Dr Luke Buckmaster
Mandy Biggs
Social Policy Section


The 2007–08 health budget includes new expenditure in a range of areas across the health portfolio. A number of these new measures have been welcomed by the Opposition and interest groups. For example, the Shadow Minister for Health, Nicola Roxon, welcomed additional funding for health and medical research ($485 million in grants to leading research facilities), the Royal Flying Doctor Service and the establishment of a new dental school at Charles Sturt University.[1] The Australian Medical Association (AMA) welcomed new funding for Indigenous health, aged care, combating obesity, rural health dental care, chronic disease and after-hours GP services (although with the reservation that actual funding amounts were ‘well short of what is needed to make a real difference’).[2]

Perhaps the two most strongly contested areas of political debate in the health portfolio over the past year have been dental health and preventive health (particularly in the area of chronic disease). The Government made two announcements in the Budget directly related to these areas. These announcements, as well as measures regarded by some commentators and interest groups as significant omissions from the Budget, will be examined below.

Prevention of chronic disease


For much of this year, the question of whether the Australian Government places sufficient emphasis on policies aimed at preventing chronic disease in the community has been the subject of much political debate. Chronic diseases are generally defined as those characterised by such features as complex and multiple causes, (usually) gradual onset, and long duration involving gradual deterioration of health. Cardiovascular disease, cancers, diabetes, asthma, arthritis and other musculoskeletal conditions are examples of chronic diseases.

Chronic diseases are widely regarded as a significant health concern both in Australia and internationally. In addition to the threat posed to individual quality of life through physical limitations and disability, chronic diseases pose particular problems for health systems. People with chronic diseases are frequent and extended users of the health services. This means that they are associated with high health expenditure. The major chronic diseases account for around 70 per cent of total health expenditure in Australia.[3]

The National Chronic Disease Strategy has argued that preventive strategies should be a major part of efforts to address the problem of chronic disease because ‘a number of the major chronic diseases can be prevented or their onset delayed.’[4] However, it also notes that, on the whole, the health system remains oriented towards acute and short term responses.[5] Further, national expenditure on public health activities such as health promotion and prevention remains at a relatively low level (only 1.7 per cent of total recurrent health expenditure in 2004–05 was directed to public health).[6]

This situation has led many commentators to call for the Australian health system to be reoriented towards preventive strategies for healthcare delivery and funding. That is, on the promotion of health, rather than treatment of disease. The then Health Minister, Senator Kay Patterson, made this point in 2002 when she argued that prevention should become the ‘fourth pillar’ of Medicare, alongside the Pharmaceutical Benefits Scheme, the Medicare Benefit Scheme and public hospital services.’[7]

In recent years, Commonwealth health budgets have included a variety of measures which the Government has described as being part of an increasing focus on preventive health. These have included measures directed at specific diseases, as well as initiatives aimed at greater involvement of general practitioners (GPs) in prevention (e.g., through the introduction of new Medicare items). The Commonwealth has also increasingly collaborated with the states and territories on strategies aimed at preventing chronic disease through, for example, the National Chronic Disease Strategy and the Australian Better Health Initiative.

The political debate around prevention in recent months has focused on the question of whether Australian Government efforts in this area are sufficient. For example, Shadow Health Minister, Nicola Roxon, has sought to highlight the threat posed by chronic disease to national productivity (also raised in recent reports such as the 2006 Access Economics report, The Economic Costs of Obesity, and the 2007 Productivity Commission report, Potential Benefits of the National Reform Agenda), and argued for a greater focus on prevention from the Government.[8] The Minister for Health and Ageing, Tony Abbott, has rejected the proposition that the Government is not sufficiently oriented towards the prevention of chronic disease, arguing that, for example, in 2006, ‘through Medicare the government spent some $200 million on preventive health and treating chronic disease with 650,000 GP team care plans; 250,000 team care plans; 500,000 allied health consultations; and some 250,000 senior health checks.’[9]

Prevention  and chronic disease  budget measures

In the 2007–08 Budget, the Government has announced additional funding of $236 million for ‘measures to help Australians to avoid preventable chronic illness.’[10] The measures include:

