The prevailing health funding crisis will inevitably worsen, with ongoing pay demands for increases throughout the sector, ACT Health Spokesman Ken Shirley predicted today.

"A new round of union militancy can be expected, with increasingly unrealistic demands, supported by strike action.

"The Employment Relations Act, championed by the coalition, has bestowed new powers on unions. They now have greater leverage to progressively push the limits of their demands.

"The problem has been further compounded by erratic funding flows for health under this Government and the politicisation of health resulting from the unwanted and unnecessary structural upheavals. The first two years of this Government saw public health sector funding frozen, with the 2000-2001 financial year seeing a per capita cut, after allowing for inflation.

"Late last year the Government announced a $3 billion funding package, commencing in election year and spread over three years. The new area health boards cannot plan under erratic stop-go funding and the announced increase invites all groups, including the unions, to bid their hardest to capture as much as possible.

"Some 80 percent of health funding is spent on salary and wages. With $8 billion allocated from taxpayers this year, that means that some $6.4 billion is consumed by salary and wages. An average pay round of 20 percent would cost in the order of $1.3 billion - more than the signalled annual increase in health funding.

"Under this likely scenario it is clear we can only expect further cuts in health services, which will erode the health sector and further compound health professionals' dissatisfaction. The fear is that we are embarking on a self-perpetuating downward cycle.

"This downward spiral must be curtailed. ACT advocates a greater involvement of the private sector to ensure that all health resources are allocated and used in an optimum manner. The level of wastage within the public health sector is appalling. Most of that wastage flows from inefficient resource allocation. This Government is moving in the opposite direction - with increased central control and more state provision. This can only compound the problems," Ken Shirley said.

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