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Senate Select Committee on Health

ARCHER, Mr Steven, Deputy Chief Executive, Finance and Business Services, Department for Health and Ageing, South Australia

JACOBI, Ms Skye, Director, Intergovernment Relations and Ageing, Department for Health and Ageing, South Australia

WOOLCOCK, Mr Jamin, Chief Finance Officer, Department for Health and Ageing, South Australia

Committee met at 08:39

CHAIR ( Senator O'Neill ): I declare open this public hearing of the Senate Select Committee on Health. I welcome you all here today. This is a public hearing and a Hansard transcript of the proceedings is being made. The hearing is also being broadcast via the Australian Parliament House website. Before the committee starts taking evidence, I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to a committee. The committee generally prefers evidence to be given in public but under the Senate's resolutions witnesses have the right to request to be heard in private session. If a witness objects to answering a question the witness should state the ground upon which the objection is taken and the committee will determine whether it will insist on an answer, having regard to the ground which is claimed. If the committee determines to insist on an answer, a witness may request the answer be given in camera. Such requests may of course also be made at any other time.

I remind committee members and officers that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how the policies were adopted. I now invite you to make an opening statement. The secretariat reminds me that we need to seek your permission for filming to take place while you are giving your evidence.

Mr Archer : Sure. I just want to pass on apologies on behalf of Mr David Swan, the chief executive, who is unable to make it today because he is interstate, but he would have liked to have been here otherwise. I would like to thank you for the opportunity to be able to come before you today. I would like to outline a few things in relation to our submission. I will not labour too much on it because I am sure you have already seen it before and heard it before from the Premier. SA Health comprises the Department of Health and Ageing, as well as five local health networks. The department is responsible for managing the South Australian public health system including commissioning services for the local health networks which are responsible for delivering public healthcare services. The SA Health budget is $5.248 billion for the current financial year, with $1.5 billion of this funding expected to be received from the Commonwealth government.

I would like to summarise for you today some of the key issues that have been raised previously in the submission that we put to this committee on health. The Premier of South Australia, the Hon. Jay Weatherill, has previously appeared before you and detailed South Australia's concerns about the significant funding and policy changes detailed in the recent federal budget. These changes have had a significant impact on sharing commitments between all jurisdictions that aim at improving health outcomes for all Australians and ensuring sustainability of the health system. The federal health budget reductions will mean that South Australia will receive approximately $444 million less over the next four years for public hospital services when compared to what was published in the 2013-14 Mid-Year Economic and Fiscal Outlook. This grows to a loss of $4.6 billion over the next 10 years. These reductions relate to the cessation of funding guarantees under the National Health Reform Agreement, not increasing contributions to 50 per cent of the efficient public health service expenditure and new indexation arrangements from 2017-18 to a composite CPI and population growth.

It is important to understand that these changes do not just mean a reduction in Commonwealth funding in South Australia. These changes detailed in the federal budget leave the state bearing the risk associated with growing public hospital costs, but without the resources required to meet expected growth and with limited ability to influence the full range of policy levers across the health system as the whole of the demand drive for public services grows. The Commonwealth not sharing the risks of growing public hospital costs limits the extent to which decision making in areas of Commonwealth responsibility—primarily, primary health and aged care—considers the impacts on the hospital system.

The South Australian submission notes a number of key interfaces between the hospital and other services and sectors that are of specific interest to this inquiry. Whilst states are responsible for the delivery of public health and hospital services to increasing numbers of older people, responsibility for aged-care policy, planning, funding et cetera sits with the Commonwealth. Of particular concern is ensuring that patients who have finished their hospital treatments and who are eligible to receive Commonwealth subsidised aged-care services are able to move seamlessly, without waiting for an extended period of time, into a public hospital bed. Remaining in a hospital longer than is clinically necessary is not in the best interests of patients in particular. Their wellbeing and safety is at risk, it is extremely resource intensive and it has flow-on effects to other parts of the system that rely on the availability of beds, such as the emergency department and elective surgery services.

The introduction of the proposed Medicare co-payment is a further example of Commonwealth policy change that will influence the demand on public hospitals. If passed, the co-payment may result in many people not accessing health services at all or waiting until their conditions become chronic or require more expensive and acute hospital treatment. In the short term, the co-payment is likely to result in an increased pressure on the public hospital emergency departments for potentially avoidable GP-type presentations.

