Prescription for chaos

Hospitals: clearly another back of the envelope proposal

Why does so much from the Rudd government bear all the marks of being little more than something scribbled on the back of an envelope?

It may be that there are programmes produced by the Rudd government which are well thought out, where the objectives have been tested, which are well managed and where there are reasonable controls to prevent prodigious waste. If there are, none spring to mind. Not even those which have come from the empire of the media darling, Deputy Prime Minister Julia Gillard.

Fair Work may be one, but that was to restore the power of the unions and remove flexibility from the workplace – the sort of flexibility which reduced unemployment in the Global Financial Crisis and which was absent in earlier recessions.

It is true that Australia has technically escaped a recession, and more importantly maintained reasonable employment levels. Much had to do with the boom in the Chinese economy, and those gifts the Howard government left – the world’s best  bank regulations, the enormous and hard won surplus and a very sound economy.

No doubt the stimulus package produced some economic activity, but at what cost? A massive debt with much of the money lost in fraud and mismanagement. Was escaping two successive quarters of negative growth really worth this price?

Now we have another even more grandiose programme to take over the hospitals of the nation. It will expropriate a goodly part of the states’ one remaining growth tax, the GST. The absence of detail, the refusal to give this, the petulant order to all questioners to “get out of the road” and the vague superficial similarity with the Abbott plan for local control taken together suggest panic.

This is clearly something rushed together to create a distraction from the roofing insulation debacle and the overdue response on hospitals.

This was confirmed by the fact that the Rudd hospital takeover plan had not obviously been cleared or even seen by the government’s constitutional experts.  

Even with the approval of all the states to the diversion of the GST, the Prime Minister’s hospitals plan has the potential to run up against serious constitutional obstacles.

In a public interest case courageously brought in 2009 by law academic Bryan Pape, the High Court recently indicated that there are real limits to the power of the Federal Parliament to spend, or “appropriate”, taxation receipts.

The case related to the Tax Bonus for Working Australians Bill, 2009 which was to provide, at a cost of $8.2 billion, financial support to about 8.7 million taxpayers. This support was to take the form of one-off payments ranging from $950 to $300 according to the taxable income of the recipients in the year ended 30 June 2008. The stated purpose was to “immediately support jobs and strengthen the Australian economy during a severe global recession."

While the court upheld the validity of this particular measure, the judges considered the meaning and implications of the appropriations power  in section 81 of the Constitution. This provides:

All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution.

In a leading case in 1975, the AAP case, there was a challenge to a Whitlam government plan to transfer moneys to regional councils for social welfare payments which the Commonwealth itself could not make under the existing social services powers in the Constitution.

In upholding the plan by a 4:3 majority, the Court was divided as to the meaning of the crucial words “purposes of the Commonwealth.”

Three judges thought this was to be determined by Parliament. Another three judges thought the purposes were those set out in the constitution and could be reviewed by the court.

But in the Pape case, the judges havenow  indicated that it is not just for the politicians to decide what are the purposes of the Commonwealth. So in seeking to bypass making grants to the states the Commonwealth could leave itself open to a serious constitutional challenge. Funding or running hospitals is not a “purpose of the Commonwealth”

The Commonwealth could avoid this by making payments to the states under section 96 on condition that they then paid the money to the regional health boards. But this would require that the states co-operate.

Missing this important constitutional point suggests the Rudd plan, if it exists in detail, was never shown to the lawyers. If it were, this would be dated earlier than the Prime Minister’s announcement, would refer to a detailed plan and could be easily tabled. But as with the national broadband plan when it was announced, the hospitals plan probably does not exist in any detail.