Statement 1: Budget Overview
Positioning for the recovery — delivering world‑class universities, research and hospitals
To complement investment in infrastructure and improve long‑term productive capacity, the Government is building world‑class higher education and hospital systems, and investing in innovation. The Government will also establish a historic Paid Parental Leave scheme to boost participation in the future. These investments form part of the building blocks for economic recovery.
Education — planting the seeds of future growth
This Budget continues the Government's drive for a world‑class education system. The Government is investing $2.1 billion in higher education over five years and additional funding from future Education Investment Fund (EIF) funding round in education and training to build the productive and skilled workforce of tomorrow. The structure of the Government's reform package flows from the Review of Australia's Higher Education System (the Bradley Review) commissioned by the Government last year.
A new approach is needed for higher education for the 21st century, one based on acknowledging the central importance of students. Current rigidities limit the capacity of universities to respond to changes in student preferences and demand, causing potential students to miss out on critical opportunities to build their skills and contribute to the development of a modern economy and a highly skilled workforce.
The Government is committed to ensuring all Australians have an opportunity to participate in tertiary education, especially in these tough economic times. As part of this commitment, the Government will invest $491 million over four years to uncap the number of public university places from 2012, allowing universities to offer a place to all eligible students. This will allow an extra 50,000 students to commence studies over the next four years and help achieve the Government's ambition that 40 per cent of all 25 to 34‑year‑olds attain a bachelor level qualification or above by 2025. These additional places will boost the overall skill level of the workforce and will assist in equipping students to become effective participants in the labour market of tomorrow.
Education is a key building block for future growth. That is why the Government is investing $578 million over three years to increase the rate of indexation for higher education funding. The higher rate of indexation will be phased in from 2011.
This change will improve funding across learning, teaching and research, reduce pressure to cross‑subsidise courses and help Australia compete in an increasingly international market for higher education.
To ensure universities maintain high standards within the new system, a more robust quality assurance process, overseen by a new independent national regulatory body, will be introduced. The Tertiary Education Quality and Standards Agency (TEQSA) will accredit providers, carry out audits of standards and performance, protect and quality assure international education and streamline current regulatory arrangements to provide national consistency.
The Bradley Review identified a further two areas for improvement in the higher education system: low participation and completion rates by all students; and low enrolment rates of people from disadvantaged backgrounds. The Government is putting in place measures to overcome these issues.
The Government will vigorously pursue the ambition that, by 2020, 20 per cent of higher education enrolments at undergraduate level should be of people from low socio‑economic backgrounds. To help achieve this, the Government is investing $394 million over four years in a two‑pronged strategy to encourage universities to take a greater leadership role in promoting the benefits of higher education to all groups in society.
- A new financial loading will be provided as a reward for institutions to attract and retain low socio‑economic status students.
- Universities will be given funding to build long‑term partnerships with schools and communities in disadvantaged areas to lift the aspirations of students who would never previously have considered university as an option. This complements the Government's investment in low socio‑economic schools.
To further support participation in higher education, particularly amongst low socio‑economic students, the Government will reform the student income support system to improve targeting and boost the level of assistance to those most in need.
The Government has taken the tough decision to tighten the definition of independence to ensure that only students who have worked full‑time (at least 30 hours a week) for at least 18 months in the last two years can qualify for Youth Allowance through independence prior to turning 22 years of age.
The savings realised from tightening the independence test will be reinvested to provide greater levels of support and more generous means testing arrangements for lower income students, including relaxing the Parental Income Test for Youth Allowance and ABSTUDY to more closely align with the Family Tax Benefit Part A income test, introducing the Student Start‑up Scholarship, worth $2,254 per annum, and a more generous Personal Income Test to allow student income support recipients to earn more before their payments are reduced.
To improve standards and outcomes across all universities, the Government will invest $206 million over two years to introduce performance funding. The Government will set agreed performance outcomes across teaching quality, participation, student engagement, and completion rates, with reward funding attached to the targets. TEQSA will provide an independent assessment of whether the agreed performance targets have been met. This approach will encourage innovative institution‑led solutions, as the onus is on institutions to develop their own plans to meet the agreed outcomes.
To support the increased investment in teaching and learning, the Government is rolling out the second EIF funding round. The Government is concentrating EIF round two funding on education and training infrastructure which supports the Government's response to the Bradley Review and ensures the university and vocational education and training sectors have 21st century facilities.
The Government is committing $613 million to fund 11 higher education and 12 vocational education and training projects as part of the second EIF funding round. In addition, the Government will provide $750 million over four years to conduct future EIF funding rounds of which $250 million will be partnered with up to $400 million allocated under the Clean Energy Initiative to form a $650 million sustainability round. $200 million of round three funding will be allocated to projects which assist universities to adjust to the reforms in the higher education sector.
