Communist Party of Australia

We acknowledge the Sovereignty of the First Nations’ Peoples.


The Guardian

Current Issue

PDF Archive

Web Archive


Press Fund


About Us

Why you should ...

CPA introduction

CPA Policies

CPA statements

Contact Us

facebook, twitter

Major Issues





Climate Change



What's On







Issue #1453      5 May 2010

Rudd’s health revolution

Designed to fail

Kevin Rudd got what he wanted and paid less in bribes than expected. The Labor state and territory ministers returned to their electorates claiming they had bargained hard and got a good deal for public health. West Australian Premier Colin Barnett held out, refusing to hand back up to 33 percent of his state’s GST to give the Commonwealth control of WA hospitals. The public were dealt a very raw deal indeed. Rudd’s national health plan fails to address the most pressing issues and short-comings in the public health system. It is a neo-liberal cost-cutting exercise that will further the privatisation of health care and begin the federal claw back of GST monies from the states.

Designed to fail – asthma cigarettes (WA Medical Museum, Australia).

Rudd and his health minister Nicola Roxon won the political battle in Canberra. With the exception of WA, the states and territories have handed over around a third of their GST income to be ultimately controlled by the federal government.

It cost Rudd $5 billion in promises over the next four years to buy off the Labor states – money that should have been forthcoming anyway to meet the growth in population let alone improvements to the public health sector. The $5 billion will be funded by cuts in other areas – over 260 new childcare centres have been cancelled, cuts in access to the disability pension and other areas still to be announced. At the same time Rudd expects to make “savings” of up to $1.5 billion annually through changes to public hospital funding!


There will be a new structure:

National Health and Hospital Network (NHHN) Fund – pays states GST monies and commonwealth contributions for public hospitals, primary health care, research, capital investment, etc

National Funding Authority – a so-called independent body allocates from the NHHN (60% of costs, states contribute other 40%) to states and territories

State and territory Funds – “system managers” allocate funds to local networks

Local Hospital Networks – around 100 boards manage public hospital services

Independent Hospital Pricing Authority – sets national “efficient price” for every procedure

Australian Commission on Safety and Quality in Health Care – sets national clinical safety standards

National Performance Authority – reports on hospital performance measured against these standards

State based supervisory boards – three members: state, commonwealth and “independent” representatives.

These various bodies have “independent” boards with commonwealth, state, financial and other “experts” still to be appointed. No prize for guessing how many come from the private health industry!

The hospital networks will be able to contract out public patients to private hospitals – a means of subsidising the private sector instead of adequately funding and resourcing public hospitals.

The commonwealth will fully fund and take responsibility for aged care and primary health care, including GP services (Medicare etc), much of which it already does. It will continue to pay out around $4 billion a year in subsidies to the private hospital system through its 30 or 40 percent (aged-based) private health insurance rebate.


The centrepiece of hospital funding is the one-size-fits-all “efficiency price” that hospitals will be paid for each procedure – known as casemix. It will replace block funding of hospitals. Rudd describes it in classic, neo-liberal spin as an “appropriate balance between reasonable access, clinical safety, efficiency and fiscal considerations.” Translated into plain English: safety and speedy access will be compromised to meet cost-cutting targets. Patient need is not paramount.

Casemix does not make allowances for patients with more complex conditions that might need additional procedures or a longer time in hospital, such as the aged, Indigenous Australians, diabetics and others with chronic conditions. A hip replacement is a hip replacement, regardless of what is involved and the hospital is paid the set price for it. If a hospital goes over budget it will go into debt. If it can come in under it gets to keep the profits.

When the Kennett Liberal government introduced a form of casemix in the 1990s costs were cut 28 percent – thousands of nurses and other workers were sacked as hospitals tightened their belts. An impressive performance by Rudd’s standards. Patient churning saw reductions in the length of Victoria’s average hospital stay, the postponement and rationing of unprofitable procedures and the rate of unplanned readmissions rise. In Victoria it is now 6.2 per 100 discharges compared with a national average of 3.7 percent. This figure alone points to the dangers of a system driven by profit not patient need.

No overall strategy

“We don’t have a fair health system,” said Dr Woodruff, president of the Doctors Reform Society. “The least needy get the most care and the most needy get the least care and the Prime Minister, the Premiers, and the various oppositions are ignoring that fact in favour of playing politics with power and money. Nothing substantial has been suggested to address access problems to non-hospital care in a systematic way. Nothing substantial has been suggested to address the problems of public hospitals being too full. Aged care funding suggestions remain woefully inadequate.”