  • $103.4 million over four years for a new program to identify those at risk of type 2 diabetes and help for them to modify risky behaviours. This implements a COAG announcement from 13 April 2007. The program is to be delivered through GPs and risk will be evaluated on the basis of a standardised survey (or ‘tick test’). People at risk of developing type 2 diabetes may be referred to accredited ‘lifestyle modification programs’
  • $10.6 million over four years for a series of national nutrition and physical activity surveys aimed at enhancing understanding of lifestyle related health problems and developing education campaigns to help people avoid such problems
  • new public information and education campaigns on the health benefits of breastfeeding ($8.7 million) and the prevention of Hepatitis C ($17 million) and sexually transmitted infections ($9.8 million)—all over four years. The current national education campaign on skin cancer will also be extended at a cost of $11.5 million over two years
  • one-off grants totalling $11.7 million over four years for physical activity projects in the community and
  • extended eligibility for two cholesterol lowering drugs through the Pharmaceutical Benefits Scheme to help people at risk of developing heart disease ($77.6 million over four years).

The Budget also includes other measures which, while not included in the prevention announcement, address the problem of chronic disease. These include:

  • $291.3 million over four years for new Medicare items to enable patients with chronic and complex illnesses to receive longer, more comprehensive care sessions from consultant physicians
  • $337.6 million over four years through Medicare to help people whose chronic conditions are made (or are likely to be made ) worse by poor oral health (see below for an analysis of the dental health budget measure) and
  • $57 million over four years on other measures, including the continuation of the Sharing Health Care Initiative to help people better manage chronic conditions through informed self-management.

These measures, like those in previous budgets aimed at preventing and managing chronic disease, represent a range of approaches and target a range of health problems. The largest financial commitments are to be provided through Medicare via the primary care system. The use of the primary care system to help prevent chronic disease is widely regarded as an important part of the prevention agenda. It is consistent with the Government’s approach in previous years and will most likely assist many people. One concern, though, is that (as discussed in the section on dental health) evidence suggesting that only a very small percentage of those with chronic diseases in Australia have actually been placed on a care management plan does not inspire great confidence in this as the primary mechanism for preventing or managing such diseases.

As such, while the package of chronic disease measures will most likely lead to improvements for many people, it is probably best characterised as moving the health system only incrementally in the direction of a greater orientation towards prevention. For example, it appears unlikely to provide much of a boost to the current level of national expenditure on prevention-related activities (which, as noted above, is around only 1.7 per cent of total recurrent health expenditure). The package is also, on the whole, relatively limited in scope in that it targets a number of important chronic health problems (or aspects of chronic health problems) such as diabetes or obesity. However, it fails to bring them together as part of a more integrated or comprehensive strategy.[11]

Dental health

Although the provision of public dental services is largely funded by the states and territories, the Commonwealth has funded dental benefits in the past (the School Dental Scheme in the 1970s and the Commonwealth Dental Health Program in the mid 1990s are examples), and continues to fund certain dental services today (such as the Cleft Lip and Cleft Palate Scheme and dental services for service personnel and veterans). Since July 2004 limited dental treatments through Medicare have been available for eligible patients with chronic conditions on referral from their GP.

As access to dental health care has become an important public issue, fuelled by media reports of up to 650 000 Australians on public dental waiting lists, calls for a greater Commonwealth role in funding dental services have increased. A number of recent parliamentary inquiries have recommended increased Commonwealth funding (although none advocated funding dental care through Medicare).[12] Additional pressure has come from within government with some government backbenchers calling for increased dental funding in this year’s budget. 

The 2007–08 Budget provides funding of $377.6 million to expand Medicare benefits for dental services for patients with chronic conditions and complex care needs (and some residents of aged care facilities). Eligible patients will be able to claim Medicare benefits (up to a maximum of $2000 per year including extended Medicare Safety Net benefits) for a range of dental services, on referral from their GP, provided they have a GP Management Plan and Team Care Arrangement in place.[13] Full details of the services are yet to be finalised, but will include a diagnostic consultation and a range of dental services.

