Prime minister backs down on claim that cuts to public hospital funding agreements would not take effect for three years

Tony Abbott has conceded the government is cutting a hospitals funding agreement with immediate effect, contrary to his weekend claim that the cuts did not take effect for years.

On Sunday Abbott said: “We’re not talking about next week or next month or even next year; we are talking about changes in three years' time”.

But Abbott now agrees the national partnership agreement on public hospitals, which begins on 1 July, has been cut. Budget documents say it has been cut by $1.8bn over the next four years.

The prime minister says the reductions should be blamed on Labor because the former government had previously revised the agreement.

“There was a national partnerships agreement which the Labor party hadn’t funded on [hospital] beds and we have decided not to renew it, but this is a Labor cut, it is not a Coalition cut,” Abbott told the ABC.

But the budget document is clear that money has been cut by this government, stating: “The government will save $1.8bn over four years from 2014-15 by ceasing the funding guarantees under the national health reform agreement 2011 and revising commonwealth hospital funding arrangements from July 2017.”

The decision cuts $217m from hospitals in 2014-15, $260m in 2015-16 and $133m in 2016-17 before the big cuts begin in 2017-18, when the commonwealth ceases its contribution to the growth in hospital costs due to the ageing population and higher treatment costs. From that time commonwealth spending increases only in line with inflation and population growth.

State premiers say the cuts remove funding needed for 1,200 hospital beds and they have no capacity to fill the gap.

Abbott was flying to Rockhampton on Monday morning with the Queensland premier, Campbell Newman – one of the most outspoken critics of the cuts – to attend the funeral of Graeme Acton, a prominent Queensland grazier.

Later in the day Abbott returned to his earlier argument – that hospital funding is still increasing year on year.

“For the next three years hospital funding increases … and then in the fourth year commonwealth funding will increase by 6%, so we aren’t cutting funding, we are increasing funding … all we are not doing is not agreeing to the pie-in-the-sky funding promised by Labor,” Abbott said.

The budget documents reveal almost $3bn worth of funding agreements with state governments in the health portfolio alone that have been cut, deferred or abandoned – with the cuts starting this year or next year.

These cuts are on top of the $80bn in long-term funding cut out of health and education, and on top of savings from the new $7 Medicare co-payment (which could force people to seek help in state-run emergency departments instead of seeing a general practitioner); the additional $5 co-payment for medicines; the pausing of indexation for medical benefit schedule fees and other budget savings. As well, many partnership agreements have been axed in other portfolios.

The health agreements abandoned or deferred include:

• The national health reform agreement, signed by all states and the commonwealth in 2011. (This cuts $1.8bn from public hospital funding, starting this year. Money to be put into the medical research future fund.)

• The dental flexible grants program. (Cuts amount to $229m, starting this year. This program was to help dentists set up in outer metropolitan and rural areas. Money goes to the Medical Research Future Fund.)

• Adult public dental services. (Cuts equal $390m, starting this year, by deferring a national partnership agreement signed with the states, which was supposed to help clear the 400,000-strong waiting lists for public dental care. Money goes to the Medical Research Future Fund.)

• Improving public hospital services. (Cuts of $201m, starting next year, from money that was supposed to help the states reduce waiting times at public hospitals. Money goes to the Medical Research Future Fund.)

• National partnership on preventive health. (Cuts of $367m, starting this year, from agreement that was supposed to fund preventive health education programs, such as anti-smoking campaigns. The government is also saving $6m by abolishing the national preventive health agency. Money from both goes to the Medical Research Future Fund.)

The budget also ends federal contributions to a range of pensioner concession schemes. Abbott said: “We made the decision in a very tough budget that if the states wanted to continue those concessions they could do it themselves.”

As two polls showed a dramatic slump in his own and his government’s standing after the budget, Abbott repeated that, despite his pre-election pledges not to cut education and health and not to change pensions, voters had been “on notice” about the cuts unveiled in last Tuesday.

South Australian premier Jay Weatherill said the budget removed funding for 150 hospital beds in his state from July.

The premiers have demanded an emergency Coag meeting. The prime minister’s spokeswoman says there is unlikely to be a meeting before the next scheduled gathering in September. She says the prime minister has spoken to most of the premiers by phone. Weatherill said the prime minister had not spoken to him.

