“An alleged increase in the share of health costs can hardly be argued as an excuse or explanation for the appalling state of the ACT budget.” JON STANHOPE & KHALID AHMED call out Treasurer Steel’s feeble excuses.
The headline to a media article on the day before presentation of the ACT Budget 2025-26 read: “ACT budget on life support amid health funding woes”.
We initially thought this was an editing error, and “ACT health on life support amid budget funding woes” was the intended heading.
However, reading the article, it became clear that newly minted Treasurer Chris Steel was indeed setting the scene – making excuses – for the woeful state of the ACT budget and finances by blaming it all on health costs.
The evidence? Mr Steel is reported to have said that health spending accounted for less than 30 per cent of the ACT budget in the ’90s, but now it accounts for 36 per cent. Media reporting of the Treasurer’s comments also refers to the “anaemic” revenue stream.
Unfortunately, as a simple fact check would have revealed, Mr Steel is mistaken.
Mr Steel could not, of course, blame any of the usual suspects.
He could not blame, for example, his predecessors – when his immediate predecessor, Chief Minister Andrew Barr, delivered the longest unbroken string of ever-growing deficits in ACT, if not Australian, history.
He could not blame external factors – after all, other jurisdictions were delivering surpluses year on year under the same conditions.
He could not blame the “Tories” on the hill – Scott Morrison and Josh Frydenberg – as his predecessor, Andrew Barr was wont to do.
It is beside the point that the Commonwealth cannot and does not shortchange any state or territory under the federal financial arrangements with each getting their fair share.
It is also beside the point that Mr Barr was happy to sign an agreement with those very same Tories to sell off over a thousand units of public housing stock and to apply the money to the light rail project.
He could not blame the pandemic as, with some notable individual exceptions, the states and territories are returning to balanced and surplus budgets.
Having nowhere to go, Mr Steel went where he should not have gone. We note the use of health metaphors, for example, “life support” and “anaemic” to explain away the budget problems. While those crafting the budget narrative may think it clever, in our view, it is not only cynical but also dangerous.
But first, the facts: We are uncertain of the source of the figure Mr Steel quoted as reflecting the share of health costs as a proportion of the total budget, ie 36 per cent.
However, the most reliable source of information for actual expenditure on healthcare and total budget expenditure by the States and Territories is the Australian Bureau of Statistics (ABS). The ABS publishes this information on a consistent and comparable basis across all jurisdictions.
Chart 1 below details the health costs as a proportion of the total budget (in percentage terms) for all states and territories from 2011-12 to 2023-24. While we could go back even further, this timescale alone completely undermines Mr Steel’s desperate attempt to attribute responsibility for the underfunding of the ACT health budget to Minister for Finance Katy Gallagher, Prime Minister Anthony Albanese and the Commonwealth generally.
Mr Steel may be referring to SA and Tasmania, where the health share of the budget is around 35 per cent. However, any claim that the ACT is “in the same boat” does not stand scrutiny. Not only has the ACT’s health expenditure, as a proportion of the budget, not exceeded 30 per cent, the ACT has recorded a deficit of more than $1 billion while the SA budget is in surplus.
In 2011-12 not only was the ACT in surplus (that is in fact the last year it posted a surplus) but health costs as a proportion of the total budget were 1 per cent higher than the weighted national average (27 per cent compared to 26 per cent nationally).
From 2015-16 onwards, the ACT’s health costs as a proportion of the budget have remained below the (weighted) national average. It has consistently posted deficits while other jurisdictions as a whole were in surplus until the pandemic struck.
In 2011-12, the ACT had the second highest level of budgeted health funding in Australia, however by 2023-24, Chief Minister and Treasurer, Andrew Barr, with the support of Mr Steel, had reduced it to the third lowest level of funding of all states and territories.
An alleged increase in the share of health costs, or the growth in such costs, can hardly be argued as an excuse or explanation for the appalling state of the ACT budget.
We have previously provided data from several sources that show how the ACT has transitioned from a below average taxing jurisdiction to the highest taxing jurisdiction in Australia.
Notably, the latest assessment by the Commonwealth Grants Commission has confirmed that the ACT remains the highest taxing Australian jurisdiction. Treasurer Steel’s claims about “anaemic revenue” do not stand scrutiny. They are sheer nonsense.
We noted above that Treasurer Steel has nowhere to go in laying blame. However, he could be open and honest with Canberrans.
He could, for example, acknowledge the warped priorities adopted by his government and the fact that there has been virtually no return from the expenditure by it on its vanity projects.
He could acknowledge the waste under his and his colleagues’ watch, such as the failed IT systems in human resources, health records and the public trustee.
He could commit to a review of priorities, to seeking better returns for taxpayers’ money and assuring accountability for regularly wasted expenditure.
Unfortunately, that has not been the case and what we have instead is the shameless bashing of healthcare. We will write more on the 2025-26 budget in coming weeks.
THE CHART THAT GIVES LIE TO STEEL’S EXCUSES
We have previously noted that 2015-16 was the year in which a major change in priorities occurred in the ACT.
Not only were detailed plans for a major investment in health infrastructure and services abandoned, but recurrent funding was also cut, in real terms, resulting in severe bed shortages.
It is notable, when it comes to blame shifting, that the ACT government has form.
We have previously highlighted that in seeking to explain why the ACT has the worst emergency department wait times in the country, the Minister for Health, Rachael Stephen-Smith, had no compunction blaming patients for turning up while failing to either ask or answer questions about unfilled clinical positions.
There are more than 12,000 health practitioners, nurses, midwives, and allied health professionals working in the ACT’s health system. They have been working in stressful circumstances, and delivering quality care despite staff and bed shortages.
They are the real heroes and alleging that they are the cause of the territory’s budget and financial problems is cowardly, cruel and shameful.
Jon Stanhope is a former chief minister of the ACT and Dr Khalid Ahmed a former senior ACT Treasury official.
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