The healthcare system of Australia requires urgent attention, along with the tax framework that supports it.
If the state and federal governments cannot come to a consensus on significant changes in how they gather revenue and allocate it for health purposes, countless individuals will face premature death, endure unnecessary suffering, and waste valuable years navigating an ineffective system instead of engaging in more meaningful activities such as employment, parenting, or simply enjoying gardening.
The issue arises because the state health ministers have been left to bargain for solutions with the federal health minister, leading to a situation where both are playing a zero-sum game.
In the ongoing discussions, any financial gain for one state either results in a loss for another or contributes to the deficit of the Commonwealth.
A clear answer would be to discover additional revenue sources, yet that topic typically falls under the purview of treasurers rather than health ministers.
Attempting to resolve issues within the public health sector without addressing revenue collection is akin to treating heart disease while neglecting the importance of improved nutrition and physical activity.
Systematic issues are best addressed with comprehensive solutions. Fortunately, there is a straightforward approach to ease the challenges faced by health ministers.
However, before we present the remedy, it is crucial to accurately identify the core issue.
The primary source of revenue for the states from the Commonwealth is derived from the GST.
When John Howard and Peter Costello introduced the GST, they involved state premiers in promoting the concept by assuring them that all proceeds from the GST would be allocated to states for supporting services like health and education.
The challenge facing today's state leaders is that, despite Costello's assertion that the GST would function as a "growth tax," the revenue generated from the GST has consistently fallen behind both population increases and economic growth over the past several decades.
Initially, when the GST was launched, it was anticipated to expand in line with GDP; however, its revenue growth has actually trailed the economic growth for years. Consequently, the states are facing significant budget shortfalls.
According to research conducted by the Australia Institute, since the beginning of the 21st century, states have lost approximately $231 billion. This year specifically, they will find themselves about $26 billion short due to the GST not fulfilling Costello's expectations.
This leads me back to the pointlessness of health ministers attempting to resolve their significant challenges.
Issues such as population growth, aging demographics, and public demand for prompt and high-quality healthcare are not likely to diminish in the foreseeable future.
Once the health ministers from various states and territories recognize that the GST will not improve on its own, they must collaborate to advocate for new sources of revenue, similar to their efforts in the 1990s.
A straightforward, although not particularly effective, measure would be to raise the GST from 10 percent to 11 or 12 percent. However, the GST is already an inequitable tax, full of exceptions and exclusions that particularly benefit the affluent, including exemptions for private school tuition and salary-sacrificed vehicles.
Moreover, amidst a crisis in the cost of living and the Reserve Bank of Australia grappling with inflation, now is the least appropriate time to implement tax policies that would further inflate consumer prices.
However, a straightforward remedy exists: the national government could implement a basic tax on natural gas exported from waters within the Commonwealth and allocate the proceeds to the various states and territories.
The annual revenue generated could reach at least $10 billion through a small tax, which could be entirely directed to the states and mainly funded by foreign gas corporations. This would certainly be beneficial for all parties involved.
If our country is truly committed to improving the healthcare system in Australia, we cannot rely on health ministers from different states and territories to compete against each other and the federal government in a detrimental manner.
To ensure that a growing and aging population has prompt access to advanced diagnostic methods, medications, and dental services, a considerable increase in health spending will be necessary.
Instead of our elected officials battling over which Australians will be deprived of necessary medications, they should unite in opposition to the gas sector.
Similar to an injection of anesthetic, the immediate discomfort may be brief, but in the long run, it will prevent considerable suffering.
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