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From Earle Page to turning the page

Julia Gillard

Earle Page's life

Earle Christmas Grafton Page was Minister for Health, from 1949 to 1956, in the government of Robert Menzies. He is remembered for this rather than for his 20 days as Prime Minister in April 1939, when he acted as a caretaker after the death in office of Joe Lyons.

Earle Page was a doctor of medicine who turned his immense energy and skills to the service of the nation and of all Australians. At the end of a parliamentary fortnight in which the Treasurer, Peter Costello, has started to wear the label 'chicken man', it is worth noting that Earle Page was described by his contemporaries as an extraordinary character, who always spoke at a rapid rate, rarely paused for breathe, and juggled his parliamentary files 'like a demented hen scratching for grubs'. Echoed by Alexander Downer, during the 1920s Earle Page was often depicted in cartoons as a 'rather riotous-looking lady'.

More seriously and much more fairly, Earle Page was described as 'a man of boundless energy, fertile in ideas' and as a 'controlled tornado'. He had vision and he knew how to turn his vision into action. Earle Page got off to an early start as a precocious scholar who graduated from the University of Sydney at the top of his class in medicine. He acquired a reputation as a brilliant surgeon while working at the Royal Prince Alfred Hospital. It was an exciting time in medicine as the microscope was helping to elucidate infectious diseases, aseptic techniques were introduced to make surgery safer, and X-rays had just been discovered.

In 1903, keen to bring modern medicine to the north coast, he returned to Grafton where he built an extensive country practice and opened a progressive private hospital. The battery-operated X-ray equipment he ordered was among the first in NSW. He was also the first person in the district to own a car, which he also used as an ambulance. He had the telephone connected to his surgery. His practice was a model of modern medicine.

Earle Page was elected to Federal Parliament in 1919 at the age of 43. From the beginning, Earle Page saw himself as someone elected to do a practical job of work for the country, and he often described himself as a doctor to the nation. In 1928 he planned to introduce a national insurance scheme, paid for by all Australians, which would finance their medical costs and their old age. Unfortunately this idea did not progress as the economy faltered in the lead-up to the Great Depression, and although he tried again in 1938, again he was unsuccessful. It took the Whitlam Labor government to achieve a national health insurance scheme.

But as Minister for Health from 1949 until 1956, Earle Page was able to be the architect of the Menzies government's post-war health policy. He gave school children free milk. He subsidised hospital beds and gave tax concessions for voluntary contributions to health funds. He increased Commonwealth grants to hospitals. These are all worthy initiatives, but Earle Page's enduring achievement was the introduction of the forerunner of our Pharmaceutical Benefits Scheme.

I should point out that legislation to implement such a scheme had been passed twice by Labor governments during the war years, but the implementation was frustrated by the objections of the Australian Branch of the British Medical Association. Earle Page was tough enough to stand up to the doctors and to his sceptical colleagues. The importance of affordable access to medicine was not an academic or political issue for Earle Page.

When Earle Page was a young house surgeon at Sydney's RPA Hospital in 1902, he contracted a near-fatal infection of his arm after conducting a post mortem. This was in the days before disposable gloves, and it was only 10 years or so since subjects such as bacteriology and sterilisation were introduced into Australian medical courses. There were no antibiotics in those days - the discovery of penicillin was 26 years off - so he was lucky to survive.

Earle Page had another brush with severe infectious disease in 1942, when he was the Australian minister resident in London, sitting in on the relevant British war cabinet committees. He was engaged in difficult mediations between Churchill and Curtin which took its toll and in June 1942 a severe attack of pneumonia forced his return to Australia. I do not know if Earle Page was treated with penicillin in London. He would not have had access to this new drug in Australia because it was not until 1943 that the Commonwealth Serum Laboratories commenced manufacture of penicillin for public use. But certainly, as Minister for Health, as a doctor, and as a patient who had survived two life threatening infections, Earle Page knew at first hand how important it was that all patients had access to the new miracle drugs. Driven by his personal experience, he put in place the beginnings of the PBS by making essential medicines such as pencillin and sulfa drugs available to all patients.

Earle Page left a solid legacy of achievements that made a real difference to peoples' lives, right through to today. The current Howard government is in desperate need of his vision, his initiatives, his commitment to universal access, and his farsightedness in health care policy.

It will break, so let's fix it - the case for health reform

Earle Page had the courage to look at what was being done and to imagine how it could be done better. Our health system needs some of that courage from our national leaders today. Indeed, without that courage, this nation will see its health system break. To prove this proposition we just need to look in to the crystal ball for your state of NSW and imagine a world without health reform.

