Private profit vs public access: How class struggle shaped Australia’s healthcare system

The healthcare system in Australia today is commonly described as being in “crisis”. New South Wales nurses and midwives on strike in February and March this year carried home-made placards contradicting Health Minister Brad Hazzard’s claims that hospitals were “coping”. One midwife attested that the previous few months had “been absolute hell”.[1]

Although the main immediate cause of the dire strain the system is under is the Covid-19 pandemic, it is widely recognised that health care was under severe pressure before that. This article does not analyse how the present situation arose, but aims to provide the reader with an historical perspective on the health system confronting this crisis, by examining the key battles that formed its structures in the twentieth century. A study such as this is important because the healthcare system is not only essential social infrastructure, but a major industry: it employed 1.1 million people in 2021, and has made up 10 percent or more of Australia’s GDP since 2015–16.[2] Health and health care in any given society are shaped first and foremost by that society’s economic system.

Capitalism prioritises profit-making over human life and everything else, and therefore it produces illness: it makes working-class people, in particular, sick.[3] Whether the health of any population – or for that matter, any individual – is generally good, average or poor is shaped by numerous factors. Fundamental ones include reliable access, or lack thereof, to nutritious food and good-quality shelter, essentials which are not guaranteed for the majority of humanity in a system run for profit. From the late nineteenth century in industrialised countries, construction of sewerage systems and provision of clean drinking water contributed to improved health among city dwellers. But working conditions often undermined health, and continue to do so. Economic disadvantage is closely correlated with worse health outcomes. In short, access to health care and medicines is only one of the factors that shape health. While the economic system produces conditions detrimental to health, the healthcare system is supposed to prevent and cure illness and treat injury. The healthcare system is not expected to maximise good health, but rather to serve the interests of the ruling capitalist class. The standards this requires will vary depending on specific contexts and factors, including unemployment and profit rates, expectations of the population, the pressure the working class may bring to bear, and more. However, its implicit minimum requirement is for enough of the population to be sufficiently healthy to maintain the status quo. In particular, the capitalist class needs most of the working class to be healthy enough to work and to raise the next generation of workers, and sufficient numbers to be fit for military service. It also needs most of the middle classes to be in good enough health to fulfil their specific roles (ranging from shop keepers to managers to doctors).

Within the capitalist framework, health care can be organised in different ways, with varying levels of public and private sector involvement. Drawing on health systems expert Gwendolyn Gray’s outline of distinct types of systems, it is useful to distinguish between the financing and delivery of health care, and identify whether they are in private or public hands.[4] In a national health service system, both are publicly controlled: hospital and medical services are publicly financed and provided. Doctors are generally salaried employees or contracted to the state, rather than operating private practices, and hospitals are publicly owned. Everyone can access the medical and hospital treatment they need, free of charge (or at a low cost), with services funded through tax revenue. Health systems close to that model operate, for example, in Sweden and Britain.

By contrast, where private insurance predominates, both the delivery and financing of health care are in the hands of private operators. Doctors are generally in private practice, hospitals are privately owned, and providers charge patients fees. Private health insurance, in theory, provides a means for individuals or their employers to prepay the costs of health care. However, fees tend to be high, even for those with insurance. Where private insurance is the main means of health financing, a proportion of the population is uninsured – usually over 15 percent in industrialised countries – because they cannot afford the premiums, and a further proportion is under-insured. It is not the case that public finance plays no role – indeed, Gray noted that private health insurance systems cannot operate without being heavily subsidised by taxpayers – but governments have little control. The system in the United States operates along those lines. In a national health insurance system, provision of health care is likewise private, but the financing is under public control. Services are generally funded by residents’ contributions to public insurance, or otherwise through taxation. Governments can exercise a high level of control over costs, as the dominant or sole payer. Costs to patients, and therefore financial barriers to care, are usually eliminated or kept low. The health systems of Canada and most European countries are closest to that model.

Health care in Australia today is delivered by a mixture of private and public providers, and financed predominantly by public funds. We do not have universal health care, but a system of health insurance that fits somewhere between the private insurance and public insurance models. Medicare, administered by the Health Insurance Commission, is a less-than-universal national health insurance scheme.[5] Alongside it operates a large private insurance sector, which is heavily publicly subsidised. Private insurance is fostered through a “carrot-and-stick” approach: those who purchase cover receive a public rebate for a proportion of their premiums, while higher income earners without sufficient hospital cover must pay a Medicare levy surcharge.[6] As of March 2022, 55 percent of Australia’s population has private insurance for general treatment, and about 45 percent for hospital treatment.[7] Thus, although public funds consistently comprise over two-thirds of health care expenditure, there is less public control than in a national health service.[8]

Most health care providers are private enterprises, from general practitioner (GP) clinics to pharmacies to specialists. Hospitals are the major exception: most of them are public, and run by the states and territories. In some instances, a public entity competes with private operators, for example in pathology in South Australia, with SA Pathology narrowly escaping privatisation amidst the Covid pandemic. Adding complexity, the responsibility for funding hospitals and other public health services is split between the state and federal governments. The emergence of this jumbled organisation is briefly outlined below. It is important to recognise that health care is treated as a commodity in this country, not as a human or civic right. Although Medicare obscures and somewhat mitigates this fact, access to health care is nonetheless shaped by a person’s ability to pay for it. Profits, by contrast, are all but guaranteed in this system, underpinned by generous public subsidies to capitalists, large and small.

The shape of the healthcare system is often discussed as the product of conflict between contending interest groups.[9] That conceptual framework provides a reasonable starting point, but such analyses at worst elide the fundamental matter of the class positions of those groups. This article instead applies a Marxist analysis and examines how class struggle shaped the modern healthcare system. To contain the scope of the subject, it concentrates on the role of the main players in the conflicts – namely, the major political parties and doctors’ organisations – and also gives attention to interventions of the organised working class. As such, the article omits the part played by the supporting cast: insurance companies, hospital boards, the public service and state governments in the federal political sphere. The main actors considered here are: the Liberal Party, which defends the interests of the capitalist class; the Australian Labor Party (ALP), which is understood as a “capitalist workers’ party”, that is, a party with a base in the working class but that is committed to governing Australia in the interests of the nation’s capitalists; and the organised medical profession, which protects doctors’ interests as a middle-class group.[10]

The article considers how the modern healthcare system developed from when federal governments became involved in the 1940s. It deals mainly with fights at the federal political level, starting with the reform efforts of the Curtin and Chifley governments and the resistance they met. Taking a leaf out of Rob Watts’ book, it resists the narrative of a heroic struggle of the ALP against reactionaries.[11] The first part accounts for why Australia does not have a national health service. Secondly, the article covers struggles over health insurance policy, which explain how the current system emerged. It concentrates on the late 1960s to 1983: Whitlam’s introduction of Medibank, Fraser’s destruction of it and union resistance, and Hawke’s reintroduction of universal health insurance as part of the Accord. The article’s focus shifts to the state level for its final part, about nurses’ industrial action, to explore how organised workers can have an impact on the system.

While struggles at the federal level have largely decided the health system’s structures, and particularly the matter of who pays for health care, equally fierce battles have been waged at the state level. Those fights have been over the resources the states provide for health, particularly for hospitals. The levels of funding and of staffing, and pay and conditions for staff, have been key matters in recurring struggles. A brief overview is provided of the most outstanding such battle to date – the 50-day strike in 1986 of Victorian nurses – as well as their industrial action in 2000. Those actions had structural implications in terms of both professionalisation and nurse-patient ratios. Fights against the privatisation of particular institutions, and significant structural changes that were introduced without major political struggles – such as organising hospitals around efficiency targets – are beyond the scope of this article. Before delving into the 1940s events, a summary is given of today’s healthcare structures in terms of how patients access care, followed by an outline of the system’s evolution up to the mid-twentieth century.

Today’s health system

The first point of contact for anyone seeking medical care is usually a GP, who provides primary care for ill health. Treatment sought from a GP may involve a range of other medical professionals. A GP may, for example:

– order diagnostic tests, which require the skills and equipment of pathologists or radiographers;

– prescribe medication, which the patient must buy from a pharmacy;

– refer the patient to an allied health professional or a medical specialist.

If a serious illness is diagnosed, the patient may need specialist treatment in a hospital. If the patient needs surgery, but their life will not be endangered if they do not receive it, it is categorised as elective surgery and they will generally be put on a waiting list. A person suffering a life-threatening medical episode usually goes directly to hospital, often under the care of paramedics in an ambulance.

