Let’s be clear about the magnitude of the reform achieved by Kevin Rudd yesterday: it’s not very much. But it’s something.

The Rudd health plan was never really about health (well, okay, it was mainly about politics, but put that aside for the moment). It is a useful micro-economic reform in the health sector, courtesy of the shift to activity-based funding and much greater, and more consistent, performance information. Those two reforms alone will drive significant efficiency gains in the health sector, which is useful because we’re going to be spending more on health in years to come, no matter how much reform puritans like me rant about the need for more user-pays.

The failure to shift to a single-funder model is unfortunate, partly because the unification of funding sources would have ended cost and blame-shifting, and partly because bypassing the states would have taken us a small step closer to getting rid of them entirely.

Even so, we’ve still got the two important reforms locked in.

This is more of the “5%” reforms that this Government specialises in — unglamorous, low-level removals of inefficiencies and impediments that by themselves are small and have survived successive waves of bigger reforms, but which together yield substantial long-term benefits. The fact that it’s in the ever-growing health sector is beneficial, too.

As a health reform, as opposed to an economic reform, it won’t do a lot, but then we’ve already got a high-quality health system for people in urban and suburban areas. At least there’ll be some additional funding for mental health services, and the increase in doctor training might increase the overall supply of doctors and, therefore, make more available to regional and rural communities.

This modest amount of reform has been purchased, in true COAG style, with a lot of money — $5.365 billion over four years, much of it going to gold-plated and already-effective metropolitan hospital system. A lot of dynamic efficiencies will be needed to cover that, but they’ll mount up, in time. Fortunately it’s not as much money as that demanded by John Brumby, whose “last bastion” act didn’t last long after his press conference shoulder-to-shoulder with Colin Barnett yesterday.

Brumby didn’t exactly backflip, he merely repeated his act from previous COAG episodes of talking tough and claiming he’d hold out until enough cash came his way to enable him to claim he’d secured a good deal. Why change a winning formula?

All this has created a sort of reform inflation. Every COAG meeting, the price of buying off the states seems to go up, partly because Kevin Rudd is so willing to pay. Even with the threat of a referendum, and a starting point of 60-odd% support for his plan, he didn’t baulk at spending money. The cost of the next round of reform, major or minor, has just gone up.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey