Budget 2005-06 - Health Budget responsible and sustainable

The 2005-06 Budget delivers the Government’s election commitments and makes the responsible but necessary changes to keep Medicare sustainable in the years ahead.

Page last updated: 10 May 2005

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10 May 2005

The 2005-06 Budget delivers the Government’s election commitments and makes the responsible but necessary changes to keep Medicare sustainable in the years ahead.

Since October 2003, the Howard Government has made a series of major investments in Australia’s health system: $3.8 billion for Strengthening Medicare; $2.2 billion to improve aged care following the Hogan Report; $2.0 billion for 100 per cent Medicare; over $1 billion for expanded and new drug listings on the PBS; $556 million for Round-the-Clock Medicare; $616 million for higher health insurance rebates for seniors; $279 million for new immunisation programmes; $200 million for better medical research infrastructure; and $413 million for medical indemnity insurance.

Thanks to these changes, GP bulk-billing rates have increased from 66 per cent in December 2003 to 72 per cent in December 2004 and people with high out-of-pocket medical costs have more protection. The Government has maintained and improved Medicare as Australians’ guarantee of universal access to affordable, high quality health care. But there is no such thing as “free medicine”. In the coming year, the Government will spend over $44 billion on Health and Ageing (up 6.7 per cent on last year) – which is more than the total budget for the state of NSW and more than the annual GDP of 65 per cent of the countries of the world. Since 1996, federal health spending has grown from under 15 to over 20 per cent of the budget and from 3.8 to 4.4 per cent of Australia’s GDP. Better medical services, the latest health technology and more effective drugs will only be affordable in the future if individuals continue to bear a reasonable share of their own health costs.

In this Budget, the Government has restored the originally proposed Medicare Safety Net thresholds of $500 (for concession card holders and family tax beneficiaries) and $1000 (for everyone else). With the lower safety net thresholds negotiated by the Senate last year, costs for the period 2003-04 to 2006-07 had increased from the original estimate of $440 million to $1.0 billion. This equates to $1.4 billion over the period 2004-05 to 2007-08. Notwithstanding the restoration of the original thresholds, the safety net will still cost $1.1 billion over the current forward estimates period and benefit 1.5 million Australians in 2006.

The Government will extend the number of co-payments needed to reach the PBS Safety Net gradually over four years. In addition, Safety Net entitlements will not apply for additional or early supplies of medicines for long-term use dispensed under the immediate supply provisions.

Because the PBS was not intended to cover every useful medicine, the Government will remove calcium tablets from the PBS. Two months supply of calcium tablets typically cost $13 over the counter (as opposed to $4.60 for card-holders under the PBS). Medicines listed on the PBS for use in the treatment of osteoporosis with a related fracture will continue to be subsidised. Current PBS funding for these medicines is around $131.5 million a year.

The 2005-06 Budget funds measures that have already commenced, including higher private health insurance rebates for people 65 years and over and election commitments such as higher rebates for GP consultations, and a $10 loading for after hours GP consultations.

The Budget delivers on the Government’s further election commitments including: a phased in national bowel cancer screening programme; expanded mental health services; a national trauma response centre at Royal Darwin Hospital; and more diabetes research including a national centre of excellence in islet transplantation.

In addition, the Budget contains important new measures to establish an independent WHO-collaborating influenza laboratory, boost funding for drug treatment and rehabilitation, fund a new anti-smoking campaign targeted at youth, and provide $10 million to two medical research institutes.

Within the Health and Ageing portfolio, the Budget provides a further $40.0 million to increase access to primary health care to at least another four indigenous communities, and to provide additional access to care through existing clinics. Other new Budget measures announced tonight by the Minister for Immigration, Multicultural and Indigenous Affairs include a further $122.1 million for programmes designed to boost indigenous health. This latest commitment by the Government will increase total funding for Indigenous-specific health programs to $387.7 million per annum in 2008-09; a more than three-fold increase from the $115 million provided in 1995-96.

Media contact: Kate Miranda, 0417 425 227 (Minister Abbott's Office)