gillard uses $15b threat for reforms

Phillip Coorey
February 5, 2011
A THREAT by Julia Gillard to withhold more than $15 billion in funding to the states should they refuse to adopt the Commonwealth's health and hospitals reforms is the latest push by the prime minister to ensure Labor delivers its policy agenda this year.

Ms Gillard's attempt to browbeat the Liberal states and the NSW Opposition Leader, Barry O'Farrell, before the February 14 Council of Australian Governments meeting, follows moves in past days to kickstart the campaign to put a price on carbon and deliver water reforms along the Murray Darling Basin.

Last year, all states and territories, except Western Australia, signed up to the health reforms as proposed by Kevin Rudd.


Since then, Victoria has changed to a Liberal government, which opposes the process. Mr O'Farrell has suggested that if he wins the March 26 election, NSW will renege.

Ms Gillard has upped the threat by warning the states that $15.6 billion in growth funding - to be handed to the states in the five years to 2019-20 - would be withheld.

The health reforms require the states to cede an average of 30 per cent of their GST revenue to the Commonwealth, which, in turn, will fund 60 per cent of hospital costs. In addition, it will cover the predicted blowouts in health costs over the future, which is the $15.6 billion.

If there is no deal, the states will have to fund the price spikes.

''The government has always made [it] clear we will not be signing blank cheques,'' a spokesman for the Health Minister, Nicola Roxon, said.

''Hospitals need extra funding - but that extra funding must come with reform.''