HOST: Prime Minister, welcome. First, can I ask you a practical question- who will decide whether a hospital gets more staff, or more beds, under this reform plan?
PM: The service agreements will be determined of course between local hospital networks and individual State Governments. That was what we outlined of course when we put forward our plan six weeks ago at the National Press Club. The key change is the funding of the system. And the funding of the system has two big reforms.
The Australian Government, for the first time in this country's history, becoming the dominant funder of the public hospital system. But secondly, delivered through a new funding method which is called activity-based funding. No longer are health bureaucrats saying well it might cost this much, it might cost that much. Instead, local hospitals are being actually funded for the real services they deliver. And that is the big underlying reform in this system.
HOST: But if one of these local hospital networks gets it wrong on their allocation of staff and resources, who do voters blame? Who's accountable? The Commonwealth, or the State?
PM: The system that we have devised is very plain. On the funding of the system, because I as Prime Minister have taken on the responsibility of being for the first time the dominant funder of the public hospital system of Australia, and the exclusive funder of primary healthcare and the exclusive funder of aged care, when it comes to the funding of the system, the buck stops with me.
On the question of the running of the system, we've said we'd have a new health and hospitals network which is funded nationally, but run locally. That is therefore run through your individual local hospital networks, and they therefore would be locally accountable. That's as it should be. We do the funding, they do delivery, that's as it must be.
HOST: You did have to concede ground though on giving the states these state-based payment authorities for the funding to be channelled through. This wasn't part of your original plan. What will they actually do?
PM: Let's be very clear about that. These are joint funding bodies established by Commonwealth and State legislation, on which we are both represented- point one. Point two, this is actually better than what we had before. That's why I'm happy to support it. Do you know why? Because not only do we have this transparent flow of funds through to local hospital networks based on activity-based funding to the people who are delivering frontline services. You now have the same transparent flow coming through this joint funding authority from the states as well.
In other words, you have a transparent pool of funding flowing through to the local hospital network. In the past, the states could be non-transparent about how they actually funded their systems. This actually makes it clear. Funding model, price determined by an independent hospitals pricing authority- secondly, local hospitals being funded by the actual services they deliver, and thirdly, a joint payment authority which makes it absolutely transparent that the money actually goes through to the service providers. That is the change which is made.
HOST: You- the Commonwealth controls the payment authority?
PM: This is a joint statutory authority between the Commonwealth and the states. But why it is better than before, it's not just our money which goes through it, it is now the states' money as well. That means that we're going to have a common pool being delivered through to the local hospital networks. That is a reform which many people have been calling for.
HOST: This wasn't in your original plan, and Christine Bennett, who chaired your hospital review process, has told Sky News this morning that this is a political reality, to give comfort to the states. Is that right?
PM: Well, as far as the State Governments were concerned, many of the State Governments had expressed various views about the Commonwealth's direct funding model through to local hospital networks. Some fully supported it, others opposed. But where I think Premier John Brumby had a contribution, a real contribution to make in the debate was let's be pretty sensible about this- if we're going to be serious about activity-based funding, transparency of money flowing through to hospital networks which is based on what they actually do on the ground based on the price for delivering those services, then let the states have their money flow through this joint statutory body as well.
Let's remember, it's just a payment authority- but it will produce transparent data about the money which comes in from our level of Government, and from the states- and what it's actually spent on in the delivery of those services on the ground.
HOST: You do have John Brumby onboard, but you don't have Colin Barnett.
PM: Well deduced.
HOST: The West Australian Premier, he's holding out on this. Now, do you acknowledge that WA is a special case? They say they're dudded on the GST carve up already. Should they get special circumstances?
PM: Well, let's just think about this dudding on the GST stuff. Look I'm all for working with our friends in the West on their longer term financial needs. I'm a Queenslander, I kind of understand some of these questions of geographical distance and separation, but also-
HOST: Does he have a point on that, though?
PM: But also the intensity of the infrastructure which underpins major resource states as well. There's a key question there to be worked through. On the Commonwealth Grants Commission, which Premier Barnett was talking about yesterday, remember, his Treasurer Troy Buswell came out and said, as we produced the Commonwealth Grants Commission report, that it should be implemented lock, stock and barrel. Whoops- he didn't give the right answer for the West on this occasion.
So I'll let them sort that debate out locally. But on this one, I just think it's pretty useful to be transparent about what's happening here. We have said- the Australian Government- that if we are being the dominant funders of the system, we need therefore one third of the GST from the states to be dedicated to a new national hospitals fund. That's why we're retaining that part of the GST. What the West Australian Government is saying is, actually, we want an accounting trick to conceal that, that is, we the Australian Government pay them the GST, they then send that cheque back to us, and pretend that that is somehow done in an accounting way which covers up the political fact and the cold hard reality that this money's going to be spent through our national hospitals fund. I just think-
HOST: You won't cop that?
PM: Well, it's a bit of an accounting trick to be quite honest. The key thing is-
HOST: But he's equally refusing to budge on this too. He's worried about this Commonwealth Government, future Commonwealth Governments tearing into the GST for other reasons down the track. Education or something else.
PM: Let me just go to that, because I think it is a really important point. When I was talking to the Premiers yesterday, and the day before, and the night before that, it's been a long meeting - it's been a long day, already.
The two reasons I gave for wanting to reform the health and hospitals system were these: one, all of the working families, pensioners and carers out there who know from their waits in accident and emergency and know from their delayed elective surgery that change has to happen and has to start happening now.
