Lack of policy leadership in Australia

What's sad is that while we are trying to lead from the front, while other countries are walking in the opposite direction, we need leadership to address challenges we can directly influence. The real leadership challenges are at home in the public sector reform to convert many of our public sector institutions onto a more sustainable footing.

As the government's intergenerational report outlines by 2050 Australia's health bill will increase by three and a half times compromising the sustainability of taxpayer-funded universal healthcare. Worse the number of working people to pay the taxes to support it will also decline.

In many ways it is the same challenge that faced the Hawke/Keating government over the sustainability of taxpayer-funded pensions. Millions of Australians had paid taxes their entire lives with the reasonable expectation that other taxpayers would foot the bill when they decided to give up work. Nice idea. But it has struggled to work in practice.

The ongoing crisis of the American social security system provides a clear example of how the interests of working Australians could have been compromised if government didn't show leadership.

But the Hawke/Keating government rose to the challenge and our compulsory superannuation scheme now provides a more sustainable scheme to provide certainty to us all when we retire. It was a known challenge. It was within the government's sphere of influence. It required a mature discussion with the public. Leadership was shown.

Now it is needed in health. As the government's own reports show, Medicare is unsustainable in its current form. And the revenues provided from the present mining boom provide the opportunity to structurally readjust Medicare to make it sustainable.

The establishment of superannuation-inspired Medicare health accounts where individuals contribute to saving for their health costs could be one solution.Individual Medicare health accounts, coupled with tax cuts reflecting the reduced expenditure by government for healthcare, would enable working people to save for their healthcare throughout their lives. Considering around a third of all health costs are incurred in a patient's final years everyone would have plenty of time to make sure they are sufficiently protected.

Of course any scheme would require equalising government contributions to ensure those who were not working, did not earn enough, or have overly burdensome health costs don't miss out. But it would mean we were directly subsidising those who need it most, unlike the current private health insurance rebate, which is not.

What such a scheme would also do is drive competition in the health sector, which is currently an option for those in the private system, and not for those in the public system. Using the power of competition would drive up standards in the interests of patients and would start to address the shocking information asymmetry between those who provide, and those who receive healthcare.

But most importantly it would put Medicare's universal healthcare principle on a sustainable footing.

But structurally adjusting from the unsustainable Medicare of today to a sustainable system requires mature debate led by responsible leaders.

The same leadership challenge exists if we are to reform education and move towards a system that provides choice for the rich and the poor.