How does Australia’s health system rate internationally? This year it wins bronze

Posted on August 14, 2021 by particularkev

Stephen Duckett, Grattan InstituteIn the wake of the Tokyo Olympics, another international scorecard has been released, and Australia does well here too.

The US-based Commonwealth Fund conducts regular surveys of health care in 11 countries: Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom and the United States.

In its latest comparison, Australia ranks third overall, slipping from second in the previous comparison in 2017.

The US, not unexpectedly, ranks last overall, and last on four of the five component rankings.

Australia comes in at number 3 overall, after The Netherlands and Norway.
Eric C. Schneider et al., Mirror, Mirror 2021 — Reflecting Poorly: Health Care in the U.S. Compared to Other High-Income Countries (Commonwealth Fund, Aug. 2021)

Why did Australia get bronze overall?

Australia was awarded gold for two of the five component rankings: equity and health care outcomes.

The equity score is based on measures of disparity. For example, how different is access to care for people with above-average income compared to people with below-average income?

Australia’s Medicare scheme helps explain our good performance on this dimension.

Health care outcomes incorporates measures such as life expectancy and infant mortality rates.

Australia scored well on these and on outcomes of health care, such as the rate of women dying in childbirth, or of people dying in the month after being discharged from hospital after a heart attack.

Nurses in scrubs makes a hospital bed. — Australia’s health system delivers good health outcomes for patients.
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Australia scored silver on administrative efficiency. Although primarily a measure of paperwork and its electronic equivalent, this also measures the ease with which medical practitioners can navigate the health system for their patients.

Australia’s good score again reflects well on Medicare as a single insurer. But it might also reflect Australia’s absence of a scheme requiring patients to get a second opinion from another doctor before surgery. Second opinions can be useful, so it might actually be disguising a shortcoming in the system.

Now for the bad news

Our overall score was dragged down by poor performance on the remaining two dimensions: access to care (where we were ranked 8th out of 11); and care processes (6th out of 11).

The first of these is not a surprise – stories about long waits for hospital care including elective procedures and outpatient appointments, and ambulance ramping, regularly feature in the media.

Poor affordability of dental care also contributed to Australia’s low score on access to care.

Australia performed somewhat better on access to primary care, which includes general practitioners.

Child sits in a dentist's chair, holding a purple blanket to her chin. — Dental care remains unaffordable for many in Australia.
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More than 30 separate indicators were used to judge processes of care, for which New Zealand was awarded gold. Here, Australia was judged in the middle of the pack, doing moderately well on preventive care, and moderately well on “patient engagement/preferences”, such as nurses and doctors always treating patients with respect.

But it was dragged down by measures of safe care, such as failure to have alert systems to provide pathology results back to patients, and high hospital infection rates.

Australia’s processes of care score was also brought down by poor care coordination. For example, GPs aren’t necessarily notified when their patient presents to an emergency department. And specialists’ reports on patients aren’t sent to GPs within a week of the patient’s visit.

What do we need to improve? More funding

Problems with access to health care will not be easy to fix. The federal government has limited growth in its funding to the states for hospital care to 6.5% each year. This does not keep pace with growth in demand.

States can either find the additional money elsewhere to meet rising demand for health care (for example, by increasing state taxes such as payroll tax, or making cuts elsewhere). Or it can ration services, such as not providing enough operating theatre time (which results in longer waiting times for elective procedures). Or it can improve efficiency – and there is some scope for that in almost every state. States will typically do a mix of all three.

However, states alone can’t improve efficiency, because some measures fall within the federal government’s control. The federal government is responsible for primary care, for example, so it’s difficult for the states to design strategies to keep people out of hospital by making better use of primary care.

An easier option for states is to apply political pressure to get the federal government to lift the cap on funding and give the states more money. We can expect to see more of this in the lead up to the next federal election, which will be held before mid-May 2022.

Specialist doctor at a desk talks to a patient, who sits facing her. — Communication is often lacking between GPs and specialists.
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Improving processes of care will also be difficult, but hopefully improved electronic patient records in hospitals will facilitate quicker communication between hospitals and GPs.

Why do these rankings matter?

International comparisons help us identify opportunities to improve – but only if we avoid simply basking in a self-congratulatory glow from our high overall ranking.

The Commonwealth Fund survey is by no means perfect – there is some volatility in rankings of components from edition to edition – but it does allow us to drill down into the important attributes of health care, and to identify where others are doing better.

We should now set ourselves an agenda of what we want to learn and from whom.

Stephen Duckett, Director, Health Program, Grattan Institute

This article is republished from The Conversation under a Creative Commons license. Read the original article.

A mining camp won’t cut it: Australia’s quarantine system needs a smarter design

Posted on June 26, 2021 by particularkev

Mathew Aitchison, Monash UniversityThe announcement that the Victorian and federal governments will build a 1,000-bed COVID quarantine hub at Mickleham in Melbourne’s north marks a welcome end, or at least a fresh chapter, to the finger-pointing over Australia’s quarantine saga.

Time is of the essence when protecting Australians from COVID, so hats off to both governments for setting an ambitious timeline that could see the facility up and running by the end of this year.

But in their haste to deliver an alternative to hotel quarantine, we believe the governments haven’t taken advantage of the newest available innovations.

The plan for the proposed quarantine facility produced by the Victorian government is, by its own admission, little more than a specced-up version of a mining camp, similar to the Howard Springs facility already in use in the Northern Territory. In turn, this type of construction harks back to the postwar quarantine facilities built from the 1950s onwards.

Part of the problem with the current proposal is the focus on the “hardware”, with almost no discussion of the “software”. By hardware, we mean buildings, physical structures, road layouts and infrastructure; by software, we mean how it will be used, the operational patterns and processes, and “softer” operational modes of use and their technologies.

This hardware-centric approach would be more reassuring if the hardware were the best and fittest for use, but unfortunately the proposal has reached for what it knows, and what it knows is around 70 years old.

