‘Substantial’ $18bn hospital injection amid funding stoush
Anthony Albanese will be on the hook for an extra $18bn if the states sign off on a new deal to increase commonwealth spending by 13.5pc under new hospital funding agreement.
Anthony Albanese will be on the hook for an extra $18bn if the states sign off on a new deal to increase commonwealth spending by 13.5 per cent in the first year of a new hospital funding agreement, a $5bn blowout compared what the federal government predicted at the end of last year.
A new analysis by the Grattan Institute showed the government’s latest hospital funding offer to the states would be higher than the $13.2bn predicted by the Prime Minister following an indicative national cabinet agreement in December.
Health Minister Mark Butler on Thursday confirmed the government has offered to more than double a funding cap on hospital spending but that he had not yet landed a deal with premiers and chief ministers.
The confirmation comes after The Australian revealed the commonwealth had offered to increase spending by 13.5 per cent in the first year, with the cap to be 8 per cent for the next four years.
While Mr Butler claimed the deal had been on the table since December, The Australian has been told the federal government increased its original offer of 13 per cent to 13.5 per cent in the first year of the agreement in a bid to break a stalemate over the funding.
The commonwealth’s new offer was discussed at a meeting of top health officials on Wednesday, and is designed to bring federal hospital contributions from about 40 per cent of total funding to 42.5 per cent over five years and 45 per cent over a decade.
But negotiations on the in-principle December agreement hit a stalemate in recent months, with states concerned the commonwealth’s initial offer on hospital funding would fail to increase federal spending to 42.5 per cent by the end of the decade.
Mr Butler said the offer was “substantial” and took into account a range of pressures on hospital systems left over from the Covid pandemic and that more reforms were needed in order to ensure healthcare was functioning properly.
“We’re working hard to achieve that. it was a very significant offer. I really emphasise this was a landmark offer that the Prime Minister made to the states in December as part of a broader deal to really pull together a whole range of shared opportunities and challenges the government shared.”
Mr Butler said he was confident the new deal was enough to bring federal contributions up to 42.5 per cent by 2030 and left open the possibility that Labor may have to stump up more money under the new funding proposal, saying the precise figure “will largely turn on the activity undertaken by hospitals, and also the annual price changes put in place by the Pricing Authority”.
Grattan Institute health director Peter Breadon said new investment into the hospital system was crucial but that it was “even more important to agree national reforms that aren’t just about who pays what, but what they pay for”.
Prominent health economist Stephen Duckett said the commonwealth’s offer to increase hospital spending to 13.5 per cent in the first year was “very high” and that any boost in spending must be tied to health outcomes including improving efficiencies in the system.
“There are a lot of reforms we should be discussing and the commonwealth has put a lot of money on the table and if we only talk about money and not reforms it's a wasted opportunity,” Professor Duckett said.
Opposition health spokeswoman Anne Ruston accused the government of being focused on “a shallow debate about who pays for what”, warning Mr Butler must not cave to the states’ demands.
“This shouldn’t just be about who pays. We must ensure our health system works to keep more people out of hospital, and primary care is key to prevention,” Senator Ruston said.
“The Albanese government must ensure this does not become a simply a cost shifting exercise where their state Labor mates take them for a ride.”
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