Where will the 2022-23 Budget take us?

Composite image shows a vector depicting a a graph, upward arrow and a dollar symbol. Beside this vector is a screenshot of the cover of the 2022-23 Budget Submission.

Adjunct Professor Terry Slevin – PHAA CEO

This post is the first in our series of articles exploring the PHAA’s 2022-23 pre-Budget submission, The Public Health Crisis Budget. Future articles will include levies on harmful products including tobacco, alcohol and sugar-sweetened beverages.

With polls showing the federal Government is a little behind, talk of a (slightly) early March election has ceased, and the Commonwealth Budget will be released on Tuesday 29 March.

Every Budget sets a national strategic direction. In 2022, the Government should recognise that the future of the Australian economy as a whole will depend more than ever on building a society with strong population health.

PHAA’s 2022 pre-Budget submission, The Public Health Crisis Budget, outlines recommendations that would both improve the health of all Australians, and at the same time restore public confidence and bolster Commonwealth revenue to help repair the nation’s battered finances.

Australia’s strategic position – and its resulting budgetary position – are at a potential tipping point. The economic and wider social consequences of COVID-19 have been dramatic, as have their fiscal whacks to government budgets across the nation.

In order to build back healthier, government strategy now needs to recognise that the way in which we manage the population’s health is a major driver of our economic wellbeing.

Population health in all its manifestations – but primarily in respect of the major determinants of chronic as well as infectious disease and their impacts on economic productivity – should therefore be a major strategic theme in the coming 2022-23 Budget.

Australia’s Budget position is obviously under great strain, with the pandemic presenting the Government with both extraordinary expenditures and significant reductions in revenue. The 2021-22 Mid-Year Economic and Fiscal Outlook statement (December 2021) forecasts Budget deficits unprecedented in our peacetime history of $99 billion for 2022-23, $84 billion for 2023-24, and $57 billion for 2024-25.

By way of context, Australia spent about $202 billion on health in 2019/20, and of that, 42.7% (or about $86.5 billion) came from the federal government. And of course, the spending figures continue to grow.

From a longer-term perspective, the Treasury’s Intergenerational Report projections, updated in 2021 to take account of pandemic factors, foresees that, “the Australian economy is projected to grow at a slower pace over the next 40 years than it has over the past 40 years …  Slower population growth is the main reason for the expected slowdown” (p.viii).

However, it also says that, “Health and aged care are projected to be the fastest growing areas of spending over the next 40 years. Growth in these areas reflects pressures from the ageing of the population as well as non-demographic factors such as technology, changing consumer preferences and rising incomes” (p.89).

The Government is therefore under extreme pressure to identify financial initiatives which will lift the productivity of the workforce, improve the health of the population, and increase revenue. PHAA’s Budget Submission offers proposals for achieving all of those aims.

The economics of investment in public health (consistently less than 2% of health expenditure) – which is not to be confused with the far greater public financial expense of health treatment services – offers the Government opportunities to reduce expenditure over the long-term, by means of modest investments in key areas of population health in the short term. As the details of our Submission show, the return on investments in public health is positive, and in many cases powerfully so.

In addition, public health provides some significant opportunities to increase revenue as a by-product of specific health policies.

This should be welcome advice, since only last December the Government announced its National Preventive Health Strategy (NPHS), which focuses heavily on improving population health for preventing chronic diseases and boosting the population’s overall health.

Launching decisive public health policy measures through the 2022-23 Budget offer the prospect of significant gains for the community in health, social, economic and environmental wellbeing – all of which should be strongly prioritised by the Government.

The PHAA estimates that its recommended revenue measures could generate an additional $17 billion over the forward estimates.

The revenue measures we propose include reforms to taxation of tobacco and alcohol, and a levy on sugar-sweetened beverages – all products which harm public health.

By comparison, our Budget recommendations for new expenditure initiatives on public health programs, investing in a healthier future population, total less than $1.5 billion.

The Government needs to act seriously on building up Australia’s overall health. We need to become a healthier population, not just to fend off the pressures of the pandemic, but for everyone’s good.

Never again should there be a failure to understand that public health policy IS economic policy.

The Budget due on 29 March is the last great chance to do so in this term of Parliament.


See other Budget-related posts:

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