Introduction by Croakey: Labor’s first Federal Budget in almost a decade was, as expected, a pragmatic and conservative response to current political and economic pressures, delivering on the Government’s pre-election commitments but failing to address some of the most pressing reform issues in the health and aged care sectors.
Regular Croakey contributor and a former senior Department of Health executive, Charles Maskell-Knight, provides a big picture overview of the Budget, outlining key spending and savings measures and analysing the overall trajectory of growth in the health portfolio, which he says has changed little since the former Government’s last Budget in May this year.
He also identifies the portfolio’s “most unloved program”, which for the third time in a row has failed to receive the ongoing funding required to effectively plan and deliver an essential health service to Australians on low incomes.
Charles Maskell-Knight writes:
In an article in Croakey last week I forecast that there would be no surprises in the Budget as far as heath was concerned. I suggested that the health budget would focus on delivering on election commitments, with no significant savings contributing to the overall budget repair task.
If only I could be so good at forecasting Powerball numbers.
The big picture
Budget Paper 2 shows net decisions affecting the health portfolio adding $8.2 billion over four years.
This includes almost $1.4 billion in 2022-23 for extending various COVID-19 programs to the end of 2022, including $810 million for aged care providers, $145 million to extend Medicare Benefits Schedule (MBS) rebates for polymerase chain reaction (PCR) testing, and $332 million for the distribution of fourth vaccine doses and for communication activities to drive uptake.
The Treasury will also receive $760 million to extend the National Partnership on COVID‑19 Response, which provides for 50 percent of the cost of state and territory COVID‑19 responses.
The two other big-ticket items are aged care and the Pharmaceutical Benefits Scheme (PBS).
Aged care
In relation to aged care, almost $2.5 billion is being provided to fund the increase in care minutes and a 24/7 nursing presence promised during the election.
A further $526 million is provided for other aged care reform initiatives such as aged care information and communication technologies system maintenance and enhancements, and establishing the Inspector‑General of Aged Care and the Office of the Inspector‑General of Aged Care as a Statutory Agency.
The Pharmaceutical Benefits Scheme
In relation to the PBS, the Government has continued the regrettable practice of claiming new listings as new policy, amounting to almost $1.4 billion over four years. (If government policy is to have an up-to-date formulary available under the PBS, new listings should be part of ongoing policy). The budget also includes $785 million as the cost of the election commitment to lower the PBS co-payment.
Other significant measures include $328 million for continuous blood glucose monitors, $295 million for improving First Nations peoples’ health, and $227 million for grants to support general practices, including ACCHOS, to “invest in training, equipment and minor capital works to enhance digital health capability, upgrade infection prevention and control arrangements, and support practices to achieve or maintain accreditation under the National General Practice Accreditation Scheme”.
Savings measures
The only contribution the health portfolio has made to the whole of Government Spending Audit is removing $50.4 million from the “Training for Authorised Nurse Immunisers in Residential Aged Care” funding provided in the March 2022 Budget. The Budget paper notes that “providers have a variety of existing arrangements in place to support the vaccination of their care recipients”.
Trajectory of growth
Despite this additional funding the overall long term trajectory of growth in health function spending has changed very little since the March budget.
As the table below (drawn from data in Budget statement 6) shows, the extension of COVID-19 measures in this budget has deferred the big reduction in health spending flowing from the end of the pandemic from 2022-23 to 2023-24.
But after that real growth in the third and fourth years is about the same at around one percent. Needless to say, if there are outbreaks of a highly transmissible and virulent COVID variant, this pattern could easily be disrupted.
A much more substantial difference between the two budgets Is apparent In aged care. Under the March budget real growth in the third and fourth years dropped off to around two percent – not enough to keep up with growth in the ageing population.
Under the October budget, real growth in aged care spending continues in the third and fourth years at 7.5 and then 3.4 percent. This is before taking into account any government contribution to the costs of the Fair Work Commission case – an allowance for which has been included in the contingency reserve.
Real annual growth in health and aged care
| 2022-23 | 2023-24 | 2024-25 | 2025-26 | |
| % | % | % | % | |
| March 2022 Budget | ||||
| Total health | -7.9 | -5.6 | 0.7 | 1.0 |
| Total aged care | 9.7 | 5.4 | 1.5 | 2.5 |
| October 2022 Budget | ||||
| Total health | -2.3 | -8.3 | 0.9 | 1.2 |
| Total aged care | 10.9 | 6.1 | 7.5 | 3.4 |
| A predictable outcome |
In summary, a very predictable outcome for the health and ageing areas.
My award for most confusing measure description in Budget paper 2 goes to “Improving Access to Care” – which is actually the measure funding improved access to continuous glucose monitoring.
And the award for the most unloved health program goes yet again to the National Partnership Agreement on Adult Public Dental Services.
This has now been subject to three annual extensions – making it very hard for the states to plan public dental services more than one year at a time. Any hopes that this budget would offer some certainty of funding beyond 2022-23 were dashed. Perhaps next year’s May budget will do it?
Also read Professor Stephen Duckett at The Conversation, ‘What does the budget mean for Medicare, medicines, aged care and First Nations health?’
Save the dates
- 5pm AEDT, 8 November: Health policy and the Federal Budget
- 5pm AEDT, 15 November: Health in All Policies and the Federal Budget
More details to come closer to the time.
