Budget 2022: Pandemic support plug pulled

A halt to federal Covid-19 support within the next financial year is ­expected to save the Albanese government’s health budget more than $8bn a year.

A new $2.6bn package, only funded for the current financial year, is intended to ‘extend Australia’s Covid-19 response’. Picture: NCA NewsWire / Daniel Pockett

A halt to federal Covid-19 support within the next financial year is ­expected to save the Albanese government’s health budget more than $8bn a year, with funding for vaccines, treatments and state hospital cash to end by July.

In what is expected to be an ongoing bone of contention with premiers, the temporary pandemic funding arrangement, which currently sees hospitals funded on a 50/50 basis between state and ­federal governments, has not been extended beyond December.

Expenses in the health services subcategory of the health budget are expected to decrease by 44.1 per cent in real terms between 2022–23 and 2025–26, largely due to the expiry of funding for Covid-19 measures, including ­vaccines and treatments.

A new $2.6bn package, only funded for the current financial year, is intended to “extend Australia’s Covid-19 response and adapt it to the current state of the pandemic”, the budget papers say.

This includes $845.1m in funding for aged care, and $808.2m for hospitals and emergency response. The budget shows expenses for health will decrease by 7.2 per cent in real terms between 2022–23 and 2025–26, “largely due to the profile of expenditure for measures responding to the Covid-19 pandemic, which are primarily in 2021–22 and 2022–23”.

A 7.2 per cent reduction on the total health budget of $111.6bn in 2025-26 represents a saving that year alone of $8.03bn.

Of the hospital funding, $759.9m funds the extension of the National Partnership on Covid-19 Response 50/50 funding arrangement with the states and territories, which expires in December.

The $2.6bn also funds continued supplies of personal protective equipment from the National Medical Stockpile, access to vaccines and antiviral treatments for at-risk cohorts and new Medicare Benefits Schedule items to test for Covid-19 and other respiratory ­viruses, but again these items are largely unfunded beyond the ­current financial year.

Budget Paper 1 shows the overall health budget rising from $106.2bn in 2021-22 to an estimated $109.7bn this financial year, then falling to $104.1bn in 2023-23 before rising again to $107.7bn and $111.6bn over the following two years.

“The decrease in expenses from 2022–23 to 2023–24 reflects the cessation of temporary measures responding to the Covid-19 pandemic, while the overall increase to 2025–26 is primarily driven by expected growth in the assistance to the states for public hospitals sub-function, largely reflecting anticipated growth in the volume of services,” the budget states.

Covid-19 savings elsewhere are expected to save the arts and cultural heritage budget 20.6 per cent in real terms between 2022–23 and 2025–26, and the sport and recreation budget 46.0 per cent and vocational and industry training budget 56.3 per cent over the same period.

Other features of the $2.6bn package include $145.1m to extend Medicare rebates for Covid PCR testing, $6.3m to establish a new temporary Medicare item for GPs to undertake telehealth consultations to evaluate eligible Covid patients’ suitability for oral antivirals, $5.7m to extend the temporary Medicare item to support GPs and other medical practitioners to manage Covid patients in the community, and $5.4m to continue access to Medicare rebates for telehealth appointments for patients with Covid, regardless of whether they have an existing clinical relationship with the GP.

There is also $410.3m for the procurement and distribution of rapid antigen tests and PPE to support Covid outbreak management and prevent the spread of Covid in high-risk settings.

Elsewhere, the budget warns of the significant risks Covid continues to pose to the global economy, listing “a sharper than expected downturn in China due to outbreaks and the property market downturn” as one such hazard.