Interview: Minority Report
Industrial: Girl Power
Unions: Made in NZ
History: Spirit for a Fair Go
Economics: Fool's Gold
Politics: Worth Fighting For
Health: The Force Behind Medibank
Legal: Robust Justice
International: After the Revolution
Poetry: The Sound of Unions
Review: Bad Santa
The Locker Room
Not A Casey Fan
The Force Behind Medibank
Universal health and happiness are goals of all peoples. Workers formed trade unions so that their combined wills and energies could improve working hours, wages and conditions, all aspects of personal and family health.
In Australia the ALP has led the way politically with universal health provision. However the trade union movement has been pushing them into this for many years. The way they have done this has not been by pressuring the political wing of the labour movement to enact legislation but by using their power in the workplace to improve working conditions and by using member contributions to set up health insurance and decent medical services.
They have set up charity and health funds from the times of friendly societies. Members donated to their "charities" based around their trade. One of the earliest surviving English trade union cards found by E P Thompson from the woollen industry indicating that the holder of the card had contributed to the charity dates from 1725. The charity was designed to help members of the fund when out of work, due to injury or severe downturns in the industry. There were no public social welfare systems then. Social welfare was another innovation of the combined labour movement and labour parties of Australia and New Zealand.
The mining unions have been in the forefront and provide an excellent example of the link between worker solidarity, work and private life. Many of the health funds that exist today had their origins as union based funds from coal mining areas. NIB and Westfund are two examples of this, from Newcastle and Lithgow respectively. Manchester Unity, another insurance fund and HCF had its origins in the charity movements and artisan societies of the 18th and 19th centuries.
The other way unions expressed the problem of members who could not work because of ill health or injury was to press for the establishment of workers compensation and employer liability for injury to workers. The Sydney Trades and Labour Council was actively campaigning on these issues from the early 1880s, as manufacturing industries expanded and steam driven machinery lead to boiler explosions.
One of the major achievements of the 1925 Lang Labor Government in NSW was an effective workers' compensation scheme with increased benefits and an attempt to cover work-caused diseases and injuries sustained going to and coming home from work. When insurance companies raised premiums the government established the Government Insurance Office. Lang was partially motivated by the power alliances within the ALP but his actions demonstrated the importance of the union movement to a reformist government.
The historians of the Whitlam government's Medibank system, Scotton and Macdonald point out that the notion of fully publicly funded and administered health insurance systems required structural change and a clarifying of the relationship between health insurance and access and equity.
Such barriers as disability, lack of transport and distance from facilities can limit access. Equity implies justice and fairness, key issues for trade unions. Unions would agree with Scotton and Macdonald on the "importance of modern health care to survival, to social and physical functioning and to enjoyment of life" and that ""medically effective health services ought to be made available to all members of the community without regard to their capacity to pay".
Cross subsidisation is a key element of health insurance and essential for the provision of a universal equitable service. Union based charitable funds were an expression of this principle. Private health insurance systems are based on the idea of cross-subsidisation but are not concerned with access and equity.
When unions and their friendly society predecessors began, access to hospital and medical care were not really issues. The major factor was ensuing the worker and his family had at least some income and/or food and clothing whilst the major income earner was unable to work. When Australian unions were in their first periods of development, from the 1850s until the end of the 19th century, hospitals were as Scotton and Macdonald point out, good places to avoid as "medical treatment was mostly ineffectual and frequently dangerous...The role of the public hospitals was to offer accommodation and personal care to the disadvantaged, rather than to provide treatment which was not available elsewhere."
The friendly societies were the major source of health cover for the lower paid. In Victoria they expanded the medical coverage of the population from 13% in 1870 to 29% in 1910. Another factor driving health insurance was the response of the British Medical Association (BMA), the major doctors group to the rise of the friendly societies, but they were not interested in the lower income groups. State governments also began to act in the area. The role of Labor governments in this development is an example of the way direct labour movement pressure was applied in our federal system to improve the role and quality of public hospitals. Lang's move to establish the GIO was an example of the way the labour movement could act strategically to improve the position of the working classes against the interests of the powers that be.
