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Thursday, 12 September 1985
Page: 517

(Question No. 395)

Senator Missen asked the Minister representing the Minister for Health, upon notice, on 31 May 1985:

(1) Does Victoria receive approximately $10 per head less than New South Wales in terms of per capita allocation of funds for health; if so, why does Victoria receive less in per capita Commonwealth Grants than New South Wales.

(2) Will the Commonwealth Government increase its allocation of funds to Victoria in the 1985-86 Budget.

Senator Grimes —The Minister for Health has provided the following answer to the honourable senator's question:

(1) No. The Commonwealth, during 1984-85 made payments to the Victorian Government for health services of $344.2m via the identified health grant arrangements and a further $249.2m under the Medicare compensation payments. This represents a per capita allocation of $146.40. This compares with New South Wales which received $521.4m (identified health grant) and $368.5m for Medicare which provides a per capita allocation of $165.46, i.e. Victoria received $19.06 less per capita than New South Wales.

The reason that funding levels vary from State to State relates to individual State costs and charging practices. The identified health grants have, as their genesis, the Medibank hospital cost sharing arrangements, community health grants and the school dental program which ceased in 1981-82. The base levels of identified health grants were the payments made in 1980-81 for those programs, adjusted in the case of hospital cost sharing for additional revenue raising capacity of States. The grants have been increased each year since 1981-82 to reflect increases in costs. Different States have different cost structures and mixes of services and charging policies within their hospital systems which have led to differences in the allocation of Commonwealth funds when compared on a per capita basis.

Under Medicare States are reimbursed on the basis of revenue lost and increased costs associated with the introduction of Medicare. The introduction of Medicare has also affected States in different ways leading to differing levels of per capita allocation to States under the arrangements.

(2) No. The level of identified health grants for 1985-86 was discussed at the 1985 Premiers' Conference in the context of the Commonwealth Grants Commission's `Report on Tax Sharing Relativities 1985'. At the Conference it was agreed that the identified health grant arrangements would continue as separate payments from general revenue financial assistance grants for the 1985-86-1987-88 triennium. The levels of grants would be the 1984-85 payments adjusted by an appropriate index to hold them at the same real levels as in 1984-85. At the Premiers' Conference it was also agreed that the Medicare compensation arrangements would continue until 1987-88. It should be noted that the identified health grant payments and the Medicare grants are untied funding and, with the general tax revenue grants to States, are available to States to spend in accordance with their own priorities.