Australian Financial Review, Australia

23 Jun 2015, by Phillip Coorey

General News, page 1 - 345.00 cm
National - circulation 57,451 (MTWTF--)

Copyright Agency licensed copy

(www.copyright.com.au)

Leaked proposal

ID 423917813

PAGE

Pressure to raise GST

Make states
fund health:
PM's office
Exclusive
Phillip Coorey
Chief political correspondent
The states would lose up to $18 billion a
year in Commonwealth support for
public hospitals and be left to fund and
operate the system by themselves,
under one option prepared by the
Prime Minister's department as part of
the Federation reform process.
The leaked proposal brings into play
the prospect of the states having to
raise the goods and services tax or find
another funding source by accepting
that the "ongoing financial durability of
this option is likely to be challenged"
unless the states could find the money
by cutting back on hospital admissions
and addressing shortfalls in primary
care.
"Durability will also be challenged if
the states and territories do not have
access to adequate revenue," it says.
The option is one offivepresented by
the Department of Prime Minister and
Cabinet in a green paper on reforming
the Federation by seeking more efficient ways to run the public hospital
and public schools systems.
If s leaking follows the disclosure on
Monday of the options to change the
funding of schools, including meanstesting public schools so wealthier parents had to pay more.
Labor accused the government of
contemplating a "school tax", prompting Prime Minister Tony Abbott to
unequivocally rule it out
"Not today, not tomorrow, not ever,"
he told Parliament

"If the states and territories want to

charge wealthy parents fees for public
schools, that is a matter for them."
NSW and Western Australia quickly
scotched the option, with WA calling it
stupid.
Mr Abbott did, however, compliment South Australian Labor Premier
Jay Weatherill who, The Australian
Continued p4
Editorial Living standards drift south p46

From page 1
Make states fund
health: PM's office
Financial Review revealed on
Monday, wants to extend the GST
to financial services as he seeks to
reshape the GST debate ahead of
next month's federal and state
leaders retreat to discuss hospital
and school funding.
"Obviously, there is a federation
reform white paper process taking
place now," Mr Abbott said.
"We are perfectly happy to see a
broad debate about the future of
reform in this country, but I do
have to say that the actual running
of public schools is entirely a matter for the states and territories."
The leaked green paper on
health says the five options
stemmed from consultations with
stakeholders and the states and
territories.
The states provided about 54
per cent of public hospital funding

totalling $34.7 billion in 2012-13.

The Commonwealth contributes
37 per cent, which will soon level
off at about $18 billion a year, while
the remainder comes from individuals, health insurers, workers
compensation and motor vehicle
insurers.
Option one, which mirrors the
recommendation in the government's commission of audit,
would give the states and territories full operational responsibility
for public hospitals. "The Commonwealth would no longer
provide funding for public hospital services and would have no
role in setting operational targets
for public hospitals," it says. Its
role in primary care and private
health would be unchanged.
The recommendation is likely to
be controversial given that in the
2014 budget the Abbott government withdrew $80 billion in
funding for schools and public
hospitals over the next decade.
This was designed to force the
states to consider new revenue
options such as an increased GST
or a GST with a broader base.
The second option is for the
Commonwealth to establish a
benefit scheme similar to the
Medicare Benefits Schedule for all
hospital treatments, regardless of
whether they were performed in a
public or private hospital. The
states would cover the gap
between the benefit and the actual
cost for public patients to ensure
they were still treated free.

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Australian Financial Review, Australia

23 Jun 2015, by Phillip Coorey
General News, page 1 - 345.00 cm
National - circulation 57,451 (MTWTF--)

Copyright Agency licensed copy

(www.copyright.com.au)

ID 423917813

"This would be the public hospital equivalent of bulk-billing in

general practice," it says.
The third option would see the
Commonwealth and states jointly
responsible for funding individualised care packages for patients
with or at risk of developing
chronic or complex conditions.
Option four would see the establishment of regional agencies
which would purchase health services for people in their catchments. The Commonwealth and
the states would put their funding
into a pool from which payments
would be made to purchasing
agencies. The fifth option would
see the Commonwealth become
the single government funder of
health services. It would withdraw
all funding from the states and disburse all health money itself. A
purchasing agency would commission a range of services from
public and private providers based
on individual community requirements.
The paper's authors' stress that
the order in which the options
appear does not indicate any preference.
It says option one, under which
the states would have full operational and funding responsibility
for public hospitals, "delivers clear
lines of accountability".
"Australians would know who
to hold to account for the provision of better hospital services," it
says.
"This would improve incentives
for increasing the efficiency of
public hospitals."

PAGE

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