Did the Federal Budget deliver for health?

Health is the Federal Government’s largest financial commitment outside social welfare, absorbing approximately 15% of taxpayer funds. Yet, tonight’s Budget raises questions about whether this investment is keeping pace with real-world demands – or if Australians are being shortchanged.

The Pharmaceutical Benefits Scheme (PBS) investment remains fairly static, shifting only marginally from $20.9 billion in 2024-25 to $21.6 billion in 2025-26. The government attributes the figures to price reductions and a policy decision to announce new drug listings only after they’ve been approved. Meanwhile, the investment in new and amended PBS listings over five years has shrunk from the $3.9 billion quoted in the last Budget to the new figure of $3.2 billion.

Disappointingly, more than six months after the Health Technology Assessment (HTA) Review delivered its recommendations, not a single one has been implemented, leaving patients waiting while bureaucratic debates drag on. Minister Butler has resisted calls for immediate action, insisting that the government would not “cherry-pick” easier recommendations but instead address the entire “package” of HTA reforms as a whole. He stated that the HTA Review reforms is one that the “next parliament has to deal with”.

Liz de Somer, CEO of Medicines Australia, emphasised “While we welcome the increased investment in health in this budget, these investments need to be complimented by reforms to the PBS. HTA reform must be the focus of the next Health budget, so Australians get access to the best medicines when they need them.”

Health Minister Mark Butler’s previously announced pre-election commitments include a women’s health package featuring new PBS listings for contraception, menopause, endometriosis, and IVF medicines.

The government also revealed that from 1 January next year, the general PBS co-payment will drop to $25, at an annual cost of $200 million to tax payers – a policy the Opposition quickly pledged to match. However, the government has remained silent on lowering the PBS safety net threshold, which sits at $1,647.90. This means Australians will need to pay for 65 scripts before qualifying for concessional PBS access.

Federal health funding must account for both consumer price index (CPI) growth and population expansion. Failing to do so means that, in real terms, the government is cutting health spending – without admitting it.

The health portfolio sub-functions, including the Pharmaceutical Benefits Scheme (PBS), Medicare Benefits Schedule (MBS), and public hospital funding, must experience a spending uptick of at least 12% to avoid regressing in real terms.

Yet, analysis of the new Budget reveals that only two components of the health portfolio – the MBS and public hospital funding – are growing at a rate sufficient to keep pace with inflation and demographic shifts.

Meanwhile, the Grattan Institute has outlined health reforms that should be on the agenda for whichever party wins the 2025 Federal Election. It identified four areas of focus in health.

The first is chronic disease prevention, where it recommends that the government establish a national prevention funding agreement with the states, ensuring increased investment in evidence-based initiatives. The independent Centre for Disease Control would oversee these efforts, ensuring they are driven by data rather than political cycles.

The second priority is overhauling general practice and chronic disease management. The government is urged to implement the Scope of Practice Review recommendations and move beyond the outdated fee-for-service model, which rewards volume over quality.

The third issue is repairing the cracks in the healthcare safety net. This means tackling GP shortages in underserved areas, gradually introducing universal dental care, and increasing access to specialists through expanded public specialist clinics.

Finally, the government must stop throwing money at problems without demanding results. A smarter, value-driven approach to healthcare investment is needed – one that prioritises high-impact areas, funds services based on patient outcomes, and holds the system accountable for real improvements rather than simply maintaining the status quo.

Will the next government have the courage to act on these reforms?

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