Deputy Prime Minister Michael McCormack has been lobbying for a regional medical school arguing it would be a way to lure students to the bush and keep them there.
Some $95.4 million has been set aside in the budget to create the Murray Darling Medical Schools Network comprising the University of NSW in Wagga Wagga; the University of Sydney in Dubbo; CSU/Western Sydney University in Orange; Monash University in Bendigo and Melbourne University/La Trobe in Bendigo, Wodonga and Shepparton.
But there'll be no new Commonwealth supported places for medical students.
"This is a fundamental change in the teaching and supply of rural and regional doctors and will transform rural training schools," Health Minister Greg Hunt said in a statement on Tuesday.
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"(It will enable) students to undertake most of their education and training in rural areas to provide a continuum for doctors to learn, train and work in the regions."
There are also extra incentives for GPs to practice in rural areas and a new junior doctor training program.
The budget also includes $84 million for the Royal Flying Doctor Service to help provide more dental care and mental health services.
