Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Department of Health—Report for 2015-16


Download PDF Download PDF

2015-2016

Annual Report

Over 634,000 calls were made to the My Aged Care Contact Centre Consumer line

$17.2 billion of hospital funding provided to State and Territory Governments to improve access to and the efficiency of public hospitals

Over 100,000 spectators safely enjoyed the 2015 INF Netball World Cup

11.3 million Australians have private health insurance hospital treatment cover

33% decline in Aboriginal and Torres Strait Islander child mortality rates from 1998 to 2014

324,797 hearing services vouchers were issued

Over 90% of all Australian children aged 1, 2 and 5 years old were fully immunised

1,700 cord blood units were banked ensuring access to lifesaving treatment for cancer and other serious conditions

Over 4,500 practices participating in the Practice Nurse Incentive Program

150 health-related incidents were responded to by the National Incident Room

Over 230,000 Australians living with chronic hepatitis C now have access to a subsidised break-through cure

Part 2 Annual Performance Statements

Better health and wellbeing for all Australians, now and for future generations

This is the Secretary’s report to the Minister for Health for the financial year ended 30 June 2016.

As the primary mechanism of accountability to the Parliament of Australia, this report has been prepared in line with the Resource Management Guide No.135 Annual reports for non-corporate Commonwealth entities.

As required under the Public Governance, Performance and Accountability Act 2013, this report contains the Department of Health’s Annual Performance Statements for 2015-16. The Annual Performance Statements detail results achieved against the planned performance criteria set out in the 2015-16 Health Portfolio Budget Statements, the Department’s 2015-16 Corporate Plan and the 2015-16 Health Portfolio Additional Estimates Statements.

This report also contains other mandatory reporting requirements and key corporate information.

The compliance index (on page 440) will direct you to where required information can be found.

Navigation/access aids include:

• Tables of contents (overarching and also at the beginning of each part);

• Comprehensive index;

• Glossary; and

• List of acronyms and abbreviations.

About this Report

108 Indigenous employees

70% of employees feel supported to achieve work-life balance

21% of employees work part-time

5,037 employees

Part 3 Management and Accountability

Part 4 Financial Statements

69% 31%

Total Administered Expenses

$55.8 billion

71% Personal Benefits

17%

Subsidies

10% Grants 2% Other

II DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Annual Report 2015-2016 ISSN: 2204-5716 (Print)

ISSN: 2204-5724 (Online)

Publications approval number: 11555

Copyright statements

Paper-based publications

© Commonwealth of Australia 2016

This work is copyright. You may reproduce the whole or part of this work in unaltered form for your own personal use or, if you are part of an organisation, for internal use within your organisation, but only if you or your organisation do not use the reproduction for any commercial purpose and retain this copyright notice and all disclaimer notices as part of that reproduction. Apart from rights to use as permitted by the Copyright Act 1968 or allowed by this copyright notice, all other rights are reserved and you are not allowed to reproduce the whole or any part of this work in any way (electronic or otherwise) without first being given the specific written permission from the Commonwealth to do so. Requests and inquiries concerning reproduction and rights are to be sent to the Communication Branch, Department of Health, GPO Box 9848, Canberra ACT 2601, or via email to: copyright@health.gov.au

Internet sites

© Commonwealth of Australia 2016

This work is copyright. You may download, display, print and reproduce the whole or part of this work in unaltered form for your own personal use or, if you are part of an organisation, for internal use within your organisation, but only if you or your organisation do not use the reproduction for any commercial purpose and retain this copyright notice and all disclaimer notices as part of that reproduction. Apart from rights to use as permitted by the Copyright Act 1968 or allowed by this copyright notice, all other rights are reserved and you are not allowed to reproduce the whole or any part of this work in any way (electronic or otherwise) without first being given the specific written permission from the Commonwealth to do so. Requests and inquiries concerning reproduction and rights are to be sent to the Communication Branch, Department of Health, GPO Box 9848, Canberra ACT 2601, or via email to: copyright@health.gov.au

Contact information If you would like to comment on this Annual Report, or have any queries, please contact the Editor at: The Editor Annual Report 2015-2016 Australian Government Department of Health MDP 51 GPO Box 9848 CANBERRA ACT 2601 AUSTRALIA Phone: +61 2 6289 7181 Fax: +61 2 6289 7177 Email: annrep@health.gov.au

This Annual Report is available online at: www.health.gov.au/internet/main/publishing.nsf/ Content/Annual-Report2015-16

Further information about the Department of Health is also available online at: www.health.gov.au

Cover design Department of Health

Internal design Spectrum Graphics Sg.com.au

Photography Rob Little Digital Images (Executive photos)

Printing Union Offset Co. Pty Limited

1 Annual Report 2015-2016 DEPARTMENT OF HEALTH

LETTER OF TRANSMITTAL

2 DEPARTMENT OF HEALTH Annual Report 2015-2016

Contents Preliminary Pages Letter of Transmittal 1

Secretary’s Review 4

Chief Medical Officer’s Report 8

Chief Operating Officer’s Report 14

Part 1: About the Department 19

1.1: Executive 20

1.2: Department Overview 26

1.3: Structure Chart 29

1.4: Ministerial Responsibilities 32

1.5: Department-Specific Outcomes 34

1.6: Portfolio Entity-Specific Outcomes 36

Part 2: Annual Performance Statements 39

2.1: 2015-16 Annual Performance Statements 40

Outcome 1: Population Health 44

Outcome 2: Access to Pharmaceutical Services 66

Outcome 3: Access to Medical and Dental Services 82

Outcome 4: Acute Care 102

Outcome 5: Primary Health Care 106

Outcome 6: Private Health 124

Outcome 7: Health Infrastructure, Regulation, Safety and Quality 130

Outcome 8: Health Workforce Capacity 164

Outcome 9: Biosecurity and Emergency Response 174

Outcome 10: Sport and Recreation 184

Outcome 11: Ageing and Aged Care 194

2.2: Entity Resource Statement 222

3 Annual Report 2015-2016 DEPARTMENT OF HEALTH

CONTENTS

Part 3: Management and Accountability 225

3.1: Corporate Governance 226

3.2: External Scrutiny 234

3.3: Financial Management 242

3.4: People Management 246

3.5: Staffing Information 256

3.6: Work Health and Safety 272

3.7: Addressing Disability and Recognising Carers 276

3.8: Ecologically Sustainable Development and Environmental Performance 282

3.9: Advertising and Market Research 290

Part 4: Financial Statements 295

4.1: 2015-16 Financial Statements 296

Independent Auditor’s Report 297

Statement by the Secretary and Chief Financial Officer 299

Statement of Comprehensive Income 300

Statement of Financial Position 301

Statement of Changes in Equity 302

Cash Flow Statement 304

Administered Schedule of Comprehensive Income 305

Administered Schedule of Assets and Liabilities 306

Administered Reconciliation Schedule 307

Administered Cash Flow Statement 308

Notes to and Forming Part of the Financial Statements 310

Appendices 387

Appendix 1: Processes Leading to PBAC Consideration - Annual Report for 2015-16 388

Appendix 2: Report from the Director of the National Industrial Chemicals Notification and Assessment Scheme 394

Appendix 3: Health Provider Compliance Report 403

Appendix 4: Australian National Preventive Health Agency Financial Statements 410

Appendix 5: Australian Digital Health Agency 2015-16 Annual Report 424

Navigation Aids 439

List of Requirements 440

Acronyms and Abbreviations 448

Glossary 452

Index 458

4 DEPARTMENT OF HEALTH Annual Report 2015-2016

The main focus of 2015-16 has been change and reform, both in our external environment, the Australian health care system, and our internal working environment.

While Australia’s health system performs well, there are many pressures on it that will drive change and adaptation.

Health spending continues to rise faster than GDP growth, raising concerns about the long-term fiscal sustainability of our health system. Underlying causes of this trend include new medical technology and pharmaceuticals, increasing consumer expectations, an ageing population, and increasing chronic disease.

Reforms are essential to ensure that Australia’s world-class health system serves us long into the future.

This year saw reforms developed or implemented in primary care, mental health, Medicare, the Pharmaceutical Benefits Scheme (PBS), aged care, hospital funding, and digital health.

These reforms will build over time and support each other, bringing our health care system into the 21st century, and provide better health outcomes for Australians. They have three broad objectives: to make our health system more patient-centred and effective for consumers; to drive more efficient and effective use of public funding; and to provide the system with the capacity to respond to future challenges.

The Department has worked hard to progress these reforms, in consultation with stakeholders across the health and aged care sectors.

At the same time, we have made changes in our structure and culture to improve our ability to achieve our goals. This has included a new focus on more strategic policy development, better data analytics, innovation and meaningful engagement with all stakeholders, including the States and Territories.

Secretary’s Review

Rebuilding the primary health care system One in two Australians are living with chronic conditions such as diabetes, asthma, heart disease, respiratory illness and mental illness.1 Innovative ways to fund and deliver primary care will help more people to avoid preventable diseases, and to manage their conditions to avoid health crises.

1 Australian Institute of Health and Welfare 2016. Australia’s health 2016. Australia’s health series no. 15. Cat. no. AUS 199. Canberra: AIHW.

SECRETARY’S REVIEW

5 Annual Report 2015-2016 DEPARTMENT OF HEALTH

This will bring greater efficiency to health care, reduce pressure on hospitals and improve health outcomes.

On 1 July 2015, 31 Primary Health Networks (PHNs) became operational, replacing the previous Medicare Locals network. The key objective of PHNs is to increase the efficiency and effectiveness of medical services for patients. They improve coordination of care for patients, especially those with chronic and complex conditions, to ensure patients receive the right care in the right place at the right time.

To ensure integration and continuity in local services, PHNs commission, plan and purchase medical and health care services. They have six key priorities set by the Government - mental health, Aboriginal and Torres Strait Islander health, population health, health workforce, digital health, and aged care.

The Health Care Homes initiative, a key recommendation of the Primary Health Care Advisory Group also represents a fundamental reform of primary care. It integrates care into a single contact point - the Health Care Home base. It simplifies the interface between the individual and the system. It empowers general practices and Aboriginal Health Services to tailor care to the individual - in a true partnership between the patient and the health care team.

In November 2015, the Government response to the National Mental Health Commission’s Review of Mental Health Programmes and Services was released. The response set out a bold reform package that will put the individual needs of patients at the centre of our mental health system.

Other health system improvements Another important health reform process under way is the Medicare Benefits Schedule (MBS) Review. The Review Taskforce is considering all 5,700 services listed on the MBS to ensure that Medicare funds quality, cost-effective and contemporary services. The Taskforce’s first round of recommendations identified a number of obsolete services to be removed from the MBS.

A milestone was also reached in relation to public hospital funding, with agreement in April 2016 by the Council of Australian Governments (COAG) to an additional estimated $2.9 billion committed to public hospitals from 1 July 2017 to 30 June 2020.

Activity-based funding will continue so hospitals will be paid based on the number and complexity of patients they treat.

The Commonwealth, States and Territories also agreed to improve the quality of care in hospitals and reduce the number of avoidable admissions by better coordinating care for patients with chronic and complex conditions. The COAG agreement will mean greater efficiency, better quality of care, and less waste and pressure on Commonwealth, State and Territory health budgets in the medium to long-term.

Key elements of the landmark pharmacy and PBS reform package under the 6th Community Pharmacy Agreement came into effect in 2015-16. In April 2016, millions of prescriptions for medicines treating common conditions such as high cholesterol and high blood pressure among others, dropped in price for consumers by as much as 60 per cent. A range of breakthrough medicines was also listed on the PBS for the first time. New treatments for patients with chronic hepatitis C were available through the PBS from 1 March 2016, which could eliminate hepatitis C as a public health threat in Australia within a generation.

Building an appropriately trained and supported health workforce, and attracting workers to areas of need, is central to health reform. Location incentives and better targeted training, particularly for GPs, will further help to bridge the city-country divide in health services delivery.

From 1 July 2015, the General Practice Rural Incentives Program was based on the new remoteness classification system, the Modified Monash Model. This model is widely agreed to be a better system for informing the distribution of workforce incentives to draw GPs to areas where they are in shortage, especially rural, regional and remote areas.

Health inequality between Aboriginal and Torres Strait Islander peoples and non-Indigenous Australians continues. Achieving the Closing the Gap targets in health remains a key focus for the Department. Child mortality rates are steadily reducing and are on track to meet the target of being halved by 2018. Greater efforts, however, are needed to achieve equality in life expectancy by the target date of 2031. The National Aboriginal and Torres Strait Islander Health Plan Implementation Plan was launched in October 2015 as a ten-year strategy to achieve better health for Aboriginal and Torres Strait Islander children, youth and adults.

6 DEPARTMENT OF HEALTH Annual Report 2015-2016

Aged care returns to Health Responsibility for aged care was transferred back to Health in September 2015. Aged care is an essential part of an integrated health system to care for Australians throughout their lives.

The process of transforming aged care from a traditionally welfare-based system where consumers received set services to a system that is more responsive to consumers’ needs, continued during 2015-16. In March 2016, the Aged Care Sector Committee presented Government with the Aged Care Road Map which provides its views on what is needed to achieve a sustainable, consumer driven and market-based system.

From 1 July 2015, the majority of Home Care Packages were delivered on a consumer-directed care basis. After intense consultations between the Department and the aged care sector, the first stage of reforms to home care were passed by Parliament without dissent in March 2016. Preparation is well progressed for changes to occur in February 2017 that will see funding for home care packages follow the consumer, allowing them to choose their service provider.

Better use of health data The Department is an active contributor to the Australian Government’s public sector data agenda, including the Digital Transformation Agenda for more digitised, streamlined and innovative interactions with consumers.

Better use of health data is the basis for more informed policies for the health system. Health care data analytics can help us learn about patient populations, enhance preventive care and drive policy innovation.

Data analytics is also strengthening our health provider compliance activity, ensuring rigorous monitoring of the appropriate use of the MBS and PBS by practitioners, staff and consumers.

Major progress was made towards realising the potential of the national digital health record system. In March 2016, the system was renamed My Health Record. Two large trials were launched of opt-out participation in which My Health Records were automatically created for residents of trial areas unless they chose not to have one. To date, around 17 per cent of all Australians have a My Health Record. The use of My Health Records reduces occurrences of adverse medical

events; decreases in the number of tests; and less duplication and better coordination and quality of health care.

This year also saw the commencement of preliminary work to consider options for modernising health and aged care payment services.

Promoting preventive health and improving sport for all The Department continues to promote the importance for physical and mental health of being active. Lack of physical activity is a risk factor for many preventable lifestyle related diseases. The Girls Make Your Move campaign was launched in February 2016 and encourages young women to actively engage with sport and physical activity. The campaign followed research showing that young women were 46 per cent more likely than boys to report no or low levels of physical activity.

In August 2015, the 2015 INF Netball World Cup was staged in Sydney, proudly supported by the Department on behalf of the Australian Government. As part of a 10-day festival, Netball Australia put on the World’s Biggest Netball Clinic for more than 550 New South Wales primary school students. As well as picking up some netballing tips from the world champion Australian Diamonds, the clinic spread important messages about the importance of a healthy and active lifestyle.

The Department is committed to safeguarding the integrity of sport in Australia and internationally from threats such as doping, match-fixing, illicit drug use and criminal infiltration. In April 2016, the Illicit Drugs in Sport e-learning education program was launched by Minister Ley, following its development by the Department’s National Integrity of Sport Unit, in partnership with the Australian Sports Commission.

SECRETARY’S REVIEW

7 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Engaging in global health issues Australia worked in consultation with other countries and key international institutions on a broad range of health issues, including supporting the response to international communicable disease outbreaks such as Ebola, Middle East Respiratory Syndrome Coronavirus and Zika virus, and in preparation for potential outbreaks in Australia. Health worked closely with the Department of Agriculture to develop the first implementation plan to support our national strategy to combat antimicrobial resistance due to the overuse of antibiotics. These issues are discussed in more detail in the Chief Medical Officer’s Report .

In May 2016, I led the Australian delegation to the World Health Assembly, the World Health Organization’s (WHO) governing body, in Geneva. I had the privilege of chairing the committee which, among other things, established a new WHO Health Emergencies Programme, and adopted the first ever global strategy on healthy ageing, which Australia played a key leadership role in developing.

Investing in our people During 2015-16, I continued to pursue the recommendations of our Health Capability Program. The Executive’s Strategic Policy and Innovation Group worked to create an environment which fosters high quality strategic policy development, collaboration and innovation. Our Behaviours in Action and new Stakeholder Engagement Framework encourage better relations both within the Department and with our stakeholders.

The Department adopted a new operating model for our Health State Network. This model reinforces the important contribution people in our State and Territory offices make, through harnessing their local knowledge and on-the-ground engagement with stakeholders to better inform the development and delivery of policies and programs. The new Health State Network is discussed further in the Chief Operating Officer’s Report .

Challenges ahead 2015-16 has been a highly productive year for the Department. The pace of reform has quickened, with much more remaining to be done. I am confident we are in excellent shape to advance the reform agenda over this coming year, making our quality health and aged care system even better. I thank staff for their on-going commitment to our endeavours and our stakeholders for their continued support.

Martin Bowles PSM Secretary September 2016

8 DEPARTMENT OF HEALTH Annual Report 2015-2016

Managing mosquito-borne disease Although mosquito-borne diseases such as Zika, malaria, dengue, yellow fever and chikungunya are a risk for overseas travellers, Australia is fortunate in being largely free of local transmission.

There are many species of mosquito in Australia, but only a few that are a concern for human health. The exotic mosquitoes Aedes aegypti and Aedes albopictus are carriers of dengue, yellow fever, Zika and chikungunya, but are restricted to certain areas of Queensland.

There is a range of mechanisms to manage the risks of importation and spread of exotic mosquito- borne diseases in Australia. The Department continues to work closely with the Queensland Government to monitor and control the spread of Aedes albopictus in the Torres Strait. Control mechanisms are proving to be effective, with a reduction in the number of Aedes albopictus in the target areas.

Zika has come to recent global attention because of a rapid increase in infection rates in Brazil and other South and Central American countries. In unborn babies, Zika can cause microcephaly, foetal death, or a range of other serious birth defects. As at 30 June 2016, there were 41 confirmed cases identified in Australia, all of which were acquired overseas. There is no evidence of Zika transmission in Australia and there is a very low risk of it becoming established in Australia, as the mosquitoes that can transmit Zika virus are only present in North Queensland in significant numbers.

Preventing local mosquito-borne transmission of Zika and other exotic diseases in North Queensland is a high priority. The Department, in collaboration with the Queensland Government, is working to enhance surveillance efforts and reduce the possibility of Zika transmission.

Chief Medical Officer’s Report

The Department worked closely with the Department of Foreign Affairs and Trade to provide advice through the Smartraveller website, emphasising the need for all travellers to affected areas to take precautions to prevent mosquito bites. Due to the ever-evolving situation and gaps in surveillance in some of the affected areas, defining the risks for travellers has been a challenge. Guidelines and recommendations are being regularly updated to match the current state of knowledge.

9 Annual Report 2015-2016 DEPARTMENT OF HEALTH

CHIEF MEDICAL OFFICER’S REPORT

Biosecurity is the new quarantine - Biosecurity Act 2015 The Biosecurity Act 2015 (the Act) came into effect on 16 June 2016. As discussed in my report last year, the Act came out of the Beale Review of Biosecurity in 2008, and replaces the Quarantine Act 1908 in managing biosecurity threats posed by people, goods and conveyances at Australia’s international borders and within Australia. The Act is the culmination of many years of effort by a number of teams across the Department, in close partnership with the Department of Agriculture and Water Resources (DAWR).

In the past year, the Department worked closely with our State and Territory counterparts and DAWR on detailed implementation arrangements and subordinate legislation. This included the delivery of a national roadshow to raise awareness of the Act, and training relevant State and Territory officials in their new legislative roles. Post-implementation, the Department continues to liaise with relevant stakeholders to ensure that Australia remains protected from human biosecurity risks.

New treatments for hepatitis C Hepatitis C is a significant public health issue in Australia. In 2014, it was estimated that there were more than 230,000 Australians living with

chronic hepatitis C. Hepatitis C can lead to a variety of serious liver diseases and conditions and is the most common reason for liver transplants in Australia.

Recent advances in antiviral treatment have led to the development of new medicines for treating hepatitis C, which are much better tolerated than previous therapy. From 1 March 2016, these new medicines were listed on the Pharmaceutical Benefits Scheme (PBS). All adult Australians with chronic hepatitis C have access to these new breakthrough treatments through the PBS - a change that could see the disease all but eradicated as a public health threat in this country within a generation.

With a treatment success rate of more than 90 per cent, these medicines will enable most patients to be free of the disease within months. Australia is one of the first countries in the world to publicly subsidise these treatments for every person living with hepatitis C, no matter what the severity of their condition or how they contracted it.

In the first three months after listing the new treatments on the PBS, more than 11,000 patient prescriptions were processed for PBS reimbursement. This is nearly four times the number of people estimated to have received treatment for hepatitis C in 2014. The availability of these new treatments is an important step towards achieving the objectives of the Fourth National Hepatitis C Strategy (the National Strategy), to reduce the transmission of, and morbidity and

Figure 1: Notifications of Zika infection acquired overseas, 2012 to 30 June 2016 by region of acquisition

0

5

10

15

20

25

30

35

40

45

2012 2013 2014 2015 2016

Southeast Asia

South and Central America

Pacific Islands Number of cases

10 DEPARTMENT OF HEALTH Annual Report 2015-2016

mortality caused by, hepatitis C, and to minimise the personal and social impact of the epidemic.

The Australian Government is also funding a number of hepatitis C prevention and education programs in line with the priority actions and targets set out in the National Strategy. This includes providing targeted information to priority populations, in particular people who inject drugs, about the new hepatitis C treatments and encouraging these people to know their hepatitis C status; establishing links into care so that people living with hepatitis C can access the new treatments; and encouraging the use of Needle and Syringe Program services for prevention and safe injecting practices.

Looking at tick-borne disease The Department is concerned about hundreds of Australians presenting with a chronic debilitating illness manifesting as a constellation of multiple non-specific symptoms. Some health care practitioners have ascribed this as chronic Lyme disease or a Lyme disease-like illness. To date, there remains no evidence of classical Lyme disease in Australia. The diagnosis of chronic Lyme disease is disputed by conventional medicine.

In November 2015, an inquiry into the Growing evidence of an emerging tick-borne disease that causes a Lyme like illness for many Australian patients was established under the Senate’s Community Affairs Reference Committee. Over 1,200 submissions were lodged, including a submission from the Department. An interim report was published by the committee, recommending: the continuation of the inquiry; further consultation with patients and health practitioners; and increased community education and awareness.

The Department has funded the National Serology Reference Laboratory to evaluate the different serological tests used to diagnose Lyme disease in Australian patients. We also developed a diagnostic guideline to assist Australian doctors to diagnose overseas acquired Lyme disease, and a tick bite prevention document to educate the public and medical authorities on tick bite prevention and first aid. During 2015-16, Professor Peter Irwin from Murdoch University published a number of research papers describing new tick-borne bacteria. Whether these bacteria can cause multiple non-specific chronic debilitating symptoms in humans and the implications for human health have yet to be determined. Attributing disease causation

requires more research and epidemiological studies. This highlights the need to target the national health and medical research effort to address gaps in health and medical research, such as this tick-borne illness.

The Department will continue its role to find and disseminate information on Australian research relevant to this tick-borne chronic debilitating illness and to coordinate dialogue with patients, their supporters and health care professionals.

Combatting antimicrobial resistance Antimicrobial resistance (AMR) was a highlight in my report last year. In 2015-16, AMR continued to be a significant global health priority. AMR occurs when microorganisms, such as bacteria, become resistant to medicines to which they were originally susceptible.

Following the release of Australia’s first National Antimicrobial Resistance Strategy 2015-2019 in June 2015, our efforts this year have been focussed on developing a detailed implementation plan that outlines specific focus areas for action, and highlights activities that are being undertaken by stakeholders across all sectors to minimise the development of antimicrobial resistance and ensure the continued availability of effective antimicrobials. The implementation plan has been developed in consultation with stakeholders from the Australian Government, State and Territory Governments, non-government organisations, professional bodies and research organisations.

A major achievement this year has been the establishment of the Antimicrobial Use and Resistance in Australia (AURA) Surveillance System by the Australian Commission on Safety and Quality in Health Care. The AURA Surveillance System collates data from a range of sources and allows integrated analysis and reporting of antimicrobial resistance and antimicrobial use at a national level. The first AURA report was released in June 2016, and was well received by all stakeholders. The data provided in the report will inform immediate actions and provides evidence to evaluate and set priorities.

Given that research shows AMR is largely driven by the misuse of antibiotics, improving antimicrobial stewardship across all sectors and settings is critical to ensure appropriate use of antimicrobials. This year, the Department engaged a consortium

11 Annual Report 2015-2016 DEPARTMENT OF HEALTH

CHIEF MEDICAL OFFICER’S REPORT

led by the University of Queensland to develop and pilot an integrated, multifaceted package of interventions to reduce antibiotic prescribing in general practice. The results from the General Practitioners Antimicrobial Stewardship Programme Study will be made publicly available on the Department’s website in August 2016 and will inform broader implementation of antimicrobial stewardship initiatives in general practice.

Planning is also underway to develop a dedicated national AMR website to provide a central repository of trusted information for professionals and consumers. The website will be critical in achieving a collaborative approach to responding to AMR and is intended to support whole-of-society awareness and participation in the implementation of the National Antimicrobial Resistance Strategy 2015-2019.

Implementing Optimal Cancer Care Pathways The diagnosis and treatment of cancer continues to be challenging. One in two Australian men and one in three Australian women will develop cancer before the age of 85. An ageing population means that new cancer cases will continue to rise, and it is anticipated that over 130,000 Australians will be diagnosed with cancer in 2016. Though challenging, outcomes for Australian cancer patients have improved dramatically over the past 30 years, reflecting strong public awareness of cancer prevention, participating in cancer screening, and acting on early diagnosis.2

During 2015-16, the National Cancer Expert Reference Group (NCERG) endorsed the Optimal Cancer Care Pathways (OCPs) and national agreement to pilot the adoption of several of these pathways into our health services. The Department provides the secretariat support to the NCERG. The secretariat will assist national promotion of the OCPs in 2016-17.

OCPs are national guides to promote the best cancer care for specific tumour types. They describe the key steps in a patient’s cancer journey and expected standards of care at each stage. They aim to improve patient outcomes by promoting quality cancer care and ensuring that all people diagnosed with cancer receive the best care, regardless of where they live or receive their treatment.

2 Australian Institute of Health and Welfare 2014. Cancer in Australia: an overview 2014. Cancer series no.90. Cat. no. CAN88. Canberra: AIHW.

Looking ahead, the NCERG’s major focus will be reducing the variation in rates and outcomes across geographical locations, socioeconomic status and the Indigenous population.

Improving immunisation rates across Australia The Department continues to prioritise preventing vaccine preventable diseases, especially in vulnerable populations, including young children, pregnant women, Aboriginal and Torres Strait Islander people and the elderly.

Of these, influenza causes the greatest burden of disease in Australia3 and continued significant effort is required to address this. Key achievements in 2015-16 included the move to provide quadrivalent influenza vaccines (QIVs) under the National Immunisation Program (NIP), for the 2016 seasonal influenza season. The Department also re-introduced a pertussis (whooping cough) booster vaccine for toddlers at 18 months of age. The QIV provides added protection to the previously supplied trivalent influenza vaccine, while the 18 month whooping cough booster dose aims to reduce whooping cough notifications and reduce transmission of the disease in babies too young to be immunised.

Australia has high childhood immunisation rates, with over 90 per cent of children fully immunised at one, two and five years of age. However, we need to stay vigilant to improve this rate to achieve community immunity, especially amongst vulnerable populations. The Department’s performance against immunisation is discussed further in Program 1.3: Immunisation, on page 60.

Looking ahead, in collaboration with Chief Health Officers from all States and Te rritories, we have set an aspirational target of 95 per cent immunisation coverage. This target provides sufficient herd immunity to prevent transmission of vaccine preventable diseases, and provides the community with the best possible protection.

3 AIHW 2016. Australian Burden of Disease Study: impact and causes of illness and death in Australia 2011. Australian Burden of Disease Study series no. 3. Cat. no. BOD 4. Canberra: AIHW.

12 DEPARTMENT OF HEALTH Annual Report 2015-2016

Protecting Australia from emerging diseases Most emerging infectious diseases are of animal origin, and their emergence can be related to sociological, ecological and environmental factors.4,5

This has been borne out in recent years by Zika, Middle East Respiratory Syndrome Coronavirus (MERS-CoV) and the Ebola outbreaks.

