Healthcare is now Australia's biggest industry. Why has the ABS changed how it measures it?

Australia's largest industry is no longer mining, finance or construction. It is healthcare and social assistance, according to new Australian Bureau of Statistics data.

The industry's economic contribution reached $265.2 billion in 2025–26, representing 9.6% of Australia's economic activity. It also employed 2.58 million people, accounting for 15.8% of filled jobs.

But the most interesting finding is not the industry's size. It is what the ABS has discovered about how healthcare operates.

Thirty years of extraordinary growth

Since 1994–95, healthcare and social assistance output has increased approximately 273% in inflation-adjusted terms.

Over the same period, Australia's total economic output increased 143%, mining output increased 184%, and manufacturing grew just 18%.

The expansion reflects Australia's ageing population, growing demand for medical services, the development of aged care and the introduction of the National Disability Insurance Scheme.

Healthcare is now fundamental to Australia's economic growth, employment and government expenditure.

Is healthcare really a government industry?

The ABS previously relied heavily on expenditure data to measure healthcare production, assuming much of the activity was non-market.

Its new analysis reveals that approximately 60% of healthcare and social assistance value added comes from market producers.

These include private hospitals, medical practices, allied health providers and other commercial service businesses.

Importantly, market production does not necessarily mean private funding.

A privately operated medical practice receiving Medicare payments may be a market producer even though taxpayers finance much of the service.

This distinction matters when assessing the economic role of government.

What changed in the statistics?

The ABS has introduced business survey information and administrative data to better measure the industry's production and costs.

For 2023–24, it revised estimated healthcare output upwards by $49.1 billion.

But it also identified an additional $35.3 billion of intermediate inputs, including pharmaceuticals, medical equipment and contracted services.

The net result was a $13.9 billion increase in measured industry value added.

That is not new economic activity. It is activity that was previously incompletely measured.

What does this mean for productivity?

Healthcare has traditionally been included in the non-market sector of Australia's productivity statistics.

That classification remains unchanged, despite the new evidence that much healthcare production is market-based.

This is significant because productivity is harder to measure when services are valued by their production costs rather than market prices.

A hospital can improve treatment outcomes without those improvements being fully reflected in conventional output statistics.

The ABS will publish experimental productivity estimates distinguishing healthcare's market and non-market activities in December.

With healthcare now Australia's largest industry, understanding how efficiently it produces services is becoming central to understanding Australian productivity itself.