A smarter way

We and our colleagues at the Building 4.0 Cooperative Research Centre, funded jointly by the federal government and a consortium of industry, are developing a state-of-the-art design, called Q_Smart, which we submitted to the Victorian government in March 2021.

In our proposal, building services, controls, sensors and management systems (alongside well-designed and efficiently produced buildings) all play a role in preventing the transmission of COVID-19. We might think of this as a correction towards a more “software-driven” approach, as it seeks to use a range of processes, techniques and technologies already available from our collaborators at Siemens to augment the work done by the physical structures.

In terms of the physical layout, our design avoids the large common corridors, inadequate air-tightness controls for rooms, or unhygienic air handling systems that have emerged as problems with current hotel stock.

Table listing design features of Q_Smart — Building 4.0 CRC

As leading infection control experts have already pointed out, mining dongas may have worked well so far for quarantine at the repurposed Howard Springs facility in the Northern Territory. But from an epidemiological point of view, the current design is concerning for the proximity of neighbouring verandahs, especially in cases where more than one group of quarantine residents is housed in a unit.

The government’s provisional staffing patterns for the new facility suggests that separation between residents will rely on strict protocols around staff movements and quarantine measures intended to slow and limit the spread of disease, should a breach occur.

In contrast, the smart building management system we are developing would not “wait” for a breach to occur, but would aim to stop such contact ever being made. A door would not open, an airlock would have its contents automatically evacuated, and UV light would cleanse contaminated surfaces or air in ducting.

Some of these features, such as proximity authentication, are innovations that we routinely expect from our 20-year-old cars. If we turn to our now ubiquitous smartphones, there are yet further possibilities to safely and conveniently track and control movement in more humane way that would not need to reach for punitive ankle bracelets and the like. And, yes, should a breach occur, such systems could ultimately carry out near-instantaneous contact-tracing.

But such a system could only work if the “hardware” and “software” are fully integrated and planned together from the start.

An eye on the future

There are many ways to deal with quarantine, and although it may be too late to integrate our designs into the proposed Victorian facility, perhaps other states and territories embarking on building ventures might yet consider this advice.

In viewing the current proposed plan of closely spaced mining dongas, arranged in “mini-districts”, it is nigh-on impossible to imagine it being used for anything other than a quarantine facility, or perhaps a correctional centre.

Proposed layout for the new quarantine hub — The plan for the proposed quarantine hub makes it hard to imagine it being used for anything other than quarantine – or perhaps a correctional facility.
Vic.gov.au

Q_Smart, on the other hand, was designed to be flexible, reusable and adaptable to different sites, which, for example, may not necessarily have large amounts of flat open space. This would potentially allow facilities built for quarantine to be reused for other purposes after the pandemic. Transforming the building’s operational pattern would be a matter of simply flipping a few (virtual) switches. Depending on the use case, certain controls could be activated or deactivated, new patterns of movement through the buildings could be enabled or disabled almost instantaneously.

With more thinking and development, perhaps such buildings could also be used as affordable housing, or disaster relief accommodation or — how’s this for ironic — future hotels.

This article was coauthored by Dr Bronwyn Evans AM, chair of Building 4.0 CRC and chief executive of Engineers Australia.

Mathew Aitchison, Professor of Architecture and CEO of Building 4.0 CRC, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why NSW is skewing its tax system toward build-to-rent apartments and away from mum and pop landlords

Posted on August 2, 2020 by particularkev

Harry Scheule, University of Technology Sydney

In an apparent about face, the NSW government has halved land tax for developers of build-to-rent housing.

It came weeks after the the Treasurer Dominic Perrottet launched a report that called for a greater reliance on land tax as a replacement for stamp duty.

The greater reliance on land tax is a long-term goal. At the moment family homes are exempt, along with boarding houses, caravan parks, retirement villages and farms. Most other users pay land tax, including landlords and businesses.

The change will give developers who invest in build-to-rent schemes offering long tenancies a 50% discount on their land tax for 20 years.

Why build-to-rent?

Most Australian rental properties are owned by individuals, units in apartment blocks as well as free-standing houses. Half are owned by landlords with only one property; three quarters by landlords with only one or two properties.

If you want to rent from a corporation, or from someone with wide experience in owning and renting properties, you’ll find it hard.

It makes Australia unusual.

Nails in walls can cause problems for tenants.

In other countries corporations rent out housing, big time. America’s five largest corporate landlords own 420,000 properties. Germany’s largest landlord, Vonovia, owns more than 330,000.

Overseas experience suggests corporations provide more affordable housing, and in many ways they make better landlords.

Individuals who own just one property have put most of their eggs in one basket.

Because they can’t afford for anything to go wrong they check the condition of the property regularly.

They prohibit nails in walls and pets, and typically offer only short-term leases.

Corporations can play the law of averages.

Because they know most properties will be well maintained they are satisfied with less-frequent inspections. They allow modifications, and typically offer long-term leases.

They offer an experience pretty close to ownership, in return for rent.

It’s this that the NSW government wants to encourage.

To ensure it happens and to ensure built-to-rents don’t revert to the Australian pattern of individual investors owning individual units, it will specify that the apartments have at least 50 units and are managed under unified ownership.

Tax makes it hard

At the moment such developments are discriminated against when it comes to land tax. No tax is due if the land value is below a threshold.

Individual landlords are usually below the threshold (some spreading their portfolio between multiple states to ensure they don’t trigger each state’s threshold).

Wholly-owned apartment blocks are above the threshold and can’t escape it. University of Technology Sydney calculations suggest land tax on build-to-rent developments can consume up to 27% of the annual rent collected.

And they are subject to goods and services tax. They can reclaim some of it but not all.

The announcement comes at a time when the COVID crisis has cut stamp duty receipts and created an oversupply of vacant apartments, particularly around universities.

