Budget Review October 2022–23 Index 

Amanda Biggs and Emma Vines

Key figures and trends

Total spending on health in 2022–23 is estimated to be $109.7 billion, representing approximately 16.9% of the Australian Government’s total expenditure (Budget strategy and outlook: budget paper no. 1: October 2022–23, pp. 177–179). Table 1 provides expenses by function.

Table 1         Health function expenses, 2021–22 to 2025–26 ($ million)

Function	2021–22	2022–23	2023–24	2024–25	2025–26
Medical services and benefits	37,306	39,893	40,819	42,812	44,835
Pharmaceutical benefits and services	16,273	18,934	17,854	17,968	18,044
Assistance to the states for public hospitals	24,230	26,575	28,325	30,030	31,982
Hospital services	1,049	1,065	1,082	1,115	1,153
Health services	21,691	17,949	11,202	11,060	10,999
General administration	4,648	4,157	3,569	3,392	3,333
Aboriginal and Torres Strait Islander health	989	1,122	1,223	1,290	1,246
Total	106,185	109,694	104,074	107,667	111,592

Note: totals may vary due to rounding.

Source: Australian Government, Budget Strategy and Outlook: Budget Paper no. 1: October 2022–23, 186.

Budget paper no. 1 provides a breakdown of each function, briefly summarised below (pp. 186–188):

• Medical services and benefits, comprised largely of Medicare and the Private Health Insurance rebate, account for $39.9 billion in 2022–23.
  • Real spending is expected to increase by 2.6% over the period 2022–23 to 2025–26.
• Pharmaceutical benefits and services, primarily comprised of subsidies for Pharmaceutical Benefits Scheme (PBS) medicines, is anticipated to be $18.9 billion in 2022–23.
  • Expenses are expected to decrease in real terms by 13.0% over the forward estimates, primarily due to the impacts of existing pricing policies.
• The Commonwealth’s contribution to the states and territories towards public hospital funding is estimated to be $26.6 billion in 2022–23.
  • This is separate to the funding provided for the National Partnership on COVID-19 Response, which has been extended to 31 December 2022[HD(1] .
  • More detail on the Commonwealth’s contribution is provided in Federal financial relations: budget paper no. 3: October 2022–23 (pp. 17–20).
• Hospital services, mainly comprised of payments to the state and territories to deliver veterans’ hospital services, accounts for $1.1 billion.
  • Expenditure is expected to decrease by 1.1% in real terms between 2022–23 and 2025–26, mainly due to an expected reduction in the number of older veterans.
• Health services, which include Government expenses towards the delivery of population health, mental health, blood and blood products, health infrastructure, medical research and other allied health services, is expected to account for $17.9 billion.
  • Expenditure is expected to decrease by 44.1% in real terms between 2022–23 and 2025–26, largely due to the cessation of COVID-19 measures.
• General administration, comprised of health workforce measures, support for rural health initiatives and general administrative costs, is estimated at $4.2 billion.
  • Expenses are expected to decrease by 26.8% due to the cessation of COVID-19 measures.
• Aboriginal and Torres Strait Islander health, compromising of the Health portfolio’s Indigenous-specific services, is estimated at $1.1 billion.
  • Expenses are expected to increase by 1.4% over the period 2022–23 to 2025–26.

Average staffing levels for the Health portfolio agencies will rise from 7,585 in 2021–22 to 8,212 in 2022–23, with notable increases at the Aged Care Quality and Safety Commission and Australian Digital Health Agency (Agency resourcing: budget paper 4: October 2022–23, p. 154).

Significant policy measures

A selection of key health portfolio measures is outlined below, with aged care covered in a separate article. The page references below refer to Budget measures: budget paper no. 2: October 2022–23, unless otherwise indicated.

Medicines and Medicare

Fulfilling an election promise, the Government has allocated $787.1 million over 4 years from 2022–23 (and $233.4 million per year ongoing) to decrease the general patient co-payment for treatments on the PBS (p. 135). The co-payment will decrease from $42.50 to $30.00 from 1 January 2023. The National Health Amendment (General Co-payment) Bill 2022 passed both Houses on 27 October 2022. No changes will be made to either the PBS Safety Net thresholds or the concessional co-payment rate.

Stakeholders welcomed the change, with The Pharmacy Guild of Australia stating that ‘this was the single most significant change to the cost of, and access to, medicine since the PBS was introduced 75 years ago’.

The Government has also provided $1.4 billion over 4 years for new and amended listings on the PBS and notes that the cost of some medicines listed in the Budget papers will be reduced by revenue from rebates negotiated through purchase agreements (p. 134).

Additionally, $229.7 million will be provided over 2 years from 2022–23 to the Strengthening Medicare General Practice Grants Program, with additional money for the Strengthening Medicare Fund in the Contingency Reserve. This money is expected to be released following the publication of the Strengthening Medicare Taskforce report at the end of 2022 (p. 141). These measures fulfill an election commitment.

Other measures of note relate to replenishing the National Medical Stockpile, with partial costs to be met through existing resourcing of the Department of Health and Aged Care. Funding in this area includes:

• $73.9 million in 2022–23 to purchase additional Monkeypox vaccines and treatments
• $234.9 million to purchase personal protective equipment
• $174.8 million to purchase rapid antigen tests (pp. 122 and 132).

Health workforce package

This Budget includes a rural and regional health workforce package estimated at $143.3 million, and several other workforce initiatives, taking the total workforce spend to $185.3 million, with partial funding through existing resources.

