John Howard's move to nationalise the Mersey hospital may be brilliant tactical politics, but it is a serious policy mistake.
Clearly the move on the hospital is another attempt by the Prime Minister to focus the election debate on areas of state government failure.
Tactically, this is needed to counter the Labor Party's strategy of the premiers taking the lead in criticising Howard on issues of his choosing, leaving federal Opposition Leader Kevin Rudd clear to focus on higher-level issues of his choosing.
Howard, a conviction politician to the end, is also pursuing his long-held desire to centralise power in Canberra by steadily undermining the states. To date, Howard has focused on takeover of state functions in areas where the states are clearly failing: industrial relations, law and order in Aboriginal communities, provisions of public housing, national consistency in schools, and technical colleges.
The Mersey hospital is different. It is not an example of state government failure. Quite the opposite.
The changes under way at the hospital are a result of a detailed and open process of reform on behalf of the Tasmanian Government. The plan is for the two hospitals in Mersey and Burnie to share and specialise, with emergency and more acute services going to the larger Burnie hospital and the Mersey hospital specialising in day surgery and aged care with emergency facilities. The concern was not just with efficiency but with quality and safety as the volumes in each of the hospitals were insufficient to maintain adequate skills and back-up support.
To facilitate this decision, the Tasmanian Government agreed to provide doctors, nurses and health professionals with a huge wage increase in 2006 that made them the highest paid in the country. The wage increases made the need for restructuring all the more imperative.
These decisions are the types that must be made across the country to maintain high quality and cost effective public services. Indeed, the facilitation of such decisions is the greatest policy challenge facing governments, federal and state.
What has Howard done? His plan is to throw money at the hospital to sustain the status quo. He has offered $40 million to $45 million a year to the Mersey hospital not to change.
Howard's plan did not consider the effects on the rest of the Tasmanian hospital system. It did not seek or suggest alternative means of achieving efficiencies or sustaining the hospital. It does not have a plan for managing the hospital. It did not assess the relative needs of Mersey hospital. Beyond spending a large bucket of money to maintain the status quo in a marginal seat, Howard had no plan.
Of course, the local community and the staff of the Mersey hospital are pleased for now. The staff will keep their high wages and have less work. The local community will keep their full-service hospital with the added option of enhanced services in nearby hospitals all funded by others.
Howard has gone further and offered the same carrot to other hospitals across the country: not all, just some. The signal to health professionals and communities is to resist change and demand higher wages without productivity offsets because the Commonwealth may bail you out.
There is plenty of scope and need for Commonwealth leadership in reform of the public hospital system. Indeed many experts, including a recent Commonwealth high-level review, have concluded public hospitals, along with the rest of health policy areas, should be ceded to the Commonwealth. This would not only reduce the overlap and duplication and cost-shifting endemic to the existing balkanised system but facilitate greater focus on community and preventative medicine, greater system-wide innovation and better integration of public and private systems. Health is an area where a national system makes sense.
However, the PM has ruled out systemic reform and made it clear the nationalisation of the Mersey hospital is not a precursor to wider system-wide takeover.
The problems for Howard are fourfold. First, the Australian public recognises the federal system is a mess. They are looking for lasting solutions and leadership from the Commonwealth. All Howard has offered in the case of the Mersey hospital is a bribe and takeovers.
Second, while the states may be on the nose with the public, the Commonwealth is not far behind. The idea that people believe the Commonwealth is best in all areas has no foundation in truth or public opinion.
Third, Howard's move against the Tasmanian public hospital will send ripples through the Liberal Party and many of his most ardent supporters. Despite nearly 11 years of Howard leadership, the rank and file of the Liberal Party is still committed to the federal system, particularly in Western Australia and Queensland, where the Liberal electoral success will be determined. While they will tolerate interventions by the Commonwealth when justified, they will not support knee-jerk efforts that undermine the running of state health systems.
Fourth, eventually, Howard will need to produce the goods. He will need to show the Commonwealth can produce better outcomes than the states. Given the lack of service delivery expertise and sloppy preparation of the Commonwealth takeover to date, better outcomes will be difficult to achieve. Sure, he may be able to postpone the day of reckoning until after the election, but it will come.
Howard's approach to the states is like George W. Bush's approach to the Iraq war: motivated by belief and short-term tactical objective, flawed by failure of long-term planning, excessive self-belief and under-estimation of the difficulty of the task.
So much for being a thoughtful conservative government.
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