Government spending on health relative to government expenses

The ratio of government health spending to total government expenses provides a broad indication of the amount of government financial resources being dedicated to health over time, how this compares with other sectors and how the mix of revenue sources being used to fund health is changing. In this context, comparisons to total government spending represents total government resourcing in terms of both tax revenue and other sources, including borrowing.

In 2022–23, government health spending was $178.7 billion, which accounted for 17.1% of total government expenses, approximately 0.1 percentage points lower than 2021–22 (Figure 7). This indicates that growth in government health spending was slower than other areas of government expenses (1.5% compared with 2.5% over 2022–23, in nominal terms).

Figure 7: Ratios of government health spending to government expenses, current prices, 2012–13 to 2022–23

The line graph shows that total government health spending, and government expenses increased from 2012–13 to 2022–23. Total government health spending increased from $100.1 billion in 2012–13 to $178.7 billion in 2022–23. In addition, total government expenses were higher than total government health spending and increased from $621.6 billion in 2012–13 to $1,046.6 billion in 2022–23. During this period, total government health spending to government expenses ratio ranged from 16.1 per cent to 17.1 per cent.

The line graph shows that total government health spending, and government expenses increased from 2012–13 to 2022–23. Total government health spending increased from $100.1 billion in 2012–13 to $178.7 billion in 2022–23. In addition, total government expenses were higher than total government health spending and increased from $621.6 billion in 2012–13 to $1,046.6 billion in 2022–23. During this period, total government health spending to government expenses ratio ranged from 16.1 per cent to 17.1 per cent.

Note: Government expenses include the total expenses of Commonwealth government, state governments and local governments.

Sources: AIHW Health Expenditure Database; Australian Bureau of Statistics (ABS 2024b) (Table 9).

More on the relationship between tax revenue and government expenses can be found in the box below.

Government expenses

Taxation revenue is a major source of income used by governments to fund expenses. However, tax revenue is not the only way that governments fund public expenses, including health spending. Government expenses can also be funded through borrowing and other forms of revenue generation, such as licence fees, charges for goods and services, fines and return on government assets.

The Australian Government raises revenue through taxing individuals and businesses, including through:

  • personal income tax
  • goods and services tax (GST), for which all revenue is distributed to states and territories
  • company tax.

State and territory governments receive funds from the Australian Government, but also collect taxes, such as stamp duty on the purchase of a house or taxes on payrolls.

Apart from health spending, other purposes of government expenses include social protection, general public services, economic affairs, defence, education, public order and safety, environmental protection, recreation, culture and religion, and transport (see ABS 2023c).

 

ABS (Australian Bureau of Statistics) 2023c, Australian national accounts: national income, expenditure and product, December 2023. ABS cat. no. 5206.0. Canberra: ABS.

ABS (Australian Bureau of Statistics) 2024b, Government Finance Statistics, Annual, 2022-23 financial year, April 2024. ABS cat. no. 5512.0. Canberra: ABS.

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