I mentioned before that we have been impacted by a $444 million cut in public hospital services as a result of the changes in the Commonwealth budget but, in addition to that, the submission that South Australia has put to you has highlighted the impact of a further $211 million in funding reductions relating to the termination of several significant health related national partnership agreements. $120 million of that $211 million relates to the discontinuation of the NPA on improving public hospital services; $42 million relates to the discontinuation of the NPA on financial assistance for long-stay older patients; and $50 million worth of other reductions in health services include things like the early termination of the NPA on Preventative Health, which provides funding for the highly successful obesity prevention and lifestyle program in South Australia. These impacts of decisions made in the federal budget will be felt at the community level, particularly by the most vulnerable, and it will have long-term adverse population health outcomes. SA Health's ability to undertake budgetary and service planning is compromised by uncertainty, created by the Commonwealth's reneging on these important commitments. That concludes my opening statement.

CHAIR: Thank you. Can I just go straight to the questions about South Australians' views regarding the tearing up of these agreements? Clearly on the day before the election, we heard the now Prime Minister Abbott say that there would be no cuts to health. The scale that you are talking about in your submission is very alarming: $444 million less for hospitals and $4.6 billion over the next 10 years out of your hospital sector. Then you went on to let us know that there is an additional $211 million. I do not know whether the Australian people understand what happened with these national partnership agreements but, to the best of my knowledge, they have essentially been torn up and, with them, the money that was set to flow through to the states. Could you explain that extraordinary process and how that has affected you here in South Australia?

Mr Archer : Thank you. I think the Premier has previously outlined our concerns in relation to the late advice that we received on the changes that were announced in the federal budget. Certainly, we were not expecting it and, if you look at previous budget papers that are set at the state level, you would see that the estimates that were provided to us through the Commonwealth processes were reflected in our forward estimates. We were planning and making provision within our service planning for receiving those fundings. We have people employed under those agreements. As a result we have had to terminate people or let their contract run out, so they no longer have jobs. It has an incredible impact on them.

CHAIR: To be clear, you had signed-up agreements between the federal government and the state government and, based on those national partnership agreements, you were planning the finances of the state. Is that correct? Is that how it works?

Ms Jacobi : That is correct. We should say that although many aspects of the National Health Reform Agreement have been compromised the agreement is effectively a live agreement. However, the funding and arrangements around funding have obvious changed as a result of the federal budget arrangements. Some of the COAG national partnership agreements, such as the preventive health national partnership agreement, were meant to go on for a further four years, so we have had significant dilemmas around that.

CHAIR: Let us go to the number for preventive health. Mr Archer, I think you indicated in your opening remarks that it was $50 million.

Ms Jacobi : That includes a few agreements but preventive health was the most significant agreement within that number.

CHAIR: This is aligned with the abolition of the national preventive health organisation that was overseeing preventive health for the nation?

Ms Jacobi : No. This was a national partnership agreement that related to South Australia, which was providing a range of services targeted at a prevention approach to reduce obesity in children. We were running a program called OPAL, which is an internationally recognised program that South Australia runs, and also the Healthy Workers initiative, which related to trying to increase healthy lifestyle choices amongst workers. We were working with a range of workplaces, key unions and a range of different organisations to deliver those initiatives.

CHAIR: In addition to abolishing the National Preventive Health Agency, the government removed this funding from the states, and it is probably replicated around the country in a range of other programs across the states. These are programs that you were running for children and also for workers here in South Australia to improve their health and through that to relieve pressure on the health budget of the state of South Australia—and to improve peoples lives, we should not forget that.

Mr Archer : In fact, our biggest concern, obesity, has a range of poor health outcomes, so it impacts directly on the health system in the longer term.

CHAIR: Could I ask you to speak to the matter you first raised, which is the hospital funding structure. My understanding is that prior to the former Labor government being in office the practice was to provide block funding to the states. To be crude, the federal government gave a chunk of money to the states, and the states were responsible for implementation. There was a change in policy to what is called activity based funding. Could you explain why that happened and the impact of that change.

Ms Jacobi : In 2011, all jurisdictions signed the National Health Reform Agreement. That agreement had some significant changes to funding arrangements but it also introduced a range of changes to governance arrangements in health. With funding arrangements it led to the movement towards activity based funding. There was still some block funding provided to community-service-obligation type hospitals, particularly small country hospitals, and in recognition of the teaching, training and research type work that public hospitals do. We moved to the provision of public hospital funding to the states and territories being related to the activity that was being provided and that being funded against a national efficient price.

CHAIR: It was described to us in Melbourne yesterday as balancing up the relationship between the federal government and the state governments to make sure that the federal government had skin in the game, that everybody was committed to making our hospitals work as effectively as possible and to come to the end of the blame game between the federal government and the states about who is responsible.

