Funding The Medical Profession Australia 1788-1900

Dec 12, 2000Health Funding, Paper

Section: First Settlement to Federation

1788 – 1901

During the eleven decades from First Fleet to Federation, many of the embryonic elements of Australia’s current health system were established.

The basic roles of civil society, the medical professions and government became apparent. Humanitarian welfare aspirations sprang from civil society. Doctors, nurses and other health carers performed the actual services, improved their scientific effectiveness, and developed the ethical values governing the delivery of those services. Government provided financial assistance and sought to regulate health service activities as required in the public interest.

During this period, basic concepts evolved to improve public health, to establish, improve and fund medical services, and to extend their availability to more of the population.

Some of the most notable developments were practitioner qualification and registration, public and private hospitals, specialist hospitals (psychiatric, women’s, children’s, infectious diseases), honorary visiting medical officers, private medical practice, government salaried hospital medical practitioners, government-funded medical and public health research, private health insurance, community- and risk-rating, fee-for-service and capitation forms of payment for doctor services, hospital boards of management, medical boards, teaching hospitals, university medical schools, professional associations, quarantine, compulsory immunisation, compulsory notification of certain infectious diseases and sanitation and water-supply development.


  • The First Fleet established a national health service – ie a service that comprised five medical officers from the Colonial Medical Service. They were, salaried employees of the British crown, with funding from the British Treasury. The CMS medical officers treated patients on government premises (tents) with no fees charged. They existed to treat military and other government employees and convicts, rather than the few early free settlers.


  • The first local certificate of competence as a medical practitioner was issued by an official CMS panel to William Redfern.


  • Governor Macquarie converted a farmhouse at Castle Hill into a public lunatic asylum.


  • The NSW Society for Promoting Christian Knowledge and Benevolence in these Territories and the Neighbouring Islands was founded by a journalist Edward Smith Hall. (The first of Australia’s benevolent societies.) Hall told the foundation meeting that there were numerous cases of disease out of the reach of the [existing government] provision. He urged the benevolent members of the community to endeavour to mitigate the suffering.
  • The first local medical student, James Dawes, was apprenticed to William Redfern. Dawes died the following year. A 14 year old, Henry Cowper, took his place.


  • Australia’s first private doctor, William Bland, arrived in Australia. He was a naval surgeon who killed the ship’s purser in a duel. He was convicted of murder, sentenced to seven years transportation, and sent to Castle Hill lunatic asylum to serve as its medical officer.
  • Pardoned the following year, he settled in Sydney as Australia’s first full time private practitioner. He was offered a post in the government medical service subject to his passing an examination skills by three government medical officers of his medical skills. He refused claiming that he was better qualified than the examiners, and continued in private practice. Politically active, he was sentenced to another year’s imprisonment for libelling Governor Macquarie (1818-19). He went on to play a major part in public life, serving as an honorary medical officer to the Benevolent Societies” asylum and the Sydney Dispensary. He became the first President of the Australian Medical Society following its foundation in 1859. He continued in active medical practice until he died of pneumonia aged 78.


  • Governor Macquarie assisted the Benevolent Society with an official donation of ten pounds. (Government subsidy)


  • A General Hospital was built in Sydney by contractors who were paid by government with a monopoly of rum imports for a set period.


  • The Colonial Auxiliary Bible Society undertook a survey to see how many Bibles were needed but it disclosed a harrowing tale of poverty and squalor. It met with the Governor and a new society, The Benevolent Society of NSW, was jointly instigated. It took over the original society started by Hall. The Governor became its Patron. Membership was open to all who subscribed at least one guinea per year. Its objects were:
    “To relieve the Poor, the Aged, the Infirm and thereby to discountenance as much as possible Mendicity and Vagrancy, and to encourage industrious habits amongst the indigenous poor, as well as afford new religious instruction and consolation in their distress.”
  • The Benevolent Society absorbed other smaller organisations and developed into an established component of the colonies” health system.


  • The Benevolent Society, unable to cope financially, began receiving financial subsidies from the Treasury. Private charity proved unable to meet the social requirement without the financial assistance of government.
  • Other benevolent societies grew up. Most provided “outdoor relief”. ie treatment at their homes as most people wished to avoid entering the hospitals of the day, which were often tents and were squalid and dangerous.
  • In 1820 Government handed over a building in Sydney to the Benevolent Society as an Asylum for the Poor, Blind, Aged and Infirm. Only the military and convicts were automatically entitled to care in the General Hospital. The asylum’s Matron and Master were government-salaried. A number of other asylums and infirmaries established by societies, were eventually taken over financially by government. (ie they became in effect government-subsidised health care institutions run by charities)


  • Sydney Dispensary which was financed by charitable subscriptions and donations to provide outpatient care to the poor. It was to become known as Sydney Hospital – the first public hospital exclusively for civilian use.


  • Private health insurance began with the first friendly society. It was started by Sydney boat builders. Many other such societies followed.


