Anthony Albanese to face demand for $5bn hospital boost at first national cabinet meeting

The prime minister, Anthony Albanese, will face state demands for an immediate $5bn funding boost for public hospitals and calls to do more on skills shortages at his first meeting of national cabinet.

The meeting with state and territory leaders on Friday will be held as the country faces a deepening energy crisis that saw the regulator shut down the wholesale electricity market on Wednesday for the first time.

Amid soaring inflation and overwhelming demand on state hospitals, state and territory leaders will present a united front on the issue of health funding, calling for the federal government to scrap a 6.5% cap on health spending and to extend a 50-50 funding agreement for pandemic health costs that is due to expire in September.

The two measures would cost the federal government about $5bn a year.

The New South Wales premier, Dominic Perrottet, told Guardian Australia the issue of labour and skills shortages would also be “top of the list” for Friday’s meeting. He said the states and territories were still grappling with the fallout from the pandemic.

“This will be the first meeting with prime minister Anthony Albanese and state and territory leaders and provides an important opportunity for national cabinet to look at new ideas and solutions to the challenges we face as a nation in the months and years ahead,” Perrottet said.

“In the short term, there must be a focus on addressing labour and skills shortages in healthcare, construction and hospitality sectors so they can continue to bounce back from a tough couple of years.

“Our international borders have been closed up until recently for close to two years, which has resulted in a significant backlog of skill shortages that need to be addressed immediately.”

Long visa processing times for overseas workers wanting to enter Australia have seen some skilled migrants wait more than four years for their visa approval.

With Australia’s jobless rate at a 50-year low, many sectors are reporting difficulties finding staff, particularly hospitality and tourism.

Perrottet has flagged the states and territories need to improve how the primary health system interacts with the hospital network. He argues there is clearly a need for reform.

“We have a state health system that is not currently working alongside the GP network and change is needed to deliver a more coordinated system that delivers first-class healthcare for people no matter where you live,” he said.

“It is vital we tackle these important reforms and issues to help secure a brighter future for the people of NSW in the wake of the pandemic.”

The Victorian premier, Daniel Andrews, said this week that state and territory leaders would be pushing back in a “united front” against the slated September end to the 50-50 health funding agreement. He said “it is not responsible, it is not fair, it is not appropriate to proceed with that cutback”.

Andrews also criticised the 6.5% funding cap which was written into the national health reform agreement in 2020, saying it made “no sense” in the wake of the pandemic.

The Victorian health minister, Martin Foley, said the state was “looking forward to working with the new Albanese government for a better and fairer partnership to fund these critical investments”.

“This is not about the states paying less, it’s about an equal 50-50 partnership, and the previous funding arrangement with the Morrison government, where the states paid more, was unfair and unsustainable,” Foley told Guardian Australia.

“The pandemic has played a major part in putting pressure on the system, but it’s not the only issue – we’re also seeing deferred care, a spike in winter respiratory illnesses, record ambulance demand and bed block issues caused by a lack of funding for the NDIS and the aged care sector.”

The Western Australian premier, Mark McGowan, said the federal government should take advantage of “this new political era” and work closely with the states to reform Australia’s healthcare system which was struggling across the nation.

“Western Australia funds its health system more than any other state per capita but it’s vital the Albanese government ensures any federal funding keeps up with demand, which has grown to unprecedented levels during the pandemic,” McGowan told Guardian Australia.

“Any discussion at national cabinet should prioritise initiatives that divert people who don’t need to go to hospitals to instead go to their GP or other healthcare services. That is why it is important more is done to attract GPs to Western Australia. So I will certainly be raising this at national cabinet.”

The WA premier will also warn against any raid on WA’s GST share, and highlight the benefits of the state’s domestic gas reservation policy that was put in place by the Carpenter Labor government.

“East coast communities crippled by the power crisis could do worse than look west for an example of a reliable energy system that balances the needs of local consumers with international customers,” he said.

“The decision by the Carpenter Labor government to insist on a domestic gas reservation policy means Western Australia is avoiding the nightmare being forced on families over east who, through no fault of their own, are struggling to keep the lights on or heat their homes during winter.”

He said the policy had also allowed the state to transition out of coal-fired power to more renewables while avoiding significant price hikes.

The ACT chief minister, Andrew Barr, said state and territory health ministers had repeatedly asked the former health minister Greg Hunt to work collaboratively on the challenges in the health system to no avail.

“Under the new government, we should now work together to address these concerns, and this will be discussed in Friday’s meeting,” Barr said.

The chief minister said that in addition to extending the cost-sharing deal for Covid care, the commonwealth needed to progressively increase its funding contribution to 50% of efficient growth and to pause the national funding cap for the new national health reform agreement. Under the current agreement signed in 2020, the commonwealth’s share is fixed at 45% until 2025.

“This will take time to implement though. It is unlikely to be achieved in a single year but rather over the life of the next agreement,” Barr said. “We need to work together now to ensure that we’re not just responding to the immediate impacts of the pandemic, but preparing for the decade ahead.”

The South Australian premier, Peter Malinauskas, also backed the need for reform of the health system, saying there was a need to improve how primary care worked to prevent people ending up in hospital which was more costly for taxpayers.

The Queensland premier, Annastacia Palaszczuk, said health reform would be “front and centre” of Friday’s meeting but refused to be drawn on what her state was seeking from the new Albanese government.

The federal health minister, Mark Butler, said “we will sit down with premiers constructively and work through these issues”.

“After almost a decade of the Liberal government’s cuts our health workforce is exhausted, it’s never been harder or more expensive for Australians to see a GP and emergency departments across the country are overwhelmed,” he said in a statement.

The state and territory leaders will meet in Canberra on Thursday before being hosted by Albanese for dinner at the Lodge on Thursday night ahead of Friday’s national cabinet meeting.

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