Prime Minister Julia Gillard reverses Labor's Victorian hospital funding cuts Bed closures were among plans announced by hospitals because of the funding brawl between federal and state governments. THE $107 million cut to Victorian hospitals has been reversed by Prime Minister Julia Gillard. Ms Gillard announced the backdown in what she called a "rescue package" that could be passed on to hospitals immediately. Hospitals have announced plans to cut about 20,000 elective surgeries over the next four months, close 350 hospital beds, shut overnight emergency departments and axe staff because of the funding brawl between the federal and state governments. The hospitals affected ranged from the Royal Children's, The Alfred and Peter MacCallum to Bendigo, Colac and Lilydale. It will be paid for through the extraordinary step of ripping away other money earmarked for Victoria for occupational health and safety and will "count against" future projects. In a letter to Premier Ted Baillieu, Ms Gillard accused Victoria of "a disingenuous and purely political campaign." She said the state was to blame for the cuts because it managed the hospital system and despite receiving other federal money, it had decided to hurt patients. The federal backdown applies to Victoria only for this year. Victorian Health Minister David Davis welcomed the return of the 2012-13 funding as a "first step," but said he would push for ongoing cuts to be returned over the next three years. "The Federal Government now needs to follow up and restore the full amount of $475 million," he said. Mr Davis said the cuts had crippled Victoria's health system and it would take a long time for the impact to be reversed, even with the return of this year's funding. Federal Health Minister Tanya Plibersek said the money would be paid directly to hospitals and would bypass the Baillieu Government. "The money will not pass through the hands of the Baillieu Government, which has proven itself to be a cruel and incompetent manager of the Victorian health system," she said. For two years Premier Baillieu's blatant disregard for the welfare of Victorian patients has seen beds close, elective surgery waiting lists blow out and standards of care decline. This funding injection will go directly to frontline hospital administrators so they can immediately restore services shut down by the Baillieu government in recent months. The funding cut was announced in Treasurer Wayne Swan's Budget update in October and based on a complex formula and controversial population estimates that Victoria said were outdated. The State Government said it was outrageous because it had changed the amount of funding in the middle of the financial year. Ms Plibersek said the State Government had used it to cover up its own $616 million health funding cuts. She said federal funding for Victoria's health system was increasing by $900 million over the next four years to $4.5 billion a year by 2015. Federal Opposition health spokesman Peter Dutton said the Gillard Government had been incompetent. Victorian Greens Senator Richard Di Natale said the backdown by the government came on the eve of a Senate inquiry forced by the Greens that would have embarrassed it. "It appears that the government manipulated ABS data to justify the cuts," he said. The architect of Medicare John Deeble slammed the federal hospital funding cuts describing the misuse of population figures to justify them as "contentious" and "extraordinary" in a submission to the Senate inquiry. "They deliver cuts that should be spread over several years in just a single year," he said. Evidence to the same Senate inquiry which begins hearings in Melbourne today also shows the Federal Government ignored the advice of the Australian Bureau of Statistics when recalculating population growth. "Doctors and nurses have been put off and people contacted to have their elective surgeries cancelled," Mr Dutton said. Tanya Plibersek should be ashamed and should resign. with Grant McArthur and Sue Dunlevy