March 04, 2010 | Graham

Hospitals policy ensures administrative competence the issue next election

Many of the commentators have been speculating that health will be the issue of the next election. I don’t think so. The health policy doesn’t blow the pink batts affair off the agenda, it reinstates it at the centre.

From what I can tell from the morning’s newspapers the proposal is an administrative rearrangement where the commonwealth takes over some of the funding from the states, and reclaims some of the tax base, in return for an new administrative arrangement where hospitals are grouped into regional groups of one to four hospitals called Local Hospital Networks under overall Commonwealth supervision.

How this is supposed to fix the problems in health is obscure.

The only benefit that the Feds have been touting is that the states will run out of money¬†for their hospital systems, so they should hand it over to the Feds because they won’t run out. This implies that the Commonwealth will increase taxes to deal with health costs, or that growth in tax revenues will do this automatically. The further implication of this is that the GST deal where the states gained a growth tax in the GST, is being progressively unpicked,the states filleted, and even more power is being centralised in Canberra. (Sinclar Davidson in the Oz finds another implication – that the GST will be increased, but think this is going too far).

Which brings us back to the batts fiasco.

The Commonwealth is generally not very good at running programs, and the batts fiasco is a handy example of this. If they can’t install roof insulation without killing people, the argument will run, how can you trust them to actually save people’s lives?

We’re seeing in our polling that increasing government expenditure and increases in Commonwealth debt are motivating some voters to change their votes from Labor to the coalition. The admission that this will cost additional revenue will add to the number of those converts. Where is the money going to come from?

If there were some tangible numbers pointing to benefits to the health system – like increased numbers of doctors, dentists nurses and other health professionals – then it might be different. But all that has been produced appears to be a vague management plan which proposes a restructuring of the sector without really providing a benefit, making it a management rather than a health issue.

The problems with health appear to have to do with incompetent management. If health were a business, and the Commonwealth was a corporate doctor, what should be their first move? I know what mine would be – sack the incompetent managers, which would be the state governments. Of course the Commonwealth government can’t do that, but the electors can, and appear to be on the verge of doing it in a number of states.

In which case this Commonwealth move can be portrayed not as a way of fixing the system, but of trying to save the dodgy managers who caused the problem in the first place. Why should we “end the blame game”? As the PM is now fond of saying, the “buck has to stop somewhere”, or words to that effect. Let those who caused the mess be replaced by people who can fix it. More shades of the batts affair.

There are things that can be done to improve the hospital system, but they have to do with micro-reform of how each hospital is managed and staffed. What this requires is not a bureaucratic organisational system, but setting the funding system so that it will allocate resources effeciently and give the administrations of individual hospitals the flexibility to innovate. This can be done without the Commonwealth taking control of one hospital.

There is also an issue with the supply of professionals – this is not addressed in this policy.

But this government is not good at those systemic things (unlike the Hawke Keating government which was very good).

And the batts affair shows again just what happens when instead of twiddling with settings you fiddle with direct intervention programs – something burns.

Posted by Graham at 12:21 am | Comments (4) |
Filed under: Uncategorized


  1. It always worries me when politicians rush in to save themselves from political anihalation with a drastic policy. I would have to question Rudd’s timing and how much research has really gone into this decision. To me it is something which needs to be worked on in a systematic way and needs time to work out the correct strategy. I think politics has been the main focus for this policy and in that case, I think it is doomed for failure.

    Comment by Jonathan — March 4, 2010 @ 10:53 pm

  2. Why are not the standards of electrical installations
    questioned as part cause of the insulation debacle ?

    Political Science (a contradiction in terms) will no doubt get us back to “basics”, (Kevin’s new buzz word
    whatever it may mean) and all will be well !

    A digression. Prices will always rise to meet the money available ; with financial institutions pumping out unsecured credit, contemplate the future ! ! !

    Comment by R.B.Thompson — March 5, 2010 @ 3:00 am

  3. Perhaps it is time for Ms Nicola Roxon to confess to taxpayers why she paid a gentleman $80,000 per annum to write her speeches, who had no such experience in writing speeches. She may also need to explain when her department came in under-budget and she insisted the department spend another several hundred thousand dollars just to get rid of the money, instead of saving it. Myles Petersen might ring a bell. This MP is costing taxpayers dearly.

    Comment by Andreas — March 7, 2010 @ 9:50 am

  4. This new concern for workers’ welfare from Liberal supporters is very encouraging, particularly when Liberal state governments have shown little interest in improving occupational health and safety. If the current government is to blame for the deaths of employees while installing insulation Conservative state governments are liable for every work place death during their terms of office.Negligent employers are the problem not the government.
    By the time any safety audit is complete the circus will have passed and the voters will have forgotten.

    We in Oz are fortunate that health is not a business otherwise we’d be burdened with something like the US system.

    Comment by Russell W — March 9, 2010 @ 5:53 am

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