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 2021–22, government health spending was $176.0 billion, which accounted for 17.2% of total government expenses, approximately 1.8 percentage points higher than 2020–21 (Figure 7). This is attributed to total government expenses growing slower than health spending (1.1% compared with 12.6% over 2021–22, in nominal terms).
Figure 7: Ratios of government health spending to government expenses, current prices, 2011–12 to 2021–22
The line graph shows that total government health spending, and government expenses increased from 2011–12 to 2020–21. Total government health spending increased from $99.1 billion in 2011–12 to $176.0 billion in 2021–22. In addition, total government expenses were higher than total government health spending and increased from $611.8 billion in 2011–12 to $1,021.8 billion in 2021–22. During this period, total government health spending to government expenses ratio ranged from 15.5 per cent to 17.2 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 2023c) (Table 9).
More details on the Australian Government’s Economic Response to COVID-19 can be found at Supporting individuals and households while state and territory government programs can be found in their specific websites. More on the relationship between tax revenue and government expenses can be found in the box below.
Taxation revenue is a major source of income used by governments to fund expenses. However, tax revenue is 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’s 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).