The initiative appears to have been crafted before the crisis and to be more forward looking. Many of the build-to-rent projects will take years to complete.

It’s about changing the mix

That said, any extra building activity will support the construction industry and extra stock will reduce home prices and rents.

The initiative doesn’t spell the end of mum and dad landlords. They will still predominate for a long time.

It’s about providing options and security for tenants that isn’t widely available and will become more important as a greater proportion of Australians rent.

Other states will be taking note.

For a government that wants to eventually make land tax universal, the 50% cut is a step in the wrong direction. It might have been better to remove the threshold for small landlords.

But there’s no sign the NSW government has given up on its longer term goal. It’s unlikely to be the last time land tax rules are changed.

Harry Scheule, Professor, Finance, UTS Business School, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

7 lessons for Australia’s health system from the coronavirus upheaval

Posted on June 23, 2020 by particularkev

Stephen Duckett, Grattan Institute and Anika Stobart, Grattan Institute

The COVID-19 pandemic forced us all to change the way we live. The lockdown altered fundamental aspects of our lives, not only to protect our own health but also the health and lives of others.

Just as Australians have shown a remarkable ability to adapt to a world with COVID-19, so too has Australia’s health system. In a report released today, the Grattan Institute outlines seven key lessons that can help make the health system more effective, efficient and equitable, and better able to deal with future crises.

Lesson 1: telehealth works

Since mid-March, Australians have been able to consult their GP or a specialist from the comfort of their own homes, via phone or video (known as telehealth). Although face-to-face consultations are sometimes still necessary, the pandemic has shown the enormous potential for telehealth to provide more efficient care in many instances, such as for routine appointments or mental health check-ups.

During the pandemic, telehealth was a no-brainer to protect patients and health professionals from getting sick or making others sick. But given its widespread adoption and success, it is also a no-brainer for telehealth to become a permanent fixture of health care in Australia.

The federal government should revise the temporary telehealth Medicare items to ensure they promote continuity of care and make them more appropriate for the longer term, couple them with e-referrals (to replace the museum-era fax machines), and introduce rules to prevent rorting.

Lesson 2: out-of-hospital care also works

Alongside telehealth, the pandemic prompted a rapid expansion of hospital-in-the-home care, including new “virtual hospitals”. Many people with chronic health conditions, or who are in rehabilitation or residential aged care, can be monitored by health professionals and given health advice without face-to-face contact, using technologies such as telemonitoring.

Commonwealth and state governments should fund further expansion of these services.

Telehealth consultations have become more commonplace during the pandemic.
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Lesson 3: Australia needs new funding arrangements for general practices

Australia’s rigid primary care funding model, in which doctors are paid on a fee-for-service basis, made it hard for GPs to set up new practice models during the pandemic – such as quickly establishing COVID-19 testing clinics or making outreach calls to vulnerable patients.

Governments should remove barriers in the Medicare system to allow for different models of care.

Lesson 4: public and private systems should be more integrated

The pandemic showed the potential for public and private health-care systems to work better together. Private hospitals were set up to deal with the overflow from potentially overwhelmed public hospitals. At the same time, private hospitals effectively came to a halt when governments suspended non-urgent elective surgeries, to free up resources to tackle the pandemic.

Now there is a huge backlog of patients who need elective surgeries. Clearing this backlog should not be a business-as-usual matter. The pandemic provides an opportunity for Australia to move away from the current inconsistent wait-list process, to a standardised, efficient, equitable process with a single wait-list priority system to properly manage elective surgeries.

State governments should also consider negotiating long-term contracts with private hospitals for extra help.

Lesson 5: there are gaps in Australia’s pandemic preparedness

Despite Australia’s largely successful response to the pandemic, our preparedness regime was not totally up to scratch. Australia had not contemplated a crisis of this scale, and as a consequence the early response was characterised by reactive policy-making and mixed messages to the public.

Future pandemic planning should include a workforce strategy to support the rapid expansion of health-care capacity; provide a national surveillance approach to quick and accurate reporting of disease data; and ensure that secondary health effects such as mental health problems and domestic violence are built into the plan and managed in the longer term.

Lesson 6: the health system needs a stronger supply chain

During the pandemic, health workers had to cope with inadequate supplies of testing kits and personal protective equipment (PPE) such as face masks. Problems with Australia’s supply chains hampered ready access to supplies, and the global surge in demand forced Australian health departments to join the global bidding for fast-tracked supplies from overseas.

We’ve seen shortages of PPE during the pandemic.
Shutterstock

Australian governments need to strengthen local supply chains, by drawing on a diverse set of suppliers and increasing product standardisation to enable easier substitution of products. The National Medical Stockpile also needs to be reviewed, because it did not have sufficient supplies.

Lesson 7: Commonwealth and state governments can better coordinate primary care

The creation of the National Cabinet improved national coordination in response to the pandemic, as the old fractured federal relationships were temporarily set aside.

Renewed cooperation through primary care agreements, and strengthened Primary Health Networks, could reduce – or, better still, end – the overlap in services provided by the Commonwealth and states, and improve primary care delivery.

The new normal can be better than the old

Australia’s health care must not “snap back” to the old order. The pandemic has shown us a better way. Now reform is needed to transform these temporary improvements into long-term successes.

But reform and a “new normal” won’t just happen automatically. Consumers and clinicians should be engaged now to build on what went well during the pandemic, to ensure our health system is better than it ever was before the pandemic.

Stephen Duckett, Director, Health Program, Grattan Institute and Anika Stobart, Associate, Grattan Institute

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Post-coronavirus, we’ll need a working tax system, not more taxes and not higher rates

Posted on May 5, 2020 by particularkev

Neil Warren, UNSW and Richard Highfield, UNSW

Oliver Wendell Holmes Jr famously observed in 1927 that “taxes are what we pay for civilised society, including the chance to insure”.

