Federal Budget 2021-22 Review

The Bottom Line

"Ahead of any major advanced economy, Australia has seen employment go above its pre‑pandemic levels. At 5.6 per cent, unemployment today is lower than when we came to government. This is remarkable."

Hon. Josh Frydenberg, Federal Treasurer

The 2021-22 Federal Budget, brought down last night by Treasurer Josh Frydenberg, represents a marked departure from Australian political norms. A Coalition Government has spent freely, committing the nation to a debt reaching nearly one trillion dollars within four years. This has been done to consolidate what is a faster than expected post-pandemic recovery, notable for much lower unemployment than anticipated.

There is significant investment in infrastructure, which will have obvious knock-on effects for other sectors, such as mining and construction. There is significant spending on skills and training, with a view to expanding the manufacturing sector.

But there is also substantial investment in social services, which is of particular interest to occupational therapists and their clients. The Budget includes significant additional expenditure on aged care, aimed at addressing the recommendations of the recent Royal Commission.

There is also substantial spending on mental health and suicide prevention, which were areas of growing concern long before recent natural disasters and the COVID-19 pandemic threw them into sharp relief.

Key economic forecasts in the budget include growth of 4.25 per cent in the next financial year, falling to 2.5 per cent in the following three years.

Inflation is forecast to grow by 1.75 per cent in 2021-22, while wages grow by 1.5 per cent. This would represent a fall in real wages.

The unemployment rate will fall from its current 5.6 per cent to 4.75 per cent next year, and to 4.5 per cent the year after that.

Net debt will reach $980.6 billion in 2025, amounting to 40.9 per cent of GDP. This is high, but not as high as most other comparable nations. The debt would have been much worse but for the strong rebound in company profits and a surging iron ore price.

While the Budget defers harsh austerity measures so as to safeguard an economic recovery that is clearly underway, it does so for an obvious political reason as well. As the Australian editorialises:

Mr Frydenberg’s feat in bringing us through the economic fallout of COVID has been herculean. But in what is clearly an election budget, he and the Prime Minister have revealed a strong appetite for spending at levels that will not be sustainable long term.

Aged Care

The aged care component of the 2021-22 Federal Budget represents the Morrison Government’s fiscal response to the recent Royal Commission into Aged Care Quality and Safety. (The Government’s response to the Commission’s specific recommendations can be found here: https://www.health.gov.au/resources/publications/australian-government-response-to-the-final-report-of-the-royal-commission-into-aged-care-quality-and-safety)

Over five years, the Commonwealth will invest 17.7 billion in additional aged care funding to address issues identified by the Royal Commissioners. This commitment is divided into five pillars.

Pillar 1 – Home Care: $7.5 billion towards supporting senior Australians who choose to remain in their home, including:

  • $6.5 billion for an additional 80,000 Home Care Packages – 40,000 released in 2021– 22 and 40,000 in 2022–23, which will make a total of 275,598 packages available to senior Australians by June 2023;
  • $10.8 million to design and plan a new support in home care program which better meets the needs of senior Australians;
  • $798.3 million to support the 1.6 million informal carers, including additional respite services for 8,400 senior Australians each year; and
  • $272.5 million for enhanced support and face-to-face services to assist senior Australians accessing and navigating the aged care system.

Pillar 2 – residential aged care services and sustainability: $7.8 billion towards improving and simplifying residential aged care services and to ensure senior Australians can access value for money services, including:

  • $3.9 billion to increase the amount of front line care (care minutes) delivered to residents of aged care and respite services, mandated at 200 minutes per day, including 40 minutes with a registered nurse;
  • $3.2 billion to support aged care providers to deliver better care and services through a new Government funded Basic Daily Fee Supplement of $10 per resident per day;
  • $102.1 million to assign residential aged care places directly to senior Australians, and to support providers to adjust to a more competitive market;
  • $49.1 million to expand the Independent Hospital Pricing Authority to help ensure that aged care costs are directly related to the care provided;
  • $189.3 million for a new Australian National Aged Care Classification to deliver a fairer and more sustainable funding arrangements; and
  • $5.5 million to reform residential aged care design and planning to better meet the needs of senior Australians, particularly those living with dementia.

