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Hospital funding crisis ‘not our problem’, says Commonwealth

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The Commonwealth is on a collision course with the states over health spending after Treasurer Scott Morrison declared the second tier of government was on its own despite a looming $35 billion funding gap.

As the nation’s treasurers prepare to meet next month, Mr Morrison has told his State and Territory counterparts that there would be no extra funding from the Commonwealth.

“We all have to manage our budgets,” he told the National Press Club. “Asking for buckets of money doesn’t solve your expenditure problem.”

Several states have been pushing for tax reform, including a bigger slice of the Commonwealth’s tax take, because of a looming shortfall in funding for hospitals and schools.

Changes unveiled in the 2014-15 Budget that are due to come into effect next year are expected to strip $57 billion from public hospital funding revenue over 10 years, creating what AMA President Professor Brian Owler said was “funding black hole” that would have dire consequences for patients.

“Public hospital funding is about to become the single biggest challenge facing State and Territory finances,” Professor Owler said. “Without sufficient funding to increase capacity, public hospitals will never meet the targets set by governments, and patients will wait longer for treatment.”

The AMA’s annual Public Hospital Report Card showed that performance improvements have stalled and, in some instances, are going into reverse, as hospitals struggle with inadequate funding.

Almost a third of Emergency Department patients categorised as urgent are waiting more than 30 minutes for treatment, and elective surgery patients are, on average, waiting six days longer than they were a decade ago.

There had been hopes that Federal, State and Territory leaders would agree on tax changes at a meeting to discuss reform of the Federation next month that would put health funding on a firmer financial footing.

But the likelihood of the meeting appears to be rapidly receding after Prime Minister Malcolm Turnbull ruled out any changes to the GST, which was at the centre of reform plans advanced by several states, including South Australia and New South Wales.

Instead, the Commonwealth appears determined to divest itself as much as possible of responsibility for health funding.

Mr Turnbull said the Federal Government did not want to increase the total tax take “in net terms”, and challenged the states to find their own sources of extra funds for health.

Papers prepared for the Council of Australian Governments meeting in December indicated that the Commonwealth and the states faced a combined health funding gap of $35 billion by 2030, and suggested closing it would require both spending restraint and an increase in tax revenue.