THE survival of Kevin Rudd’s health and hospitals reform plan hinges on either the states or the Commonwealth backing down today after another $1.5 billion in sweeteners the Prime Minister offered failed to shift entrenched opposition to surrendering 30 per cent of GST revenue.Mr Rudd wound up yesterday’s meeting about 6.30pm with a warning that the $4.5 billion on offer in inducements would vanish should all the states not agree to surrender the GST revenue to help fund his reform plan. ”The whole deal’s off the table,” Mr Rudd was quoted as telling premiers and chief ministers.Victoria is the most entrenched against giving up the GST. It has the backing of Western Australia and NSW.But as the premiers and treasurers headed to The Lodge for dinner last night, there were strong suggestions that NSW would agree to the deal today. Western Australia, a senior source said, was considered malleable while the Victorian Premier, John Brumby, who was largely quiet in the meeting yesterday, was the key obstacle.”It’s going to be like the shoot-out at the OK Corral,” said one participant of the meeting today.About 4pm yesterday, Mr Rudd, who had already revealed inducements worth $3 billion, threw on the table another $1.2 billion. This included $827 million for 800 sub-acute care beds, including mental health beds. There was also another $250 million to augment the $500 million already on offer to speed up treatment in emergency departments, and another $150 million for elective surgery, on top of the $650 million already offered.Mr Rudd called it his final offer, causing one of the states to observe that was his ”sixth final offer”.The meeting resumed at 5pm and Mr Rudd added another $316 million – $200 million more for emergency departments and $116 million more for mental health. The states accepted, clearing the decks for the fight today over GST revenue and the states’ demand for all revenue to be put into, and administered by, a single funding pool.While Mr Rudd could agree to the latter, he is refusing point-blank to allow the states to keep the GST. He wants to keep the money and spend it directly on local hospital networks.This would make the Commonwealth the dominant funder and give it overall control of the pool and the health system.”Our bottom line is that the GST must be retained by the Commonwealth and dedicated to health in order for the Commonwealth to become the dominant funder of hospital services,” said the Health Minister, Nicola Roxon.NSW and WA have suggested guaranteeing that they put 30 per cent of GST into a pool but the Commonwealth refuses to accept this because it wants control of the money.Mr Rudd has promised a referendum if his plan is blocked. Recalcitrant states have been warned implicitly that the referendum would give the Commonwealth much greater scope to plunder GST revenue than the health deal allows.