Rudd empowers hospital system
Ross Gittins says Rudd's plan to push power down to the lower levels of our ailing heath system will benefit all.
I don't know if I'm getting any wiser but, certainly, the older I get the more I conclude that small is beautiful. I've discovered there's a big phrase to make that strengthening prejudice sound deeply intellectual.
It's ''the organising principle of subsidiarity'' - that is, matters ought to be handled by the smallest, lowest or least centralised competent authority.
One problem always coming to our attention is our dysfunctional federal system - all the buck-passing, duplication between federal and state, the opposite problem of people and issues falling between the cracks, the inordinate delay in federal and state ministers agreeing on a uniform approach to anything, the eternal arguments about the states' need for more money.
Illustration: Kerrie Leishman.
I used to think - rather than having both levels of government get involved in education, health, industrial relations, consumer protection and so forth - we ought to work out a rational division of responsibilities.
Some issues are better handled at the national level, others at state level. Just work out which is which, then have the other level of government withdraw from that activity.
Trouble is, just about all the pressures are for national uniformity. Businesses operating in more than one state don't want to be burdened by having to comply with differing laws in each.
Fair enough. Years ago we moved to uniform regulation of companies. With WorkChoices, we finally ended the madness of having competing federal and state industrial relations systems. Only last week we took our first concrete steps towards a national curriculum for schools - a benefit for families moving interstate.
So in which areas of government regulation are state differences immaterial or even desirable? It's hard to think of many. On the other hand, do we really want everything to be centralised in faraway Canberra? How can people there be familiar with differing conditions on the ground throughout this vast continent? Do we really want a rigid, one-size-fits-all approach across the land?
The bungling of the home insulation scheme is a reminder that while the feds may be good at setting policy and paying uniform sums for pensions, doctors' bills and so forth, they're not good at delivering physical services locally.
Should we stick with the present divided responsibility between federal and state after all?
One problem here is that the states are themselves quite centralist. They may complain about having everything run from Canberra but their substitute is to have everything run from the state capital.
In theory we have three levels of government - federal, state and local - but often in practice little power is devolved to the local level.
We've been groping towards a better resolution of these conflicting objectives - a better ''trade-off'', as economists say. As with all trade-offs it's not perfect - you have to give up some potential benefits - but it is an improvement on what preceded it.
It's to bypass the middle level: a strong centre setting uniform national policy and providing the money, but with services being delivered by local government agencies with some power to adapt the arrangements to local conditions.
This is an attraction of Kevin Rudd's ''nationally funded, locally run'' plans to reform healthcare: get rid of a lot of the duplication, gaps in coverage and wasteful cost-shifting; reduce - to some extent, anyway - the blame-shifting; but strengthen the system on the ground.
But note that Rudd doesn't go all the way to the bottom. He wouldn't empower each and every hospital, but rather would establish local networks of up to four hospitals (and possibly more in country areas).
This recognises that key word in the subsidiarity principle: you decentralise to the lowest competent authority. The trouble with empowering individual hospital boards is they're too tempted to seek progress by empire-building - let's serve the local people by aspiring to provide them with every type of health service they might need, even though a hospital in the next suburb is already strong where we want to expand.
No hospital can be good at everything. Rudd's plan seeks to reduce the empire-building temptation by putting together small local networks of complementary hospitals, allowing for some specialisation within the group.
The messy part, of course, is we can't just get rid of the states. Rudd's answer is to take over 60 per cent of the funding of hospitals, leaving the state governments with a financial interest in making the new system work.
An earlier experiment in shifting power to the local level was Paul Keating's dismantling of the centralised wage-fixing system. I believe the move to bargaining at the enterprise level has done wonders in reducing industrial disputes, increasing co-operation and making wage settlements more appropriate.
When employers and their unionised workers bargain directly it's easier for each side to see the merits of the other's case and the needs of the business both sides rely on, then reach a satisfactory compromise.
That's the first advantage of shifting power to the local level. You get more co-operation, more willingness to accommodate the reasonable needs of people on both sides of the desk. The smallness of the system allows everyone to gain a better understanding of how it works - what causes lead to what effects - and a better appreciation of the other side's point of view. It's harder to delude yourself that the other side is an unreasonable monster.
But the beauty of smallness doesn't end there. Reducing institutions to a more human scale makes us more comfortable with them. We have personal relationships with more of the people involved, we feel a greater sense of control over our lives and feel our loyalty will be reciprocated.
In short, small makes us happy.
Ross Gittins is economics editor.
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