In my reports for the last three years, I highlighted the risk of MERS-CoV particularly in the context of increasing global travel, and the significant outbreak of MERS-CoV in the Republic of Korea during 2015. There have been no further cases in the Republic of Korea since my last report. While there have been no cases in Australia, I have, through my role as chair of the World Health Organization (WHO) International Health Regulations Emergency Committee on MERS-CoV, been closely monitoring the outbreak overseas. The general risk assessment for MERS-CoV has not changed during the past year: it continues to occur in the Middle East with occasional exportation to other countries resulting in limited transmission; it continues to cause severe human infections resulting in high mortality; and it can transmit between people in health care settings and in the

4 Alexander KA, Sanderson CE, Marathe M, Lewis BL, Rivers CM, Shaman J, et al. What factors might have led to the emergence of Ebola in West Africa? PLoS Negl Trop Dis 2015;9(6):e0003652.

5 Taylor LH LS, Woolhouse ME. Risk factors for human disease emergence. Philos Trans R Soc Lond B Biol Sci 2001;356:983-989.

community. As of 30 June 2016, there were 1,769 cases of MERS-CoV including at least 630 deaths world-wide since the outbreak was first reported in September 2012.6

The WHO Public Health Emergency of International Concern related to Ebola in West Africa was lifted on 29 March 2016. A total of 28,616 confirmed, probable and suspected cases were reported in Guinea, Liberia and Sierra Leone, with 11,310 deaths.7 While there were cases exported from West Africa to other areas, including the United States and the United Kingdom, there were no cases in Australia. With the reduced risk of importation, border measures for Ebola, highlighted in my report last year, were de-escalated in November 2015.

Supporting Australians with dementia With an estimated 353,800 Australians currently living with dementia, and a projection of 900,000 by 2050,8 dementia is one of Australia’s national health priorities.

6 World Health Organization. Middle East Respiratory Syndrome Coronavirus (MERS-CoV). 2016. Accessed on 29 June 2016. Available from: www.who.int/emergencies/mers-cov/en/

7 World Health Organization. Situation Report Ebola Virus Disease 10 June 2016; 2016.

8 Statistic supplied by Australian Institute of Health and Welfare (AIHW)

Figure 2: Confirmed and probable MERS-CoV cases by confirmation status, as of 30 June 2016.

0

50

100

150

200

250

300

350

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

July

Oct

Jan

Apr

2012 2013 2014 2015 2016

Republic of Korea cases

Probable cases

Other confirmed cases

Number of cases

13 Annual Report 2015-2016 DEPARTMENT OF HEALTH

CHIEF MEDICAL OFFICER’S REPORT

Approximately 70 per cent of Australians with dementia are living in the community.9 The National Framework for Action on Dementia 2015-2019, published in September 2015, identified the need to develop dementia-friendly communities in order to build greater awareness, acceptance and understanding of dementia in the community.

In 2015-16, the Department funded Alzheimer’s Australia to support the establishment of ‘Dementia Friendly Communities’ around the country. As part of this initiative, a National Dementia Friendly Resource Hub will be developed to provide information, resources and best practice guides, as well as opportunities for networking and support for creating local dementia friendly communities.

Dementia is also a key issue in the aged care sector, with over 50 per cent of current aged care residents assessed as having high behavioural needs under the Aged Care Funding Instrument, an indicator of dementia. In November 2015, the Australian Government held the second Ministerial Dementia Forum to engage with key stakeholders on how people with dementia and their carers can be better supported. These forums are a valuable mechanism to consult with health care professionals, aged care providers, peak bodies, individuals with dementia, family carers and other stakeholders.

Severe Behaviour Response Teams commenced operation nationally in November 2015, and act as a top tier support to complement the long standing Dementia Behaviour Management Advisory Service. The establishment of the teams followed the 2014 Ministerial Dementia Forum, which recommended that a mobile workforce of clinical experts be established to assist residential aged care providers to manage clients with severe behavioural and psychological symptoms of dementia.

The National Health and Medical Research Council is also delivering a series of initiatives to prioritise and fund vital new dementia research projects and translate research to improve prevention, diagnosis, treatment and care for dementia patients, their carers and communities.

Internationally, Australia actively participates in global action against dementia through the Organisation of Economic Co-operation and Development and the WHO, and also holds an associate membership on the World Dementia Council.

9 AIHW Dementia in Australia Report, 2011, available at: http://www.aihw. gov.au/WorkArea/DownloadAsset.aspx?id=10737422943

Farewelling the Department 2015-16 is the final year of my tenure as Australia’s Chief Medical Officer. Taking over the reins will be Professor Brendan Murphy from October 2016.

I would like to take this opportunity to thank all my colleagues in the Department of Health for their support, their dedication and the value they add to our health system. I would also wish to pay tribute to all State and Territory Chief Health Officers who ensure public health is delivered to a very high standard in their jurisdictions. Our cooperative and collaborative efforts serve Australia well.

Professor Chris Baggoley AO Chief Medical Officer July 2016

14 DEPARTMENT OF HEALTH Annual Report 2015-2016

Chief Operating Officer’s Group Operating Model At the Department of Health we have refreshed our approach to the way we deliver corporate services across the organisation. The Chief Operating Officer’s (COO) Group Operating Model, released in December 2015, provides a new framework for designing and delivering corporate services that are customer-focused, cost-effective and professional.

Our services are diverse and cover everything from human resources, finance, legal and communication advice, to managing grants and IT systems and support. All corporate functions were integrated within the COO Group in early 2016, and up to 40 initiatives to optimise our service offer are under way. To date, we have:

• streamlined our financial processes;

• introduced new self-service tools, and tools to help staff work more collaboratively;

• strengthened the role of State and Territory offices for program delivery and stakeholder engagement; and

• improved our handling of administered funding through new systems.

From July 2016, a corporate front door was introduced to provide easier and faster access to information and contacts. This was supported by a COO group customer service charter and set of principles. A priority for the year ahead will be a continued focus on productivity and providing the best possible service to our customers.

Building Health’s capability We continue to build our organisational capability, so we are best positioned to fulfil Our Purpose in leading and shaping Australia’s health outcomes through evidence-based policy and well targeted programs.

Chief Operating Officer’s Report

In 2015-16, the Department focussed on five themes to build Health’s capability:

• leadership and culture;

• strategic capability;

• governance;

• risk; and

• stakeholder engagement.

The Department is currently finalising a review of its organisational capability journey through an independent review process.

15 Annual Report 2015-2016 DEPARTMENT OF HEALTH

CHIEF OPERATING OFFICER’S REPORT

Leadership and culture We continued to build leadership and culture at all levels of the organisation through a range of initiatives including our mentoring program, launch of the Our Behaviours in Action, induction and coaching programs, performance and development frameworks, formation of an organisation-wide staff social club, and ongoing staff surveys to assess our progress. For further information on the Department’s people management strategies, refer Part 3.4: People Management.

Strategic capability We are transforming our ability to support health policy by encouraging our policy makers to have a greater whole-of-system perspective. As well, we have been shaping an environment in which staff have greater license to explore innovative options and new solutions to keep pace with a constantly evolving health system.

Governance We have made a number of changes to our senior governance committees to better support the Department’s Strategic Intent 2016-20 and Corporate Plan 2016-17. For further information on corporate governance, refer Part 3.1: Corporate Governance.

We have been working to improve our systems so we can share and use health data more readily and to better effect. Linking disparate data sources and applying expert analysis will help Government and industry alike to better understand our health system, improve patient care, and inform effective, evidence-based initiatives in the future.

Risk Enterprise risk remains a strong pillar of the Department’s Strategic Intent 2016-20. Risk management helps protect the integrity of the Department as we continue to be responsible stewards of Australia’s health system.

We have been fostering a culture where innovation and creativity is encouraged - and a critical part of this is giving strong support to decision makers as they consider and manage appropriate levels of risk. In building this support, we have developed an Enterprise Risk Framework and Risk Appetite Statement, identified our enterprise level risks, and new decision support tools for staff. These resources will encourage risk conversations,

highlight areas where we are more willing to engage with risk for a greater benefit, and to achieve our strategic objectives. In 2016-17, the Department will embed these resources across the organisation throughout our business processes. For further information on risk management strategies, refer Part 3.1: Corporate Governance.

Stakeholder engagement A collaborative and transparent relationship with our stakeholders is central to our ability to lead and shape Australia’s future health system. We have introduced a Stakeholder Engagement Framework with supporting tools and resources. These will help us to better identify our stakeholders’ needs and ideas so we can incorporate them into policy development and decision-making processes. We are also making a concerted effort to consult early and often.

Health State Network - working together In 2015-16, the Department adopted a new operating model for our Health State Network. On 1 July 2016, the Health State Network Division came into effect, as we brought together staff across all State and Territory offices as well as program and grant operations staff in Central Office. The new Health State Network:

• brings together the core functions of grants and program delivery in each State under a single State Manager;

• gives State Managers a site leadership role for departmental employees in their State;

• provides a clear role for State offices to engage locally with stakeholders and maintain relationships with State and Territory Governments; and

• improves links between the Health State Network, grant operations, and policy and program areas while developing and implementing a nationally consistent grants management framework.

Working closely with policy and program areas, the Health State Network brings local intelligence and location-specific needs to help shape the development and delivery of our policies and programs to serve all Australians, regardless of where they live.

16 DEPARTMENT OF HEALTH Annual Report 2015-2016

People Strategy - our greatest asset The Department is investing in our people - our greatest asset. We are promoting a culture that rewards and recognises staff performance, where people are engaged and empowered to do their best work.

The People Strategy 2016-20 (the Strategy) outlines the way we are achieving this. Through the Strategy and our workforce planning, staff are encouraged to be adaptable, flexible, empowered and motivated. The Strategy outlines how we attract and keep the highest performing staff as we become an employer of choice.

With strong ties to Our Behaviours in Action, our Strategy provides a blueprint for shaping an organisation in which people work together, embrace new ideas, nurture talent and invest in high performance, trust and empower one another, listen with intent, value contribution, lead by example and embrace change.

With an ever-increasing complexity in our environment, the Department’s workforce planning will see new approaches to the way we recruit,

upskill and rotate staff throughout the organisation. It will ensure we are resourced to be at the top of our game when facing new challenges and opportunities. For more information on our people management strategies, refer Part 3.4: People Management.

Improved grants management In 2015-16, we improved our grants processes, including better risk management as a central part of grant administration. We have changed the way we publish grant program guidelines to make it easier for people to apply. The Indigenous Australians Health Programme has been the first program to benefit from this approach. In collaboration with the Indigenous health sector, we have developed grant program guidelines that enable us to fund outcomes for Indigenous health initiatives nationally. Five grants rounds, distributing more than $35 million of Indigenous Australians Health Programme funding to more than 100 organisations around the country, have been successfully delivered since February 2016.

The Department utilises the community hub, provided by the Department of Social Services, to manage its grant programs.

Figure 3: Breakdown of administered expenses during 2015-16

Grants 10%

Other 2%

Subsidies 17%

38%

19%

11%

Other 3%

2015-16 Financial year Total expenses administered by the Department of Health: $55.8 billion

Personal Benefits 71%

Medical Services

Pharmaceuticals and Pharmaceutical Services

Private Health Insurance

17 Annual Report 2015-2016 DEPARTMENT OF HEALTH

CHIEF OPERATING OFFICER’S REPORT

Property review A review of the Department’s property locations across Australia has led the Department to consolidate our properties nationally to one per State and Territory, except in Sydney and Canberra where there will be two locations each. This review accommodates the inclusion of the Health State Network, Health Products Regulatory Group, Health Provider Compliance Division and other out-posted staff of the Department.

2015-16 financial results In 2015-16, the Department administered 37 programs on behalf of Government, including six aged care programs transferred to the Department under the Administrative Arrangements Order issued on 30 September 2015. Administered expenses totalled $55.8 billion, comprised primarily of payments for personal benefits of $39.6 billion (71 per cent of the total), including those for medical services, pharmaceutical services and private health insurance rebates. Subsidies, predominantly for aged care, amounted to $9.3 billion (17 per cent of the total), and grants expenditure was $5.8 billion (10 per cent of the total) — the majority of which was paid to non-profit organisations.

As at 30 June 2016, the Department’s administered assets totalled $2.1 billion, including investments in health related entities and inventories held under the National Medical Stockpile. Administered liabilities

Figure 4: Administered expenditure by category 2011-12 to 2015-16

0

10,000

20,000

30,000

40,000

50,000

60,000

2011-12 2012-13 2013-14 2014-15 2015-16

$ millions

Other expenses

Subsidies

Grants

Personal benefits

were $3.3 billion, which included provisions for personal benefits, grants and subsidies.

Key administered expenditure is illustrated in Figures 3 (refer previous page) and 4 below.

The Department incurred an operating loss, prior to unfunded depreciation, of $5.5 million for the year. This loss was a consequence of payments associated with the Administrative Arrangements Order for aged care programs. The Department remains in a positive net asset position as at 30 June 2016.

2015-16 financial statements The Auditor-General has provided the Department with an unmodified audit opinion for the 2015-16 financial statements, noting that we have in place appropriate and effective financial controls.

Part 4: Financial Statements contains the Department’s financial statements which include information on the financial performance of the Department over the financial year.

Matt Yannopoulos Acting Chief Operating Officer July 2016

20

26

29

32

34

36

PART1 About the Department 1.1: Executive

1.2: Department Overview

1.3: Structure Chart

1.4: Ministerial Responsibilities

1.5: Department-Specific Outcomes

1.6: Portfolio Entity-Specific Outcomes

PART 1 ABOUT THE DEPARTMENT

20 DEPARTMENT OF HEALTH Annual Report 2015-2016

1.1

1.1 Executive as at 30 June 2016

From left to right Andrew Stuart, Matthew (Matt) Yannopoulos, Dr Wendy Southern, Professor Chris Baggoley AO, Secretary Martin Bowles PSM, Mark Cormack, Dr Margot McCarthy, Paul Madden, Adjunct Professor John Skerritt.

The Department’s Executive was current at 30 June 2016. For up-to-date details, refer to the Department’s website at: www.health.gov.au/internet/main/publishing.nsf/Content/health-executive.htm

21 Annual Report 2015-2016 DEPARTMENT OF HEALTH

1.1 1.1 EXECUTIVE

Martin Bowles PSM Secretary

Professor Chris Baggoley AO Chief Medical Officer

Martin Bowles was appointed Secretary of the Department of Health in 2014.

As lead policy adviser to Government, Martin is responsible for ensuring the Department achieves the Australian Government’s priorities for health. Martin is also responsible

for the overall management and operation of the Department.

Previously, Martin was Secretary of the Department of Immigration and Border Protection, overseeing the management of migration, humanitarian, citizenship and visa policy and programs. Martin has also held Deputy Secretary positions in the Department of Climate Change and Energy Efficiency and the Department of Defence, and senior executive positions in the education and health portfolios in the Queensland and New South Wales public sector.

Martin has a Bachelor of Business, a Graduate Certificate of Public Sector Management, and is a Fellow of the Australian Society of Certified Practicing Accountants.

Professor Chris Baggoley AO was the Chief Medical Officer for the Australian Government and principal medical adviser to the Minister and the Department of Health. Chris also had responsibility for the Department’s Health Protection Group and attended the World Health Assembly and

represented Australia on the International Agency for Cancer Research Council. Professor Baggoley chairs the World Health Organization International Health Regulations Emergency Committee concerning Middle East Respiratory Syndrome Coronavirus (MERS-CoV).

Prior to his appointment as Chief Medical Officer in 2011, Chris was the Chief Executive of the Australian Commission on Safety and Quality in Health Care. He is a former Chief Medical Officer and Executive Director with the South Australian Department of Health. His clinical career has been in emergency medicine.

In addition to his medical degrees, Chris holds a degree in Social Administration from Flinders University, an Honours degree in Veterinary Science from the University of Melbourne, and has been awarded the Order of the International Federation for Emergency Medicine. Chris was made an Officer of the Order of Australia (AO) in 2013.

Chris retired as Chief Medical Officer on 15 July 2016.

Professor Brendon Murphy has accepted the role of Chief Medical Officer and will commence with the Department in October 2016.

PART 1 ABOUT THE DEPARTMENT

22 DEPARTMENT OF HEALTH Annual Report 2015-2016

1.1

Matthew (Matt) Yannopoulos Acting Chief Operating Officer, Acting Deputy Secretary, COO Group

Matt Yannopoulos joined the Department in July 2015. Matt assumed the role of Acting Chief Operating Officer from May to July 2016. During this period Matt was responsible for the Department’s corporate and enabling areas that support the Department in meeting its purpose.

Responsibilities included finance, legal, corporate services, the Health State Network and information communication technology (ICT). Matt co-chaired the Department’s Strategic Policy Committee and was deputy chair of the Finance and Resources Committee and the People, Values and Capability Committee.

Previously, Matt held the roles of the First Assistant Secretary of Portfolio Investment Division, and the Chief Information Officer (CIO) responsible for the management and operation of ICT functions.

Prior to joining the Department, Matt was the Portfolio CIO of the Department of Immigration and Border Protection, where he was accountable for ICT across the Department and the Australian Customs and Border Protection Service. Matt has also held the roles of Chief Design Officer for the Australian Taxation Office, the Department of Defence’s first Chief Technology Officer with responsibility for Enterprise Architecture, ICT standards, and ICT Strategy and Futures.

Mark Cormack Deputy Secretary, Strategic Policy and Innovation

Mark Cormack is responsible for Health Systems Policy, including portfolio engagement and coordination, international strategies, best practice regulation and strategic policy. Mark is also responsible for Health programs including primary health care, hospitals,

mental health and dental. Mark is co-chair of the Department’s Strategic Policy Committee.

Prior to joining the Department, Mark held the position of Deputy Secretary in the Department of Immigration and Border Protection, and was the Department’s senior executive responsible for implementation of Operation Sovereign Borders. Mark has also held the role of Chief Executive Officer of Health Workforce Australia and Chief Executive, ACT Health.

Mark has worked in and for the public health care sector for over 30 years in various capacities as a health professional, senior manager, policy maker, planner, agency head and industry advocate, and has held a number of senior roles in the public health care system.

23 Annual Report 2015-2016 DEPARTMENT OF HEALTH

1.1 1.1 EXECUTIVE

Dr Margot McCarthy Deputy Secretary, Ageing and Aged Care Group

Paul Madden Special Adviser, Strategic Health Systems and Information Management

Dr Margot McCarthy joined the Department in November 2015 as Deputy Secretary of the Ageing and Aged Care Group10 and is responsible for overseeing policy, funding, and a range of regulatory activities for the ageing and aged care system.

Margot has held a number of senior

positions in the Department of Defence, the Department of the Prime Minister and Cabinet (PM&C) and the Department of Social Services.

In February 2013, she was appointed as an Associate Secretary in PM&C, leading the National Security and International Policy Group, which provided advice to the Prime Minister, and whole-of-government coordination on national security matters.

Margot is a graduate of Oxford University (D.Phil. in English Literature) and the London School of Economics and Political Science (MSc in Management). She completed her undergraduate studies at the University of New England in Armidale, Australia.

10 Responsibility for the Ageing and Aged Care functions transferred to the Department of Health from the Department of Social Services as part of the Machinery of Government changes announced in September 2015.

Paul Madden holds the position of Deputy Secretary/Special Adviser, Strategic Health Systems and Information Management. His role includes supporting the Government in leading the national rollout of Digital Health initiatives including: foundation technologies and

related services across Australia; the continued and improved operation of the My Health Record; and the opt-out trials. He is also responsible for setting and operation of governance policies and processes for data and information management.

He is chair of the Department’s My Health Record Operations Management Committee, a member of the Australian Digital Health Agency Board, and the Australian Institute of Health and Welfare Board.

Prior to joining the Department, Paul was Program Director of the Standard Business Reporting Program led from the Australian Treasury from 2007 to 2010.

PART 1 ABOUT THE DEPARTMENT

24 DEPARTMENT OF HEALTH Annual Report 2015-2016

1.1

Dr Wendy Southern PSM Deputy Secretary, National Programme Delivery Group

Dr Wendy Southern is responsible for national delivery of population health (including sport), Indigenous health, and health workforce programs and initiatives. Wendy is Chair of the People, Values and Capability Committee.

Prior to joining the Department, Wendy

held the position of Deputy Secretary in the Department of Immigration and Border Protection, leading the development and delivery of policy advice and program management across the Department. Wendy has also previously worked for the Department of the Prime Minister and Cabinet.

Before joining the Australian Public Service, Wendy worked in various research, teaching and consultancy positions at the Australian National University, Monash University and the University of the South Pacific.

Adjunct Professor John Skerritt Deputy Secretary, Health Products Regulation Group

Adjunct Professor John Skerritt is responsible for Health Products Regulation including medicines regulation, medical devices, blood and tissue products, and product quality and regulatory practice. He is also responsible for drug control, including dealings with controlled drugs,

and development and implementation of the new regulatory framework for medicinal cannabis.

John was a Deputy Secretary in the Victorian Government, and has extensive experience in medical, agricultural and environmental policy, regulation, research management, technology application and commercialisation. He is the former Deputy Chief Executive Officer of the Australian Centre for International Agricultural Research, and a former Ministerial appointee on the Gene Technology Technical Advisory Committee.

John is an Adjunct Full Professor of the Universities of Queensland and Canberra, has a PhD in Pharmacology from the University of Sydney, and is a graduate of the Senior Executive Programs of London Business School and of IMD Business School, Switzerland. He is also a Fellow of the Academy of Technological Sciences and Engineering and a Fellow of the Institute of Public Administration of Australia (Victoria).

25 Annual Report 2015-2016 DEPARTMENT OF HEALTH

1.1 1.1 EXECUTIVE

Andrew Stuart Deputy Secretary, Health Benefits Group

Andrew Stuart has had an extensive career in the Department of Health spanning across Ageing and Aged Care, Population Health, Primary Care and corporate affairs.

Currently, Andrew leads the Health Benefits Group, ensuring existing and innovative medicines

and medical devices, procedures and services are accessible to all Australians, used appropriately, at a cost the individual and community can afford.

Andrew’s responsibilities include the Pharmaceutical Benefits Division, the Health Provider Compliance Division and the Medical Benefits Division including Private Health Insurance and the Office of Hearing Services. Andrew also oversees the Office of Chemical Safety.

In a previous Deputy Secretary role at Health, Andrew led the Department’s Strategic Review and internal change management program to downsize the Department, realign the corporate functions, reform grant management and promote deregulation.

PART 1 ABOUT THE DEPARTMENT

26 DEPARTMENT OF HEALTH Annual Report 2015-2016

1.2

This annual report is for the 2015-16 financial year, based on the Department of Health’s structure as at 30 June 2016, and reports on the Department’s activities during 2015-16.

The Department of Health is a Department of State. In 2015-16 we operated under the Public Service Act 1999 and the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

Our History The Commonwealth Department of Health was established in 1921, in part as a response to the devastating effects of the Spanish influenza pandemic of 1919, and through the vision of Dr J H L Cumpston, the first head of the Department.

The Department of Health has continued to evolve over the last 95 years, and has undergone a number of changes in name, function and structure.

Our Vision Better health and wellbeing for all Australians, now and for future generations.

Our Purpose Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation.11

11 Department of Health Corporate Plan 2016-17 available at: www.health. gov.au/internet/publications/publishing.nsf/content/corporate-plan-2016-17-toc

1.2 Department Overview

Our Strategic Priorities

Better health and ageing outcomes and reduced inequality through:

• An integrated approach that balances prevention, primary, secondary and tertiary care;

• Promoting greater engagement of individuals in their health and healthcare; and

• Enabling access for the most disadvantaged including Aboriginal and Torres Strait Islander people, people in rural and remote areas and people experiencing socio-economic disadvantage.

Affordable, accessible, efficient, and high quality health and aged care system through:

• Partnering and collaborating with others to deliver health and aged care programs;

• Better, more cost-effective care through innovation and technology; and

• Regulation that protects the health and safety of the community, while minimising unnecessary compliance burdens.

Better sport outcomes through:

• Boosting participation opportunities for all Australians;

• Optimising international performance; and

• Safeguarding integrity in sport.

27 Annual Report 2015-2016 DEPARTMENT OF HEALTH

1.2 1.2 DEPARTMENT OVERVIEW

Our Capabilities • We build leadership at all levels.

• We think strategically and make evidence-based choices.

• We strengthen our key relationships.

• We embed innovation in our work.

• We manage cost and invest in long term sustainability.

Our Values and Behaviours The Department of Health adheres to the APS ICARE principles, which are central to Our Behaviours in Action. The Department has continued to champion Our Behaviours in Action through 2015-16, with a particular emphasis on leadership modelling these behaviours.

Machinery of Government changes On 13 February 2016, the Prime Minister, the Hon Malcolm Turnbull MP announced changes to the Machinery of Government. The Hon Sussan Ley MP continued in her role as Minister for Health, Minister for Aged Care and Minister for Sport. Senator the Hon Fiona Nash continued to be the Minister with responsibility for Rural Health. To reflect his existing responsibilities, the Hon Ken Wyatt AM, MP added Aged Care to his title, becoming Assistant Minister for Health and Aged Care (for further information refer Ministerial Responsibilities page 32).12

The Administrative Arrangements Order issued on 30 September 2015 included the following changes to the Portfolio’s responsibilities:

• Ageing and Aged Care functions returned to the Health Portfolio from the Social Services Portfolio, including the Australian Aged Care Quality Agency;

• The statutory offices of the Aged Care Commissioner and the Aged Care Pricing Commissioner transferred to the Department of Health; and

• Medicare Provider Compliance for the Medicare Benefits Schedule, Pharmaceutical Benefits Scheme and allied health services transferred to the Department of Health from the Department of Human Services.

There were no changes to the Portfolio as a result of the Administrative Arrangements Order issued on 18 February 2016.

12 On 19 July 2016, the Prime Minister, the Hon Malcolm Turnbull MP’s new Ministry was sworn in. The current Health Portfolio Ministers and their responsibilities are available at: www.health.gov.au/internet/main/

publishing.nsf/Content/Ministers-1

PART 1 ABOUT THE DEPARTMENT

28 DEPARTMENT OF HEALTH Annual Report 2015-2016

1.2

Portfolio structure In 2015-16, the Health Portfolio consisted of:

• the Department of Health (refer Structure Chart on page 29)

• 17 Portfolio entities (refer Portfolio Entity-Specific Outcomes on page 36)

• five statutory office holders:

- Aged Care Complaints Commissioner

- Aged Care Pricing Commissioner

- Gene Technology Regulator

- Director, National Industrial Chemicals Notification Assessment Scheme

- National Health Funding Pool Administrator.

Changes to Portfolio entities In 2015-16, the Australian Government continued to reduce the size and complexity of Government through the Smaller Government reforms. These reforms, which include further reducing the number of Government bodies in the Health Portfolio, reduce overlap, streamline services and improve efficiency.

• From 1 July 2015, the functions of the Private Health Insurance Administration Council were transferred to the Australian Prudential Regulation Authority.

• From 1 July 2015, the responsibilities of the Private Health Insurance Ombudsman were transferred to the Office of the Commonwealth Ombudsman.

• From 30 June 2016, the National Health Performance Authority was abolished, with its functions transferring to the Australian Institute of Health and Welfare, the Australian Commission on Safety and Quality in Health Care, and the Department of Health.

• From 1 July 2016, the operational functions of the Independent Hospital Pricing Authority transferred to the Department of Health, with the Board, Chief Executive Officer and associated functions retained.

• From 1 July 2016, the Australian Digital Health Agency commenced operation, replacing the National eHealth Transition Authority. The Agency will manage governance, operation and ongoing delivery of digital health.

