Saturday, August 04, 2007

Pork-barrelling on hospitals - bad move JWH

It is difficult to see the Commonwealth Government’s move to intervene and inject $45 million annually to maintain hospital services at the Mersey Hospital in Davenport as much more than a pre-election stunt.

The State government had previously agreed to downgrade the facility on the grounds that the local region could not reasonably support 3 specialist hospitals – it is the type of tough political decision no state government would like to undertake. There is a case for rationalising health responsibilities between the states and perhaps a case for the Commonwealth taking over all public hospitals in Australia. There are also arguments for maintaining a Federal system that encourages competition in service provision between the states – in health as in education. Australians do not seem to be getting an appropriate standard of hospital health care in part because of duplication and waste in this sector and buck-passing between State and Federal Governments.

However, the case for singling out one particular hospital in the marginal seat of Braddon (the Liberals gained it in 1994 by a 1.1% margin after gaining a 7.1% swing against Labor) does not advance this rationalisation objective. Even Health Minister Abbott seems to agree it is an election gimmick. I generally concur with the analysis of John Quiggin on this. We don’t want a sort of ’selective centralism’ based on handouts to win elections. There needs to be policy reform not ad hoc moves or attempted vote-buying.

It is hard to see that the Commonwealth here has improved capacities to run particular hospitals than the states. Indeed it is not even clear what exactly is to be done with the $45 million - this has not been spelt out - or why the money should be spent there rather than in other parts of Tasmania or the rest of Australia.

Moreover, there are suggestions the $45 million might be wasted given the difficulty in securing specialist doctors to this hospital and the limited population base this hospital in conjunction with two others serve. All hospitals may be left ineffectually short-staffed.

Ken Henry in a much criticised speech earlier this year warned of the potential of pre-election pork-barrelling to derail an economy operating at close to full employment. The implications of resource shortages emphasised in Mr Henry’s discussion seem to make particular sense in the hospital sector where key labour resources are already in short supply.

Vote-buying might achieve a few votes in a particular electorate but contribute to increasing scepticism throughout the electorate as a whole. I’ve recently been talking with informed people on the Labor side of politics who believe that Howard will be returned by a narrow margin so that perhaps the Government is not in a desperate situation at this stage.

Cynical moves with the public purse might tip things back in the opposite direction, particularly if the press does its job as it has on the hospital issue. This move by the Commonwealth was a mistake though not a particularly expensive one. Let’s hope it stops here.

An interest rate increase this Wednesday might help the Commonwealth Government regain a sense of its macroeconomic management responsibilities and the need to exert budgetary restraint up to the next election.


Mark U said...


I agree with you entirely that this seems like terrible policy. But it is part of Howard's current strategy to portray State Labor governments as so incompetent that the Feds have to continually step in. Expect one line in the Coalition's election campaign to be: "The State Labor Governments have dropped the ball on water, health, education and aborigines. And we are better at running the economy and tougher on national security. So how can you possibly trust Labor to run the whole country?".

whyisitso said...

And the Coalition's argument is perfectly correct, mark u. The State governments don't have to do much in the policy area. They just have to run basic services like water, hospitals, schools, public transport and so on efficiently. They don't even have to raise much of the revenue to do these jobs. They do their jobs particularly badly, none more so than the Iemma government in NSW. 2007 is destined to be a black year for NSW. We've reinstalled arguably the worst State government in Australia's history and now will be the largest contributor to the defeat of one of the two best federal governments we've had since federation.

Mark U said...


I am not sure whether you are being toungue in cheek when you say that the States only have to run hospitals, schools and public transport efficiently. It is in those areas that most of the thorny economic issues arise, especially given that the electorate expects equity issues (rightly or wrongly)to be addressed at the same time.

I am also not sure what you mean when you say they don't have to raise much of the revenue to do these jobs. They have to obtain sufficient revenue to at least cover their recurrent expenditure. The fact that one of the sources of this revenue is the GST, which is collected by the Australian Tax Office on behalf of the States doesn't substantially lessen their budget management task. Tax collection (as oppposed to budget management) is not exactly rocket science.