Ms Jacobi: The agreement did include further commitments from the Commonwealth beyond just the ABF funding aspect. The commitments included that the Commonwealth would by 2014-15 start to make contributions towards efficient growth in public hospital services to up to 45 percent and then by, I think, around 2017-18 to 50 per cent. The changes in the federal budget are that they will continue to fund 45 percent of efficient growth from 2014-15 onwards, but the federal budget outlined that the Commonwealth's intention is to move back towards block grants by 2017-18. There were also some national funding guarantees under the National Health Reform Agreement while states and territories implemented ABF arrangements. These funding guarantees were, firstly, to ensure that the states were no worse off compared with previous arrangements, but there was also a further guarantee of being better off overall.

CHAIR: We have had a change. We have gone back from the activity based system to something that I understand to be more like the old block funding system. In addition to that, we have had a massive decrease in the amount that the federal government is committing. Mr Archer, in your comments you spoke about the $444 million and then $4.6 billion. Could you speak in more detail to the impact of those cuts and the trajectory with which the impact is going to happen.

Mr Archer: Over the next four years the $444 million is what we had hardwired into the state government's forward estimates. As far as the state government is concerned that is no longer available for us to invest in health or in health related services. In addition to that was the $211 million that I mentioned in relation to NPAs. I refer you to our submission, which, unfortunately, is not page numbered. Item 6 of our submission provides a chart that highlights what our expected income revenue source in relation to hospital services was to have been for the next 10 years. That is the basis for the $4.6 billion. You will see from that chart that by 2024-25 we were expecting to get an additional billion dollars. In 10 years time, based on what we were projecting, we will lose $1 billion from the health system as a result of the changes.

CHAIR: That is a pretty significant impact. Can you explain, for people who might be watching or listening, what that actually looks like in terms of their local hospital.

Mr Archer: It is common knowledge that this government has tried to translate the $655 million that we will lose out of the four years that we currently have for our forward estimates—this is by 2017-18. It is the equivalent of 600 hospital beds or closing an entire 600-bed hospital. It is the cost of employing another 3,000 nurses. Or it will double elective surgery waiting times. It will have a significant impact on us. It must be said, though, that the government has not passed the full $655 million onto the health system. It has raised an emergency services levy to offset that. The equivalent savings that SA Health has had to find in its budget in relation to $655 million is only around $332 million over the four years.

CHAIR: So because Tony Abbott broke his commitment that there would be no cuts to health the people in South Australia have now been levied, or taxed, an emergency services levy to make up the gap in funding. Is that correct?

Mr Archer: I would like to refer you to a chart in the state budget statements. I have brought copies so that I can make reference to it. I can table it.

CHAIR: Senator Cameron, will you move that we accept these tabled documents?

Senator CAMERON: It is so moved.

Mr Archer: On page 6 of the 2014 Budget Paper No. 3: Budget Statement, which is a state government publication, table 1.3, at the very top left-hand side, explains what the funding reductions have been as a result of the federal budget. It splits it into health funding and other funding. You will see, to the right-hand side of that, $655.4 million, which is the 655 that I have been referring to.

If you go to table 1.5, on the other side of that paper that I have just handed out, you will see that the government has responded to the reductions in Commonwealth funding in a number of ways, and it is a range of different measures. One of those is to make changes to the emergency services levy, together with imposing savings on certain aspects of the health system and other areas of government to come up with the full measures to offset the Commonwealth cuts.

You will see, on table 1.3, the total Commonwealth cuts, including health, are $897 million, and the measures that this government has put in place also are $897 million. It is a combination of different measures. It is not for me to comment on whether or not it is a tax on the citizens of South Australia. I will let you come to that conclusion if that is what you think it is.

CHAIR: If I am trying to make a conclusion here, the people of South Australia were not paying these fees, levies and items in table 1.5 before Tony Abbott broke his 'no cuts to health' promise.

Mr Archer : That is correct.

CHAIR: So there is the before and the after. Before, federal government funding was making sure that the health system was operating with federal government input, and, after the budget, the people of South Australia are now paying 897.5 million additional dollars out of their pockets.

Mr Archer : It is fair to say that the state has picked up some of the burden as a result of those reductions, yes.

CHAIR: A very gracious response, Mr Archer.

Senator CAMERON: We have had evidence before the committee that the cuts in health are regressive—that is, the poorest in the nation will be the hardest hit by these cuts. Is that your assessment in South Australia?

