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Federal Government to Assume Responsibility for Hospitals

Legislation submitted to parliament in October proposes that the federal government assume 60 percent of funding responsibility for public hospitals and full responsibility for primary and aged care. The legislation followed a health reform agreement between the Australian Commonwealth, led by Prime Minister Julia Gillard, and seven states and territories that would transition primary responsibility for the nation’s hospitals from the states to the federal government. Federal funding of public services had dropped to as low as 38 percent under the previous administration.

The existing arrangement is based on five-year contracts between the Australian government and each state and territory, through which the states and territories receive federal funding to provide free hospital services and perform daily administration and management of public hospitals. The reforms would relieve states and territories of $15.6 billion in health costs between 2014 and 2020, allowing them to invest in other services. In exchange, the states and territories have agreed to contribute up to one-third of their Goods and Service (GST) revenue to the federal government.

In addition, hospitals will now be paid for each service they provide rather than through block grants. Prime Minster Julia Gillard said that this new funding arrangement will help hospitals meet increasing demands and shorten hospital waiting lists, as well as increase accountability.


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