This report is the latest in the Australian Institute of Health and Welfare’s (AIHW) Health expenditure Australia series and includes estimates of how much was spent on health between 2006–07 and 2016–17. These estimates form Australia’s National Health Accounts. The National Health Accounts give in-depth information relating to the performance and efficiency of Australia’s health system and changes over time. They are a related (but separate) collection from the Australian National Accounts prepared by the Australian Bureau of Statistics (ABS), which cover the entire economy.
Governments driving growth
More than two-thirds (69%) of health spending is funded by the Australian Government and state and territory governments ($75 billion and $50 billion, respectively) and governments were the main drivers of the recent growth in spending. Total government spending on health grew by 6.8% in real terms in 2016–17 to $124 billion, well above the average growth rate for the previous 5 years of 2.6%.
Tax revenue is the main source of government income used to fund public services, including health care. Due to the relatively rapid growth in government spending, the ratio of government health expenditure to tax revenue increased in 2016–17 following a period of relative stability (rising by 0.8 percentage points to 27.1%).
Real growth in health expenditure over the decade to 2016–17 was similar for the Australian Government and state and territory governments (4.5% and 4.6%, respectively), though average growth in the last 5 years was greater for states and territories (3.1% compared with 2.4%).
In contrast, in 2016–17, non-government sources recorded the lowest growth rate in health spending in the decade since 2006–07—0.2% compared with the decade average of 4.8%. Around $30 billion of this spending came from individuals.
Balance of public hospital funding shifting
In 2016–17, $69 billion was spent on hospitals—a real increase of $2 billion from the previous year.
Funding of public hospitals has shifted between governments in recent years. Australian Government expenditure on public hospitals rose 6.2% in real terms to nearly $22 billion, whereas state and territory government funding for public hospitals increased 0.1% in real terms from the previous year, to $27 billion.
Because of this shift, the share of public hospital funding contributed by the state and territory governments fell from 52.4% to 51.0%, with the Australian Government share increasing from 39.3% to 40.6% between 2015–16 and 2016–17.