COAG Health Failures sum up Labor’s first term

By Marise Payne - Australian Polity - Volume 2 (Number 1)

The Council of Australian Governments (‘COAG’) health and hospital reforms that were such a prominent part of Labor’s campaign to defeat the Howard Government in 2007 provide the perfect snapshot of the Government’s disastrous first term, which culminated in the Rudd-Gillard Government losing its majority at the 2010 election: big promises, lots of reviews and no tangible action.

COAG was to be the vehicle to drive a number of bold reforms in Labor’s first term. Aside from health these also included Closing the Gap on Indigenous health, education and employment, along with an ambitious business deregulation agenda aimed at improving Australia’s productivity.

But health was the jewel in the crown. When Kevin Rudd stood before the voters in 2007, he made a bold promise to fix the ailing state hospital systems. Labor “had a plan”, Mr Rudd said. He promised to “end the buck-passing” between Canberra and the States. “The buck stops with me”, he said. This pledge would surely have convinced many voters who were flirting with giving Labor a turn after 11 years of responsible Coalition Government, to take that step at the ballot box.

He made the ambitious and unrealistic promise to “fix” the nation’s public hospitals through “cooperative federalism” with the states and territories by the middle of 2009, or he would seek a mandate from the Australian people at the following federal election for the Commonwealth to take financial control of Australia’s 750 public hospitals.

However, the voters quickly realised they had been duped. Health reform was held up in a maze of reviews and committees as Labor set about burning through the surplus it inherited through wasteful stimulus spending and Mr Rudd – the pre-election “fiscal conservative” – busied himself rewriting the history of the global financial crisis and advocating more government intervention to prevent future collapses.

Throughout 2008 and 2009, various funding commitments were made through COAG, but as the July 2009 deadline approached, the danger signs were there that Mr Rudd had no chance of delivering his election promise.

The crunch came in June 2009, when the National Health and Hospitals Commission (‘NHHC’) handed down its final report which showed the nation’s public hospitals had not been improved.

Stung by the report, Mr Rudd fought back the only way he knows how: a big media blitz. He embarked on a “listening” tour of the nation’s hospitals. Suddenly there was not a public hospital patient who was safe from a beaming Mr Rudd, with Health Minister Nicola Roxon and television cameras in tow, angling for top billing on the nightly news bulletins.

There were hopes of some progress on the health reforms at the December COAG meeting, however the result was more vague statements of action and no indication that any major developments were on the horizon.

It was not until early in 2010, when Mr Rudd’s previously strong polling was being eroded by continuing scandals like the pink batts insulation farce and the Building the Education Revolution rip-offs that he cooked up “reforms” that were little more than funding re-arrangements and would do nothing to improve the efficiency and standard of care in our hospitals.

Mr Rudd’s “reforms” fell well short of what he promised at the 2007 election and comprised a Commonwealth takeover of a third of the States’ GST revenue to pay for health and hospital services.

In true Rudd style, his plan also involved the establishment of another big layer of bureaucracy which consisted of regional health offices, which would sit on top of existing state paper-shufflers, including the bloated New South Wales area health services.

In the weeks leading up to the April 2010 COAG meeting, Mr Rudd demonstrated how not to negotiate with the States and Territories on reform of health funding, making all sorts of threats to withhold funding from states who did not sign up to his deal in what appeared to be more coercive than cooperative federalism. However he was played off a break by canny state Labor governments, Victoria in particular, that used stalling tactics to extract billions more in funding promises from the spendthrift Rudd Government.

John Brumby even fronted the National Press Club to reject Mr Rudd’s model and instead advocate his State’s casemix funding formula – widely acknowledged as one of the better state health systems – before eventually accepting the Commonwealth deal.

The only problem was the Barnett Liberal Government in Western Australia refused to hand over part of its GST revenue to the Commonwealth, so all Mr Rudd had to show for weeks of public and private haggling was a clayton’s agreement on a health funding rearrangement that was not worth the paper it was written on.

However, as most of us suspected all along, Mr Rudd’s leadership would not live to see the day when meaningful reform of our health and hospital system would occur.