Each of those elements of care is treated as a commodity that must be paid for, and a patient typically pays out-of-pocket for at least some of their treatment. Even a Health Care Card holder who goes to a bulk-billing doctor for a script will have to pay the chemist for medicine, although most of the cost is paid by the federal government through Medicare, which is funded by tax revenue. Importantly, Medicare also promises that those it covers are eligible for free hospital services as public patients in public hospitals. Services that the government subsidises are itemised on the Medicare Benefits Schedule (MBS), which also lists a nominal cost (known as the schedule fee) for each service. Medicare pays providers some or all of the schedule fee: 75 percent for services in hospital, 85 percent for most services out of hospital, and 100 percent for GP consultations.[12] Bulk-billed services are free to the patient, as the provider accepts the Medicare benefit as their whole payment. The Pharmaceutical Benefits Scheme works in a similar way. Patients pay a co-payment (which is lower for concession card holders) and the Australian government pays the rest.[13] The rebate system has a catch for patients: providers do not have to limit their charges to the MBS schedule fee, indeed they can and do charge far higher fees. Those who have bought private cover may be insured for some or all of the gap between the Medicare rebate and the actual cost.

The parallel operation of public and private insurance effectively entrenches a two-tiered system of health care. Those who rely on Medicare are not insured for all health services they may need: for example, most dentistry is not covered by Medicare. Public patients face excessively long waiting times for elective surgery, as a result of long-term cost-cutting to public hospitals. Private patients, however, can pay to avoid the worst queues. To access dental care or surgery as a private patient, for example, anyone without private insurance will face large out-of-pocket costs. This makes access extremely difficult, if not impossible, for low income-earners. Those who are privately insured – and generally wealthier – thus have better access to care, though they too usually also have to pay out-of-pocket costs, as well as insurance premiums.

Emergence of the system, up to 1940

In the nineteenth century, various practitioners provided primary health care services in Australia, generally on a fee-for-service basis. Medical practice was not particularly scientific until the later decades of that century; there was little to differentiate doctors from quacks. But with breakthroughs in medicine, the profession gained prestige.[14] The question of equitable access to medical services did not become an issue until a random patient consulting a random doctor had a better than 50/50 chance of benefiting from the consultation, a milestone estimated to have been reached in 1912.[15] While fee-for-service remained the predominant method of paying doctors, from the 1870s to the mid-twentieth century many working-class people accessed medical services through associations of mutual aid called friendly societies.[16] Members effectively prepaid for basic medical care by regular contributions to the friendly society, which contracted doctors to provide services for an annual per-person payment. That system came under great strain in the economic depressions of the 1890s and 1930s, which provided the impetus for states to intervene to subsidise services.[17] Those who could not afford to subscribe to a friendly society but needed a doctor’s care either sought treatment as a charity case at a hospital’s outpatient department, or went without.

Hospitals began as small institutions. The purpose of public hospitals was to care for the sick poor, but they could provide little in terms of curative treatment.[18] In NSW and Victoria, most were founded as charities to which wealthy contributors subscribed, while some were established by religious orders. Even in their early days, subscriptions did not provide enough funds to sustain these hospitals, so colonial authorities contributed public funds. As hospital care improved, demand for treatment and hence operating costs grew. Hospitals were brought under public ownership as they became increasingly reliant on public funds, although independent boards that ran them retained a high degree of control. In the less populous states, colonial and subsequently state authorities played a greater role in establishing and running hospitals from the outset.

From around the 1920s, public hospitals were transformed and grew into large institutions. The transformation was brought about by advances in surgical practice, medicines and technology.[19] Techniques developed in military hospitals, and equipment such as x-ray machines, were brought into public hospitals after the First World War. Public hospitals became the sites where the medical profession’s emerging specialisations were practiced and taught, and where the most advanced care was delivered. Until that juncture, public hospitals admitted as patients only those who needed charity, judged by a strict means test. Patients were not charged fees and doctors provided their services on an honorary basis (free of charge). But the improvements in treatment brought new demands for access to be extended to patients who would not seek or be eligible for care as charity cases, and responses to it differed between states.[20]

In NSW and Victoria, hospitals allowed doctors to admit their private patients on a fee-paying basis, while charity treatment continued for means-tested patients. The high cost was a barrier to hospital treatment for those whose means ruled out charitable admission, but could not afford private fees. By contrast, in Tasmania and Queensland state governments intervened to take greater control of public hospitals in response to systemic financial shortfalls, and expanded access while excluding private practice and abolishing stigmatising charity treatment. The state takeover of hospitals was carried out by Labor in Queensland, but in Tasmania non-Labor governments also took part, and all did so for pragmatic rather than ideological reasons. In Queensland, all means testing and patient fees were ended in 1945.

The federal government did not become significantly involved in hospitals until the 1940s. At Australia’s federation, health care remained mainly with the states, while the federal government was put in charge of quarantine. States also kept administering taxation after 1901. This only changed in 1942, when the Curtin Labor government succeeded in gaining uniform taxation powers as part of strengthening the war effort.[21] This created a vertical fiscal imbalance: while states remained responsible for the large expenditure hospitals needed, the Commonwealth had taken over their former revenue-raising power.[22] The split responsibility set the stage for each level of government to continually blame the other for under-funding of hospitals. The Chifley government extended free public hospital treatment beyond Queensland to all states and territories in 1946, but did so without implementing a nationally coherent and unified health system. Federal involvement in health care thus continued and entrenched the mixed private-public structure of the health system that persists to this day.

1940s health system battles

Welfare and the Second World War

The health reforms introduced by 1940s Labor governments came in the context of widespread expectations of far-reaching changes following the misery of the Depression and the Second World War. Far from being a product of Labor’s supposed radicalism, they fulfilled a longstanding intent on both sides of politics for the federal government to provide welfare. By the outbreak of the Second World War, the major political parties agreed that the Commonwealth should provide social security, including expanding access to health care, although they disagreed on how to organise it. Non-Labor governments favoured contributory national insurance schemes, and twice tried to introduce one, in 1928 and 1938. The first was set aside as the economic depression began.[23]

The 1938 scheme was to cover health care, sickness and disability benefits, old age and widows’ pensions, and be financed by employee and employer contributions and government.[24] Labor had opposed contributory schemes since 1912, arguing that social security should not be a charge on workers’ wages but paid for by the whole community through general revenue. The 1938 scheme had multiple shortfalls and produced objections from all sides (including farmers as well as unions and the ALP), but most notably from the medical profession. Leaders of the main doctors’ organisation, the British Medical Association (BMA) initially agreed to it, but a revolt by its members forced them to withdraw their support, on the basis that the proposed payments would be insufficient.[25] The 1938 legislation was dropped largely because of doctors’ opposition.

The Second World War provided greater impetus for welfare reforms, to help secure support for the war effort. The major parties recognised the lack of popular enthusiasm for the war when it began: working-class people had in recent years borne the brunt of the 1930s Depression and, moreover, remembered the devastation wrought by the last war.[26] There was bipartisan agreement on making post-war social services a major objective. Conservative Prime Minister Robert Menzies established the Joint Parliamentary Committee on Social Security (JPCSS) to plan for them in July 1941.[27] Historians of the health and welfare systems, Sidney Sax and Rob Watts, have disputed the idea that social services were intended to buy social peace.[28] But it is hard to believe that popular sentiment did not factor into governments’ calculations, and Watts cites one account of concern over civilian morale influencing Labor Prime Minister John Curtin to introduce a reform.[29] Throughout 1942, Curtin’s government successfully galvanised support for the war by encouraging fear of Japanese invasion, despite knowing that was not going to happen.[30] The following year though, increased strike action indicated that working-class discontent was again rising. When the war ended, the strike rate exploded as fear of a new depression lent urgency to workers’ demands for better wages and conditions.[31] A widespread sentiment that ordinary people deserved substantial improvements after their wartime sacrifices, plus the industrial unrest, clearly contributed to welfare reforms remaining on the government’s agenda.

