Federal government won’t increase its share of hospital funding despite state push for 50-50 split

The federal health minister, Mark Butler, says the commonwealth will not increase its share of hospital funding before the national partnership agreement with the states and territories expires in 2025.

Butler’s comments put an end to the states’ hopes of an urgent financial boost for their struggling hospital networks.

The newly appointed minister, who on Wednesday announced a push to increase uptake of Covid boosters and the flu vaccine, said there was an opportunity to begin reforming the health system while negotiations on the new national reform agreement got under way.

Butler said he was urgently reviewing options to extend Covid-19 telehealth services before funding expires next week.

The prime minister and state and territory leaders agreed last week to a two-month extension of a cost-sharing deal for Covid-related hospital spending. But the states were pushing for the government to increase its current 45% share of ongoing costs to a 50-50 split as part of an overhaul of the health system.

Butler said that while the states had made their position clear, the federal government would not be “tearing up an agreement” that was signed in 2020 and was already factored into budget forecasts.

“From our point of view, this is an agreement that all states and territories signed on to for five years,” Butler said. “We didn’t design it, we didn’t put it in front of them – the Morrison government did – and they signed it.

“We recognise there are pressures on hospitals and there are things that we should do now to relieve those pressures in primary care and aged care. But very much our position is that agreements that we inherit from a former government by and large are agreements that will continue.”

Butler said states and territories would be involved in a health system review process being led by the new head of the Department of Prime Minister and Cabinet, Glyn Davis, with negotiations to begin next year on a new national partnership agreement.

He said the current national health reform agreement allowed for a range of reforms but the process had stalled as a result of the pandemic.

“For the next round, I think everyone is clear what the state negotiating position will be, and we’ll have to respond to that,” Butler said.

The Davis review of the health system comes as states and territories warn of unprecedented pressure on hospitals, with the impact of Covid compounding existing structural problems in the system.

The states are calling for the federal government to do more to prevent people ending up in the state hospital system by boosting funding for primary care and ensuring aged care and NDIS patients are not taking up hospital beds unnecessarily.

Butler said the Albanese government was coming to office after “10 years of cuts” to primary care and his focus would be on rebuilding Medicare.

“I have no higher priority than rebuilding general practice,” Butler said.

“As you will have seen in a lot of the commentary from the state premiers and health ministers, that’s what they want the commonwealth to do. That’s our job.

“We fund and largely regulate and support general practice, the same in aged care, and when those systems break down, the lightning rod ends up in the emergency department of the local hospital.”

In the lead-up to the election, Labor promised $750m for a “strengthening Medicare” taskforce and fund, which Butler said would report by the end of the year to determine priority areas for spending, along with $135m for 50 urgent care clinics and $200m for GP grants.

Butler said that there were about four million non-urgent presentations to hospitals each year that he was hoping the new clinics may help mitigate – with expectations they could be up and running next year. Their locations will be discussed with state and territory health ministers at a meeting next week.

'[Emergency departments] are built for once-in-a-lifetime emergencies,” Butler said. “That’s what they should be dealing with.”

He said he was looking at what more could be done to ease pressure on workforce shortages, saying he wanted to see any visa backlogs quickly dealt with along with delays to accreditation processes.

“There are obviously backlogs … but there are frankly some bottlenecks once health professionals arrive in Australia from other countries as skilled migrants to get their registration, and I’ve asked for some advice about how we could speed that up," hy het gesê.

“Obviously, we want those accreditation processes to be robust, so the people who are being put on to the floor of our hospitals or aged care facilities are properly qualified, but it’s important that we don’t just look at the immigration department and we also look at opportunities to streamline some of those processes.”

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