Tasmania’s state health system has been underfunded, compared with those in other states, by at least $1.4 billion over the past decade.
This is overwhelmingly the greatest reason for Tasmania’s public hospitals and health system’s incapacity to meet the needs of the state’s population.
The under-funding has two main components. The first is the diversion away from health of hundreds of millions of dollars in extra GST which is allocated to Tasmania by the Commonwealth Grants Commission in recognition of the health requirements of our older, sicker and poorer population.
The second is the amount spent per head below the national average on health by successive state governments. In only one year has spending exceeded the average.
The Grants Commission calculates GST distribution in two stages. The first is to bring each state and territory to the level at which it can spend an equal amount of money per capita on providing services. In this process, Tasmania is funded to be able to spend the national average on health. In fact, we spend far less.
The second stage is to consider the relative health needs of particular populations. In this stage of the process, Tasmania is being given an extra $266 million this financial year. Over the past decade, that has added up to $749 million, almost none of which has been spent on health.
In addition, successive governments have spent at least $654 million over the decade less than the national average.
Those two measures, when combined, show how much the state has been granted by the GST system for its health needs but which it has diverted for other purposes.
In the other states and territories, health funding is in line with GST allocations. In Tasmania it is not.
The agreements covering federal-state relations mean Tasmanian governments are allowed to do this. But ‒ although they are breaking no law ‒ the cost of diverting so much money out of health has enormous human and economic costs. And even if the present government changes its approach, it will take many years to bring Tasmania’s health system up to the standard enjoyed by other Australians.
This under-funding has produced a vast reservoir of untreated and under-treated patients. Many of those inevitably develop more serious and complex conditions which, when they can no longer be ignored, will cost far more to treat.
The failure to spend very large amounts of GST money for the purposes it was allocated potentially endangers the system of fiscal equalisation which benefits Tasmania so profoundly.
Hundreds of millions of dollars are taken from other states each year and given to Tasmania. This state’s failure to use this money for its intended purpose gives a powerful argument to those states.
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