Whilst tax as a price for civilised society is well understood, less appreciated is the second part of his observation – that tax provides a chance to insure against a crisis.

As nations emerge from the COVID-19 crisis with policies unthinkable just six months ago, and associated debts previously unimaginable, it is becoming clear that while some were well insured and able to respond rapidly, most were underinsured, exposing their civilisations to previously unthinkable risks.

In many ways Australia is an exemplar in its use of taxation to provide the “chance to insure”. It funds Medicare; the Pharmaceuticals Benefit Scheme; the Higher Education Loan Program; the Superannuation Guarantee Charge and contingency-based welfare payments.

COVID has exposed the weakness in our system

COVID-19 has exposed how underinsured Australia is in other ways. It will have to borrow heavily to protect the economy, but for many years won’t be able to impose the extra taxes that will be needed to pay down the debt.

Introducing new taxes or increasing existing tax rates would threaten what will be a fragile recovery.

The only realistic option is to review what Australia gives away, such as tax concessions, and what it fails to collect, as measured by the so-called tax gap.

The tax gap is the difference between the amount the Tax Office collects and what we would have collected if every taxpayer was fully compliant with tax law.

In 2016-17, the Commonwealth raised A$389 billion in taxes, intentionally gave away an estimated $166 billion and unintentionally failed to collect a further $30-35 billion that the Tax Office knows of.

Mapping out a pathway to winding back government debt and funding programs to better insure our civilised society has to begin with ensuring those who are not currently carrying their fair share of the legislated tax burden do so through reforms to reduce non-compliance.

Many of us aren’t paying the tax we should

The Tax Office conservatively estimates that non-compliance for the taxes it has so far examined is equivalent to more than 8% of the tax revenue it collected in 2015-16.

The Treasury also estimates that tax concessions in 2017-18 were equivalent to 41% of Commonwealth government revenue, or more than 9% of GDP (although it cautions against adding estimates together as reducing one concession can affect the use of others).

Given the scale of the Commonwealth response to COVID-19, the government will need additional tax revenues of around 2.5% of GDP (about $50 billion) for some years.

This should not prove insurmountable. In comparison with other advanced economies, Australia is a relative low taxer with a total tax burden of 28.6% of GDP in 2017-18, well below the OECD average of about 34.5%.

There’s revenue going begging

The tax gap estimates show billions can be raised from integrity measures such as addressing overclaimed work-related expenses ($3 billion), unreported cash wages ($1 billion) unreported rental property net income ($2 billion) and unreported business income ($2-3 billion).

There’s much more available from reducing tax concessions, removing the personal tax-free threshold, winding back retirement savings concessions, and broadening the goods and service tax (especially from fully taxing the food that is already partially taxed).

Lower income groups affected by the changes should be compensated by improved targeting of expenditure programs.

Right now we’ve a near-universal welfare system and a targeted tax system.

The way out of our present problems is to make the tax system more universal and the welfare system more targeted.

New taxes and higher rates should be resisted, especially if made more palatable by more concessions.

What we are proposing would not only result in a tax system that was simpler and harder to escape – but one that was capable of funding the insurance we will need to preserve our society into the future

There’s no reason to think there won’t be another pandemic exposing the weaknesses in our tax system that remain.

Neil Warren, Emeritus Professor of Taxation, UNSW and Richard Highfield, , UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

If coronavirus cases don’t grow any faster, our health system will probably cope

Posted on April 3, 2020 by particularkev

Stephen Duckett, Grattan Institute; Anika Stobart, Grattan Institute, and Will Mackey, Grattan Institute

The growth in COVID-19 cases in Australia appears to have slowed across all states, through a combination of tighter border control and spatial distancing.

With the number of new cases each day growing at a slower rate, there is a chance the pandemic can be brought under control and dealt with in our existing public hospital system – even without help from the private system.

However, it’s still too early to say for sure. Although Australia is testing more people than many other countries, it is only just starting to relax its criteria and testing more people with COVID-19-like symptoms.

As testing expands, we’ll have a better idea of how the health system will cope. But here’s what we know so far.

Australia’s infection rate appears to be slowing

The number of new COVID-19 cases in Australia has flattened over the past five days.

This is not just because new arrivals have slowed with much tighter border controls, and the slump in international air travel. The number of new local infections each day is also not growing.

For most of March, the total number of cases doubled in Australia every three to four days. That rate has now slowed to doubling every six to seven days.

The chart below shows this slowing occurred in each state that has a significant number of COVID-19 cases, and consistently from March 20.

On March 16, gatherings of more than 500 people were banned and all international arrivals were required to self-isolate for 14 days.

The health system will probably cope

Slowing the growth of new cases will ease pressure on the hospital system.

If we continued to double the number of cases every three to four days, we would have hit the then-capacity of intensive care units (ICUs) of about 2,200 beds in about mid-April when the number of new cases hit 12,000 per day. Doubling or even tripling the number of ICU beds would have delayed the crunch by a week.

At the current doubling rate, of six to seven days, that crunch would hit in early May.

But the doubling rate is falling and so that crunch time will probably be pushed out even further.

The slower COVID-19 spreads, the more time we get to prepare health systems and increase the capacity of ICUs, where necessary.

Over the past week the growth pattern has slowed and shifted from the exponential doubling to a linear trend with the number of new cases in Australia increasing by about 350 per day. If this rate continues, Australia’s current ICU capacity will be able to cope.

But it is still early days. And our current testing regime may not be shedding as much light on community transmission as we need. With limited community testing, and a disease which is asymptomatic or mild for many, we don’t know how far infections have spread into the community and so we don’t know the actual number of new cases each day.

But we need to test more broadly to understand the spread

With more than 250,000 COVID-19 tests so far, Australia has a high testing rate compared to other countries.

But the number of testing kits has been limited, so Australia has done “targeted” rather than “widespread” testing.