Pillar 3 of the Royal Commission Response – residential aged care quality and safety: $942 million to drive systemic improvements to residential aged care quality and safety, including:

  • $365.7 million to improve access to primary care for senior Australians, including the transition of senior Australians between aged care and health care setting and improved medication management;
  • $262.5 million to ensure the independent regulator, the Aged Care Quality and Safety Commission (ACQSC), is well-equipped to safeguard the quality, safety and integrity of aged care services, and can effectively address failures in care;
  • $7.3 million for additional resources to build capacity within residential aged care for the care of senior Australians living with dementia;
  • $67.5 million for the Dementia Behaviour Management Advisory Service and the Severe Behaviour Response Teams to further reduce reliance on physical and chemical restraint (restrictive practices); and
  • $200.1 million to introduce a new star rating system to highlight the quality of aged care services, and better informing senior Australians, their families and carers.

Pillar 4 of the Royal Commission Response – Workforce: $652.1 million to grow a skilled, professional and compassionate aged care workforce, including:

  • $228.2 million to create a single assessment workforce to undertake all assessments that will improve and simplify the assessment experience for senior Australians as they enter or progress within the aged care system;
  • $135.6 million to provide eligible registered nurses with financial support of $3,700 for full-time workers, and $2,700 for part-time workers;
  • $9.8 million to extend the national recruitment campaign, and to help increase the skilled and dedicated aged care workforce; and
  • upskill the existing workforce and providing training for thousands of new aged care workers, including 33,800 subsidised Vocational Education and Training places through JobTrainer.

Pillar 5 of the Royal Commission Response – Governance: $698.3 million to improve the governance across the aged care system. This aims to embed respect, care and dignity at the heart of the system, guaranteeing better choice, high quality and safe care for senior Australians, including:

  • $21.1 million to establish new governance and advisory structures, including a National Aged Care Advisory Council and a Council of Elders, and working towards establishing a new Inspector-General of Aged Care;
  • $630.2 million to improve access to quality aged care services for consumers in regional, rural and remote areas including those with First Nations backgrounds and special needs groups;
  • $13.4 million to improve rural and regional stewardship of aged care, with Department of Health aged care officers embedded within eight of the 31 Primary Health Network regions; and
  • The drafting of a new Aged Care Act to enshrine the Government’s reforms in legislation by mid-2023.

Mental Health and Suicide Prevention

The Morrison Government has committed $2.3 billion in funding over four years to the National Mental Health and Suicide Prevention Plan.

This reflects the first phase of its response to the findings of the Productivity Commission’s Inquiry into Mental Health and the National Suicide Prevention Advisor’s Final Report. Importantly, the Government has accepted all recommendations of both reports in full, in part or in principle.

Similar to aged care, the Government’s mental health and suicide prevention response is divided into 5 pillars.

Pillar 1 – Prevention and Early Intervention: $248.6 million over four years, including:

  • $111.2 million for new and existing digital services, including the creation of a single digital platform for online professional counselling, peer support, clinical support and referrals;
  • $47.4 million to support the mental health of new and expectant parents, including universal perinatal mental health screening across antenatal and postnatal care settings;
  • $77.1 million to support early resolution of legal problems for those experiencing mental illness, and for mental health workers in Domestic Violence Units and Health Justice Partnerships to support women who have experienced family violence;
  • $6.3 million to increase mental health support services for fly-in fly-out and drive-in drive-out workers;
  • $5.7 million to build on the Individual Placement and Support (IPS) program to assist people with mental illness to participate in the workforce; and
  • $0.9 million to continue the Ahead for Business digital hub, supporting small business owners to take proactive, preventive and early steps to improve their mental health.

