Friday, September 28, 2007

Federal-State Health Funding

On Tuesday (25-Sep), a woman had a miscarriage in a public toilet at Royal North Shore Hospital in Sydney. On Wednesday, another lady contacted the media to say she had had a similar experience 2 years ago. Both had gone to the hospital, and been waiting for more than 1.5 hours. The experience of both could only be described as shattering.

Triage sets priorities for waiting patients. Those most at risk (chest pains, breathing difficulties) are treated sooner. The process relies on assessment, and on available nurses and doctors. Both are in short supply. RNS has vacancies for over 60 registered nurses, and an unknown number of doctors. It underwent a restructure last year - presumably to reduce costs.

Health is one of the "big 3" budget items in NSW (the others are educations and police), the proportion of the budget spent on each of them is increasing. Health now uses about 26% of NSW's budget. While many call for more funding, no one disputes the need.

How to properly fund the provision of State services is a much bigger issue. States cannot reasonably borrow to pay for recurrent expenditure. ie money spent each year in running the services, the same way that we cannot relentlessly borrow to pay for food and regular household bills.

Since the Hawke-Keating years, the % of GDP provided to the states has fallen. Under John Howard and Peter Costello is is at its lowest point - just 5% of GDP. Yet the costs borne by states has risen inexorably. If the states, and NSW in particular, cannot adequately fund the required levels of service using the money we pay in GST, there are only 2 options:
  1. we pay more tax - eg by increasing GST from 10% to , say 12%, or more income tax to the Federal Government
  2. the Federal Government releases more money to the states, possibly as tied grants for specific service areas.

John Howard has 3 fundamental objections to increasing Federal Government grants to the states:
  1. He considers the budget surplus his, to be used for the benefit of the Liberal Party, and his re-election. Last election he splurged $6 billion in voter "sweeteners": we're paying higher interest rates partly because of that largess.
  2. He has a fundamental objection to helping fund Labor governments to provide services. That doesn't help him.
  3. He has a fundamental objection to public services: he would much rather spend Federal money helping private companies deliver the same services, because he retains a measure of control, and he can take "credit".

States need to be have increased funding to provide the services we "demand". That money must come from our taxes, either new, increased, or existing income tax. Perhaps we really do need to look at a new Federal-State funding model. We will need a different Federal Government to do it, though.