This measure expands Medicare benefits for dental treatment that were first introduced in 2004 as part of a broader allied health care initiative for people with chronic conditions.[14] At the time the Government emphasised this initiative was as a health measure ‘not a dental care scheme.’[15] The allied health component has proven popular with over half a million allied health services provided in 2005–06, but uptake of the dental component has been considerably lower with only 5532 services provided.[16] 

The Government estimates that around 200 000 patients will benefit under the enhanced dental care items to be made available by this expanded measure, but it is unclear how this target will be achieved. Although there are currently around 392 000 GP Management Plans in place to manage patients with chronic conditions, few patients on these plans have taken up the option of dental treatment using the currently available Medicare items.[17] High out-of-pocket costs have been recorded, with departmental figures showing some patients paying up to $692 extra for certain services.[18] Strict eligibility requirements may also be inhibiting uptake.[19]

This expanded measure in this year’s budget addresses some of the financial barriers faced by patients by increasing the maximum amount that can be claimed from Medicare in a calendar year from $220 to $2000, and expanding the range of dental services available. However, where in the past high out-of-pocket costs incurred by the patient counted towards the extended Medicare Safety Net (thus easing the financial burden of further medical costs), this may no longer apply to patients accessing dental treatment. Although full details are yet to emerge, concern has been raised that that the total cost of dental services incurred by Medicare will be capped at $2000—including the cost to Medicare of the extended Medicare Safety Net[20]. If this is the case, dental patients may have to meet the ‘gap’ between the Medicare rebate and the fee charged by the dentist once the cap is reached, potentially eroding the benefit of the increased amount that can be claimed.

In addition many Australians with chronic conditions and dental problems will not be eligible for the dental benefits, even under the expanded dental services that will be introduced. There is some evidence to suggest that only a small percentage of those eligible are actually placed on a GP Management Plan (a prerequisite for accessing dental benefits).[21]

While this budget introduces some measures to improve the management of chronic disease, for example, additional funding for extended consultations with specialist doctors (see discussion above), improvements to the uptake of GP Management Plans and further reducing financial barriers are required before the benefits of this dental initiative will be seen.


According to some health groups a number of health areas have been neglected in this budget. The criticisms include that this budget does not provide enough spending for Indigenous health, obesity, rural health, chronic disease and dental care, even though the Budget provided some funding for each of these areas.[22] 

Budget initiatives for Indigenous health have come in for particular criticism from the AMA. The Budget provides for just over $121 million in new spending for Indigenous health, well short of the extra $460 million the AMA has called for.[23] Specific initiatives in the Budget include funding to family centred primary care, a nurse-led home visiting program for mothers and babies, improved accreditation for Indigenous health services, Indigenous workforce improvements and expansion of the Indigenous scholarship scheme. Although the Government has provided funding for some of the initiatives recommended by the AMA in its 2007–08 budget submission, such as the mothers and babies’ initiative, other recommendations were not funded.[24] These include funding a national rheumatic heart disease program and implementation of the Australian Indigenous Doctor’s Healthy Futures Best Practice Framework. The surplus from this year’s budget may well have been regarded as an opportunity for the Government to address more comprehensively the poor state of Indigenous health. However, government priorities appear to have favoured other areas of the Budget in general, and other areas of health spending.

The Rural Doctors Association of Australia (RDAA) has also been strongly critical of the Budget as having failed to provide sufficient measures to increase the numbers of rural practitioners or improve access to healthcare services in rural and remote Australia.[25] One measure that the RDAA had been hoping for was a rural-specific Medicare item ‘to compensate rural doctors for the professional and family isolation, and the increased skills and responsibility, of rural and remote practice.’[26]



[1].     N. Roxon (Shadow Minister for Health and Ageing), Health budget gets some things right–but there are big gaps, media release, 9 May 2007,, accessed on 17 May 2007.

[2].     Australian Medical Association, Health budget 2007—a budget of downpayments: little steps not giant leaps, media release, 9 May 2007,, accessed on 17 May 2007.

