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The strategic public governance of health services in Australia, as a federation of states and territories, is shared between three levels of government and the public, private and not-for-profit sectors. While national and sub-national governments hold the legitimate authority for most strategic decision-making and service delivery, many powerful actors with vested interests influence policy agenda-setting processes. Unlike the broader public governance systems in Australia, which are founded largely on the market-based model of neo-classical economic principles, the health governance system is more socially oriented. However, there is evidence that suggests that continuing moves by governments towards a more competitive model of governance with greater private sector involvement could impact negatively on health outcomes. At the same time, it is equally apparent that the structural, instrumental and dynamic aspects of the strategic health governance system, as they stand, could create more adverse indicators of public health. In fact, some trends in the health care system put state capacity for strategic governance in doubt. This paper will use the basic principles and assumptions of the now largely universal neo-liberal economic public governance model, based on market principles, to examine how these ideas are reflected in the conceptual and practical approaches to health services management in the Australian context. In this sense, the focus is on the ill health, treatment system rather than on the governance of public health broadly interpreted. First, to provide a more global context of health governance in Australia, some comparative analysis relating to Anglo-American polities will be presented. Second, the fundamental value of health as a market product or merit good will be considered. Third, the structural, instrumental and dynamic aspects of the health governance system in Australia will be explored. Finally, the paper examines whether the Australian s [ABSTRACT FROM AUTHOR]