29 Annual Report 2015-2016 DEPARTMENT OF HEALTH

1.3 1.3 STRUCTURE CHART

Secretary Martin Bowles

Chief Medical Officer Professor Chris Baggoley

Office of Health Protection Principal Medical Adviser

Health Protection Policy

Principal Medical Adviser

Health Emergency Management

Immunisation

Health Benefits Deputy Secretary Andrew Stuart

Health Provider Compliance Medical Benefits

Pharmaceutical Benefits

Health Compliance

Medical Specialist Services

Pharmaceutical Policy

Health Compliance Strategy

Office of Hearing Services

Pharmaceutical Evaluation

Health Professional Review & Advice

Primary Care & Diagnostics Pharmaceutical Access

Private Health Insurance Office of Chemical

Safety

(incorporating NICNAS & AgVet Chemicals)*

Medicare Reviews Unit

Principal Medical Adviser

Principal Medical Adviser

Strategic Policy and Innovation Deputy Secretary Mark Cormack

Health Systems Policy Health Services Research, Data

& Evaluation

Principal Medical Adviser

Portfolio Strategies, Engagement & Coordination

Primary Healthcare

Health & Medical Research

Chief Nurse & Midwifery Officer

International Strategies Hospitals & Acute Services

Health Analytics

Health Adviser - Geneva

Best Practice Regulation

Mental Health Early Intervention

Health System Financing

Strategic Policy Mental Health Services

Performance, Accountability & Evaluation

Primary Health Care Advisory Group Taskforce

Primary Health Networks

Principal Adviser

Principal Medical Adviser

1.3 Structure Chart as at 30 June 2016 The Department’s current structure chart is available at: www.health.gov.au/internet/main/publishing.nsf/Content/health-struct.htm

Group

Division or equivalent

Branch

Adviser

Overseen by a Statutory Office Holder *

PART 1 ABOUT THE DEPARTMENT

30 DEPARTMENT OF HEALTH Annual Report 2015-2016

1.3

Secretary Martin Bowles

Strategic Health Systems & Information Management Special Adviser Paul Madden

Digital Health

Legislation, Policy & Governance

Digital Health Operations

Participation

Health Products Regulation Deputy Secretary Adjunct Professor John Skerritt

Medicines Regulation

Medical Devices & Product Quality

Regulatory Practice & Support

Office of Drug Control

Prescription Medicines Authorisation

Medical Devices

Regulatory Services & Improvement

Complemen-tary & OTC Medicines Laboratories

Regulatory Engagement & Planning

Pharmacovigi-lance & Special Access

Manufacturing Quality

Regulatory Practice, Education & Compliance

Scientific Evaluation

Principal Medical Adviser

Principal Legal & Policy Adviser

Senior Adviser, Regulatory Reforms

National Programme Delivery Deputy Secretary Dr Wendy Southern

Population Health & Sport Indigenous Health

Health Workforce

Preventive Health Policy

Programme, Services & Access Support Health Training

Office for Sport Strategy & Evidence Rural Access

Sport Integrity Adviser

Health Programmes & Sector Development

Health Workforce Reform

Cancer & Palliative Care

Office of the Gene Technology Regulator*

Senior Medical Adviser

Tobacco Control

Regulatory Practice & Compliance

Senior Medical Adviser

Drug Strategy Evaluation Adviser

Principal Medical Adviser

1.3 Structure Chart as at 30 June 2016

31 Annual Report 2015-2016 DEPARTMENT OF HEALTH

1.3 1.3 STRUCTURE CHART

Groups

Division or equivalent

Branch

Adviser

Overseen by a Statutory Office Holder

Secretary Martin Bowles

Office of the Secretary

Chief Operating Officer A/g Deputy Secretary Matt Yannopoulos

Portfolio Investment

Grant Services

People, Capability & Communication

Information Technology

Legal

Digital Payments Services Taskforce

Chief Financial Officer Grants Office

Ministerial, Parliamentary Exec Support & Governance

Enterprise Solutions

Legal Services

Digital Payments Services Taskforce

Chief Budget Officer

Capital & Assessment

People

IT Strategy & Governance Regulatory Legal Services

Investment Strategy

Grants Management

Capability

Service

Management & Optimisation

Shared Services

Regional Services Grants Communication

Information Knowledge Management

Integrity

Delivery Strategy & Operations

Regulatory Knowledge & Technology Services

Aged Care Complaints Commissioner*

Organisational Performance

SA

Governance, Education & Strategy

VIC

Aged Care Pricing Commissioner*

NSW/ACT

QLD WA TAS NT

Ageing & Aged Care Deputy Secretary Dr Margot McCarthy

Ageing & Aged Care Services

Aged Care Policy & Reform

Access, Quality & Compliance

Residential & Flexible Care Aged Care Policy

My Aged Care Operations

Home Support Funding Policy & Legislation

Prudential & Approved Provider Regulation

Ageing & Sector Support

Access Reform

Aged Care Reform Taskforce

Quality & Regulatory Policy

Home Care Reform & Sector Engagement

*

PART 1 ABOUT THE DEPARTMENT

32 DEPARTMENT OF HEALTH Annual Report 2015-2016

1.4

The Hon Sussan Ley MP Minister for Health, Minister for Aged Care and Minister for Sport As senior Minister and the Portfolio’s Cabinet member, Minister Ley held overall responsibility for the Portfolio, its entities and programs with specific responsibility for:

• Medicare benefits

• pharmaceutical benefits

• hospitals policy and implementation of funding reforms

• private health insurance

• health workforce

• primary health care

• digital health

• mental health policy

• health protection

• aged care policy and funding

• sport

• Therapeutic Goods Administration

• palliative care

Senator the Hon Fiona Nash Minister for Rural Health Senator the Hon Fiona Nash had responsibility for:

• rural and regional health

• rural health workforce

• Indigenous health services

• tobacco

• illicit drugs including National Drug Strategy

• National Ice Action Strategy

• alcohol

• food policy and regulation

• oversight of the following Portfolio entities:

- Food Standards Australia New Zealand

1.4 Ministerial Responsibilities as at 30 June 2016

33 Annual Report 2015-2016 DEPARTMENT OF HEALTH

1.4 1.4 MINISTERIAL RESPONSIBILITIES

The Hon Ken Wyatt AM, MP Assistant Minister for Health and Aged Care Assistant Minister Wyatt had responsibility for:

• aged care service delivery and implementation

• dementia

• multipurpose services

• Office of Chemical Safety

• Office of the Gene Technology Regulator

• National Industrial Chemicals Notification and Assessment Scheme

• hearing services

• oversight of the following Portfolio entities:

- Australian Radiation Protection and Nuclear Safety Agency

- National Blood Authority

- Australian Organ and Tissue Donation and Transplantation Authority (Organ and Tissue Authority)

On 19 July 2016, the Prime Minister, the Hon Malcolm Turnbull MP’s new Ministry was sworn in. The current Health Portfolio Ministers and their responsibilities are available at: www.health.gov.au/internet/main/publishing.nsf/Content/Ministers-1

PART 1 ABOUT THE DEPARTMENT

34 DEPARTMENT OF HEALTH Annual Report 2015-2016

1.5

Outcomes are the Government’s intended results, benefits or consequences for the Australian community. The Government requires entities, such as the Department, to use outcomes as a basis for budgeting, measuring performance and reporting. Annual administered funding is appropriated on an outcomes basis.

Listed below are the outcomes relevant to the Department and the programs managed under each outcome in 2015-16.

1.5 Department-Specific Outcomes

Outcome 1 Population Health 1.1: Public Health, Chronic Disease and Palliative Care

1.2: Drug Strategy

1.3: Immunisation

Outcome 2 Access to Pharmaceutical Services 2.1: Community Pharmacy and

Pharmaceutical Awareness

2.2: Pharmaceuticals and Pharmaceutical Services

2.3: Targeted Assistance - Pharmaceuticals

2.4: Targeted Assistance - Aids and Appliances

Outcome 3 Access to Medical and Dental Services 3.1: Medicare Services

3.2: Targeted Assistance - Medical

3.3: Pathology and Diagnostic Imaging Services and Radiation Oncology

3.4: Medical Indemnity

3.5: Hearing Services

3.6: Dental Services

Outcome 4 Acute Care 4.1: Public Hospitals and Information

35 Annual Report 2015-2016 DEPARTMENT OF HEALTH

1.5 1.5 DEPARTMENT-SPECIFIC OUTCOMES

Outcome 5 Primary Health Care 5.1: Primary Care Financing, Quality and Access

5.2: Primary Care Practice Incentives

5.3: Aboriginal and Torres Strait Islander Health

5.4: Mental Health

5.5: Rural Health Services

Outcome 11 Ageing and Aged Care 11.1: Access and Information

11.2: Home Support

11.3: Home Care

11.4: Residential and Flexible Care

11.5: Workforce and Quality

11.6: Ageing and Service Improvement

Outcome 6 Private Health 6.1: Private Health Insurance

Outcome 7 Health Infrastructure, Regulation, Safety and Quality 7.1: eHealth

7.2: Health Information

7.3: International Policy Engagement

7.4: Research Capacity and Quality

7.5: Health Infrastructure

7.6: Blood and Organ Donation

7.7: Regulatory Policy

Outcome 8 Health Workforce Capacity 8.1: Workforce and Rural Distribution

8.2: Workforce Development and Innovation

Outcome 9 Biosecurity and Emergency Response 9.1: Health Emergency Planning and

Response

Outcome 10 Sport and Recreation 10.1: Sport and Recreation

PART 1 ABOUT THE DEPARTMENT

36 DEPARTMENT OF HEALTH Annual Report 2015-2016

1.6

1.6 Portfolio Entity-Specific Outcomes

In 2015-16 the Health Portfolio consisted of the Department and 17 Portfolio entities. Each entity has its own specific outcome(s), with performance against their outcome(s) reported in their respective annual reports.

Portfolio entity Outcome

Australian Aged Care Quality Agency High-quality care for persons receiving Australian Government subsidised residential aged care and aged care in the community

through the accreditation of residential aged care services, the quality review of aged care services including services provided in the community, and the provision of information, education and training to the aged care sector.

Australian Commission on Safety and Quality in Health Care

Improved safety and quality in health care across the health system, including through the development, support for implementation, and monitoring of national clinical safety and quality guidelines and standards.

Australian Institute of Health and Welfare A robust evidence-base for the health, housing and community sectors, including through developing and disseminating comparable

health and welfare information and statistics.

Australian Organ and Tissue Donation and Transplantation Authority (Organ and Tissue Authority)

Improved access to organ and tissue transplants, including through a nationally coordinated and consistent approach and system.

Australian Radiation Protection and Nuclear Safety Agency

Protection of people and the environment through radiation protection and nuclear safety research, policy, advice, codes, standards, services and regulation.

Australian Sports Anti-Doping Authority Protection of the health of athletes and the integrity of Australian sport, including through deterrence, detection and enforcement to

eliminate doping.

Australian Sports Commission

Outcome 1 Improved participation in structured physical activity, particularly organised sport, at the community level, including through leadership and targeted community-based sports activity.

Outcome 2 Excellence in sports performance and continued international sporting success, by talented athletes and coaches, including through leadership in high performance athlete development, and targeted science and research.

37 Annual Report 2015-2016 DEPARTMENT OF HEALTH

1.6 1.6 PORTFOLIO ENTITY-SPECIFIC OUTCOMES

Portfolio entity Outcome

Australian Sports Foundation Limited

Improved Australian sporting infrastructure through assisting eligible organisations to raise funds for registered sporting projects.

Cancer Australia Minimised impacts of cancer, including through national leadership in cancer control with targeted research, cancer service development, education and consumer support.

Food Standards Australia New Zealand A safe food supply and well-informed consumers in Australia and New Zealand, including through the development of food regulatory

measures and the promotion of their consistent implementation, coordination of food recall activities and the monitoring of consumer and industry food practices.

Independent Hospital Pricing Authority Promote improved efficiency in, and access to, public hospital services primarily through setting efficient national prices and levels

of block funding for hospital activities.

National Blood Authority Access to a secure supply of safe and affordable blood products, including through national supply arrangements and coordination of best practice standards within agreed funding policies under the national blood arrangements.

National Health Funding Body

Provide transparent and efficient administration of Commonwealth, state and territory funding of the Australian public hospital system, and support the obligations and responsibilities of the Administrator of the National Health Funding Pool.

National Health and Medical Research Council Improved health and medical knowledge, including through funding research, translating research findings into evidence-based clinical

practice, administering legislation governing research, issuing guidelines and advice for ethics in health and the promotion of public health.

National Health Performance Authority Contribute to transparent and accountable health care services in Australia, including through the provision of independent

performance monitoring and reporting; the formulation of performance indicators; and conducting and evaluating research.

National Mental Health Commission Provide expert advice to the Australian Government and cross-sectoral leadership on the policy, programs, services and

systems that support mental health in Australia, including through administering the Annual National Report Card on Mental Health and Suicide Prevention, undertaking performance monitoring and reporting, and engaging consumers and carers.

Professional Services Review A reduction of the risks to patients and costs to the Australian Government of inappropriate clinical practice, including through

investigating health services claimed under the Medicare and pharmaceutical benefits schemes.

Annual Performance Statements 2.1: 2015-16 Annual Performance Statements Outcome 1: Population Health

Outcome 2: Access to Pharmaceutical Services

Outcome 3: Access to Medical and Dental Services

Outcome 4: Acute Care

Outcome 5: Primary Health Care

Outcome 6: Private Health

Outcome 7: Health Infrastructure, Regulation, Safety and Quality

Outcome 8: Health Workforce Capacity

Outcome 9: Biosecurity and Emergency Response

Outcome 10: Sport and Recreation

Outcome 11: Ageing and Aged Care

2.2: Entity Resource Statement

40 44

66

82

102

106

124

130

164

174

184

194

222

PART2

40 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Introduction As required under the Public Governance, Performance and Accountability Act 2013, this report contains the Department of Health’s Annual Performance Statements for 2015-16. The Annual Performance Statements detail results achieved against the planned performance criteria set out in the 2015-16 Health Portfolio Budget Statements, the Department’s 2015-16 Corporate Plan and the 2015-16 Health Portfolio Additional Estimates Statements.

Structure of the Annual Performance Statements The Annual Performance Statements demonstrate the direct link between each Outcome and its contribution to achieving the Department’s Purpose. The Annual Performance Statements follow the following structure - each Outcome contains:

• analysis of the Department’s performance against the objective of the Outcome;

• key community benefits delivered through the Outcome;

• graphical representation of performance criteria results for the Outcome;

• key activities planned for 2016-17;

• analysis of the Department’s performance against the objectives of the program(s) for the Outcome; and

• results and discussion against each performance criteria.

The page overleaf provides an outline of how the Department’s 11 Outcomes contribute to the Department’s broader Vision, Purpose and Strategic Priorities.

Results key

Met

100% of the target for 2015-16 has been achieved.

Substantially met

75-99% of the target for 2015-16 has been achieved.

Not met

Less than 75% of the target for 2015-16 has been achieved.

Data not available Data is not available to report for the 2015-16 reporting year. Associated performance criteria are not included in the graphical representation of results.

N/A The use of N/A in performance trend boxes indicates that data was not published in the relevant year for that performance criterion. Associated performance criteria are not included in the graphical representation of results.

The 2015-16 Annual Performance Statements are in accordance with s39(1)(a) of the PGPA Act for the 2015-16 financial year. The Annual Performance Statements accurately present the Department of Health’s performance in accordance with s39(2) of the PGPA Act.

2.1 2015-16 Annual Performance Statements

41 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1

Better health outcomes and reduced inequality through:

Affordable, accessible, efficient, and high quality health and aged care system through:

Better sport outcomes through:

• An integrated approach that balances prevention, primary, secondary and tertiary care;

• Promoting greater engagement of individuals in their health and healthcare; and

• Enabling access for the most disadvantaged, including Aboriginal and Torres Strait Islander people, people in rural and remote areas, and people experiencing socio-economic disadvantage.

• Partnering and collaborating with others to deliver health and aged care programs;

• Better, more cost-effective patient care through innovation and technology; and

• Regulation that protects the health and safety of the community, while minimising unnecessary compliance burdens.

• Boosting participation opportunities for all Australians;

• Optimising international performance; and

• Safeguarding integrity in sport.

Our Vision Better health and wellbeing for all Australians, now and for future generations.

Our Purpose Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation.

Strategic Priorities

42 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

We will achieve this through our Department’s Outcomes

Outcome 6. Private Health

Outcome 2. Access to Pharmaceutical Services

Outcome 3. Access to Medical and Dental Services

Outcome 4. Acute Care

Outcome 1. Population Health

• Program 1.1: Public Health, Chronic Disease and Palliative Care

• Program 1.2: Drug Strategy

• Program 1.3: Immunisation

• Program 6.1: Private Health Insurance

• Program 2.1: Community Pharmacy and Pharmaceutical Awareness

• Program 2.2: Pharmaceuticals and Pharmaceutical Services

• Program 2.3: Targeted Assistance - Pharmaceuticals

• Program 2.4: Targeted Assistance - Aids and Appliances

• Program 3.1: Medicare Services

• Program 3.2: Targeted Assistance - Medical

• Program 3.3: Pathology and Diagnostic Imaging Services and Radiation Oncology

• Program 3.4: Medical Indemnity

• Program 3.5: Hearing Services

• Program 3.6: Dental Services

• Program 4.1: Public Hospitals and Information

Outcome 5. Primary Health Care

• Program 5.1: Primary Care Financing, Quality and Access

• Program 5.2: Primary Care Practice Incentives

• Program 5.3: Aboriginal and Torres Strait Islander Health

• Program 5.4: Mental Health

• Program 5.5: Rural Health Services

43 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1

Outcome 7. Health Infrastructure, Regulation, Safety and Quality

Outcome 8. Health Workforce Capacity

Outcome 9. Biosecurity and Emergency Response

Outcome 10. Sport and Recreation

Outcome 11. Ageing and Aged Care

• Program 7.1: eHealth

• Program 7.2: Health Information

• Program 7.3: International Policy Engagement

• Program 7.4: Research Capacity and Quality

• Program 7.5: Health Infrastructure

• Program 7.6: Blood and Organ Donation

• Program 7.7: Regulatory Policy

• Program 8.1: Workforce and Rural Distribution

• Program 8.2: Workforce Development and Innovation

• Program 9.1: Health Emergency Planning and Response

• Program 10.1: Sport and Recreation

• Program 11.1: Access and Information

• Program 11.2: Home Support

• Program 11.3: Home Care

• Program 11.4: Residential and Flexible Care

• Program 11.5: Workforce and Quality

• Program 11.6: Ageing and Service Improvement

44 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 1

Our Purpose

Outcome 1 Population Health A reduction in the incidence of preventable mortality and morbidity, including through national public health initiatives, promotion of healthy lifestyles, and approaches covering disease prevention, health screening and immunisation

Analysis of performance - Outcome 1 Population Health In 2015-16, the Department implemented key public health initiatives that contributed to the reduction of the incidence of chronic disease and encouraged Australians to lead healthier and more active lifestyles. These included the development of strategies for asthma, diabetes and chronic conditions. In addition, continuation and expansion of the national cervical, bowel and breast screening programs will ensure more Australians are screened, increasing the chances of detecting cancers early and saving more lives.

The Department also continued to deliver programs and communication campaigns aimed at discouraging the use and misuse of alcohol, tobacco, prescription and illicit drugs. Through the delivery of the National Immunisation Program, childhood immunisation rates continued to be high, indicating a high level of protection in the Australian community.

These activities have contributed to the Department’s achievement of the objectives under Outcome 1 and Our Purpose.

45 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Key community benefits for Outcome 1 in 2015-16

Improved detection and survival outcomes for people with cancer

The National Bowel Cancer Screening Program expanded to include 64 and 72 year olds. When fully implemented in 2020, four million Australians aged 50- 74 will be invited to participate every two years.

Continued to reduce tobacco use in the community through education

On 1 May 2016, a new national media campaign targeting Aboriginal and Torres Strait Islander smokers was launched. The campaign, Don’t Make Smokes Your Story, encourages smokers to make a serious quit attempt, not just for themselves but also for the health and wellbeing of their families.

Increased national immunisation coverage rates and improved the efficiency of the National Immunisation Program

Childhood vaccination coverage rates have been maintained or improved in 2015-16, particularly among Aboriginal and Torres Strait Islander children.

Combatted the decline in physical activity among young women aged 12—19 years

The Girls Make Your Move campaign was launched to increase positive attitudes among young women towards being physically active and provide information about different ways to participate in physical activity and sport. In particular, there have been improvements in perceptions about the importance of being active for young women, that activity is good for both mental and physical health and that it is fun.

Summary of performance criteria results for Outcome 1

Met

90.5%

Substantially met

9.5%

Not met

0.0%

46 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Looking ahead • In 2016-17, the Department will support the renewal of the National Cervical Screening Program and expansion of the National Bowel Cancer Screening Program. Implementation of the National Cancer Screening Register is expected to commence in early 2017.

• The next Australian National Drug Strategy Household Survey will be conducted in 2016-17.

• From September 2016, the Australian Childhood Immunisation Register will expand to become the Australian Immunisation Register, and will collect immunisation data for all Australians where vaccinations have been provided through general practice and community clinics.

• In 2016-17, an evaluation of the ongoing effectiveness of the curr ent suite of health warnings on tobacco products will be initiated.

Programs and program objectives contributing to Outcome 1

Program 1.1: Public Health, Chronic Disease and Palliative Care

• Reduce the incidence of chronic disease and promote healthier lifestyles

• Support the development and implementation of evidence-based food regulatory policy

• Improve detection, treatment and survival outcomes for people with cancer

• Reduce the incidence of blood-borne viruses and sexually transmissible infections

• Improve access to high quality palliative care services

Program 1.2: Drug Strategy

• Reduce harm to individuals and communities from misuse of alcohol, pharmaceuticals and use of illicit drugs

• Reduce the harmful effects of tobacco use

Program 1.3: Immunisation

• Increase national immunisation coverage rates and improve the efficiency of the National Immunisation Program

47 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Analysis of performance - Program 1.1: Public Health, Chronic Disease and Palliative Care The Department has met all performance targets for Program 1.1: Public Health, Chronic Disease and Palliative Care, for criteria for which data is currently available.

Chronic diseases are the leading cause of preventable death and disease in Australia, presenting a major challenge to Australia’s health care system. In 2015-16, the Department continued efforts to reduce the incidence of chronic disease in the community, through the finalisation of the Australian National Diabetes Strategy 2016-2020, and the development of a National Asthma Strategy, and the National Strategic Framework for Chronic Conditions. A cross-jurisdictional working group comprising State and Territory health department representatives will develop an Implementation Plan for the Australian National Diabetes Strategy.

In 2015-16, the Department continued efforts to maintain and incr ease cancer screening rates for eligible Australians. Recognising the importance of cancer screening in the early detection and treatment of cancer, the Department continued expansion of the National Bowel Cancer Screening Program and BreastScreen Australia, and commenced implementing changes to the National Cervical Screening Program. Continuing to actively invite Australians to participate in cancer screening programs will ensure that more Australians are screened, increasing the chances of detecting cancer early and saving more lives. In some cases, early detection also means less invasive treatment.

A key challenge to increasing participation in cancer screening programs is effectively and efficiently supporting equitable access, particularly for harder to reach groups, including Aboriginal and Torres Strait Islander and Culturally and Linguistically Diverse people. In 2015-16, the Department implemented communication strategies to improve participation in cancer screening.

In 2015-16, the Department continued to implement priority actions of the National Blood-borne Viruses (BBV) and Sexually Transmissible Infections (STI) Strategies 2014-2017. Although these actions focus on a reduction in transmission of BBV and STI in priority populations, the flow-on effect is a decreased risk of transmission in the broader community. Through regular progress reporting, the Department ensures a comprehensive approach to increasing BBV and STI testing and treatment, helping to identify and respond to any gaps that increase the risk of transmission in the community.

Through development and implementation of evidence-based food regulatory policy, the community continues to benefit from confidence in the safety of the food supply chain, and consumers are able to make informed choices about food.

48 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Girls Make Your Move - inspiring, energising and empowering young women to be more active Launched in February 2016, the Girls Make Your Move campaign is about inspiring, energising and

empowering young women and girls aged 12-19 years to be more active. It reinforces the many benefits of an active life, whether through recreation, incidental physical activity or sport.

The campaign was in response to 2014-15 research that identified 55.9% of girls aged 15-17 years reported no or low exercise levels, compared to boys at 38.3%. Young women also tend to reduce their participation in sport and physical activity levels at a faster rate than boys.

The campaign addresses this by encouraging young girls’ participation in physical activity

and sport by reducing perceived barriers, generating positive perceptions towards exercise and generating intentions to be more active.

The campaign encourages sport and physical activity to be a natural part of young women’s lives - it’s about having fun and feeling good:

“…it makes me feel good about myself, and being active and not just going home and watching T.V., and being proud of what I’ve done or accomplished.” - Selam, 16 years

“…it helps with my mental state as well as my physical. I feel like it’s a big achievement in my life.” - Taesha, 17 years

This campaign encourages young women in their teenage years to lay down the foundations for the rest of their lives as they are setting up good habits and their muscles and bones are growing.

Being active has many physical, social, emotional and economic benefits for individuals and the community. Regular physical activity can help with managing stress, alleviating depression and anxiety, strengthening self-esteem, enhancing mood and boosting mental alertness. It also provides social benefits through increased social interaction and integration.

Comprising a website,13 Instagram presence with over 7,000 followers, advertising across traditional and social media, events and public relations, the campaign has reached over 80% of girls aged 12-19 years. The campaign has been positively received, with more than one in five (23%) girls surveyed indicating they had done more physical activity or sport as a result of the campaign.

13 Available at: www.health.gov.au/internet/girlsmove/publishing.nsf/content/home

49 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Reduce the incidence of chronic disease and promote healthier lifestyles

New National Diabetes Strategy in place to support better prevention and management of diabetes. Source: 2015-16 Health Portfolio Budget Statements, p. 43

2015-16 Target 2015-16 Result

National Diabetes Strategy finalised and publicly released. The Australian National Diabetes Strategy 2016-2020 (the Strategy) was publicly released on 13 November 2015.

Result: Met

The Strategy is a high-level document that contains seven goals and potential areas for action. It identifies the most effective and appropriate interventions to reduce the impact of diabetes in the community and lead the way internationally in diabetes prevention, management and research. The Strategy is available on the Department’s website at: www.health.gov.au/internet/main/publishing.nsf/Content/nds-2016-2020

The Commonwealth, State and Territory Governments will each have a role in supporting strategic investments that enable development and delivery of policies, programs and initiatives to address diabetes and support the goals of the Strategy.

Key chronic disease policy activities (National Strategic Framework for Chronic Conditions and National Asthma Strategy) are informed by appropriate expertise, knowledge and evidence. Source: 2015-16 Health Portfolio Budget Statements, p. 44

2015-16 Target 2015-16 Result

Experts and the public are consulted through a variety of means, including: working groups, focussed workshops, and online processes.

Experts and the public were consulted in the development of chronic disease policies and strategies.

Result: Met

The development of the National Strategic Framework for Chronic Conditions has been informed by a variety of means, including: a Jurisdictional Working Group; relevant external experts; a Roundtable Workshop; and targeted and public consultation processes. These processes have provided opportunities for feedback from a range of stakeholders including peak bodies, key stakeholders including State Government representatives, clinical experts, health professionals, academics and consumer representatives. Thirteen targeted consultations were held in nine locations across Australia between September to November 2015 and a six-week online public consultation process concluded in June 2016 with 159 submissions received.

The development of a National Asthma Strategy has been informed by: an Advisory Group; a roundtable of experts and interested persons/organisations; and an online public consultation process. The Strategy is being managed by the National Asthma Council with funding from the Australian Government, and is expected to be completed in 2017.

50 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Support the development and implementation of evidence-based food regulatory policy

Develop advice and policy for the Australian Government on food regulatory issues. Source: 2015-16 Health Portfolio Budget Statements, p. 43

2015-16 Target 2015-16 Result

Relevant, evidence-based advice produced in a timely manner. Relevant, evidence-based advice was produced in a timely manner.

Result: Met

The Department provided advice to the Australian Government in relation to food regulation issues such as country of origin labelling, maternal and infant nutrition, front-of-pack labelling, low tetrahydrocannabinol hemp in food, and labelling of food including health claims.

Promote a nationally consistent, evidence-based approach to food policy and regulation. Source: 2015-16 Health Portfolio Budget Statements, p. 44 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result

Develop and implement nationally agreed evidence-based policies and standards.

A consistent regulatory approach was applied across Australia through nationally agreed evidence-based policies and standards.

Result: Met

In 2015-16, the Department continued to work with the Australia and New Zealand Ministerial Forum on Food Regulation, the Food Regulation Standing Committee and the Implementation Subcommittee for Food Regulation to develop and implement consistent food policies and regulations.

51 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Improve detection, treatment and survival outcomes for people with cancer

Implement the expansion of the National Bowel Cancer Screening Program to a biennial screening interval. Source: 2015-16 Health Portfolio Budget Statements, p. 43

2015-16 Target 2015-16 Result

Commencement of invitations to 64 and 72 year olds in 2016 and the continued delivery of communication and program enhancement activities.

64 and 72 year olds are being invited as scheduled. Phase two of the Communications Campaign and associated public relations activities supporting the National Bowel Cancer Screening Program was also undertaken in March 2016.

Result: Met

As a consequence of expanding the National Bowel Cancer Screening Program to include 64 and 72 year olds, around 40,000 invitations per week are being sent out. By 2020, when the expanded program is fully implemented, it is anticipated that around four million invitations will be sent out each year.

In addition to the Communications Campaign, additional promotional activities, such as an event with Culturally and Linguistically Diverse (CALD) clinicians was held in Sydney, hosted by Anton Enus, from the SBS television network. A regional radio promotional activity was also undertaken.

Other program enhancement activities are progressing well. These activities include a strategy and plan focussing on GP engagement to support increased participation and confidence in the program, and an Alternative Pathways Pilot to support increased participation of Aboriginal and Torres Strait Islander people.

Percentage of people invited to take part in the National Bowel Cancer Screening Program who participated. Source: 2015-16 Health Portfolio Budget Statements, p. 45

2015-16 Target 2015-16 Result Jan 2013 - Dec 2014 Jan 2012 - Dec 2013

41.0% Data not available 37.0%14 36.0%

As there is a time lag between an invitation being sent, test results and collection of data from the cancer registry, participation rates for 2015 and 2016 will not be available until mid-2017.

A participation rate of 37% has been recorded for January 2013 to December 2014, an increase from 36% for January 2012 to December 2013.