The Commonwealth government previously advised doctors to limit testing to people who develop a respiratory illness and have either returned from overseas or been in close contact with a confirmed COVID-19 case in the past fortnight.

As the restrictions on international arrivals kick in, community transmission will become the main source of COVID-19 risk.

The Commonwealth government last week expanded the testing criteria to people who have fever or acute respiratory infection and are in an at-risk group (for example, a health worker) or setting (such as a geographic area with confirmed clusters of cases).

Some states have gone further. New South Wales now allows GPs to refer for testing people with COVID-19 symptoms.

Victoria has introduced randomised testing at its screening centres to get a better understanding of how the virus is spreading. This involves testing every fifth person who presents at the clinic, in addition to those who meet the testing criteria.

As overseas cases fall and our testing capability rises, all states should implement some form of randomised testing in the community.

As the testing criteria is further relaxed and picks up more cases of community transmission, we will get a better understanding of how the virus is spreading in the community. Only then can we be confident about the adequacy of our health system in the coming months.

Stephen Duckett, Director, Health Program, Grattan Institute; Anika Stobart, Associate, Grattan Institute, and Will Mackey, Associate, Grattan Institute

This article is republished from The Conversation under a Creative Commons license. Read the original article.

No food, no fuel, no phones: bushfires showed we’re only ever one step from system collapse

Posted on February 14, 2020 by particularkev

Anthony Richardson, RMIT University

This summer’s bushfires were not just devastating events in themselves. More broadly, they highlighted the immense vulnerability of the systems which make our contemporary lives possible.

The fires cut road access, which meant towns ran out of fuel and fell low on food. Power to towns was cut and mobile phone services stopped working. So too did the ATMs and EFTPOS services the economy needs to keep running.

In a modern, wealthy nation such as Australia, how could this happen?

In answering this question, it’s helpful to adopt “systems thinking”. This approach views problems as part of an overall system, where each part relates to each other.

In other words, we need to look at the big picture.

Through a systems lens

Systems are everywhere, from the coral ecosystem of the Great Barrier Reef to the vast technology networks of global financial markets. In a human sense, social systems range from the small, such as a family, to large organisations or the national or global population.

The systems I mentioned just now are “complex” systems. This means they are connected to other systems in many ways. It also means a change in one part of the system, such as a bushfire in a landscape, can set off unpredicted changes in connected systems – be they political, technological, economic or social.

All complex systems have three things in common:

they need a constant supply of energy to maintain their functioning
they are interconnected across a range of scales, from the personal and local to the global and beyond
they are fragile when they have no “redundancy”, or Plan B.

Traders work on the floor of the New York Stock Exchange – part of the complex system of global financial markets.
Justin Lane/EPA

The case of East Gippsland

To better understand a complex system collapse, let’s examine what happened in Victoria’s East Gippsland region, particularly the coastal town of Mallacoota, during the recent fires.

This case demonstrates how one trigger (in this case, a bushfire) may start a cascade of events, but the intrinsic fragility of the system enables total collapse.

Transport-wise, neither East Gippsland nor Mallacoota itself are physically well connected. Fires cut both the only transport connection to East Gippsland, the Princes Highway, and the lone road out of Mallacoota.

Smoke haze prevented air transport. This meant the only way out was by sea, in the form of intervention by the Australian Navy.

Second, there were no reserves of food, fuel, water, medical supplies or communications at hand when the fires had passed. Supplies ran so low there were reports of a looming “humanitarian crisis”.

These shortages are no surprise. In Australia, as in most developed countries, food and fuel distribution systems run on a “just in time” model. This approach, originally developed by Japanese car manufacturer Toyota, involves organising supply networks so materials are ordered and received when they are needed.

Such systems remove the need to store excess goods in warehouses, and are undoubtedly efficient. But they are also extremely fragile because there is no redundancy in the system – no Plan B.

Implications for Australia

Australia as a whole is, in many ways, just as fragile as Mallacoota.

We import 90% of our oil – a figure expected to rise to 100% by 2030. Much of that fuel passes through the Straits of Hormuz and then through the Indonesian archipelago. We have few alternative routes.

Nor do we maintain sufficient back-up reserves of fuel. Australia is the only International Energy Agency (IEA) member that does not meet the obligation to keep 90 days of fuel supplies in reserve.

As East Gippsland and Mallacoota have shown, many other connected systems, such as food distribution networks, are critically dependent on this fragile fuel supply.

A close shave

On January 3 this year – the very day HMAS Choules evacuated people from Mallacoota – the US killed Iranian general Qasem Soleimani by drone strike.

If Iran had responded by disrupting the flow of oil through the Strait of Hormuz, throwing global oil supply into turmoil, Australia may have faced nationwide fuel shortages at the height of the bushfire crisis.

Late last year Australia reportedly had 18 days of petrol, 22 days of diesel and 23 days of jet fuel in reserve.

A global fuel crisis was avoided only due to restraint by both the US and Iran. Australia might not be so lucky next time.

Activists calling for de-escalation in the conflict between the US and Iran in January.
MARK R. CRISTINO/EPA

The need for reserves

Our communities, especially in bushfire-prone areas, need more redundancy to make them resilient to disasters. This might mean towns storing water, non-perishable food, blankets, medical supplies, a generator, a satellite phone and possibly fuel, in protected locations.

More broadly, Australia needs a national fuel reserve. This should be in line with the IEA’s 90-day obligations. In December last year, Australia reportedly had just 54 days’ worth of reserves.

The federal government has recently looked to bolster reserves through possible deals with the US and Holland. But overseas supplies will not be very helpful in an immediate crisis.

The implications of the bushfire crisis are clear. At a national and individual level, we must improve the resilience of the systems that make our daily life possible.

