March 20th 2010

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Articles from this issue:

EDITORIAL: Rudd's hospital scheme: spin before substance

CANBERRA OBSERVED: Rudd lays groundwork for health referendum

NATIONAL AFFAIRS: Tony Abbott's faux pas alienates allies

SOUTH AUSTRALIA: Can SA's Liberals topple Labor's Mike Rann?

FOREIGN TRADE: Australian shareholders suspicious of China's motives

GLOBAL FINANCIAL CRISIS: Gathering crisis engulfs the European Union

FOREIGN AFFAIRS: Australian force in East Timor reduced

OPINION: Labor unconcerned about Australia's debt explosion

DIVORCE LAW: Family Law's unending war on fatherhood

MEDICAL RESEARCH: Cannabis causes psychotic disorders in young users

UNITED NATIONS: Aid for Haiti delayed by condom shipments

OPINION: Eight arguments for school voucher funding

CIVILISATION: The politicisation of modern education

AS THE WORLD TURNS: Couple nurture virtual child as real daughter starves to death; Staring into the chasm; French intellectual victim of hoax

CINEMA: Suspense-filled American war thriller - The Hurt Locker, rated MA15+ (for war violence and language)

BOOK REVIEW: GOING ROGUE: An American Life, by Sarah Palin

BOOK REVIEW: WEDNESDAY WARRIORS: Doing it for the Jumper, by James Gilchrist

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Rudd's hospital scheme: spin before substance

by Peter Westmore

News Weekly, March 20, 2010
The release of Kevin Rudd's long-awaited $80 billion plan to take over the nation's hospitals served as a circuit-breaker to push the Government's home-insulation fiasco, and his embattled Environment Minister Peter Garrett, off the front pages of Australian newspapers.

Rudd's hospital plan envisages that the states will surrender about 30 per cent of their GST revenue to the Commonwealth, earmarked for them since the GST was introduced in 1999, in order for it to be used to fund a federal takeover of public hospitals.

The Commonwealth Government will meet 60 per cent of funding of public hospital services and capital expenditure, and up to 100 per cent of their outpatient services. The states will have to find 40 per cent of funds for hospitals, and meet additional costs associated with ownership of hospital buildings, payment of staff and fixing performance problems.

The plan faces massive obstacles, some involving issues of principle, and others of implementation.

The further centralisation of federal power will be strongly resisted by most Australians. It will give Canberra bureaucrats enormous power over the delivery of hospital services, not merely to people living in the cities, but to those living in regional, rural and remote areas where cost of delivery is much higher.

The plan to apply "one-size-fits-all" efficiency standards to the widely varying challenges facing hospitals in different parts of Australia is bound to fail. More importantly, it is likely to lead to the closure of hospitals in country towns, and a further centralisation of hospital services in the cities.

Former Federal Treasurer, Peter Costello, made the telling comment that "the Federal Government could not run a home insulation program. Do you think it can run every hospital and hospital department in the country?"

He added, "They will say: 'We will recruit people who have experience in hospital management. They will run the services properly.' Which people? The people now running the health system for state governments. The same people running the same hospitals will report to Canberra rather than the state capitals.

"Do you think this will make the hospitals run better? Do you think the federal minister will take responsibility for any failures in the health system? About as much responsibility as Garrett takes for the insulation system. Someone senior and sensible should think about this. And stop it before it begins."

The Rudd plan faces apparently insuperable obstacles from other quarters. It requires the consent of the states, who have to agree to his plan which involves not only the hospital takeover, but surrendering 30 per cent of their GST revenues.

The states have been given until the next meeting of the Council of Australian Governments (COAG) to fall into line.

Under Rudd's plan, every state must agree to amend the GST formula, an improbable scenario with elections to be held shortly in South Australia and Tasmania, and, later in the year, in Victoria.

While it is true that hospitals comprise a significant component of state government expenditures, the fact is that the GST is the principal source of revenue for all state government services.

The states will never accept any plan which involves surrendering a share of the GST while they continue to be held responsible for a large share of the cost of running hospitals, but without having any control.

Not surprisingly, several of the largest Labor states have bridled at the plan, with both Victoria and New South Wales publicly declaring their opposition. Others have asked for more information, which should be seen as a polite rejection.

Rudd's response to this was incomprehensible. He tried to browbeat the state governments into accepting his plan — a tactic which he should have known would alienate him from the very people whose co-operation he depends upon to implement it.

Kevin Rudd's hospital plan seems destined to follow the home insulation fiasco and the wasted billions on school refurbishments as his political legacy.

Credible alternative

Despite the confusion surrounding Mr Rudd's hospital plan, there is a real need for credible solutions to the crisis in Australia's public hospitals, which arises from the fact that they are both over-used and under-funded.

Anyone who has attended hospital casualty facilities is aware that most of those who are there should be visiting their local GP, but are using these facilities because they are free. The inevitable result is that emergency staff are overworked, and patients with severe illnesses face unacceptable delays in getting attention.

Separately, there is not sufficient incentive for most people to take out private health insurance. The Rudd Government's plan to means-test the private health insurance rebate will simply push high-income earners into the public system, worsening the already serious problems of overcrowding in public hospitals.

Peter Westmore is national president of the National Civic Council.

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