Health juggling act for Albanese

Anthony Albanese is considering a compromise at his first national cabinet meeting by extending Covid healthcare funding to the states.

Anthony Albanese, centre, with state and territory leaders on Thursday night, from left, Annastacia Palaszczuk (Queensland), Natasha Fyles (NT), Mark McGowan (WA), Andrew Barr (ACT), Peter Malinauskas (SA), Dominic Perrottet (NSW), Jeremy Rockliff (Tasmania) and Daniel Andrews (Victoria).

Anthony Albanese is considering a compromise at his first national cabinet meeting by extending Covid healthcare funding to the states while rejecting demands to inject an extra $5bn annually into public hospitals.

Seeking to put his stamp on the group of the country’s political leaders, who had an informal dinner at The Lodge on Thursday night, the Prime Minister will use national cabinet as a vehicle to push through micro-economic reform and drive productivity.

He expressed concerns that processes under the Council of Australian Governments “just disappeared” when Scott Morrison established national cabinet – to meet in Canberra on Friday – amid calls for a new way to reduce red tape.

While states want the commonwealth to lift its contribution to public hospitals from 45 to 50 per cent, Mr Albanese warned the country was saddled with debt that was preventing his government from doing “everything we would like to do immediately”.

The Australian Medical Association estimates the 5 per cent increase and removing the 6.5 per cent cap on funding growth would cost taxpayers $20.5bn over four years.

“We do inherit not just a decade of denial and delay when it comes to climate change, we inherit a trillion dollars of debt with not much to show for it from the former government. That is the context in which we will consider discussions going forward,” the Prime Minister said.

AMA president Omar Khorshid said he was confident the Albanese government would continue paying for half of each state’s Covid funding, including for vaccinations and treatment, but did not expect the public hospital agreement to be a priority at the first national cabinet meeting since the federal election.

The 50-50 federal-state Covid funding arrangement, which saw the Morrison government pay states nearly $10bn over two years, is due to expire on September 30. The states want the partnership extended to next June but the federal government on Thursday was not committing to that.

“An extension of the 50-50 funding, the extra money to help the hospital system cope with Covid is absolutely critical and we are confident that will be the decision of national cabinet and of our national government tomorrow,” Dr Khorshid said. “(It) needs to be for long enough for the states to be able to plan their workforce, their systems. A year-long extension makes a lot more sense than a shorter extension (because) Covid’s going nowhere.”

Mr Albanese said he would talk with state counterparts about how local governments, which had permanent representation at COAG, could be involved in the national cabinet process.

“I have expressed my concern publicly that some of the processes of the former COAG have just disappeared. We need to lift productivity in this country. One way that we lift productivity is through micro-economic reform,” he said.

“I have foreshadowed with the premiers and chief ministers that that is something I want to discuss as well, how we get that driving through of that reform, how we get better national consistency, how we remove some of the duplication (of red tape) … as well.”

Labour and skills shortages and the flood recovery are also expected to be discussed on Friday.

ACT Chief Minister Andrew Barr acknowledged increasing the commonwealth’s share of public hospital funding from 45 to 50 per cent would be a “significant cost” to taxpayers and would not be achieved in any one year. The existing agreement, with a 45-55 funding split, is due to end in 2025.

“The next agreement … needs progressively, over the life of the agreement (five years), for the commonwealth to lift their share year on year,” he told ABC radio.