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Thursday, 24 May 2012
Page: 5508


Mr DUTTON (Dickson) (12:14): I start by commending the member for Dunkley for his contribution of obviously well thought-out words. They come from a man who knows the area of health very well and is very well connected with his community. I appreciate very much the time that he took to give the House just a small part of his knowledge this morning.

The bills before us, the National Health Reform Amendment (Administrator and National Health Funding Body) Bill 2012 and the Federal Financial Relations Amendment (National Health Reform) Bill 2012, seek to enact the funding model of the National Health Reform Agreement. The agreement announced in August 2011 was the third time the Labor government lauded an historic health reform proposal. Each new agreement was effectively a watered-down version of what was previously promised and supposedly agreed to. The genesis of the government's various health reform proposals, and of these bills, was the member for Griffith's central promise at the 2007 election, as the then Leader of the Opposition. The member for Griffith promised that he had a plan to fix hospitals, that the buck would stop with him and that, if his plan was not being achieved by mid-2009, Labor would hold a referendum to 'seek to take financial control of Australia's 750 public hospitals'.

Labor's leadership turmoil earlier this year provided a valuable insight into the government's chaotic decision-making process on this major policy platform. Former health minister Ms Roxon, the member for Gellibrand, claimed that the process for considering health reform policy was often done without proper advice and it was, to quote Ms Roxon, 'a ludicrous way to run government'. In particular, the proposal for a referendum to take over the hospital system was, in her words, 'a cynical approach' and 'would have been a disaster'. The member for Gellibrand issued joint media releases with the member for Griffith and promoted a possible referendum as part of the government's policy. However, in relation to her concerns, Ms Roxon, now Attorney-General, said—and I quote—she 'did not think it served any purpose to share that with the public'. The member for Gellibrand refused to stand up to what she considered to be bad policy, in an area in which she had executive responsibility. Incredibly, she was not admonished but rather promoted. That in itself is a good reason for the intense scrutiny that has been applied to this government's turbulent administration of this important area of public policy.

The current Minister for Health, Ms Plibersek, introduced this legislation as the final tranche of the government's reform agenda. The National Health Reform Amendment Bill establishes the administrator of the National Health Funding Pool and a national health funding body. A national funding authority, the National Health and Hospitals Network, was to be established as part of the government's first version of an agreement; however, within months of it being announced, the Department of Prime Minister and Cabinet advised that the authority would no longer be established. The then health minister, the member for Gellibrand, then claimed:

… it's not appropriate for us to … and we've made it very clear we don't want to increase the size of the bureaucracy. It's not appropriate for us to establish an authority where there is not a need to do so.

She went on to say:

… there will need to be people who can process essentially the cheques that need to be paid through to local hospital networks, but it doesn't require an authority.

Yet here we are today considering a bill for a new bureaucracy the government considered was necessary, then was not necessary and now is necessary again. It speaks volumes for the chaos of this government's approach to policy and the lost opportunity for genuine health reform in this country.

The unnecessary, until recently, funding body is just another in a long line of bureaucracies. Funding for hospitals under the agreement enacted by these bills will not flow until 2014—well beyond even the next election. I suspect even the member for Griffith would acknowledge that, despite all Labor's promises, public hospitals in this country are not fixed. Yet there has been no delay in ensuring enormous additional funding is available for the immediate establishment of new bureaucracies.

So far under this government, in only 1½ terms, we have seen the establishment of: the Australian Commission on Safety and Quality in Health Care, separate to the department, at a budgeted cost of over $35 million; the National Health Performance Authority, at a cost of over $118 million; the Independent Hospital Pricing Authority, at a cost of over $91 million; Medicare Locals, with funding of over $416 million; the Australian Medicare Locals Network, at a cost of $12.5 million; and local hospital networks. In addition, this government has already established the Australian Preventive Health Agency and Health Workforce Australia, and has proposed in this budget that the Aged Care Financing Authority and the Aged Care Reform Implementation Council be established.

There is enormous potential for duplication, waste and overregulation. That will be the hallmark of this government. This risk is even greater, given the former health minister's recent illumination of the government's politics-over-policy approach to these reforms. There has been $38 million allocated in the budget for the administrator and funding body. That is a large investment by taxpayers for 'people who can process essentially the cheques'—to again to quote the words of the former minister, Ms Roxon.

The funding pool, according to the National Health Reform Agreement, is comprised of state pool accounts for each state and territory. The administrator will operate the pool which will provide payments to the states for public hospital services. The administrator will calculate and advise the Commonwealth Treasurer of payments to the pool. The states will also pay their contribution into the pool for activity funded services and the administrator will then distribute it to the local hospital networks. I suspect that Barry Jones has been engaged to put together the organisational chart and the way in which this giant money laundering exercise will operate at huge expense to both the Commonwealth and to state taxpayers.

The Independent Hospital Pricing Authority is meant to set a so-called national efficient price for hospital services and to determine which services are to be block funded as opposed to activity funded. The department, in its evidence to the Senate Community Affairs Legislation Committee, advised that the administrator in making the payments will need to know the number of services provided by each local hospital network and the efficient price of those services. A national efficient price has not yet been established. On available advice from the authority, activity based funding will initially be based on mean or median cost of a service rather than any notion of an actual 'efficient price'. This may have consequences for hospitals in terms of driving real efficiency, but also in ensuring the viability of best practice where providing quality service with good outcomes is above the median cost.