To date, program participation has been hindered by the difficulty in promoting regular screening as the program moves from a five year to a two year screening interval. With the program on track to be fully implemented by 2020, when all eligible people aged 50-74 years will be invited to screen every two years, participation is expected to increase noticeably. A range of measures are being implemented to help increase program participation.

14

14 AIHW 2016. National Bowel Cancer Screening Program: monitoring report 2016. Cancer series no. 98. Cat. no. CAN 97. Canberra: AIHW.

52 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Support the expansion of BreastScreen Australia to invite Australian women 70-74 years of age through the implementation of a nationally consistent communication strategy. Source: 2015-16 Health Portfolio Budget Statements, p. 43

2015-16 Target 2015-16 Result

Delivery of communication activities such as print, radio and online promotion.

Phase two of communication activities to support the expansion of BreastScreen Australia was launched in February 2016.

Result: Met

In February 2016, the Australian Government launched phase two of the campaign An invitation that could save your life, to support the expansion of the BreastScreen Australia program target age to include women aged 70-74.

Media activities included print (national, regional, community press and consumer magazines), radio (metro and regional), and out-of-home and online media activities. Media activities were also adapted for Aboriginal and Torres Strait Islander and CALD audiences by specialist agencies.

Number of breast care nurses employed through the McGrath Foundation. Source: 2015-16 Health Portfolio Budget Statements, p. 44

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

57 57

Result: Met

57 53 44 30

There are 57 Commonwealth-supported breast care nurses located across Australia, with around 86% of these nurses situated in regional and remote communities. Breast care nurses funded through the McGrath Foundation provide vital information, care and support to women diagnosed with breast cancer and their families.

In 2015-16, 4,286 women diagnosed with breast cancer, and their families, were supported by the McGrath Foundation breast care nurses.

Percentage of women 50-69 years of age participating in BreastScreen Australia. Source: 2015-16 Health Portfolio Budget Statements, p. 45

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

55.0% Data not available 54.0% 53.7% 54.4% 54.6%

In 2015-16, the Australian Government continued to work with the States and Territories to provide free screening to ensure more Australian women participate in the BreastScreen program.

As there is a time lag between an invitation being sent, test results and collection of data from registries, participation rates for 2015 and 2016 are not yet available. These participation rates will not be available until 2017.

From 2014 to 2015, 54.0% of women aged 50-69 years participated in the program. This compares to 53.7% in 2013 and 2014, and 54.4% in 2012 and 2013.

Age is the biggest risk factor in developing breast cancer, with most breast cancers occurring in women over the age of 50.

53 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Percentage of women 70-74 years of age participating in BreastScreen Australia. Source: 2015-16 Health Portfolio Budget Statements, p. 45

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

51.0% Data not available 48.7% N/A N/A N/A

In 2015-16, BreastScreen Australia continued to actively invite women 70-74 years of age to participate in the program.

As there is a time lag between an invitation being sent, test results and collection of data from registries, participation rates for 2015 and 2016 are not yet available. These participation rates will not be available until 2017.

From 2014 to 2015, 48.7% of women aged 70-74 years participated in the program.

Percentage of women in the target age group participating in the National Cervical Screening Program. Source: 2015-16 Health Portfolio Budget Statements, p. 46

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

57.0% Data not available 56.9% 57.0% 57.7% 57.3%

As there is a time lag between reminders being sent, test results and collection of data from registries, participation rates for 2015-16 are not yet available. In 2014 and 2015, 56.9% of women aged 20-69 participated in the National Cervical Screening Program (NCSP).

In 2014 and 2015, more than 3.83 million women participated in the NCSP. Currently 56.9% of women participate in the NCSP every two years, which increases to 70.2% every three years and 83.0% every five years.

The Australian Government has now accepted the evidence-based recommendations of the Medical Services Advisory Committee (MSAC) that a five-yearly primary human papillomavirus (HPV) test should replace the current biennial Pap test for cervical screening. This will ensure Australian women will have access to a cervical screening program that is safe, effective, efficient, and is based on current evidence.

The renewed NCSP will commence on 1 May 2017 when the HPV screening test will become available on the Medicare Benefits Schedule and the National Cancer Screening Register will be in place to support the renewed clinical pathway.

54 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Reduce the incidence of blood-borne viruses and sexually transmissible infections

Implement priority actions contained in the National BBV and STI Strategies 2014-17. Source: 2015-16 Health Portfolio Budget Statements, p. 44

2015-16 Target 2015-16 Result

Ongoing implementation of programs which support delivery of priority action areas to reduce BBV and STI.

Implementation of priority programs continued through 2015-16.

Result: Met

Priority actions contained in the National BBV and STI Strategies 2014-2017 and the Implementation Plan continued throughout 2015-16. To achieve this goal, the Department worked with non-Government organisations representing and targeting communities affected by HIV, hepatitis B, hepatitis C and sexually transmissible infections.

Support programs which are effective in reducing the spread of communicable disease and working towards the national strategy targets. Source: 2015-16 Health Portfolio Budget Statements, p. 45 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result

Reporting on progress of programs that support the National BBV and STI Strategies 2014-2017 is undertaken according to the evaluation framework in the Implementation and Evaluation Plan.

Reporting against the progress of programs is being undertaken in accordance with the Implementation Plan.

Result: Met

The Commonwealth, together with partners to the National BBV and STI Strategies 2014-2017, reports regularly on progress of programs. This process is ongoing through the life of the strategies.

Improve access to high quality palliative care services

Implement national palliative care quality improvement activities consistent with the National Palliative Care Strategy 2010. Source: 2015-16 Health Portfolio Budget Statements, p. 44

2015-16 Target 2015-16 Result

Implementation of national projects that support quality improvement in palliative care priority areas including education, training, quality standards and advance care planning.

Implementation of all national projects that support quality improvement in palliative care continued in 2015-16.

Result: Met

National palliative care projects continued to be implemented in 2015-16. These projects continued to be consistent with the National Palliative Care Strategy 2010 and the objective of assisting Australians to live well at the end of life.

55 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Support effective quality improvements to palliative care priority areas through funding of national projects. Source: 2015-16 Health Portfolio Budget Statements, p. 45

2015-16 Target 2015-16 Result

Progress reports from contracted organisations indicate that activities are being implemented in accordance with contractual arrangements and are achieving expected outcomes.

All progress reports from contracted organisations indicate that national palliative care projects are achieving expected outcomes in 2015-16.

Result: Met

National palliative care projects continue to submit progress reports that indicate activities are being implemented in accordance with contractual arrangements. These national projects address three key objectives:

• improve access to high quality palliative care for all Australians as they require it;

• enhance the quality of palliative care service delivery; and

• provide support for people who are dying, their families and carers.

56 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Analysis of performance - Program 1.2: Drug Strategy The Department has met all performance targets for Program 1.2: Drug Strategy, for criteria for which data is currently available. In December 2015, the Department launched the Positive Choices web portal. The web portal provides a national access point for evidence-based information, tools, and school-based programs on illicit drugs and related harms. It is targeted at teachers, parents and students. It raises awareness about harms associated with illegal drug use, and improves access to evidence-based drug prevention resources.

In response to the National Ice Taskforce Final Report, the new National Ice Action Strategy was agreed at the 11 December 2015 meeting of the Council of Australian Governments. The National Ice Action Strategy includes funding targeted at strengthening education, prevention, treatment, support and community engagement. The Strategy includes a range of achievable actions that will help governments, service providers and communities to work together to reduce the use and supply of ice in Australia, and the harm it causes.

Tobacco smoking is one of the leading causes of preventable death and disease in Australia. The Department continues efforts to reduce the harmful effects of tobacco use among Australians. In 2015-16, this included a new media campaign, Don’t Make Smokes Your Story, which encourages Aboriginal and Torres Strait Islander smokers to quit, but is also resonating well with non-Indigenous smokers. For more information about initiatives targeted at reducing smoking rates among Aboriginal and Torres Strait Islander people, see Program 5.3: Aboriginal and Torres Strait Islander Health and the case study below.

The Department also concluded a Post-Implementation Review (PIR) of tobacco plain packaging, which became fully effective on 1 December 2012. The PIR concluded that the tobacco plain packaging measure is achieving its public health objectives of reducing smoking and exposure to tobacco smoke in Australia, and it is expected to continue to do so into the future.

An expert analysis commissioned by the Department found that tobacco plain packaging, in combination with updated and enlarged graphic health warnings (the 2012 packaging changes), was associated with a statistically significant estimated decline in smoking prevalence. The analysis estimated that the 2012 packaging changes accounted for about one quarter of the total drop in smoking prevalence, during the 34 month post-implementation period from 1 December 2012 to 30 September 2015, which equates to more than 108,000 fewer smokers.

The Government continued to fund the defence of legal challenges to tobacco plain packaging in two international fora. On 18 December 2015, the arbitral tribunal that heard Philip Morris Asia’s (PM Asia) claim regarding Australia’s tobacco plain packaging measure, unanimously agreed with the Australian Government’s position that the tribunal had no jurisdiction to hear the merits of PM Asia’s claim.

In 2015-16, compliance and enforcement activities under the Tobacco Plain Packaging Act 2011 (the Act) continued. The Department is required to report on contraventions of the Act. The 2015-16 report is included under Part 3.2: External Scrutiny of this Annual Report.

57 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Working towards a tobacco-free future Australia’s smoking rates are among the lowest in the world, but this is by no means due to chance.

Over the last few decades, the Australian Government has worked hard to reduce Australia’s smoking rates. We have introduced tobacco plain packaging; new and larger graphic health warnings on tobacco products; increased tobacco taxes; restricted tobacco advertising and promotion, including on the internet; continued developing new anti-smoking social marketing campaigns to educate Australians about the health impacts of smoking; and subsidised smoking aids and nicotine replacement therapies through the Pharmaceutical Benefits Scheme.

In 2014-15, 14.5% of adults aged 18 years and over smoked daily (approximately 2.6 million smokers), a decrease from 16.1% in 2011-2012.15 In April 2016, the Australian Bureau of Statistics released the 2014-15 National Aboriginal Torres Islander Social Survey, which showed that 40.6% of Aboriginal and Torres Strait Islanders aged 18 years and over were daily smokers, down from 44.4% in 2012-13.16

The Council of Australian Governments target is that by 2018, the adult daily smoking rate will be reduced to 10%, and the Aboriginal and Torres Strait Islander adult daily smoking rate will be halved from 47.7% within the same period.

Don’t Make Smokes Your Story is the latest phase of the National Tobacco Campaign which uses an empowering and positive approach to encourage quit attempts among Aboriginal and Torres Strait Islander smokers.

The campaign tells the story of a young dad, “Ted”, played by a former smoker alongside his real family. The storyline tells how Ted quits smoking for his family - two young children, his pregnant wife, mum and aunties. He has lost his father to smoking-related illnesses and has experienced his own health scares. A range of extension videos demonstrate Ted’s quitting journey, including Ted actively refusing

smokes in common trigger environments and accessing a range of support services such as speaking to an Aboriginal counsellor from the Quitline and using the My QuitBuddy mobile app.

This story ran alongside the other existing advertisements, Break the Chain and Quit for You, Quit for Two, as part of an integrated strategy utilising mainstream mass media, local and targeted channels, digital and social media, and below the line activities.

Quitting resources available include - My QuitBuddy and Quit for You, Quit for Two mobile phone apps, that are free and can be downloaded to an iPhone or iPad from the Apple iTunes online store17 or an android phone from Google Play store.18

15 ABS, National Health Survey: First Results 2014-15. Released 8 December 2015. Available at: www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/4364.0.55.0012014-15?OpenDocument

16 ABS, National Aboriginal and Torres Strait Islander Social Survey, 2014-15 - Australia. Released 28 April 2016. Available at: www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/4714.02014-15?OpenDocument

17 Available at: itunes.apple.com/au/app/quit-for-you-quit-for-two/id549772042 18 Available at: play.google.com/store/apps/details?id=au.com.bcm.quitfortwo

58 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Reduce harm to individuals and communities from misuse of alcohol, pharmaceuticals and use of illicit drugs

Provide up-to-date information to young people on the risks and harms of illicit drug use. Source: 2015-16 Health Portfolio Budget Statements, p. 47

2015-16 Target 2015-16 Result

Continue dissemination of materials and delivery of the National Drugs Campaign including provision of resources for parents, teachers and students.

Material continued to be disseminated supporting the National Drugs Campaign, including the launch of the Positive Choices web portal in December 2015.

Result: Met

The Positive Choices web portal was developed to provide curriculum-specific materials aimed at preventing drug and alcohol harms, which can be used by schools in an Australian context. It raises awareness about harms associated with illegal drug use, and improves access to evidence-based drug prevention resources and programs. The website includes a menu of age-appropriate options for school teachers, students and their parents. It enables parents and teachers to provide their children and students with credible and up-to-date information.

The web portal and any related materials developed are promoted on the National Drugs Campaign website.19

While the portal has only been accessible since December 2015, there are early indications that it is being accessed regularly and visitor numbers are growing. 19

Availability of prevention and early intervention substance misuse resources for teachers, parents and students. Source: 2015-16 Health Portfolio Budget Statements, p. 48

2015-16 Target 2015-16 Result

Increasing access to new material through the National Drugs Campaign website as measured by an increase in site visits.

2015-16 saw a 9.9% increase in the number of visitors to the National Drugs Campaign website.

Result: Met

The National Drugs Campaign website was updated during 2015-16 to include information on activities relating to:

• the National Ice Taskforce, including promotion of the final report of the Taskforce and the National Ice Action Strategy; and

• promotion of links for the Positive Choices web portal and state-based help and support services.

19 Available at: www.drugs.health.gov.au

59 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Percentage of population 14 years of age and older recently (in the last 12 months) using an illicit drug. Source: 2015-16 Health Portfolio Budget Statements, p. 48 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result 2013 2010 2007 2004

<13.4% Data not available 15.0% 14.7% 13.4% 15.3%

The National Drug Strategy Household Survey (NDSHS) is undertaken every three years and is the primary data source used to report on this criterion.

The most recent NDSHS undertaken in 2013 found that the prevalence of recent use of illicit drugs was relatively stable between 2004 and 2013. The next NDSHS will be conducted during 2016, and results for the 2016 NDSHS will be available in 2017.

NDSHS data is available at: www.aihw.gov.au/alcohol-and-other-drugs/ndshs/

Reduce the harmful effects of tobacco use

Implement social marketing campaigns to raise awareness of the dangers of smoking and encourage and support attempts to quit. Source: 2015-16 Health Portfolio Budget Statements, p. 47

2015-16 Target 2015-16 Result

Deliver a campaign within agreed timeframes. National Tobacco Campaign launched 1 May 2016. Result: Met

A new national campaign primarily targeting Aboriginal and Torres Strait Islander smokers 18-40 years of age was launched on 1 May 2016. The campaign, Don’t Make Smokes Your Story, included media placement across television, print, radio, cinema, out-of-home and digital/social media channels, as well local level community activities.

During the campaign period of 1 May to 18 June 2016 there were 32,760 downloads of the My Quit Buddy mobile phone app and a total of 234,698 visits to the QuitNow website. During 2015-16, there were 48,487 calls to Quitline counsellors.

Percentage of population 18 years of age and over who are daily smokers. Source: 2015-16 Health Portfolio Budget Statements, p. 48 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result 2014-15 2011-12 2007-08

12.6% Data not available 14.5% 16.1% 18.9%

In December 2015, the Australian Bureau of Statistics (ABS) released the National Health Survey: First Results, 2014-15, which showed that 14.5% of adults aged 18 years and over were daily smokers (2.6 million adults), down from 16.1% in 2011-12. The report also showed that a further 1.5% of adults smoked less often than daily, 31.4% were ex-smokers, and just over half, 52.6%, had never smoked. The ABS National Health Survey is undertaken every three years, therefore updated information from this survey will be available in 2018.

60 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Analysis of performance - Program 1.3: Immunisation The Department has either met or substantially met all performance targets for Program 1.3: Immunisation.

High immunisation rates were maintained in 2015-16, with over 90 per cent of children fully immunised at one, two and five years of age. High coverage rates indicate a high level of protection against vaccine preventable diseases for individuals, which reduces transmission of infection within the Australian community, resulting in fewer outbreaks and stronger protection for those unable to immunise.

However, the rate achieved is below the aspirational target of 95 per cent set by the Chief Medical Officer and the State and Territory Chief Health Officers in 2014. During the previous 12 months of reporting, immunisation coverage rates have continued to increase. This trend is expected to continue towards the 95 per cent target. The Department will continue to work with States and Territories to achieve this target over coming years, noting that geographic variation in coverage will need to be addressed to achieve this aspirational target.

Local level analysis has found significant regional variation in coverage rates, which can create vulnerability to local outbreaks. The Department is conducting further work to address this, including investigating the immunisation information needs of Australians, and options for addressing vaccine hesitancy.20

In 2015-16, the Department completed four tenders under the Essential Vaccines Procurement Strategy. Sourcing vaccines under this strategy enables the Department to continue working with States and Territories to secure the continual supply of high quality, safe and efficacious vaccines at value for money for the Australian community.

Increase national immunisation coverage rates and improve the efficiency of the National Immunisation Program

Key actions of the National Immunisation Strategy 2013-2018 (NIS) are implemented. Source: 2015-16 Health Portfolio Budget Statements, p. 51

2015-16 Target 2015-16 Result

NIS actions to improve vaccination coverage rates are undertaken in accordance with the NIS Implementation Plan.

Implementation of key actions under priority one of the NIS was ongoing in 2015-16.

Vaccine coverage rates for human papilloma virus improved amongst girls and boys (currently 77% and 66% respectively in 2015, up from 73% and 61% in 2014).

Result: Substantially met

Key activities in 2015-16 include provision of free catch up vaccines for children aged 10 to 19 years of age, additional incentives for vaccination providers to catch up children more than two months overdue for vaccines, and dissemination of materials to support vaccination providers engaging with parents with concerns about vaccination.

In 2015-16, phased expansion of the Australian Childhood Immunisation Register to the whole-of-life Australian Immunisation Register (AIR) commenced. From 1 January 2016, immunisation data collection was expanded to include individuals up to 20 years of age (up from 7 years of age).

From September 2016, the AIR will collect immunisation data for all Australians where vaccinations have been provided through general practice and community clinics. This improved data capture will, for the first time, enable understanding of immunisation rates in adolescents and adults at the national level.

20 Vaccine hesitancy refers to delay in acceptance or refusal of vaccines despite availability of vaccination services. Vaccine hesitancy is complex and context specific varying across time, place and vaccines. It includes factors such as complacency, convenience and confidence. Further information is available at: www.who.int/ immunization/programmes_systems/vaccine_hesitancy/en/

61 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Number of completed tenders under the National Partnership Agreement on Essential Vaccines (Essential Vaccines Procurement Strategy). Source: 2015-16 Health Portfolio Budget Statements, p. 51

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

2 4

Result: Met

1 0 3 1

As part of the Department’s transition to centralised purchasing arrangements for essential vaccines funded under the National Immunisation Program (NIP), four tenders were completed in the 2015-16 financial year for the supply of:

• human papillomavirus (HPV) vaccine to adolescents aged 12 to 13 years;

• hepatitis A vaccine to Aboriginal and Torres Strait Islander children in high risk areas;

• diphtheria-tetanus-acellular-pertussis (DTPa) vaccine to infants aged 18 months; and

• pneumococcal vaccine to medically at risk four year olds, medically at risk Aboriginal and Torres Strait Islander people aged 15 years and over, Aboriginal and Torres Strait Islander people aged 50 years and over, and people aged 65 years and over.

During 2015-16, the Department also procured catch-up vaccines for the No Jab, No Pay Budget measure to enable adolescents aged 10-19 years in receipt of family payments to access free catch up vaccines.

States and Territories meet the requirements of the National Partnership Agreement on Essential Vaccines (NPEV). Source: 2015-16 Health Portfolio Budget Statements, p. 51

2015-16 Target 2015-16 Result

Analysis of data from the Australian Childhood Immunisation Register confirms that the performance benchmarks to improve vaccination coverage rates are achieved in the NPEV.

Preliminary analysis of State and Territory performance for 2015-16 shows that States and Territories have met the required NPEV benchmarks.

Result: Met

Childhood vaccination coverage rates have been maintained or improved in 2015-16.

• All States and Territories met benchmark 1 - maintain or increase coverage rates for Indigenous Australian children registered aged: 12-15 months; 24-27 months; and 60-63 months.

• All States and Territories met benchmark 2 - maintain or increase coverage in areas of low immunisation.

• All States and Territories met benchmark 3 - maintain or decrease vaccine wastage and leakage to 10% or below.

• All States and Territories met benchmark 4 - maintain or increase coverage rates for four year olds.

62 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Increase the immunisation coverage rates among children 12-15 months of age. Source: 2015-16 Health Portfolio Budget Statements, p. 52 & 2015-16 Corporate Plan, p. 15 (aggregated performance criteria)

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

91.5% 93.0%

Result: Met

91.3% 90.4% 91.3% 91.8%

Increase the immunisation coverage rates among children 24-27 months of age. Source: 2015-16 Health Portfolio Budget Statements, p. 52 & 2015-16 Corporate Plan, p. 15 (aggregated performance criteria)

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

91.5% 90.7%

Result:

Substantially met

89.2% 92.4% 92.4% 92.6%

Increase the immunisation coverage rates among children 60-63 months of age. Source: 2015-16 Health Portfolio Budget Statements, p. 52 & 2015-16 Corporate Plan, p. 15 (aggregated performance criteria)

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

92.0% 92.9%

Result: Met

92.3% 92.0% 91.5% 90.0%

In December 2014, the definition of fully immunised was updated to include meningococcal C (given at 12 months), and dose 2 measles, mumps, rubella (MMR) and dose 1 varicella (given as MMRV at 18 months). This caused a drop in the 24-27 month coverage rates. The more vaccines that are included in the assessment of full immunisation, the higher the likelihood of reduced coverage rates. This usually resolves over time, as the changes become routine.

While there was a drop in coverage rates after December 2014, coverage rates have recently been increasing, and it is expected that coverage for 2015-16 will come closer to meeting the target.

Exceeding the national target is a good outcome, and all States and Territories experienced increased immunisation rates for children 12-15 months and 60-63 months of age.

63 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Figure 1.1: Percentage of five year olds fully immunised by Statistical Area Level 3 (1 July 2015 - 30 June 2016)21

Increase the immunisation coverage rates among 12-15 months of age Aboriginal and Torres Strait Islander children. Source: 2015-16 Health Portfolio Budget Statements, p. 52

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

87.0% 89.8%

Result: Met

N/A N/A N/A N/A

Exceeding the national target is a good outcome, and all States and Territories experienced increased immunisation rates.

By five years of age Aboriginal and Torres Strait Islander children have very high vaccination rates, with coverage at 94.2%. The lower rates at one year of age (89.8%) show that these children are getting vaccinated but are doing so late. The Department will continue to work with States and Territories to improve vaccination timeliness in this cohort.

These high coverage rates provide Aboriginal and Torres Strait Islander children better protection against vaccine preventable diseases circulating within the community.

21 Data source: Australian Childhood Immunisation Register. Statistical Area Level 3 is a designated reporting level that provides a geographic breakdown of Australia. It generally contains a population of between 20,000 and 130,000 people.

64 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 1 - Budgeted expenses and resources

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 1.1: Public Health, Chronic Disease and Palliative Care2

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 165,074 155,205 (9,869)

Special appropriations

Public Governance, Performance and Accountability Act 2013 s77 - repayments 2,000 8,107 6,107

Departmental expenses

Departmental appropriation3 23,369 26,196 2,827

Expenses not requiring appropriation in the current year4 609 1,724 1,115

Total for Program 1.1 191,052 191,232 180

Program 1.2: Drug Strategy2

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 122,232 121,806 (426)

Departmental expenses

Departmental appropriation3 18,101 18,536 435

Expenses not requiring appropriation in the current year4 467 1,197 730

Total for Program 1.2 140,800 141,539 739

Program 1.3: Immunisation2

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 53,696 42,590 (11,106)

to Australian Childhood Immunisation Register Special Account (5,858) (7,270) (1,412)

Special appropriations

National Health Act 1953 - essential vaccines 240,150 234,738 (5,412)

Special account

Australian Childhood Immunisation Register Special Account 9,563 9,712 149

Departmental expenses

Departmental appropriation3 9,960 9,862 (98)

Expenses not requiring appropriation in the current year4 257 614 357

Total for Program 1.3 307,768 290,246 (17,522)

65 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 1 POPULATION HEALTH

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Outcome 1 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 341,002 319,601 (21,401)

to Special accounts (5,858) (7,270) (1,412)

Special appropriations 242,150 242,845 695

Special accounts 9,563 9,712 149

Departmental Expenses

Departmental appropriation3 51,430 54,594 3,164

Expenses not requiring appropriation in the current year4 1,333 3,535 2,202

Total expenses for Outcome 1 639,620 623,017 (16,603)

Average staffing level (number) 309 325 16

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2 This Program excludes National Partnership payments to State and Territory Governments by the Treasury as part of the Federal Financial Relations Framework. 3

Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’ and ‘Revenue from independent sources (s74)’. 4 ‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees.

66 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 2 Access to Pharmaceutical Services

Access to cost-effective medicines, including through the Pharmaceutical Benefits Scheme and related subsidies, and assistance for medication management through industry partnerships

Analysis of performance - Outcome 2 Access to Pharmaceutical Services In 2015-16, the Department continued to support the Pharmaceutical Benefits Scheme (PBS), ensuring the efficiency and cost-effectiveness of the PBS, and supporting a viable effective community pharmacy sector. Access to a contemporary range of effective medicines is integral to improving health outcomes in Australia.

The Department managed the ongoing application of price disclosure policy which continues to reduce the price of many medicines for consumers and taxpayers.

The Department also continued to review medicines that are listed on the PBS to ensure that they remain clinically and cost effective. This helps to ensure that Australians have access to innovative and affordable medicines. In 2015-16, there were 370 new and amended PBS listings. This included high cost medicines for the treatment of cancers such as trastuzumab, pertuzumab and trastuzumab emtasine for the treatment of metastatic breast cancer, and pembrolizumab and trametinib for the treatment of melanoma.

The Department continued to support the integrity of the PBS by delivering on health provider compliance activities. Refer Program 3.1: Medicare Services and Appendix 3: Health Provider Compliance Report.

These activities have contributed to the Department’s achievement of objectives under Outcome 2 and Our Purpose.

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 2

Our Purpose

67 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 2 ACCESS TO PHARMACEUTICAL SERVICES

Key community benefits for Outcome 2 in 2015-16

Ensured access to cost-effective, innovative and clinically effective medicines

The Department worked with the Pharmaceutical Benefits Advisory Committee and product sponsors to ensure the Australian community has access to contemporary, high quality and affordable medicines. 370 new and amended medications were listed on the PBS in a timely manner at a cost of $2.1 billion (including revenue).

Provided access to expensive and lifesaving drugs for rare and life threatening medical conditions through the Life Saving Drugs Program

71 new patient applications to access medicines listed on the Life Saving Drugs Program were approved within 30 days, giving these patients access to critical medication.

PBS subsidy for break-through drugs to cure chronic hepatitis C from 1 March 2016

Over 230,000 Australians living with chronic hepatitis C will benefit from having access to new medicines that cure this potentially fatal disease.

Summary of performance criteria results for Outcome 2

Met

90.5%

Substantially met

9.5%

Not met

0.0%

68 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Looking ahead • The Department will implement the Pharmacy Trial Program during 2016-17. This program will test new approaches to providing primary care services to Australians through pharmacies.

• In 2016-17, the Australian Government will continue to consider new listings as recommended by the Pharmaceutical Benefits Advisory Committee.

• The Australian Government will continue to support the PBS by:

- looking at ways to reduce the cost of medicines for taxpayers and consumers;

- bringing new and innovative medicines on to the PBS in a timely way; and

- ensuring effi ciency in the pharmaceutical supply chain.

• The Department implemented the first phase of the Hospital Medication Chart on 1 July 2016, with electronic Hospital Medication Charts to be implemented by March 2017. The Hospital Medication Chart aims to improve the efficiency and safety of medication management in Australian hospitals, leading to improved quality use of medicines outcomes.

Programs and program objectives contributing to Outcome 2 22

Program 2.1: Community Pharmacy and Pharmaceutical Awareness

• Support timely access to medicines and pharmacy services

Program 2.2: Pharmaceuticals and Pharmaceutical Services

• Increase the sustainability of the PBS23

• List cost-effective, innovative, clinically effective medicines on the PBS

• Post-market surveillance

Program 2.3: Targeted Assistance - Pharmaceuticals

• Provide access to new and existing medicines for patients with life threatening conditions

Program 2.4: Targeted Assistance - Aids and Appliances

• To improve health outcomes for people with diabetes across Australia through the provision of subsidised products and self-management services

• Assist people with a stoma by providing stoma related products

• Improve the quality of life for people with Epidermolysis Bullosa

• Access to aids and appliances

22 Revised performance information for Outcome 2 was published in the 2015-16 Portfolio Additional Estimates Statements, replacing the performance information published in the 2015-16 Health Portfolio Budget Statements and the Department’s 2015-16 Corporate Plan.

