Budget locks in $654m for Digital ID, lifts tech spend to $2.4bn

The 2026-27 federal budget locks in $654.3 million over four years to sustain Australia’s Digital ID system, the centrepiece of a $2.4 billion technology spending package that also shores up My Health Record and government service delivery platforms.

Finance Minister Katy Gallagher confirmed the funding envelope on Tuesday, describing the Digital ID allocation as ongoing operational investment for a system that now underpins access to more than 130 government services. A further $166.7 million in annual funding will follow the four-year forward estimates.

“The government recognises the critical importance of digital technologies to improve the accessibility and quality of services,” Gallagher said. “Since 2022–23, the government has invested in digital services and systems to keep pace with rapidly developing technologies and public expectations for services to be available digitally.”

The Digital ID system, which the Australian Taxation Office operates with Services Australia as the primary administrator, lets Australians verify their identity once and reuse that credential across more than 130 government services. It cuts the friction of repeatedly supplying passport and Medicare details, plus a driver’s licence, every time a citizen interacts with a federal department.

Also in the package is $598.3 million over two years to enhance My Health Record, the national digital health summary running since 2012. That investment sits outside the Digital ID line but feeds the same goal: making digital services the default channel for Australians interacting with federal agencies.

How the funding breaks down

Funding for Digital ID runs through the Department of Finance, which has carried the system since legislation passed in mid-2024 establishing a permanent governance framework. Its original build was bankrolled through a series of one-off budget measures starting in 2015, when the concept was branded GovPass. This is the first multi-year package since the legislation took effect — a signal that Canberra now treats the platform as permanent national infrastructure rather than a pilot.

My Health Record’s $598.3 million envelope, administered by the Australian Digital Health Agency, covers operating costs, cybersecurity hardening, and a planned integration with the Digital ID system. That integration would let patients authenticate to their health summaries using the same credential they use for myGov — a technical project the agency has flagged as complex but achievable within the two-year funding window.

The allocation is lower than the $712 million committed in the 2024-25 budget, reflecting what the government describes as a shift from build-phase spending to steady-state operations. Agency officials told a Senate estimates hearing in March that My Health Record had reached 24.1 million active records, covering more than 90 per cent of the population.

Roughly $1.15 billion of the remaining spend goes to myGov upgrades, the National Disability Insurance Scheme’s digital platform, aged care IT systems, and the integrity functions of Services Australia — including fraud detection and identity-proofing checks that sit upstream from Digital ID. Budget papers do not break out every line item, but the Digital Transformation Agency’s major projects report, published in February 2026, provides a project-level view of where the money lands.

The international context

Gallagher used the budget lock-up to point to Australia’s rise in the OECD digital government rankings as evidence the spending is delivering. “For the first time, Australia is now ranked second globally in the OECD’s 2025 digital government index,” she said, “with the OECD highlighting the strength of Australia’s digital service delivery, national coordination and focus on designing services around Australians’ needs.”

The ranking places Australia behind only South Korea, an improvement from eighth place in the previous edition. The index evaluates whether governments design services around user needs, maintain a whole-of-government data strategy, and let citizens complete transactions entirely online. Australia scored highest on digital service delivery and national coordination, and lower on open data and public sector AI adoption.

That ranking predates the 2026-27 budget and reflects investment made across three prior budgets. Gallagher’s framing was intended to anchor the new spending in a narrative of measurable improvement rather than a cost-centre argument — a deliberate shift from years when technology outlays were more easily painted as back-office overhead.

Canberra’s long-term target, outlined in the Data and Digital Government Strategy published in December 2025, is for 80 per cent of citizen-to-government transactions to be completed digitally by 2030. It estimates the figure currently sits at roughly 65 per cent, with wide variation across agencies.

Closing that gap with $A2.4 billion depends on execution at the agency level, and the DTA’s February 2026 major projects report offers a cautionary note: two of the five largest federal technology projects are rated “amber” — at risk of missing deadlines or exceeding budgets. Neither is directly funded by the new measures, but both rely on the same agency delivery capability the government is now betting billions on. The budget was handed down on Tuesday evening and now moves to the Senate for estimates hearings through June.