There has been little explanation of if, when, or how the system is to transition to a normative pricing model where value—or in the government's terms, the 'efficient price'—is properly defined. It has not been properly explained why another $40 million bureaucracy is required to process the payments when we already have an independent authority pricing the services. Similarly, there is not proper consideration given in this bill, including in the functions as to how this new body will coordinate its responsibilities with the other entities that have been established under the National Health Reform Act 2011.

In addition to the activity based funding, the agreement provides for the continuation of block grants in certain circumstances. Commonwealth funding for block grants, teaching, training and research will flow through the pool accounts to state managed funds. Public health funding and any top-up funding will flow through pool accounts directly to state health departments. All discretion of how that Commonwealth funding will be spent will rest with the state health ministers. This bill and corresponding legislation in each state will appoint a single administrator for all jurisdictions.

It is reasonable to ask why the Commonwealth would cede these powers to the state health ministers, bearing in mind that this is giving a discretion over Commonwealth funds. The answer lies very simply in this single fact: the Prime Minister put pen to paper on this deal, not because it was going to provide better health outcomes for Australia and not because it was going to drive efficiency or see better outcomes in the way in which we finance health in this country; it is simply because this Prime Minister was at a moment of weakness and wanted to sign a deal and wanted the Australian public to believe that she had brokered a deal. Greater scrutiny since that time shows why the states were so anxious to sign it, because they found a buyer or a purchaser in distress.

The administrator will be appointed after the Standing Council on Health has agreed to that person and the date, period and terms and conditions of appointment. Clause 232 provides that the Chair of the Standing Council on Health is to give each member of the council an opportunity to nominate an individual. All members of the council must agree on the appointment. A unanimous appointment may be an interesting test for cooperative federalism. The bill also sets out provisions for termination. The council can suspend the administrator from office if requested to do so by at least three state ministers or the Commonwealth minister.

The bill sets out the functions and powers of the administrator, which will also be contained in state legislation. The Western Australian government did raise a number of concerns in relation to the need for greater delineation between the functions of the administrator and those functions that will be performed on behalf of the Commonwealth and the functions it will perform on behalf of the states. It was argued that clause 238 of the bill was not fully consistent with clauses B26 and B27 of the agreement—in particular, that the Commonwealth bill should not confer the function of making payments from each state pool account in accordance with the direction of the state concerned but that this authority should be provided solely by state legislation.

The bill also provides for the states to confer powers and functions or impose duties on the administrator and a Commonwealth officer. This is intended to address the issues arising from the High Court's decision in the Hughes case, which found that an officer of the Commonwealth may only be conferred with powers under a state act with the express agreement of the Commonwealth parliament. The Western Australian government's submission to the Senate inquiry noted that the administrator will be appointed jointly and severally. Therefore, it was argued, the Western Australian parliament is able to appoint and confer powers on the administrator of the Western Australia state pool account. I note that the government has circulated amendments intended to address these concerns.

The administrator and the officials are not subject to the control or direction of any Commonwealth minister but must comply with written resolutions of COAG. The administrator will make payments from each state pool account in accordance with the direction of the relevant state minister but, in accordance with the government's amendments, this specific function will be removed from clause 238 of the Commonwealth's bill.

The primary objective of the administrator and funding body, as stated by the minister in her second reading speech, is to provide transparent arrangements for public hospital funding. Under clause 240, monthly reports must be provided to all jurisdictions, and made publicly available, on payments into and out of state pool accounts and state managed funds. An annual report must also be provided to responsible ministers and tabled, in the words of the bill, 'as soon as practicable' in the parliament of each responsible minister. It may assist the House if the minister would explain what time frames 'as soon as practicable' might entail and why a number of sitting days was not, or could not be, specified.

The Auditor-General may undertake a performance audit of the administrator. This involves an audit to determine whether the administrator is acting effectively, economically, efficiently and in compliance with all relevant laws. The Auditor-General must advise the other jurisdictions' Auditors-General of an intention to conduct a performance audit so that any other audits may be coordinated at the same time.

The bill also establishes the National Health Funding Body to assist the administrator in their role. The CEO and staff will be employed under the Public Service Act 1999 and will constitute a statutory agency. The bill, and this year's budget, are silent on the number of staff that will be employed by this nearly $40 million entity. Similarly, there is minimal detail of the responsibilities of the body, other than to 'assist the administrator'. Surely, for this level of expenditure, there must be a more defined role for the body, and it is incumbent on the minister in her summarising comments to advise the House how many new bureaucratic positions will be paid for from that $40 million.

The bill also contains provisions creating an offence for the disclosure of certain information, with relevant exceptions. There are additional provisions preventing the publication and dissemination of information by the Australian Commission on Safety and Quality in Health Care, the Independent Hospital Pricing Authority, the National Health Performance Authority, the administrator and the funding body that is likely to lead to the identification of a particular patient without consent.

