Leader exposes the flaws in Rudd's revolution

JOHN Brumby has thrown out the most serious challenge to Kevin Rudd's $50 billion health and hospital takeover because the Victorian Premier has queried the plan's basic political and policy foundations.

Brumby's alternative blueprint is no simple plea for a bigger share of federal funds for Victoria - it undermines the Prime Minister's entire argument and makes it likely there will be no federal-state agreement for months.

Brumby's assessment is devastating factually and politically. The Victorian government's analysis is that Rudd's proposed 60-40 funding share would only create more wasteful health bureaucracy; the funding is re-badged with a real increase in federal funding of only 1 percentage point; there's no real extra money in the health system until 2017, at least three elections away; and a 50-50 funding split with state control is better.

These assertions are at odds with Rudd's entire reasoning for a takeover and provide potent political arguments - from a fraternal Labor government - against his central re-election theme. It also makes it more likely Rudd will have to exercise his threat to hold a distracting health referendum at the next election.

Federal Labor's attempt to reason away Brumby's dramatic disclosures by drawing a parallel with Victoria's similar position on the national water scheme as just part of state bargaining seems to miss the point that because of Victoria's position on the issue, there still isn't a viable national water agreement.