In addition, as Watts’ study shows, Australia’s welfare state was developed as “part of novel taxation and fiscal policies” crucial to the war economy.[32] The Curtin government secured the financial basis for both greater wartime expenditure and future social services by expanding the federal tax base. Against opposition from the states, it established uniform taxation by seizing tax-raising powers from them in mid-1942. It then extended taxation to most wage earners, who had not previously been subject to income tax. In late 1942, Ben Chifley as treasurer was under pressure to find extra tax revenue, both to fund the war and curtail civilians’ spending to head off inflation.[33] The Labor government did this by significantly lowering the income tax threshold, which immediately raised the number of direct taxpayers from 800,000 to two million in 1943, to raise funds from all but the poorest workers.[34] To make this reactionary policy palatable, it was linked to the foundation of the National Welfare Fund which would receive 30 percent of the new revenues.[35] Thus the ALP abandoned its previous position that social services should be funded by the rich, to institute a system largely paid for by workers. Independent labour MP Maurice Blackburn criticised it as “steal[ing] a sheep and giv[ing] the trotters away in charity”.[36] The welfare system amounted to income redistribution within the working class, not from bosses to workers.[37]

Anticipation of a national health service

In relation to health care specifically, it was widely expected that Labor would introduce a free, comprehensive health service. The party’s platform included the nationalisation of “public health” (as well as banking and other sectors).[38] Curtin, when in opposition, had said the ALP believed that “national health services should be treated, in principle, in the same way as education. They should be free to all members of the community”.[39] Within days of Labor forming government in October 1941, new health minister EJ Holloway indicated that he wanted to nationalise medical services.[40] Such statements were basically understood to mean that the government would run a national network of medical clinics and hospitals, which would be available free of charge, staffed by salaried doctors. Proposals along those lines came not only from Labor, but equally from public sector entities. The National Health and Medical Research Council (NHMRC) recommended a national health service in 1941; likewise a JPCSS subcommittee drafted detailed proposals for a salaried medical service two years later.[41] Since doctors’ organisations later made the question of compulsion a major theme of their campaigning against Labor’s health reforms, it is important to note that these proposals did not involve compulsory participation. On the contrary, they expected that private medical practice would continue for doctors and patients who wanted it.[42] It was recognised that the Commonwealth lacked the constitutional authority to run a national health service, but this was not seen as an insuperable obstacle.[43]

From the start of the decade, the medical profession anticipated a far-reaching overhaul of the health system, and it looked like it would cooperate with it. In discussion on the future of Australia’s health system in the BMA’s publication, the Medical Journal of Australia, from 1940, all contributors thought a national medical service was inevitable. Most expected it would be a salaried service, which some were in favour of, although most wanted the more lucrative fee-for-service model.[44] GPs who had established commercially successful practices, and wealthy specialists, were generally wary of becoming government employees. However, doctors in working-class areas who mainly treated friendly society patients appreciated the stable income of contracts and were generally more open to a salaried system. In late 1942, the Victorian branch of the BMA drafted a proposal for a salaried medical service, reasoning that a system drawn up by medical professionals would be better than a government-conceived scheme.[45] Even Menzies indicated he favoured a salaried service, as late as 1948, albeit in a private meeting.[46] In short, Labor said it intended to nationalise health services, and everyone in the early 1940s expected it would. So what went wrong?

Action postponed and powers denied

Initially, the new Labor government deferred the anticipated major changes. In January 1942, Holloway promised doctors that “no complete salaried [medical] Service [would] be inaugurated during the war”.[47] That commitment was probably motivated by the government’s need for the medical profession’s cooperation: with up to one-third of Australia’s doctors in the military, the rest had to make up the shortfall in civilian services. Although Holloway’s undertaking did not rule out any new initiatives (as the BMA later claimed), it precluded setting up the structures of a national service so that doctors leaving the military could directly enter it. In 1943, the BMA’s attitude towards reforms shifted from reluctance to opposition, and the government set aside its plans for a national service.[48]

The Curtin government, re-elected in August 1943, tried to lay the basis for post-war health care reforms in the meantime. Since it would be more straightforward for the federal government to implement a national health service directly, it tried to obtain the power to do so through a constitutional referendum. In August 1944, it sought to extend the additional powers the Commonwealth had temporarily gained during the war. But the “Yes” campaign was poorly organised and faced concerted opposition. Labor’s conservative opponents used “red scare” themes and accused the government of authoritarian overreach.[49] Their objection to centralisation of powers was probably mainly because the proposal came from a Labor government. After its failure, the ALP abandoned the project of far-reaching healthcare restructure, in favour of cash payments to subsidise existing services.[50] Whether the referendum result should have prompted that response is a matter we will return to. First, it is necessary to examine the extraordinary fight over pharmaceutical benefits, which began around the same time.

The battle over pharmaceutical benefits

The government believed that a Pharmaceutical Benefits Scheme (PBS) was one element of health reform it could implement without major controversy. Yet the proposed PBS generated an unprecedented political storm. The BMA waged a fierce fight with the Labor government over the scheme, which it saw as a proxy for the broader issue of “socialised medicine”.[51] It involved two High Court challenges to the legislation, a propaganda campaign by the BMA, and a near-unanimous doctors’ boycott of the scheme.

The government did not anticipate opposition from doctors, as a PBS would have only a minimal impact on their practice. Labor hoped to provide patients with prescription medicines free of charge. Medications eligible for subsidy would be on an extensive list called the formulary, which would include all pharmaceuticals that GPs regularly prescribed. (But unlike in New Zealand, the government would not subsidise every medicine because it feared a cost blowout.) The doctor would fill out a government-issued prescription form for the patient, who would obtain the medicine from a pharmacy, and the government would pay the pharmacist. The Curtin government secured in-principle agreement from the Pharmacy Guild. In December 1943, it provided the BMA with details of the scheme, which worked similarly to one doctors already participated in, a limited benefit scheme for war veterans.[52] But doctors with a range of views on other health reforms were basically united in objecting to the PBS.

This allowed BMA leaders to mobilise opposition to the PBS with little risk of internal dissent, on the grounds that they opposed government interference in medical practice. Some doctors were initially concerned about limits to the formulary, but even when it was clear most medicines would be covered, the BMA painted its limits as symptomatic of flaws of state-controlled medicine. As the campaign progressed, anti-socialist themes became more prominent, as the BMA railed against public control over medicine and public employment of doctors.

A boycott was declared in October 1945: the BMA instructed all members to return the new prescription forms and copies of the formulary unopened.[53] Only about 180 doctors – less than two percent – joined in the scheme to provide free medicine.[54]

BMA leaders were keen to challenge the constitutional validity of the legislation, but Menzies convinced them to wait until after the August 1944 referendum. If they had challenged it earlier and won, that could well have helped the government win the referendum. Thus the High Court heard the challenge in November 1945, and it overturned the Pharmaceutical Benefits Act.[55] By implication its decision also threatened Commonwealth welfare payments such as maternity allowances and unemployment benefits. This set the stage for another constitutional referendum.

The next referendum was held in September 1946, at the same time as the federal election, which Labor won. The government put three separate questions to electors in the constitutional referendum: the one relevant here asked for the Commonwealth to be given power over social services. The initial draft included a clause to safeguard against “industrial conscription”, but Menzies convinced Attorney-General HV Evatt to amend it to “civil conscription”, a detail that later became significant.[56] The referendum question on social services power had bipartisan support, and it was successfully carried. This allowed the government to bring in new legislation for a PBS.

In mid-1947, a new Pharmaceutical Benefits Act came into effect and the BMA’s battle against it resumed. The BMA fought in three ways: through propaganda, a boycott and another High Court challenge. The PBS was a very popular measure, for obvious reasons, so the BMA cynically declared it had no objection to free medicine. Yet in private correspondence the BMA’s president suggested an agreement might be reached if patients were required to pay part of the cost.[57] Meanwhile in newspaper advertisements, the Victorian BMA secretary made the ludicrous claim that any doctor who used government forms to write prescriptions would “immediately place his private practice under Government control”.[58] Some doctors thought of the fight against the PBS as one front in a broader battle against the “socialistic tiger”.[59] The boycott continued: in March 1949 there were just three doctors participating in Queensland and eleven in NSW, although in Victoria 111 participated.[60] Doctors, as a group of middle-class professionals, were taking reactionary collective action to defend their narrow interests.

The government’s response to the BMA’s assault was inept. It barely responded to BMA propaganda: health department officials were frustrated that the only literature supporting the PBS came from the Communist Party of Australia.[61] When the Australian Council of Trade Unions (ACTU) offered to launch a campaign in support of the PBS, the new health minister, Nick McKenna, demurred, insisting that it would be counterproductive.[62] Building trade unions raised the prospect that they might ban work on buildings owned or occupied by doctors who did not comply with the free medicine scheme, but they did not follow through.[63] Thus union opposition to the propaganda and boycott was essentially limited to passing worthy resolutions. In May 1948 the government introduced penalties for doctors who refused to participate in the scheme. This gave the BMA – and its reactionary allies in the judiciary – grounds to once again challenge the legality of the Act.

