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I acknowledge the First Australians on whose land we meet, and whose cultures we celebrate as among
the oldest continuing cultures in human history.

Thank you for the invitation to join you this morning. This year is an historic year for health
reform. Right now, the Government is involved in a significant national economic debate: a debate
about economic management and economic responsibility; how we build a stronger Australian economy
into the future; how we ensure all Australians share in the benefits of our natural resource

This debate is ongoing and the Australian Government will be out there, making the case for
significant tax reform, between now and the election.

Amidst that national debate, we are continuing the fundamentally important work of national health
reform. This work cannot wait. Our health and hospitals system is at a tipping point, as the
National Health and Hospitals Reform Commission said last year. The pressures of rising demand, an
ageing population and the increased costs of medical technology in coming years will push it beyond
that tipping point if we do not.

That is why the Australian Government has taken on the great challenge of building a 21st century
national health and hospitals network. Last month we concluded an historic agreement on health
reform at COAG. As I said at the end of that meeting - our work has only just begun.

In this historic year, I want to acknowledge the contribution that the Australian Medical
Association has made to the health policy debate - and the contribution the AMA has made to the
Government's national health reform agenda; reforms that are long overdue; reforms that health
professionals have told the Australian Government are needed - so that Australia has a strong,
modern and sustainable health care system for the 21st century.

Today I will make remarks on three matters.

First, I will discuss how the Government is addressing the priorities for health care reform
identified by the AMA.

Second, I will make an important announcement on strengthening the role of doctors in providing
clinical leadership in our hospitals.

Third, I will address the importance of general practices in the Government's plans for the
National Health and Hospitals Network.

On 16 September last year, Andrew Pesce presented the Government with the AMA's Priority Investment
Plan at our consultation with the AMA and the medical colleges. This was the first of many
discussions that Nicola Roxon and I have had with Andrew in addressing these priorities as part of
our national health reform agenda.

The key change the doctors have been calling for is an end to the blame game between the
Commonwealth and States over the funding of our public hospitals. The Australian Government has
acted on that call with our blueprint for the National Health and Hospitals Network that is
nationally funded and locally run.

Under our reform plan, the Commonwealth becomes the majority funder of public hospitals and will
pay a fixed majority share - that is, 60 per cent of the efficient price of every hospital service,
set by an independent umpire, to take the politics out of health funding.

This will end the five-yearly cycle of Commonwealth and State governments finger-pointing at each
other over hospital funding. It will ensure that the Commonwealth contribution to public hospitals
is permanently linked to health service demand and increases in cost.

In addition, as the majority funder the Commonwealth will no longer have an incentive to cost-shift
into the hospital system. The Commonwealth will ensure that patients have appropriate access to
high quality GP services in the community, because it will otherwise foot the bill for more
expensive hospital care.

Doctors also called for more investment. The Australian Government is investing an additional $7.3
billion in the health system over five years. We are addressing problems in the health system that
have been of longstanding concern to the AMA:

ò $750 million to support the staged introduction of a four-hour National Access Target to reduce
emergency department waiting times.

ò $800 million to support a National Access Target for 95 per cent of Australians to receive
elective surgery in clinically recommended times.

ò $1.6 billion to fund more than 1,300 new sub-acute care beds - and, to address concerns raised by
the AMA that this increased funding could just be lost in bureaucracies, the COAG Agreement will
specifically require States and Territories to actually increase bed numbers.

ò $120 million for capital investments for around 286 additional places in multi-purpose services.

The way hospitals will be funded aligns directly with what the AMA called for in its priority
investment plan. Hospitals will be funded through a single source - a National Health and Hospitals
Network Funding Authority, which in each state will combine Commonwealth and State funding.

There has been a lot of conjecture about the significance of the COAG agreement and arrangements
for how hospitals are funded. The COAG agreement goes further than our original reform blueprint by
requiring that full transparency will apply not only to Commonwealth funding of hospital services,
but State and Territory funding as well.

I welcome this as a change for the better. For the first time Australians will be able to see
transparently how their hospitals are funded from both levels of Government - and how funds
dedicated to health are spent.

The AMA also called for national targets and performance monitoring - and in each of these key
areas - the National Health and Hospitals Network has delivered.

The AMA also called for greater clinical input into our hospital system. This is the second matter
I wish to address today.

During the past year I have had hundreds of conversations with doctors, nurses and other health
professionals in hospitals across the nation. One of the most common messages I heard was that
doctors feel locked out from decision making on the ground in hospitals where they work.

