Federal Health Minister Nicloa Roxon has again laid the government's cards firmly on the table in relation to hospitals reform, saying a referendum will take place if the states can't come to an agreement with the government.
Earlier on Tuesday, Victorian Premier John Brumby insisted there is no way he will agree to the reforms.
Brumby said Victoria won't sign up to the plan in its current form, despite a new $3 billion sweetener.
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The problem for Mr Rudd is that despite perceived failings of hospital management at the state level, Victoria is widely acknowledged to have a successfully functioning system, and Mr Brumby is loathe to change it. This despite the possible improvements to the situations in other states, were Canberra's proposed 60/40 funding split to go ahead.
Brumby wants a 50/50 funding split, instead of the Commonwealth's 60/40 takeover, which would be achieved through clawing back 30 per cent of GST from the states.
Roxon stands firm
But Roxon today played tough: 'It's crunch time', she said.
The state premiers gather for the Council of Australian Governments (COAG) meeting in Canberra on Monday, and Roxon told reporters on Tuesday that the meeting would continue for "as long as it takes" until an agreement was reached.
But when pressed on what would happen if the government cannot get a result, she said the issue would go to a referendum.
"If an agreement isn't reached there will be a referendum...but we hope the premiers will take a constructive approach," she said.
She said the reforms are needed to make Australia's health system sustainable into the future.
"We won't be putting extra money on the table for business as usual," she said.
"We will do everything we can at COAG to make sure an agreement is reached."
Brumby says Rudd holding states to ransom
Mr Brumby said he could not agree to any deal that contained no new money from the government and only a "recycling" of the GST.
He said Prime Minister Kevin Rudd's threat to cut money from the states if they did not sign up to the deal was holding the states to ransom in a manner not seen since the Joh Bjelke-Petersen government of the `70s.
In a firm challenge, the Victorian government Tuesday announced an extra $45 million for elective surgery as it ramps up pressure on the federal government to commit to more health funding before Monday.
Less than a week before a showdown with the states on the reforms, Brumby has brought forward money from next month's budget to treat an extra 9000 patients a year.
"This is no strings attached, it starts tomorrow, it will benefit 9000 patients and it will do that immediately," Mr Brumby told reporters in Melbourne on Tuesday.