The High Court made its ruling in October 1949, finding in the BMA’s favour. It found that that requirement to use the government’s prescription form, backed by penal sanctions, amounted to “civil conscription”. This dubious decision, like its rejection of bank nationalisation around the same time, reflected the deep anti-Labor sentiment sweeping through the ruling class. The ruling did not invalidate the entire Pharmaceutical Benefits Act, only one particular clause. Labor postponed any decision on what to do about it until after the upcoming election, which it lost to Menzies, who dismantled Labor’s health reforms. The High Court’s finding was thus decisive, marking an end to the battles of that era over the health system.[64] Doctors, organised collectively, had succeeded in denying patients access to free medicine. A similar government subsidy scheme was eventually established by the Liberals, but it required a co-payment from patients. That received no opposition from doctors. However, it was restricted to a narrow list of drugs: it was not until a decade later, in March 1960, that the scheme was expanded to cover the full range of medicines.[65]

Watered-down reforms

While its first attempt at the PBS was being challenged, the Labor government introduced its Hospital Benefits Act 1945, which established a Commonwealth subsidy of six shillings per day for each occupied hospital bed.[66] Through the subsidy, universal access to free treatment as a public patient in a public hospital was guaranteed nationwide.[67] This was done by means of conditional grants from the Commonwealth to the states: the funding was provided on the condition that no means test be applied to public patients. The subsidy was similarly provided for private patients on the condition that their fees be reduced by six shillings per day. This was a progressive achievement: it significantly expanded free access to advanced medical care, while lowering costs for all patients. Yet it was a substantially diluted version of Labor’s earlier policy. The government ignored the advice it had sought from the NHMRC and JPCSS, which had both strongly recommended substantial capital expenditure to expand the capacity of public hospitals.[68] It did not want to embark on a program of big spending, so it settled for improving access to the existing system. This meant essentially abandoning any attempt at public planning for service provision. The bill also entrenched a split in welfare provision between civilian and war veteran schemes, with repatriation hospitals providing better quality services than were available to the rest of the population.[69]

The hospital scheme was the one element of health reform that succeeded because it dodged all the major issues, and essentially preserved the status quo.[70] And since the subsidy was granted equally to private patients, it did not threaten private practice.[71] The expansion of free treatment was expected to put an end to the honorary system and result in specialists becoming hospital employees, a change some doctors were against. However, the BMA’s state branches were divided on the question – Queensland hospitals had already moved to a salaried system by 1938 – so it did not oppose it.[72] In fact, the honorary system was only ended in Tasmania as a result.[73] Doctors reported by the end of 1946 that the abolition of the means test had not significantly affected their practices.[74] Another advantage in subsidising existing services was that the government avoided having to confront the Catholic church, which controlled a substantial proportion of hospitals, and still does to this day. There was some resistance from state governments, but increased Commonwealth funding attracted them.

The scheme began operating at the start of 1946, and all states had passed enabling legislation by July of that year. But it was a short-lived reform: it lasted only until 1952. After that, the Menzies government used new funding agreements to force the re-introduction of means testing and axe universal free treatment. Only Queensland refused to comply and kept hospital treatment free for patients.[75]

The third and final element of the Labor government’s health reforms was a medical benefits scheme to subsidise out-of-hospital care.[76] This was legislated towards the very end of Chifley’s government, in late 1949, instead of a national health service. The scheme was barely a shadow of its earlier ambitions. It provided for the patient and the government to share the costs of treatment, with no requirement for doctors to participate, and no role for the government in any planning of services. This minimal measure never got off the ground; the Menzies government was elected a few weeks later and mothballed it.

The failure of the 1941–49 Labor governments to inaugurate a national health service warrants further comment. Their defenders would undoubtedly point to the 1944 referendum result and the BMA’s hostility to explain it. The first of these arguments is unsatisfactory, because the referendum’s failure did not rule out implementing a medical service through tied grants, the means by which the government successfully introduced hospital benefits and a program to control tuberculosis.[77] Gray and Gillespie both suggested that the federal government could have reshaped the health system that way. Gray identified that there was the basis for the beginnings of a national service: three states had salaried medical services in rural areas which might have been expanded. She also noted that hospitals had successfully recruited salaried staff, especially in Tasmania and Queensland.[78] Gillespie pointed to the fact that Queensland Director-General of Health Raphael Cilento advocated using conditional grants to pursue health reforms; the option was on the table, but the government did not take it up.[79] Obstruction by the medical profession would have presented a greater obstacle. However, there were differences of opinion among doctors, who were not always united behind the BMA. For example, in a dispute over hospital staffing in Tasmania in 1918, the BMA was not able to control its own members: many accepted salaried posts against its instructions.[80] Gillespie’s history highlighted the divisions within the profession over prospects of a future medical service.[81] Some were in favour of a national service, and those who were not would likely have adapted over time, as they adjusted to other changes.

The biggest problem was that the government essentially surrendered after the 1944 referendum defeat. Sally Wilde, writing about the 1946 referendum, was probably right to remark that Labor “had no plans to…nationalise medicine”.[82] Although the government’s lack of intention is impossible to prove, it may be stated categorically that a national health service was not one of its priorities, as it focused instead on attempts to nationalise banking and airlines. Thus it was not that the government was defeated in its effort to fundamentally reform health care, but that it did not seriously fight to do so. The BMA’s victory over the PBS was the final nail in the coffin of any hopes for a free, comprehensive health service in Australia. Labor had aimed to establish a strong public health system, to guarantee medical treatment as a right for its working-class base and the wider population. But faced with concerted opposition from a section of the middle class, it simply gave up: the opportunity to transform the health system was squandered without a serious fight.

Struggles over health insurance

Inequity under Menzies, and the alternatives

Since the late 1960s, the main battles over the health system have concerned health insurance. After the December 1949 election of the Liberal government, federal funding for health care continued, but for the ensuing 23 years it was directed towards bolstering the private market. The new health minister Earle Page – a surgeon and BMA member – overturned Labor’s reforms and established a scheme with private fee-for-service practice at its centre, and publicly-subsidised health insurance playing a major role.[83] Universal access to care was no longer a consideration; instead, health care was treated as an individual responsibility, and free publicly-funded services made up only a residual part of the system. Only pensioners were eligible to receive care and medications free of charge; everyone else had to pay out-of-pocket. Even those with insurance still had significant co-payments for care outside of hospital, at least one-third of the treatment cost. Page’s scheme was originally meant to include a system for working-class patients to prepay for care with doctors in contract practices, as per the friendly society arrangements, but opposition from the medical profession meant that element was scrapped.[84]

Health care became increasingly expensive for patients, who were effectively divided into three classes: pensioners, the insured and the uninsured.[85] The latter, predominantly lower income earners, were by far the worst off as cost barriers restricted their access to care. To make matters worse, the Page scheme only offered public subsidies for health care for those with private insurance; the uninsured received no support. That is, public funds assisted the wealthier patients.

Through the 1960s there was growing criticism of the health system and calls for reform.[86] Working-class expectations and confidence were rising across the board despite long-standing Liberal rule, as the growing number of economic and political strikes indicated. Under Page’s scheme, the proportion of uninsured was never below 17 percent of the population, and by the mid-1960s it was about one-third.[87] Serious illness could spell financial ruin for many working-class people. As opposition leader, Gough Whitlam railed against not only the inequity of this situation, but also the “national waste”.[88] Such remarks pointed to the fact that reforming health care to improve access would be beneficial for Australian capitalism.

Initially, there were three camps in the debate over how to fix the healthcare system.[89] Political conservatives, including many doctors, thought minor improvements that did not alter the main structures would suffice. On the left of the unions and the ALP, there were proponents of a publicly-run national health service. They included Labor MPs who were medical doctors, notably Moss Cass, opposition health spokesperson, who had earlier outlined a plan for such a service.[90] ALP leader Whitlam and the party’s right favoured the public health insurance scheme that would become Medibank, and later Medicare. Whitlam quickly made clear that universal health care was off the table, despite being Labor’s long-standing policy. Instead, he got the Labor Party to adopt the national insurance proposal, which would renew the public-private system.[91]

As with Curtin and Chifley’s earlier plans, Whitlam’s universal insurance hoped to improve health care access by removing financial barriers, but not to disturb the basic structures of a system organised for private profit. Whitlam had concluded that Labor’s earlier objective of nationalising health was an outdated relic, whereas public insurance was a viable alternative to the existing system.[92] He made the Medibank proposal the main health policy that the ALP took to the 1969 and 1972 federal elections. After Labor lost in 1969, a sub-committee of its parliamentary caucus that included Cass and four other doctors argued the party should ditch the Medibank proposal and instead pursue its national health service policy. Whitlam, however, would not countenance that recommendation as he saw Medibank as a vote winner, central to the party coming close to victory. He railroaded objections from his party and parliamentary colleagues to keep his policy, then and after winning the 1972 election.[93] Thus, while class struggle expanded, the main fight over the health system shifted to narrower terrain, centred on whether it should be based on private or public insurance, where it has basically remained since.

