Health inequalities

Dec 10, 2012

The recent GST review: a missed opportunity for health?

A recent review of how GST revenue is distributed among the stat

Melissa Sweet — Health journalist and <a href=Croakey co-ordinator" class="author__portrait">

Melissa Sweet

Health journalist and Croakey co-ordinator

A recent review of how GST revenue is distributed among the states and territories has failed to consider the impact upon the community’s health and health inequalities, according to health economist Professor Gavin Mooney.

The review, by John Brumby, Bruce Carter and Nick Greiner, considered whether the current approach to distributing the GST – according to the principle of horizontal fiscal equalisation – would ensure that Australia is best placed to respond to the expected significant structural changes in the economy and would maintain public confidence in financial relationships within the Federation.

In the article below, Gavin Mooney urges public health advocates to engage with the review and wider debates about the distribution of GST revenues.

Meanwhile, two paragraphs from the review’s summary leapt out in my quick reading of it:

“Outside of a small core group, very few people, politicians included, have a good understanding of the background to, or the features of, the current system [of GST distribution]. This lack of understanding, compounded by the ‘zero sum’ nature of the exercise and the capacity of all to view the arguments through the lens of a geographic perspective, means that debate about the system can be frustrating if not futile. If a simpler system allowed the democratic processes to operate in a better informed environment, that would be beneficial to transparency and good government. Decision-makers should not be captive to the advice of a very narrow pool of experts, especially when the objectives of the system are contested amongst those experts and, because of the relative nature of the calculations, its effects are hard to predict and sometimes counter-intuitive.”


“In the longer term, citizens must make important decisions about the size of the government sector they expect and the taxes they pay for it. Maintaining government service delivery at about the same levels as currently will place increasing pressure on governments to raise taxes. On the other hand, maintaining taxes at about the same levels as currently will place increasing pressure on governments to reduce services.”


Public health sector needs to stand up and be counted in GST debate

Gavin Mooney writes:

The recent review of the distribution of GST revenues across the country states “HFE [horizontal fiscal equalisation] is not for the faint hearted”.

One can only agree! But behind that rather off-putting expression and hidden within the 238 pages of the review are two disturbing messages for public health.

First and foremost is that the eminent authors  – John Brumby, Bruce Carter and Nick Greiner – seemingly at no time in their 26 meetings over 18 months considered the possible implications of their review for the health of the Australian population – the health of the Australian economy yes, but not of Australian citizens.

Their report suggests they are oblivious to the impact of inequality on health, despite the fact that questions of inequality and equity lie at the heart of their deliberations.

The second point of note is that horizontal fiscal equalisation is clearly about equity. To that extent at least it should be of interest to public health people.

Today the embargo is lifted on a series I have just edited on health equity for the Australian and New Zealand Journal of Public Health. 

With contributions from around the planet (including from Sir Michael Marmot, the guru of the Social Determinants of Health), one of the key findings of this group of expert contributors is that we are failing on health equity because we are failing on equity. It is in this context that horizontal fiscal equalisation and the GST Review matter.

The review unfortunately does nothing to further equity. It may have staved off the chest beatings by the WA Premier in his bellicose arguments for a per capita allocation. That would have satisfied his desire to see WA remain well off and not get into even a minimally decent Samaritan role with respect to for example poor Tasmania.

Apart from arguing against that very regressive form for dividing up GST revenue and the very divisive rich versus poor arguments which Barnett employed, the report, while perhaps superficially supporting equity or at least seeking not to make existing inequities yet greater, does nothing to promote equity.

There are two types of equity. Horizontal equity (which is what horizontal fiscal equalisation is about) involves treating equals equally.

Vertical equity (which horizontal fiscal equalisation is not about) is more complex. It is about treating unequals unequally but equitably. If some people are badly off, horizontal equity is about not only acknowledging that, but accepting that. Vertical equity is about acknowledging that but going on to argue that such differences are not acceptable and trying to do something about it.

An analogy is that the level of people’s health can be equated with being on the rungs of a ladder with each rung equidistant (in terms of health) apart. To move someone low on the ladder up one rung and move someone high on the ladder up one rung would give each the same extra amount of health.

Yet society might want to argue that the former is more socially worthwhile  – of higher value – than the latter. This ‘positive discrimination’ involves vertical equity. Over time, this will reduce inequities.

The extent of the difference in valuation of the health gain for those high on the ladder and for those low on the ladder will reflect the extent to which the society is compassionate. The more compassionate society is, the greater the difference in value and the faster the gap on the ladder will narrow.

We know from the work of the likes of Marmot and Wilkinson and Pickett that inequality is bad for health.

Yes, there remains debate if it is bad only for those at the bottom or all of us but that does not stop, or should not stop, those of us not at the bottom from wanting to reduce inequalities – unless of course we really believe that all that matters is our own well being.

It is time for the public health community to get on board in examining these issues.

More generally, is it not time for Australian governments to consider implementing ‘equality impact assessments’ whereby (as has happened in the UK – even if it now looks as they will abandon them) major policies can be examined to see what effect they have on inequality and in turn on health?

It was Richard Wilkinson (the other social determinants of health guru) who wrote:

“We are used to feeling indignation at the human rights abuses in countries where people are imprisoned without trial, are tortured, or simply disappear, but health inequalities exact a much greater toll. What would we think of a ruthless government that arbitrarily imprisoned all less well-off people for a number of years equal to the average shortening of life suffered by the less privileged in our own societies? Given that higher deaths rates are more like arbitrary execution than imprisonment, perhaps we should liken the injustice of health inequalities to that of a government that executed a significant proportion of its population each year without cause.”

Pity these words had not been directed to Greiner and co before they did their review.

If, however, we are serious about the social determinants of health, it is time for the public health community to get involved in the debate on the distribution of GST revenues.

The outcome of this debate can save lives and suffering – or add to Australians’ misery.



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