Senator ALLISON (1:12 PM) —The Health Care (Appropriation) Amendment Bill 2003 provides the Commonwealth contribution to funding our public hospital system. The government argues that $42 billion over five years is an increase. The states argue that it is almost $1 billion less than the previous budget for the same period. It also happens that the amount of $918.4 million that the states argue is a shortfall is roughly equivalent to the government's Medicare package—I will come to that a bit later. The federal government says that for the first time the states are being challenged to be more transparent in their funding to hospitals and to contribute the same growth amount as the federal government. But, of course, this is simplistic. What we do know is that the growth factored into this bill is around five per cent in nominal terms, whilst in the previous five years it was over seven per cent. This in itself is concerning given that the government's Intergenerational Report drew attention to the effect of an ageing population on the health budget.

We ask why the federal government would effectively be reducing its contribution when we are aware of the challenges that the public hospitals face in our country. Emergency departments have seen huge increases in patients—these are of course people who cannot afford fees the doctors charge in their area. Funding formulas continually squeeze hospital budgets, waiting lists are still too long and so on. The government's argument is also simplistic because the traditional boundaries between federal and state health authorities are continually shifting. What was once the clear province of the states to provide an acute hospital setting is no longer the case. Intensive home based treatments for the chronically ill and for those with serious diseases are increasingly becoming technologically possible and, certainly, it is what the ill would prefer. In the long run, home based or out of hospital treatments are less expensive than hospital based care; however, they are only an option when someone takes responsibility for them and they are properly funded.

The 2003-04 budget papers are lower by $918.4 million than previous estimates of funding for health care agreements. The flimsy premise on which this is based—I quote the portfolio budget statement—is:

We say that that is an extraordinary justification. We have here an analysis based only on the volume of admitted patients, with no regard for whether or not each acute care episode is more expensive. Of the most unwell are those treated in hospital. With less acute cases treated outside the hospital walls it is also the case that the intensive care necessary in hospital is on average more expensive per episode. As well, there is a strong push for reducing the length of stay in hospital, endorsed by this government and its health department. Worldwide, hospitals are now viewed as expensive and often inappropriate places to recuperate. As long as the reduction in the rate of growth is appropriate and does not compromise quality, any government with long-term vision would be rewarding the states. Of course, the figures the government uses to justify the reduction in state funding may be due to the inadequacy of performance data held by the federal government. The ANAO audit report No. 21 entitled Performance information in the Australian health care agreements for the 1998-2003 appropriation period concluded:

· monitoring State and Territory conformance with the conditions and principles of funding;

· providing an informed assessment of progress against AHCA objectives;

· and monitoring the efficiency of the AHCAs.

This is a serious lapse of accountability, the Democrats say, and it appears to suggest that this government accords very little priority to the principles underpinning its grants to the states on Medicare. That is, the lack of performance information allows greater political ambiguity and a lack of accountability of a substantial amount of taxpayer funds for one of the fundamental services of government: the provision of good quality health services. One needs to question why this might be so and why so few resources within the health department are directed towards ensuring the principles of efficiency, quality, appropriateness, accessibility and equity of health services as agreed under Medicare.

Is the answer that the government is not committed to ensuring that these principles are upheld? One might look to where the reduction in outlays has been allocated to examine this government's priorities. As I said before, the reduction of $918.4 million is the outlay required for the Medicare package. The government paid $140,000 just to produce the title—A Fairer Medicare, and we all know that it is not fairer. The marketing has not fooled us and it has not fooled anybody else, as far as I can see. It is galling that such misleading and wasteful marketing has cost taxpayers so much and that the minister for health shows no sign of taking responsibility for this particular poor performance. In fact, $140,000 would go a long way to assist funding some self-funded, resource-stretched organisations, such as those for cystic fibrosis or motor neurone disease, which exist on the goodwill of volunteers.

The Democrats say that the outlays for the Medicare package which shift costs to the sickest and the poorest individuals are budgeted at $917 million. I do not think it is unreasonable to suggest that the government is not only dismantling Medicare with this package but also using funds from public hospitals to do so. This government has eroded confidence in the public health system by marketing itself as financially responsible and claiming that no more money can be found while at the same time happily funding those policies it sees as a priority, such as the $2.4 billion for private health insurance rebates.

Let there be no mistake: the Democrats want to see financial responsibility in government, but diminishing investment in hospitals and in quality health care is irresponsible. We think that government priorities need to be more transparent. This requires good quality information, which is currently not available, and some mechanism for inspiring public confidence in the process. Given the abject failure of governments to date to undertake this process in a collaborative fashion, I believe there needs to be a change in that mechanism.

At the time the National Blood Authority was debated in the Senate, I congratulated the minister on achieving a collaborative model with the states to establish a state-Commonwealth body for the collection, dissemination and coordination of blood supplies. That demonstrated that where there is political will, a positive outcome can be achieved across Commonwealth-state divides. The Democrats have been calling for an independent arbiter in health funding since February this year. Just this week, this approach was endorsed by the Australian Health Reform Alliance, which consists of eminent groups such as the Australian Consumers Association, the Australian Council of Social Service, the New South Wales Nurses Federation, Catholic Health Australia, the Australian Salaried Medical Officers Federation and the Royal Australian College of Physicians. However, the minister rejected this idea, on the basis that it adds another layer of bureaucracy. I find that an astounding comment. The states and the Commonwealth have been embroiled in working parties negotiating meetings for over a year, possibly two years, with eight subgroups looking at ways to improve health care delivery. These working parties have essentially come to nothing. I challenge the minister to provide us with a costing of the wasted effort that went into a process that in the end was totally ignored by the minister.

As I envisage it, this independent arbiter could have the authority to build on the collection of data already held by the health department, the Health Insurance Commission and the Australian Institute of Health and Welfare, as well as hospital data from the states. The arbiter would have the authority to request and monitor data pertaining to services and service costs, and Australians could be confident that what they get is not just another product of political argy-bargy and spin wars between Liberal and Labor governments. The Commonwealth and states could agree to a global budget at the beginning of an appropriation period, with an agreement about how those funds would be spent—that is, both acute care services in hospital and after- and pre-care in the community. An acknowledgment would be made about the proportion of spending that the Commonwealth excludes for the provision of primary care, including pharmaceuticals, but grants would also be included for the states to provide primary care in rural and remote areas.

I hope that in time more funding for primary care will be allocated to the states, with the arbiter overseeing this to ensure national coverage and consistency of quality. However, we recognise that all changes need to be incremental. Where there are significant changes in the mix of primary and acute related services, this needs to be addressed by changes to annual funding, and this would be within the scope of the arbiter's authority. This represents a significant reform from the present situation, but it is time to come up with some solutions. We need to keep this in perspective, of course—we as a nation do have very good quality health services and very good health outcomes, but there is a tremendous potential to improve on where we are and to make the most of the excellent skill base we have in our medical and health work force.

We will support the bill. However, we are not happy that funding for hospital services has been reduced, as I have already said. The budget surplus of $2.4 billion has been wasted on propping up private health insurance, an estimated $1 billion leakage from the PBS system and a costly war against a country that did not, as most us knew, have weapons of mass destruction—to name just a few areas in which savings could have been made to better fund our hospital sector. We are not happy with the federal and the state governments still being at loggerheads over everything from hospital funding, to disability funding, to housing funding. People are sick of those two levels of government not being able to get their act together on hospital funding and on other issues. We suggest that an arbiter might be a very good solution to sort this out. I foreshadow that the Democrats will be moving a second reading amendment. It has not yet been circulated, but I understand that it will be shortly.