Echoes of Kevin Rudd in Malcolm Turnbull's radical health funding, tax plans

Malcolm Turnbull is not the first Prime Minister to want to end health funding duck-shoving with a radical plan.

There are echoes of Kevin Rudd in his language, if not his solution.

"The blame game, the finger pointing, we're all sick of it," Mr Turnbull said today.

In 2007, Mr Rudd identified the Commonwealth-state funding divide as the chronic condition at the heart of the public hospital system.

"I will end the blame game between Canberra and the states," he declared in the lead up to that year's election.

His solution was the mirror opposite of Mr Turnbull's: he would fix public hospitals or take them over. He even threatened a referendum "for a mandate to take Commonwealth responsibility for full funding of public hospitals into the future".

If the states had to raise all of the money they spend themselves, they would spend it much more wisely.

Prime Minister Malcolm Turnbull

It was a big idea. Mr Rudd dubbed it "the single biggest reform to our system since the introduction of Medicare".

But in early 2010, he settled on a smaller plan. The Commonwealth would lift its funding share from 40 to 60 per cent. The idea was to bypass the states by directly funding local health networks. The slogan was "funded nationally and run locally" and savings would be found by identifying — and only paying for — the agreed "efficient cost" for every service.

The Commonwealth bypassing the states was never going to fly, but the premiers happily took the money. When Mr Rudd was rolled by his party, his successor kept the plan.

Julia Gillard, Tony Abbott weigh in

In October 2010, Julia Gillard agreed that "the Commonwealth [would] permanently pay 60 per cent of the efficient cost of each and every hospital service".

This was a truckload of new money the Commonwealth didn't have, so in early 2011, Ms Gillard trimmed the plan. Now the ambition was defined as "the Commonwealth will step up to a fair share of growth — 50 per cent". But Ms Gillard signed on to a decade-long multi-billion-dollar deal that her government was never going to have to pay for.

So Tony Abbott walked on a landmine when he agreed to it in his infamous "no cuts to education, no cuts to health" SBS interview in the shadow of the 2013 poll.

His first budget cut $57 billion from the over-the-horizon hospital costs. The states and the Opposition cried foul and his prime ministership blew up.

'No-one knows who's responsible for what'

Mr Turnbull inherited the Abbott hospital plan and all the grief of having to deal with disgruntled states. Yesterday he identified the Commonwealth-state funding divide as the chronic condition at the heart of public hospital system, calling it "this depressing blame game where no one really knows who's responsible for what".

Turnbull's economic agenda 'a liability'

By allowing states to increase income taxes, while at the same time flagging corporate tax cuts, the PM risks undermining the Coalition's economic credibility, Peter Lewis writes.

His description of the plan to give states the right to levy a share of income tax is Ruddian: "The most fundamental change to the federation in generations".

It would allow the Commonwealth to get out of public hospitals and hand all responsibility for the system to the states.

"If the states had to raise all of the money they spend themselves, they would spend it much more wisely," Mr Turnbull argued.

And if the states agree to the big bang tax change, the Prime Minister has made it clear he would also like to wipe his hands of responsibility for funding state schools.

"If the states had the money, if they had the money from a share of the tax base, would they not do a better job managing those schools themselves?" Mr Turnbull asked Radio National's Fran Kelly.

States divided over tax plan

Detail on the tax plan is scant, so New South Wales is wary.

"I have concerns about what I've seen but let's wait and see the full proposal," Premier Mike Baird said.

The Victorian Premier was scathing, with Daniel Andrews declaring: "It doesn't make sense, it doesn't add up".

Western Australia's Premier Colin Barnett sees an advantage for his state and believes "Malcolm Turnbull is on the right track".

If it is accepted, the plan would take years to finalise, so in the short term the Commonwealth will have to cough up more money for health. That is likely to be a touch over $3 billion split between all the states and territories between now and 2020. And there is another argument to be settled over the adjustment for inflation which is hovering between 6 and 7 per cent.

Who knows where the income tax debate will all land. But history shows big ideas tend to get cut down a few pegs when Prime Ministers and Premiers collide

Source: ABC News

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