This package was an election commitment and includes the following:

• $74.1 million over 4 years to fund tiered incentive payments of up to $10,500 to rural GPs and rural generalists with additional advanced skills working in rural and remote areas (p. 137)
• $29.4 million over 4 years to expand the list of health professionals eligible for rural loading payments available under the practice stream of the Workforce Incentive Program (p. 137)
• $24.7 million over 4 years to expand the Innovative Models of Care program (p. 137)
• $8.4 million over 3 years to fund 15 additional hospital-based training positions for rural generalists and rural GPs to support them to attain advanced and specialist skills (p. 137)
• $5.6 million in 2025–26 and $11.2 million per year ongoing to fund additional rural primary care training for junior doctors through the John Flynn Prevocational Doctor Program, which was established in the 2020–21 Budget (p. 137).

Other significant workforce measures include:

• $19.2 million over 4 years to the Australian Nursing and Midwifery Federation to establish a National Nurse and Midwife Health Support Service (p. 133), implementing an election commitment
• $14.8 million over 4 years to Melanoma Institute Australia for additional National Melanoma nurses in each state and territory (p. 133), fulfilling an election commitment
• $13.2 million over 3 years to James Cook University under the Rural Health and Medical Training for Far North Queensland measure, to provide 20 additional Commonwealth supported places on an ongoing basis (p. 138), fulfilling an election commitment.

Infrastructure

According to the Department of Health and Aged Care’s Budget Overview, funding of $638.8 million is provided for new infrastructure projects to be delivered collaboratively with state and territory governments. Measures include:

• Funding from the Department of the Treasury for Comprehensive Cancer Centres in Brisbane and Adelaide, fulfilling an election commitment:
  • $375 million over 6 years for a Queensland Cancer Centre in Brisbane
  • $77 million over 5 years for the Bragg Comprehensive Cancer Centre in Adelaide (p. 118).
• $200 million over 6 years for Flinders Medical Centre expansion and upgrades to the Repat Health Precinct in Daw Park, Adelaide. This measure fulfils an election commitment and is funded by the Department of the Treasury (p. 126).
• $75 million over 5 years for the delivery of the Bentley Hospital Surgicentre in Perth. This measure fulfils an election commitment and is funded by the Department of the Treasury (p. 118, see also Budget paper no. 3, p. 28).
• $20.6 million over 4 years for a pilot cancer support program and construction of a new palliative care hospice at Launceston General Hospital, and $4.0 million over 5 years for a medical and research centre also at Launceston General Hospital (pp. 128–129). These measures are partially funded by the Department of the Treasury and the Contingency Reserve, and relate to an election commitment to fund local health investments.
• $235 million over 4 years for the roll-out of Urgent Care Clinics, which includes $100 million over 2 years for the states and territories to pilot innovative models of care (p. 145, see also Budget paper no. 3, p. 26). This measure is an election commitment and is partially funded by the Department of the Treasury.

Mental health

The Budget includes a number of mental health measures, with an additional $114 million for mental health and suicide prevention initiatives (Health portfolio budget stakeholder pack, p. 4). Among these initiatives is $47.7 million over 4 years to reinstate Medicare Benefits Schedule (MBS) item 288, which provides a 50% loading for bulk-billed telehealth psychiatry consultations in eligible areas across regional and rural Australia (p. 136). The Royal Australian College of General Practitioners (RACGP) had earlier called for longer telehealth phone consultations to be permanently added to the MBS.

COVID-19

The Government has provided for the extension of select COVID-19 measures until 31 December 2022. Measures include:

• $845.4 million for aged care providers’ efforts to prevent COVID-19 infections
• $162.4 million for COVID-19 related Medicare items and medicines
• $355.8 million for COVID-19 vaccines (pp. 119–123).

The Government has also provided $759.9 million to extend the National Partnership on COVID-19 Response (p. 120), with Budget paper no. 3 reporting a total commitment of $1.8 billion to the states and territories for the COVID-19 public health response (p. 18).

New bodies

The Budget provides funding for the development of 3 new bodies:

• $15.9 million over 4 years (and $6.6 million per year ongoing) to establish and support a National Centre of Excellence in Intellectual Disability Health (p. 132)
• $3.4 million over 4 years (and $0.7 million per year ongoing) to develop a National Health and Climate Strategy and establish a National Health Sustainability and Climate Unit (p. 124)
• $3.2 million to undertake the initial design and consultation phase for a proposed Australian Centre for Disease Control (p. 117), fulfilling an election commitment.

Stakeholder reaction

Generally, stakeholders reacted positively, with several acknowledging the focus was on election commitments and noting more reform was needed. Selected commentary is summarised below:

• The Australian Medical Association said investments in general practice were ‘a welcome down payment towards the long term funding increase that is needed in general practice’, but was critical of current hospital funding arrangements.
• Medicines Australia said the Budget ‘rightly focuses on easing the cost-of-living pressures Australians are facing and fulfils the election commitments made by the incoming Labor Government’.
• The Consumers Health Forum described it as ‘a ‘no-surprise’ budget that delivers on the government’s election commitments, but the promise of true health system reform is still ahead of us’.
• The RACGP said ‘although Budget October 2022–23 delivers on key election promises, significant funding for general practice care is urgently needed to address the GP crisis’.
• The Australian College of Nursing said it ‘welcomed initiatives in last night’s Budget to address health inequalities in our community, but more needs to be done to provide safe and appropriate health care now and in the future’.

 

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