While the recent Federal Budget brought many welcome initiatives, there are also some critical gaps, according to Leigh Clarke, CEO of the Victorian Healthcare Association.
“There are no quick fixes to building a better healthcare system and it will take years of successive governments to move the dial,” she writes below, calling for a bipartisan commitment to ensuring ongoing health reform.
Leigh Clarke writes:
The Victorian Healthcare Association (VHA) – which represents more than 90 percent of the state’s $26.8 billion public healthcare sector – applauds targeted solutions in the recent Federal Budget to address the challenges facing the Australian healthcare sector.
This budget contains investment across critical areas, including primary care, aged care delivery and the provision of culturally safe care.
While there were some missed opportunities, in particular the need to build the mental health workforce, it is pleasing to see that the Federal Government remains committed to lifting health equity for all Australians, enabling greater access to GPs and primary care services in their communities.
Our healthcare system has remained resilient through significant challenges – an ageing population, changing demographics in urban and regional centres and the rising burden of chronic disease.
The VHA’s Federal Budget submission called for investment to build a stronger and sustainable health workforce, tackle the growing inequities in our healthcare system, including cost-of-living and to strengthen the resilience of the system to deliver new and improved services.
We called for a $200 million investment in upgrading residential aged care infrastructure; $50 million over four years to build the capacity of the mainstream health sector to provide culturally safe care; $30 million to progress the implementation of the National Mental Health Workforce Strategy; and $200 million to fund the National Health and Climate Strategy and recognise the role of Community Health Services in the Strategy, to strengthen the primary care system’s preparedness, response and recovery for climate-related emergencies.
We are pleased to see progress on some of these areas through the Federal Budget, noting there are a range of positive investments, as well as a few missed opportunities.
The Australian Government has committed to phased implementation of the National Health and Climate Strategy through the National Health and Climate Change Strategy Implementation Plan but has not funded the Strategy’s actions.
This means the health sector continues to rely on short-term and ad-hoc funding for emergency preparedness, response and recovery initiatives.
As it stands, the Strategy does not recognise the role that Victoria’s registered Community Health Services can play in supporting the Strategy’s actions, given their vital role in delivering of primary care and recovery support for families and communities impacted by disaster.
For example, after bush fires impacted areas of the Grampians early last year, Grampians Community Health was instrumental in supporting the community through running the local emergency relief centre.
Health and primary care
National Health Reform Agreement
Ahead of the Budget, the Government announced $33.9 billion for the 2025-26 financial year to extend the 2020-2025 Addendum to the National Health Reform Agreement (NHRA) to 30 June 2026.
This includes $32.2 billion in 2025-26 for Federal funding under the NHRA and a previously announced $1.8 billion in 2025–26 as a one-off funding boost to fund public hospitals and related health services, of which Victoria will receive $402 million.
This will provide public hospitals with financial certainty while the Commonwealth and states and territories continue to work collaboratively to map out long-term health and disability reforms.
The VHA is pleased to see this progress and issues a call for Victoria to receive its ‘fair share’ of health services funding in any future negotiations on the NHRA. Negotiations have stalled on the NHRA while progress on NDIS reform continues.
Expansion of Medicare Bulk Billing
Victoria’s Community Health Services provide accessible and equitable care that improves the health and wellbeing of communities.
These health services use a multidisciplinary model to deliver a variety of cost-effective services across primary care, allied health, health prevention and promotion. They sit alongside and complement general practice.
The Budget allocation of $7.9 billion to boost Medicare bulk billing will assist in bridging the gap between the funding Community Health Services receive and the true cost of delivering primary care.
Subsequently, it will also support Community Health Services in the attraction and retention of general practitioners in their services.
Pleasingly, this funding has received bipartisan support and will support Community Health Services to continue to deliver services that address the social determinants of health and meet the needs of some of the most vulnerable in our communities.
Aged care
Aged care as a sector has been financially challenged in recent years with estimates demonstrating around half of all Australian aged care providers are operating at a loss.