As part of their Budget papers for 2006-07, New South Wales included a Long Term Fiscal Pressures Report. This report found that growth in the working age population will consistently be below that of total population, a phenomenon that will start as early as 2010. At the same time the proportion of the total population aged 75 years or more will increase from the current 6.6 percent to 14 per cent by 2044. In NSW the health budget currently accounts for the largest share of any expense category in the budget. It is 27 percent of total expenditure this year, and at current rates of growth, by 2044 paying for health will cost more than NSW earns in tax.

This is clearly an unsustainable position. NSW knows it and each of the states and territories is doing comparable work on what a future without national health reform would look like. Each of the states and territories is asking itself the right question; what do we need to do now to manage an ageing population, the subsequent increase in the dependency ratio, rising health care costs due to new technologies and entrenched health inequalities.

Last year, the Productivity Commission's research report, the Economic Implications of an Ageing Australia, also made a significant contribution to the debate on the inter-relationship between health care spending, health reform and the ageing of Australia's population. The Productivity Commission's report presented a clearer picture on the links between the ageing of the population and expenditure on health care than that in Peter Costello's 2002-03 Inter-Generational Report. It placed greater emphasis on the uncertainty of non-demographic factors and tells us that small variations in productivity will have large impacts on future projections. The Commission makes it very clear that more importance should be given to determining the ageing population's real contribution to future health spending. This is crucial because it has implications for how future health spending is projected, and how to design the best responses to the policy challenges we face. But despite this substantive work, the Howard government has not even asked itself the right questions, let alone answered them.

The long term fiscal sustainability of the health system is not the only challenge we face. Our health system is placing an increasing cost burden on individuals, a burden which is already too heavy for some Australians. Evidence of this trend is clear in data released last September by the Australian Institute of Health and Welfare that showed that personal health bills are rising at 6.2 percent a year - more than twice the rate of inflation. Australians are paying an average of $796 a year on medication, dental and medical treatments not covered by the federal government or health funds. The report shows that Australians have personally shouldered a bigger share of overall health spending in the past decade, in contrast to the trend in most other western countries. Finally, while the Medicare that Labor built remains at the centre of our health system, it needs help.

The appeal of a national single payer system such as Medicare is not just its universality, but also its efficiencies and ability to control costs. There is a direct relationship between the percentage of GDP spent on health and the number of health care funders. The United States is at one extreme here, and the Scandinavian countries are at the other, with Australia somewhere in between. But under the Howard government, the life and function of Medicare depends solely on electoral politics. On any day they sniff an opportunity, the Howard government will end universal Medicare and replace it with an American-style system where Medicare is no longer universal but is confined as an under-funded, welfare-style system.

Even with Medicare, health inequalities remain a huge challenge. Medicare Australia figures indicated that the current average annual Medicare spend on GP services in Sydney and Melbourne ($200) is more than three times that in Cairns ($60). This is not due to an outbreak of wellness and fitness in Queensland, or the opposite phenomenon in Sydney and Melbourne. But it does illustrate increasing inequalities in accessing health care services, particularly for people in rural and regional Australia, and their impact on ulitilisation.

"I certainly have an open mind on a single funder for health care."

Letting it break - the Howard government squanders the chance for reform

In 1998 and in 2003 the Howard government squandered two major opportunities for health reform. Much of the shape of our health system and particularly the way in which our public hospitals work is dealt with in five yearly agreements between the federal government and state government. But the Howard government has failed to use either the 1998 Health Care Agreements or the 2003 Agreements to deliver reform. The lost opportunity of 2003 was particularly egregious, coming after expectations had been raised and working parties in nine different areas had developed reform proposals.

But in the end, the Howard government was interested only in ripping $1 billion out of the Agreements, and then getting them out of the way. Indeed, the current Minister for Health, Tony Abbott, denies the need for reform. In a speech last August entitled 'The Trouble with Reform', the Minister famously gave the Treasurer heart palpitations when he stated that 'the syllogism "health costs are rising, we can never afford to spend 15 percent of GDP on health, therefore health must be reformed" is just wrong - especially if the reform in question is more trouble than it's worth.'

