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01 Apr 2016

The injection of an extra $2.9 billion of Commonwealth funding for public hospitals will provide some relief for cash-strapped health systems, but still leaves institutions desperately short of the resources they need to meet growing demand for their services, state premiers have warned.

Echoing AMA concerns that the extra money fails to bridge the huge $57 billion hospital funding shortfall created by the 2014 Budget, the leaders of New South Wales, Victoria, Queensland and South Australia said the additional funds would be helpful, but details of how hospitals were to be adequately funded in the longer term remained unresolved.

AMA President Professor Brian Owler said the states would be grateful for any new funding, but the outcome of the COAG meeting was disappointing.

“Today’s agreement goes nowhere near meeting the long-term needs of the nation’s public hospitals, and falls dismally short of replacing the funding taken away from the states in the 2014 Federal Budget,” Professor Owler said.

He said the extra funds would relieve some of the pressure on hospitals in the short-term, but did not provide the funding certainty that was vital for the decade ahead.

Prime Minister Malcolm Turnbull, who hopes to neutralise public hospital funding as an issue in the forthcoming Federal election, used the 1 April Council of Australian Governments meeting to thrash out a deal under which the states will receive an additional $2.9 billion between July 2017 and June 2020, capped at an annual growth rate of 6.5 per cent, in exchange for greater efforts to reduce hospitalisation rates through improved chronic disease care and fewer hospital-acquired infections and other complications.

The deal means that activity based funding and national efficient price mechanism, two reforms that were driving hospital efficiency and which were facing the axe next year, will be sustained until at least 2020.

In announcing the deal, Mr Turnbull acknowledged that the Commonwealth shared responsibility with the states and territories to provide universal health care, but warned that it had less revenue to pay for it.

“We are recognising that we have a serious structural budget problem,” the Prime Minister said. “We have to be clear eyed about our choices”.

Mr Turnbull had hoped the COAG meeting would back his radical plan to give the states the power to raise their own income taxes as a way to increase hospital funding, giving his Government scope to go into the election promising Federal income tax cuts.

But only one premier, Colin Barnett from Western Australia, embraced the idea and it was knocked back by the COAG meeting.

Instead, a proposal to convert tied Commonwealth grants into a share of income tax revenue will be developed.

The state leaders warned the Commonwealth needed to provide much more significant funding if a looming crisis in public hospitals was to be averted.

Victorian Premier Daniel Andrews said that while the agreement signed at the COAG meeting would provide his state’s hospitals with “hundreds of millions in extra funding…it doesn’t replace the billions taken away”.

“I would ask to remain focused on the context here. The fact is that many billions of dollars which will not be flowing to our hospitals because of decisions made in 2014,” Mr Andrews said.

New South Wales Premier Mike Baird struck a more positive note, expressing the hope that there would be a “coming together” between the states and the Commonwealth on long-term hospital funding.

Queensland Premier Annastacia Palaszczuk said Mr Turnbull had recognised that health was the “most fundamental issue” facing the nation, and welcomed the short-term funding deal, which would inject an extra $445 million into Queensland’s public hospitals.

“But there is still a huge gap [in funding] that is going to place a huge strain on our hospitals,” Ms Palaszczuk said.

See also: Hospital cuts will hurt all

Adrian Rollins

Published: 01 Apr 2016