For the past few years, a growing problem has put healthcare budgets under increasing stress.

State and territory governments have been trying to do more with less, and it is all starting to come apart at the seams.

Extra money for healthcare during the pandemic hid the problem for a while. But, with those emergency sources of revenue gone, the states face funding shortfalls, and it is everyday Australians who are suffering as a result.

Overcrowded hospital waiting rooms. People waiting years in pain for hip replacements. People delaying appointments because of the cost, which then means issues are not picked up early.

Source of the problem probably not what you think

But this is not all doom and gloom. There is the real possibility of meaningful change.

The problem is that the GST is failing. The GST was created as a state tax, collected by the Commonwealth government, but then transferred in full to the state and territories.

It was promised to be the states’ own growth tax, which would help them fund their spending responsibilities, the biggest of which was healthcare.

But over the past 25 years since its introduction, it hasn’t grown with the economy.

This was a small problem at first but, year by year, it has grown and the shortfall is now worth $26 billion a year. This is why there are an increasing number of stories of revenue shortfalls, longer waiting lists, and ambulance ramping.

Why healthcare?

The truth is there are revenue constraints across state government services, but healthcare remains their biggest spending responsibility. It is also an area that can have a huge impact on people’s lives when things go wrong.

Australia’s health system is by no means perfect and there are plenty of ways it could be improved.

But compared to other developed countries, Australia’s health system does well. We have the 10th highest life expectancy among developed (OECD) countries, and we are the eighth lowest for preventable deaths.

Funding pressures are putting all this at risk.

So, what is the solution?

We could increase or broaden the GST, but this would be incredibly unpopular and politically difficult.

The idea that the GST should be the one and only source of revenue for the states is widely held but not based on any constitutional or economic grounds. There is nothing about the GST deal that precludes the Commonwealth from collecting new forms of tax and allocating the additional revenue to the states.

What new tax could that be?

A 25 per cent tax on gas exports from Commonwealth waters could raise $17 billion a year.

Australia currently taxes its resource sector poorly and the gas industry is particularly good at avoiding paying its fair share. The Petroleum Resource Rent Tax (PRRT) is broken and has barely collected any extra revenue during a massive boom in gas company profits.

A gas export tax wouldn’t increase Australian gas prices because it would affect only exports. It would really impact only multinational gas companies, reducing profits that flow mainly to their overseas owners.

Such a tax could also have broad support across the parliament. Crossbenchers – from the Greens to One Nation – have called for higher taxes on gas. Even Peter Dutton, when he was leader of the opposition, took a proposal for a new tax on the gas industry to the last election.

This additional revenue could be distributed to the states in the same way as GST revenue. It would be a game-changer for the states and territories.

It would provide much-needed funding, particularly for the health sector: Reducing waiting lists, providing more resources to stretched hospitals, and ensuring our health services continue to meet the needs of Australians into the future.

It is important to understand that the slow growth in the GST is likely to continue to get worse. Australia Institute research found that the loss in revenue in 2033-34 alone could be $39 billion.

Doing nothing will mean further cuts to state and territory budgets and a significant part of that is likely to come from their health budgets. This will mean fewer services at a time when funding is already stretched.

Australians shouldn’t suffer just because the GST didn’t deliver as promised.

Fortunately, we have a source of revenue that can help. This could be tax reform to unite the Commonwealth, states, and territories. The winners would be all of us.

This article was originally published in The New Daily.