While the commentators might say it was Mr Rudd’s inept handling of the mining super profits tax or his decision to abandon the emissions trading scheme that brought him down, his failure on health reform, which just added to his reputation as a poor negotiator, undoubtedly played a part as well.

Following the elevation of Julia Gillard to the leadership in June 2010, the COAG health reforms once again took a back seat as Labor infighting dominated the rest of the year and only worsened after its woeful performance at the 2010 election.

The campaign itself was marred by simmering tensions between the Prime Minister and her vanquished former boss. Health reform did get a brief mention when two days out from the poll Ms Gillard caused voters to experience a sense of déja vu when she told the media: “The buck stops with me for delivering the health reforms we have promised”.

After sticking to her promise to pursue the Rudd health reforms as late as November 2010, Ms Gillard ditched the plans early this year ahead of the February COAG meeting with the States and Territories, opting instead for a model under which the Commonwealth Government will, eventually, pay 50 per cent of “efficient growth” costs, and that leaves the States’ GST revenues untouched.

Although Ms Gillard’s package is still sketchy, her volte face vindicated the position taken by Colin Barnett, then the only Liberal Premier in Australia, who staunchly rejected the Rudd GST-grab, in stark contrast to the Labor Premiers and Chief Ministers who succumbed to Mr Rudd’s cash inducements and revived memories of Paul Keating’s immortal line “never stand between a premier and a bucket of money”.

But while no-one will lament the slow death of Mr Rudd’s so-called reforms, this episode is another plank in Labor’s platform of making impossible promises to get elected, breaking those promises, blaming those they must negotiate with for the changes, and then celebrating the broken promises as fundamental reform.

The comparisons with the ongoing carbon pricing travesty are alarming. Climate change is the great moral challenge of our time; until it proves too difficult to get through parliament. The solution, a double dissolution election, was of course rejected, as this would involve inviting the exercise of the will of the people. The Government will not introduce a carbon tax; until it needs The Greens’ support to form government. The alternative, refusing to form government with a party the Prime Minister herself has called extreme, was of course rejected, as this would involve the will of the people. Labor’s election plans have become so simple; tell the people what they want to hear, blame other elected representatives for sabotaging their plans (even though this is the essence of democracy), and whatever the final result is, ignore that and revel in your own glory at being courageous enough to make fundamental reforms.

As the Liberal Party understands, Australia is a democracy in which other elected representatives can, and usually do, disagree with the Government. When the Liberal Party decides true reform is needed, it does not give up at the first political hurdle or solve the problem by lying about its intentions prior to a tough election. The Liberal Party outlines its vision, presents it to the people and negotiates with those that disagree. Where the Liberal Party does change its mind, as with the GST, it takes the issue to an election.

COAG is a collection of leaders from different jurisdictions, often from different parties, and all representing different (though often converging) interests. COAG is not a Commonwealth department that is there to deliver on the Labor Government’s ill-conceived promises. Mr Rudd treated state Premiers, including Labor Premiers, like children and then got upset that they refused to do as he insisted. The Liberal Party would not, and will not, make the same mistake.

Kevin Rudd ran on a platform of cooperative federalism – until there no longer were wall-to-wall Labor governments. The Liberal Party understands that cooperative federalism is about working with the states when they disagree with you, not just when they agree with you.

There will nevertheless be times when federal funding is not used efficiently. Cooperative federalism is not about imposing your word, but it is also not about throwing money at the states without any conditions and calling it fundamental reform. The Liberal Party recognises that it is vital for the Commonwealth, when providing taxpayers’ money to areas for which it does not have direct responsibility, to have strong accountability mechanisms. Payments made to the states must be subject to measurable performance targets. States must be given the incentive to use Commonwealth money in a transparent, efficient manner and rewarded for efficiency improvements.

The Liberal Party knows the importance of under-promising and over-delivering. The Liberal Party knows the importance of cooperation and negotiation in a federation. The Liberal Party knows the importance of taxpayers’ funds being used in an efficient, effective, transparent and accountable manner. The Liberal Party alone has the ability and will to practice cooperative accountable federalism.