One state has the worst hospital system – and the most expensive.

Inefficient, neglected hospitals cost lives and waste dollars. You don’t always get what you pay for.

Australia’s smallest state has a big budget problem. It also has the nation’s least adequate hospital system. There’s a relationship between the two but none of the state’s politicians, from any party, has a clue about how to fix either.

The government has been spending more than it’s earned for so long that net debt now accounts for 93% of annual revenue. Revenue is $9.5 billion and borrowings are at $8.8 billion.

According to the state Treasury, borrowings are forecast to increase to $14.9 billion by 2027-28. That’s 152% of annual revenue. Interest payments are soaring, predicted to reach $700 million by 2027-28.

That’s a remarkable result for a government which came to power in 2014 with a policy of ruthless slash-and-burn budget cuts. Saving money was at the core of the government’s strategies – and no area was as hard hit as the public hospital sector.

Salaries were cut, staff numbers restricted and – most importantly – critical capital investment was delayed, abandoned or not even contemplated. By failing to borrow to fund productive hospital infrastructure, the government has condemned its hospitals to a double-whammy of overcrowding and soaring day-to-day costs. Tasmania’s nation-leading inefficiency is driven almost entirely by a lack of investment in capital. Staff are working harder and harder and achieving less and less.

When the Liberals came to power in 2014, the cost of treating an average patient was in line with the national average, both for acute inpatients and for emergency department presentations. But by 2022-23, it cost 28% more to treat a given patient in an acute ward than it did in other states.

The situation in emergency departments was even more remarkable: up 40%.

The government’s ill-advised attempts to save money has backfired so badly that the resulting inefficiency has added substantially to the state’s budgetary problems. By 2022-23, it cost the budget $339 million. And by now, that figure is likely to be between $400 and $450 million.

All of that accrues to the state. Both the federal government and the Commonwealth Grants Commission refuse to reward inefficiency, so the Tasmanian government gets no extra federal health funding and no extra GST to cover these rising costs. The share of federal health funding, split equally between the Commonwealth and the state when the government came to power, is now grossly distorted.

There are ways to fix all this. I have some proposed answers, which all state politicians have ignored. So you can see for yourself in these two detailed proposals.

The first, analysing the cost issues, can be downloaded here.

The second, a detailed, costed and affordable eight-year plan to make Tasmania’s hospital system finally fit for purpose, can be downloaded here.