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Wednesday, 27 February 2013
Page: 1143

Senator DI NATALE (Victoria) (16:23): This debate has been a very frustrating one. Full of huff and bluster, lots of hand wringing, lots of finger pointing: 'It's your fault'; 'No, it's your fault'; 'It's the states'; It's the Commonwealth's responsibility'; 'It's Labor's fault'; 'It's the Liberal's fault'. I think what is forgotten in all of this is what this means for patients.

Let's get back to what this actually means. It means the closure of the emergency department in Colac overnight. It means that in the Peter James Centre in Burwood people who are waiting to get a bed so they can have rehabilitation for their stroke cannot get one. It means that a hospital like the Austin Hospital, which does such great work, originally budgets a $2 million surplus then suddenly finds itself with a $4 million deficit. Spokespeople report that that means 800 fewer operations at that hospital in order to make those savings. For Barwon Health it means the closure of a number of beds at Geelong Hospital. It means potentially the closure of more emergency departments. At Peter MacCallum, it means the closure of 16 beds—announced in February. At Royal Melbourne, it effectively means cuts to 700 operations. At the Royal Children's Hospital and at the Northern Hospital a series of planned expansions are being cut.

What this whole debacle means is that people who are waiting for urgent treatment are no longer going to get it. When you strip away all of the huff and the bluster, the finger pointing, the hand wringing, the 'It's your fault,' 'No, it's your fault', what you get is an issue that affects people's lives. We have to fix it. How are we going to fix it?

Firstly, let's work out what has actually happened. It can be summarised in a few short sentences. We have seen state governments underinvest in our public hospital system, particularly in the states of Queensland and Victoria. That is, I think, not in dispute. But we have also seen the sudden withdrawal of funding by the Commonwealth government from the public hospital system.

It is a very simple proposition. A number of state governments are underinvesting in health care, and then in December this year we see the Commonwealth government pull out $1.5 billion over the forward estimates. When you have a simple proposition like that, how is it that we hear arguments that allow both the state and federal governments to escape responsibility for their share of the problem? The lesson is: if you muddy the waters enough, you can get away with saying or doing anything.

Let's strip this back. In question time today we heard Senator Conroy say that the Commonwealth share of hospital funding is increasing. He is absolutely right. But that is not the relevant point. The relevant point is that the states are now confronted with the proposition that they are going to get a reduction in funding compared to what they were promised. So, sure, the Commonwealth share of funding is increasing, but it has increased by less than what was promised to the states. That is effectively a cut. Let's say I negotiate a pay increase with my employer. I take out a mortgage based on that new pay increase. Then, a year later, I find out that I cannot pay the mortgage, because the employer says: 'Well, I am not going to give you as much as I said I was going to give you. I gave you a little bit more, but you are not going to get quite as much as I promised you.' That is a cut. That is what has happened here.

Why have they done it? Why has the Commonwealth cut back on funding to hospitals? The answer is a little complicated but not very complicated. The Commonwealth has based its reasoning on a change in population. The government's argument is: population has not changed much and therefore we are not going to increase the funding as was promised. It is able to get away with that claim because it has compared two different population datasets. In 2011 the census changed the way it would ultimately establish population number. So there was a change between 2006 and 2011 in the way we estimate population.

What the government has done is, instead of comparing like with like, essentially compare population changes using the old approach for one and the new approach for another. That is a maths 101 error. It is a straightforward mistake and it is despite the recommendations from the ABS, the Australian Statistician, that we should be comparing like with like, that we should be using the new population estimates and comparing those using the same dataset. By doing that, the government has been able to strip away $1.5 billion worth of funding that was promised to the states over four years. Sure, it is going to increase its commitment, but it is still a reduction on what was promised.

The other part of this equation is this thing known as the health price index or health inflation. Health inflation is another measure that determines how much money is being paid by the states.

Unfortunately, we have a health price index, or an inflation measure, that does not actually reflect the cost of running a hospital. The health price index brings in all these other costs that have absolutely nothing to do with running a hospital. That is why, for example, private health premiums are going up by five per cent based on health inflation and yet, when it comes to public hospitals, we have a health inflation figure of 0.9 per cent, despite the fact that wages—by far the biggest cost of running a public hospital system—have gone up by in the order of three per cent. So we have got two important factors here. We have got the population data, which is wrong, and we have got the health inflation index, which does not reflect the cost of running a hospital.

On the back of those two things, the Commonwealth has pulled out the money that was promised to the states. But, worst of all, if that were not bad enough, halfway through the financial year, after hospitals planned their budget, worked out how many operations they were going to do, got staff employed and got everything lined up—being good corporate citizens—the government says, 'Guess what? We are going to pull away some of your funding; you need to find savings. And not just that—we are not going to pull away just this year's funding; we are going to go back to the year before and in Victoria take out $40 million from the previous year.' Again, to take the analogy of the pay cut: you negotiate a pay increase with your employer and he comes back a year later and says, 'Guess what? I am not going to pay you as much as I said I was going to pay you—but, even worse than that, I am going to deduct pay from the year before.' That is what has happened here, and it is not acceptable.

What is welcome is that the government in Victoria decided to restore $107 million worth of funding. That is absolutely welcomed. But the government has continued to play politics here. Rather than doing what it should do and give the money through its own agreed National Health Reform Agreement, which is a central funding pool jointly owned by the states and the Commonwealth, it has decided to bypass the states, undermining its own agreement, and fund the hospitals directly so that it can continue playing this ridiculous blame game—'It's your fault'; 'No, it's your fault.' It is not good enough.

What we have is a situation now where we do not know how the money is going to be paid to these hospitals. Who is going to oversee it? Are they going to get it in a block? Is it going to be paid out in dribs and drabs? How is that money going to be paid? We have doubts over the constitutional validity of how that money should be paid. We know that some of the money is not coming from additional Commonwealth spend and that we are in fact rearranging the deck chairs on the Titanic and some of the money that was originally allocated to Victoria for national occupational health and safety reforms is going to go to plug the shortfall.

So what we are seeing is an effort to continue the blame game, rather than a genuine effort to resolve the issue. The responsible approach would have been, 'Look; we misinterpreted the ABS data. We have a health inflation index that does not reflect the cost of running a hospital. We are going to fix it. We are not going to fix it by this short-term political fix in Victoria; what we are going to do is restore funding to all states and not just for this year but over the forward estimates.' That is the right thing to do.

In the end it is the people who miss out. It means that somebody who was going to get their hip done next week might not be able to get it done for another six months. It means that the kid with asthma who is in an emergency department might not be seen immediately but might have to wait two, three or four hours.

The only little ray of light in all of this is that we are going to move to a new way of funding our hospital system. We are going to get an independent umpire. It is two years away. It cannot come soon enough, because this spectacle has been particularly unedifying.