Anthony Richardson, Tutor and Researcher, Centre for Urban Research, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Premiums up, rebates down, and a new tiered system – what the private health insurance changes mean

Posted on April 19, 2019 by particularkev

File 20190327 139377 12fjpz7.jpg?ixlib=rb 1.1 — This year’s premium increase is small in comparison to previous years – but it still outweighs wage inflation.
From shutterstock.com

Peter Sivey, RMIT University and Terence Cheng, University of Adelaide

If you have private health insurance, or are considering getting it, a series of changes coming into effect on April 1 are worth knowing about.

These include the annual premium increase, a small decrease in rebates, the introduction of a new tiered system designed to simplify things for consumers, and some premium discounts for young people.

This year’s premium increase is quite small compared to recent years, and the reforms are generally sensible. But cost pressures and confusion in private health insurance cannot be fixed overnight.

A modest increase in premiums

Private health insurance premiums will increase by an average of 3.25% in 2019. These increases are relatively modest, as premiums have been rising at between 4% and 6% per annum for more than 10 years.

However, compared to consumer price index inflation of 1.8% and wage inflation of 2.3%, premiums are still rising substantially in real terms for Australians.

But in the current environment, above-inflation premium rises are not unexpected.

For comparison, consider the public health system, where spending increased at nearly 7% per year in the decade to 2017.

Out-of-pocket spending by patients also had an above-inflation trend of 5.1% per year over the past decade.

So both public and private expenditure on health are increasing substantially. Driving this is the increased usage and price of health care. Hospital visits are growing at 4% a year, and health price inflation is a further 2% per year.

Many hospital procedures such as cardiothoracic surgery, colonoscopies, hip and knee replacements, are increasing in volume by over 5% a year. So as patients use their health insurance more, it’s reasonable for the price to rise.

Rebates continue to decrease slowly

Most Australians with private health insurance receive a rebate from the Australian government to help cover the cost of premiums.

Means testing of rebates along income tiers was introduced in 2012. This sees individuals and households with higher incomes receive lower subsidies.

From 2014, the government began indexing rebates every year, using a formula that is calculated as a difference between the consumer price index, and the industry weighted average increase in premiums.

As a result of indexation, rebate entitlements have been gradually falling.

Government rebates for private health insurance go down a small amount each year.
From shutterstock.com

For example, this means in 2013/14, a person aged 65 or below earning less than $88,000 (base tier) would have received a 30% rebate. Today, a person of the same age in the base tier would receive a rebate of just over 25%.

From April 1, rebates will decrease between 0.1% to 0.5% from their levels in 2018/19, depending on the income tiers that people fall into.

For a typical family policy that covers both hospital and extras (with premiums approximately A$140 a fortnight), the decrease in the rebate translates to a very small rise in premiums of A$1 a fortnight.

Basic, bronze, silver or gold?

One key initiative starting on April 1 is the introduction of four tiers of private health insurance coverage: basic, bronze, silver, and gold. This is distinct to the income tiers we talked about above.

In this case, each tier mandates the minimum set of treatments (defined by clinical categories) that insurers must cover.

For instance, policies in the “basic” tier are required to cover rehabilitation services, hospital psychiatric services, and palliative care.

Insurers can include other types of treatments which are not mandatory under the basic tier, if they choose to do so. Each additional tier covers a wider range of treatments, in addition to services mandated in lower tiers.

The Conversation/Australian Government, CC BY-ND

This simplified categorisation of policies is designed to help consumers understand how comprehensive their cover is, and enable them to more easily compare products offered by different health funds.

While this initiative provides consumers with greater clarity on the types of services covered by each type of health insurance product, it still does not standardise care completely.

Health funds can offer to cover, in lower tier products, treatments that are mandated only in higher tiered policies (such as providing coverage for pregnancy in a basic policy).

This may confuse patients if they assume their policy covering pregnancy will also cover other costly private procedures such as joint reconstructions (bronze), or back, neck and spinal surgery (silver).

Young people

From April 1, health funds will be able to offer discounts on premiums of 2% for each year a person is under the age of 30 when he or she takes up private health insurance. Premium discounts are capped at a maximum of 10%. The discount is retained until the person reaches the age of 41, after which it will be gradually phased out.

This initiative is being introduced to encourage young Australians to purchase private health cover and to stem the decline in private health insurance ownership among younger people. From September to December 2018, the largest net decrease in insured persons was recorded in people aged 25 to 29.

These discounts on premiums for young people complement the Lifetime Health Cover policy introduced in 2000, which was designed to encourage Australians to take up private hospital insurance earlier, and also to maintain cover.

Under the Lifetime Health Cover policy, which is still in force, people above the age of 30 without private cover are required to pay a 2% loading on premiums for each year they are over 30, if they choose to take up private cover later on.

Other changes

Another key change is that health funds are permitted to offer private hospital policies with a higher excess, in return for lower premiums. The maximum permitted excess is increasing from A$500 to A$750 for singles, and A$1,000 to A$1,500 for families.

Travel and accommodation benefits will be allowed to be included in hospital insurance plans for customers living in regional and rural parts of Australia. This will assist patients and their carers to meet the additional costs of having to travel to urban centres or capital cities to receive specialised treatment.

Natural therapies such as yoga, naturopathy, pilates and reflexology will no longer be covered under a general treatment policy. A total of 16 natural therapies are excluded. A review undertaken by the National Health and Medical Research Council concluded there is no clear evidence of the efficacy of these therapies.

Finally, to strengthen consumer protection, the role of the private health insurance ombudsman will be expanded, giving the agency new powers and greater capabilities to address issues and complaints.

Peter Sivey, Associate Professor, School of Economics, Finance and Marketing, RMIT University and Terence Cheng, Senior Lecturer, School of Economics, University of Adelaide

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Fairness isn’t optional. How to design a tax system that works

Posted on March 17, 2019 by particularkev

File 20190227 150708 1iizk7e.jpg?ixlib=rb 1.1 — No-one would ask low earners to pay the same as high earners.
Shutterstock

Fabrizio Carmignani, Griffith University

This is part of a major series called Advancing Australia, in which leading academics examine the key issues facing Australia in the lead-up to the 2019 federal election and beyond. Read the other pieces in the series here.

