The push and pull of political reform

TUG of war generally requires an equal balance of strength on either side to ensure the longevity of the game, but at various times in Australia’s history politicians have played the game of political push and pull with uneven strength on either end of the rope.

Most recently it has been the Rudd government’s health reform that has given WA Premier Colin Barnett rope burn – left alone to anchor a rope held by Prime Minister Kevin Rudd and the rest of the state leaders.

This is certainly not the first time federal and state leaders have disagreed at this level.

One only has to look to disputes over corporation law and industrial relations in the Howard era, and the recent squabbling over occupational health and safety law reform to see the Canberra healthcare battle is not the first of this magnitude.

Mr Rudd proposed the health care reform plan, dubbed the National Health and Hospitals Network, earlier this year.

Under the plan, the federal government will take responsibility for the majority of funding, paying 60 per cent for all public hospitals, and full funding responsibility for all health services outside hospitals, such as GP and community health clinic services.

“Under the plan for the first time ever, Australian hospitals will be funded nationally but run locally through a national health and hospitals network,” Mr Rudd said.

The proposal is for a single national network of hospitals instead of the current healthcare system in which there are eight separate hospital systems.

The federal government will take control of hospitals from central bureaucracies and hand it to what will be called Local Hospital Networks, which will be paid directly for each service they provide rather than providing a cheque to the states.

The national health and hospitals network reform paper says the distribution of responsibilities for health between different levels of government is blurred and unclear, resulting in duplication, cost shifting and blame shifting.

Mr Rudd was quick to use the same rhetoric on the first day of the COAG health reform meeting this week.

“The blame game must stop, cost shifting must stop, duplication and waste must stop and we must act on the reality that the cost of health will soar into the future as our population ages,” Mr Rudd said.

The PM has high hopes for a reformed system. He has plans to introduce 6,000 new doctors to the system, has set goals for 95 per cent of elective surgeries to be carried out on time, and plans to cap emergency department waiting times at four hours.

Federal Treasury has forecast the healthcare system will need an additional $15.6 billion over the next decade.

Healthcare costs will increase to 11 per cent of Commonwealth government spending, or 3.1 per cent of gross domestic product, between now and 2050.

Mr Rudd announced at the COAG meeting that Canberra would meet Treasury’s forecast of required health funding, although that contribution was conditional.

“We can only do this if the states agree now to the AG retaining one third of the GST,” Mr Rudd said.

That contribution hangs in the balance, with WA continuing to contest the GST grab.

When Mr Rudd’s plans were outlined earlier this year they immediately attracted opposition, most heavily from Victorian Premier John Brumby and Mr Barnett, for its move to take 30 per cent of each state’s goods and services tax revenue in order to fund the majority of Australian health care.

For WA, this would mean $950 million of the state’s GST being taken back by Canberra.

Mr Barnett and Mr Brumby may ordinarily have rivalry between them as a result of their differing party memberships but in the case of health, they dug their heels in together.

It was only at the 11th hour that Mr Brumby left Mr Barnett alone to hold the rope, agreeing to hand over the state’s 30 per cent GST after a closed door meeting that involved only Labor premiers.

Mr Barnett now stands as the lone premier opposing the reform on its funding merits.

He said at the COAG meeting this week that he was not opposed to the funding scheme itself but the state’s disempowerment by the structure of the funding pool.

“We aren’t arguing about the amount, Western Australia wants to retain and will retain control of its GST funds,” Mr Barnett said.

Mr Barnett may have been left to fend for himself with his interstate counterparts signing the deal on the second day of the COAG meeting, but he is not without support from his WA ministers.

Treasurer Troy Buswell said WA had been given the raw end of the deal when it came to GST distribution in the past “and we certainly don’t want to be ripped off in terms of health reform”.

Mr Barnett was fierce in his statements at the close of the second day of COAG meetings.

“Twenty pieces of silver won’t work with Western Australia and won’t work with me, you cannot buy Western Australia, I won’t be party to that sort of horse trading,” Mr Barnett said in response to the $5 billion deal sweetener offered by Mr Rudd if he were to sign the deal.

The independent peak national body representing public hospitals, area health services, community health centres and public aged care providers – the Australian Hospitals and Healthcare Association – has called for the full support of all states and territories for the reform program.

“Our vision for Australian health system governance involves effective national standards coupled with significant regional influence and control over health delivery programs,” AHHA said on the first day of the COAG meeting.

While WA (and previously Victoria) have been fighting off Canberra’s control of the state’s GST contribution to health funds, AHHA believes states will have sufficient levels of influence when it comes to the use of those funds.

“Creation of regional entities with influence over the allocation of funding within the region and the authority to develop, monitor and improve actual delivery of local services,” AHHA said.

"It is vital for the future of our health care system that these important reforms do not get blocked because COAG members refuse to compromise on funding details."