Australia's Two-Tier Society

Australia has had tremendous economic and social progress in recent decades. However, the progress has been eclipsed by growing disparities between the haves and have-nots, resulting in a divided society. This disparity, according to Jamrozik(2009), is caused by unequal distribution of goods and services. The imbalance in resource distribution has, in turn, created a significant gap between the poor and the wealthy, resulting in what appears to be a two-tier society (Jamrozik, 2009). This two-tier society is manifested in all the three pillars of social policy i.e healthcare, education and social welfare (Brooks, 1998). In Australia, this two-tier society is characterized by a wealthy urban population and a struggling minority in the rural areas.

Australia's Two-Tier Healthcare System

Looking at the Australian health care system, it is safe to note that it is a two-tier care system (Hoskins, 2016). A two-tier health care system is an arrangement whereby the government provides a guaranteed care for all residents but then again a corresponding care system exists for those who are willing to get faster services by paying more (Smith, 2007). The health care system in Australia comprises of a public health care system and a private health care system. In these two systems, the public health care system forms the first tier and provides all the services at local, municipal, territory and state levels. The second tier is made up of private sector health providers and comprises private hospitals, medical practices and pharmacies (Hoskins, 2016).

Public Health Care System

The public health care system in Australia is managed by the government through the universal health insurance scheme known as Medicare. The Medicare was developed in 1984 to provide free and sponsored cure by health professionals. It comprises of three basic parts namely hospitals, medical and pharmaceutical. The main elements of Medicare are the provision of free treatment to all members of the public in all public hospitals, the disbursement of benefits and refund to all health care providers listed on the Medicare schedule and subsidization of the expenses of all pharmaceutical prescriptions scheduled on the Pharmaceutical Benefits Scheme. Unfortunately, the public health care system does not cover all the services that one might require. The system does not cover for contact glasses, cosmetic surgery, ambulance charges, major dental services, and dietary advice (Hoskins, 2016). The system is also slow and one has to be on a waiting list in order to be attended. One is also required to contribute towards the gap amount and the choice of facilities is limited. These shortcomings of the public-tier system necessitate those with funds to seek private healthcare services (Smith, 2007).

Private Health Care System

To enjoy the services lacking in the public health care system, one has to get a policy with the private care providers. Under the private health policy, one has a number of options in regard to the choice of facility. One may choose to be treated in either the public facility or the private facility as a private patient and the Medicare will still pay for 75% of the Medicare scheduled fee (Hoskins, 2016). The remaining 25% will be covered by the patient. The advantage of this arrangement is that the expenses will be paid fully or partially by the insurer depending on the terms of the policy. Furthermore, the private health care system also covers diseases that are not covered under the public health care system. There is also minimum waiting time under this system unlike in the public healthcare system where one has to wait for a long period of time since treatment is priority based and therefore, those under emergency conditions are treated first. Although it is not mandatory to take up private health insurance in Australia, the government encourages its citizens to take up a private insurance cover for their health. This is especially encouraged for high-income earners. Owing to the long waiting time in the public system and government encouragement in Australia, many people are taking private medical covers.

The Impact of Neoliberalism on Australia's Healthcare System

The health care system has not always been a two-tier system. Following the period after the Second World War, Australia moved toward a welfare state that relied on the government for the provision of major social services such as health, education and income security (Jamrozik, 2009). However, under pressure from the market forces and under the emerging trends such globalization the welfare state was under threat. Moreover, international financial institutions such as the International Monetary Fund (IMF) and the World Bank (WB) exerted pressure on the government to give room to neoliberal ideologies. Before globalization, social policies under welfare state were meant to reconstruct the economies, especially after the Second World War. However, in the 1960s and under the new wave of globalization and a free market, the private sector started to see the welfare state as a hindrance towards their businesses. The public expenditure on social policies such as health and education was seen as an impediment towards economic development. There are those that felt that the welfare state policies were discriminatory especially given the fact that the healthy subsidize the sick and the young contributed towards the upkeep of the old (Jamrozik, 2009). There was also an increase in demand for social services beyond the level which the government could provide (Gramberg & Bassett, 2005). All these factors led towards the emergence of a neoliberal healthcare system.

The Rise of Neoliberalism

In the wake of globalization, the concept of neoliberalism came into force. The term neoliberalism comprises of two philosophies- 'neo' denoting new and 'liberal' meaning free from government interference (Becchio & Leghissa, 2015). The concept of neoliberalism arose from the ideas of Adam Smith who in the 1770s supported the ideology of minimum government involvement in economic matters so that trade could flourish under a free market. Neoliberalism is guided by three main principles namely: Individualism, free market through Privatization and Deregulation, and decentralization (Becchio & Leghissa, 2015). Under neoliberal health care system there is cost cutting of health expenditure by the government, there is decentralization of health care services to regional, state and territorial government and there is the presentation of the health care as a private good that is open for sale to those who can afford it (McDaniel & Chappell, 1999). In a nutshell, neoliberalism aims at removing the government from major economic policies through privatization of the public sector, removal of government regulations and taking the power to the people. The driving forces for the neoliberal ideology are free market and globalization. As in the free market, the desires of neoliberal philosophers are to replace the role of government with private corporations (Horton, 2007).