Concern has been raised about the reliance on consent, rather than informed consent. The department advised the legal view is consent that must, by definition, be informed. In relation to protecting the affairs of a person, by not disclosing protected information, the minister said, 'The inclusion of these provisions is essentially precautionary, as it is highly unlikely that the administrator or the funding body will hold information about the affairs of a person.' We will have a watching brief on that issue.

One of the more interesting aspects of the administrator is that they will be appointed severally by the Commonwealth and the other jurisdictions. This appears to be a fairly unique arrangement in modern times. This means that the administrator is subject to various administrative laws and requirements. The minister used FOI as an example. There are also various archives, ombudsman and privacy considerations. The EM explains that proposed regulations will modify the Commonwealth acts so they can apply effectively as laws of the states, conferring appropriate rights and obligations on responsible state ministers and referring appropriately to state entities.

Today we are also considering the Federal Financial Relations Amendment (National Health Reform) Bill 2012. The bill replaces national healthcare special purpose payments with national health reform payments. It also provides for changes to funding responsibilities for aged and disability services agreed through the National Health Reform Agreement, with the exception of Victoria and Western Australia.

Finally, and not directly related to the health reform proposals, the bill makes minor technical amendments to GST determination. It has been stated that the changes do not affect the total GST determined. They remove the requirement to separately determine three components of GST where the data are not available or provide little or no insight into GST collections. In relation to health funding, the bill provides that payments will be determined by the minister by legislative instrument. However, the legislative instrument will not be disallowable. While this may not be in the interests of parliamentary scrutiny, it is consistent with subsection 44(1) of the Legislative Instruments Act 2003, as it concerns a scheme between the Commonwealth and the states.

The bill states that financial assistance is payable to the states 'on condition that the financial assistance is spent in accordance with the National Health Reform Agreement'. Under clause 70 of the agreement, the Commonwealth is to provide $16.4 billion through guaranteed top-up payments to the states and territories. This will occur from 2014-15, well after the next election. It seems to be a common trait of the Labor government to announce and seek praise for promises to be supposedly delivered in the distant future. There is no requirement for the states to spend the Commonwealth's so-called top-up payments on public hospital services. Clause A71 of the agreement says just that funding can be spent on ameliorating the growth in demand for hospital services. It is difficult to see how this will promote productivity or ensure the efficient use of Commonwealth funds. It seems state treasurers have secured a good deal, but there is little in this agreement to guarantee improvement in how funding is spent.

The minister in her second reading speech said:

For far too long the dialogue between the Commonwealth and the states on public hospital funding has been characterised by mutual blame and recrimination, with accusations of removal of funds by one level of government when additional funds were put in by another.

However, whilst this agreement sets the Commonwealth contribution as a proportion of the efficient price, the agreement at clause A60 provides that states will continue to determine the amount they pay for public hospital services. They will also determine the mix of those services and functions.

The mutual blame and recrimination the minister referred to is alive and well under this agreement. Just months after signing up, the Tasmanian Labor-Greens government pulled millions of dollars out of public hospitals and front-line services. Over $100 million was proposed to be cut from health and public hospitals, including a reported 20 per cent of the operating budget of the Royal Hobart Hospital. It is very difficult to see how this reform is delivering better outcomes for the people of Tasmania, who are suffering under the fiscal mismanagement of a Labor-Greens government.

Labor has always measured success on how much money is spent, rather than what is achieved by the expenditure. We have seen it with the school halls, we have seen it with pink batts, we have seen it with GP superclinics, we have seen it with the NBN, and we are seeing it with this bill before the parliament today—very little achieved for enormous sums; money that mums and dads and small businesses have worked hard for and that their taxes have contributed to. Somehow, Labor seems to take pride in that.

Health reform should be about more than bureaucracy and buying off state governments. It should be about using taxpayers' money more wisely and productively in our health system. It has been well documented in this House, and publicly, that health costs are rising faster than government revenues and at some point there will be a crunch. This government missed the opportunity to make genuine reforms to improve productivity and efficiency. That fact is now widely accepted and recognised. This government's attacks on productive areas of our health system are even more perplexing given this supposed reform agenda. The multiple billion-dollar cuts to private health will only put a greater burden on the public system and highlight the inconsistency of this government's approach. Around 10½ million Australians have private hospital cover and private hospitals perform 65 per cent of elective surgery. Disrupting this balance is a profound risk to our health system and is not consistent with any genuine efforts to improve the system.

In relation to public hospitals, the coalition supports sustainable and transparent funding. Despite the government's best propaganda efforts, Commonwealth government expenditure for public hospitals increased around 110 per cent between 1995-96 and 2006-07 and greater accountability measures were imposed on how the states spent the money. There is a responsibility on federal and state governments to ensure we have a viable and robust public hospital system going forward.

The coalition does not oppose the bills being debated today but does continue to hold concerns about the lack of focus on productivity, the bureaucratisation of the health system under Labor and the lack of evidence for improved outcomes for patients, as evidenced by the unfolding situation in Tasmania. The coalition will continue to carefully monitor and scrutinise the implementation of these reforms.