States to receive $14bn health windfall

THE states will secure a $14 billion windfall from the GST to provide growth funding for the health reform plan.

THE states will secure a $14 billion windfall from the GST as a result of Australia's recovery from the global financial crisis, to provide growth funding for the health reform plan.

Wayne Swan released the new figures yesterday to bolster negotiations, confirming the states will secure $14bn more than was forecast in November's mid-year economic forward outlook.

But he has also flagged a tough budget next month that will drive savings across all portfolios, including health, to fast-track the nation's budget to surplus.

"The most important thing is to dedicate a third of GST revenue to be spent on health," the Treasurer said yesterday on the Nine Network.

"At the moment, what Canberra has given the states is a blank cheque; there's not enough accountability.

"And what I can say this morning is that because of our stimulus, and because of its impact on confidence, consumption has been quite strong in the Australian economy and that has produced additional revenues to the states of over $13bn over the forward estimates, including $2bn to 3bn a year.

"So additional resources are currently flowing to the states from the GST, in contrast to what is happening with commonwealth revenues, which are lagging behind because of accumulated losses in business particularly."

Government sources said the additional revenues would deliver a $4bn boost to NSW over the next four years and a $3bn boost to Victoria.

Mr Swan said the government's decision to put up its hand for 60 per cent of the cost of hospitals and 100 per cent of primary care would also deliver to the states an extra $15bn over the period beyond the forward estimates.

He foreshadowed "strict fiscal rules in the budget, and the funding of the proposal that we have put forward so far will be all there on budget night for everybody to see. This won't be a typical pre-election budget the likes of which John Howard used to deliver," he said.

Opposition Treasury spokesman Joe Hockey said he remained unconvinced.

"Every year we see this pre-budget rhetoric of `we're going to make those hard decisions'," Mr Hockey said. "They never make the hard decisions."

Health Minister Nicola Roxon said the government could "absolutely rule out any increase in the GST" to fund health spending.

"And the Treasurer has made it quite clear, and I've been assisting him in this work, as one of the ministers responsible for a big-spending portfolio, to make sure that we are finding sensible savings," she said.

"This was something that the previous government never did, never was prepared to say that money could perhaps be spent more wisely in health or elsewhere.

"So we've got a difficult task for the budget across the board, and Wayne has been really leading that in a very determined way."