Cost shifting or community service? Councils’ role in general practice

Ratepayers in the postcard-pretty town of Bicheno know the cost of seeing a GP goes beyond the tap of a Medicare or credit card. They’ve paid for it in their council rates for almost three decades.
 
Sitting on the east coast of Tasmania, and recently crowned Australia’s Best Town, the seaside suburb has an ageing population and, thanks to its local government, a general practice. So too does the smaller, nearby town of Triabunna.
 
But it comes at a cost. Initially charged as a separate ‘medical levy’, residents of Glamorgan Spring Bay Council pay $90 as part of their overall council rates to fund the two GP clinics.
 
‘That raises around $500,000 that directly supports the Bicheno and Triabunna practices,’ Mayor Cheryl Arnol told newsGP.
 
Back when the levy began, the area was struggling to find a GP and there was ‘very little assistance coming through federal and state governments, so the town had to take matters into its own hands’.
 
The council ran the two clinics for many years but contracted the challenging job out to primary care provider, cohealth, three years ago.
 
It’s a model that works, but when asked whether councils should be supporting GP services, Councillor Arnol’s answer is a clear ‘no’.
 
‘Our medical levy has been successful, but it’s not sustainable for a small council to do that. It just shouldn’t be a council responsibility,’ she says.
 
‘We should never have been placed in this situation by the federal and state governments.’
 
Across Australia, from large regional centres to small remote towns, councils have had to step in to fund primary care for their communities.
 
This includes buildings, salaries, income guarantees, housing, vehicles, incentives and marketing campaigns, as well as time and council resources.
 
In response, GPs say rural healthcare requires stronger, targeted Federal Government funding to reduce councils’ reliance on subsidising local medical services, while the Government says its increased Medicare investment and workforce initiatives are already improving access to care.
 
Regardless, it’s expensive work, and often the most vulnerable communities are doing the heavy lifting.
 
A West Australian medical workforce agency recently put a dollar figure on that ever-growing load.
 
‘Back in 2021–22, around 48 local governments contributed around $7.8 million towards GP services. That had grown in 2024–25 to $9.5 million,’ Kerida Hodge from Rural Health West told a recent Senate Committee hearing.
 
‘And 90% of that funding is coming from local governments with quite small populations of under 5000 people, in those inland regions like the Wheatbelt region of WA.’
 
Local Government Association of Tasmania CEO, Dion Lester, questions whether this is a fair approach.
 
‘Councils should not be required to fund general practice clinics. This is a responsibility of the Federal Government,’ he told newsGP.
 
‘Typically, it is rural or regional councils with a narrow rate base that pick up this burden. This means they must divert resources away from their core community services and infrastructure.    
 
‘This is inequitable for residents in these municipalities, who pay income tax, which is meant to fund Medicare, and then also have to pay an additional local medical levy on their council rates.
 
‘Councils are not equipped or trained to manage complex medical businesses, recruit specialised healthcare staff, or navigate medical indemnity insurance.’
 
Mr Lester is not alone in his views.
 
The outback experience
Local Government NSW recently called for a $20 million program to help alleviate pressure on councils after exposing that more than 20% of the state’s regional and rural councils are having to fund their own health services, ‘where state and federal governments are neglecting their obligation’.
 
The weight of financial strain is a familiar feeling for Louie Zaffina, Mayor of Balranald Shire Council in the outback Riverina region of western NSW.
 
Maintaining a local GP service for the community has ‘put a lot of pressure on us’, he tells newsGP.
 
Considered an MM5 area under the Modified Monash Model, the region has a widely dispersed community, an Aboriginal and Torres Strait Islander population of around 6%, and two major townships – Balranald and Euston which are an 80 kilometre drive from each other.
 
In 2024, Balranald lost its long-term GP and the council had to assist a new doctor to move, as well as supplying a house and paying 12 months of rent upfront.
 
‘We didn’t have the money to do it but thank God we were able to get some money out of the State Voluntary Planning Agreement (VPA) with a mining company that’s in our shire ... because there was no way we could afford it,’ Councillor Zaffina says.
 
So far, the bill has come to ‘around $160,000–$180,000 just to have a doctor there’. While the VPA helped with the initial cost, the council continues to pay weekly rent of about $500 which comes out of residents’ rates.
 
‘That money could have gone towards a playground, a footpath, or something else that’s needed – how do you maintain those areas or get other projects off the ground if you’ve got to keep contributing [to health services]?’ Councillor Zaffina questions.
 
‘It’s hurting our small rural areas really, really bad.’
 
Getting a GP into town is one challenge, but there are also other pressures, adds council CEO, Terry Dodds.
 
‘It’s not just the financial strain, it’s that we’re also hanging on to a doctor tenuously by a very thin thread,’ he told newsGP.
 
And losing a GP hits rural towns right to the heart.
 
‘Because when people look to move to a regional, or rural, or remote–rural, and we’re classified as a remote–rural council, they look at three things: health, education, and police,’ Mr Dodd says.
 
‘Usually, the first thing is whether there’s a doctor in town. If they’ve got kids, then what’s the school like? And how safe is the community?
 
