The Hon. Nicola Roxon is Minister for Health. 

To read my Adjournment Speech on Children's Health and Autism follow this link: Children's Health

1 August 2007

1st Annual Health and Productivity Management Congress

Prevention, productivity, and Australian health care

Kevin Rudd was originally invited to be here, and I’m sorry he couldn’t be. I know he would have liked to have come. This is one of the many areas of public policy that Kevin is passionate about, and I know he would have liked to share some of his thoughts with you.

A month ago, Kevin Rudd delivered his first major health speech, in which he outlined Labor’s approach to health care.

In many ways, it builds upon Labor’s past approach to health care. We believe in the principle of universal care, that all Australians are entitled to high quality, affordable health care. We think that the ability of an individual to access the care that he needs should not be dictated by his income, nor by his race, nor which part of Australia he makes his home.

But the fundamental point that Kevin wanted to make in his speech – and it is a point largely ignored by Governments around the world until recently, and still ignored by this one – is that health policy is inextricably intertwined with economic policy.

Put simply: good health policy is good economic policy.

The invitation I received to this event read, in part: The congress focus is on a global movement to realise the value of health as the human capital asset of the future, transferring it into business performance creating a positive economic impact. 

I couldn’t agree more.

As you would all know, Labor has spent time this year arguing for a renewed focus on climate change and on education. John Howard’s defensive response has been that it is only a strong economy that makes investment in these areas possible.

The Prime Minister’s response rests on a false assumption – that you must choose between economic investment and investment in education, in climate change, in health. On the contrary, Labor believes that it is investment in these areas that will make possible Australia’s economic prosperity long into the future.

Dr Ken Henry, the Treasury Secretary, is fond of noting that Australia’s future growth and prosperity rest on our growth in population, participation and productivity.

And today I want to talk about the role that health policy will play in helping us to achieve our best possible rates of workforce participation and productivity growth.

Labor’s key point is that health policy will increasingly influence not just the well-being of the Australian community, but our economic performance.

As individuals, Australians won’t fulfil our potential to enjoy long lives and well-being if looming health crises are not addressed now. Likewise, our economy will fall short of its potential as workforce productivity is strained and participation rates fall.

The cost of providing health care and demand for health care are rising and according to the Commonwealth Treasury this trend will continue. 

The Second Intergenerational Report noted: Australian Government spending on health is projected to increase as a proportion of GDP from 3.8 per cent in 2006-07 to 7.3 per cent in 2046-47.

And while all of this is happening, our health system remains largely static, unable and unwilling to change with the times or to face the new realities.

We need to look with fresh eyes at the health system, and tackle the challenges in front of us.

You would all be aware of Labor’s focus on human capital. It is the single most important long-term economic investment we can make, and up till now, there has not been enough attention paid to it.

So far this election year, the most visible symbol of this has been the debate over education. Labor has called for an education revolution as the key plank in our focus on human capital.

But the productivity and participation challenge doesn’t start and finish with schooling, an apprenticeship, a college course or university degree – it goes beyond the training and re-training that will occur in the workplace.

It extends to our doctors’ surgeries, health clinics and hospital wards.  And more importantly, it goes to what happens before Australians need to go to any of those places.

In his speech in June, Kevin Rudd cited one statistic that makes the point – and I’d like to repeat it now.

Two years ago the Business Council of Australia published a report on ‘Locking In or Losing Our Prosperity’.  It noted how much Australia’s economic performance had changed since the election of the reformist Hawke Government in 1983.

When the report looked ahead, it concluded that the greatest potential economic gains from optimal policy settings would actually come from maximising workforce participation – an annual difference to our economic growth rate of 0.6 per cent per year, adding up to an increase of 14 per cent in GDP by 2024-25. In today’s numbers, that’s just under $140 billion dollars.  The report said:

’If Australia could manage to achieve a lift in workforce participation rates to the equivalent of the OECD 80th percentile rate in each age cohort, this would imply rising workforce participation rates through to around 2015, compared with the ‘base case’ which would see aggregate participation rates falling steadily over the next two decades.  According to Access Economics, raising workforce participation rates along these lines would increase the average annual growth rate by 0.6 percentage points over the two decades to 2024-25 and result in a 14 per cent increase in GDP compared to the ‘base case’ by 2024-25.’

There are, of course, many factors that influence workforce participation rates: education and training policies, childcare, industrial relations, to name just a few.