The fight to set up Medibank[94]

Medibank was not a universal healthcare system, but a national health insurance scheme that would further subsidise existing services. Yet despite its relatively modest aims, this too took a major fight to establish.[95] Academic economists Richard Scotton and John Deeble developed the scheme that Whitlam advocated during the 1969 election campaign.[96] The multiple existing insurance funds would be replaced by one Commonwealth fund, which would extend health cover to Australian citizens and residents. Taxpayers would contribute 1.25 percent of their taxable income to the fund. All residents would receive free hospital care, and would be reimbursed for 85 percent of doctors’ fees if they paid them upfront. If their doctors chose to bill the fund, they would not pay anything. Whitlam was at pains to emphasise the fact that Medibank was not modelled on the British National Health Service (NHS), a state-run system which at the time provided free and comprehensive health care.[97]

The Labor government once again faced enormous opposition from the Australian Medical Association (AMA, formerly the BMA) and a hostile Senate. The AMA argued against the universal insurance scheme from 1969, and fought for increased medical fees in the first half of the 1970s.[98] It launched an unprecedented lobbying effort to ensure that non-Labor MPs opposed the legislation, backing it up with an extensive publicity campaign.[99] Private hospitals and private insurance funds also campaigned against Medibank, and their influence was probably decisive: the AMA alone may not have convinced politicians, because of its poor public image from its aggressive pursuit of higher fees.[100] In mid-October, the Liberals committed to opposing Labor’s legislation, on the grounds that it would “lower the quality of care” and “be the first stage of nationalisation of health and medical care in Australia”.[101]

When the Medibank bills were first introduced in December 1973, the reactionary Democratic Labor Party voted with the opposition to defeat them in the Senate. This made it clear to the ALP that none of its contentious legislation would pass. The government fought back by using the second rejection of the Medibank bills as grounds for a double dissolution election.[102] This was a political gamble that only partly paid off: after the May 1974 election, Labor still lacked a Senate majority. When the Senate voted against the Medibank bills for a third time, the government convened a joint sitting of both houses of Parliament – a constitutional provision never used before or since – in August 1974, which passed the bills. However, supporting legislation (which could not be considered at the joint sitting) was subsequently rejected by the Senate. This meant the government could set up Medibank, but not the income tax levy to finance it.[103] Nevertheless, Medibank was rapidly established: it began on 1 July 1975.[104] The federal government secured agreements with the states to operate the hospital side of it by offering increased funding, with costs shared between the Commonwealth and states on a 50/50 basis. The new agreements all came into effect by October 1975, just weeks before the Kerr coup.[105]

Doctors’ organisations campaigned vociferously against Medibank from 1973, and specialists resisted its implementation. AMA advertising equated the scheme with “nationalised medicine”, pushing the idea that it would be an authoritarian system in which each patient would be seen as simply a number.[106] Medibank’s opponents claimed the freedoms of patients and doctors were under threat, and the AMA asserted that the scheme was only the start of Labor’s “socialisation” plans.[107] The General Practitioners’ Society in Australia (a small organisation that gained outsized prominence) went the furthest, comparing Labor’s health program to Nazi control in a poster depicting Bill Hayden, social security minister, in an SS uniform.[108] A minority of doctors who were in favour of Medibank organised themselves into the Doctors Reform Society to speak out in support of it, but the extent of their impact is unclear.[109] Market research showed that the AMA had got its message about nationalisation across, but that more people supported “nationalised medicine” than were opposed to it.[110]

Once the legislation had passed, the AMA moved to delay Medibank coming into effect, and tried to undermine it by advising members not to bulk bill.[111] In April 1975, the AMA recognised it would have to “live with Medibank” although it was still against it.[112] However, specialists working in hospitals actively resisted. Faced with the new requirement that they be employed on a contract rather than fee-for-service basis, large numbers refused to cooperate. In September 1975 in Victoria, they performed only emergency surgical procedures in public wards, on an honorary basis as per the old system. NSW and Victorian surgeons threatened a complete strike, including emergency services. Even after Whitlam was sacked, hospital doctors’ boycott actions continued. At the same time though, the uptake of bulk-billing (doctors invoicing Medibank and not the patient for their services) was increasing.[113] So by early 1976, Medibank had started, but it was not yet functioning smoothly.

Defending Medibank against Fraser

The dismissal of the Whitlam government was a monumental attack on democracy and the labour movement. In the context of renewed economic crisis, the governor-general intervened because Australia’s ruling class feared Labor would not govern in its interests. This was despite the 1975 budget, which indicated that Labor would comply with the monetarist trend towards slashing social spending and attacking workers’ living standards.[114] Regardless of its accommodation to ruling-class orthodoxy, working-class people were livid that “their” Labor government had been ousted. Many trade unionists wanted to wage an industrial fight to reverse the coup, but ALP and union leaders instead told them to “cool it”. Having abandoned the extra-parliamentary fight, Labor was easily defeated by Malcolm Fraser’s Liberal Party. In that context, all of the Whitlam government’s reforms were potentially under threat. Although Medibank had not fundamentally transformed the health system, it had nonetheless improved the standard of living for the Australian working class. It was the union movement, rather than the ALP, that took the lead in defending it.

The Fraser government did not immediately launch a frontal attack on Whitlam’s health scheme, but dismantled it in stages before ending it completely, despite Fraser earlier promising to maintain it.[115] The Liberal government first ended one of Medibank’s core features, its universality, by encouraging those who could afford to buy private insurance to opt out, expecting about half of all taxpayers to do so. In 1977, it cut hospital funding without consulting or notifying the states, reducing the Commonwealth’s share to 45 percent.[116] It stopped bulk-billing (except for pensioners) in May 1978, and abolished the last of Medibank in 1981 when it ended free hospital care (except in Queensland).[117] Anne-marie Boxall and James Gillespie contended in Making Medicare that Fraser did not intend to destroy Medibank, but did so due to financial pressures and ineptitude in health policy-making.[118] However, the Fraser government’s intentions were far less important than its actions. It destroyed Medibank, so the union movement was right not to trust it.

Sections of the union movement came to Medibank’s defence and pushed for a nationwide fightback.[119] In the wake of the Kerr coup, union militants were spoiling for a fight with the Fraser government and the undemocratic ruling class it represented. Its May 1976 mini-budget (widely seen as an attack on labour) introduced a 2.5 percent Medibank levy, but allowed those who bought private health insurance to opt out and avoid it. This attack on Medibank led labour movement activists to fight back. Unionists on the NSW South Coast, with long traditions of militancy, kicked off the industrial action. Some 40,000 workers in the Illawarra joined in a 24-hour stoppage on 7 June, with thousands rallying in Wollongong, vowing to take further industrial action. Post office workers voted to ban the government’s pamphlets about the Medibank changes from their counters. The trades and labour councils of Queensland and South Australia demanded the ACTU lead nationwide resistance to changes to Medibank, with the latter calling for a 24-hour strike. Leaders of the Victorian left-wing unions likewise pressed for an industrial response. In Years of Rage, Tom O’Lincoln recounted the anger at a Melbourne meeting of 1,500 shop stewards, who saw the Victorian Trades Hall Council (VTHC)’s proposal for a four-hour stop-work as utterly inadequate.[120] They voted instead for a 24-hour stoppage. Despite that, the VTHC called only a four-hour strike for 16 June. Of the 350,000 who struck, some 150,000 remained out after the official 1pm end of the VTHC stoppage.[121] Faced with rank-and-file outrage, union leaders then called a 24-hour strike for 30 June, which involved some 400,000, or 90 percent of Victoria’s blue-collar workers.[122] Bob Hawke, leader of the ACTU, successfully delayed its decision on a national strike until early July.

The ACTU eventually called a national one-day political strike on 12 July, the only such strike it has ever held.[123] But the strike did not advance the campaign to defend Medibank, undermined as it was by the union bureaucracy. By stalling for weeks, Hawke, who preferred negotiations with the Fraser government to industrial resistance, had effectively dissipated the energy of the movement. The ACTU did not call central rallies on the strike day, and 12 July was a Monday, which made the stoppage feel like a “long lazy week-end”, rather than a militant action.[124] This made the strike a relatively harmless way for unionists to register their objections, rather than a declaration of war. Such a timid approach could not reverse the government’s measures, though it probably contributed to delaying further changes.