A key reform in the new National Health and Hospitals Network is the establishment of Local
Hospital Networks, which put clinicians and local communities back at the centre of delivering
hospital services. Local Hospital Networks will be responsible for running hospitals - instead of
State Health Departments, Area Health Services and the other centralised models in place today.

Clinical leadership will be an integral part of Local Hospital Networks. Today I want to make an
important announcement about how we will achieve this goal.

The COAG agreement we have secured will put in place the structure that clinicians have sought - a
locally run system, with decisions located closer to local doctors, nurses and allied health
professionals, and today I am pleased to announce that we will reinforce this new structure with a
financial commitment.

The Government will invest $58 million to establish Lead Clinicians Groups in Local Hospital
Networks and at a national level.

This is an investment in better leadership for better hospitals and better healthcare.

Locally, Lead Clinicians Groups will guide Local Hospital Networks on:

ò how national best practice is best delivered locally.

ò how we can best improve quality and safety;

ò service planning and the most efficient allocation of clinical services within the Network, and

ò developing innovative solutions that best address the needs of local communities.

These Groups will be made up of local health professionals - doctors, nurses and allied health
professionals drawn from within each Network. Some States have already moved in this direction and
we will work with them and professionals on making sure this commitment is complementary.

This Government is committed to ensuring that Local Hospital Networks turn to the expertise of
their Lead Clinicians in determining how they can best deliver on the tough national standards we
will be seeking. I have already made clear that clinicians will be represented on Local Hospital
Network Governing Councils.

We want to ensure that clinicians have confidence in the Governing Council, and that clinical
representatives are the best people for the job. This Government believes that local clinicians
will often be the best people for the job - and Local Lead Clinician Groups will also be approached
to nominate clinicians to sit on the Governing Council of their Local Hospital Network.

In addition to the local groups, the Government will also establish National Lead Clinicians Groups
to develop and encourage the use of evidence based clinical guidelines. They will help set national
standards - which local Lead Clinicians Groups can translate into best practice in communities'
right across the country.

As a result of these measures, at both a National and Local level - doctors, nurses and allied
health professionals will have a permanent and influential voice in our health and hospitals
system. This is an important reform of the governance of our health system and I believe it will
deliver safer, higher quality health care, to the benefit of patients and their families.

We look forward to working with the AMA on the development and implementation of Lead Clinicians
Groups, as we work to ensure that medical professionals play the fullest possible role in shaping
the healthcare system of the future.

Together with the changed funding arrangements outlined above, local clinical engagement represents
a key reform in delivering a nationally funded and locally run healthcare system for the future.

The third matter I want to address today is how we provide for better General Practice and primary
health care.

As the majority funder of the entire health system, the Commonwealth now has a direct financial
incentive - one that it has never had before - to help Australians stay healthy and out of
hospitals. That can be achieved through improving GP and primary care, better prevention and
investing in electronic health records.

Less than a month after reforms were agreed with the States, the Commonwealth rounded out its
health reform agenda with a $1.2 billion investment in GP and primary care. This investment is a
reflection of a new era in healthcare in Australia - where the Commonwealth has the incentive to
improve primary care, based on international evidence that better primary care delivers better
health outcomes.

This all starts with having high-quality, well-trained medical staff, and if we're to build the
health workforce we need for the future, we need to make the right long-term investments, as the
AMA has long argued.

The Australian Government has announced a $1.2 billion investment to train more doctors, nurses and
allied health professionals.

ò This includes 1,375 more general practitioners practising or in training by 2013, and 5,500 new
GPs or GPs undergoing training over the next decade.

ò It will provide for 680 more specialist doctors over the next decade.

ò And it will deliver 975 places each year for junior doctors to experience a career in general
practice during their postgraduate training period.

This package is the single largest expansion of Australia's health workforce in Australian history.
The AMA has played a key role in the design of the health workforce plan, and we appreciate that

The Government recognises that GPs are at the heart of primary care services in Australia and we
want to provide you with the extra support you need deliver the best possible care for your
patients. We will support GPs expand their practice and deliver additional services by investing
$355 million to upgrade 425 existing general practices and primary care facilities across the
country, and to provide a further 23 GP Super Clinics.

Over the coming weeks, the Government will be opening the first round of applications and I remain
hopeful that the Opposition will decide to support this policy.

We will also provide $390 million to expand support for around 4,600 full time equivalent nurses
working in general practice in a major boost to primary care. For this first time, GPs in urban
areas will be eligible for funding to help employ practice nurses. This will mean general practices
are provided with annual incentive payments of $25,000 per full time GP for a registered nurse and
$12,500 per full time GP per enrolled nurse.