‘Unless you’ve got those three pillars, you are flogging a dead horse.’
 
Councillor Zaffina says funding healthcare hasn’t always been a council cost, and he isn’t convinced its sustainable.
 
‘I don’t think it is fair. We’re having trouble just surviving as it is, and this is just an extra burden,’ he explains.
 
‘If government said “this is part of your role” then that’s okay, as long as we get extra money to do the job so that it’s not coming out of our budget. But where does it end? That’s the problem.’
 
The funding debate
Dr Michael Bonning, a member of the RACGP Expert Committee – Funding and Health System Reform, says the fact that councils are having to financially support GP care ‘represents ongoing market failures around certain parts of our health system’.
 
‘We know that many communities find it very difficult to attract, recruit and retain GPs for a myriad of reasons, and because a health service is a central part of a viable community, councils in their wisdom take it upon themselves to try to cross-subsidise or cross-fund services,’ he told newsGP.
 
‘It’s certainly something we are seeing more commonly occurring that other bodies are needing to step in to make general practice viable in regional, rural, and remote communities.
 
‘Our payment system often doesn’t sufficiently account for healthcare provided in difficult-to-service areas, and we know that government is considering different forms of payment – traditional fee-for-service and then also some block funding arrangements for those hard-to-service, hard-to-reach communities.’
 
While it might be difficult to have a thriving general practice in those areas, Dr Bonning adds, ‘it would likely improve the situation – especially block funding in some of these communities where there isn’t large population.’
 
But there are also equity issues that can’t be ignored.
 
‘Councils are asking for more money from people who have already paid taxes, and we must recognise that there is significant inequity, and almost another tax on being remote that should be recognised and supported by governments in making sure that they do provide sufficient funding to especially rural and remote communities,’ Dr Bonning said.
 
‘I’d like to see primary care funded so that everyone can get access to good primary care everywhere in the country, and we know that that’s not the case.
 
‘We know that it is much harder to get good access to primary care in more regional, rural, and remote areas of Australia, and if it takes a premium to achieve that, then we should have a funding mechanism in place to do that.’
 
Is it sustainable?
Local Government Association of Queensland CEO Alison Smith says growing cost pressures have pushed councils to ‘tipping point’ and they are ‘increasingly being asked to do more with less’.

‘Several Queensland councils, particularly in rural areas, have had to step in to ensure their communities have access to a local GP,’ she told newsGP.
 
‘Some are even having to use council dollars on global marketing campaigns to attract a doctor to their community, including the cost of council housing. We also know some councils are being forced to build the facilities for medical services to be housed.’
 
The ‘cost shifting councils are experiencing at the hands of the other levels of government is a growing threat to their financial health’, Ms Smith warns.
 
‘Queensland councils have reached a tipping point where they and their communities cannot continue to fund the services and infrastructure that are properly the responsibility of state and federal governments and the private sector.’
 
It’s a view echoed at a national level by the over-arching Australian Local Government Association (ALGA) at a recent Senate inquiry into Medicare access in rural, regional and remote areas.
 
In its submission, the ALGA said there is evidence local governments routinely fund or deliver GP clinics, health centres and housing for medical, disability and aged care workers.
 
These costs being picked up by councils ‘are not recognised in Medicare or aged-care funding models, despite being essential to sustaining services’.
 
And while national programs rapidly expand, councils note the ‘structural gap in recognising and directly supporting the role of local government as a delivery partner in small and thin-market communities where health service viability is most fragile’.
 
‘Without substantive reform to Medicare and related funding arrangements, this role will continue to expand in an unsustainable and inequitable manner, masking system failure and placing increasing pressure on councils and local communities,’ the submission said.
 
The Government response
The difficult situation in many rural areas has not gone unnoticed by the Federal Government, with recent policies aimed at lifting rebates and increasing GP numbers.
 
‘We know people living in rural and remote areas face greater health challenges because of the tyranny of distance,’ a spokesperson told newsGP.
 
‘That’s why we’re investing in more bulk billing, more doctors and more nurses for the bush.
 
‘Bulk-billing incentives are paid to GPs for every patient they bulk bill and this payment is scaled by remoteness with GPs in remote areas receiving up to 190% more than in metro locations.’
 
There is also the Federal Government’s flagship Bulk Billing Practice Incentive Program as well as a range of targeted initiatives to provide incentives for doctors to move to, and remain working in, areas of workforce shortage.
 
‘More doctors are registering to practice in Australia, more junior doctors are training to become GPs, and more medical graduates are aspiring to become GPs since our Government’s record investments to strengthen Medicare,’ the spokesperson added.
 
‘This investment is prioritising regional and rural areas, with half of Government-funded GP training occurring in regional, rural and remote areas.
 
‘Although we’re not out of the woods yet we are seeing things turn around in those areas that we need.’
 
As for councils, there is no doubt that they are grateful for their GPs, and GPs are thankful for their support. But are local governments getting the recognition they deserve?
 
Log in below to join the conversation.

councils healthcare funding local government Medicare workforce workforce shortages