This infrastructure spending builds on the significant capital investment the Government has already made in the university sector, including $500 million for the Better Universities Renewal Fund in the 2008‑09 Budget, the $500 million Teaching and Learning Capital Fund for higher education as part of the 2008 Nation Building Package and $580 million to fund 11 projects for the first EIF funding round.
Reaching our innovation potential
Innovation is critical to Australia's growth and its ability to confront both current and emerging economic, social and environmental challenges. By supporting innovation, the Government will not only create conditions to support long‑term growth and jobs but also prepare Australia for a faster and more prosperous recovery from the global financial crisis.
Recognising the importance of a strong innovation system to future productivity and jobs, Dr Terry Cutler led an expert panel reviewing Australia's national innovation system. The panel's report, Venturous Australia, provided valuable insights into the limitations of the current system and provided the basis for the Government's long‑term vision to increase Australia's innovation capacity.
In March 2009, the Government signalled its ambitious long‑term innovation agenda in announcing aspirational targets to increase Australia's innovation performance. By 2020, the Government seeks to double the level of collaboration between Australian businesses, universities, and publicly‑funded research agencies; increase by 25 per cent the proportion of businesses engaging in innovation over the next decade; and progressively increase the number of research groups performing at world‑class levels.
This vision complements the Government's reforms in response to the Bradley Review of Australian Higher Education, reflecting the importance of university research in the innovation system. To ensure that our universities have a better chance to perform at world‑class levels, the Government is introducing initiatives aimed at improving research quality. The Government will provide an additional $512 million over four years to support universities fund the indirect costs of research, which will reduce the need for universities to cross‑subsidise research costs from teaching and learning. The Government is also implementing the Excellence in Research for Australia initiative to improve the measurement of research standards of universities.
In addition, the Government will introduce reforms through the Joint Research Engagement program to encourage greater research collaboration between universities, industry and end‑users.
In recognition of the importance of infrastructure to our innovation effort, the Government will provide $1.2 billion from the EIF for 30 priority research infrastructure projects. Funding is for immediate‑start projects that have been identified as vital to building Australia's research capability.
Investing now will equip the researchers and industries of tomorrow, and is therefore critical to the Government's vision of an internationally competitive and prosperous nation. The Government's investment includes $901 million for the Super Science Initiative, which will build Australia's capacity in key areas including space science and astronomy, marine and climate science and future industries (nanotechnology and life sciences), and $322 million for eight research projects through the second round of the EIF. Together with infrastructure initiatives in higher education, vocational education and training and clean energy, this takes the Government's investment in infrastructure from the EIF in this Budget to $3 billion.
The 2009‑10 Budget also includes funding of $500 million over four years to encourage the commercialisation of ideas, improve the incentives for business research and development and collaboration, and provide for key enabling technologies. The Government will provide $196 million over four years to establish the Commonwealth Commercialisation Institute, which will bring together research, business and finance in the Australian economy. The Institute aims to address the disparity between our strong research performance and the comparatively low level of commercialisation.
The Government will replace the current research and development tax concessions with an expanded tax credit from 1 July 2010 that improves support for smaller firms in tax loss as well as rewarding larger firms for their research and development efforts. The new research and development tax credit will feature a 45 per cent refundable credit for firms with an annual turnover of less than $20 million — equivalent to a tax concession of 150 per cent.
The Government is also developing a National Enabling Technologies Strategy to ensure our researchers are equipped with world‑class analytical tools and measurement capability. This will be achieved by establishing a National Office of Enabling Technology and building the capacity and expertise of the National Measurement Institute.
Health and hospitals investment and better access for Australians
This Budget continues the Government's commitment to a world‑class health and hospital system by providing increased funding for public hospitals, investment in the health workforce and infrastructure, investment in prevention, as well as reforms to deliver better services and more choice for patients across Australia.
In November 2008, COAG agreed to a historic package of reforms to the health and hospital system, announcing that the Government will provide $64 billion in funding over five years for the health system, an increase of over $20 billion compared to the previous Australian Health Care Agreements.
As part of this commitment, the Government will provide $2.5 billion over five years to drive hospital and health workforce reform with the States and Territories. This funding will be used to address the capacity and productivity of the health workforce, improve health outcomes for Australians and ensure the sustainability of the health system.
In addition to an increased commitment to public hospitals, the Government established the Health and Hospitals Fund (HHF) in the 2008‑09 Budget for capital investment in health infrastructure, including renewal and refurbishment of hospitals and other facilities, equipment and projects. This arrangement was put in place to ensure that substantial funding was available for capital investment to support the Government's health reform agenda.
The Government will make significant investments from the HHF in this Budget. Funding from the HHF will support stimulus activity, most notably through increased employment, improve our health infrastructure and lead to improved health outcomes.