Pillar 2 – Suicide Prevention: $298.1 million over four years to move towards zero suicides, including:

  • $158.6 million to fund aftercare for every Australian discharged from hospital following a suicide attempt;
  • $12.8 million for a National Suicide Prevention Office to oversee the national whole-of-government approach to suicide prevention;
  • $12 million to continue the delivery of local suicide prevention initiatives across Australia through the former National Suicide Prevention Trial sites;
  • $22 million to provide national suicide postvention services which help those bereaved or impacted by suicide, including families, friends, workplaces, schools, community groups, frontline responders and witnesses, and
  • $31.2 million to pilot, in partnership with the states and territories, a national Distress Intervention program which will reach people in crisis earlier and provide immediate support.

Pillar 3 – Treatment: $1.4 billion to improve and expand mental health treatment, including:

  • $487.2 million to fund establishment of eight new Head to Health centres, 24 new satellite centres and a dedicated phone service to support intake, assessment and referral;
  • $278.6 million to establish 10 new headspace centres, upgrade 5 satellite services and boost clinical capacity at existing headspace services;
  • $54.2 million to establish up to 15 new Health to Health mental health and wellbeing centres for children aged 0-12 years;
  • $26.9 million for a range of measures to provide additional support for people with eating disorders and their families;
  • $171.3 million over two years to continue psychosocial support for people with severe mental illness who do not qualify for the NDIS;
  • $111.4 million to support the take up of group therapy sessions and participation of family and carers in treatment provided under the Better Access initiative;

Pillar 4 – Supporting the vulnerable: $107 million to support vulnerable groups, including:

  • $79 million to implement key initiatives under a renewed National Aboriginal and Torres Strait Islander Suicide Prevention Strategy;
  • $16.9 million to fund mental health early intervention supports and preventive measures for migrants and multicultural communities, and address the cultural competence of the broader health workforce; and
  • $11.1 million to improve the experience of, and outcomes for, people with complex mental health needs through a range of targeted initiatives.

Pillar 5 – Workforce and governance: $202 million to ensure the mental health system has the capacity and capability to provide quality care, including:

  • $58.8 million for a range of measures to grow the mental health workforce, including funding for up to 280 scholarships and 350 clinical placement sin mental health settings;
  •  $15.9 million to support GPs and other medical practitioners to provide primary mental health care;
  • $2.6 million to provide tailored mental health supports to health practitioners and reduce stigma associated with health practitioners seeking support for their own mental health;
  • $0.3 million to engage with mental health stakeholders to investigate and co-design future national peak body arrangements to provide consumers and carers with a greater say in the future of the mental health system; and
  • $117.2 million to establish an evidence-base to support real time monitoring and data collection for our mental health and suicide prevention systems.


The Budget delivers additional funding of $13.2 billion over four years to ensure the short to medium term viability of the National Disability Insurance Scheme (NDIS), but all indications to date are that the Morrison Government is looking to rein in the scheme’s costs, which are significantly higher than forecast.

The NDIS will increase in real terms by 1.4 per cent from 2020-21 to 2021-22, while from 2021-22 to 2024-25 it will jump by 3 per cent. These increases largely reflect a higher number of people with a disability entering the scheme and associated increases in individual support costs, which contributes 12.1 per cent growth in real terms from 2020-21 to 2021-22, and 10.5 per cent growth in real terms from 2021-22 to 2024-25 for the NDIS.

There are also emerging workforce pressures, with the NDIS needing an additional 83,000 disability workers by 2024, at exactly the same time as the aged care sector is seeking an additional 57,000 workers.

To address this problem, the Morrison Government has announced funding of $12.3 million over two years to maximise the pool of workers in the care and support industry by aligning employment requirements across the aged care, disability and veterans’ sectors. The measure will reduce red tape for service providers and make it easier for workers to work across the three fields.

A single code of conduct and improved information sharing will mean workers need to meet the same standard of behaviour irrespective of who they are caring for and be held accountable across the entire industry.

OTA is sure that OTs, perennially burdened by red tape and the duplication of administrative requirements, will welcome this initiative.

Department of Veterans’ Affairs

OTA is delighted to report that, after many years of advocacy, we have helped secure an increase in the fees paid to OTs by the Department of Veterans’ Affairs (DVA).