Health, too, is a major indicator of workforce participation, and a major indicator of productivity in the workplace. Without investing in health, we cannot hope to carry forward any economic gains that we have made, nor to build Australia’s prosperity on the solid base we need it to be built upon.

The largest threat to Australia’s health right now is the looming tsunami of chronic diseases. Many of them are preventable, and yet we have not done enough, nor are we doing enough right now. Diseases such as Type 2 diabetes make up an increasing proportion of the chronic disease burden. The impact lies in many lives being lost prematurely as well as years of healthy life lost due to disability. Many factors are contributing to the rise of chronic diseases.

Most chronic conditions have a set of modifiable risk factors – and mitigating the impact of these risk factors would significantly improve the health of the population.

We can affect preventable disease by our own behaviour. But recent history demonstrates that even while most of us already know this, we sometimes need help from the system to turn this knowledge into practice. The extent of preventable illness in Australia today cannot be underestimated. Over 50% of Australians already have a chronic illness or long-term condition.

The prevalence of Type 2 diabetes has doubled in the last decade. By 2030, it is expected that 3 million Australians will have diabetes. Type 2 diabetes – which used to be called adult onset diabetes – is now increasingly being diagnosed in children. There are over half a million preventable hospital admissions each year.

Cardiovascular diseases, many of them preventable, are together the leading cause of death in Australia.

Diabetes that isn’t properly managed can also lead to chronic kidney disease – through the long-term loss of kidney function.

And we know from the recent State of Our Hospitals report that renal dialysis, to treat kidney disease, is the single largest cause of public hospital admissions in Australia.

The prevalence of asthma in Australia is among the highest in the world – it affects up to 14 per cent of children and 10–12 per cent of adults.

In considering all of these factors, it is also worth realising that the pain of chronic disease does not fall evenly on the population.  Evidence suggests that those who are wealthier are likely to be healthier, while those who are poorer, are likely to suffer from poor health.

Labor believes significant changes are needed in our health system. Based on what I’ve said so far, you will not be surprised to learn that Labor believes our health system needs to shift to tackle the growing chronic disease burden. Our current system is generally good at providing acute and episodic care, but when it comes to chronic disease, we fall down.

Put simply, we are better at providing a hospital bed when you have had your heart attack than providing the advice and lifestyle supports to prevent it occurring in the first place.

The challenge today and for the future is simply this – we need to build on the foundations of the existing system by enhancing its capacity to deal with preventable chronic disease.

It is not a question of cutting resources to hospitals.  It is not about shifting the balance of funding between public and private.  It is about investing in intelligent preventative health care for the benefit of both individual health - and for the health of our future economy.

We must find ways to keep more people healthy and out of hospital.

One of the shortcomings of the Government’s Intergenerational Reports is that they have failed to include a detailed assessment of the economic impact of chronic and preventable disease. They have also failed to consider the impact of chronic and preventable diseases on current health expenditure, future health expenditure, workforce participation and productivity. However, while the government has been largely missing in action on this front, there is enough evidence at hand to suggest that our failure to act is having a considerable impact on our economy today.  And will increase in the future.

 While the impact of an ageing population on our health system is well understood, what is often not widely appreciated is that the current rise in younger people with chronic diseases may well place greater stress on our health system in the immediate future.

 Chronic, preventable disease is now a major driver of increasing health expenditure in its own right.

 In 2005, Access Economics estimated the annual cost of cardiovascular disease in Australia at $14.2 billion dollars, or 1.7 per cent of GDP.  This figure includes lost productivity costs of $3.6 billion dollars, caused by lower employment rates and premature mortality.

 In addition to the financial costs, Access estimated the value of suffering and premature death from cardiovascular disease at a staggering $94 billion dollars.

 The estimated total cost of diabetes is around $11 billion dollars.  This figure includes lost productivity health and carer costs, taxation revenue foregone and welfare and other payments

 Last year Access Economics also estimated that the total cost of obesity in Australia in 2005 was $21 billion dollars. This figure was arrived at by calculating productivity losses of $1.7 billion dollars, as a result of absenteeism, lost management productivity, long-term lower employment rates, and premature death.  It also includes the cost to the health system of obesity-related illness, and a range of indirect costs.