Mr Archer : We actually do believe that it will disproportionately disadvantage the vulnerable and marginalise members in the community. The changes undermine the important principles of universal access to health services which are the basis of the Medicare system. South Australia is significantly concerned about the disproportional detrimental impact the co-payments will make on the most vulnerable people in the community, particularly Aboriginal and Torres Strait Islanders, older people, those with low socioeconomic status and those with chronic conditions needing primary management in order to avoid hospital. It is concerning that these at-risk patients may see the co-payment, in particular, as a prohibitive barrier and be discouraged from seeing their doctor or filling their prescriptions. In turn, these conditions could worsen or place increasing pressure on our hospitals but also impact on quality of life and health outcomes. But, more specifically to your question in relation to the reductions to our budget, if we have to make service cuts, that will hurt people who cannot afford health services. There are people who have private arrangements who will be able to substitute through those means, but in the public system it may hurt those people that most need it.

Senator CAMERON: So, if you are well off, you will still be okay but, if you are poor, the impact is greater?

Mr Archer : Absolutely.

Senator CAMERON: The other area in your submission that is interesting is the graph that shows the Commonwealth share of public funding, which through to 2024-25 was projected to move up to about 42 per cent. That is now going to be about 23 per cent, after the budget. We have had evidence to say that the macro-economic approach of this budget is to cost-shift from the federal government back to the state governments and cost-shift back onto individuals. Is that the assessment of the state government?

Mr Archer : I probably will not be drawn into a debate about whether it is cost shifting or not. It is clear from our expectations that—

Senator CAMERON: It is your graph.

Mr Archer : The graph indicates our understanding of what was going to be our share from the federal government previously in relation to health services.

CHAIR: It is a pretty big gap there now, is it not?

Mr Archer : It is. It pretty much reflects the evidence I gave before that there was an intention to go to 50 per cent shared funding with hospital services.

Senator CAMERON: I do not know if you saw the reports yesterday from the New South Wales press which has a Department of Premier and Cabinet note which has been achieved under freedom of information in New South Wales, that estimates that because of the co-payment there could be another 500,000 incidents of people seeking support in the emergency service area at hospitals. Have you seen that report?

Mr Archer : I have not seen the specific report you are referring to but we have a similar impact—

Senator CAMERON: So you are saying it is similar?

Mr Archer : We are anticipating another 290,000 presentations in our emergency.

Senator CAMERON: So 290,000 in South Australia, 500,000 in New South Wales. New South Wales have estimated that this is a significant cost burden on hospitals. Is that the same here?

Mr Archer : Absolutely, we have estimated that the cost will be $80 million.

Senator CAMERON: Have you had to find that $80 million in your budget?

Mr Archer : No, not at all, because the co-payment is not in place as yet. Our response and how we will respond to a co-payment, should it be approved, would be a subjective opinion at this stage and it is not for me to make comment yet.

Senator CAMERON: In evidence yesterday from the Australian College of Emergency Medicine—these are the doctors and professionals who are dealing face to face with people coming into the emergency service sector—they indicated that they thought the co-payment was crazy—that is, the argument for a co-payment in hospitals. You understand that the federal government has proposed that the states could impose a co-payment at your emergency departments?

Mr Archer : Absolutely.

Senator CAMERON: They say that this is a crazy proposition, that it is not practicable. What is your approach on this?

Mr Archer : Certainly our opinion would be that the administration cost with putting something like that in place would be significant and you would have to put a rather large levy—it would be much larger than the proposed co-payment at the moment—to enable you to recover that cost. It is problematic, it again disadvantages the vulnerable and you would need to make an assessment about those who should or should not be charged the co-payment. It is quite a difficult process and something that you do not want doctors and nurses wasting time doing—they want to be caring for patients. So you would need to put in another layer of administration bureaucracy in order to be able to manage it.

Senator CAMERON: Maybe, Mr Archer, you are not the correct officer to raise this with, but I did raise with Commonwealth Treasury officials yesterday the issue of horizontal fiscal equalisation, which in my view means that, if you have the capacity to raise a tax and you do not raise it, that will have an effect on your GST payments. They could not tell me that, if South Australia failed to actually impose a tax in terms of the emergency services and hospitals—the casualty area--it would not have an effect on horizontal fiscal equalisation. That is, if you do not raise it then you would get less money through your GST payments. Have there been any discussions to your knowledge at the state level as to whether this is an issue?

Mr Archer : I cannot answer that, I am sorry. I do not know if there has been any discussion at all.

Senator CAMERON: Maybe you could take that on notice and put it through the appropriate department.

Mr Archer : Absolutely, we will take it up with our Treasury colleagues.

Senator CAMERON: The other argument that has been put through the evidence to us is that the cuts are based on ideology and not on good economics. If they were based on good economics, you would not be stopping people getting access to a doctor early—because the cost of not getting access to their doctor means that the costs are greater in the longer term. Is that something you have had a look at?

