States line up against open blood supply

9 February 2007, Australian Financial Review, By John Breusch

A majority of state governments has rejected a federal government request to allow foreign companies to compete against sharemarket-listed CSL to supply blood plasma products to Australia.

The states' resistance threatens to spark a trade row with the United States, which, through a free trade agreement with Australia, has pushed for its companies to be given access to the local blood fractionation market.

Fractionation is the separation of blood into its component parts.

State health ministers, whose consent would be needed before the federal government could dismantle CSL's monopoly, will discuss the issue when they meet in Melbourne today.

Under the FTA, which came into force two years ago, the federal government was obliged to conduct a review of Australia's blood plasma supplies and to push the states to open up the service to tender.

The review, completed in December by former Department of Foreign Affairs secretary Philip Flood, recommended against allowing overseas processing, saying it could threaten the quality of Australia's blood supply.

A US embassy spokesperson yesterday said Australia had met its FTA commitments. The spokesperson said a tender arrangement would be safe and would cut costs, urging the states to adopt the federal government's recommendation.

However, Western Australia and Tasmania yesterday backed Victoria's and South Australia's decision to reject the commonwealth's push.

"I will strongly oppose any proposition that would see blood products sent offshore for processing," WA Health Minister Jim McGinty said.

A spokesman for Tasmanian Health Minister Lara Giddings said: "The Tasmanian government supports the Flood inquiry, which supports the status quo."

Opposition trade spokesman Simon Crean said the development underlines the inadequacy of the original FTA negotiations.

"This shows that regardless of the health issues and what the science showed, the government was prepared to sell out the national interest - and subsequently they were prepared to dud their negotiating partners," said Mr Crean. "How inept is that? Clearly the Americans thought they had an agreement; luckily the states have held firm."

The US embassy earlier challenged Mr Flood's assertion that the quality of Australia's blood supply could not be assured if processing was sent overseas.

The states' position has also provided a reprieve for the commonwealth, enabling it to comply with its FTA obligations while avoiding what could be an unpopular policy in an election year.