This document discusses the sustainability of health spending and revenues for the Australian central government in the long term. Chart 1 shows projections of the fiscal position over time, with the primary balance and net interest expected to decline but remain in deficit by 2060-61. Chart 2 shows that health spending projections as a percentage of GDP have increased across intergenerational reports and are expected to continue rising. Chart 4 specifically focuses on rising health spending projections over time. The document raises the question of whether these spending levels can be sustained by the tax system into the future.

1. Will health spending and revenues be
sustainable in the long-term?
Matt Crooke
Assistant Secretary
Commonwealth-State Relations Branch
Australian Treasury

2. Chart 1: Central Government – Fiscal Position
-10
-8
-6
-4
-2
0
2
-10
-8
-6
-4
-2
0
2
2000-01 2010-11 2020-21 2030-31 2040-41 2050-51 2060-61
% of GDP
% of GDP
Underlying cash balance
Primary balance
Net interest

3. Chart 2: Central Government - spending across
intergenerational reports
15
20
25
30
35
15
20
25
30
35
2000-01 2010-11 2020-21 2030-31 2040-41 2050-51 2060-61
% of GDP
% of GDP
2002 IGR
2007 IGR
2010 IGR
2015 IGR
2021 IGR

4. Chart 3: Central Government – composition of
spending over time
0
1
2
3
4
5
6
7
0
1
2
3
4
5
6
7
Health Payments to
individuals
(excl. Age
Pension)
Age and
Service
pensions
Defence Education Aged care NDIS Infrastructure Interest
payments
Other
payments
(excl NDIS
state and
GST)
% of GDP
% of GDP
2021-22
2060-61

5. Chart 4: Central Government - Health spending
projections across intergenerational reports
3
4
5
6
7
8
9
3
4
5
6
7
8
9
2000-01 2010-11 2020-21 2030-31 2040-41 2050-51 2060-61
% of GDP
% of GDP
2002 IGR
2007 IGR
2010 IGR
2015 IGR
2021 IGR

6. Chart 5: Central Government – composition of tax
receipts
0
5
10
15
20
25
0
5
10
15
20
25
1900-01 1920-21 1940-41 1960-61 1980-81 2000-01 2020-21 2040-41 2060-61
% of GDP
% of GDP
Income tax
Personal
income tax
Company and
other income
taxes
Sales taxes
excl. GST
GST
Other indirect taxes
Tax-to-GDP averages 23.9 per cent

7. Chart 6: Central Government - Average PIT rates
18
19
20
21
22
23
24
25
26
27
28
18
19
20
21
22
23
24
25
26
27
28
1990-91 1995-96 2000-01 2005-06 2010-11 2015-16 2020-21 2025-26 2030-31 2035-36
%
%
Average personal
income tax rate
Tax receipts
(per cent of GDP)
Tax-to-GDP cap
Tax cuts
Tax cuts
Tax cuts

8. Will health spending and revenues be
sustainable in the long-term?
Matt Crooke
Assistant Secretary
Commonwealth-State Relations Branch
Australian Treasury