They were no longer seen as dangerous but as a way of providing decent medical care for lower income earners, a more direct challenge to the doctors power existing through the BMA and expensive private practice. The BMA sought to maintain a segregated system, providing three levels of service, for the indigent, lower paid working classes and the middle class.
These friendly society funds came under extreme pressure in Australia during the Depression years, as they lost members. The public hospital system was barely developed and struggles to cope with the huge numbers who now had to depend on them as they could no longer afford contributions to funds.
The response to the strains on the system came initially from the Lyons United Australia Party government in 1937, with a scheme modeled on the British one, providing only for general practitioner coverage. The BMA branches were not keen on the ideas, despite the fact that the BMA delegates had been involved in drawing up the scheme. The hostility of the trade unions and the BMA sections, and from within the governments own ranks forced Lyons to withdraw the scheme and it was not reintroduced before the onset of World War II.
The wartime extension of federal government powers and the ideas generated for post-war reconstruction were part of a new approach to health and social issues. The federal Parliament had a Joint Standing Committee on Social Security that developed broad national plans for public health, but these were scaled back, according to Scotton and Macdonald to publicly funded benefit schemes. Even here, resistance from the BMA and state conservative governments began to make their presence felt as the Victorian government and the BMA won a High Court challenge to the 1944 Commonwealth Pharmaceutical Benefits scheme. A referendum of 1945 yielded the necessary powers to the Commonwealth. The BMA maintained a doctors boycott up to the defeat of the ALP in 1949. The hospital benefits scheme of 1945 that provided grants per bed day and had means tests to public ward beds was unchallenged. This was because it was a step back from any national planning and was designed as a way of removing financial burdens from patients rather than challenging the way doctors ran their practices and hospitals.
The social security aims of the Curtin and Chifley government were not so threatened, and with union support and also the post-war "consensus" on social issues, pensions, maternity benefits, sickness benefits and a hospital scheme, aimed particularly at the tuberculosis outbreaks were established.
Chifley's first biographer, Crisp, described Chifley as seeking an ideal health and medical system which was "free, comprehensive, and of the highest technical evidence, covering all who wished to come within its scope for both preventive and curative medicine, both general and specialist". The defeat of the pharmaceutical part of the scheme meant that free medicine was never established. The BMA actually put forward its own national scheme for health and hospitals, the chief difference from the Chifley scheme being that it wuld not be controlled by the Commonwealth government. Just how it would run was never explained, but that was not the point, as Gollan points out in Revolutionaries and Reformists. Cold War rhetoric was coming to the boil, and tainting the ALP with the brush of Stalinism and totalitarianism was the aim. For example, the BMA actually produced The Socialised Medicine Bedside Book with the claim that "Lenin had proclaimed socialised medicine as the keystone of the arch of the Socialist State".
The defeat of Chifley meant another change in direction at the federal level but not the end of conflict between federal government and the BMA. Earle Page thought he had a scheme, based essentially on the three tiered approach - one level for the indigent, one level for the lower paid working classes and one for the middle class - that the BMA had essentially supported for years. However the conflicts with the various state branches of the BMA, and the governments concern to establish itself as the champions of the "forgotten people" meant that Menzies sought to deliver coverage to all on a fee for service basis, but also sought not to tread on the toes of the BMA by constraining the powers of doctors. One of the aims was to further contract the influence of the old friendly societies, seen by the BMA as "cankers in the minds and pockets of the medical profession" and thus end the cross-subsidisation and capitation schemes they were based on. The aim was to remove the friendly societies as third party player, who could and did act to keep fees down. The BMA succeeded in its aims here, with its own Medical Benefits Fund (MBF) expanding and also the Blue Cross funds falling under BMA control.
The outcome of all the debate and lobbying was the voluntary insurance scheme that lasted until the return of the ALP to government in 1972 and its development of Medibank.
The medical profession got a scheme that suited them and which established barriers to competition so high that their funds were unassailable without the restructuring of the system.