That's why we've done this reform, funded nationally, run locally, to deliver lasting reform, but here's the second reason - it's about the reform of the federation. If we don't do this the health budgets and hospital budgets of the states and territories will crush their budgets entirely within the next 25 years or so, and if that happens: no money for them to spend on education, no money at all left for them to spend on transport infrastructure, no money for law and order, so if I did a John Howard and just stood back there and said 'OK, all I'm going to do is gouge, with Tony Abbott, a billion dollars out of the health system, the hospital system, and just watch it slowly fall over', you know something? The states would fall over, the hospitals would fall over - it's bad for the federation.
So, this is a big reform in enabling the states to actually perform the rest of their functions.
HOST: Do you need WA to do the same thing that the other states have done or can you have a separate arrangement, because he's not moving on this and says he can't be bought off?
PM: Well, can I just say yesterday what Colin had to say was just plain wrong about the fact that the national agreement wouldn't proceed in his absence. I mean-
HOST: So it can? You can have a separate-
PM: Can I just be very plain about that: there are already two intergovernmental agreements which we have with the other states and territories which don't include WA, for one reason or another.
HOST: Does that mean WA doesn't get the billions of dollars you've put on the table?
PM: Can I say I am absolutely confident that we will sort something out with the West. There'll be the usual argy-bargy over the period ahead between the two governments-
HOST: Including a separate-
PM: And I get on well with Colin. Look, we've done a lot of good work together on infrastructure funding and-
HOST: But a separate deal for the West?
PM: We'll sort it out and there's a lot of time ahead and we're going to, I'm sure find an appropriate way through this.
HOST: You haven't won over Tony Abbott, either, this morning.
PM: Surprise, surprise.
HOST: He has raised concerns about the level of bureaucracy in this.
PM: Yeah, yeah, yeah, yeah.
HOST: What legislation do you actually need to get through federal parliament for this reform to get up?
PM: Well, I have noted, I think, with a fair bit of disappointment, just how consistently negative Mr Abbott is. Doesn't matter what we put forward, he is always opposed - always opposed. And I think on health and hospitals reform it's pretty sad that he just comes out with a knee-jerk political reaction and says 'no, we're going to oppose it.'
My challenge to him, my very clear challenge to him today, is to come out in black and white and say that he will not use his numbers in the Senate to block these fundamental health reforms.
HOST: What do you need his support for?
PM: Well, obviously, with changes to the intergovernmental agreement we're going to have to change the legislation which is associated with that.
HOST: And you'd have to do that before July 1?
PM: We need to get that legislation done. We need to get it done really quick for, frankly, the reform process to start - but there are other things as well.
For example, the driving engine of so many of these reforms is the introduction of activity-based funding. Activity-based funding, that is, paying hospitals on the basis of the actual services they deliver, it is made possible through an independent hospital pricing authority. That has to be set up under legislation so that we've got an efficient hospital price. There's another piece of legislation.
HOST: Can you tell me this, Prime Minister - will you tie that legislation to your means test on the private health insurance rebate, which was a broken promise, and for that reason Tony Abbott is saying he won't support that means test? Will these two things be tied, or can they be dealt with separately in the parliament?
PM: The funding which is associated with, frankly, this crazy system which Mr Abbott continues to defend whereby people like you and me and Tony Abbott who are on high incomes have our private health insurance in part rebated by working people on 50 grand a year, I reckon that stinks. We need to change that for people like us on $200,000, $300,000, $400,000 a year. That money should be going to the public hospital system, but in answer to your question-
HOST: -Will tie that to the reforms?
PM: In answer to your earlier question, they've already rejected that particular proposal. We simply want to get on with the business of delivering these other reforms, but the system has to be funded as well.
HOST: You'll separate them?
PM: Of course they'll be dealt with each on their own merits and through separate pieces of legislation.
HOST: And before the election? Will these reforms have to be put through before the election?
PM: We need to get cracking now. People have been waiting a long, long time for fundamental health and hospital reform. We intend to get on with the job. I have a heard a thousand reasons in the last six months about why we should delay, delay, delay.
Guess what? Not one of them has actually come from a real, live human being out there in the community who's sitting in an accident and emergency waiting to be treated. They have come from politicians and some state health bureaucrats and elsewhere.
It's time to get on with this. It's a big reform, the biggest since Medicare, and that's because I believe working families, pensioners and carers want better health, better hospital services - starting now. That's why our payments would start flowing for these reforms from 1 July this year.
HOST: Just finally, Prime Minister, Tony Abbott's idea for taking the dole off young Australians to encourage them to fill some of the skills gaps in mining and other industries - what do you think of that?
PM: I notice Mr Abbott has a habit of policy making on the run. Last time he did this was with his $11 billion great big new tax to pay people and families on up $150,000 a year, say $75,000 by putting in a whole big new tax on business and allowing those costs to flow through to working families for bread and milk and other things. That was the last time we had policy making on the run.
Our position is pretty clear. When it comes to any young person in Australia under 20, it's earn or learn. If you're not out there learning or earning you don't get youth allowance. It's pretty basic.
HOST: Under 30 he's talking about.
PM: We also have a broader set of arrangements for, in our Compact with Young Australians, for those under the age of 25. Can I say this is considered policy. We've worked it up, it's thorough, it's in detail. I've already started to see some changes happening out there in the community as a result of its introduction.
What we've had instead from Mr Abbott is, once again, policy making on the run. I think, you know, you do too much of that, as we've seen with his $11 billion great big new tax coming off the back of subsidising folk on higher incomes for paid parental leave, I just think it's time Mr Abbott did some hard work on these sorts of questions.
HOST: Prime Minister, thank you.
PM: Pleasure.