THE 2009 budget provided the Rudd Government with its best chance to respond to the health threats posed by the global recession, as well as the existing challenges of chronic disease and an ageing population. Given the vast sums attached to the nation-building aspects of the stimulus package, it was also its best opportunity to act decisively on its 2007 election promise of delivering more fundamental health reforms.

For most of us, new health investments are just as important as education infrastructure, roads, rail, ports or a $40 billion national broadband network.

Real health reforms need to ensure that all Australians get better care, particularly outside of our hospitals. Further, the whole system needs to embrace innovation and sustainability. Innovation is clearly lacking in the old Soviet-style state health services.

Innovation in the private sector is focused at present on maximising profitability for private investors. The sustainability question is not limited to the size of government financial contributions. It must also mean ensuring that out-of-pocket expenses do not become excessive.

The predictable tsunami of 21st-century chronic health problems (heart disease, depression, diabetes, lung disease, dementia and arthritis) soon will overwhelm our 19th-century health systems. Faced with these same challenges, other countries are headed down the path of reform.

Britain has a new phase of investment in regionally responsive health authorities and more competitive providers of care. In the US, the Obama administration is using its stimulus package to drive health insurance reform and bankroll big new investments in basic and clinical research. The Netherlands is implementing a more radical system of competing national insurance systems to drive innovation in its public and private sectors.

In Australia, Health Minister Nicola Roxon has stated clearly her preference for preventative health care, primary care teams and child and youth services. Kevin Rudd has promised to take over health care if the states continue to neglect their responsibilities.

As was the case with the 2008 budget, however, Treasury and the Finance Department, rather than health reformers, are driving the agenda. The reduction in support for high-income earners with private health insurance is a political sideshow. Minor changes to the rebates available for some surgical or fertility procedures are not central health reform issues.

Most important, under the new five-year Australian Health Care Agreements, $64billion will be transferred to the states without any clear process for achieving fundamental improvements. Most of the $3 billion in new capital investments is focused on completing large hospital projects that the states had already failed to deliver. Preferentially supporting specialised cancer centres and new acute care hospitals does little to redress the fundamental lack of support for prevention, primary care, mental health services, child and youth services or other key elements of community-based care.

In fact, the sheer size of these new hospital packages guarantees that those other essential parts of the healthcare system will remain starved of new investments, recurrent funds and skilled staff. Clearly, serious health reform was not "shovel-ready" for this budget.

Consequently, rather than seizing the chance for kick-starting reform, most of the stimulus package has been spent on reinforcing the existing dysfunctional system.

When unemployment rises, so do mental health problems, relationship breakdowns, alcohol and drug misuse, chronic health difficulties and suicide. Certain groups are highly vulnerable during a recession. Most notable are those with existing mental health problems, men in middle life who lose their jobs and young people who have only had casual employment. Importantly, children in at-risk families are placed at even greater risk of poor health, education and social outcomes.

We have strong evidence that the 30 per cent reduction in suicide in Australia from the mid-1990s was not only a consequence of a strong economy but also a direct result of providing better care for common problems such as anxiety and depression.

Sadly, less than 40 per cent of people with these difficulties get this care, a figure that is unchanged since the late '90s and that compares poorly with a figure of more than 80per cent for other common physical healthproblems. In this high-expenditure budget, there has been no substantial new investment in primary mental health care, youth mental health services or related clinical research infrastructure.

Despite these new pressures, serious health reform is on hold until the Government receives its truckload of reports on productivity savings, health financing options, health system reorganisation, preventative health care and primary care reform.

Consequently, we will move to the 2010 election burdened not only by the same problems that led the Prime Minister to make his bold promises in 2007 about a national health takeover but by a range of additional recession-induced pressures that have not yet been taken seriously by this Government.

Ian Hickie is executive director of the Brain and Mind Research Institute at the University of Sydney.