Australia's Prime Minister Kevin Rudd has warned states were in danger of being swamped by spiralling health-care costs, which had risen by 11 per cent in the past five years while state revenues had only increased by 4 per cent in the same period.
''Forty years ago, Australian Government spending on health equated to 1.2 per cent of gross domestic product. In 2010, Australian Government health spending equates to 4 per cent of GDP, and the intergenerational report projects that it will rise to 7.1 per cent in 2050,'' he said Monday, while speaking in Sydney.
'In dollar terms, that's an increase of over $200billion by 2050 and equates to an increase in average Australian Government health spending per person in real terms from $2290 today to $7210 in 2050.''
''Rapidly rising health costs create a real risk, absent major policy change, state governments will be overwhelmed by their rising health spending obligations,' he said.
''If current spending and revenue trends continue, Treasury projects that the total health spending of all states will exceed 100 per cent of their tax revenues, excluding the GST, by around 2045-46 and possibly earlier in some states.
''Without reform, states' ability to provide the services they currently provide will be significantly strained.'
Mr Rudd said Australia's ageing population meant while at present there were five people working to support those over the age of 65, by 2050 that number would fall to 2.7 people.
As the population continued to age, health costs could spiral out of control unless steps were taken including major investment in infrastructure and health services to improve productivity and head off the rising cost of an ageing population, Mr Rudd said.
The Prime Minister also reiterated investment in education, infrastructure and increasing productivity would remain priorities for his Government.
Only the previous day, he had warned that the population would explode to 36 million by 2050, while the participation rate in the workforce would decline from 65 per cent to 60 per cent, it is projected.
That means more expenditure on aged pensions when tax generated will go down. A way out for ensuring a decent life for all - improved productivity and greater investments, argues Mr.Rudd.
Clearly by projecting himself as a visionary, with great concerns for the future, Mr. Rudd is getting ready for the elections next year, and he could be concentrating his efforts on the health front.
A major factor in his victory back in 2007 was the health plank, but he hasn't delivered much on that score, critics say. He is perhaps trying to make up for his own omissions now.
Meantime South Australia's Health Minister John Hill has said the Federal Government should take over all health funding and leave running the system to the states.
Mr Hill said yesterday only the Commonwealth had the money to meet increasing need in the sector.
"The cost is growing so quickly that the states won't be able to continue to afford it," he said.
Mr Hill said the State and Federal governments used to split health costs about evenly, but that gradually the state's share had increased to about 60 per cent.
"We need to work out what's actually required, and then the funds need to flow and (the Federal Government) has the greatest capacity," he said.
"And the states have the capacity to run the services, provide them where they're needed. We're in a better place to do that."
Mr Hill conceded there would always be some need for federal control, such as for the Pharmaceutical Benefits Scheme and Medicare, but that certainly hospitals should be entirely state-run.
The Australian Medical Association has backed the idea of having a single funder, because that makes one body responsible for the money.