THE HON PETER DUTTON MP

MINISTER FOR HEALTH

MINISTER FOR SPORT

AUSTRALIAN INSTITUTE OF POLICY AND SCIENCE
POST BUDGET HEALTH BRIEFING, PARLIAMENT HOUSE, CANBERRA,
MAY 15

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Laying the foundations for a stronger health system

Ladies and gentlemen, good morning and thank you for the
introduction.

The last time a Coalition Government handed down the health
Budget, Tony Abbott was Health Minister.

It was 2007 and the seven years since have been challenging
ones for the Australian health system.

Commonwealth expenditure has grown 46 per cent.

The pressure on Medicare, the PBS and public hospitals has been
unrelenting, driven by an ageing population, chronic disease, and
higher costs.



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We have seen wasted opportunities and failed experiments under
National Health Reform, which promised much, but delivered little in
the way of improved health outcomes.

So in this Budget, the Government is laying the foundations for a
stronger, more sustainable health system a system that only a
Coalition Government can deliver.

It is a Budget for now and the future. It draws a line in the sand on
ineffectual programs; on duplication, waste and bureaucracy; and on
unmanageable spending.

And it introduces unprecedented investments in medical research,
along with new, tough but fair, ways to finance and sustain health
care in the years ahead.

In this Budget, the Government is addressing the need to rein in
growth in Medicare, the PBS and public hospitals by asking
Australians to take more personal responsibility for their health,
through modest contributions to the costs of their care.

Fundamentally, the Budget continues to protect those who are least
able to look after themselves. We are not undermining the health
safety net. We are making it stronger and fairer.



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We are cutting bureaucracy and red tape so that we can invest in
rebuilding primary care and general practice, expanding the health
workforce and improving cancer screening and mental health
services.

We are providing better support for kids to get more physically active
through sport.

And the centrepiece of the Budget is a $20 billion capital protected
Medical Research Future Fund, to build a future for Australian
medical researchers and for better health care.

This is unprecedented, not just in Australia but the world. It is an
historic commitment in medical research.

And, as the Treasurer said on Tuesday night, it may well save your
life, or that of your parents, or your child.

Three months ago I called for a national conversation as I put it
then to help heal our health system. This Budget now takes the
next step from talk to action with all Australians contributing to
build a patient focused, sustainable and cutting-edge health system.


Thinking behind the Health Budget
We have framed this Health Budget with four guiding principles:


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1. that we must spend taxpayer funds on programmes and
services that improve health outcomes for Australians;

2. that bureaucracy and red tape should be cut, and efficiencies
and productivity improvements continually found;

3. that people should take more responsibility for their own health,
including through modest contributions to the cost of care; and

4. that we must set up the health system for the future.

Let me take you through some of the detail.

Patient contributions to improve sustainability

MBS

Ten years ago, the Commonwealth was spending $8 billion a year
on the MBS. Today its $19 billion. Without policy change, in 10
years time it would be more than $38 billion.

That kind of growth is unsustainable and threatens the future
capacity of governments to fund universal access to primary health
care. So something has to change to reframe the parameters of the
MBS.


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The Government has decided that that change will be a patient
contribution of $7 for previously bulk billed visits to GPs, and for out
of hospital pathology and diagnostic imaging services.

We consider this is a fair contribution from patients to help support a
system that currently funds 263 million free Medicare services a
year, to which the taxpayer through the Government - is currently
contributing more than $30 per GP visit.

We are making parallel changes to ensure the incentives are right
for doctors to charge only the $7 contribution for concession card
holders and children, to make sure cost does not become a barrier
to access.

These include a $5 reduction in the Medicare rebate, and a low-gap
incentive replacing the bulk-billing incentive.

The number of calendar year services for which concessional
patients will be charged the $7 contribution will be capped at 10
after which services will be free, as an additional protection for
people who need frequent access to care.

To avoid setting up a perverse incentive for patients to attend public
hospital emergency departments rather than GPs, we will also allow
state and territory hospital managers to charge a small contribution
for GP-type visits to emergency departments.


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We consider these changes are fair: the patient contribution of $7
contrasts with a taxpayer contribution of over $30; doctors will have
incentives to charge only the low gap, and only up to a cap of 10
services per year; and these new parameters will reframe the MBS
for a more sustainable future.

This reframed MBS will be supported by a new simple Medicare
Safety Net, with lower thresholds to protect more families from high
out of pocket expenses. It will also include a cap on benefits of 150
per cent of the Schedule Fee as a discipline to help prevent
providers charging more simply to push patients over the taxpayer-
funded safety net threshold.

These measures are not about taking money out of Medicare - we
will continue to spend more than $20 billion on Medicare every year.

These measures are about strengthening Medicare. And with the
help of all Australians we will ensure everyone can continue to
affordably access world-class health care services.

