A $1.2-BILLION hole in payments promised to the states and territories to deliver health services has reignited tensions between conservative state governments and the Gillard government.
Queensland Health Minister Lawrence Springborg and his New South Wales' counterpart Jillian Skinner raised their concerns about the payments during a health ministers' meeting with Federal Minister Tanya Plibersek in Perth on Friday.
While the federal May budget projected more than $67.883 billion would be given to the states for health services, that figure fell $1.2 billion to $66.5 billion in the government's October mid-year budget update.
In Queensland, where the state budget was based on the May figures, the $387 million shortfall will leave the State's health system with about $13.5 billion over the next four years, down from $13.9 billion in May.
South of the border in NSW, the more populated state will see a cut of $601 million to the Commonwealth payments, down to $20.965 billion from the May estimate of $21.566 billion.
Despite the fall in the estimates, the total amount the Commonwealth will give the states for health will still grow by 21% over the forward estimates.
But the shortfall has infuriated state health ministers, some of whom attacked the Federal Government in statements sent out before the Perth meeting.
Mr Springborg said despite agreeing on a formula with the Federal Government, the Commonwealth was applying the formula inappropriately.
The formula was based on Australian Bureau of Statistics Census figures on population growth, which were released between the May budget and the mid-year update in October.
The ABS estimates showed that while the population was still expected to grow, the rate of growth across the country would be slower than first thought.
Mr Springborg said the he understood the shortfall was not Ms Plibersek's fault, but a "strategy" of Treasurer Wayne Swan to bump up the budget surplus.
"The reality is that population growth is still growing in Queensland, and while all states and territories are working with tighter budgets, this is going to mean $347 million of services won't be delivered," he said.
"That comes on top of a cut to another payment of $40 million to special purpose payments to Queensland - much of which has already been spent.
"So now it's going to be the people on our local hospital and health boards that are going to have to find a way to find that saving across the board."
But Ms Plibersek said the Queensland and NSW governments had cut their own state health budgets by $1.6 billion and $3 billion respectively this year.
"I understand why those health ministers are defensive about it, but it's not fair to look for someone else to blame," she said.
"That formula has three elements to it. It has an element that's based on population, it has an element that's based on health price inflation and it's got a technology element as well."
Asked whether Queensland was wrong to use the Federal Government's May Budget to help calculate the state budget, a minister's spokesman said "No".
Ms Plibersek said all state and territory government had signed up to using that formula to calculate the funding levels, during an October meeting before the change of government in Queensland.