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Hospital reform: reviewing the Tony and Kevin face-off

By Thomas Faunce and Ruth Townsend - posted Friday, 26 March 2010

Tuesday’s health reform debate at the national press club between Prime Minister Kevin Rudd and opposition leader Tony Abbott gave valuable insight into a central issue in the federal election campaign later this year. Abbott had been Health Minister for five years under the Howard government and the debate provided many undecided voters with a chance to see the challenger perform in an area where it could reasonably be expected he’d have substantial expertise.

The PM entered the lunchtime contest the day after President Obama had passed substantial legislative reform to curb excess costs (18 per cent of GDP compared to our 9 per cent) and related inequities (for example, withdrawal of coverage for pre-existing conditions) that the supply-driven (and corporate profit-oriented) managed care private insurance model had forced upon the US healthcare system. That vote offers, at the beat of the Congressional speaker’s gavel, to transform Obama, at least in the eyes of possibly less observant critics, from a “do-nothing” time server, to a “once in a generation” leader of egalitarian reforms.

Will the 60 per cent federal funded, locally managed National Health and Hospital Network do the same for federal Labor in Australia? With some safeguards against subsequent cuts and privatisations, it may. Did the PM make a better case for it at this debate. Yes he did, unequivocally.


Two obvious initial points were that the PM seemed to have a better grasp of detailed facts about health policy and appeared more constructive. Appearances at such occasions of course are carefully stage managed, but this makes Abbott’s truculence and negativity more problematic in terms of his leadership credentials.

The PM was also convincing in detailing how his health and hospitals policy arose from wide-ranging consultations, particularly with doctors and nurses. Abbott in turn was unable to adequately answer why he had advocated a full federal takeover of public hospitals while federal health minister, but opposed it now, or why at that time he’d promised a policy on the subject but was yet to announce it. Those of us who’ve studied the Abbott tenure as Health Minister recall it as notable chiefly for the open-door policy he gave the multinational pharmaceutical industry on changes to the Pharmaceutical Benefits Scheme, his reduction of the federal contribution to public hospitals from above 40 per cent to 37 per cent and his disproportionate interest in restricting contraception or the capacity of female minors to obtain confidential information about it.

It was inevitable, given President Obama’s legislative triumph, that the PM would face questioners seeking to lock him into promises that he wouldn’t attempt to reform the excesses and injustices caused by taxpayer subsidisation of private health insurance in Australia. Despite the political pressure, the PM pointed out the inequities of high income earners having their private health insurance subsidised by those on more marginal incomes. He could also have made more of the economic discrimination involved in subsidising this particular inefficient industry, or the injustice of taxpaying patients injured in hospitals (but prevented from obtaining fair compensation by Draconian tort law changes introduced in the Howard years) being forced to subsidise the premiums as well as the soaring profits, of medical indemnity insurers.

Both the PM and Leader of the Opposition were asked why they didn’t advocate a national taxpayer-funded dental scheme. Their answers were unconvincing, perhaps because each realised that dental care provides a telling example of what can go wrong when you fully privatise an area of healthcare. The Keating government signed off to “liberalise” dental services and health insurance under the World Trade Organisation’s General Agreement of Trade in Services (GATS) in 1994. GATS “liberalisation” (requiring no barriers to foreign corporate ownership) along with related prohibitions on regulating the total number or value of services or unnecessarily burdening investment, limit an Australian federal government’s practical capacity (due to threat of trade sanctions) to expand taxpayer-funded dental services. Bear in mind that the influential United States Coalition on Service Industries is already lobbying for majority foreign ownership of all Australian hospitals.

Overall the PM explained his plan well: federal funding to 60 per cent with local control for public hospitals and full responsibility for general practice and primary healthcare services. The federal-state mix of responsibilities this arrangement maintains is an important protection against subsequent attempts to “liberalise” hospital services under GATS by a more privatisation-minded federal government. The relationship between the new and existing bureaucracies will need to be worked out.

It is important to note that compared to what is happening in the United States, our public hospital system is not in crisis. President Obama’s preferred option (and one he is still working towards) is to create a mixed public-private hospital system like ours (and that of Canada and the UK).


It will be unfortunate if the policy debate for the coming federal election shifts too far from an unequivocal crisis demanding strong action (human-induced climate change) which has proven intractably difficult nationally and internationally despite popular support. We need the PM’s health and hospital plan to succeed not because of the “blame game” or any relative “crisis” in healthcare. The reason is more due to the prolonged disinterest, policy inaction and undermining of public hospital funding that occurred during the years of the Howard government when Tony Abbott was Health Minister.

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About the Authors

Thomas Faunce is Assoc. Professor at the College of Law and Medical School ANU.

Ruth Townsend is a Lecturer at the College of Law and Medical School ANU.

Other articles by these Authors

All articles by Thomas Faunce
All articles by Ruth Townsend

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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