Health Sector Criticizes Major Budget Cuts
Health groups in Tasmania have strongly criticized the $700 million in proposed cuts to the Tasmanian Health Department, calling them “completely unrealistic.” The state budget, presented by Treasurer Eric Abetz, includes $1.47 billion in “operational efficiencies” across the public service over four years. This initiative aims to address financial challenges and ensure the state’s finances are balanced by the end of the decade.
As the largest department within the public sector, the Health Department is tasked with finding $702.61 million in savings over four years, including $131.45 million in the upcoming year. These figures have sparked significant concern among health professionals and advocacy groups.
Dr Michael Lumsden-Steel from the Australian Medical Association (AMA) expressed his frustration, stating that the budget targets do not reflect the reality of current healthcare expenditures. He emphasized that it is nearly impossible to achieve these savings when resources are already stretched thin.
“We know we need to find efficiencies, but it’s impossible to find efficiencies when we don’t have the resources to care for patients in 2026,” he said. “Every doctor I know that’s involved in the healthcare system that’s got a budget they look at — they laugh at it and they think this is a joke.”
According to the budget, health expenditure is expected to rise from $3.66 billion in 2026-27 to $3.87 billion by 2029-30. However, this increase of 7.8 per cent over the budget’s forward estimates is lower than the Treasury’s inflation prediction of 11 per cent over the same period. The AMA estimates that inflation in the health sector is higher, putting it at between four and eight per cent annually. Additionally, demand for health services is growing by six per cent annually.
Emily Shepherd, secretary of the Australian Nursing and Midwifery Federation Tasmania, highlighted the disconnect between the existing challenges in the health system and the current budget. She warned that the savings targets would only increase the workload for nurses and midwives.
Labor Calls for Corrections
Labor has called on Health Minister Bridget Archer to correct the record, as she claimed there are no cuts to health funding in the budget. However, Treasurer Abetz confirmed that the Health Department will be part of the $1.47 billion “operational efficiencies” program, meaning the department must cut more than $700 million in programs or staff to meet the goal.
Sarah Lovell, Labor’s health spokesperson, stated that the cuts were clearly outlined in the budget. “Bridget Archer must immediately correct the record after falsely trying to claim there are no cuts to health in the budget,” she said.
The budget claims that the Health Department will “prioritise frontline services,” but there is no guarantee that these services will not be affected. The budget outlines strategies for achieving the $702.61 million in savings, including improved cost recovery, enhanced vacancy management, and a revised executive structure.
Dr Lumsden-Steel emphasized that any savings found should be reinvested into patient services rather than used to improve the budget position. “It’s not okay that patients wait three years for their surgery. It’s not okay that patients wait 10 weeks for a pathology sample that finds out they’ve got cancer and then we have to change their treatment.”
Over the three-year period from 2026-27 to 2028-29, $265 million more in new state health spending is included in the budget compared to last November’s Interim Budget. The federal government has also agreed to contribute an additional $527 million to health over that period under the new National Health Reform Agreement.
Dr Lumsden-Steel questioned where some of that money has gone, suggesting that states are pocketing some of the funds and diverting them elsewhere to make the budget look better. “There really is a lot of smoke and mirrors that seem to be coming out with this year’s state budget.”
Concerns Over Workload and Wages
A state government spokesperson noted that the Tasmanian government was forced to step in and fund additional demand amid uncertainty over the federal government’s commitment under the National Health Reform Agreement.
Emily Shepherd from ANMF expressed concerns about the impact of the cuts on the health system. She warned that non-frontline positions being cut would increase workloads for nurses and midwives, who would have to take on additional duties such as cleaning beds or administrative tasks.
Spending on locum nurses has risen 600 per cent in the last five years, reaching $105 million in 2024-25, which is roughly five per cent of the department’s budget. Ms. Shepherd pointed out that failing to address workloads would undermine the department’s goal of reducing reliance on locum and agency nurses.
Tasmania is an outlier in terms of not having nurse-to-patient ratios across the health service, which could deter nurses and midwives from joining or staying in the state. The Health Department is currently negotiating two separate wage agreements: one for nurses and midwives, which ends on June 30 this year, and another for doctors, signed last year.
Most other wage agreements recently signed by the Tasmanian government include annual pay rises of around three per cent. The budget books state that agencies will need to “absorb” any wage increases above 2.5 per cent through “internal savings, service re-prioritisation or workforce adjustments.”
