Federal Budget 2014 - Key Highlights from the MHCA CEO

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Federal Budget 2014 - Key Highlights

Good evening MHCA members and friends.

Tonight’s budget has seen the Government meet its pre-election commitments to mental health, but it has also seen some very substantial changes to programs which, over time, are likely to have a very direct impact on people who experience mental illness.

We will do more analysis as the week progresses and will be included in the Friday update, but here is our initial summary of the budget night announcements as they stand.

My thanks as always to the Policy Team who have stayed back late on budget night, and in some cases endured some very unhealthy catering at the budget “lock ups” in order to produce the summary below.

Election commitments

In line with its election commitments, the Government has provided:

  • $14.9 million over four years will establish ten new headspace sites and conduct a two-year evaluation of the program
  • $18.0 million over four years for the establishment of a National Centre for Excellence in Youth Mental Health, to be operated by the Orygen Youth Health Research Centre.

PHaMS, Mental Health Nurses and Partners in Recovery

We understand that funding for Personal Helpers and Mentors will be continued for 12 months (this was already budgeted, so does not appear as a specific measure in the Budget papers).   Letters to agencies should be sent as early as tomorrow.

Funding for the Mental Health Nurses Incentives Program has been extended for 12 months ($23.4 million in 2014-15). 

Funding originally slated for Partners in Recovery in the 13 remaining Medicare Locals regions will not go ahead, though existing PiR consortia will continue. 

A new Medical Research Future Fund

Savings from PiR – along with other savings in the health portfolio – will be redirected to a new Medical Research Future Fund, which is expected to reach $20 billion by 2019-20.  How this funding is spent will depend on the purposes stated in the enabling legislation, which the MHCA will be looking out for in coming weeks.  It is disappointing to see funding moved out of direct service delivery and into research.

Streamlining existing health agencies

Several independent health agencies will soon cease to exist, with their responsibilities taken over by the Commonwealth Department of Health. These include Health Workforce Australia, General Practice Education and Training and the Australian National Preventive Health Agency.

Certain other agencies will be rolled into a new Health Productivity and Performance Commission from July 1 2015, subject to consultation with states and territories over the coming year. These include the Australian Institute of Health and Welfare, the Independent Hospital Pricing Authority, the Australian Commission on Safety and Quality in Health Care, the National Health Funding Body, the National Health Performance Authority, and the National Health Funding Pool Administrator. Notably, this will not include the National Mental Health Commission (pending any further announcements).

Medicare Locals - to be replaced by Primary Health Networks

Medicare Locals will continue to operate until 30 June 2015, but from 1 July 2015 will be replaced by a smaller number (yet to be determined) of Primary Health Networks (PHNs). The budget papers state that PHNs “will establish Clinical Councils, with a significant GP presence, and local Consumer Advisory Committees that are aligned to Local Hospital Networks, to ensure primary health care and acute care sectors work together to improve patient care.”  While the number and regional boundaries for these are still to be determined, it appears there will be no net savings in the Budget by making the transition to PHNs. Funding for the Australian Medicate Locals Alliance will continue only until 30 June 2015, with no funding provided for a PHN-type alliance beyond this date.

NDIS - no changes

The Budget contains no specific the NDIS contained in the 2014 Budget.  This is unsurprising, given that implementation of the NDIS is dictated by Commonwealth-State agreements and any changes would need state/territory endorsement to proceed.

Disability Support Pension

The Government will introduce compulsory activities for DSP recipients aged under 35 who are deemed to be able to work more than eight hours a week. Penalties for non-compliance will be introduced.

The Australian Government will review all DSP recipients aged under 35 who started receiving the payment between 2008 and 2011.  It is unclear at this stage whether these reviews will be conducted by independent doctors (as flagged in recent media reports), although we note that there is a considerable investment in this new process ($46 million over four years).  People deemed to be able to work more than eight hours a week will be required to undertake compulsory activities to build their work capacity.

The Government will achieve savings of $449.0 million over five years by indexing pension and equivalent payments and Parenting Payment Single by the Consumer Price Index (CPI) ), rather than the (higher) rate at which average male weekly earnings increases.  The measure will affect DSP recipients from 2017.

Employment assistance and Newstart Allowance

From 1 January 2015, the age of eligibility for new applicants for the Newstart and Sickness Allowance payments will increase from 22 to 24 years. People aged under 25 years will receive youth allowance which is $100 per fortnight lower.

From September 2014, all job seekers who refuse any work without a good reason or who Centrelink deems to be ‘persistently non-compliant’ will lose their payment for eight weeks.

From 1 January 2015, people under 30 years of age (except people in Streams 3 or 4) must have been in work or other participation activity for six months before they can receive Newstart Allowance or Youth Allowance (Other), although prior workforce participation may reduce the waiting period.  After 6 months, recipients must participate in 25 hours per week work for the dole to receive these payments. After a further 6 months, these payments will be replaced by a wage subsidy.  More precise details are limited at this stage.

GP co-payments

The Government will reduce Medicare Benefits Schedule (MBS) rebates from 1 July 2015 by $5 for standard GP consultations and allow GPs to collect a patient co-payment of $7 per service.  A new Low Gap Incentive ($6 for GPs) will replace bulk billing incentives for GPs where they provide services to patients with concession cards or children under 16 years of age and only charge the $7 patient contribution.

For patients with concession cards and children under 16 years of age the MBS rebate will only be reduced for the first 10 services in each year, after which it will return to current benefit levels.

This measure also removes the restriction on State and Territory Governments from charging patients presenting to hospital emergency departments for ‘general practitioner like attendances’.

As we state in our press release tonight, we will be keen to ensure this initiative does not impact negatively on early intervention and prevention in mental health.

PBS co-payment

The Government will increase Pharmaceutical Benefits Scheme (PBS) co-payments and safety net thresholds.  PBS co-payments will increase for general patients by $5 (from $37.70 to $42.70) and for concessional patients by $0.80 (from $6.10 to $6.90) in 2015.  PBS safety net thresholds will increase each year for four years from 1 January 2015 by 10 per cent each year (for general patients) or the cost of two prescriptions each year (for concessional patients).

Areas of uncertainty

Some uncertainty remains around grants programs and other flexible funds.  In the Health portfolio, for example, funding from 18 different flexible funds will be paused from 2015-16, but no decisions have yet been made by Government about which savings will be applied. 

There is also uncertainty regarding federal funding for programs that operate through the states.  A number of National Partnership Agreements will cease (e.g. the National Partnership on Preventive Health), while the Government has distanced itself from federal guarantees around health reform – including that no State or Territory will be worse off as a result of health and hospitals reform. 

The Mental Health Better Access Education and Training has been cut, although we await the findings of the NMHC’s review regarding the implications of this for the administration of Better Access.

The budget papers

Further information about the budget is available online, with specific details contained in Budget Paper 2, including in the health portfolio, human services, social services and in employment, as well as for cross-portfolio measures (including the streamlined health bodies).  More reader-friendly overviews are also available in the Health Glossy, Social Services Glossy and – for information about the Budget more broadly – in the Budget Overview.

MHCA media release - Long term mental health reform waits for NMHC review

The MHCA was tonight encouraged to see the Commonwealth Government meet its pre-election commitments to mental health. Read the MHCA media release here.

Warm regards


Frank Quinlan
Chief Executive Officer

T: 02 6285 3100  |  M: 0409 655 460
E: frank.quinlan@mhca.org.au  |  W: mhca.org.au

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