It’s a core part of Labor’s election campaign, repeated ad nauseum: the government has cut health funding over the course of its two terms in office. “Liberal health cuts”, or “Liberal hospital cuts” are a routine feature of media releases from the opposition, along with a commitment to reverse them.
And while the government certainly froze indexation of the Medicare rebate — and has been progressively unfreezing it, though Labor promises to accelerate that — the full story on health funding is very, very different from what Labor wants voters to believe.
In 2013-14, Commonwealth health spending totalled $64 billion. In 2017-18, the last year for which actual figures are available (all subsequent figures are estimates or forecasts) it totalled $76 billion. That’s just under 19% growth, or more than 12% higher than inflation. The updated figure in the 2019 budget papers for the current financial year is $80.6 billion, which is a further 6% growth. The only “cut” in sight is that spending is only forecast to rise to $81.8 billion next year — or growth of 1.4%, around the current inflation rate.
You can argue that the Coalition hasn’t lifted spending significantly in GDP terms: in 2012-13, the last full year of Labor, and in 2013-14, Commonwealth health spending was almost exactly 4% of GDP. This year, if the budget forecasts for spending and GDP hold true, it will be 4.1%, and just below 4.08% next year, before falling just below 4% later in the forward estimates. If that happens under a Coalition government, it will be the first time health spending has fallen under the levels inherited from Labor as a proportion of GDP.
If you consider Commonwealth spending as a proportion of all Commonwealth expenses, it’s a similar story: health was around 16% of expenses in the last years of Labor and has remained around or above 16% in the years since, rising to 16.5% of expenses in 2017-18, the same figure as forecast for this current year.
So no matter how you measure it, the Coalition hasn’t cut health spending. What about the specific area of hospital spending? When it was elected, the government renamed that category of spending but it continued to grow strongly — from $13.8 billion in payments to the states in 2013-14 to $19.9 billion in 2017-18, or 44%, with further growth to $26.2 billion forecast across the forward estimates.
It is possible for Labor to argue that the Coalition hasn’t increased spending as quickly as the Gillard/Rudd government intended to, but that isn’t a “cut”, not in any universe where words are supposed to have meaning, especially not when spending is growing far more quickly than inflation.
The 2013 budget forecast spending in 2016-17 to be $75.5 billion. The first Abbott budget pared that back to $71.8 billion and that figure stayed in subsequent budgets. So here, at last, is a cut — except, that was just a forecast: actual spending ended up being $74.4 billion that year. It’s true that in 2014-15 and 2015-16, actual spending came in below the levels forecast in Labor’s last budget as well — but that’s a regular feature of health budgeting given the demand-driven nature of the two biggest Commonwealth items, the MBS and PBS systems. MBS and PBS require bureaucrats to estimate demand and ensure the government isn’t left trying to find an extra billion because someone forgot to factor in a demand for a new medicine. These “underspends” happened as much under Labor as under the Coalition.
The Coalition has had a series of confused messages about its fiscal policies in government. It claimed to be the fiscal fire brigade, only to dramatically escalate the budget deficit from what Labor left behind. It insisted that the age of entitlement was over and a new era of fiscal discipline would be imposed, while ramping up spending to levels not seen since the Rudd stimulus. Since the departure of Tony Abbott, proper fiscal discipline has been restored to spending, but higher taxes have fuelled the return to surplus.
But throughout it all, no matter what rhetoric, the reality of health spending has been a steady and real increase. If facts mattered to Labor instead of scare campaigns, they’d acknowledge that.
20 thoughts on “Labor should stop lying: the Liberals did not cut health spending”
TheRabidHamster
May 9, 2019 at 11:30 amThe ALP has been arguing that the Coalition cut the planned spending on Health that Labor had proposed. They also argue the same with regard Gonski. The NBN and NDIS are other policies in name only that the Coalition have defundd and claim to still be committed to. The ALP’s arguments are perfectly reasonable.
If you want to see a really pretty graph, then put the growth in franking credit payments next to the increase in spending on health. This will give you an absolute idea of the focus of the Coalition Government.
braddybear
May 9, 2019 at 11:57 amBernard, you conveniently forget to mention that hundreds of thousands more people have come into the country since your figures were valid and are now using our health services and infrustucture, of course scummo `s mob have spent more, but not enough, and who do you think your kidding, of course the coalition wants medicare to starve to death, they hate it, they long for the U.S health system where the rich get the best health care in the world and the rest just die , seems you are just another conservative wolf in sheeps clothing and hoping we are all as stupid as the rusted on redneck brain dead, well I`ve got bad news mate, we aren`t.
Desmond Graham
May 9, 2019 at 1:26 pmDidn’t labor first freeze Medicare all the following administrations just did’t unfreeze it -coincidently just began to thaw with an election coming up.
Why the worry about Labor lying ? Why should it stop?
It worked last election – regarding Medicare [Mediscare]- that the government was about to sell Medicare – when there was no such indication .
