This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/australia-news/2016/mar/31/turnbull-schools-hospitals-plan-wont-work-unless-taxes-go-up

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Turnbull's schools and hospitals plan won't work unless taxes go up Turnbull's schools and hospitals plan won't work unless taxes go up
(5 months later)
If the funding of Australian hospitals and schools was reasonable, if everything was running fine, then Malcolm Turnbull’s plan to renegotiate revenue raising and responsibilities with the states could be a good one.If the funding of Australian hospitals and schools was reasonable, if everything was running fine, then Malcolm Turnbull’s plan to renegotiate revenue raising and responsibilities with the states could be a good one.
It does make sense to disentangle who does what and to give states more power to raise their own revenue. Prime ministers have been receiving reports advocating that, and they’ve been promising, and usually failing, to do it, for years.It does make sense to disentangle who does what and to give states more power to raise their own revenue. Prime ministers have been receiving reports advocating that, and they’ve been promising, and usually failing, to do it, for years.
Related: Turnbull looks to income tax-raising powers for states to fix school and hospital funding
And – in theory – Turnbull’s version could be an attractive proposition for the states. Ever since the commonwealth took over taxation powers in 1942 federal governments have used their revenue-raising power to expand their control over state policymaking. In steady circumstances it could be an attractive option for state governments to achieve more power and a greater say over their own policy destinies, even though the idea that they’d perform better once in fiscal competition with one another is highly debatable.And – in theory – Turnbull’s version could be an attractive proposition for the states. Ever since the commonwealth took over taxation powers in 1942 federal governments have used their revenue-raising power to expand their control over state policymaking. In steady circumstances it could be an attractive option for state governments to achieve more power and a greater say over their own policy destinies, even though the idea that they’d perform better once in fiscal competition with one another is highly debatable.
But the funding of Australian hospitals and schools is not reasonable, and these are not steady circumstances. This a time when these crucial policies, central to everyone’s lives and the future of the nation, have been on a roller coaster ride through years of political disruption.But the funding of Australian hospitals and schools is not reasonable, and these are not steady circumstances. This a time when these crucial policies, central to everyone’s lives and the future of the nation, have been on a roller coaster ride through years of political disruption.
Kevin Rudd and Julia Gillard recognised that the states – with their current taxing powers – had no chance of funding the ballooning costs of running their hospitals. Through torturous negotiations spread across their years of leadership infighting, they did a deal which offered more federal money – in the form of higher annual increases – in return for a system that tried to make sure the states all ran hospitals as efficiently as possible.Kevin Rudd and Julia Gillard recognised that the states – with their current taxing powers – had no chance of funding the ballooning costs of running their hospitals. Through torturous negotiations spread across their years of leadership infighting, they did a deal which offered more federal money – in the form of higher annual increases – in return for a system that tried to make sure the states all ran hospitals as efficiently as possible.
And Labor promised more money to schools too, in response to the very convincing evidence in the Gonski report that disadvantaged students and disadvantaged schools were falling further and further behind, evidence that has been reinforced by more recent reports.And Labor promised more money to schools too, in response to the very convincing evidence in the Gonski report that disadvantaged students and disadvantaged schools were falling further and further behind, evidence that has been reinforced by more recent reports.
Related: Turnbull's plan to end tax blame game threatens to break Morrison's budget pledge
Then Tony Abbott came to power, and swept all that additional funding aside, with no explanation and a single graph in the budget papers. Funding increases for health would only reflect inflation. After the Coalition’s 2013 election promise to match four years of Gonski funding expired, the same would apply to schools. In fact a recent book revealed that Abbott hadn’t even wanted to include the graph in the 2014 budget, but former treasurer Joe Hockey snuck it back in because he was proud of the decision.Then Tony Abbott came to power, and swept all that additional funding aside, with no explanation and a single graph in the budget papers. Funding increases for health would only reflect inflation. After the Coalition’s 2013 election promise to match four years of Gonski funding expired, the same would apply to schools. In fact a recent book revealed that Abbott hadn’t even wanted to include the graph in the 2014 budget, but former treasurer Joe Hockey snuck it back in because he was proud of the decision.
Which leaves Turnbull, and the state governments, facing the same funding problems that Rudd and the states faced almost a decade ago, and no obvious or easy way to pay for a solution. Turnbull is offering a short-term partial fix for hospitals at the Commonwealth of Australian Governments (Coag) meeting on Friday, a bit more than $3bn to get them through the next three years.Which leaves Turnbull, and the state governments, facing the same funding problems that Rudd and the states faced almost a decade ago, and no obvious or easy way to pay for a solution. Turnbull is offering a short-term partial fix for hospitals at the Commonwealth of Australian Governments (Coag) meeting on Friday, a bit more than $3bn to get them through the next three years.
