2021 Federal Budget: What it means for Health

Aged care, mental health, vaccine and NDIS funding headlined in the 2021 Federal Budget – plus women’s health funding and tax incentives for biotech start-ups.



The healthcare sector was expected to be at the centre of this year’s Budget, following the findings of the Royal Commission into Aged Care Quality and Safety released during March this year. Among its key findings the commission concluded that the present ration-based system of aged care should be replaced in favour of a rights-based system that allocated care to individuals based on assessments of their requirements in order to eliminate waiting lists. There were also calls for stronger governance and oversight into the sector including an independent pricing mechanism to set industry cost standards. The Commission also pointed to the need for new standards for front line workers, including a new national registration scheme. Finally, the report called for a universal funding model to replace the current mixture of means-tested arrangements. It would also eliminate refundable accommodation deposits, which can make the process of securing care difficult for many.

The healthcare sector was also hoping to see the Government take on board recommendations from the Productivity Commission and the Royal Commission into mental health and allocate additional investment into the system. National Mental Health Commission CEO Christine Morgan noted that the COVID-19 pandemic had shone a spotlight on the need to access mental health services as it showed Australians their mental health “is as much a part of us as our physical health.”

What did business want?

The Australian Medical Association identified a range of key areas for funding commitments:

  • Telehealth – permanent Medicare Benefits Schedule rebates for telehealth consultations with GPs and medical specialists – which were introduced in response to COVID but are only funded to the end of the year.
  • Public hospitals – implement a comprehensive funding solution for public hospitals to reduce waiting times and cope with times of increased demand.
  • Aged care – provide greater access to healthcare within the system to reduce the reliance on hospitals.
  • General Practice – invest in the sector to respond to the needs of the ageing population.
  • Private health insurance – addressing the decline in private health insurance and ensuring its long-term sustainability.
  • Indigenous health – better access to healthcare to improve current poor health outcomes.

The Pharmacy Guild of Australia and the Pharmaceutical Society of Australia highlighted measures including:

  • Combating opioid dependence – by increasing access to, and reducing the cost of, opioid dependence treatment.
  • Implementing e-prescriptions – to reduce medication errors.
  • Aged care – increase funding to allow residential aged care facilities to directly engage pharmacists to reduce preventable harm caused by medicines.

Australian Aged Care Collaboration, a group comprising of six peak bodies that deliver 70% of in-home and communal residential aged care services, outlined a range of priorities for this year’s Budget, based on the findings of the Royal Commission. These were grouped into broad categories, including:

  • Human rights, access and choice – including committing to a rights-based (non-rationed) Aged Care Act by July 2023; providing funding to remove the waiting list for home care packages by December 2022; developing and implementing uncapped and better integrated aged care (both in home and residential) by July 2024 with clear funding (comprising a mix of block and activity models and personal contributions).
  • Workforce – increase minimum award wages; fund training program to ensure adequate long-term aged care workforce; improve access to wider health system by older people receiving aged care (including allied health professionals); implementing a national registration scheme for personal care workers.
  • Transparency – implementing transparency and accountability provisions from December 2022, including clinical indicators, performance-based star ratings, reporting of care staff hours, reporting financial data to the independent pricing authority and strengthening prudential regulations.
  • Sustainability – establishing an independent aged care pricing authority by July 2022 to determine pricing based on case-mix; funding for implementing amendments to indexation arrangements; extending the 30% increase in the Viability Supplement (for rural and regional providers); increased funding for residents’ everyday living expenses and reimbursement for employers for their staff development costs.

Vision 2020’s pre-Budget submission focussed on enhancing local eye care for Aboriginal and Torres Strait Islander communities, increasing support to combat blindness in Papua New Guinea, enhancing support for older Australians with vision loss, supporting workforce training, and increasing access to cataract surgery.

The Australian Healthcare & Hospitals Association had a wide range of recommendations across the healthcare system, including: moving from a volume-based healthcare system to a value-based one; increased funding for preventative health, mental health, oral health and aged care; a nationally consistent framework for advanced care, palliative care and end of life decisions; improved access to healthcare for Aboriginal and Torres Strait Islanders and rural and remote communities; and the establishment of an Australian Centre for Disease Control.

What did the Budget deliver?