23 Sustainability of the PBS refers to the ability of the Government to continue to fund medicines over the longer term given increasing demand for and costs of medicines and related services, e.g. dispensing.

69 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 2 ACCESS TO PHARMACEUTICAL SERVICES

Analysis of performance - Program 2.1: Community Pharmacy and Pharmaceutical Awareness The Department has met all performance targets for Program 2.1: Community Pharmacy and Pharmaceutical Awareness. Access to pharmacy services is key to improving the health of all Australians. The Department has worked with key stakeholders, including consumer organisations and industry groups, to ensure access to community pharmacies.

The Department implemented new and continuing measures such as the pharmacy Administration, Handling and Infrastructure fee, the Co-payment $1 discount measure and the continuation of existing pharmacy programs. These have enhanced the timely and affordable access to PBS medicines and professional services, through community pharmacies, for all Australians.

In 2015-16, the Department also commenced developing a Pharmacy Trial Program which will trial new and expanded community pharmacy programs with the aim of improving clinical outcomes for consumers. This included work to develop trial protocols for three trials and a ‘call for ideas’ which generated 108 ideas for future trials.

The aim of the Community Services Obligation (CSO) Funding Pool is to ensure there are arrangements in place for all Australians to have timely access to PBS medicines, via their community pharmacy, regardless of where they live and usually within 24 hours. The CSO financially supports pharmaceutical wholesalers to supply the full range of PBS medicines and diabetes products under the National Diabetes Services Scheme to pharmacies across Australia, regardless of pharmacy location, within agreed timeframes.

Support timely access to medicines and pharmacy services

Maintenance of PharmCIS and delivery of an increased suite of reporting and data related to pharmacy and PBS funded medicine access and cost made available to Parliament, consumers, business. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 42

2015-16 Target 2015-16 Result

Periodically increase the volume and nature of data on the Department of Health website during the course of 2015-16.

The target was achieved with the ongoing publication of regular PBS schedules and data sets, and an increased range of data published.

Result: Met

In addition to the regular PBS data that is published and made available to the public, in 2015-16 there was an increase in the range and availability of data captured and the level of breakdown that is publicly available. For example, the Date of Supply and Under Co-payment PBS datasets are now updated and available monthly. This provides a complete picture of the PBS data to allow researchers and stakeholders the capability to perform more detailed analysis. The pbs.gov.au website was updated on 4 May 2016 to include additional data on Fifth Community Pharmacy Agreement expenses in 2014-15. This can be found in tables 21, 22, 23 and 24 of the publication Expenditure and prescriptions twelve months to 30 June 2015.24

From 1 January 2016, under the Sixth Community Pharmacy Agreement, the Department commenced capturing point of sale data from community pharmacy and patient payments for medicines. Opportunities to publish this data will be available in PBS data releases as the data set grows.

The Department has a contract in place to maintain the PharmCIS application. The PharmCIS application is used to support the efficient management of the PBS listing process. The Department continues to manage a formal change control process to modify the PharmCIS application to accommodate policy, legislative and PBS listing changes as required. 24

24 Available at: www.pbs.gov.au/statistics/2014-2015-files/exp-prs-book-01-2014-15.pdf

70 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Providing transparency of PBS expenditure data provides the Australian community with an understanding of the costs to Government associated with the PBS supply chain, including pharmaceutical manufacturers, pharmaceutical distributors and community pharmacies, as a result of providing Australians with access to necessary medicines.

Percentage of urban centres/localities in Australia with a population in excess of 1,000 people with a resident community pharmacy or approved supplier of PBS medicines.25 Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 42

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

>90% 91.8%

Result: Met

N/A N/A N/A N/A

91.8% of communities with a population of at least 1,000 people have timely access to PBS subsidised medicines from a community pharmacy or approved supplier when needed. Approved suppliers can be a pharmacy, a medical practitioner (in rural/remote locations where there is not access to a pharmacy) or an Aboriginal Health Service, approved to supply PBS medicines to the community.

Percentage of urban centres/localities in Australia with a population in excess of 1,000 people with a resident service provider of, or recipient of, Medscheck, Home Medicines Review, Residential Medication Management Review or Clinical Intervention.26 Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 42

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

>80% 97%

Result: Met

N/A N/A N/A N/A

97% of communities with a population of at least 1,000 people, have access to advice and reviews when needed.

Medication Management Review services include the following programs:

• Clinical Intervention - the process of a pharmacist identifying, and making a recommendation to prevent or resolve a drug-related problem; for example, a change in the patient’s medication therapy, means of administration or medication-taking behaviour;

• Medscheck/Diabetes Medscheck - a structured pharmacy service, which takes place in the pharmacy, involving face-to-face consultations between the pharmacist and consumer, with the aim to improve medicine use through education, self-management and medication adherence strategies;

• Home Medicines Review - a comprehensive clinical review of a patient’s medicines in their home by an accredited pharmacist on referral from the patient’s general practitioner (GP). An assessment is undertaken to identify, resolve and prevent medication-related problems and a report is provided to the patient’s GP; and

25 The 2015-16 Health Portfolio Additional Estimates Statements indicated that this performance criterion would report against urban centres/localities (UC/Ls) in Australia with a population in excess of 1,000 people. In determining the result for 2015-16 only Urban Centres (UCs) with a population in excess of 1,000 people were utilised, consistent with the Australian Bureau of Statistics definition of an urban centre.

26 Ibid.

71 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 2 ACCESS TO PHARMACEUTICAL SERVICES

• Residential Medication Management Review - a service provided to a permanent resident of an Australian Government funded aged care facility. It is conducted by an accredited pharmacist when requested by a resident’s GP. An assessment is undertaken to identify, resolve and prevent medication-related problems and a report is provided to the resident’s GP.

Percentage of subsidised PBS units delivered to community pharmacy within agreed requirements of the Community Service Obligation. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 42

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

>95% 96%

Result: Met

N/A N/A N/A N/A

Communities have timely access to subsidised medicines from community pharmacies within specified timeframes. The timely supply of PBS medicines is secured under the Community Services Obligations (CSO) Funding Pool. Wholesalers engaged under the CSO are contractually required to deliver medicines within the guaranteed supply period of 72 hours for medicines in the Top 1,000 Brands list and 24 hours for all other medicines.

Average cost per subsidised script funded by the PBS.27 Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 43

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

$30.04 $27.37

Result: Met

N/A N/A N/A N/A

In 2015-16, the average cost of subsidised scripts under the PBS was $27.37. This includes PBS prescriptions that are subsidised (cost above the patient co-payment) and unsubsidised (those below general patient co-payment).

Average cost per subsidised script paid by consumers for subsidised medicines.28 Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 43

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

$9.76 $9.27

Result: Met

N/A N/A N/A N/A

In 2015-16, the average cost of subsidised scripts paid by consumers under the PBS was $9.27. This includes PBS prescriptions that are subsidised (cost above the patient co-payment) and unsubsidised (those below general patient co-payment).

27 This is the average across all PBS prescriptions, including under co-payment prescriptions. 28 This is the average across all PBS prescriptions for the period 1 January 2016 - 30 June 2016 to allow for the inclusion of actual under co-payment patient

payment amounts.

72 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Analysis of performance - Program 2.2: Pharmaceuticals and Pharmaceutical Services The Department has met majority of the performance targets for Program 2.2: Pharmaceuticals and Pharmaceutical Services. The PBS has continued to be managed in a fiscally responsible way which has ensured that all Australians have had access to new, innovative and affordable medicines, such as the new generation of hepatitis C medicines. Pressure is still expected to continue on the PBS growth rate due to factors such as an increase in the prevalence of chronic disease, the ageing population and the listing of specialised new and expensive medicines in Australia.

The Department has undertaken reviews of medicines to ensure the appropriateness and quality of medicines to help improve health outcomes for patients and to ensure value for money for taxpayers.

A new generation of hepatitis C medicines Hepatitis C is an infectious, blood-borne virus that attacks the liver, causing inflammation and in some cases leading to cirrhosis, end-stage liver disease, liver cancer or death.

Approximately 230,000 Australians are living with this disease.

On 1 March 2016, a breakthrough of new generation hepatitis C medicines was listed on the Pharmaceutical Benefits Scheme (PBS), at a total cost to Government of over $1 billion dollars.

So far, approximately 20,000 Australians have begun treatment to cure their hepatitis C. About 5,000 of these Australians have already completed their course of treatment. At this rate, Australia is on track to eliminate hepatitis C within a generation.

The new drugs cure hepatitis C in over 90% of patients, after just 12 weeks of treatment, making them significantly more effective than previous treatment options. They are also less complex to administer and have fewer side effects than other hepatitis C medications.

The new direct-acting antiviral medicines are available through the PBS for use by all Australians over the age of 18 who suffer from chronic hepatitis C. Eligible patients pay the normal PBS co-payment for a prescription - currently $6.20 for concessional patients and $38.30 for general patients for a treatment, which would otherwise cost more than $20,000.

73 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 2 ACCESS TO PHARMACEUTICAL SERVICES

Increase the sustainability of the PBS29

Estimated savings to Government from Price Disclosure. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 43

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

$2,429.7m $2,258.4m

Result: Substantially met

N/A N/A N/A N/A

The save in 2015-16, from all rounds, was $2,258.4 million, which is $171.3 million, or 7.1%, below the target. The savings are driven by market behaviour, and while the savings to Government are below estimates, price disclosure is still producing significant savings to consumers as the price of most medicines subject to price disclosure reductions are below the general co-payment of $38.30.

List cost-effective, innovative, clinically effective medicines on the PBS

Percentage of submissions for new medicines for listing that are considered by PBAC within 17 weeks of lodgement. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 44

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

N/A N/A N/A N/A

The Pharmaceutical Benefits Advisory Committee (PBAC) met on five occasions in 2015-16, including two special meetings in August 2015 and April 2016.30

The PBAC consistently met to consider recommendations within the specified 17 week timeframe from lodgement of submissions. Approved medications were made publicly available in timeframes consistent with long standing arrangements agreed with the pharmaceutical industry.

All PBAC assessments are based on the clinical and cost effectiveness of the medicine.

Percentage of submissions for new medicines that are recommended for listing by PBAC, that are listed on the PBS within six months of agreement of Budget impact and price. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 44

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

80% 92%

Result: Met

N/A N/A N/A N/A

Negotiations with product sponsors and listing activities for new listings of medicines on the PBS were completed in a timely manner, with 92% being listed on the PBS within six months of agreement on price, and the overall cost to Government (Budget impact), meeting the performance target.

29 Sustainability of the PBS refers to the ability of the Government to continue to fund medicines over the longer term given increasing demand for and costs of medicines and related services e.g. dispensing.

30 Refer Appendix 1: Processes Leading to PBAC Consideration - Annual Report for 2015-16 for more information.

74 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Post-market surveillance

Percentage of post-market reviews completed within scheduled timeframes. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 44

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

90% 100%

Result: Met

N/A N/A N/A N/A

Post-market reviews enable the systematic review of Government funded medicines against agreed objectives including improved patient safety, achievement of intended clinical benefits, ongoing viability of the PBS and improvements to the quality use of medicines and education for patients and prescribers.

The Post-market Review of the Life Saving Drugs Program, which sought to ensure Australians with very rare conditions continue to have subsidised access to much needed, expensive medicines, was completed and the report finalised.

The Post-market Review of Authority Required PBS Listings (Authority Review), which sought to reduce administrative burden on prescribers and dispensers of PBS listed medicines, has been completed.

Percentage of Government-accepted recommendations from post-market reviews that have been implemented within six months. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 44

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

80% 80%

Result: Met

N/A N/A N/A N/A

All Government accepted recommendations arising from the Post-market Authority Review were implemented through core PBS listing processes. Implementation of the remaining Review recommendations continue to be processed.

To date, the Authority Review has produced total savings of approximately $6,308,862, and an expected $7 million per year in red tape reduction once implementation of Authority Review recommendations is completed. The following savings have been reported:

• 2014-15: savings of approximately $935,612 (57 recommendations) in regulatory burden were reported;

• 1 September 2015: 30 recommendations were implemented saving approximately $1,470,250 in regulatory burden; and

• 1 June 2016: a further 73 recommendations were implemented, saving approximately $3,903,000 in regulatory burden.

Some recommendations required IT system changes, and/or further policy development work, which are being progressed.

75 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 2 ACCESS TO PHARMACEUTICAL SERVICES

Analysis of performance - Program 2.3: Targeted Assistance - Pharmaceuticals The Department has met the majority of performance targets for Program 2.3: Targeted Assistance - Pharmaceuticals. The Department, through the Life Saving Drugs Program (LSDP), has continued to ensure access to expensive and life saving drugs to eligible patients, for rare and life threatening medical conditions.

During 2015-16, the Department undertook a review of the LSDP to ensure it continued to provide Australians with access to much needed and very expensive medications for rare conditions. The review has been completed.

Provide access to new and existing medicines for patients with life threatening conditions

Number of patients assisted through the LSDP. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 45

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

287 335

Result: Met

278 257 228 215

The LSDP is a demand-driven program based on assessment of patients against set eligibility criteria.

Percentage of Government-accepted recommendations from LSDP post-market reviews that are implemented. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 45

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% N/A N/A N/A N/A N/A

There were no Government-accepted recommendations to implement in 2015-16.

Eligible patients have timely access to the LSDP.

Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 45

2015-16 Target 2015-16 Result

Patient applications are processed within 30 calendar days of receipt of the complete data package to support the application.

All patient applications were processed within 30 calendar days of receipt of the complete data package to support the application.

Result: Met

All 72 new patient applications received this financial year were processed within 30 calendar days of receipt of the complete data package to support the application, with 71 being approved.

76 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Percentage of eligible patients with access to fully subsidised medicines through the LSDP. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 45

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

100% 100% 100% 100%

The Australian Government provides fully subsidised access for eligible patients to expensive drugs for rare and life threatening medical conditions through the LSDP.

Twelve drugs are currently funded through the program to treat eight serious and rare medical conditions. These conditions are: Fabry disease, Gaucher disease, Mucopolysaccharidosis Types I, II and VI, Pompe disease (Infantile-onset, Juvenile-onset or Adult Late-onset), Paroxysmal Nocturnal Haemoglobinuria, and Hereditary Tyrosinaemia Type I.

Analysis of performance - Program 2.4: Targeted Assistance - Aids and Appliances The Department has met the majority of performance targets for Program 2.4: Targeted Assistance - Aids and Appliances. Diabetes is a serious complex condition that can have a significant impact on quality of life. Through the National Diabetes Services Scheme (NDSS), the Department ensures the provision of timely, reliable and affordable access to products and services to help people effectively self-manage their condition.

In 2015-16, the Department also continued to assist people with stomas by ensuring access to stoma-related products, with a greater choice of new improved products.

In addition, the Department continues to support access to clinically appropriate dressings and education on best treatment practices to improve the quality of life for people with Epidermolysis Bullosa.

The NDSS, Stoma Appliance Scheme, Insulin Pump Program and Epidermolysis Bullosa Dressing Scheme were established as a result of Government decisions to subsidise the supply of products. As the products supplied in these programs are aids and appliances and not medicines, they do not fit within the PBS.

77 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 2 ACCESS TO PHARMACEUTICAL SERVICES

To improve health outcomes for people with diabetes across Australia through the provision of subsidised products and self-management services

Number of people with diabetes receiving benefit from the NDSS. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 46 31

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

1,326,00032 1,320,328

Result: Met

1,259,203 1,133,412 1,086,860 1,037,621

The NDSS is a demand-driven program. In 2015-16, the number of people with type 1, type 2 and gestational diabetes receiving benefit from the NDSS was 1,211,251.

There were also a further 109,077 people registered on the post-gestational diabetes register who were also eligible to receive services (but not products) from the NDSS. All eligible individuals were provided access throughout the financial year.

The NDSS meets the needs of stakeholders. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 46

2015-16 Target 2015-16 Result

Annual survey of registrants demonstrates that the needs of stakeholders are being met.

Approximately 70% of surveyed registrants indicated that the NDSS improved their knowledge and understanding of diabetes and helped them manage their condition more effectively.

Result: Met

Since 2012, Diabetes Australia has been required to undertake an annual customer satisfaction and awareness survey. The results for the 2015-16 survey indicate that overall satisfaction with the NDSS ranged from 63% to 79% nationally.

31 An identical performance criterion to this was reported in error on page 47 of the 2015-16 Health Portfolio Additional Estimates Statements. 32 The 2015-16 target has been revised. The target of 1,526,000 published in the 2015-16 Health Portfolio Additional Estimates Statements was incorrect.

78 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Number of people with access (through the program) to insulin pumps and associated consumables for children under 18 years of age with Type 1 diabetes. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 47

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

68 66

Result: Substantially met

65 204 76 178

Funding for insulin pump subsidies is capped and provided on a sliding scale with those on lower incomes being provided greater subsidy. The 2015-16 target was set based on the expectation that families on incomes across the range would receive subsidies. The fact that the target was not fully met indicates that higher subsidies were provided to less people, thus assisting those families in greater need.

The performance result of ‘substantially met’ is based on meeting 97% of the target.

Assist people with a stoma by providing stoma related products

Number of people receiving stoma related products. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 47

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

43,250 43,767

Result: Met

42,678 42,228 N/A N/A

In 2015-16, 64 new products were listed on the Stoma Appliance Scheme Schedule. These provided people with stomas with greater choice of new improved products which could lead to improved health outcomes.

Improve the quality of life for people with Epidermolysis Bullosa

Number of people with Epidermolysis Bullosa receiving subsidised dressings. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 47

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

135 185

Result: Met

179 136 99 81

The Epidermolysis Bullosa Dressing Scheme is demand-driven and more people were provided with access to dressings in 2015-16 than originally anticipated.

79 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 2 ACCESS TO PHARMACEUTICAL SERVICES

Access to aids and appliances

Average time from receipt of an approved claim to delivery of aids and appliances. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 48

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

No increase on prior year. Average one business day - no increase.

Result: Met

N/A N/A N/A N/A

In 2015-16, new patients accepted to participate in the Epidermolysis Bullosa Dressing Scheme received their first order within one business day, in comparison to one business day on average in 2014-15.

Average cost per aid and appliance delivered to eligible persons. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 48

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

Increase at a rate less than CPI. $2.52 Result: Met

N/A N/A N/A N/A

In 2015-16, the average cost per aid and appliance for the Stoma Appliance Scheme remained the same as the average cost in 2014-15 of $2.52.

80 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 2.1: Community Pharmacy and Pharmaceutical Awareness

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 298,350 276,960 (21,390)

Departmental expenses

Departmental appropriation2 11,583 13,481 1,898

Expenses not requiring appropriation in the budget year3 197 639 442

Total for Program 2.1 310,130 291,080 (19,050)

Program 2.2: Pharmaceuticals and Pharmaceutical Services

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 202,161 201,078 (1,083)

Special appropriations

National Health Act 1953 - pharmaceutical benefits 9,735,781 10,837,986 1,102,205

Departmental expenses

Departmental appropriation2 36,116 37,444 1,328

Expenses not requiring appropriation in the budget year3 2,293 3,229 936

Total for Program 2.2 9,976,351 11,079,737 1,103,386

Program 2.3: Targeted Assistance - Pharmaceuticals

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 126,084 106,828 (19,256)

Departmental expenses

Departmental appropriation2 12,138 11,673 (465)

Expenses not requiring appropriation in the budget year3 105 337 232

Total for Program 2.3 138,327 118,838 (19,489)

Outcome 2 - Budgeted expenses and resources

81 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 2 ACCESS TO PHARMACEUTICAL SERVICES

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 2.4: Targeted Assistance - Aids and Appliances

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 593 572 (21)

Special appropriations

National Health Act 1953 - aids and appliances 336,427 301,104 (35,323)

Departmental expenses

Departmental appropriation2 3,162 3,104 (58)

Expenses not requiring appropriation in the budget year3 77 186 109

Total for Program 2.4 340,259 304,966 (35,293)

Outcome 2 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 627,188 585,438 (41,750)

Special appropriations 10,072,208 11,139,090 1,066,882

Departmental expenses

Departmental appropriation2 62,999 65,702 2,703

Expenses not requiring appropriation in the budget year3 2,672 4,391 1,719

Total expenses for Outcome 2 10,765,067 11,794,621 1,029,554

Average staffing level (number) 255 260 5

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2 Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’ and ‘Revenue from independent sources (s74)’. 3

‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees.

82 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 3 Access to Medical and Dental Services

Access to cost-effective medical, dental, allied health and hearing services, including through implementing targeted medical assistance strategies, and providing Medicare subsidies for clinically relevant services and hearing devices to eligible people

Analysis of performance - Outcome 3 Access to Medical and Dental Services In 2015-16, the Department continued working with our partners, including the Department of Human Services, to provide Australians with access to high quality and clinically relevant medical, dental, hearing and associated services.

The Department has continued to look at ways to improve the effectiveness and efficiency of a range of medical services including through a number of major reviews. The reviews include the Medicare Benefits Schedule Review and Diagnostic Imaging Accreditation Scheme Review, which are discussed later in this chapter.

These activities have contributed to the Department’s achievement of objectives under Outcome 3 and Our Purpose.

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 3

Our Purpose

83 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 3 ACCESS TO MEDICAL AND DENTAL SERVICES

Key community benefits for Outcome 3 in 2015-16

The Medicare Benefits Schedule (MBS) continued to provide high quality and cost-effective access to professional health services

All Australians benefit from an MBS that supports high value care in line with current clinical evidence, and is affordable over the long term.

The Department delivers this through supporting the Medical Services Advisory Committee in assessing the safety, clinical effectiveness and cost effectiveness of any new or existing MBS item.

The Department is also supporting the work of the clinician-led MBS Review Taskforce in reviewing the entire MBS with over 5,700 items describing medical services and procedures to ensure items are aligned with contemporary clinical evidence and practice and improve health outcomes for patients.

324,797 hearing services vouchers were issued

These vouchers enable eligible people to access subsidised hearing services and devices. Improved management of hearing loss assists eligible people to have better quality of life and to be able to better engage with the community.

Over 400,000 additional dental services were provided under the National Partnership Agreement on Treating More Public Dental Patients

More public dental patients received services and experienced shorter waiting periods.

Summary of performance criteria results for Outcome 3

Met

78.6%

Not met

7.1%

Substantially met

14.3%

84 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Looking ahead • The Department will be working closely with the health sector to implement Government policies including:

- access to affordable diagnostic imaging for all Australians;

- access to affordable pathology for all Australians; and

- new magnetic resonance imaging (MRI) machines in Frankston and Maroondah.

• The Department will continue to support the clinician-led MBS Review, to better align services with contemporary clinical evidence, and identify waste and inefficiencies.

• The Department will continue to support the work of the Medical Services Advisory Committee (MSAC) in assessing the strength of evidence behind new or existing medical services or technology.

• The Department will continue to liaise with stakeholders on the transition of the Hearing Services Program to the National Disability Insurance Scheme.

• The Department will also continue to implement a new Child and Adult Public Dental Scheme, through a National Partnership Agreement with States and Territories to ensure that eligible children and adults receive improved access to public dental services.

Programs and program objectives contributing to Outcome 3

Program 3.1: Medicare Services

• Improve the sustainability of the Medicare system33

• Supporting the integrity of health provider claiming

Program 3.2: Targeted Assistance - Medical

• Provide medical assistance to Australians who travel overseas

• Support access to necessary medical services which are not available through mainstream mechanisms

• Provide medical assistance following overseas disasters

• Improve access to prostheses for women who have had a mastectomy as a result of breast cancer

Program 3.3: Pathology and Diagnostic Imaging Services and Radiation Oncology

• Improve the provision of safe and effective diagnostic imaging services

• Expert stakeholder engagement in pathology, diagnostic imaging and radiation oncology

• Improve access to pathology services

• Improve access to quality radiation oncology services

33 Sustainability of the Medicare system refers to the ability of the Government to continue to fund services over the longer term given increasing demand for and costs of services.

85 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 3 ACCESS TO MEDICAL AND DENTAL SERVICES

Program 3.4: Medical Indemnity

• Ensure the stability of the medical indemnity insurance industry

• Ensure that insurance products for medical professionals and midwives are available and affordable

Program 3.5: Hearing Services

• Support access to a range of subsidised hearing services to eligible Australians to manage their hearing loss and improve their engagement with the community

• Support research into hearing loss prevention and management

Program 3.6: Dental Services

• Improve access to dental services for children

• Improve access to public dental services

Analysis of performance - Program 3.1: Medicare Services The Department met, or substantially met, all the performance targets for Program 3.1: Medicare Services. In 2015-16, the Department continued work to improve the sustainability of Medicare34 to ensure that all Australians have continued access to high quality and cost-effective professional health services.

The Medicare Benefits Schedule (MBS) Review Taskforce was established in 2015-16, as part of the Government’s Medicare reform agenda. The Department is supporting the Taskforce in its work to review more than 5,700 items on the MBS to align with contemporary clinical evidence and practice and improve health outcomes for patients.

The clinician-led Taskforce has engaged over 300 leading clinicians to contribute to its clinical sub-committees and undertaken extensive consultation with stakeholders, including consumers. There has been strong support and commitment to participate in the Review process from professionals and consumers. The initial round of consultations on obsolete items received 63 submissions to an online survey that was conducted between 21 December 2015 and 8 February 2016. The Department will continue to support the Taskforce through further rounds of review.

The Department supported the Medical Services Advisory Committee (MSAC) to continue to evaluate the clinical effectiveness and cost-effectiveness of any new or existing medical services or technology, and the circumstances under which public funding should be supported. The Department also reviewed the MSAC arrangements to streamline processes, improve timeliness and transparency. This work contributes to the sustainability of the Medicare system.

The Department also continued to support the integrity of the Medicare program by delivering health provider compliance activities encouraging appropriate claiming by health professionals. During 2015-16, the Department completed 3,912 Medicare audit and review cases, exceeding the KPI of 2,500 cases. Of these cases, 35 were referred to the Commonwealth Director of Public Prosecutions for prosecution and 80 requests for review were made to the Director of Professional Services Review. $9.9 million in associated debts was recovered in the 2015-16 financial year.

34 Sustainability of the Medicare system refers to the ability of the Government to continue to fund services over the longer term given increasing demand for and costs of services.

86 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Improve the sustainability of the Medicare system35

Preliminary review of the Medicare Benefits Schedule with development of priority action plan. Source: 2015-16 Health Portfolio Budget Statements, p. 72

2015-16 Target 2015-16 Result

Priorities and action plan to be provided to Government by 31 December 2015.

Priorities and action plan provided to Government in January 2016.

Result: Substantially met

The MBS Review Taskforce’s interim report to the Minister for Health set out the Review methodology, including the key issues to be addressed, a committee structure to undertake review of all aspects of the MBS, and a stakeholder consultation strategy.

Due to the extensive consultation process and the high level of stakeholder feedback, the interim report was provided to Government in January 2016.

Medicare Benefits Schedule Review Taskforce delivers relevant and high quality advice to Government. Source: 2015-16 Health Portfolio Budget Statements, p. 72

2015-16 Target 2015-16 Result

Committees established and engage constructively with professional and community stakeholders.

12 Clinical Committees and a ‘Principles and Rules Committee’ were established and extensive stakeholder consultation undertaken.

Result: Met

In 2015-16, the MBS Review Taskforce provided recommendations to Government on the priorities and processes going forward, as well as removal of obsolete items from the MBS. These recommendations were subject to public consultation, conducted through an online survey and submission process, a series of stakeholder forums and targeted meetings with specific organisations and groups. The obsolete items were removed from the MBS on 1 July 2016.

Continuation of MSAC process improvement to ensure ongoing improvement in rigour, transparency, consistency, efficiency and timeliness. Source: 2015-16 Health Portfolio Budget Statements, p. 72

2015-16 Target 2015-16 Result

Greater stakeholder engagement and improved timeliness of the MSAC application assessment process.

Public consultation was conducted from 1 December 2015 to 12 February 2016 on proposed improvements to the MSAC process. The Department received a total of 44 submissions.

Result: Met

These improvements aim to streamline the MSAC process. The transition into new MSAC arrangements commenced in July 2016.

35 Sustainability of the Medicare system refers to the ability of the Government to continue fund to services over the longer term given increasing demand for and costs of services.

87 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 3 ACCESS TO MEDICAL AND DENTAL SERVICES

Supporting the integrity of health provider claiming

Achievement of payment integrity standards. Medicare: Completed audit and review cases. Source: 2015-16 Human Services Portfolio Budget Statements, p. 39

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

≥2,500 3,91236

Result: Met

3,680 3,544 2,819 3,439

In total, 3,912 audits and reviews were completed in 2015-16. This includes practitioner reviews and criminal investigations.

Compliance activities are focussed on all health programs and include health professionals, practice staff or health related businesses receiving payments from the Medicare program.

Analysis of performance - Program 3.2: Targeted Assistance - Medical The Department met all the performance targets for Program 3.2: Targeted Assistance - Medical. The aim of Program 3.2 is to provide targeted financial assistance to eligible Australians to enable access to necessary medical treatment, either overseas or in Australia.