Mr Archer : We certainly have not modelled the economics that are related to that. It is a proposition that could be looked at, but I could not give you a definitive answer.

Senator CAMERON: It has been pretty much a horror budget for South Australia—the whole budget and the other issues. You have the whammy of the education cuts and the health cuts. You now have issues with job losses, where the federal government has basically walked away from the car industry. You have the shipbuilding and the submarine issues in front of you. There are huge social challenges for this government. Were any of these issues raised with the state government prior to the election?

Mr Archer : Again, I cannot answer that. I am not in a position to know whether they were or not. If you look at the evidence given to this committee previously by the Premier, that suggests it was the night before. That is all I can say—and that is simply from reading the transcript. Should you want to know more, I assume the Department of the Premier and Cabinet would welcome the opportunity to come and talk to you, particularly given the report undertaken by the University of Adelaide that was released in the media today.

Senator CAMERON: Again this may be something you cannot comment on, but I have noticed, in the discussions and debates in parliament, especially in the Senate, that the South Australian senators are defending these cuts. Is that—

Senator WRIGHT: Not all of us, can I say?

Senator CAMERON: I should have said South Australian coalition senators. They are either silent or they defend it. What has been the public reaction to these cuts in South Australia?

Mr Archer : Again I cannot say, because I do not know what the public reaction is. You would have to ask the public. But certainly the cuts are real. They have been taken from our budget, from what we anticipated, and we have had to take remedial action as a result of that. That does mean that we have had to make changes to our services within SA Health. We are also having to look at what we can do in the future. We are undertaking a serious look at how we deliver health services over the next decade.

Senator CAMERON: Given all the job losses in the car industry and Elizabeth—over the years, from what I have seen, if people lose their jobs, it can create significant health problems for them. There is depression, health problems, pressure resulting from the financial situation they are facing. Has SA Health looked at what the implications are of the job losses, in particular for suburbs like Elizabeth that have been heavily dependent on the car industry? What are the implications for your budget there?

Mr Archer : To my knowledge, we have not looked at that specifically. We do look at the service demands geographically and we plan around that—the demographic for each of those areas.

CHAIR: It sounded as if you might have done some modelling of the cost of going to an emergency department. You said it would be significantly more than $7 if you were to implement something at the emergency department—because you would have this extra layer of bureaucracy and money collection. Have you got a number? Have you looked at that?

Mr Archer : No, we have not looked specifically at what the cost of administering it would be, because at this point in time we do not know how we would administer it or what we would do. The comments were based on the normal cost of collection for our current debtors, if you like—what that normally costs to process. It is significant. I think it is of the order of $30 per transaction, from memory. That is purely through our shared services arrangements.

CHAIR: So $30 plus $7 is a possible number?

Mr Archer : I could not say what it would be. I would rather not answer that.

Senator WRIGHT: Thankyou, Chair, and thankyou for being willing to come along and give evidence and information. Can I take you right to the heart of one of my passions, and that is mental health services in South Australia. We know there are media reports even this week about people being held in emergency departments waiting for mental health services, sometimes with serious mental illnesses, being kept for days at a time. What will these cuts mean to the already seriously strained mental health services in South Australia?

Mr Archer : I would rather not be specific around particular services, but I think I mentioned earlier that our estimate is 600 beds, if we translated the full $655 million into the health system. That has not happened. The government has not taken that step of doing the full amount, so it is not as significant as 600 beds, but it could be. That is closing a hospital, as I mentioned, or reducing the workforce to service those. It is not just mental health; it is acute patients in particular and acute mental health patients.

Senator WRIGHT: But it is true, isn't it, that we currently have an acute situation in South Australia where we have people who are unable to be provided with beds in hospitals, who are waiting in emergency departments and in ambulances for services, and if there are going to be closures of beds, that situation can only become worse.

Mr Archer : That is true right now. In fact we have had unprecedented demand in our emergency departments in the last month not just as a result of mental health related issues. The contributing factors are that we have had 5,000 flu cases that have been notified to us in the past five weeks. Over 7,000 flu cases have been notified for this year, which is 5,000 more than at the same time the previous year. So we have had a huge demand on our emergency, and our mental health presentations are around five per cent higher than what they have been in the past as well. So as you have indicated, the demand on emergency has been significant.

Senator WRIGHT: Certainly, there was a joint statement of health providers recently saying that South Australia has the lowest number of acute mental health beds per head of population in Australia. Again, I ask, how will these cuts coming down the line from the federal government affect that already troubling statistic?