Aged Care

The Government has pledged $17.7 billion over 5 years as part of an overall funding package in response to the Royal Commission into Aged Care Quality and Safety. This spending includes:

Residential Aged Care Services – the Government will provide $7.8 billion over five years from 2020-21 into improving the service and sustainability of residential aged care services, including:

  • $9 billion over four years from 2021 on increasing front line care minutes with 200 minutes per day (40 minutes with a registered nurse) to be mandated by October 2023.
  • $3.2 billion to support aged care providers via a new daily supplement of $10 per resident.
  • $278.8 million over three years to continue the temporary financial support for aged care providers.
  • $189.3 million over four years to implement a new funding model, the Australian National Aged Care Classification.
  • $117.3 million to support structural reforms of the aged care sector and the strengthened financial reporting requirements for residential aged care providers.

Home Care Packages – an additional $7.5 billion will be provided in creating new home care packages which includes:

  • $5 billion over four years to create 80,000 new home care packages over two years from 2021-22.
  • $798.3 million for greater access to respite care and support carers.
  • $272.5 million over four years to support access to information about aged care for senior Australians.

Aged Care Quality & Safety – $942 million over four years of new funding will be directed to improve the quality and safety of aged care services, including:

  • $7 million for primary and other health care access and additional digital & face-to-face support to navigate the aged care system.
  • $301.3 million for the Aged Care Quality and Safety Commission to ensure the safety and integrity of aged care services and to address the failures of COVID-19 response.
  • $200.1 million for a new star rating system for senior Australians and their family and carers to make comparisons of aged care providers.

Regional Access to Aged Cared & Governance – $698.3 million in funding over five years, with the largest share to improve access to quality aged care services in regional, rural and remote areas, including those with Indigenous backgrounds and special needs groups.

Workforce – $652.1 million will be provided for training and upskilling of the aged care workforce.

Mental health

The Government will spend $2.3 billion over the four years starting 2021-22 to implement the National Mental Health and Suicide Prevention Plan, in collaboration with state and territory governments. This spending includes around $1.2 billion for mental health treatment (including specialised youth and disability services), almost $300 million for suicide prevention, around $250 million for prevention and early intervention and around $200 million to support workforce and governance.

COVID-19 measures

The Government will spend $1.9 billion over the five years commencing 2020-21 to continue the rollout of COVID-19 vaccines. The detailed breakup of this spending is somewhat unclear – given existing funding from last year’s budget, along with commercial-in-confidence details regarding additional purchases of the Pfizer BioNTech vaccine.

The Government will spend $879 million over the two years from 2020-21 (including around $140 million carried over from last year’s budget) to support Medicare and access to medicines in response to the COVID-19 pandemic. These measures include:

  • $1 million to extend temporary Medicare Benefits Schedule (MBS) pathology items for COVID-19 testing.
  • $204.6 million to extend temporary telehealth MBS services until the end of 2021, with some revised billing arrangements to commence 1 July 2021.

The Government will also spend $845.3 million over the two years from 2020-21 to continue its emergency response to the pandemic. These measures include:

  • $0 million over two years to expand quarantine facilities in the Northern Territory.
  • $271.5 million in 2020-21 to support the activities of the National Partnership on the COVID-19 Response.

Medicines and appliances

The Government will spend $882.5 million over the five years starting from 2020-21 for new and amended listings on the Pharmaceutical Benefits Scheme, the Repatriation Pharmaceutical Benefits Scheme and the Stoma Appliance Scheme, including extending the Take Home Naloxone Program to reduce the risk of opioid overdose.

Other healthcare measures

Changes to the Medicare Benefits Schedule will see the Government spend an additional $151.5 million over four years from 2021-22 for a range of services – including pre-implantation genetic testing of embryos for IVF; improved diagnosis of hypertension; and a range of cancer diagnosis and treatments.

The Government will spend an additional $231.9 million over the four years starting 2021-22 to support the national sport plan “Sport 2030” and support sport and physical activity in the community.

The Government will spend an additional $297.4 million over the four years starting 2021-22 to support greater access to primary healthcare services, with Medicare subsidised treatment for medication resistant major depressive disorder accounting for a large share of the spending.

Read more in our Federal Budget 2021: What does it mean for health report