Medicare and the Accord

When Labor was re-elected in 1983, universal health insurance was restored under the new name Medicare.[125] This was done as part of the ALP-ACTU Prices and Incomes Accord, whose main purpose was to enforce wage restraint on an unruly working class that had yet to be tamed. The Accord curbed wage rises by offering unions low but guaranteed wage rises, along with a “social wage”, in exchange for a commitment not to make above-award claims, which effectively was a promise never to strike. Medicare lent the otherwise vague “social wage” concept a concrete form, which was essential to successfully selling workers the rotten deal.[126] While Medicare has been beneficial for the Australian working class, signing up for the Accord turned the ACTU into an industrial police force and ushered in decades of declining wages and shrinking union membership rates.[127] Improved access to health care should not have come at such a high cost.

Union movement support for Whitlam’s health scheme was key to reviving it, but not inevitable. After the dismissal, the ALP considered adopting alternative, even more moderate, policies. Union support for universal health insurance was an important factor in Labor committing to it again from 1980.[128] Although the scheme fell far short of the labour movement’s earlier ambition for a national health service, it should be recognised as a positive that they campaigned to restore universal health insurance. This wasn’t inevitable: the potential existed for Australian unions to go in the same direction as their US counterparts on health. Following the failure of an attempt at national health insurance in 1949, American unions had negotiated for employers to provide private health coverage as part of industrial agreements.[129] The Amalgamated Metal Workers and Shipwrights’ Union (AMWSU) signed a similar agreement with oil industry executives in mid-1982 which committed the employers to pay for private health insurance in a new industrial award. If the AMWSU had secured the award it intended, and started a trend, it would have left workers worse off overall. However, in response to Hawke’s campaign for the Accord, the AMWSU withdrew its claim until after the election.[130]

The universal health scheme was less contentious the second time round for a few reasons. While the Liberal Party remained ideologically hostile to it, most of the Senate was in favour: the Democrats (a breakaway from the Liberal Party) held the balance of power and they supported it. Labor argued to fiscal conservatives that Medicare was economically responsible, an argument bolstered by it being key to the Accord. The AMA had been substantially weakened by its opposition to Medibank, so it did not campaign against the scheme’s revival.[131] More doctors were in favour of it the second time round, because many understood that Medicare would benefit them. Doctors had found bulk-billing profitable before it was axed: over 70 percent were bulk-billing at least some of their patients by October 1976, within a year of Medibank’s introduction.[132] Hospital doctors in most states were not motivated to oppose Medicare: it would not affect their terms of employment as they had already worked on a contract basis since 1975 or earlier.

The exception was in NSW, where specialists yet again staged a revolt, refusing to accept an end to fee-for-service payments.[133] In response to NSW legislation to enable Medicare to function, which included a requirement for hospital specialists to abide by a schedule of fees, NSW specialists accused the NSW and federal Labor governments of conspiring to nationalise medicine. In mid-1984, numerous surgeons relinquished their appointments at public hospitals. Up to 40 percent resigned in their 17-month-long reactionary effort to halt progressive reforms. Although the NSW government repealed the most contentious part of its legislation, the specialists escalated their action. Patients with injuries that were not life-threatening suffered the consequences: for example, one young man had to wait six days for an operation on his broken jaw after a motorbike crash.[134] More surgeons threatened to resign by the end of February 1985, but a settlement was negotiated after federal and NSW Labor governments agreed to measures to encourage private health insurance.[135]

Howard fostering private insurance

John Howard’s Liberal government further undermined the public system to promote the private health insurance industry. Howard had previously called Medicare “a total disaster”, and said the Liberals would “pull it right apart”.[136] However, by the mid-1990s the Liberal Party had worked out that opposing the scheme amounted to electoral suicide. So Howard promised that if elected his government would keep Medicare.[137] Howard’s Liberals did not attempt to reintroduce the Fraser government’s policies, but nonetheless attacked public health care. They froze the rates for Medicare rebates, and allowed bulk-billing to decline. Howard also insidiously undermined the concept of Medicare as a universal scheme, by repeatedly referring to it as a “safety net”.[138] Talking about it as such could not, in itself, reduce Medicare to a residual system that served only the poorest citizens. However, this laid the ideological groundwork for future cutbacks.

More significantly, the Howard government introduced measures to subsidise private health insurance, to compete with and undermine the public system. Under the Hawke and Keating governments, private insurance had continued to operate, but public subsidies to the funds ceased after 1986.[139] Their membership had declined from a high of 68 percent of the population in 1982 to 30 percent by 1998.[140] Howard aimed to reinvigorate the private funds and increase their membership to 40 percent of the population. He used three main “carrot-and-stick” measures to achieve this. Firstly, the government introduced subsidies for those who held private health insurance, and imposed an additional tax (the Medicare levy surcharge) of 1 percent on higher income-earners who did not. It substantially increased the subsidy from 1999, by granting a 30 percent rebate on private health insurance premiums. At an initial cost of $1.6 billion per year, which later increased, this was mainly a windfall for wealthier people who already had private insurance.[141] The third element, the “Lifetime Health Cover” policy, was the worst of all.[142] Introduced in July 2000, it allows insurers to charge policy-holders a 2 percent punitive fee for each year in which they did not purchase health insurance after their 30th birthday (up to a maximum of 70 percent). Its introduction was promoted by an extensive government advertising campaign using the tagline “run for cover”. This policy and advertising campaign was explicitly designed to push higher-paid workers and more middle-class people into the private insurance sector. Studies indicated the ads succeeded by creating fear that Medicare was under threat and those without cover would face restricted access to hospitals.[143]

Disgracefully, all three measures have continued (with minor modifications) under successive ALP governments. This is consistent with their approach since the 1940s, when Curtin and Chifley established that the party is not opposed to handing over millions of taxpayer dollars to bolster the profits of the private health industry.

Victorian nurses’ industrial action: 1985, 1986 and 2000

While the broad structures of health care have largely been decided at a federal level, fierce battles have also taken place to shape policies at the state level. Even as the Whitlam government was seeking to expand the public sector’s role through Medibank, state governments were implementing cutbacks to their health services. From the 1970s onwards, healthcare workers have fought back through industrial action.

Nurses in that decade engaged in industrial struggle on a scale that was unheard of and almost inconceivable to prior generations. In 1970, Canberra nurses went on strike for six weeks over pay, understaffing and long hours. Two thousand Sydney nurses staged a sit-down protest outside state parliament in 1976 when their wage rise was overturned. Although they did not follow through on their threat to strike, they implemented a series of work bans, including refusal to wear uniforms. Brisbane nurses successfully used clerical bans to make gains on a range of issues in 1978. In Melbourne, 4,000 protesting nurses stormed parliament in April 1975 over pay and staffing. Their placards included: “Dedication doesn’t pay the rent”.[144] Through work bans on non-nursing duties, they won a 12 percent pay rise.[145] Nurses, the great majority of whom were women, were beginning to challenge sexist expectations that they would submit to lousy wages and conditions because they cared. Amidst rising discontent, a clause in the constitution of the Royal Australian Nurses’ Federation (RANF) Victorian branch that explicitly prohibited strike action was overturned at the end of 1983 by a membership ballot.[146]

In October 1985, Victorian nurses went on an indefinite strike that lasted five days. They raised the slogan: “Florence Nightingale is dead, so how come we’re still getting her wages?”[147] At the time, unskilled shop assistants could earn more than a third-year nurse in the Victorian health system. Staff shortages and workloads were also major issues. Their industrial action began with a ban on wearing uniforms to work. It escalated when they implemented a work-to-rule from 7 October, to enforce the award nurse-patient ratio of one registered nurse to 10 patients during the day and one to 15 at night. Management at the Alfred Hospital were directed to scab, and did so, prompting nurses there to stage a 24-hour walk-off. Nurses then voted for a state-wide indefinite strike from 17 October; for most, it was their first time on strike. Their claims were for wage rises and better conditions, including improved nurse-patient ratios.[148] The existing ratio was absurdly outdated, as one nurse interviewed for a 2016 documentary explained. It dated back to the 1930s, “before penicillin had been discovered, before plasma infusions took place, and they still weren’t even complying with that!”[149] Nurses wanted a 1:5 nurse-patient ratio, which they had already won at Western General Hospital after work bans in 1982.[150] The result of the 1985 strike was mixed: some but not all nurses gained wage increases, and the government agreed to cooperate with the RANF on admissions and discharges, but made only a vague offer on ratios.[151] The major confrontation was deferred, but importantly, nurses had learnt how to strike.