Reciprocal Health Care Agreements enable access to local health services for Australians travelling overseas in 11 countries. The Agreements also enable access to public health services in Australia for visitors from those countries. The Medical Treatment Overseas program provides access to approved medical treatments overseas for life threatening illness, that are not currently available in Australia.

The Government also provides financial assistance to eligible Australian victims of disasters occurring overseas, including acts of terrorism, civil disturbances or natural disasters. Through the Disaster Health Care Assistance Schemes, assistance is provided in the form of ex-gratia payments to victims and their families covering out-of-pocket expenses for health care delivered in Australia for injury or ill health arising from specific disasters. There are currently six active schemes covering events such as the Bali bombings and the Asian tsunami.

In addition, the Government provides financial support to women who have undergone a mastectomy as a result of breast cancer, through the reimbursement for the cost of external breast prostheses.

Each of these programs and schemes support Australians in receiving the medical services and assistance they need.

36 This figure includes 164 criminal investigation cases involving members of the public connected to health professionals (e.g. employees such as receptionists, practice managers, or medical business owners). Those cases were transferred to the Department as part of the Machinery of Government changes announced in September 2015.

88 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Provide medical assistance to Australians who travel overseas

Ensure that the Reciprocal Health Care Agreements are supporting Australians when they travel overseas. Source: 2015-16 Health Portfolio Budget Statements, p. 74

2015-16 Target 2015-16 Result

Timely resolution of issues encountered by Australians attempting to access health services in reciprocal countries.

No major issues were encountered by Australians which prevented access to health services in countries with Reciprocal Health Care Agreements.

Result: Met

The Australian Government has Reciprocal Health Care Agreements with New Zealand, United Kingdom, Republic of Ireland, Sweden, the Netherlands, Finland, Italy, Belgium, Malta, Slovenia and Norway.

In 2015-16, 120,597 MBS services were provided to visitors to Australia under the Reciprocal Health Care Agreements with a total of $8,050,829 paid in benefits.

Support access to necessary medical services which are not available through mainstream mechanisms

Financial assistance is provided to eligible applicants through the Medical Treatment Overseas Program. Source: 2015-16 Health Portfolio Budget Statements, p. 74

2015-16 Target 2015-16 Result

Assessments of applications for medical treatment are managed in accordance with program guidelines.

All applications for financial assistance were assessed in accordance with the established program guidelines.

Result: Met

In 2015-16, the Department received eight applications for financial assistance.

Six individuals requiring care received funding to undergo treatment overseas. These applicants were supported by independent expert advice from medical craft groups.

Authorisation of payments to successful patients within agreed timeframes. Source: 2015-16 Health Portfolio Budget Statements, p. 75

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

90% 100%

Result: Met

N/A N/A N/A N/A

All payments were made within the timeframes required.

89 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 3 ACCESS TO MEDICAL AND DENTAL SERVICES

Provide medical assistance following overseas disasters

Facilitate health care assistance to eligible Australians in the event of overseas disasters. Source: 2015-16 Health Portfolio Budget Statements, p. 74

2015-16 Target 2015-16 Result

Ensure appropriate assistance is provided through timely policy advice to the Department of Human Services.

The Department continued to provide policy advice to the Department of Human Services, ensuring health care assistance was provided to eligible Australians.

Result: Met

In 2015-16, the Department of Human Services paid $477,660 for 2,209 claims on behalf of the Department of Health.

The Disaster Health Care Assistance Schemes are demand-driven programs. Eligible people receive reimbursement for out-of-pocket health care expenses related to any injury or illness which has resulted from one of the incidents covered by the Schemes.

In 2015-16, all reimbursements were provided in a timely manner.

Improve access to prostheses for women who have had a mastectomy as a result of breast cancer

Percentage of claims by eligible women under the national External Breast Prostheses Reimbursement Program processed within ten days of lodgement. Source: 2015-16 Health Portfolio Budget Statements, p. 75

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

90% 98%

Result: Met

98% 98% 98% 99.8%

14,550 reimbursements were processed under the program. Of the 14,550 eligible claims made, 98% were processed within 10 days of lodgement.

90 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Analysis of performance - Program 3.3: Pathology and Diagnostic Imaging Services and Radiation Oncology The Department met, or substantially met, most of the performance targets for Program 3.3: Pathology and Diagnostic Imaging Services and Radiation Oncology. This Program aims to ensure that pathology, diagnostic imaging and radiation oncology services are accessible, safe, effective and responsive to the needs of health care consumers.

In working to achieve this, during 2015-16, the Department completed a major review of the Diagnostic Imaging Accreditation Scheme (DIAS). Changes made to the DIAS to strengthen standards and streamline processes, have been well received by practices and accreditors.

The systematic review of the pathology services listed on the Medicare Benefits Schedule (MBS) is now being undertaken as part of the MBS Review. Progress is discussed in the performance criteria below.

Access to pathology services continues at a high level. The Department has been actively engaging with the pathology sector during 2015-16, concerning the cost of rent paid by some pathology collection centres located within medical practices. The Department will continue to work with the sector to implement changes in line with the direction set by Government.

The Department improves access to high quality radiation oncology services by funding approved equipment, quality programs and initiatives to support the radiation oncology workforce. The Radiation Oncology Health Program Grants Scheme reimburses service providers for the cost of approved equipment used to provide treatment services. These payments ensure that equipment is replaced at the end of its lifespan so that treatment is delivered with up-to-date technology.

Improve the provision of safe and effective diagnostic imaging services

Undertake a major review of the Diagnostic Imaging Accreditation Scheme to strengthen the standards and streamline processes. Source: 2015-16 Health Portfolio Budget Statements, p. 78

2015-16 Target 2015-16 Result

Review of Diagnostic Imaging Accreditation Scheme to be completed by June 2016.

The Review of the Diagnostic Imaging Accreditation Scheme has been completed and recommendations implemented.

Result: Met

As part of the Review, the Practice Accreditation Standards were reviewed in 2015. Changes to the accreditation standards came into effect on 1 January 2016. This included revised accreditation documentation to assist practices with the evidentiary requirements.

An expert committee will be established in 2016-17 to oversee a more systematic review of the current accreditation arrangements, including alternative conformity assessment options.

Diagnostic radiology services are effective and safe. Source: 2015-16 Health Portfolio Budget Statements, p. 78

2015-16 Target 2015-16 Result

Patients have access to diagnostic imaging services that are performed by a suitably qualified professional.

All practitioners providing Medicare-funded diagnostic radiology services met minimum formal qualification requirements.

Result: Met

Radiologists need to meet minimum formal qualification requirements, including the quality standards under the DIAS.

91 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 3 ACCESS TO MEDICAL AND DENTAL SERVICES

Expert stakeholder engagement in pathology, diagnostic imaging and radiation oncology

Undertake systematic reviews of the pathology services listed on the Medicare Benefits Schedule (MBS) to ensure they are safe, effective, and cost-effective. Source: 2015-16 Health Portfolio Budget Statements, p. 78

2015-16 Target 2015-16 Result

The Pathology Services Advisory Committee (PSAC) will consider evidence from six systematic reviews of pathology services and make recommendations for change to the MBS listings where required.

In 2015-16, as part of the work of the MBS Review Taskforce, the PSAC was replaced by the Pathology Clinical Committee (PCC) which was established as a sub-committee of the MBS Review Taskforce.

Result: Not met

The PCC is continuing the ongoing systematic review of all pathology MBS items with recommendations to be forwarded to the MBS Review Taskforce.

The PCC has set up six working groups (Anatomical and Cytology, Chemical, Genetics, Haematology, Immunology and Microbiology) to review pathology.

The Taskforce will publish and invite public feedback on the PCC’s recommendations, prior to the recommendations being provided to the Minister.

Stakeholder engagement in program and/or policy development. Source: 2015-16 Health Portfolio Budget Statements, p. 79

2015-16 Target 2015-16 Result

Conduct two formal meetings with the pathology sector to discuss pathology policy and sector interests.

More than two formal meetings were conducted with the pathology sector.

Result: Met

The Department formally met with stakeholders, through individual discussions and group forums to discuss issues related to the pathology sector. The focus of these meetings was the issue of the cost of rent paid by pathology collection centres, particularly where they are co-located within a general practice. Additional issues raised included the 2015-16 Mid-Year Economic and Fiscal Outlook measure to remove the bulk billing incentives and other changes to the MBS subsidies for pathology services. The Department is continuing to consult with the sector to resolve these issues.

92 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Improve access to pathology services

Number of new and/or revised national accreditation standards produced for pathology laboratories. Source: 2015-16 Health Portfolio Budget Statements, p. 78

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

4 3

Result: Substantially met

4 13 0 4

The National Pathology Accreditation Advisory Council (NPAAC) published three revised standards during 2015-16. NPAAC focussed on several comprehensive document reviews and strategic accreditation issues. Due to the complexity of some of the document reviews, not all revised standards were able to be completed during 2015-16 and will be published as soon as practicable.

The performance result of ‘substantially met’ is based on meeting 75% of the target.

Percentage of Medicare-eligible pathology laboratories meeting accreditation standards. Source: 2015-16 Health Portfolio Budget Statements, p. 79

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

100% 100% 100% 100%

An Approved Pathology Laboratory must apply for accreditation from the National Association of Testing Authorities, Australia before applying for accreditation from the Department of Human Services.

Improve access to quality radiation oncology services

The number of sites delivering radiation oncology. Source: 2015-16 Health Portfolio Budget Statements, p. 79

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

71 80

Result: Met

75 69 66 63

The Department exceeded its target in 2015-16 and continues to improve access to high quality radiation oncology services by funding approved equipment, quality programs and initiatives to support the radiation oncology workforce. These payments ensure that equipment is replaced at the end of its lifespan so that treatment is delivered with up-to-date technology. The payments complement Medicare benefits payable to patients under Program 3.1: Medicare Services.

93 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 3 ACCESS TO MEDICAL AND DENTAL SERVICES

Analysis of performance - Program 3.4: Medical Indemnity The Department has met all the performance targets for Program 3.4: Medical Indemnity.

The Department works with the Department of Human Services to administer schemes that support the medical indemnity industry and ensure it is stable and secure. These schemes make medical indemnity affordable and stable to allow the medical workforce to focus on the delivery of high quality medical services.

The schemes include the High Cost Claims Scheme (HCCS) and the Exceptional Claims Scheme (ECS). The HCCS subsidises claims over $300,000, and the ECS further assists by providing a guarantee to cover claims above the limit of doctors’ medical indemnity contracts of insurance, so doctors are not personally liable for very high claims.

The Department also administers the Midwife Professional Indemnity Scheme for eligible midwives in private practice. The Scheme allows private midwives to access professional indemnity insurance and provides financial assistance for eligible claims.

Ensure the stability of the medical indemnity insurance industry

Percentage of medical indemnity insurers who have a Premium Support Scheme contract with the Commonwealth that meets the Australian Prudential Regulation Authority’s Minimum Capital Requirement. Source: 2015-16 Health Portfolio Budget Statements, p. 81

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

100% 100% 100% 100%

In 2015-16, all medical indemnity insurers who have a Premium Support Scheme contract with the Commonwealth met the Minimum Capital Requirement as set by the Australian Prudential Regulation Authority.

Ensure that insurance products for medical professionals and midwives are available and affordable

Percentage of eligible applicants receiving a premium subsidy through the Premium Support Scheme. Source: 2015-16 Health Portfolio Budget Statements, p. 81

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

100% 100% 100% 100%

The Premium Support Scheme assists eligible doctors to meet the cost of their medical indemnity insurance by reducing their medical indemnity costs, when their gross indemnity premium exceeds 7.5% of their income. The subsidy is paid via the doctor’s medical indemnity insurer.

All eligible applicants received a premium subsidy through the Premium Support Scheme in 2015-16.

94 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Number of doctors that receive a premium subsidy support through the Premium Support Scheme. Source: 2015-16 Health Portfolio Budget Statements, p. 82

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

2,000 1,237

Result: Met

1,400 1,613 1,847 2,106

The 2015-16 estimate of doctors requiring subsidisation of their insurance premium costs through the Premium Support Scheme was 2,000. However, due to the increasing affordability of medical indemnity insurance premiums, only 1,237 doctors required assistance under the Scheme.

Percentage of eligible midwife applicants covered by the Midwife Professional Indemnity Scheme. Source: 2015-16 Health Portfolio Budget Statements, p. 81

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

100% 100% 100% 100%

The Midwife Professional Indemnity Scheme provides professional indemnity insurance to private midwives who are found to be eligible by the Nursing and Midwifery Board of Australia. For eligible claims the Government contributes 80% to the costs of claims above $100,000 and 100% of costs above $2 million.

All eligible private midwives who applied for Commonwealth-supported professional indemnity insurance through Medical Insurance Group Australia (MIGA) were offered cover.

The continued availability of professional indemnity insurance for eligible midwives. Source: 2015-16 Health Portfolio Budget Statements, p. 81

2015-16 Target 2015-16 Result

Maintain contract with Medical Insurance Group Australia to provide professional indemnity insurance to eligible midwives.

Contract maintained with an insurer (MIGA) to provide professional indemnity insurance to eligible midwives.

Result: Met

Eligible private midwives were able to purchase Commonwealth-supported professional indemnity insurance from MIGA.

95 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 3 ACCESS TO MEDICAL AND DENTAL SERVICES

Analysis of performance - Program 3.5: Hearing Services During 2015-16 the Department has either met or substantially met all of the performance targets for Program 3.5: Hearing Services. The Hearing Services Program (the Program) established in 1997, provides a range of fully or partially subsidised hearing services to eligible Australians to manage their hearing loss and improve their engagement with the community.

In 2015-16, the Department continued to support hearing research through the Hearing Loss Prevention Program (HLPP). The HLPP is managed through the National Health and Medical Research Council. The research focuses on ways to reduce the impact of hearing loss and the incidence and consequence of avoidable hearing loss in the Australian community.

The Program will transition (in part) to the National Disability Insurance Scheme by 2019-20. The Program has undertaken, and will continue to undertake, broad stakeholder consultation to develop a National Disability Insurance Scheme Transition Plan.

Support access to a range of subsidised hearing services to eligible Australians to manage their hearing loss and improve their engagement with the community

Quality service provision and client outcomes supported through a risk-based audit framework. Source: 2015-16 Health Portfolio Budget Statements, p. 83

2015-16 Target 2015-16 Result

Audit outcomes support a risk-based approach to identification of service provider compliance with contractual and legislative obligations.

Detailed audits were undertaken of specific service provider sites based on risk profiles.

Result: Met

The annual provider self-assessment process was managed and completed in accordance with contractual requirements.

Detailed audits were undertaken based on risk profiles including results of the self-assessment, new provider status, irregular claiming patterns and/or complaints.

Participating service providers have an opportunity to provide feedback to support continuous improvement.

Policies and program improvements are developed and implemented in consultation with consumers and service providers. Source: 2015-16 Health Portfolio Budget Statements, p. 83

2015-16 Target 2015-16 Result

Opportunity for stakeholders to participate in consultations. Broad stakeholder consultation was undertaken around Australia to support the development of the National Disability Insurance

Scheme Transition Plan for eligible hearing services clients.

Result: Met

A proposed Service Delivery Framework for hearing services was developed with input from key stakeholders to support stronger self-regulation. Documents consulted on, to date, include the Quality Principles for Hearing Care and the National Practice Standards for Hearing Care Practitioners.

Further consultations on elements of the Transition Plan are expected for the coming financial year.

96 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Number of people who receive voucher services nationally. Source: 2015-16 Health Portfolio Budget Statements, p. 84

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

774,000 692,283

Result: Substantially met

669,793 647,545 636,389 616,639

The voucher component of the program is client demand-driven, and the projected target is an estimation based on population trends. The performance result of ‘substantially met’ is based on meeting 89.4% of the target.

Proportion of claims for a hearing aid fitting that relate to voucher clients who have a hearing loss of greater than 23 decibels. Source: 2015-16 Health Portfolio Budget Statements, p. 84

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

95% 93.7%

Result: Substantially met

94% 94% 95% 96%

There are legislated exceptions which constrain a 100% compliance with this target. As this is a demand-driven program the target is an annual estimate. The performance result of ‘substantially met’ is based on meeting 98.6% of the target.

Support research into hearing loss prevention and management

Implementation of hearing health research projects in accordance with program objectives. Source: 2015-16 Health Portfolio Budget Statements, p. 83

2015-16 Target 2015-16 Result

Funded research projects meet NHMRC research protocols. 100% of funded research projects met NHMRC protocols. Result: Met

In 2015-16, the NHMRC managed nine hearing research related projects for the Department.

The National Acoustic Laboratories operates in accordance with the guidelines provided in the NHMRC documents, the Australian Code for the Responsible Conduct of Research and Values and Ethics: Guidelines for Ethical Conduct in Aboriginal and Torres Strait Islander Health Research.

97 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 3 ACCESS TO MEDICAL AND DENTAL SERVICES

Analysis of performance - Program 3.6: Dental Services The Department met the majority of the performance targets for Program 3.6: Dental Services.

In March 2016, the Minister for Health tabled in Parliament the Report on the Third Review of the Dental Benefits Act 2008 . The review supported the effective operation of the Child Dental Benefits Schedule which provides low to middle income families with financial assistance to help meet the costs of their children’s dental care.

The Department also conducted a review of the National Partnership Agreement on Treating More Public Dental Patients (the Agreement). The review found there was a positive impact on the community. The target of 400,000 additional services was exceeded by the end of the Agreement, meaning that more eligible public dental patients received services.

The introduction of the new Child and Adult Public Dental Scheme, in 2016-17, will improve access to public dental services. More consumers on concession cards will benefit from the scheme. State and Territory Governments will have greater funding certainty to improve waiting times and help more eligible people.

Improve access to dental services for children

Complete independent review of the operation of the Dental Benefits Act 2008. Source: 2015-16 Health Portfolio Budget Statements, p. 85

2015-16 Target 2015-16 Result

Review findings are provided for tabling in Parliament. The review’s report was provided to the Minister for Health on 17 December 2015.

Result: Met

The Minister for Health tabled the Report on the Third Review of the Dental Benefits Act 2008 in Parliament on 3 March 2016.

Number of children accessing the Child Dental Benefits Schedule. Source: 2015-16 Health Portfolio Budget Statements, p. 86

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

2,400,000 1,007,258

Result: Not met

988,963 N/A N/A N/A

The Child Dental Benefits Schedule is a demand-driven, calendar year program. Utilisation of the program was lower than expected in 2015-16. Under utilisation is being addressed through the 2016-17 Budget measure Child and Adult Public Dental Scheme.

98 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Improve access to public dental services

Improve access to dental services for public dental patients. Source: 2015-16 Health Portfolio Budget Statements, p. 86 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result

Evaluation of the National Partnership Agreement on Treating More Public Dental Patients and associated data, to determine if increased access to dental services has occurred following the conclusion of the Agreement (June 2015).

By the Agreement’s conclusion, more people had received public dental services and the waiting time to receive those services had decreased significantly.

Result: Met

The Department evaluated performance and targets under the Agreement through data and performance reports obtained from the States and Territories. The findings were positive and showed that with the increase in Commonwealth funding for public dental services, a higher volume of services was provided and waiting times decreased. The key performance indicator under the Agreement, as measured in Dental Weight Activity Units, is included in the Council of Australian Governments Report on Performance 2015, which is published on the COAG website.37

37 Available at: www.coag.gov.au/node/528

99 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 3 ACCESS TO MEDICAL AND DENTAL SERVICES

Outcome 3 - Budgeted expenses and resources Budget Estimate1 2015-16

$’000 (A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 3.1: Medicare Services

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 13,288 7,455 (5,833)

Special appropriations

Health Insurance Act 1973 - medical benefits 21,080,530 21,115,085 34,555

Departmental expenses

Departmental appropriation2 72,955 66,002 (6,953)

Expenses not requiring appropriation in the budget year3 1,952 4,313 2,361

Total for Program 3.1 21,168,725 21,192,855 24,130

Program 3.2: Targeted Assistance - Medical

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 11,943 10,728 (1,215)

Departmental expenses

Departmental appropriation2 782 797 15

Expenses not requiring appropriation in the budget year3 22 53 31

Total for Program 3.2 12,747 11,578 (1,169)

Program 3.3: Pathology and Diagnostic Imaging Services and Radiation Oncology

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 72,483 69,705 (2,778)

Departmental expenses

Departmental appropriation2 5,237 5,385 148

Expenses not requiring appropriation in the budget year3 145 353 208

Total for Program 3.3 77,865 75,443 (2,422)

100 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Budget Estimate 1

2015-16 $’000 (A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 3.4: Medical Indemnity

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 150 150 -

Special appropriations

Medical Indemnity Act 2002 88,700 81,517 (7,183)

Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010 3,904 - (3,904)

Departmental expenses

Departmental appropriation2 1,813 1,603 (210)

Expenses not requiring appropriation in the budget year3 44 99 55

Total for Program 3.4 94,611 83,369 (11,242)

Program 3.5: Hearing Services

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 498,892 475,908 (22,984)

Departmental expenses

Departmental appropriation2 10,078 9,639 (439)

Expenses not requiring appropriation in the budget year3 229 1,841 1,612

Total for Program 3.5 509,199 487,388 (21,811)

Program 3.6: Dental Services4

Administered expenses

Ordinary annual services (Appropriation Act No. 1) - - -

Special appropriations

Dental Benefits Act 2008 313,741 312,669 (1,072)

Departmental expenses

Departmental appropriation2 1,757 1,490 (267)

Expenses not requiring appropriation in the budget year3 44 96 52

Total for Program 3.6 315,542 314,255 (1,287)

101 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 3 ACCESS TO MEDICAL AND DENTAL SERVICES

Budget Estimate 1

2015-16 $’000 (A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Outcome 3 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 596,756 563,946 (32,810)

Special appropriations 21,486,875 21,509,271 22,396

Departmental expenses

Departmental appropriation2 92,622 84,916 (7,706)

Expenses not requiring appropriation in the budget year3 2,436 6,755 4,319

Total expenses for Outcome 3 22,178,689 22,164,888 (13,801)

Average staffing level (number) 527 522 (5)

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2 Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’ and ‘Revenue from independent sources (s74)’. 3

‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees. 4 This Program excludes National Partnership payments to State and Territory Governments by the Treasury as part of the Federal Financial Relations Framework.

102 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 4 Acute Care

Improved access to, and efficiency of, public hospitals, acute and subacute services, including through payments to state and territory governments

Analysis of performance - Outcome 4 Acute Care In 2015-16, the Government continued to improve access to, and the efficiency of, public hospitals through the provision of $17.2 billion of funding to State and Territory Governments.

On 1 April 2016, the Council of Australian Governments’ (COAG) agreed a Heads of Agreement for public hospital funding from 1 July 2017 to 30 June 2020 ahead of consideration of longer term arrangements.

The Department supported the Government through the provision of timely and effective policy advice on public hospital funding matters. The Department also supported the implementation of state-wide elective surgery reform activities in Tasmania.

These activities have contributed to the Department’s achievement of objectives under Outcome 4 and Our Purpose.

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 4

Our Purpose

103 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 4 ACUTE CARE

Key community benefits for Outcome 4 in 2015-16

Supported the delivery of efficient public hospital services

The Government provided funding of $17.2 billion to the States and Territories to improve public hospital service delivery for the benefit of all Australians.

Improved health services in Tasmania

State-wide elective surgery reform has meant that Tasmania has delivered additional surgeries to patients who have been waiting for longer than the clinically recommended time.

Summary of performance criteria results for Outcome 4

Looking ahead • The Australian Government will increase its funding contribution to public hospital services from $17.2 billion in 2015-16 to $17.9 billion in 2016-17. The funding will support the efficient pricing, delivery and accountability of public hospital services.

Programs and program objectives contributing to Outcome 4

Program 4.1: Public Hospitals and Information

• Support States to deliver efficient public hospital services

• Mersey Community Hospital

• Improve health services in Tasmania

Met

100%

Not met

0.0%

Substantially met

0.0%

104 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Analysis of performance - Program 4.1: Public Hospitals and Information The Department has met all its performance targets under Program 4.1: Public Hospitals and Information, and continues to work with State and Territory Governments, and relevant national agencies to support the efficient pricing, delivery and accountability of public hospital services.

On 1 April 2016, the COAG agreed a Heads of Agreement for public hospital funding from 1 July 2017 to 30 June 2020 ahead of consideration of longer term arrangements. Commonwealth funding to States and Territories for this period includes an estimated additional $2.9 billion in funding for public hospital services.

In addition, implementation of state-wide elective surgery activities have supported Tasmania to provide cost-effective surgery to patients who have been waiting for longer than clinically recommended times. The Department also continues to provide evidence-based policy advice to the Minister to better inform policy decisions to support States and Territories to deliver efficient public hospital services.

Support States to deliver efficient public hospital services

Provide accurate advice to the Minister on public hospital funding policy. Source: 2015-16 Health Portfolio Budget Statements, p. 90

2015-16 Target 2015-16 Result

Relevant advice produced in a timely manner. Relevant advice to the Minister on public hospital funding matters was provided within agreed timeframes, consistent with

Government agreed processes.

Result: Met

The Minister was provided with the information and advice required to better inform policy decisions to improve the Australian community’s wellbeing.

Mersey Community Hospital

Ensure that residents of north-west Tasmania have ongoing access to hospital services. Source: 2015-16 Health Portfolio Budget Statements, p. 90

2015-16 Target 2015-16 Result

Agreement reached with the Tasmanian Government on the arrangements for the Mersey Community Hospital.

On 28 August 2015, a new two year Heads of Agreement was reached between the Australian Government and the Tasmanian Government for the continued management and operation of the Mersey Community Hospital from 1 September 2015 until 30 June 2017.

Result: Met

Funding supports continuation of a mix of general hospital and 24-hour emergency services to the local community, as well as specialising in elective surgery and subacute care. The two year period also allows both Governments sufficient time to work together to develop an appropriate long term arrangement for the hospital.

105 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 4 ACUTE CARE

Improve health services in Tasmania

Implementation of state-wide elective surgery reform activities. Source: 2015-16 Health Portfolio Budget Statements, p. 90

2015-16 Target 2015-16 Result

Reform activities, including tendering for elective surgery, commenced.

All reform activities have commenced, with tendering for elective surgery completed.

Result: Met

Elective surgery tendering was completed with the panel of private providers announced by the Tasmanian Government on 1 October 2015. Elective surgery procedures have commenced under this process.

Outcome 4 - Budgeted expenses and resources

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 4.1: Public Hospitals and Information2

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 92,639 89,854 (2,785)

Non cash expenses - depreciation3 963 963 -

Departmental expenses

Departmental appropriation4 29,615 29,251 (364)

Expenses not requiring appropriation in the current year5 4,028 5,976 1,948

Total for Program 4.1 127,245 126,044 (1,201)

Outcome 4 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 92,639 89,854 (2,785)

Non cash expenses - depreciation3 963 963 -

Departmental expenses

Departmental appropriation4 29,615 29,251 (364)

Expenses not requiring appropriation in the current year5 4,028 5,976 1,948

Total expenses for Outcome 4 127,245 126,044 (1,201)

Average staffing level (number) 47 45 (2)

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2 This Program excludes National Partnership payments to State and Territory Governments by the Treasury as part of the Federal Financial Relations Framework. 3

‘Non cash expenses relate to the depreciation of buildings. 4 Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’ and ‘Revenue from independent sources (s74)’. 5

‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees.

106 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 5 Primary Health Care

Access to comprehensive primary and mental health care services, and health care services for Aboriginal and Torres Strait Islander peoples and rural and remote populations, including through first point of call services for the prevention, diagnosis and treatment of ill-health and ongoing services for managing chronic disease

Analysis of performance - Outcome 5 Primary Health Care In 2015-16, the Department continued working towards providing all Australians with access to cost-effective primary and mental health care including those who live and work in regional, rural and remote areas. The establishment of innovative service and funding models has increased the efficiency and effectiveness of primary health care services and improved the coordination of care for patients.

The Department has continued its commitment to Closing the Gap by improving the health and wellbeing of Aboriginal and Torres Strait Islander peoples through the delivery of high quality essential services. The Department also continued to have a strong focus on improving the prevention, detection and management of chronic disease to improve health outcomes for all Australians.

The Department continued to support the integrity of primary health care by delivering on health provider compliance activities. Refer Program 3.1: Medicare Services and Appendix 3: Health Provider Compliance Report.

These activities have contributed to the Department’s achievement of objectives under Outcome 5 and Our Purpose.

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 5

Our Purpose

107 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 5 PRIMARY HEALTH CARE

Key community benefits for Outcome 5 in 2015-16

The Practice Incentives Program (PIP) After Hours Incentive ensured that all Australians had access to high quality after-hours primary health care

Australians can access 4,680 eligible general practices for after-hours primary care.

Further progress has been achieved to help close the gap between Aboriginal and Torres Strait Islander peoples and non-Indigenous Australians

The Aboriginal and Torres Strait Islander child mortality rate has declined and is on track to meet COAG’s Closing the Gap targets.

