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Brumby stands firm on health reform -

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Premier John Brumby speaks with Kerry O'Brien about Rudd's Federal health take over.


KERRY O'BRIEN, PRESENTER: The Victorian Premier had other concerns as well today, with a detailed
challenge to Kevin Rudd ahead of the Commonwealth-State health summit on dramatic reforms to the
public hospital funding system.

The Prime Minister is insisting on assuming 60 per cent control of public hospitals, taking back 30
per cent of the states' GST revenue to fund it. John Brumby instead is calling for a 50-50
partnership with no surrender of the GST by the States, and the Commonwealth providing billions
more in money for public hospitals.

Mr Brumby's 31-page alternative health plan includes a call for more GP services to take the heat
off hospital emergency rooms, more on aged care, more to fight chronic disease, worker health
checks and training for another 200,000 health workers.

Mr Rudd has threatened a referendum seeking Federal control of public hospitals if agreement in
principle can't be reached on his reform plan at the health summit on April 19.

I spoke with the Victorian Premier earlier today. He was in his Melbourne office.

John Brumby, Kevin Rudd wants the Commonwealth to be the dominant partner in public hospital
funding, 60-40. You say it should be 50-50. Why?

JOHN BRUMBY, VICTORIAN PREMIER: What I say is that the Federal Government needs increase their
funding to go back to the old formula of 50-50. The 60-40 is really not what it seems, Kerry. It's
really just a recycling of GST money, so 30 per cent of the GST money is taken off the States and
comes back with a Federal Government label on it labelled as Federal money 60-40.

The reality is, there would be far more money and resources for the States in this and far more
patients being treated if the Commonwealth lifted their own effort to 50-50 funding as it always
was originally under the Medicare agreement.

KERRY O'BRIEN: But today the Prime Minister has made plain he's not going to shift from the
position that the Federal Government should be the dominant funder of the public hospital system.

Is that a deal breaker for you?

JOHN BRUMBY: The only thing that motivates me on this, Kerry, is what's best for Victorian patients
and what's best for our system of health care in Victoria and nationally and I think most of the
commentators have said that Victoria has a good health system, probably the best in Australia.

We already have activity-based funding; we already have local health networks. The proposition
that's been put in terms of funding won't mean a single extra cent for Victoria. And for our health
system the most important thing is more money now to treat more patients.

And I just repeat, all that is happening under the Prime Minister's plan is that money is being
taken off the States - that is the GST money - it is being recycled back as Commonwealth money and
it is being recycled back in a way that will be more confusing, not less confusing in relation to
who is in control of health services.

KERRY O'BRIEN: Do you have an in-principle objection to giving the Commonwealth back 30 per cent of
GST revenue or just an objection to the way that money would then be used?

JOHN BRUMBY: I have a number of fundamental objections but two will do for a start and the first
is, we've got a signed inter-Governmental agreement - which is all of the states and the
territories and the Commonwealth - in relation to the GST. It is an important source of revenue to
the states and in turn, what we have done in Victoria and what other states have done, is cut and
abolished a range of state taxes in return for that GST revenue.

So the first point is I would fundamentally object to starting to hand that over because it is the
thin edge of the wedge and where will it end?

But secondly, I object strenuously to the fact that these funds are being taken from our state and
from other states and then being recycled back as "New Commonwealth money". What our analysis shows
absolutely conclusively is that there is no new money in this for Victoria.

Indeed, over the space of a decade under the arrangements which the Prime Minister has announced,
the total real shift in Commonwealth funding is from 40 per cent to 41 per cent and that is why,
Kerry, the 50-50 is so important.

If the Commonwealth lifted its effort, increased its effort, to match that of the states we would
see more than $1 billion extra of funding into the system in Victoria.

And can I just repeat, Kerry, for our system which fundamentally is a good system, the one thing
that holds it back is a lack of more support from the Federal Government and if they were to put
that extra money in, we would see a transformation in our hospital system with more than 100,000
additional elective surgery patients treated each year.

KERRY O'BRIEN: Are you saying that in no circumstance will you accept a formula whereby the
Commonwealth has the dominant share in public hospital funding?