Any discussion of the tax system requires a common understanding that its purpose goes beyond revenue.

To see this, ask whether we would be willing to raise as much revenue as we do now by simply requiring each resident and business to pay A$16,400 a year, with no further complications.

We could do this. It would generate the A$450 billion the Commonwealth raises now.

And it would be appealing in some ways. It would minimise tax evasion. There would be no exemptions, no tax returns, no loopholes. And payment would be easy to monitor. It would also save the taxpayer the cost of submitting tax returns and the government the cost of checking them.

We all want some fairness

People who earn more than A$76,000 would be delighted, because they would pay less tax than they do now.

Households with people who earn much less would be less happy. Each child, no matter how young, would have to pay A$16,400. A household with two parents (one working) and one child would have to pay twice as much as it does now.

Unemployed Australians would pay the same as mining tycoons. Mum-and-dad businesses would pay the same as large corporations.

But we wouldn’t accept such a system, because it wouldn’t be fair. And that’s not just because fairness is one of our core values.

Inequality has an economic cost. Modelling by staff of the Organisation for Economic Cooperation and Development (OECD) shows that a 1% increase in a nation’s inequality lowers its gross domestic product by between 0.6% and 1.1%.

The researchers find that beyond a certain point growing inequality can undermine the foundations of market economies and lead to inequalities of opportunity. They report:

This smothers social mobility, and weakens incentives to invest in knowledge. The result is a misallocation of skills, and even waste through more unemployment, ultimately undermining efficiency and growth potential.

Progressivity helps

Almost all developed countries use the tax system to fight inequality, by increasing the rate of personal income tax as taxable income grows. In a typical “progressive” personal income tax system the first $5000 earned might be taxed at ten cents in the dollar, while subsequent earnings might be taxed at 20 cents in the dollar. The result is that higher earners pay a greater proportion of their earnings in tax.

Australia has such a system. Our personal income tax system is more progressive than most of the 36 OECD members.

But it has been getting less progressive over time.

A standard measure is the difference in proportion of earnings devoted to tax (the “tax wedge”) for high earners on 167% of a nation’s average income and low earners on 67% of the average. The greater the difference, the more progressive the system.

The graph shows Australia’s system became less progressive throughout the first mining boom in the 2000s. It then became more progressive during the global financial crisis and probably as a result of the government’s response to it. Progressivity has been drifting down since.

Unless we take action to make our personal income tax system more progressive, it is likely to become less progressive still.

Tax cuts legislated in 2018 will accentuate the trend by dramatically flattening Australia’s personal income tax scales by 2024-25, unless reversed as Labor has promised should it win the election.

Our company tax rate is high …

Company taxes are almost always proportional, set at a flat rate. Debate is about how high that rate should be.

Lower rates are said to encourage business investment, stimulating employment, wages and economic growth. But if company taxes are cut, government needs to find more revenue from somewhere else, or wind back spending.

Australia’s standard rate is 30%, reduced to 26.5% (and soon enough 25%) for companies with turnovers of less than A$50 million. It is the second-highest rate in the OECD, behind only France. A broader measure of Australia’s “effective” company tax rate, taking into account tax breaks, still shows it is high compared to other countries.

The high rate is little noticed at home. Most Australian shareholders are able to get a tax credit for the company tax paid on the profit that funds their dividend (a practice Labor has promised to wind back). This means the credit can cut the the income tax collected from a dividend recipient to zero, but not below it resulting in a payment from the Tax Office.

… which may not be a problem

There is no clear association between corporate tax cuts and economic growth.

Rough calculations using OECD and International Monetary Fund data suggest that, if anything, higher economic growth is associated with smaller tax cuts.

In part this is because foreign companies consider things other than the tax rate in deciding where to invest. In part it is because the revenue lost from corporate tax cuts has to be made up from somewhere else (most likely from extra income tax as incomes rise and push people into higher tax brackets).

Since 2001, when Australia’s rate of company tax was cut to 30%, Australia’s annual economic growth rate has averaged 2.9%. In the 17 years before then, when the company tax rate averaged about 39%, annual economic growth averaged 3.5%.

None of this implies causality. But it does show that lower company tax rates and better economic performance do not necessarily go together.

International surveys show that Australia, despite its relatively high company tax rate, is regarded as one of the 20 countries in which doing business is easiest. What most works against Australia is the high costs of electricity.

New taxes are waiting in the wings

In summary, there appears to be scope for reducing personal income tax rates at the lower end of income distribution while increasing them at the top end.

Our company tax rates are high, but this need not be a problem.

If company taxes were to be cut, other taxes would have to increase. One option is to increase the goods and services tax. But this is not ideal as the GST is a regressive tax; that is, it tends to make income distribution more unequal.

There are other options.

We could impose an extra, much higher tax rate on very high incomes, as Democratic representative Alexandria Ocasio-Cortez has proposed for the US.

It wouldn’t be a first. Australia’s top marginal rate was 75% in the early 1950s. Or we could reimpose an inheritance tax. A well-designed one would not only fund government spending but also work against intergenerational inequality.

Fabrizio Carmignani, Professor, Griffith Business School, Griffith University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why Canada’s immigration system has been a success, and what Australia can learn from it

Posted on November 27, 2018 by particularkev

File 20181122 161618 3zux9o.jpg?ixlib=rb 1.1 — Prime Minister Scott Morrison has called for a rethink of the ‘top-down’ approach to immigration in Australia, allowing states and territories more input.
Shutterstock

Jock Collins, University of Technology Sydney

Immigration policy will be a critical issue in forthcoming state (Victoria, NSW) and federal elections. The disproportionate impact of immigration on population growth and public infrastructure in Sydney and Melbourne is the key issue.

