Dr WOOLDRIDGE (Health and Aged Care) (6:09 PM) —I have no desire to get into a long debate. There is no possibility of the government and the opposition reaching any common ground on this because there is a very simple thing that the opposition is overlooking—that is, we do not run public hospitals. The states run public hospitals.

Ms Macklin —They're no good. That's why you should do it.

Dr WOOLDRIDGE —It is all very well to say you should turn the Australian health care system on its head, but that is not going to happen in the next five years. Given that we do not run public hospitals, I cannot tell the states what to do.

Ms Macklin —Exactly!

Dr WOOLDRIDGE —Exactly, so you are cutting out your own argument. We do control private health insurance. I am doing something to try to help those with private health insurance. I have already done a lot by increasing the health care agreements by an amount of money that the opposition would have thought unimaginable and certainly was much better than it was able to do in 1993 or 1988.

If the benefits are equivalent to what is happening in a public hospital, then it is the role of the state, not the Commonwealth. If hospitals are strapped for cash, that is because of the agreement signed in the dying days of the Keating government in 1993. What happened there was that the Commonwealth took money out of the financial assistance grants to the states and put it into the health care grants. The states were, in a net position, not a lot better off, except their hands were tied. Clearly, they had to cut back on their own resources into health. The net effect was that the health care agreement was a sham and public hospitals have suffered.

We have not done that. Any extra money we have put into the health care agreements is new money. We are not robbing the states financial assistance grants to do it. The states do have flexibility that they did not have under the old system to do this if they wish. I think they would be silly not to do it, but I cannot compel them to do it. The whole tone of what the opposition is saying is, `Well, just get the states to do this. If they're not going to do it, we'll fix it up in five years.' That is not the way Commonwealth-state relations work. It is not the way it worked under the Labor Party and it is not the way it works under us.

The shadow minister talked about an anomaly. In fact, what we are trying to do is correct Labor's anomaly—that is, the anomaly whereby you get 100 per cent rebate on the schedule fee if you have a procedure done in rooms and an 85 per cent rebate if it is done out of rooms. That is because private health insurance can cover the other 25 per cent. So you have an incentive now to have the highest cost treatment. This is something that, in a small way, is helping drive costs in the private health care sector.

Finally, again, the shadow minister said, `Give it $30 million if it does fix it in five years time.' I am sorry. Having opened up a new avenue of cost shifting costing the Commonwealth $150 million for no net gain, I am not prepared to do that. Having some idea of how expenditure works in government, I can assure you were you in government you would not be allowed to do it either. We believe that the opposition, while they may be sincere, are misguided. They do not understand how Commonwealth-state relations work. We will not be accepting this amendment.