and weekend access.
Hospitals ‘at breaking point’
The submission paints a bleak picture of public hospitals, warning of widespread ambulance ramping, long wait times and “exit block”, where patients remain in hospital beds because aged care or disability support is unavailable.
The AMA said bed capacity had fallen to an average of 2.5 beds per 1000 people and urged the federal government to fund 45 per cent of public hospital activity and provide dedicated funding to expand capacity.
Workforce shortages
To address workforce pressures, the submission proposes a new independent national workforce planning agency and a major expansion of specialist training places from 920 to 1700 over three years, with a focus on rural and regional areas.
Pressure on private health insurers
The AMA also wants major changes to private health insurance, including a mandated minimum payout ratio of 90 per cent to ensure more premium dollars go directly to patient care.
The submission argues record insurer profits have not flowed through to struggling private hospitals.