The struggle blew up again in 1986 after the state industrial award gave many nurses a pay cut and made no progress on conditions. The award downgraded nurses with years of experience and additional qualifications to the lowest pay grade, even as nurses’ underlying grievances went unmet. The insulting reclassifications and consequent wage cuts came amidst a severe shortage of staff. Ten thousand nurses left the profession in the year to October 1985, and a further 8,000 did not renew their practising certificates, leading to a shortfall of 14,000 nursing staff in 1986.[152] This put nurses under immense pressure: they were consistently caring for more patients than they could reasonably handle. But, having elected a new militant state secretary, Irene Bolger, in May 1986, they were more prepared to fight back.

The strike has been described in detail elsewhere, so only a short summary is needed here.[153] After fruitless negotiations with the state Labor government, nurses voted on 30 October to take indefinite strike action. Emergency departments were exempted, and a skeleton staff would remain at work elsewhere. Nurses organised to picket their hospitals, determined to prevent less urgent deliveries like laundry, while allowing essential supplies such as oxygen to go through.[154] The strike had popular support: 75–80 percent of people polled consistently backed it throughout the 50 days.[155] Fellow unionists provided supplies and support for their picket lines.

After five weeks out, the government still refused to make a decent offer. The nurses therefore decided to escalate their action to include emergency departments. In Canada, a similar tactic had brought the government to the negotiating table in seven minutes. However, the Victorian government was not under the same pressure because 50 percent of hospital beds were in private hospitals, whose operations had continued largely unimpeded during the strike. Very few private hospital nurses walked out; those who did faced severe retribution. The public sector nurses pressed ahead with their strike for 11 more days. On 19 December, the government backed down completely, conceding to the nurses’ demands. They returned to work victorious the next day, and the industrial award that made their gains law was handed down the following January.

The nurses’ victory had a structural impact in terms of their employment and it influenced developments beyond Victoria. Through their 50-day strike, nurses won better pay and, importantly, recognition of their skills. The 1987 award set out occupational classifications for their profession which allowed for career progression and rewarded experience and additional qualifications.[156] The nurse-patient ratio, however, remained the same.[157] The fact that nurses had engaged in industrial militancy was important: they refused to allow management to push them around anymore, and many became lifelong militants from that experience.[158]

In the 1990s, nurses found themselves squeezed by the Kennett state government’s aggressive neoliberal policies. Then, as a result of the Howard government’s industrial relations attacks, award clauses on staffing levels (or ratios) were ruled “nonallowable matters”, and therefore removed.[159] Despite that, Victorian nurses fought a successful struggle for substantially improved nurse-patient ratios in 2000. The impetus to make ratios central to their bargaining claims came from the rank and file.[160] They used persistent industrial action to win, particularly the tactic of escalating bed closures. They achieved a base ratio of one nurse to four patients on morning and afternoon shifts, and one to eight at night, with ward-appropriate variations. Again, nurses’ industrial action had a structural impact, improving patient care as well as their working conditions, and set a useful precedent for other states.


Class struggle has shaped the modern healthcare system that developed from the 1940s, when significant federal government intervention began. The organised medical profession has played a particularly despicable role. Doctors, or an elite section of them, have ferociously defended their narrow sectional interests by fighting to block every major reform introduced. Reactionary collective action by practically the entire profession successfully prevented universal access to free medicine, which would have been especially beneficial for working-class patients. The Liberal Party and its political partners likewise formed an obstacle to reforms, repeatedly voting against or overturning legislative advances. The Liberals’ main concern has consistently been to encourage a profitable private sector in health. Ideologically against governments providing anything without a user charge, they have sought to minimise access to cost-free care and promoted fee-for-service medical practice.

Once the Liberal Party understood that openly opposing Medicare made them unelectable, they worked to undermine it. Howard’s promotion of private insurance has had the biggest detrimental impact. Tony Abbott’s government tried to go a step further: its 2014 budget included the introduction of a $7 co-payment for bulk-billed GP consultations. Faced with mass (albeit unorganised) resistance, it eventually had to drop that attack completely. After such a humiliating backdown, the Liberals have not yet attempted to do anything similar, but they remain committed to private, for-profit services being central to health care. The ALP has used this cynically in every election since 2014, portraying itself as the only party that will defend public health care.

The Labor Party trumpets its credentials on health, as the initiator of all major reforms and especially Medicare, which it portrays as a system guaranteeing health care as a right, rather than a quasi-universal health insurance scheme. Labor apologists depict the development of Australia’s healthcare system as a tale of the heroic ALP battling its right-wing opponents and self-interested doctors to implement reforms beneficial to the working class. Although that narrative has a small grain of truth, it is an incomplete and misleading version of events. If Labor can claim credit for its reforms, it also largely bears responsibility for so much of the system being under private control and run for profit. Despite the fact that each of its initiatives prompted outcries of “socialism” from opponents, none of the measures the ALP proposed or introduced ever posed the least threat to capitalism. On the contrary, Labor’s reforms from the 1940s onwards safeguarded private medical practice and subsidised profits. More recently, it has left Howard’s regressive measures intact. This shows that to defend, let alone strengthen, the public elements of the healthcare system, electing a Labor government is not enough.

After decades of underfunding, and with no end in sight to the immense pressures sparked by the Covid pandemic, the healthcare system looks set to be the subject of further battles. Both Labor and Liberal governments have frozen and cut health spending before, and they are equally likely to cave in to future pressures to rein in spending on everything but the military. However, if fights waged by or on behalf of those who make profits from health care have largely shaped the system, working-class struggles have also had an impact. Where middle-class doctors have used their key role to obstruct reform, workers in health care can use their industrial power to win improvements. The Victorian nurses’ determined industrial struggles and the gains they won in terms of pay, conditions, and patient care, are a case in point. Their victories are an important example today, as NSW nurses and midwives fight for a pay rise that keeps up with inflation after enduring two years of pandemic conditions.[161] A concerted working-class fightback has the potential to radically reshape health care for the better.

Special thanks to Wren Somerville for research assistance, Liz Ross and Janey Stone for sharing ideas and information, and Omar Hassan and Louise O’Shea for feedback on earlier drafts.


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[1] Holcombe 2022.

[2] Australian Bureau of Statistics 2022; Australian Institute of Health and Welfare 2021.

[3] Haynes 2009.

[4] Gray 2004, pp.18–22.

[5] Medicare covers most people living in Australia, but not everyone. Those eligible include Australian and New Zealand citizens, and permanent residents of Australia. Notably excluded are prisoners, many asylum seekers, and most international students. Biggs 2016.

[6] Biggs and Cook 2018.

[7] Australian Prudential Regulation Authority 2022, p.2.

[8] Australian Institute of Health and Welfare 2021.

[9] Sax 1984 called it “a strife of interests” in the title of his book.

[10] Bramble and Kuhn 2011, pp.6–24 (chapter 1).

[11] Watts 1987.

[12] Biggs 2016.

[13] Grove 2016.

[14] Sax 1984, pp.7–13.

[15] Scotton and Macdonald 1993, p.5.

[16] Sax 1984, pp.13–14, 19–21; Crichton 1990, pp.18–20; Gray 1991, p.52; Gillespie 1991, pp.7–15.

[17] Crichton 1990, p.25; Sax 1984, pp.31–32; Gillespie 1991, p.60.

[18] Crichton 1990, pp.13–17; Sax 1984, pp.21–26.

[19] Gray 1991, pp.53–54; Gillespie 1991, pp.15–29.

[20] Scotton and Macdonald 1993, p.6; Gillespie 1991, pp.57–86 (chapter 3); Gray 1991, pp.54–60; Sax 1984, pp.42–44.

[21] Crisp 1961, pp.156–57.

[22] Swerissen and Duckett 2002, pp.15–16, 20–24.

[23] Sax 1984, pp.35–37.

[24] Sax 1984, pp.39–42; Watts 1987, pp.1–24 (chapter 1); Gillespie 1991, pp.87–112 (chapter 4).

[25] BMA branches were founded in Australian colonies from the late nineteenth century. They merged to become the Australian Medical Association (AMA) in 1962.

[26] O’Lincoln 2011, pp.119–24.

[27] Sax 1984, p.48.

[28] Sax 1984, pp.33–34; Watts 1987, pp.26–27.

[29] Watts 1987, pp.110–11.

[30] Bramble and Kuhn 2011, pp.56–57; O’Lincoln 2011, pp.139–44.

[31] Sheridan 1989.

[32] Watts 1987, p.26.

[33] Watts 1987, pp.94–95.

[34] Crisp 1961, pp.156–58; Watts 1987, pp.98–99.

[35] Watts 1987, pp.96–103.