PBS

The Government has also re-examined PBS co-payments in the
Budget to ensure the PBS can continue to support the listing of the
latest medicines, which improve patient outcomes and save lives,
but which also come at increasing cost to the taxpayer.


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PBS expenditure is up 80 per cent over the past decade, with growth
expected to average 4-5 per cent per year in coming years.

A major cost driver is the increasing expense of newly listed
lifesaving medicines and technologies. For example, recently
approved treatments for melanoma cost the Government up to
$110,000 per patient per year.

General patients currently pay less than $40 per prescription for
these treatments under the PBS, and concessional patients pay only
$6.

In the Budget, the Government is asking patients to pay a little more
for prescriptions, increasing the co-payment for general patients by
$5 per script and for concessional patients by 80 cents.

We are also making a parallel adjustment to the PBS safety net,
increasing the threshold for general patients by 10 per cent above
CPI for four years and by two prescriptions per year for concessional
patients.

Again, this will put the PBS on a more sustainable footing.



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We all benefit from a stronger PBS so everyone has a
responsibility to contribute their fair share to keep the system
affordable.

Our investment in the PBS will of course continue to grow from
$9.2 billion in 2014-15 to more than $10 billion in 2017-18.

Public hospital funding

Spending on public hospitals, owned and managed by state and
territory governments, is the fastest growing area of health
expenditure.

Under the previous governments policy settings, which provided
guarantees to the states and territories about absolute growth in the
funding envelope no matter how many or how inefficiently services
were being delivered, Commonwealth Government payments for
public hospitals would grow by an unsustainable 10 per cent a year.

More discipline is needed. And more responsibility is needed from
states and territories who are the owners and the managers of the
public hospital system.

So in the Budget, the Commonwealth has decided it will not proceed
with the previous governments funding guarantees.



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Neither will we proceed with ineffective National Partnership
Agreements that muddy the waters of Commonwealth-State
responsibilities and do not result in better, more efficient public
hospital and other services.

Instead, we will pay growth funding for the next three years,
equivalent to 45 per cent of the efficient growth in public hospital
costs as defined by activity based funding arrangements.

In 2017-18, that growth funding will cease, and the Commonwealth
will index its contribution to public hospital funding to CPI and
population growth.

The Commonwealth will still make a significant contribution to this
sector some $14.8 billion in 2014-15. And we are still increasing
hospital spending by an average of 7 per cent over the next four
years. What the Government will no longer be doing is funding
inefficient and unrestrained growth.

We will be looking to the states and territories to exercise their own
disciplines in this area, which is a clear state and territory
responsibility under our federation.






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Streamlining bureaucracy to support better services

A major theme of the Budget across the Government is reductions in
bureaucracy and red tape.

In the Health portfolio, we are rationalising bureaucracy and cutting
red tape so that we can free up resources and redirect them into
supporting better services and better health outcomes.

Rebuilding primary care and GP services

The first place we are starting is primary care. In the Budget, the
Government is ending the inefficient experiment of the previous
government that saw a new layer of primary health bureaucracy
established across the country.

They set up 61 Medicare Locals, with unclear roles, mixed
approaches to consultation and boundaries that didnt match local
hospital networks.

In line with the recommendations of a recent review by the former
Chief Medical Officer, Professor John Horvath, we will be cleaning
this up. We will be establishing a smaller number of Primary Health
Networks more focused on the important work of joining up patient
care in the community to keep people out of hospital.



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The Primary Health Networks will have well-defined roles, greater
economies of scale, be GP-led with clear processes for community
and provider consultation, and will match the boundaries of the local
hospital networks with which they will interact.

We will also be looking over the next few years at new and
innovative ways in which we might fund and deliver primary health
care, including through partnerships with private insurers.

The second place in which we are looking to rebuild primary care is
by boosting its workforce.

The Budget increases Commonwealth-funded GP training places by
300, to a total of 1500, in 2015. It doubles the teaching payment to
GPs for training medical students from $100 to $200 per three hour
session. It provides 175 infrastructure grants for GPs in rural and
remote settings to build training facilities in their practices. And it
increases the funding available for incentive payments under the GP
Rural Incentives Programme for GPs to work in rural and remote
areas.

In addition, 500 more scholarships will be available to nursing and
allied health workers over three years, on top of the more than 2,000
existing scholarships awarded each year.



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Supporting these measures, we are taking major steps to cut
bureaucracy and red tape in areas supporting health workforce.
The functions of Health Workforce Australia and GPET will be
transferred to the Department of Health, and those agencies closed,
achieving major efficiencies in the short term.

The Department will work in the medium term to find further
efficiencies to free up more resources for workforce measures.

