Health spending shrinks

A new report has given the lie to the claim by the Abbott government that the growth in Australian health spending is so massive that it's 'unsustainable'.

Spending on health in 2012-13 slowed to record low levels says a new report from the Australian Institute of Health and Welfare (AIHW).

The report, Health expenditure Australia 2012-13, shows total spending on health goods and services in Australia was estimated at $147.4 billion in 2012-13 (9.67 per cent of GDP). This was merely 1.5 per cent higher than in 2011-12 and barely the OECD average.

'This is the lowest growth the AIHW has recorded since the Health expenditure Australia series began in the mid-1980s, and more than three times lower than the average growth over the last decade (5.1 per cent),' said AIHW Director and CEO David Kalisch.

The report shows government spending on health overall fell by 0.9 per cent in 2012-13. This was largely due to a fall of 2.4 per cent in the Australian government's funding. During the previous decade, Australian government spending had experienced average annual growth of 4.4 per cent.

The main reasons for the decrease in federal government spending were reductions in the Pharmaceutical Benefits Scheme, public health, dental services and e-health. Spending also fell in health insurance premium rebates, veterans' affairs and tax rebates.

The report also shows that growth in sub-national government funding was low. State and territory health spending grew by just 1.4 per cent in 2012-13, 4.2 percentage points lower than the average growth for the decade.

In 2012-13, governments funded $100.8 billion or 68.3 per cent of total health expenditure in Australia. This was 1.6 percentage points lower than in 2011-12, the largest reduction of the decade. The Australian government's contribution was $61.0 billion (41.4 per cent of total funding) and state and territory governments contributed $39.8 billion (26.9 per cent).

Non-government funding sources provided the remaining $46.6 billion (31.6 per cent). The non-government share rose by 1.6 percentage points, with individuals contributing over half of the increase (0.9 percentage points).

In 2012-13, estimated spending per person on health averaged $6,430, which was $17 less per person than in the previous year.

Perhaps the most widely acknowledged independent authority in the field, Stephen Duckett, highlighted the fact that Australian government spending had declined by $1.5bn in real terms, while out-of-pocket costs had risen by $1.7bn.

“So there’s been, effectively, a cost-shift from the Commonwealth government to patients and consumers over that last 12 months,” Professor Duckett said.

“I think that puts the co-payment issue in perspective: there’s already been a shift in that direction. And as I’ve pointed out previously, the co-payments impact particularly on the poor and … the sickest among the poor.”


The AIHW is a national agency set up by the Commonwealth government to provide reliable, regular and relevant information and statistics on Australia's health and welfare. The report, Health expenditure in Australia 2012-13, was released on 23 September 2014.


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