Come 1 July 2025, the new rights-based Aged Care Act takes effect, adding further uncertainty as to how providers can maintain good financial health.
We know this is a particular challenge for public sector residential aged care providers, who are restricted in their ability to raise funding for capital and other projects.
On 27 February 2025, the Government announced $300 million in capital funding for a new round of the Aged Care Capital Assistance Program.
While this goes above and beyond the VHA’s budget ask, it is limiting for public sector residential aged care (PSRACs) providers as it requires them to cover at least 50 percent of the total infrastructure grant application.
Critically, this funding has not been included in the 2025 Budget.
The Federal Budget delivers $291.6 million over four years to assist with the implementation of the new Act. This breaks down as $116.1 million to strengthen the Aged Care Quality and Safety Commission and $37.8 million to support the Commission with the staged digital implementation. There is also $53.2 million to fully implement the Single Assessment System and $24.4 million for additional Commonwealth Home Support Program assessments.
Yet this funding will not support individual providers in implementing the required changes to their services arising from the reform.
While we applaud an investment of $2.5 billion over five years to fund enterprise bargaining agreements for the workforce, we need focused investment to enable the sector to transition to a new operating model under the new Act.
The sector remains concerned that 1 July is fast approaching and that there is still no clarity on the Aged Care Rules that will sit alongside the new Act. Providers have been told to set their prices in the interim.
This leaves Australians without clarity on the future of their aged care supports, how the new Act will impact them directly and aged care providers are confused about their responsibilities and staffing requirements under the changed legislation.
Culturally safe care
We are really pleased to see funding to support both Aboriginal Community Controlled Health Organisations (ACCHOs) and mainstream health services to deliver culturally safe aged care.
Whilst the VHA is pleased to see this measure in the budget, it represents only a small step towards addressing the significant and complex systemic barriers to improving the health of First Nations people.
The Federal Budget includes $47.6 million over four years to support First Nations organisations to deliver culturally appropriate aged care assessments and $24.7 million over four years to improve access to culturally safe and qualified mental health support.
This is consistent with the VHA’s Federal Budget submission, which called for $50 million over four years to support delivery of culturally safe care in mainstream health services.
This is in recognition that while ACCHOs are the preferred provider of culturally safe care, mainstream organisations also play a vital role in providing care to First Nations People and must do so in a culturally safe way.
There remain gaps in coverage that need to be addressed by both state and federal governments to build the capacity of health services to provide culturally safe care.
Mental health
The biggest missed opportunity in this year’s Federal Budget is the absence of measures to build the pipeline of mental health professionals.
Workforce shortages are a major barrier to the ability to scale up mental health services to meet growing demand and complexity. This is a particular challenge in rural and regional areas where there are pronounced gaps in workforce supply.
While we welcome $46 million over four years to continue digital mental health services, there is a pressing need to build a sustainable, skilled and supported workforce.
The National Mental Health and Workforce Strategy shines a light on the way forward through to 2032 including enhancement of training and recruitment pathways.
We would like to see a commitment from the major parties to invest in progressing the strategy in the next term of government.
The recommendations in this Strategy have not received funding since the 2022-23 Federal Budget.
Outlook
There are no quick fixes to building a better healthcare system and it will take years of successive governments to move the dial.
Whilst we are pleased to see funding for initiatives that will assist with addressing the inequity in healthcare, such as Medicare bulk billing, this Budget has only gone so far in contributing to progressing major reform initiatives such as the Aged Care reform implementation and the National Mental Health and Workforce Strategy.
With a federal election pending, the VHA wants to see a bipartisan commitment to respond to the findings of the reviews and to continue progress against the recommendations of the Strengthening Medicare Taskforce.
Irrespective of who is government, we want to see a commitment from the major parties to furthering the accessibility and provision of equity in primary and public healthcare, supporting the delivery of care Australians need now and into the future.
See Croakey’s archive of articles on cultural safety