  • Sydney Dispensary granted a Government subsidy on a pound for pound basis, controlled by a board of directors elected by subscribers. (Hospital Board concept)


  • An Act was passed “to define the qualifications of Medical Witnesses at Coroner’s Inquests and Inquires before Justices of the Peace”. Formal examination of medical practitioners’ qualifications and public records of qualified persons was instituted and a three man Medical Board of NSW was set up. NSW introduced the first legislation for the registration of medical practitioners. “Under this Act and its subsequent amendments, the Medical Board was established to oversee the rights of doctors and patients and to act as the self regulatory body of the medical profession”. NSW was the senior colony with Van Dieman’s Land (1825), Western Australia (1829) and South Australia (1834) the only other colonial governments existing at that time in Australia. (ie the beginning of state regulated professional exclusivity)
  • Five Sister of Charity nuns arrived from Ireland to work among female convicts. Two had trained as nurses in Paris. They pioneered vocational nursing in Australia.


  • Doctors threatened the first doctor walk-out from government hospitals, over the new system of medical administration under the Deputy Inspector General of Hospitals. Colonial Surgeons collectively submitted resignations. But the Home authorities refused to accept them to avoid payment of retirement allowances. Doctors accused the Deputy Inspector General of Hospitals John Vaughan Thompson of being autocratic.
  • The first “purpose built” mental asylum in Australia, the Tarban Creek Asylum opened. (Later it became part of the Gladesville Psychiatric Hospital).
  • Government hospitals introduced stratified fees – a shilling a day for civil servants, three shillings for free persons, and one shilling and nine pence for free or emancipated paupers. Convicts and military personnel were treated free.
  • The Melbourne Union Benefit Society provided members with sickness and unemployment benefits for a maximum period of eight months, funeral expenses, and medical attention from the Society’s surgeon (not necessarily in that order!). The premiums were risk-rated. Members in dangerous occupations paid more than those in safer ones. Members contributed one shilling a quarter towards the surgeon’s salary which was based on capitation – ie a flat payment per member irrespective of the amount of medical attention given.
  • (By 1905 some sort of friendly society insurance covered one million of Australia’s four million population. Many were in trade union schemes. Some involved joint employee-employer contributions. Some schemes involved hospital benefit funds guaranteeing hospitalisation costs. The first of these funds was started in 1929 at Perth Hospital (now Royal Perth Hospital) and at a small NSW BeIllngen Hospital.


  • Convict hospitals were handed over to local bodies of trustees. Scores of “private hospitals” sprang up with combined voluntary subscribers and government subsidies. A few charged fees, but they were regarded as charitable institutions for the indigent and “labouring classes”. Treatment was by honorary medical officers. The hospitals were largely autonomous but there were some minimal regulatory laws.
  • Some of the larger government hospitals became teaching hospitals and nurse training schools.
  • Lay administration in psychiatric hospitals caused the first dispute between the medical profession and government over hospital administration. There was acrimonious debate in the press and several official inquiries over the doctors’ challenge to the principle of lay administration in government psychiatric hospitals.


  • NSW introduced its first mental health legislation, the Dangerous Lunatics Act, to stop inmates suing the asylum for illegal confinement.


  • The first autonomous medical society, the Port Phillip Medical Association, was founded.


  • The first NSW Public Hospitals Act was passed, allowing public hospitals to sue and be sued.


  • Boards of management took control of former convict hospitals. Military control ceased after more than 50 years.


  • By this time the pattern of medical practice in Australia was becoming manifest. Most medical practitioners were engaged in private practice with many also undertaking honorary work in public hospitals and philanthropic institutions. Their incomes came mostly from fee-for-service, but a number had contractual arrangements with friendly or benevolent societies on an annual capitation fee per registered patient. Doctors had also begun to set up private hospitals to enable themselves to practice.
  • Embryonic consciousness of the need to counter public health hazards developed as epidemics arrived with the gold rush immigration.


  • All physicians and surgeons at Sydney General Hospital were required to “admit to his hospital practice all pupils who shall have been previously enrolled by the weekly committees as hospital, medical, and surgical pupils”. (Teaching hospitals)


  • The NSW Medical Registration Act consolidated the status and authority of the NSW Medical Board. Applicants for registration needed a course of study of not less than three years. Sydney University was named as the examining body, but it had no medical faculty until 1882.
  • First Public Health Act in Australia was passed in Victoria. It established a Central Board of Health and local health boards.


  • The Sisters of Charity opened St Vincent’s Hospital in Sydney, the first hospital run by a religious order.


  • The British Medical Act established a single register for all medical practitioners, setting out the qualifications that were acceptable. It automatically extended to British colonies, determining who could work in hospitals.


  • First formal professional training for nurses began with a midwifery training program at the Melbourne Lying-In Hospital (Later the Royal Women’s Hospital)
  • A NSW Royal Commission into the Conditions of the Working Classes of the Metropolis called attention to the threats to public health posed by gross living conditions, no sanitation, contamination of public wells, and open drains.
  • The original Australian Medical Association was founded in Sydney (but it broke up in 1869).


  • Melbourne University established the first medical school.


  • Victoria introduced compulsory registration of charities including hospitals.


  • Lucy Osborne arrived with five nurses from the London Nightingale School to work at Sydney Hospital. She started career nurse training, on Nightingale lines. (This extended to Hobart in1875, and to St Vincents and Royal Prince Alfred in Sydney in1882).


