BATTLELINES are being drawn once again in the commonwealth-state health wars, two years after Julia Gillard boasted that her $16.4 billion commonwealth-state package was "a very major achievement" that would deliver new beds and "unprecedented transparency". Who could blame patients, waiting for hours to be seen in emergency departments or in unacceptably long queues for elective surgery, if they are becoming cynical?
Seven years ago, as opposition leader, Kevin Rudd pledged to end the "blame game". Tony Abbott, as health minister in the Howard government, rightly challenged a system under which Canberra funds, and the states run, public hospitals, adding hundreds of millions of dollars in unnecessary bureaucracy. Yet unravelling this bureaucratic knot appears to be an impossible task.
If the Prime Minister's political stocks were higher, her threat to revoke the health reform agreement she clinched, with much fanfare, in February 2011 and fund hospitals direct from Canberra might have been a battle worth fighting. As it is, however, in an election year dogged by leadership speculation, abysmal polling and budgetary problems, not to mention conservative governments in most states, this may well be a problem she could do without. She is already locked into disputes with the states over school funding, the national disability insurance scheme and GST returns.
The fight with Victoria highlights Labor's failure to deliver health funding reform and streamline administration in a policy area that is eroding its advantage in an area of traditional strength. By caving in to Victoria and restoring $107 million of the money cut from the state's health budget on the strength of outdated population figures, Health Minister Tanya Plibersek has put the commonwealth in the firing line to return $1.6bn across four years to the states and territories. Strictly speaking, the commonwealth was right in docking the states because Australian Bureau of Statistics data showed projected population increases on which the original funding was based had not materialised. Disrupting the states' budget processes, however, was always going to cause a political storm. Never mind the fact that Victoria's windfall could prove a pyrrhic victory in the long run because the commonwealth will be sidestepping the state bureaucracy and paying the money directly to hospitals. Rather than paying for more pen-pushers, it will be used to reverse bed closures and boost emergency departments and elective surgery. The Baillieu government, also fighting for its political life, will use the fact that the money has been handed over to argue that federal Labor has been mean and tricky and has finally been forced to give the state its due. The backflip is also a problem for Ms Gillard in that the agreement she signed two years ago forbids direct transfer of payments - despite it being Labor's preferred position. The move could even be subject to a High Court challenge.
Eventually, if governments on both sides of politics want to fix their structural budget deficits, they must end duplication between federal and state bureaucracies. The Opposition Leader as health minister understood that and wanted to force the states to establish community-based boards to operate public hospitals, arguing they would be more effective than state bureaucracies. For now, Ms Gillard's problem will be political fallout.
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