Increased access to essential health care services for Australians living and working in remote areas

The Rural Health Outreach Fund and Royal Flying Doctors Service provided access to support and services which would otherwise not have been available.

Primary Health Care Advisory Group completed its review of the primary health care system

The Group’s core recommendation, the establishment of Health Care Homes in Australia which will benefit people with complex and chronic disease, was accepted by the Australian Government and work has begun on its implementation.

Summary of performance criteria results for Outcome 5

Met

90.9%

Not met

4.5%

Substantially met

4.6%

108 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Looking ahead • Changes to the Practice Incentives Program (PIP) to include a new quality improvement incentive payment will streamline and simplify current PIP payments to help general practices achieve high quality health care and improved patient outcomes.

• In 2016-17, the Department will establish a new digital mental health gateway which will improve access to existing evidence-based information, advice and digital mental health treatment, and will connect people to services through a centralised telephone and web portal.

• The Department will design and develop the necessary infrastructure and supporting mechanisms needed to enable the rollout of Health Care Homes, and the commencement of services from 1 July 2017.

Programs and program objectives contributing to Outcome 5

Program 5.1: Primary Care Financing, Quality and Access

• Focus investment in frontline medical services for patients through Primary Health Networks

Program 5.2: Primary Care Practice Incentives

• Provide general practice incentive payments

Program 5.3: Aboriginal and Torres Strait Islander Health

• Improve access to Aboriginal and Torres Strait Islander health care in areas of need

• Reduce chronic disease

• Improve child and maternal health

Program 5.4: Mental Health

• Invest in more and better coordinated services for people with mental illness

Program 5.5: Rural Health Services

• Improve access to primary health care and specialist services

• Improve access to health information services in regional, rural and remote areas

Analysis of performance - Program 5.1: Primary Care Financing, Quality and Access The Department met all the performance targets for Program 5.1: Primary Care Financing, Quality and Access.

In 2015-16, the Department continued to focus investment in frontline medical services through Primary Health Networks (PHNs). PHNs are primary health care organisations established to increase the efficiency and effectiveness of primary health care services for patients, particularly those at risk of poor health outcomes; and improve coordination of care to ensure patients receive the right care in the right place at the right time. On 1 July 2015, 31 PHNs came into operation. Each PHN is a locally run, independent organisation that is responsive to the local health care needs of its population.

The Department has continued to focus investment in local health services through the expansion of the PHNs’ responsibilities in commissioning primary mental health services and drug and alcohol treatment services.

109 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 5 PRIMARY HEALTH CARE

Figure 5.1: Map of Primary Health Network boundaries

New South Wales (NSW) 1. Central and Eastern Sydney 2. Northern Sydney 3. Western Sydney 4. Nepean Blue Mountains 5. South Western Sydney 6. South Eastern NSW 7. Western NSW

8. Hunter, New England and Central Coast

9. North Coast

10. Murrumbidgee

Victoria 11. North Western Melbourne 12. Eastern Melbourne 13. South Eastern Melbourne 14. Gippsland 15. Murray

16. Western Victoria

Queensland 17. Brisbane North 18. Brisbane South 19. Gold Coast 20. Darling Downs and West Moreton 21. Western Queensland 22. Central Queensland, Wide Bay,

Sunshine Coast

23. North Queensland

South Australia (SA) 24. Adelaide

25. Country SA

Western Australia (WA) 26. Perth North 27. Perth South 28. Country WA

Tasmania 29. Tasmania

Northern Territory 30. Northern Territory

Australian Capital Territory 31. Australian Capital Territory

110 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Focus investment in frontline medical services for patients through Primary Health Networks

Primary Health Networks operational. Source: 2015-16 Health Portfolio Budget Statements, p. 95

2015-16 Target 2015-16 Result

Primary Health Networks (PHNs) operating from 1 July 2015. All 31 PHNs were fully operational on 1 July 2015. Result: Met

2015-16 was an establishment year for PHNs as they prepared to become commissioners. Whilst maintaining continuity of service for existing programs transferred to PHNs, they focussed on the following:

• establishing GP-led Clinical Councils and Community Advisory Committees to ensure a clinically and regionally focussed approach;

• building effective local relationships with primary health care providers and other providers within the broader health system, including Local Hospital Networks and Aboriginal and Torres Strait Islander health providers to support local service integration; and

• preparing for the move to commissioning models, which involved a more strategic approach to the procurement of health services, informed by local health needs assessment, market analysis of local health care supply, and ongoing monitoring and evaluation of service quality and performance.

Percentage of PHNs with completed baseline needs assessments and strategies for responding to identified service gaps. Source: 2015-16 Health Portfolio Budget Statements, p. 95

2015-16 Target 2015-16 Result

100% completed by PHNs by 30 June 2016. 100% of PHNs completed baseline needs assessments and developed strategies for responding to identified service gaps by

30 June 2016.

Result: Met

Needs assessments and activity work plans for all 31 PHNs were completed by 30 June 2016.

The needs assessment process supports PHNs in working towards improving patient health outcomes. It identifies and prioritises the health and service needs of the community within their regions. The work plans describe the activities to be undertaken from 1 July 2016 to 30 June 2018 in response to local needs. These plans also outline how Commonwealth funding will be distributed against these activities.

111 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 5 PRIMARY HEALTH CARE

Analysis of performance - Program 5.2: Primary Care Practice Incentives The Department met all the performance targets for Program 5.2: Primary Care Practice Incentives.

In 2015-16, the Department continued to fund the Practice Incentives Program (PIP) to support general practice activities by encouraging continuous improvement, increased quality of care, enhanced capacity, and improved access and health outcomes for patients.

In 2015-16, the PIP After Hours Incentive was implemented with a higher than projected participation rate from all eligible general practices across the country. The PIP After Hours Incentive supports general practices to provide their patients with access to after-hours primary health care through a more streamlined, flexible and nationally consistent model of after-hours service provision.

The Government took important steps towards addressing the growing rates of chronic disease in the community. In April 2015, the Minister for Health established the Primary Health Care Advisory Group (Advisory Group) to examine opportunities for reform of primary health care in improving the management of people with complex and chronic disease. The Advisory Group examined national and international evidence relating to innovative service and funding models in primary health care, and undertook a comprehensive national consultation process to inform its deliberations. The core recommendation of the Advisory Group’s final report was the establishment of Health Care Homes to provide patients with continuity of care, coordinated services and a team-based approach according to the needs and wishes of the patient. The Government has accepted the outcomes of the Advisory Group’s final report and the Department will establish Health Care Homes through a staged rollout process, with services commencing from 1 July 2017.

Provide general practice incentive payments

Percentage of GP patient care provided by PIP practices.38 Source: 2015-16 Health Portfolio Budget Statements, p. 97

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

84.1% 86.0%

Result: Met

85.0% 84.7% 84.4% 84.0%

The Department continued to provide incentive payments to support general practice activities through the PIP, encouraging continuing improvement, increased quality of care, enhanced capacity, and improved access and health outcomes for patients.

38 This is calculated as the proportion of total Medicare Benefit Schedule (MBS) schedule fees for non-referred attendances provided by PIP practices, standardised for age and sex.

112 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Implement the PIP After Hours Incentive. Source: 2015-16 Health Portfolio Budget Statements, p. 97

2015-16 Target 2015-16 Result

Provide general practices with access to the PIP After Hours Incentive from 1 July 2015.

Access to the PIP After Hours Incentive was available to all eligible PIP practices on 1 July 2015.

Result: Met

The PIP After Hours Incentive was introduced in response to the Review of after-hours primary health care which involved extensive nationwide stakeholder consultation. The Department worked closely with the primary care sector to ensure a smooth transition to the new arrangements.

The PIP After Hours Incentive has been implemented successfully and 85% of practices were registered for the incentive at May 2016. The incentive comprises five different payment levels, which provides both national consistency and flexibility for participating practices.

Number of general practices participating in the PIP After Hours Incentive. Source: 2015-16 Health Portfolio Budget Statements, p. 97

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

4,600 4,680

Result: Met

N/A N/A N/A N/A

The PIP After Hours Incentive supports practices to provide their patients with access to after-hours primary care. It consists of five levels that allow practices flexibility to select the level of after-hours coverage that best suits their business needs.

Investigate innovative primary health care funding models. Source: 2015-16 Health Portfolio Budget Statements, p. 97

2015-16 Target 2015-16

Provide advice to Government through the Primary Health Care Advisory Group, in relation to innovative primary health care funding models. Report due by late 2015.

The Advisory Group provided its final report to Government in December 2015.

Result: Met

The Advisory Group made a number of recommendations, the core of which was the establishment of the Health Care Homes Program. In March 2016, the Government announced stage one of the establishment of Health Care Homes in Australia. Health Care Homes are general practices or Aboriginal Medical Services which will provide a patient with a ‘home base’ for the ongoing coordination, management and support of their conditions.

113 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 5 PRIMARY HEALTH CARE

Analysis of performance - Program 5.3: Aboriginal and Torres Strait Islander Health The Department met the majority of performance targets for Program 5.3: Aboriginal and Torres Strait Islander Health. The Department is committed to closing the gap by improving the health and wellbeing of Aboriginal and Torres Strait Islander Australians through the delivery of high quality essential services.

In 2015-16, the Department released the National Aboriginal and Torres Strait Islander Health Plan 2013-2023 Implementation Plan in partnership with the National Health Leadership Forum for Aboriginal and Torres Strait Islander peak organisations that provide advice on health. The Implementation Plan articulates the overarching vision of the National Aboriginal and Torres Strait Islander Health Plan 2013-2023 by progressing strategies and actions that improve health outcomes for Aboriginal and Torres Strait Islander peoples. The Implementation Plan incorporates actions across the life course and is across seven domains including: maternal health and parenting; childhood development; adolescents and youth; healthy adults; healthy ageing; health systems effectiveness; and the social and cultural determinants of health.

In 2015-16, the Department continued to fund a range of activities through the Indigenous Australians’ Health Programme to improve the health of Aboriginal and Torres Strait Islander peoples, with over 60 per cent of the program’s funding going directly to Indigenous organisations.

In 2015-16, the Department has continued to focus on improving the prevention, detection and management of chronic disease to improve health outcomes. The 2015-16 Closing the Gap Report indicated that the Department is on track to achieve the target of halving the gap in mortality rates for Indigenous children under five by 2018.

In keeping with previous years, in 2015-16 the Department funded more health checks for Indigenous adults and children than expected. Designed especially for Indigenous peoples, the health checks support early intervention initiatives and are contributing to closing the gap.

Trachoma, an eye infection that can lead to blindness, still occurs in a number of communities in Australia, primarily rural and remote Indigenous communities. In 2015-16, the Department continued to work with State and Territory Governments through the Project Agreement on Improving Trachoma Control Services for Indigenous Australians to provide trachoma screening and treatment in affected communities. Good progress has been made, with the national prevalence rate for trachoma decreasing from 14 per cent in 2009 to 4.6 per cent in 2015.

In 2015-16, the Department also reformed and improved the Tackling Indigenous Smoking program, with a focus on evidence-based approaches being delivered at multiple levels, including: health service funding; workforce training and organisational support; and support for smokers through Quitline funding. The program uses proven approaches to change smoking behaviours within Aboriginal and Torres Strait Islander communities, and alongside broader tobacco control measures, is contributing to a steady decline in Indigenous smoking rates. These initiatives have contributed to the national daily smoking rate declining from 49 per cent in 2002 to 39 per cent in 2014-15, while the number of Aboriginal and Torres Strait Islander people who have never smoked continues to increase. This positive downwards trend shows that the Department’s comprehensive and multi-faceted approach to tobacco control is working. For further information on tobacco control, refer Program 1.2: Drug Strategy, on page 56.

114 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Improve access to Aboriginal and Torres Strait Islander health care in areas of need

Implement the National Aboriginal and Torres Strait Islander Health Plan 2013—2023. Source: 2015-16 Health Portfolio Budget Statements, p. 100

2015-16 Target 2015-16 Result

Commence actions in the Implementation Plan. Implementation of activities in accordance with the Implementation Plan are underway.

Result: Met

Work on a range of milestones has included the following:

• the Indigenous Australians’ Health Programme guidelines have been completed and are being used as a basis for the program’s funding decisions; • the National Framework for Health Services for Aboriginal and Torres Strait Islander Children and Families is with the Australian Health Ministers’ Advisory Council for final endorsement; and

• five per cent of National Health and Medical Research Council funding is directed to Aboriginal and Torres Strait Islander health.

Performance against the Implementation Plan goals will be measured through the Health Performance Framework 2017, led by the Department of the Prime Minister and Cabinet. This report measures progress on Indigenous health outcomes, health system performance and determinants of health (such as employment, education and safety).

Number of Indigenous adult and child health checks completed. Source: 2015-16 Health Portfolio Budget Statements, p. 100

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

164,476 196,759

Result: Met

171,786 150,534 122,161 96,579

The Council of Australian Governments’ 2008 Closing the Gap reforms included a commitment to close the gap in life expectancy between Indigenous and non-Indigenous Australians within a generation. Ensuring access to the health check is an important part of achieving this commitment, as it has both direct benefits and also provides access to targeted follow-up measures. Health assessments are available to Aboriginal and Torres Strait Islander people of all ages.

Reduce chronic disease

Percentage of regular Aboriginal and/or Torres Strait Islander clients with type 2 diabetes that have had a blood pressure measurement result recorded at the primary health care service within the previous 6 months.39 Source: 2015-16 Health Portfolio Budget Statements, p. 100

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

60-65% Data not available N/A N/A N/A N/A

Data to support this performance criterion will be available in late 2016. At this stage, initial reports indicate this target is likely to have been exceeded.

39 A regular client is defined as an Aboriginal and/or Torres Strait Islander person who has an active medical record (attendance at least 3 times in the last 2 years) with a primary health care organisation that receives funding from the Australian Government Department of Health to provide primary care services primarily to Aboriginal and Torres Strait Islander peoples.

115 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 5 PRIMARY HEALTH CARE

Chronic disease related mortality rate per 100,000:40 Source: 2015-16 Health Portfolio Budget Statements, p. 101 & 2015-16 Corporate Plan, p. 15

2014 Target 41

2014 Result

2013 2012 2011 2010

Aboriginal and Torres Strait Islander 603-642 756.5

Result: Not met

784 898 N/A 897

Non-Aboriginal and Torres Strait Islander42

435-441 447.4 449 451 N/A 469

Rate difference 43 165-204 309.1 335 447 N/A 428

The 2014 Aboriginal and Torres Strait Islander chronic disease mortality rate (756.5 per 100,000) was not within the target range (603-642 per 100,000). Although there has been a statistically significant decline in Aboriginal and Torres Strait Islander rates over the period 1998-2014, there has been no statistically significant change in the gap between the two populations. This is because the non-Indigenous rates in chronic disease mortality have declined faster than Indigenous rates.

Improve child and maternal health

Number of services funded to provide New Directions: Mothers and Babies Services. Source: 2015-16 Health Portfolio Budget Statements, p. 101

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

110 110

Result: Met

85 85 85 85

The Department continued working towards the goal of funding a total of 136 services by 2018. The Department is on track to meet this target with the funding of 25 additional services in 2015-16, bringing the current total to 110 services. The New Directions: Mothers and Babies Services program provides Aboriginal and Torres Strait Islander families with young children access to: antenatal care, standard information about baby care; practical advice and assistance with breastfeeding, nutrition and parenting; monitoring developmental milestones, immunisation status and infections; and health checks for Aboriginal and Torres Strait Islander children before starting school.

40 Source: AIHW National Mortality Database, calendar years 1998 to 2014 (which is the most up-to-date data available) and includes jurisdictions for which data are available and of sufficient quality to publish (NSW, Qld, WA, SA and NT combined). Note that this data is reported on a calendar year basis, reflecting the ABS mortality data collection and publication processes.

41 2014 data, due to the time lag in ABS mortality data publication. 42 This is contextual data and is listed to provide a comparison. 43

Ibid.

116 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Number of organisations funded to provide Australian Nurse Family Partnership Program Services.44 Source: 2015-16 Health Portfolio Budget Statements, p. 101

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

5 5

Result: Met

3 N/A N/A N/A

The Department continued to support the Australian Nurse Family Partnership Program (ANFPP) with the goal of having a total of 13 sites supported by 2018. An additional two sites (North Brisbane and remote community outreach in the Northern Territory) were funded in 2015-16, bringing the current total to five sites. The ANFPP supports women pregnant with an Aboriginal and/or Torres Strait Islander child to improve their own health and the health of their baby through a nurse-led home visiting program. It is an evidence-based program that aims to improve pregnancy outcomes by helping women engage in good preventive health practices; support parents to improve their child’s health and development; and help parents develop a vision for their own future, including continuing education and finding work.

Child 0-4 mortality rate per 100,000:45 Source: 2015-16 Health Portfolio Budget Statements, p. 102 & 2015-16 Corporate Plan, p. 15

2014 Target 46

2014 Result

2013 2012 2011 2010

Aboriginal and Torres Strait Islander 112-166 159.1

Result:

Met

185 165 N/A 203

Non-Aboriginal and Torres Strait Islander47

80-91 74.4 84 77 N/A 95

Rate difference 48 27-81 85.7 101 87 N/A 108

The 2014 Aboriginal and Torres Strait Islander child mortality rate (159.1 per 100,000) was within the target range for 2014 (112-166 per 100,000). Over the period 1998 to 2014, Aboriginal and Torres Strait Islander child mortality rates have declined significantly (by 33%), and the gap with non-Indigenous rates has also narrowed significantly (by 34%). The COAG target to halve the gap in mortality rates for Indigenous children under five within a decade (by 2018) is on track.

44 This performance criterion has not previously been published, but monitoring of this activity has occurred, therefore a result for 2014-15 has been included. 45 Source: AIHW National Mortality Database, calendar years 1998 to 2014 (which is the most up-to-date data available) and includes jurisdictions for which data

are available and of sufficient quality to publish (NSW, Qld, WA, SA and NT combined). Note that this data is reported on a calendar year basis, reflecting the ABS mortality data collection and publication processes. 46 2014 data, due to the time lag in ABS mortality data publication. 47 This is contextual data and is listed to provide a comparison. 48 Ibid.

117 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 5 PRIMARY HEALTH CARE

Analysis of performance - Program 5.4: Mental Health The Department met all performance targets for Program 5.4: Mental Health.

The Department has continued to achieve better outcomes for people with mental illness and their carers by supporting better coordination and integration of mental health services.

In November 2015, the Australian Government announced its response to Contributing Lives, Thriving Communities - Review of Mental Health Programmes and Services.49 The reforms aim to achieve a more efficient, integrated and sustainable mental health system to impr ove mental health services for Australians and help prevent suicide. The Department has worked closely with an expert reference group and key stakeholders resulting in a new stepped care approach to mental health, which will mean better targeting of services to meet individual needs.

The Department has continued to work with key stakeholders, including State and Territory Governments to support better coordination and integration of mental health services. The Fifth National Mental Health Plan (Fifth Plan) is being developed to achieve improved outcomes for people with mental illness and their carers by improving both system and service level integration at the regional level.

In any given year, one in four Australians aged 16-24 years old will experience mental illness, facing challenges including accessibility of services, concerns about confidentiality and stigma. The Department recognises the importance of early intervention in children and young people and continued to provide funding for mental health initiatives such as headspace and KidsMatter Primary in 2015-16. The continued investment in youth mental health activities will assist to break down barriers and improve mental health outcomes.

Invest in more and better coordinated services for people with mental illness

Analysis of opportunities for reform arising from the Review of Mental Health Programmes and Services. Source: 2015-16 Health Portfolio Budget Statements, p. 103

2015-16 Target 2015-16 Result

Options developed for policy and program reform and implementation.

Australian Government Response to the Review of Mental Health Programmes and Services (Review) was announced on 26 November 2015.

Result: Met

The Department has commenced work on implementation of the nine key action areas identified in the Review.

The Review sets out system reforms in response to the review undertaken by the National Mental Health Commission, as well as advice from the Mental Health Expert Reference Group and the sector more broadly.

49 Available at: www.health.gov.au/internet/main/publishing.nsf/Content/mental-review-response

118 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Total number of headspace youth-friendly service sites funded. Source: 2015-16 Health Portfolio Budget Statements, p. 104

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100 100

Result: Met

100 85 70 55

As at 30 June 2016, there were 100 headspace centres funded, with 95 operational centres providing mental health services to young people.

The transition of funding for headspace centres to Primary Health Networks (PHNs) as of 1 July 2016 has impacted implementation of the remaining centres. The Department is working with relevant PHNs and headspace National Office to open the remaining centres by February 2017.

Support better coordination and integration of mental health services at a national and regional level to improve consumer outcomes. Source: 2015-16 Health Portfolio Budget Statements, p. 104 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result

Initial consultation with States and Territories on the development of a new national mental health plan completed by August 2015.

Initial consultations on the development of the new Fifth Plan were completed by August 2015.

Result: Met

The Fifth Plan is a joint Commonwealth State Plan that is being progressed by the Mental Health Drug and Alcohol Principal Committee (MHDAPC) Fifth Plan Working Group.

Initial meetings of the MHDAPC Fifth Plan Working Group, comprising of State and Territory representatives, agreed to the scope and objectives of the Fifth Plan.

Increase the number of schools participating in the KidsMatter Primary initiative. Source: 2015-16 Health Portfolio Budget Statements, p. 104

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

3,000 3,035

Result: Met

2,635 2,020 1,352 793

The funded organisation and subcontractors continued to engage with primary schools to encourage participation in KidsMatter. This included organising a series of professional learning events in the form of webinars and face-to-face learning. For more information refer to the following case study.

119 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 5 PRIMARY HEALTH CARE

Growing healthy minds KidsMatter is all about growing healthy minds and healthy communities. The aim of KidsMatter is to create positive school and early childhood communities, teach children skills for good social and emotional development, work together with families, and recognise and get help for children with mental health problems. KidsMatter is a partnership between education and health sectors and is the first of its kind in Australia, funded by the Department and deliver ed by beyondblue.

KidsMatter was developed by mental health and education professionals in response to a growing recognition of the presence of mental health problems in young children. It provides a broad spectrum of resources, particularly for the important people in a child’s life, such as family, peers and teachers.

“Mental wellbeing is really about how you feel, and how others feel,” said one student, age 8. Another student, age 10, said: “Mental wellbeing is being healthy with your mind, helps you work out problems.”

In addition to focussing on childhood mental health, the initiative also connects parents with the school and broader community. This then feeds into the programs and further encourages the participation of children.

Further information on KidsMatter can be found at: www.kidsmatter.edu.au

Analysis of performance - Program 5.5: Rural Health Services The Department has met or substantially met all performance targets for Program 5.5: Rural Health Services.

The Department continues to support people living in regional, rural and remote areas as they face greater health care challenges than Australians based in metropolitan areas. In 2015-16, the services of the Rural Health Outreach Fund positively impacted communities with improved access to medical specialists, GPs, allied and other health professionals. Efforts also continued with a focus on the priority areas of chronic disease management, mental health, eye health, and maternity and paediatric health. The Visiting Optometrists Scheme continued to provide greater than expected access to optometry services.

In 2015-16, the Department continued supporting the delivery of essential health services to people in regional, rural and remote areas through support for the Royal Flying Doctors Service (RFDS). The RFDS clinical services are provided to ensure people living and working or travelling in remote areas have access to services which would otherwise not be available. With the implementation of the new funding arrangements, the RFDS has been able to ensure that essential services are maintained including primary aero-medical evacuations, primary and community health clinics, remote consultations (telephone consultations) and medical chests containing pharmaceutical and medical supplies for remote locations.

120 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Improve access to primary health care and specialist services

Number of communities receiving outreach services through the Rural Health Outreach Fund. Source: 2015-16 Health Portfolio Budget Statements, p. 105

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

350 515

Result: Met

483 460 421 384

In total, 515 locations in regional, rural and remote Australia received services under the Rural Health Outreach Fund.

Medical specialist, GP, and allied and other health services provided through the Rural Health Outreach Fund meet the needs of regional, rural and remote communities. Source: 2015-16 Health Portfolio Budget Statements, p. 106 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result

Organisations funded to support rural outreach are contractually required to consult with stakeholder groups, and will be guided by existing advisory forums and Indigenous Health Partnership forums, to identify community needs.

Organisations funded through the Rural Health Outreach Fund, undertook comprehensive consultation processes to identify and address community needs.

Result: Met

Organisations funded through the Rural Health Outreach Fund, undertook needs assessments and planning for outreach health services in consultation with a range of organisations including: local health services; State and Territory health departments; Aboriginal and Torres Strait Islander Health Organisations; and Primary Health Networks and were guided by Advisory Forums and Indigenous Health Partnership Forums to identify community needs.

Number of patient contacts supported50 through the Rural Health Outreach Fund.51 Source: 2015-16 Health Portfolio Budget Statements, p. 106

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

165,000 247,455

Result: Met

216,787 190,460 192,985 191,786

In 2015-16, there were 247,455 patient contacts under the Rural Health Outreach Fund.

50 Number of patients seen by participating health practitioners per annum. 51 Targets for this criterion have been revised to reflect the 2014-15 Budget measure Health Flexible Funds - pausing indexation and achieving

efficiencies .

121 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 5 PRIMARY HEALTH CARE

Number of locations receiving optometry services through the Visiting Optometrists Scheme. Source: 2015-16 Health Portfolio Budget Statements, p. 105

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

500 526

Result: Met

480 N/A N/A N/A

The Visiting Optometrists Scheme has improved access to optometrists for people living in regional, rural and remote Australia. The Visiting Optometrists Scheme has played a significant role in detecting the need for prescription glasses, detecting eye disease and ensuring appropriate referral for treatment and ongoing management.

Number of patients attending Royal Flying Doctor Service clinics. Source: 2015-16 Health Portfolio Budget Statements, p. 106

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

40,000 34,352

Result: Substantially met

36,365 42,608 43,142 41,657

In 2015-16, 34,352 patients attended Royal Flying Doctor Service Clinics. The reduction is due to less patient demand as well as improvements in reporting. The performance result of ‘substantially met’ is based on meeting 85.9% of the target.

Improve access to health information services in regional, rural and remote areas

Accurate, quality place-based information is provided through the Rural and Regional Health Australia website. Source: 2015-16 Health Portfolio Budget Statements, p. 106

2015-16 Target 2015-16 Result

Regular revision of the Rural and Regional Health Australia website to maintain information accuracy and quality.

The content on the Rural and Regional Health Australia website continued to be updated throughout 2015-16, however the website was decommissioned on 1 July 2016.

Result: Met

In 2015-16, the Rural and Regional Health Australia website was regularly updated.

A review conducted by the Department in 2015 resulted in the decision to decommission the Rural and Regional Health Australia website on 1 July 2016, and to relocate the relevant information to a dedicated webpage on the Department of Health website. This has removed unnecessary duplication of information and provides a single access point to a comprehensive list of rural health programs and services.

122 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 5 - Budgeted expenses and resources ( Budget Estimate1

2015-16 $’000 (A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 5.1: Primary Care Financing, Quality and Access

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 424,119 419,004 (5,115)

Departmental expenses

Departmental appropriation2 25,427 24,701 (726)

Expenses not requiring appropriation in the budget year3 648 1,728 1,080

Total for Program 5.1 450,194 445,433 (4,761)

Program 5.2: Primary Care Practice Incentives

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 357,971 341,993 (15,978)

Departmental expenses

Departmental appropriation2 2,250 2,082 (168)

Expenses not requiring appropriation in the budget year3 58 137 79

Total for Program 5.2 360,279 344,212 (16,067)

Program 5.3: Aboriginal and Torres Strait Islander Health4

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 729,135 726,665 (2,470)

Departmental expenses

Departmental appropriation2 44,581 44,931 350

Expenses not requiring appropriation in the budget year3 1,153 2,912 1,759

Total for Program 5.3 774,869 774,508 (361)

Program 5.4: Mental Health4

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 663,578 648,090 (15,488)

Departmental expenses

Departmental appropriation2 21,407 20,299 (1,108)

Expenses not requiring appropriation in the budget year3 779 1,296 517

Total for Program 5.4 685,764 669,685 (16,079)

123 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 5 PRIMARY HEALTH CARE

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 5.5: Rural Health Services

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 68,074 64,795 (3,279)

Departmental expenses

Departmental appropriation2 2,126 2,559 433

Expenses not requiring appropriation in the budget year3 56 164 108

Total for Program 5.5 70,256 67,518 (2,738)

Outcome 5 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 2,242,877 2,200,547 (42,330)

Departmental expenses

Departmental appropriation2 95,791 94,572 (1,219)

Expenses not requiring appropriation in the budget year3 2,694 6,237 3,543

Total expenses for Outcome 5 2,341,362 2,301,356 (40,006)

Average staffing level (number) 572 573 1

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2 Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’ and ‘Revenue from independent sources (s74)’. 3

‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees. 4 This Program excludes National Partnership payments to State and Territory Governments by the Treasury as part of the Federal Financial Relations Framework.