The Impact of Neoliberalism on Australia's Healthcare System

In Australia, neoliberal financial guidelines were approved and executed by the Labor government under the leadership of Hawke (Horton, 2007). These neoliberal policies reformed the field of health care to the extent that people felt that the government was inefficient and the private sector was more cost-effective and efficient. To be able to discern the impact of neoliberalism in Australia healthcare system, it is important to examine the influence of the principles of neoliberalism on the same. The main principles are individualism, free market, and decentralization. Under the principle of individualism, the philosophy of neoliberalism views the citizens as independent human beings who are not influenced by the actions of others. The individual is viewed as a consumer of public goods which in this case is health care and therefore if he fails to get this good it will be a failure by an individual but not the whole society. This means that health care is no longer a basic right but rather a responsibility for individual citizens to ensure that they are well catered for. In this regard, the weight is placed on the poorest person to find his/her own answers to the lack of healthcare (McGregor, 2001). Neoliberalists do not identify the need for the government to intervene and guarantee fair distribution of health resources and therefore in neoliberal health systems like Australia's it is easy to find a wide gap between the haves and the have-nots (McGregor, 2001). The haves can afford to consume good health care products under private corporations whereas the poor are not able to get medical services apart from the government provided universal Medicare. This creates a concept of a two-tier society as observed by Jamrozik(2009). This principle of individualism empowers multinational private corporation to sell health products without any regard for their social responsibility to the society. Social policies under neoliberalism are thus traded on free market through privatization of government institution.

The major principle of neoliberalism is free market through deregulation and privatization of public sector and state-owned initiatives. Neoliberalists believe that any enterprise that is run by the government is a failure and part of the economic problem. In this regard, government-run hospitals are seen as inferior compared to private hospitals. Therefore, due to this perception, all decisions on how the health sector should be run ends up being made by private corporations. The result is that taxes to the government are cut and arrangements are made for the health services to be provided through competitive means in a free market. In Australia, these reforms in the health system have created a norm whereby people feel it is legal to pay for health services rather than seek them in public hospitals. The private ownership of previously public properties generates profit for the private sector and therefore they tend to oppose any form of government intervention. The impact of this principle is that it ends up dividing the society in two. Those who can afford to seek medical care from private institutions are usually the affluent while those who fail to get medical care are the poor in the society. This division is legal in the eyes of the neoliberalist since every person acts as an individual and independent and therefore he or she is responsible for his wellbeing. Therefore, in Australia, every person is out for himself and if he fails he is blamed for the failure to meet his responsibility (McGregor, 2001). The principle of the free market goes hand in hand with the principle of decentralization, which essentially intends to improve accountability in health care by transferring health services from the federal government to the local government.

Although the aim of decentralization is to improve accountability, the local governments may not have the capacity to offer the same level of healthcare as the national government. The health services under the local government may be so inefficient and ineffective to the extent that people feel that they are making better choices by buying health care services from the market. Therefore, this decentralization ends up making people feel as if they have no right to health care as Australian citizens. They end up consulting private health institutions and at this point, it ends up being survival of the fittest. The financially endowed are able to seek better and efficient health services from the private sector while the poor are forced to persevere the inefficiencies of local government-sponsored health care providers. This, in essence, creates a two-tier society of the haves and the have-nots.


In conclusion, the neoliberalism ideology has greatly affected the healthcare policy in Australia. It has created a society that is divided in two on the basis of how well one is able to adopt to the demands of the free market. The affluent are able to afford efficient and effective health services from private providers whereas the poor are constrained to rely on the inefficient public health care providers, thus creating a two-tier society.


Becchio, G. & Leghissa, G., 2015. The Origins of Neoliberalism: Insights from Economics and Philosophy. New York: Taylor & Francis.

Pradella, L. & Marois, . T., 2015. Polarising Development: Alternatives to Neoliberalism and the Crisis. London: Pluto Press.

Brooks, S., 1998. Public policy in Canada (3rd. ed.). Toronto: Oxford University Press.

Gramberg, B. V. & Bassett, P., 2005. Neoliberalism and the Third Sector in Australia. Wellington: Victoria University.

Horton, E., 2007. Neoliberalism and the Australian Healthcare System (Factory). Wellington, Queensland University of Technology.

Hoskins, R., 2016. Australia’s Two-Tiered Health Care System is Already Quasi Private. [Online] Available at:[Accessed 17 September 2017].

Jamrozik, A., 2009. Social Policy in the Post-Welfare State: Australian society in a changing world (3e). Sydney: Pearson Australia.

McDaniel , S. A. & Chappell, N. . L., 1999. Health Care in Regression: Contradictions, Tensions and Implications for Canadian Seniors. Canadian Public Policy, 25(1), pp. 123-132.

McGregor, . S., 2001. Neoliberalism and health care. International Journal of Consumer Studies – Special edition on ‘Consumers and Health’, 25(2), pp. 82 – 89.

Smith, E. R., 2007. A two-tiered health care system: Is there anything new?. [Online] Available at:[Accessed 17 September 2017].

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