Dental health, primary and preventative health care, mental health and the many community services that are essential to reducing the number of people in hospital are not addressed. For example, 30,000 people end up in hospital every year with infections as a result of oral health issues (Hans Zoellner, chair of the Association for the Promotion of Oral Health).

“Whatever happened to our patients and their constant battles with just finding a doctor to see, or being able to afford the care they need, be it ordinary GP services, mental health, dental care, disability services, allied health services. Whatever happened to concern about their journey through multiple uncoordinated parts of the health system to get the care they require and the huge delays in accessing the same health care their richer fellow citizens can easily access.” Dr Woodruff asked rhetorically.

Beds without nurses?

Rudd’s $5 billion over four years, includes commitments to fund 1,300 new hospital beds, 2,000 mental health places, more than 6,000 new doctor training places and 2,500 aged care beds. These are welcome and desperately needed, but they fall far short of what is required. Public hospitals are underfunded, understaffed and lack basic resources. It is not just about beds.

Rudd has not offered additional funding to increase the number of nurses – just extra beds – let alone increase their wages. Many nurses have been forced out because of the toll that the stressful working conditions takes on their health and because they cannot live on the low wages they are paid. The states will be left to pick up the costs if staff are to be found – at present they claim they cannot afford to adequately staff existing beds.

Likewise there are additional aged care beds but not the funding for staffing – another area of chronic shortage which like nursing in public hospitals relies heavily on the import of staff from third world countries who can least afford to train and lose their health workers.

MySchool – MyHospital

There are strong parallels with the privatisation process underway in education.

The federal government has introduced national testing (performance standards), league tables to compare schools and identify failed schools. The measurement of performance through the NAPLAN tests is not an accurate indication of the quality of education being received in a school. It lays the basis for an education market, where parents shop around. It is only a matter of time before “failed schools” are shut or handed over to the private, for-profit sector to manage. The government is moving towards a voucher system, where a school – private or public – is allocated a set amount for each student according to their year of study.

In the health sector hospitals the “efficiency price” (voucher) is moving in the same direction, treating hospital procedures (no mention of care or nursing) as set price services. Hospitals attempting to provide quality care on the basis of need are set to fail, their performance will be measured by the National Performance Authority (the equivalent of NAPLAN national testing). When a hospital or network fails to meet performance assessments or mounts huge debts, this will give governments the excuse to hand the hospital networks over to private, for profit corporations to manage.


Apart from setting the scene for the further privatisation of public hospitals, the Rudd government has taken the first step towards clawing back GST from states and territories. The education component could be next.

Across the board, commonwealth government is working to wind back the role of states in economic and social and political affairs. The Howard Coalition government, working through the Council of Australian Governments (COAG) took a number of steps in this direction with taxation and key infrastructure (ports, electricity, water, transportation), licencing of professionals, various health and safety regulations, industrial relations.

Costello made it clear that he was prepared to use commonwealth powers to move in when the states fail to meet their responsibilities. He had his eyes on the GST, looking for income to fund wars in Iraq and Afghanistan and an ever-burgeoning military budget. Rudd warned before he was elected that if the states “failed” to fix the public hospital system, then he would move in take it over. That is what he has done.

The Australian government is committed to the further deregulation and opening up of Australia to foreign investors, in particular in the financial, education, health, construction, transport and food areas. It has made these commitments at the World Trade Organisation and in a number of free trade agreements with other countries, including the US.

The Education Revolution and now the Health Revolution are steps in the process of removing what foreign and locally based transnational corporations see as “state barriers” that stand in their way of taking over Australian health, education and other “markets”. Capitalism must continually expand or perish, and these essential public services offer them great opportunities for additional sources of profit-gouging. 

Next article – Culture & Life – “Hands off Russia!”

Back to index page

Go to What's On Go to Shop at CPA Go to Australian Marxist Review Go to Join the CPA Go to Subscribe to the Guardian Go to the CPA Maritime Branch website Go to the Resources section of our web site Go to the PDF of the Hot Earth booklet go to the World Federation of Trade Unions web site go to the Solidnet  web site Go to Find out more about the CPA