  • Australia’s first major occupational health legislation was passed in Victoria.


  • The Compulsory Vaccination Act in Victoria required all children to be vaccinated against smallpox within six months of birth.


  • Sixty members of the medical profession petitioned the NSW Legislative Assembly to pass legislation authorising professional self-regulation, similar to that in the UK. This would grant them by law
  • “the privilege of regulating their own affairs”, and the power to regulate the profession under confirmation of government to admit those who are of the same standing as themselves, and remove those who on account of their infamous conduct are no longer worthy to remain in its ranks”.
  • The petitioners felt:
  • “aggrieved that, in the existing state of the law, there is no penalty imposed on persons who assume the professional designations which they have thus laboriously and expensively acquired for themselves”. Such designations were considered “injurious to your Petitioners and liable to lower their social status as scientific men”.
  • Doctors had attained the position they now hold in consequence of having studied the various arts and sciences which are necessary to a knowledge of their profession during several years. This entailed on them much mental labour and great expense. They underwent subsequent examinations before recognised competent bodies, who conferred upon them the degrees and diplomas which they now hold”.
  • The petitioners referred to themselves as “natural guardians of the public health”.
  • The Australian Health Society was founded in Melbourne. It pioneered public health education in public lectures, classes, pamphlets and wall sheets.


  • This period saw the introduction of Compulsory notification of specified diseases and quarantine regulations


  • Tasmania led Australia with its Dental Act, regulating dentistry and dentists.
  • A Royal Commission into working conditions led in 1885 to the Shop and Factories Act (Alfred Deakin’s initiative)


  • Unqualified practitioners (eg faith healers, herbalists, clairvoyants, electropathists – but not including druggists – outnumbered legally qualified doctors by three to one.


  • Victoria created the Board of Public Health replacing its Central Board of 1855.


  • Victorian Public Health Act required the registration and inspection of private hospitals by the Colonial Board of Health and that they be conducted according to official regulations.
  • Dr Constance Stone became the first registered woman doctor in Australia.


  • Privation resulting from the Nineties Depression incited a sharper social conscience:
  • “After the depression of the 1890s, people could no longer believe in the efficacy of independence and hard work to provide against misadventure and serious illness. The social conscience of the new nation was stirred by knowledge of the privation and squalor suffered by some and governments were moved by the necessity to provide assistance.” (Ann Daniel, Medicine and the State, 1990)
  • Aged and invalid pensions (means tested) and universal maternity benefits were introduced.
  • Central supervision was considered necessary to ensure rational allocation of subsidies from government to the growing number of health institutions. The first attempt was made to rationalise a public hospital system which had begun organically. As public hospitals improved and medicine became increasingly scientific, people began to regard hospitals not merely as places of charity for the poor, which the better off would hesitate to enter. But hospitals were still essentially a combination of the humanitarian spirit in civil society assisted by government funding subsidies, with minimal regulation as a response to perceived needs as they arose.
  • Some government regulation of pharmacy began because of the number of charlatans.


  • The case of Allison v General Council of Medical Education and Registration: A medical professional had made a scurrilous remark about the medical profession and invited patients to come to him. He was found guilty of “infamous conduct” which was defined as ‘something (with regard to the profession) which would be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and competency”.


  • The Queen Victoria Memorial Hospital (a specialist hospital for women and children), was established by the three sisters, Drs Constance, Clara and Mary Stone, who were among the first honorary medical officers in Australia. The “Queen Vic” was managed and staffed by women.


  • The Australasian Trained Nurses Association and the NSW Trained Nurses Association was founded by a group of doctors and nurses. The ATNZ set 3-5 years training as the condition for registration as a nurse or midwife and admission to practice. Nurses were put in charge of training, ethical codes, and examinations. (This system lasted for 10 years before the States took over control)
  • A NSW Royal Commission on Public Charities looked into agencies receiving government subsidies. It noted that not all were registered, but that they supplied a distinct public need. They were catering for “a class unable to afford the larger payments [for private care] and yet unwilling to enter the public hospitals”. It noted that some were run by medical practitioners and others by qualified and skilled nurses. It found many were extremely well run, but some were not. The Royal Commission recommended “that all private hospitals be placed under government supervision, provided for by Act of Parliament … [and that] they only be allowed to continue their work under a licence granted after inspection by a competent authority”.


  • The Commonwealth of Australia Constitution Act reserved only one specific health power to the Commonwealth -quarantine. States retained all other powers of intervention not the federal government. The Commonwealth of Australia Constitution Act gave the States the responsibility for community health. Quarantine was the only obvious power relating to health, but Commonwealth powers regarding grants of financial assistance had obvious implications for the future.
  • By this time there were 120 general hospitals in NSW. Only one was managed by government. Most had been set up by societies, run by boards of directors appointed or elected by subscribers. Hospitals were usually free, with visiting doctors treating the poor free. Charges were made for private patients who were starting to seek hospital treatment as hospitals and nursing improved. Friendly societies were attracting large memberships. A substantial proportion of the working class took hospital cover.