The Henry Report Is In

The Government has apparently received the Henry Report.

Whilst perhaps not as radical as originally trailed, it still apparently:

….mix(es) relief for families and individuals and controversial measures covering the taxation of bank savings, superannuation, petrol, resources, companies and federal-state financial relations.

driven by:

……the challenges of an ageing population, the new baby boom, the rise of China and India, globalisation and the environment.

It will be interesting to see what it ultimately says. As we noted earlier, the Review dropped heavy hints suggesting an increased federal role.

As Henry himself indicated in a speech made during 2009 :

I mentioned earlier that the revenue assignment of each level of government is dependent on how we view respective long-term financial needs. And this, in turn, depends on what we think is the appropriate role of each level of government in improving the well-being of Australians. Which government is best placed to be the financier of government services? Should a particular government be the sole provider of the service, or one provider amongst many? I do not anticipate that the Panel will be recommending that the Commonwealth take over the delivery of any particular services currently provided by the States, nor vice versa. However, we shouldn’t assume that the present allocation of roles and responsibilities is optimal. Much of the fiscal federalism architecture reflects past thinking about the appropriate role ofgovernment and the available means of addressing disadvantage.

Tony Abbott has now become Opposition Leader.

As we have previously remarked, he is a centralist. And we note his party is ‘thinking about’ whether there should be a referendum on who should run hospitals – an idea illustrating a centralist line of thinking.

Some would argue there is a case for the Feds to run hospitals, given the increase in costs in the sector.

As the then NSW Health Minister said on 1 August 2009:

In NSW, health consumes about 30 per cent of the state budget. Australia's Heads of Treasuries have estimated costs in every state are growing at just under 10 per cent. At that, rate the NSW Auditor-General has forecast our entire state budget will be consumed by health by 2033, leaving not a cent for education, roads, transport, police or disability.

And as the Queensland Chief Health Officer said in her 2008 Report:

The health system in Queensland and Australia is not sustainable under these current and growing pressures. Just 15 predominantly chronic diseases drove 56% of the increase in national healthcare expenditure between 1987 and 2000, with 10 of these diseases related to obesity. In fact, in South Australia it is projected that ‘… by 2042, without significant change to the health system the entire state budget could be consumed by the health care sector’. Similar analyses have not been done for Queensland, the overall magnitude of the outcome is likely to be the same.

There is an argument to say that the sector that effectively funds a particular service should have the political responsibility for it. However, others will disagree.

The current Prime Minister campaigned in the last election for ending the blame game between the states and the Commonwealth, whilst the current Opposition leader has said:

My proposal is not to abolish the states but a referendum to give the national parliament the same authority over them that it’s long had over the territories. It’s not a bid for more power to Canberra. Rather, it’s an attempt to establish clear lines of accountability and responsibility.

The Australian federal structure should thus be a significant issue in the upcoming election contest.

The next article contains some ideas that could be adopted.