He’s offering nothing for schools, because the Abbott-era lower indexation does not cut in until 2018 so that discussion can be pushed out past the federal election. And he’s claiming that an income tax share would give the states a steadily increasing revenue source to solve both problems themselves in the longer term.He’s offering nothing for schools, because the Abbott-era lower indexation does not cut in until 2018 so that discussion can be pushed out past the federal election. And he’s claiming that an income tax share would give the states a steadily increasing revenue source to solve both problems themselves in the longer term.
But that ignores the shortfall – perhaps not quite the $80bn over 10 years in projected funding that was cut by Abbott because the costs of running hospitals have not been growing quite as fast in recent years – but a big shortfall all the same.But that ignores the shortfall – perhaps not quite the $80bn over 10 years in projected funding that was cut by Abbott because the costs of running hospitals have not been growing quite as fast in recent years – but a big shortfall all the same.
This is not a funding gap that can be bridged by efficiencies like the chronic care plan announced by the government on Thursday, although they might help a bit. And it’s not a gap that can be paid for by the natural increases in income tax revenue, no matter which level of government is levying it.This is not a funding gap that can be bridged by efficiencies like the chronic care plan announced by the government on Thursday, although they might help a bit. And it’s not a gap that can be paid for by the natural increases in income tax revenue, no matter which level of government is levying it.
Related: Turnbull stuck in a tight spot as Abbott-era policies appear immovable | Lenore Taylor
Unless governments are willing to make massive cuts to spending it is a shortfall that can only be met by increased taxation. It doesn’t matter which tier of government levies taxes at their current levels. They just aren’t delivering enough money to pay for the services we need.Unless governments are willing to make massive cuts to spending it is a shortfall that can only be met by increased taxation. It doesn’t matter which tier of government levies taxes at their current levels. They just aren’t delivering enough money to pay for the services we need.
And that’s the flaw in Turnbull’s plan. The starting point is a hospital system facing a crisis. But he says the overall level of taxation won’t be allowed to rise in the short term and is unlikely to rise much even when the states are allowed to increase the income taxes handed over to them. That means, by definition, there’ll be no additional money to solve the problem.And that’s the flaw in Turnbull’s plan. The starting point is a hospital system facing a crisis. But he says the overall level of taxation won’t be allowed to rise in the short term and is unlikely to rise much even when the states are allowed to increase the income taxes handed over to them. That means, by definition, there’ll be no additional money to solve the problem.
Turnbull, like Rudd, wants to end the “blame game” where each tier of government blames the other for its problems.Turnbull, like Rudd, wants to end the “blame game” where each tier of government blames the other for its problems.
But as it stands his plan just means the states, rather than the commonwealth, will have to raise taxes to continue to fund schools and hospitals. And if the states decline to go along with it, Turnbull is already practising his comeback when they arrive in Canberra asking for more money.But as it stands his plan just means the states, rather than the commonwealth, will have to raise taxes to continue to fund schools and hospitals. And if the states decline to go along with it, Turnbull is already practising his comeback when they arrive in Canberra asking for more money.
“If they decide they’re not up to that, if they don’t want to take responsibility, if they want to continue coming to Canberra and complaining ... then I think Australians will say well, you had the opportunity, you had the opportunity to step up and be responsible and you knocked it back,” he said on Thursday.“If they decide they’re not up to that, if they don’t want to take responsibility, if they want to continue coming to Canberra and complaining ... then I think Australians will say well, you had the opportunity, you had the opportunity to step up and be responsible and you knocked it back,” he said on Thursday.
Either way, the states are likely to see this as just another way of shifting the political blame. And the funding crisis remains.Either way, the states are likely to see this as just another way of shifting the political blame. And the funding crisis remains.
• Lenore Taylor will be on the panel at Quarter Time - a topical Guardian Live event featuring Dom Knight from the ABC, Adam Creighton from the Australian and Guardian Australia’s Bridie Jabour on 14 April in Sydney.• Lenore Taylor will be on the panel at Quarter Time - a topical Guardian Live event featuring Dom Knight from the ABC, Adam Creighton from the Australian and Guardian Australia’s Bridie Jabour on 14 April in Sydney.