From July 1 this year, the fees paid to OTs and podiatrists will rise by 27 per cent. Over the next four years, this amounts to additional spending of $61.9 million. This will make veterans work more sustainable and will hopefully enable the continuation of longstanding clinical relationships between experienced OTs and their often highly complex clients.

Other budgetary initiatives include funding of $55.1 million to progress Veteran Centric Reform, $16.9 million to support veteran wellbeing through early access to medical treatment, $4.7 million for veteran advocacy services, and $5.1 million for enhanced family support packages

Rural Health

For the first time, the Commonwealth Government will implement a progressive incentive schedule, which increases bulk billing payments for doctors based on remoteness. Scaling the Rural Bulk Billing Incentive aims to better recognise that doctors in rural and remote areas face higher operating costs, smaller patient populations, increased complexity in patient care, and carry a greater burden of responsibility for the healthcare needs of people living in these communities.

The Morrison Government will also directly invest $123 million in the rural health workforce and training to improve access to health in areas outside major cities and to increase the opportunities for a rewarding career in rural, regional and remote communities. Key investments in rural and regional health are:

  • $65.8 million to increase the Rural Bulk Billing Incentive for doctors working in rural towns and remote areas;
  • $12.4 million to expand opportunities for early-career doctors to work in rural communities while they complete their medical training through the new John Flynn Prevocational Doctor Program;
  • $0.3 million to develop a new model and streamline the Rural Procedural Grants Program and the Practice Incentives Program procedural GP payments into a new rural generalist GP support program for GPs with advanced skills;
  • $9.6 million to add 90 workplace training packages through the Allied Health Rural Generalist Pathway, with 30 allocated to Aboriginal Community Controlled Heath Organisations, and to introduce 30 new Allied Health Assistant packages;
  • $29.5 million to establish an innovative funding pool for non-GP medical specialist training from 1 January 2022; and
  • $1.8 million to expand the trial of collaborative primary care models that has been running in five rural communities in western and southern NSW into other states and territories.

Primary Health

The Morrison Government will make an additional investment of $1.8 billion in primary health care, including initiatives across the aged care and mental health pillars, as well as the continuation of its response to the COVID-19 pandemic. This includes funding of $204.6 million to extend telehealth, bringing total investment to date to $3.6 billion, $87.5 million for the extended operation of up to 150 GPRCs, both through to 31 December 2021, and the $1.9 billion commitment towards the COVID-19 vaccination rollout.

Key measures in this Budget include:

  • $107.9 million for a new National Partnership Agreement (NPA) for Adult Dental Services, helping states and territories provide public dental services and $7.3 million for an extension of the Child Dental Benefits Schedule (CDBS) to children 2 years and younger;
  • $71.9 million providing an additional 12 months’ funding for the PHN’s After Hours Program;
  • $2.5 million for workforce credentialing to guarantee access to high quality, Medicare subsidised care for people with an eating disorder, as part of a $26.9 million investment in addressing eating disorders;
  • $50.7 million to continue to develop an ICT system that will enable a Voluntary Patient Registration Initiative, to be known as MyGP, which will lift the quality of services delivered to Australian patients through continuity of care;
  • $301.8 million towards the next wave of My Health Record (MHR) capitalising on the connections already in place and ensuring more coordinated healthcare; and
  • $32.3 million for continued funding for the 2018–2022 Intergovernmental Agreement on National Digital Health, ensuring interoperability within Australia’s national digital health infrastructure.

In response to the Aged Care Royal Commission, the Federal Government will invest $365.7 million to improve access to primary care for senior Australians and to better support their transition between the aged care and health care systems. This investment includes:

  • $68.1 million to double the maximum yearly incentive payment for face-to-face services by GPs within residential aged care facilities, through the Aged Care Access Incentive;
  • $36.5 million to continue the Greater Choice for At Home Palliative Care initiative in all 31 PHNs; and
  • $202.3 million for Primary Health Networks to support the health of senior Australians, including telehealth, out of hours support, and dementia pathways to support assessment and referral.

