Problems in health reform and the Australian Federation

It seems clear that the Commonwealth Government is struggling a little as it comes to grips with the sheer complexities involved in its proposed national health care changes. This is not a criticism as such; major changes in complex systems are always difficult.

Back in April in Unpacking the Rudd Government health care changes I attempted to summarise the proposals as I understood them. Rudd health care reforms - another note provided a little further discussion on some of the complexities involved.

I am not sure of the significance of the decision not to proceed with the proposed National Health and Hospitals Network Fund, but instead to rely on Commonwealth Treasury oversight. The fund would have provided a central point for Commonwealth funding, aiding transparency. The decision to abolish it means, as I see it, that the Commonwealth will now be relying on bilateral arrangements of the type already pioneered with the various National Partnership arrangements.

I do not think that these have worked very well. They suffer from two main problems. The first is that they have not been really cooperative, with the Commonwealth dictating details. The second is that the detail is not public. Their efficacy cannot be properly judged because the detail of implementation plans is not on the public record.

Beyond the decision not to proceed with the Fund, the Commonwealth and States minus WA are now enmeshed in the detail, including the definition of the boundaries of the proposed local hospital networks. This one was always going to be a little problematic. Quite simply, it is always complicated trying to translate a new structure into on-ground realities.

Consider this. You have to establish the viability along different dimensions of 170 or so new entities. In doing so, you are dealing with a jigsaw puzzle where each boundary shift affects other proposed entities. It is complicated enough with electoral boundaries where the number of variables is small, more so when a variety of factors must be taken into account.

No doubt the Commonwealth will want to approve detail. It usually does. This requires a heavy people investment. Just how many people are required? I'm not sure, because it depends upon both time horizons and the approach adopted. Still, it remains complex and resource intensive if it is to be done properly.

The WA Government is still standing out for reasons that I can understand. At this point, I doubt that the Commonwealth can make the changes required in GST allocations to bring WA in. Further, the Resource Super Profits Tax complicates things in that its effects on WA are considerable. 

The thing that I am watching closely at the moment is the impact of current policy proposals on the dynamics of the Australian Federation. I am not talking party politics here such as the impact on public opinion polls. Rather, I just have a feeling that the combination of the centralisation policies of Messrs Howard and Rudd has set in train dynamic processes that will affect the very structure of the Federation itself.

At this point, my gut judgement is that the Commonwealth has over-reached itself and that, consequently, there is likely to be a significant reaction. However, the form that this might take is still very unclear.

I have been trying to think my way through this. But that's a matter for another post.