A close reading of Budget papers reveals a lack of structural health reform, as well as under-investment in First Nations health programs and public dental services, writes health policy analyst Charles Maskell-Knight PSM.
Charles Maskell-Knight writes:
The days of deep secrecy around the federal Budget are long gone.
An article in The Conversation on Budget eve calculated that the Government had announced spending of over $29 billion over the Budget and next three years before the Budget was delivered.
Of this a little over $12 billion related to health.
It is thus no surprise that there were no surprise health announcements in the Budget.
Between 14 May 2024 (when the 2024-25 Budget was delivered) and 18 December 2024 (when the Mid-Year Economic and Fiscal Outlook (MYEFO) was released) the Government took decisions increasing health portfolio expenditure in 2025-26 by almost $2.8 billion dollars.
This included $1.1 billion for aged care (mainly for home care), $700 million for new PBS listings, and $480 million for an extensive miscellany of measures shoehorned into a “strengthening Medicare” package.
Since MYEFO the Government has decided to spend a further $2.0 billion in the health portfolio in 2025-25, and $1.8 billion on public hospital payments which are included in the Treasury portfolio.
However, most of this spending had already been announced before the Budget, including GP bulkbilling incentives for all, reduced general copayments under the PBS, and the expansion of Urgent Care Clinics.
The impact of the Government’s focus on health can be seen in the table below which compares expenditure on the health function, rather than the health portfolio, in the 2024-25 Budget, the 2024 MYEFO, and the 2025-26 Budget.
In the three months between MYEFO and the Budget, estimated 2025-26 expenditure on health grew by $1.5 billion a month. Treasury officials must have been glad the Budget was in March and not May.
While parameter changes (such as estimated inflation and population growth) will have resulted in some alteration to the estimates, the overwhelming majority of the increases has been due to policy decisions.
Disappointments
However, despite the large increases in expenditure, there will be no impact on the structure of the health system.
Government funding of primary care will continue to focus on fee for service payments to GPs, and the additional $1.8 billion for public hospitals is a once-off sugar hit which will maintain the status quo.
And despite the large increases in expenditure, time-limited funding continues to bedevil spending areas such as First Nations health programs and public dental services.
Expenditure on First Nations health programs in forecast to increase by 2.8 percent to $1,383 million in 2025-26, but is then forecast to decline every year over the forward estimates.
Budget statement 5 blandly observes the decline is “due to the currently scheduled end date of some measures which will be considered for extension in a future economic update”.
How can the Government expect to Close the Gap when it can’t even commit to maintaining the existing inadequate level of health funding?
The other poor relative of health policy is dental.
The Government has agreed to yet another one-year extension of the funding agreement with the states that assists them in providing public dental services.
I think this is now the sixth or seventh short term extension of the agreement (one extension was for two years) pending a Government decision on a substantive dental policy.
In the meantime public dental services struggle on, unable to offer staff long-term employment because of funding uncertainty.
As I wrote in this week’s edition of The Zap, budgeting is all about making choices.
The $200 million a year spent on reducing general PBS copayments would have increased spending on First Nations health services by 15 percent, or almost doubled Commonwealth assistance on public dental services.
I think most health policy pundits would regards these as far better uses of the money.
Author details
Charles Maskell-Knight PSM was a senior public servant in the Commonwealth Department of Health for over 25 years before retiring in 2021. He worked as a senior adviser to the Aged Care Royal Commission in 2019-20. He is a member of Croakey Health Media. Follow on X/Twitter at @CharlesAndrewMK, and on Bluesky at: @charlesmk.bsky.social.
Budget documents
- Federal Budget papers are here
- Treasurer’s Budget speech is here
- Budget paper No 2 is here
- Department of Health and Aged Care stakeholder pack is here
- Women’s Budget Statement is here
- Health and Aged Care Minister Mark Butler’s statement is here.
See Croakey’s articles on the 2025-2026 Federal Budget
