• Australian health system;
  • health system failure;
  • health system reform;
  • Commonwealth health intervention;
  • managed competition
  • D63;
  • H51;
  • I1;
  • I18

This article examines three issues. These are, first, the need for the 2010 Commonwealth intervention in the health sector; secondly, the reasons why the sector still needs major reform despite this intervention and thirdly, the broad options for reform. The conclusions reached are, first, that the intervention is anticlimactic but necessary in the absence of tax reform; secondly, that the system is inefficient and inequitable primarily because of two deficiencies, namely information and governance structures and thirdly that the best path to follow would be to create limited diversity and the depoliticisation of all but the largest decisions. It is argued that in the absence of market price signals, the driver of dynamic efficiency should be the generation, proactive dissemination and use of information on a scale which has not been envisaged in previous proposals.