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Wednesday, 23 June 2010
Page: 6250


Mr SWAN (Treasurer) (9:07 AM) —I move:

That this bill be now read a second time.

The Federal Financial Relations Amendment (National Health and Hospitals Network) Bill 2010 delivers a central component of the government’s health and hospitals reform.

This is a landmark economic reform which reshapes the Federation and places health funding on a sustainable footing now and well into the future.

It delivers a nationally funded health and hospitals system for Australians into the future.

A National Health and Hospitals Network will see the Commonwealth become the majority funder of public hospitals for the first time, and the sole funder of primary care and aged care.

In April this year, COAG, with the exception of Western Australia, reached an historic agreement to establish a National Health and Hospitals Network.

This is a direct response to the challenges of ageing and escalating health costs.

It will deliver tangible improvements to the health and hospital system to Australians right around the country.

It does this by dedicating a share of GST to health and the Commonwealth taking on a greater share of growth in health costs into the future. It achieves real efficiency gains through efficient pricing, better planning at the local level, clearer roles and responsibilities, and reducing waste and duplication.

Critical economic reform

This represents the most significant reform to Australia’s health and hospital system since the introduction of Medicare and one of the largest reforms to service delivery in the history of the Federation.

Reform of the health system is necessary so that future generations can enjoy world-class, universally accessible and affordable health care.

On current trends, health and hospital spending would have consumed the entire own-source tax revenue of state governments by 2045-46.

Our reforms are critical to addressing this challenge and ensuring the long-term sustainability of Australia’s health system and national finances.

We are also improving the system by ending the blame game and cost shifting, and providing national leadership while increasing control at the local level.

We are strengthening the whole system, by taking majority funding responsibility for the nation’s health and hospital system

That includes responsibility for 60 per cent of the efficient price for all public hospital services and full funding and policy responsibility for general practitioner and primary healthcare services, and for aged care.

We are delivering system-wide reform to strengthen governance, report on performance transparently, and put in place new national standards.

We are improving the way health services are delivered, through better access to high-quality integrated care focused on the needs of patients, prevention, and greater provision of care outside of hospitals.

We are providing better care and better access to services for patients right now, through $7.4 billion in new investments in better hospitals, better infrastructure, more doctors and more nurses.

Funding arrangements

This bill amends the Federal Financial Relations Act 2009 to implement the financial components of our National Health and Hospitals Network.

Changes to the federal financial arrangements between the Commonwealth and the states include the dedication of around one-third of GST revenue to health and hospital services.

This means that each time any Australian pays $1 of GST at the shops, 33 cents of that will be dedicated to the health and hospital system.

The bill also delivers our guarantee to fund a larger share of the growth in health costs—at least $15.6 billion over the period from 2014-15 to 2019-20.

The bill creates a National Health and Hospitals Network Fund through which payments will be made to the states or joint intergovernmental funding authorities in each of the states.

These reforms are critical for the long-term sustainability of our health system and of the nation’s finances for the future—not just the years ahead, but the decades ahead.

The bill preserves the existing federal financial relations arrangements for Western Australia until it becomes a signatory to the National Health and Hospitals Network Agreement.

Payment arrangements

The bill also provides for payments out of the National Health and Hospitals Network Fund.

No longer will the Commonwealth be signing a blank cheque for hospital funding with little sense of where taxpayers’ money is going.

Instead, the price the Commonwealth pays for hospital services will be determined by an Independent Hospital Pricing Authority.

Local hospital networks will be funded for the services they provide and funding will be transparently reported.

Commonwealth and state government funding for local hospital networks will be channelled through a single body, a joint intergovernmental funding authority to be set up in each state.

In some circumstances, such as in rural and remote areas, block funding will be provided through the states to ensure all Australians receive world-class health services.

These are critical reforms that will improve the transparency and accountability of our health and hospital system.

Impact on federal financial relations

The introduction of the National Health and Hospitals Network also represents a significant change to Australia’s federal financial relations.

The gap between state spending responsibilities and their revenue raising capacities will be reduced over time.

This will help to secure the funding base for health and hospital services into the future and reduce the reliance on less efficient state taxes, yielding productivity dividends across the national economy.

Roles and responsibilities between the Commonwealth and the states have been clarified, reducing duplication and improving coordination.

As a result, these reforms will put Australia’s federal-state financial relations on a more sustainable footing for the future and allow us to better manage health expenditure growth.

I am very proud that in our first term of government we are delivering fundamental reform of our health and hospital system.

Our investment in more doctors, more nurses, and more hospital beds—combined with this fundamental economic reform—will deliver the value for money, and the health and hospital services all Australians deserve.

Debate (on motion by Mrs Gash) adjourned.