The Government will also invest $449 million to improve care for people with diabetes. This will
mean that where patients diagnosed with diabetes and their doctors choose - they will have the
option of enrolling at a GP practice to help them access a range of additional services.

Practices will be able to use this funding flexibly to support general practices in helping tailor
care around the needs of individual patients. We will ensure that patients will continue to be able
to see any GP of their choice - for example, if they are on holiday in a different city.

This model represents a significant change in how patient care for diabetes is funded, and we will
continue to discuss the detail of this policy with the AMA.

The Government will complement its investment in empowering local clinicians to have more of a say
in running local hospitals by establishing a network of locally-run Medicare Locals. Medicare
Locals will support GPs and primary care organisations in improving access to health services in
the community, and driving integration with Local Hospital Networks and aged care services.

For instance, a Medicare Local, in consultation with GPs, might identify that there is a
substantial need for mental health services in an area - and organise a roster of allied health
professionals such as psychologists to provide sessional services across a number of GP clinics.

Planning and management of individual patient's care will remain the responsibility of their GP and
Medicare Locals will help complement services provided by GPs. For example, Medicare Locals will
play a key role in improving access to GP services after hours.

Each of these investments will directly improve services today, but to keep Australians healthy
into the future, we need to counter the high and increasing rates of chronic disease, much of which
is avoidable. That's why the Australian Government is making the largest ever investment in
preventative health.

In 2008 we delivered an $872 million investment. We are also tackling the lifestyle risks that
contribute to rising rates of chronic disease - smoking, excessive alcohol consumption and obesity.

Last month the Government increased the tobacco excise by 25 per cent. The increased revenues from
tobacco excise, along with existing revenues, will be directly invested in increased health
funding. We will also require plain packaging for cigarettes from 2012 - the world's toughest
tobacco packaging regime.

We have also taken action to curb excessive alcohol consumption. In our first Budget, we raised the
excise on ready-mixed drinks, the so-called alcopops that have been particularly associated with
youth binge drinking.

When we announced this policy, there was fierce resistance from a big industry. They ran ads. They
ran misleading scare campaigns. They campaigned for our political opponents. They said the policy
wouldn't work. But we pressed ahead and yesterday the Bureau of Statistics confirmed the success of
this policy.

The statistics for 2008-09 show that after four years when alcohol consumption in Australia was
increasing year after year - in 2009 we saw a small decline. The main reason for that decline was a
30 per cent decrease in ready to drink or pre-mixed beverages. Per capita consumption of pure
alcohol by persons aged 15 years and over also decreased from 10.32 litres to 10.08 litres.

The Bureau of Statistics noted that this was chiefly a result of:

"a fall in the apparent consumption of alcohol of ready to drink (pre-mixed) beverages which more
than accounts for the increases in beer, wine and spirits".

This conclusion shows that the Liberal Party were led astray on opposing good tax reform by the
alcopop industry and today we see them making the same mistake with sections of the mining

Another critical step in preparing our entire health system for the demands of the future is to
improve the accuracy and accessibility of patient health records. The AMA rightly identified
e-health as an investment priority last year, and the Government has committed $467 million to
establish an electronic health record system. This will provide all Australians with the option of
a personally controlled electronic health record.

As doctors you know that electronic health records will help you deliver better health care.
Patient information will be more accurate. You won't need to order unnecessary extra tests, chase
information from other health providers or require patients to recall their medical history.

It will mean better access to hospital discharge summaries, test results and details of prescribed
medications, and reduced adverse drug events and medication errors. It will also enable better and
safer care, and smoother transitions between hospital care and care in the community.

This is a critical component of long-term health reform and the Government urges the Opposition to
reconsider its plan to scrap investment in e-health records.

I welcome the AMA's ongoing and crucial role in rolling out the National Health and Hospitals

Securing agreement for the National Health and Hospitals Network was a major challenge. It meant
putting major health reform on the national agenda; it meant bringing the States and Territories to
the table; and it required an unprecedented process of consultation with patients, health
professionals and experts across Australia.

The medical professions played a critical role in the consultation process, and they played a
critical role in the shape of our reforms which will deliver more beds, funding for public
hospitals from a single source and greater clinical leadership.

But it is the next stage where the rubber hits the road - in the implementation of these reforms. I
look forward to working with the AMA to get the most out of our investments in health and hospitals
and the most out of these reforms to the benefit of all Australians.