CANBERRA OBSERVED:
Rudd lays groundwork for health referendum

by national correspondent

News Weekly, March 20, 2010
Kevin Rudd had been seriously considering holding a referendum on health since well before the last election - and now he looks as though he will have one.

But despite having had all that time to mull over the complexities and challenges involved and having had the assistance of armies of public servants and health reform experts to draw up a comprehensive plan, the decision to bite the bullet appears to have been rushed in response to Tony Abbott's ascendancy in the polls.

There are still too many questions about what the plan involves and how it will work.

To date, the Australian public have only seen part of the plan, with "announcements" to be staggered between now and the federal election sometime later in the year.

Lack of consultation

Yet, while state governments were not consulted, they are now being asked to sign up to a deal which strips 30 per cent of their GST revenues - or around $50 billion over the forward estimates - to fund a federal takeover of state-run public hospitals.

In reality, it is only a partial takeover anyway. The Commonwealth wants to take responsibility for 60 per cent of all hospital funding, which includes not only the average cost of each patient, but also funding for research, training and hospital maintenance and improvements.

That new share of hospital funding will cost the Federal Government $30.9 billion over the forward estimates, of which primary care funding will cost $18.7 billion.

Local authorities - but not local boards, as preferred by Mr Abbott - will oversee small groups of hospitals and will be guided by "strong national standards". These authorities will comprise mainly health professionals rather than prominent members of the local community.

A separate independent body will be appointed to establish the "efficient" cost of each treatment.

Hospitals which don't make the grade on efficiency, national standards and performance, could be stripped of funding.

In short, there will be new bureaucracies designed to tackle one of the already most heavily bureaucratised areas of government.

Hundreds of small "deemed inefficient" hospitals, particularly those in regional Australia, will be particularly vulnerable to closure.

States with overall good hospital systems (Victoria and WA) will be given the same financial treatment as states with poor systems (NSW and Queensland).

And Mr Rudd has added to the confusion by making grandiose undeliverable promises on waiting-lists, pledging that any patient kept beyond acceptable times in the public hospital system, will undergo surgery immediately in a private hospital.

Initial public reaction to the PM's announcement was overwhelmingly positive, with 75 per cent in support, according to a Melbourne Age poll.

But it is not surprising that the public are pleased that "something" is being done on health care. As with climate change, however, as soon as that indefinable "something" turns to definable government policy, the appeal quickly evaporates.

Some states are showing strong early signs of resisting the PM's plan.

The WA Liberal Government flatly rejected it. Said Premier Colin Barnett: "We will not tolerate a situation where, from Canberra, all the decisions relating to our hospitals and most of the healthcare decisions are made."

The NSW Government says it will not consider the plan until the recommendations of the Henry Tax Review - which was completed in December, but which Mr Rudd has been too afraid to release - are aired and debated.

Premier Kristina Kenneally says a new carve-up of the GST should not be discussed until all parties understand where the national tax system is heading.

And Victoria, which most strongly resisted John Howard's Murray-Darling takeover, is opposed to a plan which is unlikely to provide any real benefits.

Premier John Brumby, who prides himself on his economic management, is least likely to agree to a reduction in his slice of the GST pie.

Only the South Australian and Tasmanian premiers, both in the middle of tight election campaigns, were warm to the idea, but that co-operation may change the day after polling day.

Additional bureaucracy

As for the federal Opposition, it has flagged that it will oppose the plan, arguing that it introduces a new level of bureaucracy and makes the running of the hospitals accountable to no one.

Opposition Treasury spokesman Joe Hockey said: "It seems to put another level of bureaucracy between the people who are meant to run the hospitals, that is the state governments, and the hospitals themselves. You actually don't get better outcomes by increasing the bureaucracy.

"The bottom line is Australians want someone responsible for the hospital system and they expect that person to be accountable at election time. Now whether that's the state government or the federal government, it is no use putting a new body in between the hospitals and the person who is accountable."

Despite the first-blush public appeal of Mr Rudd's health reform plan, state resistance, lack of co-operation from the federal Opposition and the failure of previous referenda, do not bode well for Mr Rudd.

The PM will need to do a lot more to convince everyone that this is not yet another rushed, off-the-cuff policy venture designed to keep his popularity up in the opinion polls.