Australian Prime Minister Kevin Rudd announced a $45 billion funding takeover of the country's ailing health-care system on Wednesday, proposing to wrest it away from the states and cut hospital waiting lists.

The new health policy is aimed at salvaging flagging support for the Rudd government ahead of elections expected late in 2010 by winning over voters dismayed by long waiting lists for surgery in public hospitals starved of investment.

The government still has a commanding lead in opinion polls, but support has been slipping due to Rudd's inability to fulfill key promises, which include reform of the ageing hospital system.

"For the first time in history the Australian government will take on the dominant funding role for the entire public hospital system," said Rudd, adding his government would also take complete control of primary-care services outside hospitals.

"This amounts to a A$50 billion ($45.2 billion) takeover of funding responsibility from the states and territories over the upcoming forward estimates," Rudd said in a speech. The phrase "forward estimates" usually means over the next four fiscal years.

Rudd said the plan was wholly consistent with the government's fiscal strategy, adding one-third of the nation's consumption tax revenue would be directly spent on health.

The new health policy does not automatically mean increased health funding but aims to give Canberra much closer oversight of how federal funds are spent in this sector.

Australia spent more that A$103 billion on health care in 2007-08, with only A$5.5 billion going to new infrastructure. Public hospital spending totalled around A$30 billion.

Successive surveys show health care is among the most important issues for voters and Rudd won office in 2007 promising to take over hospitals and end long-running squabbles with state governments over who should control the public health system.

The plan could be bitterly opposed by state governments because it strips them of a core function under Australia's constitution and places stricter controls on federal funding.

Currently, Canberra hands health money over to the state governments which then decide how to spend it. – Reuters