Today's economic note comes to you after more consultations with the States and Territories on the biggest reform to the health system since the introduction of Medicare. On Wednesday I travelled to Perth with Prime Minister Rudd to talk with WA Premier Colin Barnett and Treasurer Troy Buswell, and then on Friday I had a really constructive meeting with State and Territory Treasurers in Canberra. Health reform is a great example of the careful, considered and consultative action we're taking that can make a real difference to people's lives right around the country. Other examples include our actions to boost competition in Australia's mortgage market for the benefit of mortgage holders, and to support growth that improves the quality of life of pensioners and working families into the future.
Our new National Health and Hospitals Network is a really important economic reform that will deliver better hospitals and better health care for Australians no matter where they live. Having one national network instead of eight separate systems means patients will benefit from the same high standards in every public hospital in the country, including acceptable waiting times for emergency departments and elective surgery. Being a nationally funded network, patients will be treated through less expensive primary care services where appropriate, rather than being shunted into expensive hospital services. And because hospitals will be locally run by Local Hospital Networks, local communities will have a say in the way their hospital is run. Getting our nation's finances on a sustainable footing is critical to our health and hospital system. Our reforms will save state budgets around $15.6 billion by 2019-20, which is why I'm working through the details, line by line, with my state treasury colleagues.
Australians have been crying out for more hospital beds, more doctors, more nurses and reduced waiting times for a long, long time. We've been taking action to fix a health system at tipping point since day one of coming to office – increasing hospital funding by 50 per cent, increasing GP training places by 35 per cent, and providing over 1,000 more nurse places at university. We're also providing $750 million to take pressure off emergency departments, $600 million to slash elective surgery waiting times, $500 million for sub-acute care beds, and $275 million for 36 GP SuperClinics across the country. And you can be sure that we'll continue to do whatever it takes to make sure every Australian gets the quality of health care they deserve.
We're also seeking a better deal for working families in the financial system. As I said in my last economic note, I understand just how much mortgage payments impact on the family budget. That's why I directed the Australian Office of Financial Management (AOFM) to invest up to $16 billion in Triple-A rated residential mortgage-backed securities (RMBS) to support home loan competition.
Today I can inform readers that previously unpublished analysis by the AOFM shows this investment is helping the RMBS market to again become a cheaper, more competitive source of funding for smaller home lenders. The new analysis shows the Government's support is giving private investors the confidence to invest increasing amounts of their own money in this important market, which many smaller lenders rely on heavily to make home loans.
As evidence of this, the AOFM noted on Thursday that the private sector's contribution to the five RMBS deals it had completed to date in 2010 was around 81 per cent, implying that over $4.25 of private money was invested for every $1 of taxpayer money over that period. This is a real improvement compared to late 2008, when private money accounted for only 20 per cent of funds raised (or 25 cents per taxpayer dollar).
These trends were identified by RBA Assistant Governor Dr Guy Debelle, when he recently commented that "RMBS is again beginning to provide a competitive source of funding, particularly for the regional banks … and non-bank lenders which had both previously depended more on this source of funding." The Reserve Bank also noted in its March Quarter 2010 Bulletin that "the securitisation market has started to recover, with the volume of issuance to private investors picking up and spreads narrowing noticeably." Narrower ‘spreads' mean cheaper home loan funding for smaller lenders – so of course this is great news.
Last Tuesday we also saw the potential for our smaller lenders to put more competitive pressure on the big banks when CUA, Australia's largest credit union, announced it would cut its variable home loan rate by 25 basis points for all customers, to be more than half a per cent lower than the average of the major banks – or $1,153 cheaper per year for a family with a $300,000 mortgage.
I've always been a big believer in the capacity of Australia's mutual credit unions and building societies to provide a safe and competitive alternative to the big banks. Of course, they meet the same high standards of prudential regulation as our banks, as they are supervised by APRA in the same way. And all deposits held with a credit union or building society are backed by the Government's Financial Claims Scheme up to $1 million – just like bank deposits – with this cap being reviewed for all in October 2011. So Australians can have absolute confidence in the safety of their money wherever their deposit is held.
Some 4.5 million Australians are members of a mutual, but many others may not be aware of the critical role they play in putting competitive pressure on the big banks. A comparison of recent independent ratings data shows the best standard variable home loan rate available from a mutual is something like 80 basis points below the average of the major banks, and that mutuals are 34 basis points cheaper than the big banks on average. As I said last week, the global financial crisis created some significant challenges for competition in the mortgage market. But I'm really encouraged to see our smaller lenders, including our mutuals, helping to put competitive pressure on the big banks, and I'll continue to support them all the way on this.
This coming Tuesday I'll be speaking at the Queensland Growth Management Summit in Brisbane, along with Queensland Premier Anna Bligh and other experts in the field. Population statistics put out by the ABS just a few days ago showed that Australia's population reached 22,066,000 at the end of September 2009, with the number of Australians increasing by 451,900 over the preceding 12 months. That means the population grew at an annual rate of 2.1 per cent.
There's been a renewed focus on population growth in this country following the release of the Australia to 2050 report a couple of months ago. From a personal point of view, I don't support growth just for growth's sake. Whether it be population growth or economic growth, growth should always be about making tangible improvements to the quality of life of Australians over time. For us to make sure that happens, the answer isn't to stop growing, but to grow differently – to grow intelligently and sustainably.
That's why the Government is focused on the composition of the population not just the number – the quality of our communities, and the contribution each and every Australian can make to our prosperity. It's why we've put in place programs like those to tackle entrenched disadvantage, reform our water system, and take action on dangerous climate change, and have set up Infrastructure Australia to work with all levels of government to improve the environmental sustainability, liveability and productivity of our major cities. I'll be talking about these and other actions we're taking to promote growth that raises our standard of living, preserves our environment and improves social cohesion at Tuesday's Summit. As always, I look forward to updating you on those discussions in next week's note.
Treasurer of Australia
Sunday 28 March 2010