The Government is concentrating HHF funding totalling $3.2 billion on three reform priorities.
First, the Government will expand and modernise key public hospital infrastructure across Australia to improve hospital care by increasing elective surgery capacity, enhancing sub‑acute care services and improving emergency department facilities. The Government will invest a total of $1.5 billion over seven years in public hospital infrastructure, building on the investment in Australian health services and hospitals agreed by COAG on 28 November 2008.
Second, the Government is investing $1.3 billion over six years in infrastructure funding to modernise cancer services and improve detection, survival and treatment outcomes for people living with cancer. This will include a major investment in regional, rural and remote areas which suffer from significantly poorer cancer outcomes. This package will support a nationally consistent approach to cancer service delivery.
Lastly, recognising the importance of collaboration between research and health professionals in improving disease prevention and delivering best‑practice health care, the Government will invest $430 million over six years in translational research infrastructure. Funding will support cooperative research practices by providing new medical research infrastructure in areas including Indigenous health, child health, heart disease, mental health and neurological disorders.
The Government also understands that maternity services in Australia are under growing pressure as the number of births continues to rise and workforce shortages worsen and that many Australian women are frustrated at the limited choices available to them for their maternity care. Limited access to maternity services in rural and remote communities is also a growing concern. To address these issues, the Government is investing $121 million over four years to reform maternity services to increase access for women and their babies to collaborative models of care and to involve midwives in a more substantive role. This package makes it possible for the Government to make better use of the maternity workforce, ensuring that the right professionals can provide the right care at the right time in the right place.
Rural Australia will receive better access to primary health services with the Government's investment of $134 million over four years for a new rural health workforce strategy. This is designed to address workforce shortages in regional and remote Australia and improve access to primary health care services for people living in these communities. An important component of the new strategy is replacing the outdated Rural, Remote, Metropolitan Areas system, which was based on 1991 population data, with a new classification system that uses 2006 Census data to reflect changes in Australia's population and demographic make‑up. The initiatives being rolled out under this strategy will help attract and retain medical practitioners in areas of need, including via more targeted incentives and support such as expanded locum relief.
In a move to strengthen and improve the health workforce, the Government will also provide $60 million over four years from November 2010 to enable nurse practitioners to access the Medicare Benefits and Pharmaceutical Benefits Schedules. This will establish an appropriate role for nurse practitioners outside acute care, and will allow doctors to focus on tasks requiring their particular skills and expertise.
The Government is committed to ensuring that all Australians are able to access modern health services, no matter where they live. Diagnostic imaging and pathology are two such services, and the Government is tailoring funding for these services to better support access through new bulk‑billing incentives costing $948 million over four years. These incentives will support providers who bulk‑bill patients, many of whom operate in low socio‑economic and rural areas, thereby improving access and supporting affordability for all Australians.
Addressing excessive fees under the Extended Medicare Safety Net
Funding for new health initiatives in this Budget has been made possible by addressing some excessive cost pressures in the Extended Medicare Safety Net (EMSN). Action in this area complements the Government's reforms of private health insurance and the Medicare levy surcharge.
The Government is committed to retaining the EMSN. This demands that the safety net remain sustainable. There is evidence to suggest that excessive growth of fees for obstetrics and other services, such as Assisted Reproductive Technology (ART), hair transplants and varicose veins is putting this sustainability at risk. The Government is therefore moving to contain expenditure by capping the EMSN benefits payable once a patient has met the relevant EMSN threshold for these and other selected items from 1 January 2010.
The current EMSN meets 80 per cent of the out‑of‑pocket costs for out‑of‑hospital Medicare services once an annual threshold is met. This is regardless of how much the doctor charges. In 2007 it is estimated that up to 78 per cent of EMSN spending went to meeting providers' higher fees, rather than reducing patients' out‑of‑pocket costs. EMSN expenditure on the items to be capped has grown at an average rate of approximately 50 per cent for the past two years.
The new EMSN caps will apply on all related items, including pregnancy‑related scans for example, to ensure that specialists do not shift their high fees to items that are not covered by a cap. In conjunction with the introduction of the cap, the Government will increase Medicare Benefits Schedule items for obstetrics to reduce the incentive to charge excessive fees. The cap per Medicare Benefits Schedule item will be set at different levels depending on the schedule fee of the item. Cap amounts will be indexed on 1 January by the Consumer Price Index, consistent with safety net thresholds. Should a patient claim an item more than once in a calendar year (for example, ante natal attendance), she would be eligible for the same maximum EMSN benefit each time she claimed the item.
By addressing the sustainability of the EMSN so that it can continue to help those who need it most, the Government will deliver savings of $452 million over four years.
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