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Landmark reforms to Australia’s health system

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The Hon Julia Gillard, MP

25 October 2010

Deputy Prime Minister and Treasurer

Minister for Health

Landmark reforms to Australia’s health system

The Gillard Government will introduce landmark legislation this week to secure better hospital services across Australia through fundamental reforms to the health system.

For the first time, the Commonwealth Government will take majority funding responsibility for public hospitals and full responsibility for primary care.

This change in funding arrangements provides the foundation for major reform of Australia's health and hospitals system.

Australia's health system has suffered from inadequate funding arrangements and unclear accountability for too long.

The new funding arrangements for Australia's health and hospital system will:

- ensure, for the first time, that Federal Governments properly fund Australia's public hospitals - reversing the Commonwealth's declining share of hospital funding; - ensure that for the first time, the Commonwealth will fund hospitals for each service they provide, rather than through block grants - meeting increases in demand and helping take pressure off hospital waiting lists; - allow the Commonwealth, as dominant funder, to introduce new national standards for public hospital services, ensuring all patients receive timely and high quality services; and - drive improvements in primary care and prevention, because as the dominant funder of the hospital system, the Commonwealth will have an incentive to provide better primary care and prevention services to take the pressure off our hospital system.

Specifically the legislation will ensure the Commonwealth will fund:

- 60 per cent of the efficient price of every public hospital service provided to public patients; - 60 per cent of recurrent expenditure on research and training functions undertaken in public hospitals; - 60 per cent of capital expenditure; and - 100 per cent of GP and primary health care services.

The legislation, which will be introduced into the Parliament this week, enables these changes by empowering the Commonwealth to dedicate approximately one-third of Goods and Services Tax revenue for health and hospital services.

The legislation reflects the historic agreement to reform Australia's health and hospital system signed by the Commonwealth and seven States and Territories.

Under this agreement, the Commonwealth Government will relieve the States and Territories of $15.6 billion in growth of health costs from 2014-15 to 2019-20 - allowing them to invest in other essential services.

The efficient pricing arrangements will mean that Australia gets value for money from our health dollars to deliver services as effectively and efficiently as possible.

Opposition support for this historic legislation will help deliver a more efficient, more sustainable and higher quality health care and hospital system.

By contrast, obstruction from the Opposition will only exacerbate funding squabbles between different levels of government, leading to longer waiting times in emergency departments and further elective surgery delays.

Australians deserve a properly funded health and hospital system with improved transparency and quality. This historic legislation will help deliver these outcomes.