[3].     National Health Priority Action Council (NHPAC), National Chronic Disease Strategy, Department of Health and Ageing, 2005, pp. 2–3,$File/stratal3.pdf, accessed on 17 May 2007.

[4].     ibid., p. 3.

[5].     ibid.

[6].     Australian Institute of Health and Welfare (AIHW), Health Expenditure Australia 2004–05, AIHW, Canberra, 2006, p. 55 (figure 18),, accessed on 17 May 2007.

[7].     K. Patterson (Minister for Health and Ageing), New study backs Government's preventative approach to health, media release, 25 November 2002,, accessed on 17 May 2007.

[8].     N. Roxon (Shadow Minister for Health and Ageing), Preventable illness: the health budget’s “climate change” threat: speech to AFR 9th Annual Health Congress, media release, 21 February 2007,, accessed on 17 May 2007.

[9].     Tony Abbott, Minister for Health and Ageing, ‘Questions Without Notice: Health’, House of Representatives, Debates, 28 February 2007, p. 74,, accessed on 17 May 2007.

[10].   T. Abbott (Minister for Health and Ageing), Preventing chronic disease, media release, 8 May 2007,, accessed on 17 May 2007.

[11].   For examples of possible alternative approaches see S. Willcox, Purchasing prevention: making every cent count: background paper, National Health Policy Roundtable, 8 August 2006,; and P. Gross, S. Leeder and M. Lewis, ‘Australia confronts the challenge of chronic disease’, Medical Journal of Australia, vol. 179, no. 5, 1 September 2003, pp. 233-34,, accessed on 17 May 2007.

[12].   Notably the 2003 Senate Select Committee’s first inquiry into Medicare; last year’s NSW parliamentary inquiry into dental services; and more recently the House of Representatives inquiry into health funding.

[13].   T. Abbott (Minister for Health and Ageing), Improving Medicare and hearing services, media release, 8 May 2007,, accessed on 17 May 2007.

[14].   T. Abbott (Minister for Health and Ageing), Allied health workers to help the chronically ill through Medicare, media release, 7 June 2004 This was for certain allied health and dental care services for patients with chronic conditions. Full details are available at, accessed 10 May 2007.

[15].   T. Abbott (Minister for Health and Ageing), MedicarePlus, media release, 10 March 2004,, accessed on 17 May 2007.

[16].   Senate Standing Committee on Community Affairs, Answers to Estimates Questions on Notice, Question no. E06-142, Health and Ageing Portfolio, Supplementary Budget Estimates, 2006–07, 1 November 2006.

[17].   The numbers of people with GP Management Plan or Team Care Arrangement in place are drawn from the Senate Community Affairs Committee, Answers to Estimates Questions on Notice, Question no. E06-140, Health and Ageing Portfolio, Supplementary Budget Estimates 2006–2007, 1 November 2006.

[18].   ibid. For item number 10977, Assessment or treatment by Dental Specialist. On average, out-of-pocket costs for dental items were $61 compared to an average $11 for other allied health items.

[19].   See the Department of Health and Ageing website for full details of eligibility requirements.,, accessed on 10 May 2007.

[20].   L. Russell, ‘Dental scheme well-funded but not well planned’, Canberra Times, 11 May 2007,, accessed on 17 May 2007.

[21].   M. Georgeff, E-health and the Transformation of Healthcare, Australian Centre for Health Research, South Melbourne, April 2007, p. 3,, accessed on 17 May 2007.

[22].   G. McArthur, ‘Health spending criticised’, Herald Sun, 10 May 2007,, accessed on 17 May 2007.

[23].   C. Siew-Yong, quoted in ‘The reaction: doctors’, Canberra Times, 9 May 2007,, accessed on 17 May 2007.

[24].   AMA, Fixing Indigenous health and stepping up the fight against obesity top AMA budget wish list, media release, 23 November 2006,, accessed on 17 May 2007.

[25].   Rural Doctors Association of Australia, Rural health forgotten in Budget ‘07, media release, 8 May 2007,, accessed on 17 May 2007.

[26].   ibid.