A stronger focus on prevention could help governments curb rising health and social care spending while improving long-term productivity, according to the Productivity Commission.
The commission says preventative investments could save taxpayers billions but argues that achieving these gains will require a shift in how governments approach early intervention.
According to a social policy analysis from the University of Tasmania, preventative investments could save taxpayers billions of dollars in health and social care costs. But to achieve these gains, significant change must be made into how investment into prevention is made.
Australia’s spending on health and social care continues to grow as a share of the economy and now accounts for five of the top seven fiscal pressures on the federal budget. The care sector is also employing a larger portion of the workforce, with close to one-third of new jobs since the pandemic created in the sector.
While this trend partly reflects changing preferences as Australians place greater value on health and wellbeing, the commission identified improving the effectiveness of this spending as a key productivity challenge.
“That means investing early to save costs later,” said lead author Angela Jackson, Productivity Commission Social Policy Commissioner and Adjunct Associate Professor at the University of Tasmania.
Authors pointed to the government-endorsed and supported SunSmart skin cancer awareness campaign, which is estimated to have prevented more than 43,000 skin cancers between 1988 and 2010.
“We estimate that an investment of $1.5 billion across all prevention programs over five years could be expected to save governments $2.7 billion over ten years. Factoring in the broader health, social and economic benefits, the total benefits would be about $5.4 billion.”
The report also notes that Canada, the UK and Finland spend more than twice as much of their health budgets on prevention as Australia, whose own health prevention strategy recommends increasing prevention spending from 2% to 5% of the health budget.
The commission argues prevention extends beyond health care alone. Investments in youth justice, out-of-home care and homelessness services can improve outcomes across multiple areas while reducing long-term costs.
“For example, when people experiencing homelessness get stable housing, they tend to end up in hospital less often, make fewer trips to the emergency department, and in some cases, even avoid incarceration,” the authors said.
“It’s also easier to look for and hold down a job when you have a stable place to call home.”
Such measures may also help address systemic inequities in access to care.
However, the commission says current government structures can discourage preventative investment because the agency or level of government that funds a program does not always receive the full benefit.
“The way governments think about and invest in prevention and early intervention needs to change,” the authors said.
The Productivity Commission has proposed a National Prevention and Early Intervention Framework to support strategic investments that improve outcomes and reduce demand for future services.
“The framework’s consistent approach to assessing interventions would bring all levels of government to the table, so that worthwhile investments no longer fall between the cracks.
“It offers a practical way to put into operation the government’s ‘Measuring What Matters’ framework. By directing funding towards outcomes and tracking progress against them, it would give federal and state governments confidence that they are investing in effective programs.”
The commission warned that with health and social care spending projected to continue rising, governments must take a longer-term view to maintain future standards of care.
“But given health and social care spending is only set to grow further, we need to start thinking long term to ensure we can afford to give future generations the standard of care we enjoy today,” the authors said.
“With a greater focus on prevention and early intervention, we can better care for future generations and put our care sector on a more sustainable path.”
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