Questions over federal plans to cut contributions to states and territories from $13.2bn to $11bn

Victorian Treasurer Tim Pallas has upped his attack on the Albanese government, accusing them of a “failure to be a full and robust partner”.

Tim Pallas has attacked the Albanese government, saying the Allan government doesn’t care which party holds the Prime Minister’s office so long as they properly fund Victoria.

Mr Pallas has raised concerns that the federal government plans to rip more than $2bn in health funding from the states and ­territories.

In an explosive letter obtained by the Herald Sun, sent Wednesday, Mr Pallas questioned Commonwealth plans to cut contributions to states and territories from $13.2bn to $11bn over the next five years.

He said the cut, detailed in new material presented at a recent Health Chief Executives Forum, would see the Commonwealth “renege” on a national cabinet deal reached in December.

On Thursday, Mr Pallas described the Commonwealth’s “failure to be a full and robust partner when it comes to health care funding” as a “continuing irritation” for the Allan government.

“To see that agreement now deconstructed, less than two months, three months after it was struck, it’s just not fair,” he said.

“We don’t care who’s in Canberra, we expect whoever is in Canberra to do the right thing by Victorians, and when they’re not doing it, we will call it out.”

Prime Minister Anthony Albanese has been accused of ‘reneging’ on a national cabinet deal. Picture: Martin Ollman

In the letter to federal Health Minister Mark Butler in which Mr Pallas doubled down on Victoria’s controversial payroll tax — which GPs have warned would hike the cost of patient fees by an average 30 per cent — demanded the funding be “provided as intended in full”.

The letter also warned Victoria faced extra cuts to hospital funding because of the way contributions were calculated.

Mr Pallas said the government had already raised that issue with the Commonwealth in December.

“I am reiterating our request from December that the cut to Victorian hospitals from the expiry of the minimum funding guarantee is reversed, in order to avoid negative impacts on patient care and Victorian hospitals’ doctor and nurse workforces,” he said.

Victorian Treasurer Tim Pallas has warned Victoria faces extra cuts to hospital funding because of the way contributions are calculated. Picture: Luis Enrique Ascui

A federal government spokesman said: “The historic agreement reached at national cabinet between states, territories and the commonwealth has not changed.”

Mr Butler this week urged Victoria to review the payroll tax and warned it could adversely impact investments in Medicare.

“Payroll tax is a matter for states but I am very worried that the historic investments we’ve put into Medicare, in response to calls from state governments, will be lost to increased payroll tax obligations by general practices,” Mr Butler said.

“I’ll again urge the Victorian government to look very closely at that model and see whether we can get a level of national consistency around those arrangements.”

Mr Pallas hit back in the letter, accusing Mr Butler of misleading the public.

“I would appreciate if you refrained from making public comments on this issue that are likely to mislead practice owners, doctors and patients,” he said.

“The Victorian government has been transparent and actively engaging with various stakeholders including individual GPs and industry peak bodies on this matter.”

On Thursday, Mr Pallas took it further labelling Mr Butler’s comments on the controversial tax “false assumptions”, claiming there had been “no change” and that it would be unfair for clinics to be exempt from the tax burden.

“Under our payroll tax system, we don’t exclude any industry or activity,” he said.

“If we start taking out one particular group, where does it stop?”

Federal Opposition health spokeswoman Senator Anne Ruston said it was concerning to hear about more cuts to hospital funding from the Albanese government.

“Just like his broken promise on stage three tax cuts, Anthony Albanese is now breaking his promise on hospital funding cutting more than $2bn from the states and territories,” Senator Ruston said.

“This comes at a time when Australia is experiencing a worsening crisis in our public hospital systems, with presentations and ambulances ramped hitting record levels.

“The Prime Minister needs to step up and be honest with the Australian public – Why is he cutting hospital funding at a time when we are seeing a dangerous ramping crisis in states across the country?”

Originally published as Questions over federal plans to cut contributions to states and territories from $13.2bn to $11bn