The National Mental Health and Suicide Prevention Plan includes significant investments in primary health including:

  • $1.4 billion in high quality and person-centred treatment, which includes the development of a national network of mental health treatments centres for adults, youth and children through the Head to Health and headspace programs;
  • $34.2 million to support GPs in their role as a key entry point into the mental health system by expanding and implementing the Initial Assessment and Referral (IAR) tool in primary care settings;
  • $27.8 million to grow the mental health workforce, including nurses, psychologists, allied health practitioners, psychiatrists, Aboriginal and Torres Strait Islander mental health workforce, mental health peer workforce, practitioners in aged care, and promoting mental health as a career option within the health workforce; and
  • $15.9 million to support GPs and other medical practitioners to provide primary mental health care.

Funding of $63.3 million will prioritise Aboriginal and Torres Strait Islander health and ageing outcomes. In addition to investments in aged care and mental health, the Government is committing:

  • $22.6 million to reform the Practice Incentives Program – Indigenous Health Incentive, encouraging continuity of care and extending the program to children under 15 years and for GP mental health care plans;
  • $12 million for the Rheumatic Fever Strategy to protect against these entirely preventable illnesses – acute rheumatic fever and rheumatic heart disease;
  • $19.1 million to continue to improve Australia’s trachoma elimination program, supporting the elimination of this blindness-causing infection in 2022; and
  • 30 workplace training packages will be allocated to Aboriginal Community Controlled Heath Organisations, out of 90 places worth $9.6 million, through the Allied Health Rural Generalist Pathway.

Preventative Health

The 2021-22 Federal Budget commits $250.9 million over four years to a range of early intervention and preventative health measures aimed at increasing life expectancy and quality of life for Australians across the lifespan.

These measures are to align closely with the Government’s National Preventative Health Strategy 2021-2030, which is expected to be completed this year.

Key investments include:

  • $1.9 million to kick-start immediate priorities outlined in the National Preventive Health Strategy 2021-2030, once finalised;
  • $125.9 million to improve cancer screening, including $6.9 million towards five lung cancer care nurses, $32.8 million to support cervical screening programs and $67.6 million to the BreastScreen Australia program;
  • $16.8 million to maintain funding for drug and alcohol treatment services, including residential rehabilitation services treating clients with severe substance use disorders;
  • $1.5 million to support the Hello Sunday Morning Daybreak Program, available online or via mobile app, to help Australians who want to change their relationship with alcohol; and
  • $49.9 million for additional alcohol and other drug treatment services to Cashless Debit Card participants and their communities.

Hospitals and Private Health Insurance

The 2021-22 Federal Budget commits $135.4 billion over five years in public hospitals, including

funding under the 2020–25 National Health Reform Agreement (NHRA) and the National Partnership

on COVID-19.

The Government is also investing $8.7 million over 4 years to fund a range of measures to make private health insurance (PHI) more sustainable and affordable. In particular, the current policy settings for the Medicare Levy Surcharge and PHI Rebate income tiers will continue for a further two years to allow an in-depth study of the effectiveness of current regulatory settings.

Other key investments include:

  • $22 million to improve and modernise the PHI Prostheses List and reduce medical device costs to make PHI more affordable for patients; and
  • $5.1 million to introduce an improved certification process when admitting patients to hospital for services normally delivered out of hospital. This is to ensure hospital costs are funded for those services which will deliver better patient health outcomes.

Medicare Benefits Schedule

The 2021-22 Federal Budget invests $125.7 billion over four years, an increase of more than $6 billion since last year’s Budget, in Medicare, including funding of $29.7 billion in 2021–22, and $30.5 billion in 2022–23, $32 billion in 2023–24 and $33.5 billion in 2024–25.

This includes $711.7 million to funding new and amended items on the Medicare Benefits Schedule (MBS). Those items most relevant to occupational therapists include:

  • $111.4 million to support the take up of group therapy sessions and participation of family and carers in treatment provided under the Better Access initiative; and
  • $14.2 million for new MBS items for allied health professionals who participate in case conferences which are organised by a patient's GP. This measure is expected to support increased allied health participation in multidisciplinary, coordinated care for patients with chronic and complex conditions.

OTA members will welcome these last two initiatives.

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