Information about the estimates
The health spending presented in this report represent the best estimates based on the available data and methodology used. Results are based on the HED finalised as at 28 September 2022.
Constant prices are used to present spending estimates in this report, unless otherwise indicated. Constant price estimates in this report are based on 2020–21 prices. Current prices represent the dollar amount spent in the year referred to.
Presentation of the dollar value of spending estimates
Spending at current prices refers to spending not adjusted for movements in prices (inflation) from one year to another and therefore represents the dollar amount spent in that year.
Comparisons over time using figures expressed in current prices can be misleading due to the effect of inflation and changing value of money. For example, $1 billion spent in 2010–11 bought more health goods and services than $1 billion spent in 2020–21.
Changes from year to year in the estimates of spending at current prices are referred to as ‘nominal growth’. These changes come about because of the combined effects of inflation and increases in the volume of health goods and services consumed.
Constant prices account for inflation by removing the effect of changes in prices over time. This means spending can be compared over different time periods. Constant price estimates indicate what spending would have been had the same prices applied across all years.
The process of generating constant prices is known as ‘deflating’ and price indexes (deflators) are used to calculate comparative prices. The result is a series of annual estimates of spending expressed in terms of the value of currency in a selected reference year. The reference year used in this report is 2020–21. More information on the price deflators used in this report can be found in the 'Concepts and definitions' section of this report.
Growth in spending, expressed in constant prices, is referred to as ‘real growth’ or ‘growth in real terms’ and represents changes in the real value of the amount of money spent in a given year.
Types of spending
Spending can be broadly categorised as being recurrent or capital. Recurrent health spending is on goods and services consumed. In contrast, capital expenditure relates to spending on infrastructure such as buildings and medical equipment.
Recurrent spending is generally on goods and services consumed within a year that does not result in creating or acquiring fixed assets. Recurrent health spending includes: health goods (such as medications and health aids and appliances); health services (such as hospital, dental and medical services); public health activities; and other activities that support health systems (such as research and administration).
Capital consumption or depreciation is included as part of recurrent spending.
Capital spending is on fixed assets like new buildings (such as hospitals) or medical equipment (such as CT scanners). It represents the cost of resources that last more than a year.