JOHN BRUMBY: No, I'm not saying that. If the Commonwealth wanted today to say that they were
prepared to put what in our case would be $2.4 billion extra on the table this year and forever
after and do the same for the other states to lift their real funding share to 60 per cent, I'd be
quite comfortable with that providing we could get some agreement on the other related matters
about how the funds are paid and how they are accountable and how transparent they are and how
people know who is actually in charge of hospitals. But putting those details aside, if this was
real, new money that the Federal Government was talking about, of course we'd have a conversation
about that.

And indeed our proposal, if you think about it logically, is to get to 50-50. I mean, the Prime
Minister says he wants to get to 60-40. Well, surely a step along the way is 50-50 with new
Commonwealth money. But you see, Kerry, the Commonwealth won't put that up new money, they won't
agree to 50-50 because basically there is no new money in their so called 60-40 proposition.

It is simply a recycled GST payment.

KERRY O'BRIEN: So for Kevin Rudd's health reform program to go ahead with your support, it all
comes down to money. It does not matter so much about the wrappings, it doesn't matter whether the
Commonwealth is the dominant funder or not, but it does come down to them providing you with
significantly more money or there is no deal?

JOHN BRUMBY: No, that is not the only issue but I have tried to be constructive today and what is a
very complex area so I'm not trying to confuse the issues, but we are broadly in support of
activity funding. We do it in Victoria. We are broadly in support of what is proposed in health
networks. We do it in Victoria.

We have fundamental objections about the confused funding arrangements which are contained in the
Prime Minister's plan so we have suggested a single state-based pool so there would be a pool
funding in Victoria, one in New South Wales, one in WA, Queensland, et cetera, with clear lines of
accountability between the health networks and that pool, so subject to all of those things and a
myriad of smaller details - there are 84 proposals in total.

Subject to those, the fundamental issue for us then comes down to, is there more real resources in
this plan or is it just a recycling of money?

And the reality is, Kerry, at this point in time it is a mere recycling of GST payments and I don't
think any responsible Government could support those arrangements. I couldn't.

KERRY O'BRIEN: If there is no agreement at the health summit with the Premiers on April 19, do you
believe Kevin Rudd could win a referendum allowing the Commonwealth to take over public hospital
funding on the basis of his plan?

JOHN BRUMBY: Well, hypothetical question...

KERRY O'BRIEN: But a potentially very real one.

JOHN BRUMBY: Well, I'm not sure about that, Kerry.

The document we put forward today is we put forward in a construction way. There's going to be a
debate about this and I'm sure the Prime Minister will be unhappy about some of the things we have
suggested and said today, but health is the biggest item of expenditure of the states. It's the
biggest thing we do, it affects everybody's lives. We've have to get it right. This is the biggest
debate about health since Medicare in the 1970s, so we need to get it right, so there's going to be
a spirited debate. I think that's a good thing but it's got to be the right plan.

KERRY O'BRIEN: I assume you would oppose that referendum based on the Rudd plan as it stands now?

JOHN BRUMBY: I would. Yeah.

KERRY O'BRIEN: And have you caucused with other premiers on your plan? Do you have any sense of
what support your plan outlined today would have from the other State Premiers?

JOHN BRUMBY: Well, look, I've been in contact with the other State Premiers. I think you'll find,
Kerry, they've all got different views and different concerns. I think all of the Premiers, me
included, would welcome the Prime Minister's genuine interest and commitment in improving the
health system but all the Premiers would have concerns about different aspects of the program.

Some are very concerned about health networks, about what it will mean in rural areas. Some are
concerned about activity funding and what that would mean again in some of their specialist
hospitals and some of their rural hospitals and a number of the states of course, 19 I think, would
have a fundamental objection to handing over 30 per cent of the GST - again, to simply see it
recycled with a different descriptor from the Commonwealth Government.

So there's going to be a range of concerns that the States will have. Again, that's why in trying
to be constructive today with this document I have set out five key principles which I think could
be achieved.

That is, a move towards activity funding, a move towards LHNs and a better and more transparent
funding arrangement through a new Australian health care pact, 50-50 funding paid into a pool with
the state clearly responsible so that in the future any patient who has a problem in the hospital
system knows exactly who to talk to or who to blame and I don't think that's clear under the Prime
Minister's proposal.

KERRY O'BRIEN: John Brumby, thanks for talking with us.

JOHN BRUMBY: Thanks, Kerry.