11 March 2010

The Feds Take Hospitals

The Federal Government has published A National Health and Hospitals Network for Australia’s Future, which sets out how it proposes to improve health services provided to Australians.

Others are better placed to discuss whether the plan as a whole will work.

I will concentrate on a few matters.

It is proposed that the Commonwealth will take full policy and funding policy for general practice and primary health care in Australia.

This appears to be a sweeping grab of responsibilities.

However, page 41 of the federal document says:

The detail of what is “in scope” for transfer to the Commonwealth in particular states will be negotiated with the states over the coming months.

If I were a state government I would be disappointed if I were told to ‘get with the program’ without knowing the magnitude of the change.

Take this example. The ACT Government is running a programme to reduce the number of falls amongst the elderly, and thus the level of injuries (and most importantly) hospital admissions.

Does responsibility for ‘primary health care’ mean that all programmes like reducing falls amongst the elderly (or for that matter, stop smoking programmes) will be run exclusively out of Canberra?

One would have thought the ambit of responsibilities to be assumed would have been thought out before expecting others to ‘get with the programme’.

Secondly, it is noted that the general practice sector is hoping to receive more money now the Commonwealth proposes being the sole funder of general practice.

There is a touching view held by some that the Commonwealth will invariably pump in more money than the states simply because they have more access to revenue.

Like any government, the Feds have ‘horror budgets’; the competing priorities that must be managed in any budgetary cycle means that (in this case) general practice won’t receive the money it would like all the time.

In that case, they may regret a political covenant investing in one tier of government all funding and policy responsibility.

Finally, it is noted The Australian has reported:

Kevin Rudd has put the Henry tax review firmly on the backburner, confirming today that his $50 billion public health takeover plan is his top priority.

The Prime Minister said this morning he had not decided on a specific timetable for the release of the review, which was delivered to the Rudd government by Treasury secretary Ken Henry in December.

``I believe what Australian people wanted me to do is to get on with the business of delivering health and hospitals reform. Number one priority,'' he told ABC radio.

``Each thing in its season, we've got to do one thing at a time.

``But in terms of specific timetables for doing it, no, I don't have anything particular in mind.''

The Henry Tax review has as one of its terms of reference:

3.5. Simplifying the tax system, including consideration of appropriate administrative arrangements across the Australian Federation

And as we have observed Ken Henry has said in a 2009 speech that one of the things that the Henry Tax Review was going to do was to consider each tax (except the GST) on its merit and:

only then are we considering the level of government to which different taxes and transfers should be assigned, taking into account the long-term financial needs of each level of government.

He also said:

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 of government and the available means of addressing disadvantage.

The Health Minister has not ruled out tax increases to pay for health reforms.

It would be a pity if a systematic review of public administration (including a review of tax and responsibilities) was lapped by a rushed release of something as important as health reform.

There is a sneaking suspicion that the rush is in part to cover for the pink batts fiasco.

That taught us the lesson of what happens when I’s aren’t dotted and T’s are not crossed.

For the sake of the health of both the federation and the individual taxpayer they have been in this important structural reform proposal.

On Dotting I's and Crossing T's: The Pink Batt Fiasco

Some hold a child life belief that the Federal Government invariably do things better than the states.

However, as the Defence Department illustrates, its record with procurements has a bit to be desired.

The failed home insulation (or pink batt) scheme is evidence of a similarly patchy outcome with programme delivery.

The pink batts scheme appears to be one of those ‘wish list programmes’ that Departments submit each budget round, with the hope that one day it will win the funding to implement its wish.

As Peter Costello recently said in the Sydney Morning Herald:

In the dying days of the Howard government, the environment department prepared a list of measures designed to reduce carbon emissions. One was to insulate houses. Back in those days, home insulation was dressed up as a climate-change policy.

I was against it. ……………. I could not see how the Commonwealth could hope to manage a scheme to insulate millions of homes with thousands of private contractors when it had no staff with experience to design and supervise such a scheme.

As we now know, law firm Minter Ellison to the Environment Department said that there was, amongst other problems:

too few auditors and insufficient government resources to manage the scheme were among other serious concerns raised.

It is reasonable for Cabinet to expect that a programme consistently sponsored by a department has a well thought through implementation and management strategy. It can be disappointed with the poor outcome.

That said, as Lindsay Tanner said to Sky News, there was no focus on ‘dotting I’s and crossing T’s’ because of the urgency of putting out stimulus measures to combat the global financial crisis. So the executive government deserved what it got from the affair. Sadly, I’s have be dotted and T’s crossed.

And there have been a number of poor outcomes.

As The Australian editorialised:

It's not just the foil batts that have been a headache for Mr Garrett. His Green Loans program, under which households are assessed for energy and water-saving measures then given zero-level loans to finance the innovations, is under fire.

His solar rebate program reportedly blew out by $850m and is also being blamed for distorting the market for other alternative energy innovations such as wind

Not everything can be solved by the Feds using contract management strategies like performance targets and benchmarks, with risk assigned to the party best assumed to be able to manage it and damages (or withholding funds) the ‘modern’ way to ensure compliance.

If the national government wants to act like a state government and get involved in programme delivery and low level standards setting it must staff itself like a state government and develop inspectorates so as to ensure programmes do not run off track.

Julia Gillard seems to have the right idea. When addressing the National Press Club recently on how to improve underperforming schools she said she would:

………. examine ways to provide the support and scrutiny necessary to drive schools to improve, which could include ''physical inspections'' or ''quality audits''.

''I believe that you've got to have the doors open,'' she said.

''Gone are the days when we could have teachers in classrooms with the door closed. I obviously want to see a debate about what more we need to do.

''This may involve external assessment and inspection of schools, and it will certainly involve strengthening school-based performance management of individual teachers.''

Sometimes the public interest needs a properly resourced inspectorate, with old fashioned enforcement powers. If not, there will be more pink batts episodes as the Commonwealth tries to do everything from Canberra.