Whitlam's arrival as leader of the ALP meant a change in its approach. The party developed activist policy on a broad range of issues. He was particularly concerned with the provision of free treatment in public hospitals, according to Freudenburg in A Certain Grandeur. He saw a wider role for the government than Chifley had envisaged in the 1940s, and sought to persuade the population as a whole of the need for this. Some of the speeches he made as leader of the ALP opposition to union meetings show that he did have to convince this key group of the need for such a national scheme, as divisions within the labour movement, dating fro cold war rivalries, meant that anything that could be tainted with the "socialist" tag was still anathema to key power brokers in the union movement.
He brought the issue of health insurance center stage in the 1969 election, where the ALP received a massive swing towards it but failed to win office. Public support for the universal scheme was a key factor in the 1972 election.
As it turned out, this was only the beginning of the battle, as the Australian Medical Association (AMA - having established itself away fro the British roots) lead the opposition to the universal scheme. The Health Insurance bills were defeated in the Senate in 1973. Whitlam's win in the 1974 election and joint sitting of the Commonwealth Parliament enabled the Medibank scheme to become law that year. The funding for Medibank then looked in doubt as the opposition parties under Snedden again blocked supply. In one of the strange twists of fate, Malcolm Fraser's ousting of Snedden enabled the funding of the new scheme to succeed as he allowed supply bills to pass in March 1975. The non-Labor states who had been refusing to sign hospital funding agreements wit the federal government them quickly signed up. Medibank began on schedule in July 1975. Processing teething problems were not cleared up until December, by which time the ALP had been dismissed.
Fraser had promised to maintain Medibank, despite the conservative opposition to the scheme, but seemed intent on doing so with little funding. He established a taxable income levy of 2.5% for this purpose. His approach went through various permutations, all with the background popularity of the universal approach.
The trade union role in all of this was strong opposition to the Fraser government changes from the outset. Worker opinion was firmly behind the Medibank scheme, and the Fraser Medibank mark II proposals of 1976 were unpopular. Morgan Opinion Polls directly contrasted the Fraser plans with the alternative developed by the ACTU in 1976. The ACTU plan was consistently favoured.
The ALP in Parliament was a shattered wreck and trade unions were the major opposition force. The ACTU was a little slow to act but pressure from individual unions and state trades and labour councils forced them into action. The ACTU plan, as released in June 1976, was the most comprehensive national health proposal yet devised in Australia. The ACTU had been actively involved since Fraser had established the Medibank Review Committee in January. As Bob Hawke, then secretary of the ACTU and President of the ALP, expressed it at the time, the unions saw Medibank as "specifically endorsed by the electorate in 1972 and re-endorsed in 1974. Mr Fraser in his election speeches at the end of 1975 made it quite clear to the Australian people that he was not going to dismantle Medibank."
At this point the government was discussing changes with the ACTU, as it was, as noted, the strongest opposition force, with over 50% of the workforce as trade union members. The ACTU demanded a 1.6% levy to fund the system, as opposed to the governments proposed 2.5%. a basic hospital cover was proposed with families able to pay extra for intermediate insurance. The extent of worker anger was manifested in the first ever national strike in Australia, on 5 July 1976. However economic downturn and subsequent budgetary squeezes lead to, in 1981, a decision to abolish the universal scheme, even in the limited form that remained, and a return to the pre-Medibank approach. This was unpopular with state governments, as the funding arrangements meant many costs were transferred their way without funding to support it.
Meanwhile the ALP was regrouping. After seemingly having the 1980 election snatched away by the Liberals "Fistful of Dollars" campaign, its approach to the next election was built around an historic Accord with the trade union movement.
The Accord was built around the need for a restructuring of the Australian economy as a whole, and the trade union movement saw that it could play a positive role in the broad aspects of economic and social policy by entering into an agreement with the ALP. The Accord covered economic change, industry restructuring, social security policy, occupational health and safety, union rights and health care.
