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Hospital cuts put GST increase in the frame

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The Federal Government has sparked outrage among State and Territory governments after stripping them of $20 billion for public hospitals.

AMA analysis indicates that the Commonwealth’s decision to disavow public hospital funding guarantees made under the National Health Reform Agreement 2011 and change future funding arrangements will rip $20 billion out of the system in the next five years.

According to the Budget, the Government will save $1.8 billion between 2014-15 and 2017-18 by walking away from its funding guarantees, and will save an additional $16.4 billion over five years by scrapping its National Health Reform Agreement commitments. It will also save hundreds of millions of dollars each year by dumping the efficient growth dividend payment that was due to kick in from 2017-18.

The move has angered State and Territory governments, and sparked warnings that hospital patients could face even longer delays for treatment.

“State budgets will be in danger of being overrun by public hospital cuts,” AMA Vice President Professor Geoffrey Dobb said. “Patients will have longer waits for public hospital services.”

Public hospitals need certainty of funding in order to plan for and provide services, and the AMA said the Commonwealth’s decision to dump the funding guarantees it had given was a threat to every public hospital, both in the short-term during the introduction of activity-based funding arrangements, and in the longer-term.

But Treasurer Joe Hockey tried to disown the problem, saying that the responsibility for public hospitals rested with the states and territories, and how they made up the shortfall in hospital funding was up to them.

The Federal Government’s move has been interpreted as a dare for the states, who have limited sources of revenue, to back an increase in the GST.

Queensland Premier Campbell Newman said the funding cut was unacceptable, and flagged he would push for an emergency Council of Australian Governments meeting on the issue.

“This whole thing seems like a wedge to get the states to ask for the GST to be raised … we’re prepared to take responsibility, full responsibility, for health and education, but we need proper secure revenue streams so that our populations, states and territories, can actually get the services they deserve,” Mr Newman said.

NSW Premier Mike Baird said he thought the Federal Government’s huge cuts to health and education funding would bring forward debate about an increase in the GST, and backed Mr Newman’s call for an emergency COAG meeting.

But both the Victorian Government, which comes up for election later this year, and the WA Government, have poured cold water on the idea of an increase in the GST.

WA Premier Colin Barnett told the Sydney Morning Herald that “if I was to support an increase in the rate of the GST, as West Australian Premier, what I’d be doing is saying to West Australians, ‘Pay more in GST so more money can go to the other states,’ so I’m never going to support that. Any change to the rate or the coverage of the GST in terms of exemptions will only change if there is also a change to the distribution”.

Adrian Rollins