Mr Archer : The Minister for Health has approached the cuts generally in a very collaborative way with the health community and practitioners. The minister has set up three ministerial clinical advisory committees representing, firstly, clinicians; nursing and midwifery; and specifically and allied health as being the third committee he has set up. They are led by clinicians and have diverse membership from that clinical area. They are focusing on what is best for the community in terms of providing good health to the community. It will be focusing on the changing community health needs. It will look at advances in medical treatment and technology, and what we need to do to modernise our services and infrastructure to accommodate new innovation and practice. More relevant to this committee, it is going to look at how recent cuts to federal health funding can be accommodated and how we can still provide better care to our community.

Senator WRIGHT: Thankyou. Can I take you to some of the specific responses that the South Australian government has been required to make on the face of these $444 million cuts to hospitals over the next four years—I think you said $4.6 billion over the next ten years—as well as other cuts to other programs specifically. So I note that one of the areas where there has been a response, a cut, is the National Partnership Agreement on Indigenous Early Childhood Development. You said earlier these cuts are going to impact some of the most disadvantaged people in South Australia. What will be the effects of those cuts, for instance, on Indigenous early childhood development?

Mr Archer : I might ask Skye to answer that.

Ms Jacobi : The National Partnership Agreement on Indigenous Early Childhood has actually been extended for just one year. The issue that we will have with it ongoing, and the dilemma of the late kind of notice we have been getting from the Commonwealth about whether funding is ongoing is around what Steve mentioned earlier about the planning decisions of the health department in terms of financial planning but also service planning. It is that difficulty—particularly around anything around Indigenous health services—that the success of many of those types of service measures really relies on building trust within those communities and having enduring kinds of services that people become familiar with and that they contribute to. So there is the difficulty that we have people who are always on short-term contracts tied up with those agreements. But it is a real dilemma: even if the agreement got extended for one year, people want greater job continuity, and actually, as we are getting closer and closer to the end of that financial year, we have to wait until the May federal budget to know whether we are going to have funding that continues beyond 30 June and can retain a lot of that important skilled workforce.

Senator WRIGHT: Ms Jacobi, what sorts of things does that program do for young Indigenous people?

Ms Jacobi : The Indigenous early childhood agreement has previously funded some programs in South Australia, particularly around the Aboriginal Family Birthing Program. One of these programs was particularly working with some Aboriginal community controlled organisations, to provide antenatal and birthing services to Aboriginal women. That has very much a cultural focus. We have trained Aboriginal health workers who work in partnership with maternity nurses and actually provide that level of cultural safety around that service, so it is a very culturally appropriate kind of service. That service started out, I think, in a service in Port Augusta, and it has been extended across the state and actually has been quite successful.

Senator WRIGHT: These are some of the most disadvantaged and vulnerable people. We know they have poor health outcomes in South Australia. This is a program that is about supporting a really good start in life for the babies being born to Aboriginal mothers and about supporting the mothers, and there is real uncertainty about whether that program will continue.

Ms Jacobi : It certainly creates real dilemmas, and I guess one of the dilemmas of the COAG national partnership funding is that it always has this short-term aspect, and states and territories would like to know much sooner. We appreciate that the Commonwealth has to do its own budget planning as well, but being able to have a greater certainty sooner, prior to it actually being finished and the funding ceasing, would be really helpful.

Senator WRIGHT: But there were promises before the election that there would not be cuts to health funding by the Commonwealth government, and now we have a situation of uncertainty, and certainly we know that cuts are coming down the line.

Ms Jacobi : I am not necessarily familiar with the comments made by the Abbott government prior to the election, but certainly we outlined in our submission the impact of these 14 or 15 federal budget cuts to South Australia.

Senator WRIGHT: Can I take you to another response, on another cut that you have indicated will have to be made, on the basis of uncertainty—or can you elaborate for me? It is about the National Partnership Agreement on Training Places for Single and Teenage Parents—again, some the most vulnerable and disadvantaged young people in South Australia, who are looking at having children. What will be the effects of that program?

Ms Jacobi : That actually is the name of the one-year agreement that is replacing the Indigenous early childhood national partnership agreement, so that is a one-year funding agreement that we are currently negotiating with the Commonwealth. It will cease again on 30 June next year, so we will be again having conversations with the Commonwealth in the lead-up to the next federal budget about what its plans are in terms of continuing that funding.

Senator WRIGHT: I am interested in how these cuts to hospital funding and the other changes to agreements that were previously entered into will disproportionately affect South Australia. I am interested in whether or not you have any information to give about what the burden of disease is in South Australia and how that would compare to other states.

Mr Archer : We would have to take that on notice.

