The Abbot govt advises that Federal funding for public hospitals under the national partnership agreement, which begins on 1 July, has been cut by $1.8bn over the next four years.
The decision cuts $217m from hospitals in 2014-15, $260m in 2015-16 and $133m in 2016-17 before the big cuts begin in 2017-18, when the commonwealth ceases its contribution to the growth in hospital costs due to the ageing population and higher treatment costs. From that time commonwealth spending increases only in line with inflation and population growth.
The budget also ends federal contributions to a range of pensioner concession schemes. Abbott said: “We made the decision in a very tough budget that if the states wanted to continue those concessions they could do it themselves.”
State premiers say the cuts remove funding needed for 1,200 hospital beds and they have no capacity to fill the gap.
Australian Medical Association president Brian Owler said the performance of hospitals would only get worse after the federal government “retreated from its responsibilities” on hospital funding. The AMA claims that taken across the board the cuts amount to a fall in funding over 10 years of $57 billion.
“The states and territories are facing a huge ‘black hole’ in public funding after a succession of commonwealth cuts,” Owler said. “A perfect storm is building ahead of new commonwealth public hospital funding arrangements based on indexation and population growth, which will take effect from 2017-18. These new arrangements will be imposed on a system already struggling with insufficient capacity, a system that is under-performing against key benchmarks,” he said.
The $57bn in long-term commonwealth funding reductions, occurring as a result of changes to the funding system put in place by Labor, means NSW will lose almost $16bn, Victoria $12bn, Queensland $10bn, Western Australia $5.7bn, South Australia $3.5bn, Tasmania and the ACT around $1bn and Northern Territory about $600mn.