This absence of reform zeal is inexcusable in the face of the pressures our health system faces, but also inexcusable given the opportunity that the strong economy has given us for reform. It is in the good times - time of high growth - that provision should be made for the future. Recent developments in world markets have caused a substantial increase in Australia's terms of trade, which is the ratio of the prices received for our exports to the prices paid for our imports. As we are earning more income from these exports, we are purchasing more imports at relatively cheaper prices. The terms of trade reached a 30-year high in 2005 after a 27 percent increase over the previous two years. Largely, this has been the result of rising export prices driven by the current non-rural commodity boom, especially in minerals, but import prices also fell over the same period. Higher export prices have improved the profitability of Australian exporters, which has fed into our Budget through revenue flows, particularly corporate taxes.

It is almost impossible to imagine, but the boost in revenues from the terms of trade bonanza have delivered corporate tax gains to the budget of well over $10 billion in single budget years alone - so it comes as no surprise then that over the 10 year period it has delivered a bonanza of $160 billion to the government's coffers. Unfortunately this bonanza has not delivered the reforms and investments in areas like health and education that will allow us to sustain and share this prosperity with future generations. This is not just a squandering of opportunities but a level of gross negligence which wastes a once-in-a-generation opportunity to strengthen the key social contracts that are part of what it means to be Australian. And if we return to the example of our counterparts in Far North Queensland, and their relatively low per capita consumption of Medicare, it is even more of a tragedy. It is these communities which are delivering our mineral wealth and driving our prosperity, but they are not sharing in its spoils.

Turning the page - The next health care agreements

Minister Abbott has signalled that renegotiating public hospital funding arrangements with the states will be a focus of a fifth term Howard government. These five yearly agreements determine the funding and administrative arrangements for our public hospital system. Regardless of which party is in government in 2008, the negotiations over the next Health Care Agreements will represent one last, final chance to reform Australia's health care system before it breaks. The same passion, vision, commitment and innovation that Earle Page brought to his role as Health Minister will be needed to ensure the Health Care Agreements deliver better health outcomes for all Australians.

The Health Minister has said that current arrangements are 'inherently unsatisfactory', and he has from time to time flirted with taking over the running of public hospitals. But John Howard has repeatedly over-ruled Tony Abbott and most of the talk from the Howard government is about what they cannot or will not do, rather than what they will do. There is certainly no mention of reform. In contrast, a Beazley Labor government would be a government of reform, prepared to build the health system we need for this century.

While the measure of a good health care system is the health of the population and the outcomes achieved when people pass through the system, it is also imperative that we operate on sound economic principles, and ensure that public dollars are invested wisely. The two are not incompatible. These principles should be interdependent. Our health system needs reform to achieve sustainability, to remove financial barriers to care for those who face them, to address health inequalities, and to improve health outcomes for the whole population.

That is why the next Health Care Agreements are too important to be left undiscussed until after the next election. The Howard government needs to state its intentions for the Agreements. The Howard government should promise to use the Health Care Agreements to take up the reform ideas already being canvassed in the national debate about the options for health care reform. That kind of leadership would lay the foundations for building the health care system of the future.

But that will not happen because if the Howard government stated its real intentions for the next Health Care Agreements, it would reveal another stark difference between the political parties. A Beazley Labor government would use the next Health Care Agreements as the first stage of health reform. But without imminent election pressure, a re-elected Howard government will undoubtedly take the opportunity to reduce its funding support for public hospitals.

So what should the next Health Care Agreements look like? The first step on the road to real reform is building better partnerships between the Commonwealth and the states. Australia has not walked down this road because the Howard government has refused to join hands with the states and begin that walk in real partnership. The states have been desperate for reform, and an incoming Beazley Labor government could harness their passion for reform to build a better health system.

The states understand that the current health system produces a whole lot of irrational results simply because of cost shifting. The Howard government can under-fund aged care knowing state administered public hospitals will pick up the load but this is bad for patients and more expensive for the system. The Howard government can under-invest in Medicare and primary care generally, knowing public hospital emergency departments will end up helping patients who could and should have been helped outside the expensive hospital setting. The Howard government can also under-invest in health promotion because state administered public hospitals end up carrying the lion's share of the treatment of those with preventable disease.

Second, the Agreements must do more to integrate and utilise the private hospital sector. We should be looking for ways to better integrate private hospital services into the provision of publicly-funded health care and the training of health professionals. My discussions with the private hospitals leave me in no doubt that they would welcome such an approach and that they will respond positively to these proposals when put to them. The Commonwealth does not do nearly enough to ensure that private hospitals are effectively used as a national health resource. This is despite the growing role of private hospitals in the delivery of a range of services, and despite the fact that the Commonwealth makes substantial contributions to the cost of these services through Medicare, the PBS and the private health insurance rebate. This is also despite the states' recognition that the private sector can extend the capacity of the public sector. Indeed there are already arrangements under which the states purchase needed beds and care. The states also work with the private health sector in other ways. For example, in Queensland, new public hospitals are designed with the capacity to accommodate private operators and private patients.

