The interim funding would tide the states over during the negotiation of more comprehensive health system reforms, but again appears to run counter to recent statements by treasurer Scott Morrison.
When asked about it at the National Press Club last week Morrison said: “I don’t think states are branch offices of the commonwealth. I think they are sovereign governments … in no business in this country would anyone just accept someone walking into their office and saying the increase in cost is 8%, give me the cheque. We all have to manage our budgets. The states almost without an exception … are in surplus at the present.”
The states had hoped extra funding could come from an increase in the goods and services tax, before the federal government finally ruled that out earlier this month.
“The states wanted us to raise the GST so we could give them more money. We were never going to do that,” Morrison said on radio at the time. “We are not about taxing and spending.”
But with all states – including those with Coalition governments – insisting they cannot operate public hospitals under the spending cuts imposed in the Abbott government’s first budget, Guardian Australia has learned that Turnbull has recently reassured several premiers interim funding will be provided in the May budget. The details are being actively negotiated at official levels in the lead-up to the April Council of Australian Governments (Coag) meeting.
It is understood the interim funding could amount to around $7bn over the forward estimates and the assurances are the reason the states have not been publicly rebutting Morrison’s statements that they could somehow pay for the funding shortfall themselves.
Turnbull and Morrison also engaged in very different public positioning on the idea of a GST increase earlier in the year, with Morrison starting the year giving a very clear impression the government would pursue the policy, before Turnbull led the backtrack, arguing the policy shift did not stack up as a means to promote economic growth.
All states insist they cannot possibly operate existing hospitals with this funding and that, without substantial extra money from the commonwealth, they are facing a funding crisis. The New South Wales premier, Mike Baird, calculated the shortfall would reach $35bn nationally by 2030.
Coag, which was “tentatively” set for 1 April but may now be further delayed, will also consider a discussion paper leaked to Guardian Australia earlier this month proposing a radical plan to abandon the $6bn commonwealth private health insurance rebate in favour of direct subsidies to private hospitals.
The document – marked “Coag in confidence” and prepared for Coag – proposed the commonwealth pay an agreed percentage of the cost of each hospital procedure under a new “hospitals benefit”, regardless of whether the service is provided in a public or private hospital or to a public or private patient.
Such a reform would take time, but remains under active consideration by state and federal officials and will be taken to Coag.