So continue with the successful program – Increase the amount of things to lie about. Nearly made government last time – this time make sure, it will work.
Labor is not alone – look at the person running the UAP – promise to pay some workers who lost out – yea ! won’t happen, the day after the election that idea will be dead and true to form forgotten. And to date nobody has been paid before the election.
Arky
May 9, 2019 at 2:10 pmWhen the Liberals stop lying about a “Retiree Tax”, a “Family Tax”, a “Death Tax”, “Labor Will Take Your Utes”, the Medevac bill allowing asylum seekers open slather to come back into the country etc and recant for $100 lamb roasts, Whyalla Wipeouts, Children Overboard etc etc etc
THEN I will care even the slightest about Labor categorising the Liberals cutting planned Labor spending as cuts.
I would love it if politics suddenly suffered an outbreak of truth and fact-based policy, but when the right wing has a hundred lies on the go at once, expecting Labor to fight without so much as an exaggeration is a bit crap.
thelorikeet
May 9, 2019 at 2:21 pmYep. Labor’s claims, overblown or not, are legitimate politics. The list from Arky is of lies for political purposes, legitimacy swept aside.
Vasco
May 9, 2019 at 2:41 pmAgreed. Throwing money at something doesn’t equate with good outcomes or people’s lived experience. The LNP constantly rattle off figures claiming record spending without a shred of evidence that it’s hit any targets or resulted in positive outcomes for most of us.
john kotsopoulos
May 9, 2019 at 2:29 pmSpending has been cut. Measuring against a joke measure like official CPI it still barely keeps up. Measure it against actual cost increases facing hospitals and I am sure you get a much different result. . Hospitals are facing more and more stress with actual funding keeping up with real demand. Just ask the public hospital CEOs and stop reading from SceMo’s cheat sheet
Another big fail Mr Keane
john kotsopoulos
May 9, 2019 at 2:48 pmOh and no mention of ScheMo’s claim to have delivered a budget surplus next year Hobbling the NDIS to deliver an underspend to prop up a shonky budget and using the flaky CPI to pretend to meet hospital costs is the sort of thing that brings jail time in the US commercial world. Here you get LNP preselection. Where the hell are you so called journos?
Vasco
May 9, 2019 at 2:56 pmCorrect John. Talk to anyone who actually works in health and they will confirm your points and call out BK’s rubbish.
JAJ
May 9, 2019 at 2:52 pmHi Bernard, the Labor references to cuts in health spending refer to money that the Commonwealth committed to the States and Territories as its contribution to the Health Reform Agreement under PM Rudd, which was unilaterally slashed without notice from 1 July in the Abbott Govts first budget. This provoked incandescent rage in all States and Territories because they had factored that contribution into their health budgets and commitments to hospitals over the life of the agreement. The flow on effects for health services were horrendous. It’s not a lie.
[email protected]
May 9, 2019 at 2:53 pmYour transformation to LNP aligned hack is now complete.
Sad to see someone I used to read for disciplined analysis has become so blinkered and one-sided.
Filthy Dancer
May 9, 2019 at 3:14 pmUh-oh – you are in a world of hurt with this piece, BK.
I don’t know the ins and outs of the matter, but the crowd don’t like doubts being cast on Labor.
Arky
May 10, 2019 at 11:01 amThe crowd like fairness.
The crowd sees the Liberals get away with 20 scare campaigns but only “Mediscare” gets a name and ad nauseum mentions by the mainstream media. There was a brief rap over the knuckles over the electric vehicle scare campaign then it was right back to pretending that it never happened.
totaram
May 11, 2019 at 10:44 amIn fact BK has now compared coalition funding with GDP etc. instead of the usual “record spending” which he used last time and I had to call him out. However, this time, the question is whether there have been cuts with respect to previous spending allocated in Labor’s last budget. Have there been cuts? Yes there have been! No point drawing graphs and all that. Just quote the figures from previous and next budgets. End of story.
I won’t go into Mediscare too much again. The history of the conservatives’ attempts to get rid of Medicare by various means is too long and complex. The big one was shovelling government money at private health insurance and forcing people to go onto it. In the meantime, I now visit an eye specialist to look after my torn retina and I pay $125 and Medicare refunds me $37/-. PHI won’t give me anything for that because Medicare refunds it! As a couple we pay around $450 every month for PHI. If I ever got any tax cuts, I’ll bet they weren’t even half that much. “Mediscare” my foot!
Peter Harkness
May 9, 2019 at 3:22 pmWasn’t there an agreement that the Gillard Government made with the States that the Commonwealth would bare half ( ? I think) the cost of funding hospitals, and did I hear that the Coalition has cut that to only 40%??
If so, maybe this is what Labor means by its assertion that the Coalition has cut health funding.
Also, it would have been interesting in your article above to calculate the changes in Commonwealth funding on health on a per capita basis given the big increase in our population since 2013.
Western Red
May 9, 2019 at 3:41 pmHow very MSM of you, Bernard.