These measures actually result in a save and give a clear example
of how we do not need to spend more money to improve services.
The previous Government measured success in health by the
amount of money it spent, not on improved patient outcomes. This
Government is interested in spending taxpayer dollars on improving
the health of Australians.

Additional agency closures and mergers

Building on the work in primary care to reduce bureaucracy and
duplication, the Government will make further changes to Health
portfolio agencies.

Rationalising a number of agencies will cut administration costs and
corporate overheads, end duplication, redirect funds to frontline
services, and enable the Government to deliver services and
programs more efficiently and at lower cost.


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A number of agencies will be closed and their functions transferred
to the Department of Health or other relevant Commonwealth bodies
with like functions.

We will also be talking to the states and territories about the possible
merger of six agencies and functions to support the establishment of
a new health productivity and performance commission.

Investments in mental health and preventative health

The sustainability measures and efficiencies generated through
these measures are enabling further investments in mental health
and preventative health to better address key pressures on
Australians health.

Seventy five per cent of all mental illness manifests in people aged
under 25. So we are investing to improve information, early detection
and treatment services by expanding the successful headspace
service by 10 sites, to reach national coverage of 100 sites. We are
also establishing a national centre of excellence in youth mental
health at Orygen youth services at Parkville in Victoria.

We are investing $95.9 million to fast track the work initiated last
time we were in government to roll out biennial bowel cancer
screening services for Australians aged 50-74 years, in full
compliance with NHMRC guidelines.


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This is a major investment in detecting a common cancer affecting
many Australians while it is still treatable.

The Budget also demonstrates our commitment to doing more to
encourage physical activity and tackle obesity, particularly among
children.

One in every four of Australian children is overweight or obese. Its
an alarming statistic.

Just as disturbing is that physical inactivity is estimated to cost the
Australian health care system $1.5 billion a year in avoidable costs
as a result of chronic disease. Clearly, this is unsustainable from
both a health and economic perspective.

This Government does not want to tell Australians what to do or
what to eat. We dont want to be in your fridges. But we do want to
help people make their own healthy choices and we do want to
encourage and support kids to get involved in sport and exercise.

The Governments $100 million Sporting Schools initiative in the
Budget will support primary school children to take part in sport-
based physical activity. Schools will get funding to run activities
across up to 35 major sports for instance, football, netball, tennis
and gymnastics for three terms each year before, during or after
school.


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Im very excited about this program and I trust mums and dads and
coaches and, of course, kids everywhere will be too. It will reach
more than 800,000 children at about 5,600 primary schools and 80
secondary schools across Australia.

Finally, in the area of sport, the Government has announced $156
million for the 2018 Gold Coast Commonwealth Games, mainly for
infrastructure. This will mean a large number of jobs during
construction, economic growth and a boost in sporting activity for the
region, as well as world-class venues to showcase our athletes
competing against the best on home soil and, hopefully, winning
gold.

Forward-looking investments in medical research

A centrepiece of the Governments Budget, which will help set up
Australias health system for a bright future, is the $20 billion capital
protected Medical Research Future Fund.
The Fund will provide more opportunities for Australias researchers,
who already punch above their weight globally, to make new
discoveries and to take the results of their research through clinical
trials.



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Medical research has the potential not only to improve health
outcomes for particular conditions and diseases, but also to improve
clinical approaches and make our health system more sustainable.

Initial investment in the new Fund will come from the almost $1
billion in funds remaining from the previous governments Health and
Hospitals Fund, as well as efficiencies and savings in health
spending.

We all have a stake and medical research benefits all Australians.

When the Fund is fully mature, it is expected to generate $1 billion in
earnings each year for medical research.

In addition to the Medical Research Future Fund, the Government
will be investing a further $200 million in new funding for dementia
research, delivering on a key election commitment.
This will help find solutions for managing and hopefully preventing a
condition that is growing in prevalence with the ageing population,
and that is so distressing to patients and their families

Medical research not only makes good health sense, it makes good
economic sense. Its a key driver of productivity and innovation in the
health care sector, which employs more than one million Australians.



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It has been estimated that every $1 spent on health and medical
research generates a health benefit valued at $2.17 thats a return
on investment for the nation of well over 100 per cent.

Conclusion

As we look to the kind of health system we want for a modern
Australia, we are rebalancing Australias health system to position it
for the future introducing new approaches to health financing,
streamlining bureaucracy to better support services, and making
forward-looking investments in medical research.

This is not a band-aid solution. This is change for the long-term.

This Government is not interested in funding programmes that only
provide benefits at the margins.

We will make a difference, and we will do so with the understanding
from all Australians that social policy isnt free, and we can no longer
put it on the nations credit card.

This Budget showcases our health commitments commitments to
better health for all Australians commitments that are profoundly
held.



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It also demonstrates our commitment sound economic and that good
social policy and economic policy are not mutually exclusive.

Thank you.