If we look to the example of another immigrant-friendly country, Canada, however, we can see how giving states and territories a greater role in immigration target setting and selection can help take the pressure off major cities without drastically reducing immigration rates.

Immigration certainly impacts on Australia’s population to a greater degree than most Western nations. Among OECD countries, only Switzerland and Luxembourg have a higher percentage of foreign-born people than Australia.

Today, 28% of the Australian population was born overseas. The key issue for Australia is that immigrants are more likely to live in large cities than smaller cities or regional areas. According to the Australian Bureau of Statistics, 85% of immigrants live in major urban areas, compared to just 64% of Australian-born people.

Indeed, according to the International Organisation for Migration (IOM), Sydney is now equal-fourth in the world (with Auckland and Los Angeles) with the highest percentage of foreign-born residents (39%), while Melbourne is not far behind (35%). Nearly two-thirds of residents in Sydney, Melbourne and Perth have at least one parent who was born overseas.

A new state-based approach?

The stress that rapid population growth has placed on Melbourne and Sydney has recently become a topic of much debate. This week, Prime Minister Scott Morrison pledged to reduce the annual permanent immigration cap of 190,000. Australia accepted just 162,417 immigrants last year, the lowest level in a decade.

Morrison has also called for a major rethink of the “top-down” approach to immigration in Australia, allowing states and territories to request the number of skilled migrants they’d like to admit each year.

The states and territories currently have a limited ability to nominate applicants for certain skilled visas. But state-nominated and regional visa approvals have fallen in recent years to just over 36,000 last fiscal year following tighter restrictions.

Morrison wants to see a bigger role for states and territories:

This is a blinding piece of common sense, which is: how about states who plan for population growth and the Commonwealth government who sets the migration levels, actually bring this together?

What we can learn from Canada

The Canadian government gave provinces a say in setting targets and selecting economic immigrants – similar to Australia’s skilled migration intake – in the early 1990s. Quebec was first to receive a high degree of autonomy in the process – it was given the right to set its own level and selection criteria for all economic immigrants. (The ability to speak French was a must.)

Quebec was also granted the right to set all of its integration programs, funded by Ottawa every year. The payments reached C$540 million this fiscal year, or C$13,500 for each newcomer.

After Quebec was given this authority, the other Canadian provinces demanded the same. But they received far more limited rights than Quebec. They can nominate the number of economic migrants they need as part of the national immigration target set by the federal government, but they can’t independently set their intake target and selection criteria like Quebec.

While provinces nominate – or in Quebec’s case, decide – annual intakes, all cases are still routed through Ottawa for application integrity testing and vetting for criminality, health and security. Ultimately, final approval rests with Ottawa.

Last year, the Canadian government set an ambitious target of admitting 1 million total immigrants from 2018-2020. The target for next year is 330,000 immigrants, of which about 190,000 will be economic migrants. The remainder will enter under the family reunification category and the refugee, humanitarian and protected category.

About one-third of the economic migrants (61,000) will be admitted through the Provincial Nominee Program. This figure excludes Quebec, which will set its numbers separately.

How the Canadian system encourages rural immigration

Giving the provinces a greater immigration policy role has helped to dramatically shift the settlement of immigrants beyond Canada’s biggest cities.

According to immigration statistics, 34% of economic migrants in 2017 landed in destinations outside Canada’s three most populous provinces, Ontario, Quebec and British Columbia – compared to just 10% in 1997.

After immigrants arrive, the key issue for the provinces is retention, since immigrants can leave at any time. The provinces put a strong emphasis on ensuring that economic migrants receive a strong welcome on arrival and are provided with support programs, including education, access to local migrant community networks and assistance finding a job for those who are not sponsored by employers.

One of the biggest success stories of the Provincial Nominee Program is thinly populated Manitoba, which has added 130,000 migrants since 1998. Ninety percent have gotten a job within a year of arriving and nearly the same number has ended up staying in Manitoba permanently. New arrivals also express some of the greatest feelings of belonging of all immigrants in western Canada.

Most immigrants to Australia end up in Sydney or Melbourne, but other states and territories need them more.
Joel Carrett/AAP

Why this could work in Australia

South Australia, Tasmania and the Northern Territory – as well as other regional and rural areas across Australia – want more immigrants and refugees.

Attracting immigrants to less-populated states is the easy part: those willing to settle outside Sydney and Melbourne can receive more points if they are skilled migrants, possibly making the difference as to whether they come to Australia or not. The key issue is retention.

My fieldwork with refugees in Australia has shown that the majority of these migrants love living in regional communities and have received a warm welcome from locals. Our research also found they are willing to stay in regional areas if they can get jobs there. Another way of encouraging more immigrants to settle in regional areas could be to offer them priority in the family reunion process.

Importantly, Canada also doesn’t politicise immigration policy. Australia should follow Canada’s lead by giving the states a bigger seat at the immigration policy table and resisting the temptation to blame immigration for complex growth problems in our overcrowded cities.

Reducing the immigration intake cap will have no significant impact on reducing congestion or strain on public infrastructure in Sydney and Melbourne, but it could severely constrain economic growth.

Jock Collins, Professor of Social Economics, UTS Business School, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Sharing my thoughts with the world from a Particular Baptist perspective

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Lesson 7: Commonwealth and state governments can better coordinate primary care

The new normal can be better than the old

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COVID has exposed the weakness in our system

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Through a systems lens

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A close shave

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A modest increase in premiums

Rebates continue to decrease slowly

Basic, bronze, silver or gold?

Young people

Other changes

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We all want some fairness

Progressivity helps

Our company tax rate is high …

… which may not be a problem

New taxes are waiting in the wings

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A new state-based approach?

What we can learn from Canada

How the Canadian system encourages rural immigration

Why this could work in Australia

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