[36] Quoted in O’Lincoln 2011, p.147.

[37] Bramble and Kuhn 2011, p.62.

[38] Australian Labor Party 1942.

[39] Quoted in Sax 1984, p.49.

[40] “Has Big Health Proposal”, Sun (Sydney), 8 October 1941, p.2.

[41] Gillespie 1991, pp.131–54; Sax 1984, pp.48–52; Gray 1991, pp.65–69.

[42] Sax 1984, pp.49, 52.

[43] Gray 1991, p.66.

[44] Gillespie 1991, pp.176–82.

[45] Gillespie 1991, pp.181–82.

[46] Gillespie 1991, p.243.

[47] Quoted in Gillespie 1991, p.144.

[48] Sax 1984, p.53.

[49] Griffen-Foley 1995.

[50] Gillespie 1991, pp.156–58.

[51] Hunter 1965; Gillespie 1991, pp.209–32 (chapter 9); Gray 1991, pp.69–72.

[52] Gillespie 1991, pp.214–15.

[53] Gillespie 1991, p.221.

[54] Hunter 1965, p.418.

[55] Sax 1984, p.54; Gray 1991, pp.63–64; Gillespie 1991, pp.222–23.

[56] Wilde 2005, pp.43–46.

[57] Gray 1991, p.70.

[58] Hunter 1948.

[59] Quoted in Gillespie 1991, p.221.

[60] Gillespie 1991, p.228.

[61] Gillespie 1991, p.229; Communist Party of Australia 1948.

[62] Gillespie 1991, p.236.

[63] “Unions Threaten Doctors on Free Medicine Stand”, Herald (Melbourne), 3 June 1948, p.2.

[64] Gillespie 1991, pp.229–30.

[65] Hunter 1965, pp.423–25; Gillespie 1991, pp.256–64.

[66] Gillespie 1991, pp.196–208 (chapter 8); Gray 1991, pp.72–74; Sax 1984, pp.56–57.

[67] “Public Ward Fees Go”, Sydney Morning Herald, 13 September 1945, p.5

[68] Gillespie 1991, pp.196–97.

[69] Gillespie 1991, pp.199–200.

[70] Gillespie 1991, pp.207–8.

[71] Gray 1991, p.73.

[72] Gillespie 1991, p.200.

[73] Gray 1991, p.73.

[74] Sax 1984, p.57.

[75] Gillespie 1991, pp.277–78; Gray 1991, p.94.

[76] Gillespie 1991, pp.246–49; Gray 1991, pp.76–79.

[77] Gray 1991, pp.74–76.

[78] Gray 1991, p.78.

[79] Gillespie 1991, pp.196–97.

[80] Gray 1991, pp.57–58.

[81] Gillespie 1991, pp.166–95 (chapter 7).

[82] Wilde 2005, p.46.

[83] Scotton and Macdonald 1993, pp.11–13; Crichton 1990, pp.42–47; Sax 1984, pp.59–68; Gillespie 1991, pp.253–279 (chapter 11); Gray 1991, pp.83–103 (chapter 4).

[84] Gillespie 1991, pp.267–73; Gray 1991, pp.89–91.

[85] Scotton and Macdonald 1993, p.13.

[86] Gray 1991, pp.96–99.

[87] Scotton and Macdonald 1993, pp.10–13; Boxall and Gillespie 2013, p.33.

[88] Quoted in Boxall and Gillespie 2013, p.42.

[89] Swerissen and Duckett 2002, pp.28–29.

[90] Cass 1964.

[91] Boxall and Gillespie 2013, pp.36–45.

[92] Whitlam 1985, pp.332–36.

[93] Boxall and Gillespie 2013, pp.44–45, 48.

[94] The Medibank discussed here was the public health insurance scheme that operated from 1975 to 1981 – not to be confused with the private health insurance company, Medibank Private.

[95] Sax 1984, pp.108–18; Gray 1991, pp.132–47; Boxall and Gillespie 2013, pp.36–77 (chapters 2–4); Scotton and Macdonald 1993.

[96] Sax 1984, pp.79–80; Boxall and Gillespie 2013, p.43; Scotton and Macdonald 1993, pp.20–27.

[97] Boxall and Gillespie 2013, p.45.

[98] Sax 1984, pp.110–11; Scotton and Macdonald 1993, pp.44–49, 79–86.

[99] Scotton and Macdonald 1993, pp.28–29, 96–102.

[100] Sax 1984, pp.114–15.

[101] Quoted in Scotton and Macdonald 1993, p.110.

[102] A provision in the Australian constitution allows a parliamentary deadlock to be resolved by dissolving both houses of parliament, to proceed to elections for the House of Representatives and the full Senate (in general elections, only half of the Senate is elected).

[103] Boxall and Gillespie 2013, pp.49–51.

[104] Scotton and Macdonald 1993, pp.197–215 (chapter 11).

[105] Boxall and Gillespie 2013, pp.52–63 (chapter 3); Scotton and Macdonald 1993, pp.152–72 (chapter 9), pp.186–95, 219–22.

[106] Scotton and Macdonald 1993, pp.99–100.

[107] Boxall and Gillespie 2013, p.68.

[108] Scotton and Macdonald 1993, pp.102–3.

[109] Scotton and Macdonald 1993, p.104; Boxall and Gillespie 2013, pp.68–71.

[110] Scotton and Macdonald 1993, p.101.

[111] Scotton and Macdonald 1993, pp.177–86.

[112] Quoted in Scotton and Macdonald 1993, p.179.

[113] O’Lincoln 1993, pp.37, 58.

[114] Bramble and Kuhn 2011, pp.94–100.

[115] Boxall and Gillespie 2013, pp.78–113 (chapters 5–7); Sax 1984, pp.127–73; Gray 1991, pp.147–51.

[116] Gray 1991, p.148; Sax 1984, p.136.

[117] Sax 1984, pp.151–53, 170; Gray 1991, p.150.

[118] Boxall and Gillespie 2013, pp.96–98, 102–13 (chapter 7).

[119] O’Lincoln 1993, pp.57–66.

[120] O’Lincoln 1993, pp.61–62.

[121] “Now…all day stop bid”, The Age (Melbourne), 17 June 1976, p.1.

[122] “Medi strike cost $67m”, The Age (Melbourne), 1 July 1976, p.3.

[123] Donn 1979.

[124] O’Lincoln 1993, p.65.

[125] The scheme was the same as before, but it needed a new name because Fraser had established Medibank Private. Medicare began operating on 1 February 1984.

[126] Boxall and Gillespie 2013, pp.122–26.

[127] Bramble 2018, pp.4–14.

[128] Boxall and Gillespie 2013, pp.116–20.

[129] Boxall and Gillespie 2013, p.121.

[130] Boxall and Gillespie 2013, p.125.

[131] Boxall and Gillespie 2013, pp.126–31.

[132] Boxall and Gillespie 2013, p.131.

[133] Boxall and Gillespie 2013, pp.138–41; Gray 1991, pp.152–53; Crichton 1990, pp.122–26.

[134] Cooke 1985.

[135] Gray 1991, p.153; Harris and Buckley 1985.

[136] Quoted in Gray 2004, p.31.

[137] Boxall and Gillespie 2013, pp.156–58.

[138] Boxall and Gillespie 2013, p.162.

[139] Gray 2004, p.32.

[140] Swerissen and Duckett 2002, p.30.

[141] Gray 2004, p.36.

[142] Gray 2004, pp.35–38; Boxall and Gillespie 2013, pp.171–73.

[143] Gray 2004, p.38.

[144] Ross 2020, p.85; Stone 1980, pp.34–35.

[145] Gardner and McCoppin 1987, p.20.

[146] Gardner and McCoppin 1987, p.21.

[147] Stone 1985.

[148] Ross 1987.

[149] “Video: The context for the strike”, in Australian Nursing and Midwifery Federation (ANMF) (Victorian Branch) 2016.

[150] Gardner and McCoppin 1987, p.21.

[151] Stone 1985.

[152] Ross 2020, p.84.

[153] Ross 2020, pp.83–98; ANMF 2016.

[154] Ross 2020, p.95; Gardner and McCoppin 1987, p.29.

[155] Ross 2020, p.91.

[156] Gardner and McCoppin 1987, p.29.

[157] Industrial Relations Commission of Victoria 1987, p.17.

[158] “Video: The aftermath” in ANMF (Victorian Branch) 2016.

[159] Gordon, Buchanan and Bretherton 2012, p.121.

[160] Gordon, Buchanan and Bretherton 2012, pp.121–22.

[161] Rafferty 2022.

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