Senator WRIGHT: Can you take that on notice for me, please?

Mr Archer : Yes, absolutely. We will see what we can do.

Senator WRIGHT: I would also like to know—and again this may be some information that you can get, to help assess the proportion, the effect, of these cuts down the line—what the average income is in South Australia and how that compares with other states, and also what the average income is in rural areas in South Australia as opposed to the metropolitan area. We have been hearing that the effect of the GP co-payment, for instance, may well be to deter people from going to the doctor, or they will defer treatment, which ultimately might mean that they will end up with chronic conditions or more serious conditions. Can you take that on notice for us, please?

Mr Archer : We will do what we can.

Senator WRIGHT: I am interested in the activity based funding aspects of the mooted changes. My understanding is that a lot of time and energy has been spent by hospitals on changing their systems, changing their coding, on the understanding that activity based funding would be implemented and now there is a great degree of uncertainty about whether that will happen. First of all, is that the case? Is that your understanding?

Mr Archer : I am advised that that is the case. We certainly have put in changes as a result of that. We did have a case-mix funding process prior to that, so we have had to adjust that to replicate the Independent Hospital Pricing Authority' s activity based pricing model.

Senator WRIGHT: So time and money has been spent on preparing for something which now may not occur. Is there any way to quantify how much money has been invested in that change that may now end up being wasted?

Mr Archer : I would suggest that it would be a significant task to try and quantify that. And, again, it would be very subjective, because you are talking about the time that people may or may not have spent around that. We could have a look at what we think, but it would be pretty hard, I think, to—

Senator WRIGHT: Even some understanding—

Mr Archer : We can give you an understanding of what additional effort we have had to undertake as a result of it. Of course, there is no guarantee that it will cease. We may continue with it as well because we have been able to get useful and rich data as a result of it.

Senator WRIGHT: Thank you.

CHAIR: Very interesting, Mr Archer. Senator McLucas.

Senator McLUCAS: Thank you very much for appearing today and thank you for your submission. Can I go back to the impact of the GP tax on your emergency departments. I want to compare it to the material we have had from New South Wales. Their modelling shows that 500,000 extra presentations will occur—and their modelling was on a $6 co-payment, not on a $7 co-payment, so you can expect that that will be even worse. So your modelling of 290,000 was on a $7 co-payment?

Mr Archer : That is correct. It was on a $7 co-payment and it was based on triage categories 3 and 4 patients. Basically, a doubling of those is our anticipation.

Senator McLUCAS: Threes and 4s, not 5s?

Mr Archer : No.

Senator McLUCAS: Okay. That is interesting. Eighty million dollars is the figure that New South Wales ascertained would be the impact on their health system; yours is similar. How did you come to that $80 million figure?

Mr Archer : I would need to take that on notice and get back to you.

Senator McLUCAS: Okay. The area that I really do want to go to, though, is the assessment by New South Wales that there will be a cost of $11.1 million to their budget in reward payments they were going to get for shortened waiting times. I dare say you are in the same boat. Can you talk us through what your current waiting times are; how successful the NEAT and NEST programs have been in bringing down your waiting times; and what your assessment is of how the GP tax will blow out your waiting times, after having successfully brought them down?

Mr Archer : I might take that last point first, if I can. The current average waiting time is 20 minutes.

Senator McLUCAS: That is good.

Mr Archer : We anticipate it will go to at least 66 minutes; that is our current estimate. I understand that the Premier in his response has also asked about the NESTs and the NEAT, and I think we provided a written response. I can go through that response if you want.

Senator McLUCAS: Please do.

Mr Archer : We will just find it.

Senator McLUCAS: The success that you have had in moving to 20 minutes is quite impressive.

Mr Archer : And that is an average, obviously.

Senator McLUCAS: Of course.

Mr Archer : In particular it was around the NES targets. South Australia met all of its NES part 2 average overdue waiting times in days in 2013, and that was an improvement on the previous year. South Australia was successful in treating all patients with the longest waiting times in 2013 and 2012. A table is provided in our submission. I will not go through that right now because it is quite detailed, but, given that elective surgery waiting times have reduced, there has been a consistent improvement in the percentage of patients that have been treated within clinical recommended time under the previously agreed funding arrangements. It is reasonable to expect that, if Commonwealth funding had continued, further improvements in waiting times could and would have been made. There was not an expectation that elective surgery waiting times would increase in the future, and the South Australian government had made a commitment to deliver new strategy to keep waiting times low and focus on areas of growing demand over the next four years. Of course, that was prior to the cuts.

Senator McLUCAS: Yes, but let us just go to our emergency department. The take-home for me is that you were at 20 minutes on average—

Mr Archer : That is correct.