 The direct costs to the health system of chronic disease are also substantial. However, many of these costs could be reduced, or in some cases avoided altogether, if chronic disease were prevented or better managed. Clearly there is much more that governments can be doing – not just in providing traditional health care services, but in helping people to help themselves – taking personal responsibility for their lifestyles and health outcomes.

The first step is to properly recognise the impact of preventable and chronic diseases on Australia’s economy and on productivity. The Productivity Commission has recognised the impact of chronic conditions on labour force participation rates. Poor health is not just associated with lower participation rates, but also with lower productivity.  Clearly people in poor health tend to be less productive when they are at work. The Productivity Commission also points out that the reverse is true - that healthy workers are more productive, and they are also more motivated to be in the labour force.

Secondly, we need to place prevention at the centre, and not at the margins, of our health policy. If we can do both of these things, then we can not only reduce an economic loss, but we can turn it into an economic gain.The Productivity Commission estimates that modest investments in health promotion and disease prevention will deliver improvements in workforce participation and national productivity. They argue that around 100,000 deaths could be avoided by 2030, if we improved health promotion and disease prevention.

Further, they argue that improved health promotion and prevention could result in as many as 175,000 extra people in the workforce by 2030, as a result of reduced mortality and incapacity, as well as an associated reduction in the need for carers. In other words, preventative health care is not simply good for individuals and good for families – it is also good economic policy.

Over the last few months, Labor has been busy putting forward positive policy proposals. Last month, Kevin Rudd launched Federal Labor’s New Directions paper: Fresh Ideas, Future Economy: Preventative Health Care for our Families and our Future Economy.  This set the framework for a significant enhancement of the Commonwealth’s role in preventative health care.

In making this announcement we committed Federal Labor to:

We believe in taking concrete steps, now, to check the spread of chronic disease.

Earlier this year, we committed to introducing Healthy Kids Checks for children starting primary school, with children being checked for basic health indicators like hearing, sight and balance, to make sure our children are happy, healthy and ready to learn.

We also committed to designing and providing a Healthy Habits for Life guide, which will provide simple, easy-to-use information to help parents help their children to develop healthy habits.

We have also made Indigenous health a priority. We are determined to close the 17-year life expectancy gap between Indigenous and non-Indigenous people within a generation. We are committing a total of $260 million to closing the gap, including $187 million for children’s health. Antenatal care, practical parenting advice and home visit services will be complemented by early childhood education and support. 

Labor has also committed to re-establishing a Commonwealth dental health program after the Howard government abolished the Commonwealth Dental Health Scheme when it first came to office, resulting in the 650,000 people on public dental waiting lists around the country today.  50,000 Australians end up in hospitals with preventable dental conditions each year, and we want to do what we can to fix that.

I don’t want to go into detail on the Government’s existing policies. Tony Abbott is here, and I’m sure he’ll enjoy doing that himself. And I certainly don’t want to get into a slanging match. But I do want to draw your attention to a couple of recent comments that Minister Abbott has made, which reveal a worrying attitude to long-term health policy.

My discussion of prevention today should have left you in doubt that Labor sees this as a golden opportunity to achieve meaningful reform of the health system, the type of golden opportunity that politicians live for.

Tony Abbott’s refusal to grasp that opportunity stuns me. A few days ago, the States asked Mr Abbott to commence negotiations for the next round of Australian Health Care Agreements. His response was: "The important task at the present time is to get re-elected and that is where my energies are focused.”

The next day, on ABC radio, he was asked about the AHCAs again, and this time he said: “I’m addressing those aspects of the portfolio that require my immediate attention... It doesn’t have to be done now, so I’m not gonna do it now.”

If, as a politician, you choose to focus on the forthcoming election – and there is always a forthcoming election – rather than the task for which you were elected – governing – you deprive the voters of the very thing they elected you to do.

We have long-term health challenges on our hands, and now is no time to be taking a rest while you fight the election instead.

There are many challenges facing Australia today. Undoubtedly, the looming chronic disease crisis is one of them. As with the other challenges facing our country, Labor has put forward solid policy proposals to tackle these health challenges. We cannot afford to wait; we must act now.

Each year, too many Australians fall ill, too many Australians end up in hospital for prolonged periods of time. That is something we can change, and we intend to change it.

Labor will act decisively on preventative health care, because unless we do, the economic cost will be great, the budget cost will be great – and the personal cost to individuals will be great.

 here is much to do, and Labor wants to start getting it done.

Thank you.