The Productivity Commission’s conclusion is based on its assessment of how much it costs to treat a disease and treatment outcomes.

“Australia’s healthcare spend is big and getting bigger, but we are seeing significant return on that investment through better health outcomes,” Commissioner Catherine de Fontenay said on Wednesday.

The commission found healthcare system productivity grew by about three per cent-a-year between 2011-12 and 2017-18 based on a subset of diseases studied, which together account for around one-third of healthcare spending.

The growth was driven mostly by improvements in quality, rather than cost reductions.

Healthcare spending accounts for 10 per cent of the nation’s gross domestic product, the commission said.

That spending was going to increase as the population ages.

“Our challenge moving forward will be to provide services more cheaply and efficiently without comprising on quality,” Ms Fontenay said.

The commission’s research also suggested there should more attention on “sizeable” health risks such as obesity and alcohol consumption.

“We have the fourth highest rate of obesity in the world and the sixth highest level of alcohol consumption,” the commissioner said.

“This worsens population health and creates more work for our healthcare sector.”