Senator McLUCAS: and that will go to 66 if a co-payment is introduced.

Mr Archer : That is our current estimate. Again, I have to stress that it is an estimate. You cannot be certain about those things. Generally, there is an immediate impact and then it tends to smooth out after a while. I would have to check how our modelling was done and whether it took that into consideration.

Senator McLUCAS: Yesterday, we asked the federal Department of Health whether they had consulted with any of their state and territory colleagues prior to suggesting that a co-payment could be introduced into emergency departments. They said they had not, but, as my colleague Senator Cameron has said, emergency physicians and emergency clinicians say that it is almost impossible to do. But you are telling us that, if you were to do it, it would not just be a $7 additional payment; you would have to put an administrative charge on top of that as well.

Mr Archer : First of all, it is a policy decision of the government whether or not they would introduce it to our system.

Senator McLUCAS: I am going to the question of practicality.

Mr Archer : If it were introduced, it would require an administrative effort—that is all I could say. Our minister previously has indicated that he is not in favour of introducing a co-payment, but that, again, would be subject to government policy.

Senator McLUCAS: Certainly. I am just going to the practicality. You have an ambulance out the front; you have a person with chest pain. Is the first thing you say, 'Can I have your $37 first?' This is the stupidity of this policy.

Mr Archer : Absolutely. The practicality of implementing it in an emergency department does have its great concerns for the health system, and I am certain that it would not be front of mind for our practitioners.

Senator McLUCAS: I wonder if I could ask Ms Jacobi a question around the national partnership agreements and the comments you were making around the Aboriginal and Torres Strait Islander parents program. Is that a negotiation through COAG?

Ms Jacobi : Yes. In funding for Aboriginal health services, the primary one now has been called the teenage sexual health—I cannot remember the full name, but that will be the name of the new program. There previously has been a National Partnership Agreement on Closing the Gap in Indigenous Health Outcomes, which has not been renewed. That was a Commonwealth and state co-funded initiative, but South Australia certainly continued to invest in the programs that it considered to be a priority on an ongoing basis.

Senator McLUCAS: Going to your budget papers, regarding the two items where South Australia has had to make up the slack—there are a few items but two in particular: the National Partnership Agreement on Indigenous Early Childhood Development and the National Partnership Agreement on Training Places for Single and Teenage Parents—are they still in negotiation?

Ms Jacobi : The national partnership agreement on teenage sexual health is currently under negotiation with the Commonwealth for one year. The indigenous early childhood agreement concluded in the middle of this year.

Senator McLUCAS: So it is finished?

Ms Jacobi : Yes.

Senator McLUCAS: But they are flow-through monies that are—

Ms Jacobi : There is a one year that just relates to [inaudible]. I should say that the Indigenous early childhood agreement previously expanded to two portfolios. It also funded some education. I think in South Australia it also funded some child and family centres, or something like that, that our education department implemented. The new agreement will just be relating to health services.

Senator McLUCAS: In your COAG negotiations, from a South Australian point of view, what sort of feedback are you getting from the Commonwealth around the sort of payments you are hoping for just to finish up these programs?

Ms Jacobi : To give you specific details, I would need to take that on notice. I cannot remember off the top of my head in terms of the evaluation of programs under that. But this funding agreement is really only for 12 months, which I think is of concern. It would be nice to have something that was a little longer term.

Senator McLUCAS: It is very stop-gap. We heard yesterday that this was just a place mark in this budget because it was such a disaster.

Ms Jacobi : I think it is a little unclear what the Commonwealth are doing in this space. There has been some consolidation of some Indigenous grants into the Prime Minister's portfolio. There are currently some significant grants rounds going out around that, but those are not necessarily specific to health. They are also specific to a range of other areas and they might not necessarily be directed towards government type services.

Senator McLUCAS: Thank you for coming along. What we have learnt today is that we are in a situation, frankly, of health chaos. We have the GP co-payment and we have the cuts to your hospital system, and you are a small state, so these cuts are deeper ones than what will be felt in some of the larger states. You have National Partnerships agreements that are ending and starting, and maybe. Frankly, this is just health chaos, and at the same time we are renegotiating all of our Medicare locals, and where does Partners in Recovery come in there? Frankly, this is a disaster. We really appreciate your evidence.

CHAIR: Thank you for your contribution for the debate nationally. There are a number of other areas you raised in your submission, particularly the PGPPPs, training matters around what might happen in the emergency departments when they are overwhelmed by patients who could be at a GP, and the implications for further training. We might seek a little further information about those areas, and others, if that is possible.