It was developed by the ACTU when Bill Hayden was leader of the ALP and Ralph Willis was the principle economic and industrial relations spokesman. Bob Hawke saw the Accord as the key element in "a new national approach which had never been tried in Australia in peacetime". It was signed by the ALP in opposition and the ACTU in 1982. The economic context was the resources boom and a so-called wages breakout. Fraser had been assuring Australians of the wealth from our minerals and unions, not unreasonably, had been demanding their share of the super profits to be made. At the same time, unemployment was being driven upwards as world wide structural change impacted on Australian manufacturing in particular.
The Accord was designed to rein in "excessive wage demands" by building up the social infrastructure with decent social security, health policy and a national program on physical infrastructure, industry development and training. Medicare, as it came to be called, was a key peg in this agreement:. "The ALP and the ACTU are in agreement on the need for a simple universal and equitably funded national health scheme". Community health funding, pharmaceutical benefits, a tax levy of 1% and aged care programs were the central planks in the initial broad outline.
By the time of the defeat of the Fraser government in 1983 unemployment was over 10% and with inflation climbing to more than 10% under Treasurer Howard. This "misery index" meant a miserable end to the Liberal-National Party coalition.
The social wage was the heart of the bargain. Evan Jones estimated in 1979 that the Fraser government had removed $4.2 billion from social wage spending. This was replaced fairly quickly by the Hawke led ALP between 1983 and 1985, and the expenditure on Medicare was the largest component of this growth.
And it happened. Hawke won in 1983 and Medicare was established under health minister Neal Blewett with a levy at 1.5% of taxable income. The current Prime Minister promised to get rid of it in 1987 when he was campaigning against Hawke. He lost the election and has not proposed the demolition of Medicare since. Certainly in 1996 Howard declared his support for Medicare (and won the election). The current federal government has sought to undermine the universal elements, giving more power back to the medical profession, but it has been unable to openly attack the basis of the system. It constantly claims to be defending Medicare. The 2004 campaign saw Health Minister Tony Abbott go so far as to claim that only the Coalition were the true friends of Medicare.
The universal equitable system that unions have always sought remains an elusive goal however, one that only trade unions have remained committed to, with the waxing and waning of ALP policies. The key, as Scotton put it in 2000, is to ensure health policy can focus on "how to achieve better health outcomes and greater efficiency within the context of universal coverage." The political parties continued to attempt to appeal to sectional interests in the health area at the 2004 election. Trade unions see equity and justice only in a truly universal system, not the class based system that the current federal government is adopting by stealth. They have been fighting for the health, wealth, safety and security of their members since their establishment and will continue to do so.
R B Scotton and C R Macdonald. The Making of Medibank (Kensington, NSW: Australian Studies in Health Service Administration (ASHA), School of Health Services Management, University of NSW, 1993)
R B Scotton. Medibank: from conception to delivery and beyond (Medical Journal of Australia; 2000; 173:9-11) (http://www.mja.com.au/public/issues/173_01_030700/scotton1/scotton1.html
Australian Council of Trade Unions. ACTU's Proposal on Medibank (1976)
Robin Gollan. Revolutionaries and Reformists: Communists and the Australian Labour Movement 1920-1955. (Canberra: ANU Press, 1975)
Frank Stilwell. The Accord...and Beyond: the Political Economy of the Labor Government (Sydney: Pluto Press, 1986)
Ray Markey. In Case of Oppression: the Life and Times of the Labor Council of NSW (Sydney: Pluto Press, 1994)
Graham Freudenburg. Cause for Power: the Official History of the NSW Branch of the Australian Labor Party. (Leichhardt: Pluto Press, 1991)
E P Thompson. Customs in Common: Studies in Traditional Popular Culture. (New York: New Press, 1991)
Gough Whitlam. Health Politics And Programs From Lyons To Keating: 4th National Conference of the Australian Community Health Association, Keynote Address, Adelaide Convention Centre, 13 April 1993 http://www.whitlam.org/collection/1993/199304_acha_conference/
Blanche d'Alpuget. Robert J Hawke: a biography. East Melbourne: Swartz, 1982
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