Common(wealth) Knowledge #35: A public healthcare debate 80 years in the making
Today, Australians take government-subsidised healthcare for granted - but that was not always the case.
A recent decision by the Commonwealth government under Prime Minister Anthony Albanese to decrease the number of subsidised psychologist sessions available under Medicare from 20 to 10 has led to much controversy, with many, including key industry figures, arguing that this won’t help the mental health crisis. Some psychologists are even leaving the field. However, exactly 80 years ago the conversation wasn’t how much the government should get involved in public welfare, but whether the Commonwealth government even had the power to.
When the Australian Constitution was first drafted in the 1890s, only three sub-sections of Section 51, which deals with what Parliament can pass laws about, dealt with social issues, out of a total of 39 sub-sections. These so-called ‘heads of power’ were the marriage power of sub-section (xxi), the divorce and child custody powers of sub-section (xxii), and the invalid and old-age pension power of sub-section (xxiii). This was consistent with the drafters’ intention to create a Commonwealth government with very limited powers, leaving most issues to State governments to deal with.
This laissez-faire approach to healthcare was questioned during World War 2. John Curtin’s Labor government began pushing for a National Reconstruction Program to help rebuild the country after the war, but this was to start in 1943-44 with the Pharmaceutical Benefits Act 1944 (Cth), which relied on a tax increase and a national trust fund created by the National Welfare Fund Act 1943 (Cth). However, the High Court of Australia rejected this in the Pharmaceutical Benefits Act Case (1945), because there was no ‘head of power’ that gave the government to do this. All the government had was the executive’s power to spend money under Section 81 of the Constitution, and the High Court said this wasn’t enough.
The Labor government had to go back to the drawing board. But by now the war was over, so the government had some breathing room. Labor also had an ace up their sleeve: the Attorney-General was H.V. Evatt, who had spent 10 years serving on the High Court before becoming the only judge to resign and enter politics. In between setting up a proper Department of External Affairs and helping create and run the United Nations, Evatt found the time to help mastermind a referendum that would give the government a legislative head of power, which would become Section 51(xxiiiA). In its final form, it read as follows:
“The Parliament shall, subject to this Constitution, have the power to make laws … with respect to: the provision of maternity allowances, widows’ pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits medical and dental services (but not so as to authorise any form of civil conscription), benefits to students and family allowance.”
Or, to put it more simply, the ‘welfare power’ or ‘social services power.’
The Liberal Party, lead by Opposition leader, former Prime Minister, and future Prime Minister Robert Menzies agreed with most of this text. But they had their reservations about two grants of power: medical and dental services. Like the Liberal Party of today, Menzies’ Liberals argued that if the government was given this power, they could nationalise medical and dental services.
And Menzies’ Liberals may have been right. This was less than a decade before the Democratic Labour Party (originally Australian Labor Party (Anti-Communist), later Democratic Labor Party) split off from Labor, and in 1940 Jack Lang’s right-wing Labor faction, ALP (Non-Communist), and the radical left (NSW) State Labor Party had both split off from Labor, so the factionalism was already present. So, while some Labor MPs, like Evatt, opposed nationalisation, some supported it. However, Evatt and Menzies reached a compromise. The Liberals would support the referendum and the inclusion of ‘medical and dental services’ in return for Labor supporting an amendment that inserted the civil conscription clause, something we will return to shortly.
Of the three constitutional amendments put to Australians in 1946, only the social services amendment succeeded. The other two, about regulating agricultural marketing and the employment of people in the industrial sector, did not have Liberal support, and failed. The social services amendment won a majority of the vote in all six states, plus a majority of all Australians.
The Labor government re-enacted its original laws as the Pharmaceutical Benefits Act 1947 (Cth). This Act listed medications that could be prescribed at no cost to the patient, if they were eligible for it under Act. This was at a time when the public/private distinction in healthcare wasn’t established, so individuals would have to meet statutory requirements to receive the medical benefits.
However, Menzies’ Liberals weren’t the only people concerned about nationalisation. The British Medical Association successfully had part of the Act overturned by the High Court in British Medical Association v Commonwealth (1949). They protested because the Act required doctors to use the same prescription form for all individuals, regardless of whether they were eligible for the free medication. In addition, they were obligated to give free medication to ‘lunatics’ and for ‘unconscious people’ if there was no other way for those individuals to get them, which the BMA said meant they were distributing “willy-nilly,” a phrase that rarely appears in High Court decisions.
‘Civil conscription’ is one of the more unusual phrases in the Constitution, and it isn’t commonly used anymore, if it even was back in 1946. Regardless, it was used to respect the rights and independence of medical practioners. This meant that any medical system created by the Commonwealth government had to be an opt-in system for medical professionals. It is why Australia now has the private/public healthcare distinction. So, it was accepted by a majority of the High Court that requiring the same prescription forms to be used for all patients, and requiring medicine to be dispensed freely to certain individuals, violated this protection.
Three quotes from the High Court sum up this decision well:
Latham CJ, at pages 242-243: “The power is not such a power to make laws with respect to pharmaceutical benefits and medical services. It is a power to make laws with respect to the provision of such benefits and services. A power to make laws with respect to medical services … would enable the legislature to control the practice of the medical profession completely.”
Latham CJ, at page 244: “If persons or institutions choose to remain outside the benefits of the scheme there is not, in my opinion, anything in the Act to compel them to accept those benefits.”
Webb J, at pages 294-295: “This civil conscription can be avoided, without any breach of law, to the extent that the doctor vacates the field of medicine, which, however, would involve, in many if not most cases, a considerable loss of practical income. But it is still civil conscription. Military conscription would not cease to be such because those liable to it might avoid it by a change of occupation.”
However, unlike last time, the rest of the Act was held to be valid. And so, with this decision in 1949, Australia’s experiment with public healthcare, at least by the Commonwealth government, began. Not even amendments to the Act by the new Menzies government later that year, which limited the scheme to live-saving and essential medication, were able to end it completely. After all, even the Liberals supported the initial concept. And that brings us to where we are today, where we continue to argue over how how, not if, the government should get involved in public healthcare, just like the Liberals and Labor did in 1946. Meanwhile, medical professionals leaving the field as a result, just like Justice Webb discussed, although not in the way that he anticipated. And yet they say that history doesn’t repeat itself.
Stuart Jeffery is the host of Between Parkes Place and Capital Hill on 6 News. His views on personal social media pages are his & his only, and do not reflect the views of 6 News or our journalists. He abides by 6 News' editorial standards relating to fairness & accuracy.
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Attorney-General (Vic); Ex rel Dale v Commonwealth (1945) 71 CLR 237;  HCA 30 (‘Pharmaceutical Benefits Case).
British Medical Association v Commonwealth (1949) 79 CLR 201;  HCA 44.
Commonwealth of Australia Constitution Act 1900 (Imp) 63 & 64 Vict, c 12.
National Welfare Fund Act 1943 (Cth).
Pharmaceutical Benefits Act 1944 (Cth).
Pharmaceutical Benefits Act 1947 (Cth).
Elijah Granet’s ‘Better AustLII’ web extension.
Check out Danuta Mendelson’s excellent paper ‘Devaluation of a Constitutional Guarantee: The History of Section 51(xxiiiA) of the Commonwealth Constitution’ if you’re interested in finding out more about the public healthcare and Section 51(xxiiiA) debate.