The public and private health systems are also linked through their shared workforce. The Commonwealth funds university places for doctors who will work in private and public hospitals. The states pay for the recruitment of doctors who end up working in both. States pay private practitioners to operate in public hospitals. Nationally the Department of Veterans' Affairs purchases private hospital care for veterans. The next Health Care Agreements must recognise that all hospitals are in the health business. We will maximise the outcomes for our health system and all patients by working together.

Finally, the next Health Care Agreements should build the kind of co-operation between the Commonwealth and the states which will support a serious discussion, leading to consensus over time, about the future division of health responsibilities between the Commonwealth and the states and territories. This is a consensus which will not be reached before the next election or before the next Health Care Agreements. But we need to start the discussion now.

Faced with the issues around the current Commonwealth-State divide, I know that many players in health even advocate extending a national model to our hospital system. I also know that those who support the Commonwealth ultimately taking over health would understand that building for that outcome will take years of better and closer co-operation between the states and the Commonwealth. Certainly more years than the term of just one inter-governmental agreement. That's why building better partnerships with the states and territories would be the first-term focus of a Beazley Labor government.

However, a Beazley Labor government would also look to the long-term and be prepared to examine the need for big changes. That includes being prepared to genuinely discuss the arguments for and against a single funder for health care. Because the real question for a major reform proposal is this: would the benefits outweigh the costs? Supporters do make some practical arguments in favour of a single funder for health care:

  • If the costs of hospital care are included in the same envelope as the costs of prevention, primary care, the PBS and aged care, then there would be an economic incentive for better investments in the things that keep people out of hospital.

  • Eliminating current duplications and gaps would save money (on some estimates as much as $2 billion a year) which could be reinvested into the system.

  • There's the possibility of better management of health care services around cross-border regions and in isolated areas and Indigenous communities.

  • It would be easier to ensure sufficient workforce in an integrated health system.

On the other hand, sceptics make the point that better partnerships with the states could deliver many of the same practical benefits, without the significant transition costs. They also argue that whatever the barriers to getting full benefits from the better partnership approach, those same barriers apply to implementing a single funder. Inherent in any re-allocation of funding responsibilities is a re-allocation of revenues, which would require real commitment to reform across all players, and would have to be subject to consideration of national expenditure priorities. There would be no-one in the country who would want remote Canberra-based departmental bureaucrats trying to run our local hospitals. That would be a recipe for disaster and for the loss of community good will and support for local services. And given the political and constitutional authority of State Governments in the Australian health system, it's clear that a move to a single funder would require a broad consensus in support of a specific model to succeed.

The one thing you can be sure of is that anyone who has already made up their mind about exactly what governments should do in this area just hasn't thought through all the difficult issues. It's a complex area of national policy which we must be prepared to examine properly. So unlike the Howard government, Labor will not rule this option out without serious consideration. I certainly have an open mind on a single funder for health care. That's the discussion for which the next Health Care Agreements must set the scene.


Reform is never easy. But no reform in health is not an option. No reform does not mean no change. But all of the changes will be bad. Our health system will break. It will be unsustainable. It will put greater barriers between individuals and the care they need. It will have increasing health equalities. I am eager to work with my state colleagues to ensure sustainability and put equity back into our health system, our hospitals, our cities, our regional centres and our outback.

Sustainability is not just about the dollars and cents spent on health. Sustainability and equity are linked. When we lose equity in our health system, we risk people not being able to afford to be well. That's not sustainable for a nation that wants to give people the best quality of life and keep them productive and participating in the workforce and society. When we take away people's access to the best of health, what do they have left?

Earle Page and I come from very different political persuasions, and at first glance the only thing we have in common is our commitment to the improvement of health care for all Australians. However in doing my homework to prepare for this speech tonight, I have come to respect Earle Page as a politician who never forgot why he was elected and who did truly serve the people of his electorate and Australia as the doctor of the nation. He was a reformer. And so am I. When I see what he was able to achieve, I am eager to take on the task of health care reform in a Beazley Labor government. Then we can truly turn a new page in health.


Julia Gillard is the Labor Shaow Minister for Health. This is the text of her address "From Earle page to turning the page - Australia's next health system", the Annual Earle Page College Politics Lecture, presented at the University of New England on 22 August 2006. Read more about Earle Page.


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