124 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 6 Private Health

Improved choice in health services by supporting affordable quality private health care, including through private health insurance rebates and a regulatory framework

Analysis of performance - Outcome 6 Private Health In 2015-16, the Government continued to improve choice and reduce the pressure on the public health system by providing the private health insurance rebate to support affordable private health care. The number of people covered by private health hospital insurance continues to rise steadily.

These activities have contributed to the Department’s achievement of objectives under Outcome 6 and Our Purpose.

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 6

Our Purpose

125 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 6 PRIVATE HEALTH

Key community benefits for Outcome 6 in 2015-16

Reduced pressure on the public hospital system

The Government has reduced the pressure on the public hospital system by supporting individuals to purchase private health insurance. Rebates make private health insurance more affordable and provide greater choice.

Ensured access to high quality prostheses

Privately insured Australians are assured of having continuing access to high quality prostheses through regular revisions to the Prostheses List.

Summary of performance criteria results for Outcome 6

Looking ahead • The Australian Government has announced the establishment of the Private Health Ministerial Advisory Committee to provide technical and specialist advice on designing and implementing reforms to private health insurance. The Committee will consider a range of issues including value for money, complexity

and transparency of private health insurance products.

• Public confidence in the process for reviewing listed prostheses will be increased by the reconstitution of the Prostheses List Advisory Committee. The Committee will provide revitalised expertise and be able to further develop and advise on changes to the prostheses listing process.

Met

100%

Not met

0.0%

Substantially met

0.0%

126 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Programs and program objectives contributing to Outcome 6

Program 6.1: Private Health Insurance

• Support the affordability of private health insurance through the private health insurance rebate

• Ensure access to safe and effective medical devices through the Prostheses List

• Promote a viable, sustainable and cost-effective private health insurance sector

Analysis of performance - Program 6.1: Private Health Insurance The Department met all performance targets under Program 6.1: Private Health Insurance. Insurers and peak bodies were consulted through individual discussions and forums.

The Department also ensured clinically appropriate and cost-effective prostheses are available to privately insured Australians through the regular revision of the Prostheses List.

The Department undertook a significant consultation process in late 2015. Over 40,000 people completed an online survey, over 100 stakeholders attended eight consultation roundtables, and the Department received over 180 written submissions. The consultations showed that consumers are focussed on value for money, and are concerned about the complexity and transparency of private health insurance products.

Government spending on the private health insurance rebate is being maintained below $6 billion. The number of people with hospital treatment policies has increased by 102,250 from March 2015 to March 2016. Almost half the Australian population is covered by private health insurance. Figure 6.1 below shows private health insurance rebate expenditure from 2009-10 to 2015-16.

Figure 6.1: Private health insurance rebate expenditure, 2009-10 to 2015-1652

$800

$700

$600

$500

$400

$300

Expenditure ($ millions)

Jul-09

Nov-09

Mar-10

Jul-10

Nov-10

Mar-11

Jul-11 Nov-11

Mar-12

Jul-12

Nov-12

Mar-13

Jul-13

Nov-13

Mar-14

Jul-14

Nov-14

Mar-15

Jul-15

Nov-15

Mar-16

52 March increases attributed to annual premium increase at 1 April and reflects some individuals and families choosing to pay in advance.

127 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 6 PRIVATE HEALTH

Support the affordability of private health insurance through the private health insurance rebate

Consultation with stakeholders on ways to ensure that the private health insurance rebate is communicated to policy holders and delivered through private health insurance products. Source: 2015-16 Health Portfolio Budget Statements, p. 111

2015-16 Target 2015-16 Result

Ongoing stakeholder discussions (a minimum of two stakeholder consultation forums) to assist in the timeliness and streamlining of processes to enable consistent advice to consumers.

Individual discussion and forums in six capital cities were undertaken with insurers and peak bodies to ensure that consistent advice was delivered to all stakeholders, to assist in the timeliness of notifications to consumers. The Department’s consultations on private health insurance also covered the appropriate provision of information to consumers. This was in addition to circulars, email advice and clarification.

Result: Met

Insurers were able to notify policy holders of variations to their private health insurance rebate within acceptable timeframes, before changes were implemented.

Percentage of insurers’ average premium increases publicly released in a timely manner. Source: 2015-16 Health Portfolio Budget Statements, p. 111

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

100% 100% 100% 100%

The Department announced the weighted average premium increase for 2016 premiums on 2 March 2016. The average premium increase was 5.6%.

The number of people covered by private health insurance hospital treatment cover. Source: 2015-16 Health Portfolio Budget Statements, p. 112 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

10.7m 11.3m

Result: Met

11.2m 11.1m 10.8m 10.6m

Private health insurance participation rates within the population remained steady over the 12 month period. The uptake of policies with hospital treatment during the same period has increased gradually.

The number of people with hospital treatment policies has increased by 102,250 from March 2015 to March 2016. Almost half the Australian population is covered as a result. Participation rates can be found in the Australian Prudential Regulation Authority Private Health Insurance Quarterly Statistics March 2016.53

53 Available at: www.apra.gov.au/PHI/Publications/Pages/Quarterly-Statistics.aspx

128 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Ensure access to safe and effective medical devices through the Prostheses List

Ensure consumers have access to safe and effective surgically implanted prostheses under the Prostheses List. Source: 2015-16 Health Portfolio Budget Statements, p. 111

2015-16 Target 2015-16 Result

Consumers have access to clinically appropriate and cost-effective surgically implanted prostheses.

Consumers continue to have access to clinically appropriate and cost-effective surgically implanted prostheses.

Result: Met

There are over 10,000 items on the Prostheses List, providing surgeons with choice to select the most appropriate prosthesis for their patients.

Application processes continue to ensure that new medical devices are assessed as being, at minimum, as clinically effective as prostheses already listed on the Prostheses List or other available health care options.

Percentage of applications to list devices on the Prostheses List completed54 within 22 weeks. Source: 2015-16 Health Portfolio Budget Statements, p. 112

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

86.0% 89.7%

Result: Met

88.89% N/A N/A N/A

The Department continues to review and refine its processes to ensure that as many applications as possible are completed within 22 weeks and listed on the next Prostheses List.

Promote a viable, sustainable and cost-effective private health insurance sector

Ensure that all health funds complete due diligence when assessing the increase in annual premiums. Source: 2015-16 Health Portfolio Budget Statements, p. 111

2015-16 Target 2015-16 Result

Premium round applications demonstrate sufficient capital adequacy, solvency and prudential viability.

All premium round applications demonstrated sufficient capital adequacy, solvency and prudential viability.

Result: Met

In 2015-16, the Australian Prudential Regulation Authority (APRA) assumed the regulatory oversight role that was previously undertaken by the Private Health Insurance Administration Council.

The APRA confirmed that all private health insurance insurers met their prudential obligations.

54 ‘Completed’ to be interpreted as a decision taken to: 1) recommend to list, or 2) recommend not to list, or 3) recommend to be deferred.

129 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 6 PRIVATE HEALTH

Outcome 6 - Budgeted expenses and resources

Budget Estimate 1

2015-16 $’000 (A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 6.1: Private Health Insurance

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 2,328 2,310 (18)

Special appropriations

Private Health Insurance Act 2007 - incentive payments and rebate 5,953,427 5,887,067 (66,360)

Departmental expenses

Departmental appropriation2 9,069 8,615 (454)

Expenses not requiring appropriation in the budget year3 181 449 268

Total for Program 6.1 5,965,005 5,898,441 (66,564)

Outcome 6 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 2,328 2,310 (18)

Special appropriations 5,953,427 5,887,067 (66,360)

Departmental expenses

Departmental appropriation2 9,069 8,615 (454)

Expenses not requiring appropriation in the budget year3 181 449 268

Total expenses for Outcome 6 5,965,005 5,898,441 (66,564)

Average staffing level (number) 43 42 (1)

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2

Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’ and ‘Revenue from independent sources (s74)’. 3

‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees.

130 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 7 Health Infrastructure, Regulation, Safety and Quality

Improved capacity, quality and safety of Australia’s health care system to meet current and future health needs including through investment in health infrastructure, regulation, international health policy engagement, research into health care, and support for blood and organ donation services

Analysis of performance - Outcome 7 Health Infrastructure, Regulation, Safety and Quality In 2015-16, the Department continued to deliver appropriate and effective regulation, safeguarding the health and wellbeing of the community. In working to ensure the health system meets future needs, the Department established the Australian Digital Health Agency, which will lead the ongoing development of the national digital health capability. The Medical Research Future Fund Advisory Board was established in April 2016 and undertook extensive public consultations which will assist in determining the Australian Medical Research and Innovation Strategy and related Priorities.

These activities have contributed to the Department’s achievement of objectives under Outcome 7 and Our Purpose.

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 7

Our Purpose

131 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Key community benefits for Outcome 7 in 2015-16

Ongoing development of Australia’s digital health capability

Work in 2015-16 ensured the commencement of the Australian Digital Health Agency on 1 July 2016. The development of the national digital health capability will allow health care providers, professionals and patients to share health information, improving availability of treatment and health outcomes.

International engagement on global health issues

The Department represented Australia at the 66th Session of the WHO Western Pacific Regional Committee meeting. The Department secured critical outcomes on regional action plans and frameworks on viral hepatitis, tuberculosis, universal health coverage and urban health. This active engagement improves health practice and knowledge internationally, and contributes to better health outcomes for all Australians.

Improvements to Australia’s research capacity

Agreement was reached with States and Territories through the Clinical Trials Framework for Action to improve the environment for clinical trials. Agreement will ensure a cohesive and strategic national approach across Australia, contributing to long term health care benefits to the Australian community.

Summary of performance criteria results for Outcome 7

Met

82.0%

Not met

10.0%

Substantially met

8.0%

132 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Looking ahead • Evaluate trials of My Health Record participation arrangements with findings used to inform the development of future strategies.

• Continue to monitor international health policy trends and actively engage in international dialogue on health policy challenges.

• Enhance investment in health and medical research by strategic investment of the Medical Research Future Fund (MRFF), with guidance from the Australian Medical Research Advisory Board.

• Redesign the Rural and Regional Teaching Infrastructure Grants Program to help deliver improved rural health services.

• Continue to promote best practice regulation.

Programs and program objectives contributing to Outcome 7

Program 7.1: eHealth

• Redevelop and operate a national shared eHealth record system

• Provide national eHealth leadership

Program 7.2: Health Information

• Provide support to the Council of Australian Governments (COAG) Health Council and the Australian Health Ministers’ Advisory Council (AHMAC)

• Support the Australian Government with informed policy advice and facilitate engagement with the health sector

Program 7.3: International Policy Engagement

• Facilitate international engagement on global health issues

Program 7.4: Research Capacity and Quality

• Improve research capacity

• Monitor the use of diagnostics, therapeutics and pathology

• Improve safety and quality in health care

Program 7.5: Health Infrastructure

• Invest in other major health infrastructure

• Improve primary health care infrastructure

133 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Program 7.6: Blood and Organ Donation

• Improve Australians’ access to organ and tissue transplants

• Support access to blood and blood products

Program 7.7: Regulatory Policy

• Continue the quality improvement and regulatory reform process

Therapeutic goods

• Regulate therapeutic goods for safety, effectiveness/performance and quality

• Participate in international regulatory convergence and work sharing activities

• Continue the quality improvement and regulatory reform process

Chemical safety

• Aid in the protection of the Australian people and the environment by assessing the risks of chemicals and providing information to promote their safe use

Gene technology regulation

• Protect the health and safety of people and the environment by regulating work with genetically modified organisms (GMOs)

Analysis of performance - Program 7.1: eHealth The Department met all the performance targets for Program 7.1: eHealth. In 2015-16, the Department implemented key recommendations from the Review of the Personally Controlled Electronic Health Record. The system was renamed to My Health Record and improvements were made to its usability and clinical content. My Health Record enables improved coordination of health care and the ability for consumers to share their health information seamlessly and securely across multiple health care providers.

National Digital Health governance arrangements and My Health Record system operations transitioned from the Department and the National eHealth Transition Authority to the newly established Australian Digital Health Agency (the Agency) on 1 July 2016. The Agency will lead the ongoing evolution of national digital health systems, which will connect and drive efficiencies in the health system and result in better health outcomes for all individuals. For further information about the Agency refer Appendix 5: Australian Digital Health Agency 2015-16 Annual Report.

The Department is currently trialling new participation arrangements, including an opt-out system, as well as innovative approaches utilising the current opt-in system. Outcomes from these trials will inform future participation arrangements in the My Health Record system.

134 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

My Health Record In March 2016, My Health Record was launched. This is a secure online summary of a person’s medications, diagnosed illnesses, treatments, allergies and tests. More than four million

Australians already have a My Health Record and more are registering every day.

Each person can control what goes onto their My Health Record, and who is allowed to see it.

For health care providers, knowing more about a patient’s

medical history can lead to a better understanding of what is happening, and result in better treatment decisions. In any week, one in three GPs will see a patient for whom they have little or no health information. More than one in five GPs face this situation every day. With My Health Record, registered health care providers can have access to important information about their patient anytime and anywhere they need it.

Pharmacist Shane Jackson recognises the benefits of the My Health Record: “I am absolutely thrilled in the potential of the My Health Record system. More appropriate and timely access to patient information allows me to deliver better clinical care to my patients.”

My Health Record enables people to take a more active role in managing their own health - both in preventing lifestyle-related chronic diseases, and managing conditions they already have. It can benefit all Australians, and is particularly helpful for people who have complex health conditions or continuing medical treatments and are being seen by a range of health care providers.

To find out more about the benefits of a My Health Record, and to sign up, visit: www.myhealthrecord.gov.au

135 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Redevelop and operate a national shared eHealth record system

Good practice principles and methods are applied to the operation and support of the My Health Record system. Source: 2015-16 Health Portfolio Budget Statements, p. 119

2015-16 Target 2015-16 Result

The My Health Record system operations and practices are regularly reviewed to improve performance and usability.

The My Health Record system operations and practices are regularly reviewed to improve performance and usability. Monthly governance meetings have been held throughout 2015-16 to manage the My Health Record program and monitor system operations and performance. These are underpinned by standard system design and operations processes and regular testing and assurance of system functions.

Result: Met

In applying and developing good practice principles and methods for the operation of the My Health Record system, the Department has taken into consideration expert advice, feedback and recommendations from a range of stakeholders, as well as the Operations Management Committee, Jurisdictional Advisory Committee and the Independent Advisory Council.

A number of improvements, informed by user research, have been made to the My Health Record system in order to improve the system operations and useability for individuals and providers.

Trials of new participation arrangements are undertaken, including for an opt-out system. Source: 2015-16 Health Portfolio Budget Statements, p. 119

Participation trial findings inform future planning to increase participation in, and meaningful use of, the My Health Record.55 Source: 2015-16 Health Portfolio Budget Statements, p. 119 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result

Trials to commence in 2016. Opt-out trials commenced in March 2016.

Opt-in trials commenced in July 2016.

Result: Met

On 28 October 2015, the Minister for Health announced that the opt-out trial sites would cover the Northern Queensland and Nepean Blue Mountains Primary Health Network regions. These trials commenced in March 2016, following the Ministerial launch of the My Health Record on 4 March 2016.

In April 2016, two trials of innovative approaches to increasing participation and use of the My Health Record system utilising the current opt-in registration arrangements were announced. These two trials are taking place in Western Australia, and Ballarat in western Victoria.

As a result of the opt-out trials in Northern Queensland and the Nepean Blue Mountains, over 970,000 new My Health Records have been created.

The Ballarat trial will seek to register patients being admitted to the Ballarat hospital for a My Health Record. It is estimated that 27,000 individuals will register over the 6 month period of the trial.

55 This performance criterion was originally published under the ‘Provide national eHealth leadership’ program objective.

136 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

The Western Australia trial will seek to increase registration of chronically ill patients when they establish a care plan with their doctor. It is estimated that 15,000 chronically ill patients will register as part of the trial.

The relative effectiveness of an opt-out system to increase participation and use of the system by consumers and health care providers is being assessed against the outcomes from the two trials of innovative opt-in approaches and the current national opt-in system, to inform future strategies for bringing forward the benefits of the My Health Record nationally.

The Department has engaged an independent evaluator to assess the outcomes of the trials. The independent evaluator’s findings, which will be presented in a final report at the end of November 2016, will inform the Department’s report to the Government. The Department’s report will inform the Government’s decisions on the future direction for the My Health Record system.

Provide national eHealth leadership

System availability. Source: 2015-16 Health Portfolio Budget Statements, p. 120

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

99% of the time (excluding planned outages)

99.38% of the time (excluding planned outages)

Result: Met

99.86%

(excluding planned outages)

N/A N/A N/A

The Department worked with its partner organisation to improve My Health Record system availability. This work included continued improvements to system monitoring tools for early detection of technical issues, and implementation of infrastructure failover capability, to ensure system availability in the event of equipment failure.

New eHealth governance arrangements are implemented, including establishment of the Australian Commission for eHealth.56 Source: 2015-16 Health Portfolio Budget Statements, p. 119

2015-16 Target 2015-16 Result

The Commission is operational from 1 July 2016. The Australian Digital Health Agency was established in law on 30 January 2016 and commenced operations on 1 July 2016.

Result: Met

The Australian Digital Health Agency commenced operating on 1 July 2016 and will lead the ongoing development and delivery of the national digital health capability, which will allow health care providers, professionals and patients to seamlessly share health information.

The Intergovernmental Agreement which commits funding to the Australian Digital Health Agency was approved and executed by the COAG Health Council on 8 April 2016.

The Minister for Health appointed the Chair and Board members on 20 April 2016, after agreement from State and Territory health ministers. An acting CEO was appointed on 4 May 2016 pending the appointment of a permanent CEO.

56 The Australian Commission for eHealth was renamed the Australian Digital Health Agency in November 2015 by the Minister for Health, to better address the long term digital transformation of health care and provide a simple title for the health consumer.

137 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Analysis of performance - Program 7.2: Health Information The Department met all the performance targets for Program 7.2: Health Information. In 2015-16, the Department continued to work with the States and Territories through the Council of Australian Governments’ (COAG) Health Council to improve health outcomes of all Australians, through a coordinated and collaborative approach to health policy development. Health services are delivered more efficiently through a coordinated approach, which in turn contributes to the sustainability of the health system.57

The Department also continued to seek advice from peak and advisory bodies. This advice is considered as part of the development of policies and programs that directly improve health outcomes.

Provide support to the COAG Health Council and AHMAC

Australian Government initiated activities undertaken by AHMAC and its Principal Committees support the COAG Health Council in providing leadership on national health issues. Source: 2015-16 Health Portfolio Budget Statements, p. 121

2015-16 Target 2015-16 Result

Relevant Australian Government priorities are highlighted and progressed in the activities of the COAG Health Council.

Priorities were agreed and progressed by Australian Health Ministers’ Advisory Council (AHMAC) and endorsed by the COAG Health Council.

Result: Met

The Commonwealth, State and Territory Governments have a shared intention to work in partnership to improve health outcomes for all Australians and ensure the sustainability of the Australian health system.58

The COAG Health Council, supported by AHMAC, focussed on a broad range of issues in 2015-16 including: long term future of the health system; hospital and health service delivery; establishment and integration of primary care networks; coordination of care for people with chronic and complex conditions; Aboriginal and Torres Strait Islander Health; digital health; health workforce; mental health; safety and quality; aged care; and health promotion and prevention.

Support the Australian Government with informed policy advice and facilitate engagement with the health sector

Advice obtained from national peak and advisory bodies informs policy and programme development. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 75

2015-16 Target 2015-16 Result

Funding agreements with a range of national peak and advisory bodies commencing from 1 January 2016.

Funding agreements commenced from 1 January 2016.

Result: Met

An approach to market was undertaken and finalised prior to 31 December 2015. Funding agreements commenced from 1 January 2016.

57 Sustainability of the health system refers to the ability of the Government to continue to fund services over the longer term given increasing demand for and costs of services.

58 Ibid.

138 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Analysis of performance - Program 7.3: International Policy Engagement The Department met all the performance targets for Program 7.3: International Policy Engagement. Responding to global health security threats, building effective health systems, and preventing and treating disease, including non-communicable disease, are global challenges that require global solutions.

In 2015-16, the Department continued to provide leadership in international health fora, promoting international best practice and sharing its technical and policy expertise, focussing on regional and global health priorities.

The Department also continued to host overseas delegations to share information and experiences in different aspects of health systems. The learnings from these delegations continue to assist the Department in the ongoing development of a more affordable, accessible, efficient, and high quality health system.

Facilitate international engagement on global health issues

Number of international health delegation visits facilitated by the Department. Source: 2015-16 Health Portfolio Budget Statements, p. 123

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

15-20 16

Result: Met

20 20 25 35

Incoming visits from overseas delegations that are interested in learning more about various parts of Australia’s health system, are an important means of engaging with other countries: to build networks and professional linkages between individuals and organisations; exchange ideas and experience; and facilitate international discussions on health issues.

139 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Australia’s interests secured at relevant meetings of key international health bodies and organisations. Source: 2015-16 Health Portfolio Budget Statements, p. 123 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result

Departmental representatives will have actively engaged in meetings of the WHO governing bodies, OECD Health Committee, APEC Health Working Group and other international fora.

The Department provided leadership in international health fora, promoting and learning from international best practice and sharing its technical and policy expertise focussing on domestic regional and global health priorities.

Result: Met

The Department pursued meaningful governance reform of the World Health Organization (WHO), and was active at the World Health Assembly, where countries achieved positive outcomes including reaching agreement on: the WHO’s new health emergency program and global health security issues more broadly; the first ever Global Strategy and Plan of Action on Ageing and Health; access to medicines; and new global health sector strategies on HIV, viral hepatitis and sexually transmitted infections. The Department also represented Australia at the 66th Session of the WHO’s Western Pacific Regional Committee Meeting securing critical outcomes on regional action plans and frameworks on viral hepatitis, tuberculosis, universal health coverage and urban health.

The Department actively engaged with the OECD Health Committee and participated in a number of expert group meetings and committee projects, including supporting a comprehensive review of Australia’s health system.

Through the Asia-Pacific Economic Cooperation (APEC) Health Working Group, the Department worked to improve health security preparedness through improved capacity and better cooperation across sectors. The Department led Australia’s delegations to the Pacific Heads of Health Meeting, contributing to strategic policy objectives for Pacific health ministries, in particular in the area of non-communicable diseases.

Analysis of performance - Program 7.4: Research Capacity and Quality The Department met the majority of the performance targets for Program 7.4: Research Capacity and Quality. There were some challenges in achieving all performance targets, which are discussed in the performance criteria below.

Health and medical research over the medium to longer term is vital to the future of the health system. All Australians stand to benefit from ongoing investments in research through the Medical Research Future Fund (MRFF), either directly through improved health, or indirectly by supporting improved system productivity and economic growth.

The first disbursements from the MRFF were scheduled to be made during 2015-16. The legislation that underlies the MRFF requires the Australian Medical Research Advisory Board to undertake consultation prior to determining the Australian Medical Research and Innovation Strategy and related Priorities. Consultations commenced in May 2016. First disbursements from the MRFF are expected to be made in early 2017.

140 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Improve research capacity

Stakeholders are engaged in developing strategies to improve clinical trials processes. Source: 2015-16 Health Portfolio Budget Statements, p. 125

2015-16 Target 2015-16 Result

Agreement reached by jurisdictions on strategies to improve clinical trials processes.

Jurisdictions and key stakeholder representatives endorsed a Clinical Trials Framework for Action.

Key stakeholders engaged in investigation into recruitment and retention barriers in Australian clinical trials.

Result: Met

The endorsed Clinical Trials Framework for Action will ensure a cohesive and strategic national approach and improve the clinical trials environment in Australia.

The Department funded a systematic review of barriers and enablers to clinical trials recruitment in Australia, to inform future strategies for improvement. Project consultations included jurisdictional representatives and key stakeholders from across the clinical trials sector, as well as consumers.

Clinical trials reform continues to deliver improved processes and drive further investment. Source: 2015-16 Health Portfolio Budget Statements, p. 126

2015-16 Target 2015-16 Result

Adoption of national metrics system by all jurisdictions as a mechanism for quality improvement.

Framework for National Aggregate Statistics for Clinical Trials was implemented by jurisdictions. Work in 2015-16 ensured that the first activity report was provided to Australian Health Ministers’ Advisory Council (AHMAC) in May 2016.

Result: Met

Health Ministers endorsed a Framework for National Aggregate Statistics for Clinical Trials in April 2015. In 2015-16, jurisdictions reported data for initial metrics and delivered the First Activity Report on Commercially Sponsored Clinical Trials in Australian Public Health Organisations to AHMAC in May 2016.

The report (which will be refined over time) provides a national picture of number, phase and timelines for clinical trials in Australia, to evaluate the success of efforts to improve the clinical trials environment, and to inform future quality and performance improvement.

141 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Investment in medical research supports sustainability for the health system and drives innovation. Source: 2015-16 Health Portfolio Budget Statements, p. 126 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result

Strategic investment of total available funding in 2015-16. First disbursements under the Medical Research Future Fund will be made in 2016-17.

Result: Not met

The Medical Research Future Fund Act 2015 (MRFF Act) was passed by Parliament in August 2015, with the Australian Medical Research Advisory Board (Advisory Board) established in April 2016.

The MRFF Act requires the Advisory Board to consult and develop the Australian Medical Research and Innovation Strategy and related Priorities to be considered by Government in making decisions on fund disbursements. The MRFF Act requires that stakeholder consultation and engagement occurs before the Advisory Board determines the Strategy and Priorities. A public consultation process, including a public call for submissions finished on 31 August 2016.

The passage of the enabling MRFF legislation (an interdepartmental effort led by the Department of Finance) and subsequent appointment of the Advisory Board, impacted on the ability to make disbursements in 2015-16.

It is anticipated the delivery of Strategy and Priorities will now occur in October 2016, allowing the first disbursements to be made in early 2017.

The movement of 2015-16 funds to 2016-17 has been agreed by Government and is published in the 2016-17 Budget.

The Biomedical Translation Fund (BTF) was announced as part of the National Innovation and Science Agenda in December 2015. The BTF will provide funding to private fund managers for investment into biomedical discoveries. Funds intended for the capital base of the MRFF have been diverted to form the BTF, which will allow for the fast tracking of investments into biomedical start-ups. A BTF Committee was established under Innovation Australia to guide the appointment of fund managers. The Committee’s first meeting was held in June 2016. The call for fund managers closed on 14 September 2016 and it is expected that fund managers will be appointed in late 2016. Fund managers are expected to identify investees and commence the drawdown of matched funds in early 2017.

Monitor the use of diagnostics, therapeutics and pathology

Information regarding quality use of medicines newly listed on the PBS is provided to health professionals where appropriate. Source: 2015-16 Health Portfolio Budget Statements, p. 125

2015-16 Target 2015-16 Result

The Department will provide funding for the provision of quality use of medicines information to be available in a variety of formats throughout the year, designed to support clinicians and consumers.

The Department supported NPS MedicineWise to produce its scheduled publications which provide evidence-based information on therapeutics, including new and revised listings of medicines on the PBS, for health professionals and consumers.

Result: Met

NPS MedicineWise publications include the Rational Assessment of Drugs and Research (RADAR), Australian Prescriber and an annual evaluation report of all NPS MedicineWise programs.

142 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

The Department also continued to support NPS MedicineWise through the Quality Use of Diagnostics, Therapeutics and Pathology Flexible Fund, to provide information and support to consumers and health professionals on quality use of medicines and medical testing.

Education was provided to health professionals in the form of one-on-one education visits, clinical e-Audits, peer group sessions, online modules and publications. Information was provided to health consumers through targeted campaigns (including on the appropriate use of antibiotics) and through various therapeutic topics accessible through the NPS MedicineWise website.59

Improve safety and quality in health care

Relevant evidence-based resources are available to help reduce unwarranted healthcare variation by changing clinical practice. Source: 2015-16 Health Portfolio Budget Statements, p. 126

2015-16 Target 2015-16 Result

Tools are available to consumers, clinicians and health services to promote adoption of clinical best practice.

Information is available to reduce variation in 36 health care interventions.

Result: Met

The first Australian Atlas of Healthcare Variation (the Atlas) points to actions clinicians and health services can take to address health care variation.

Identification of potential unwarranted healthcare variation. Source: 2015-16 Health Portfolio Budget Statements, p. 126

2015-16 Target 2015-16 Result

Agreement with relevant stakeholders on unwarranted healthcare variation for further investigation.

Agreement pending. Stakeholders currently considering the incidence of healthcare variation revealed in the Atlas.

Result: Not met

The Atlas contains 67 recommendations directed to multiple stakeholders across the health care system. The suggested actions are designed to improve equity and efficiency, as well as the safety and quality of health care. Twelve recommendations are directed to the Department and have been considered in the context of broader health reform.

59 Available at: www.nps.org.au

143 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Analysis of performance - Program 7.5: Health Infrastructure The Department substantially met two of the three performance targets for Program 7.5: Health Infrastructure.

Investment in health infrastructure will improve access to essential health services for people living in rural, remote and very remote communities. The Department continues to monitor the progress of infrastructure projects, taking remedial action where required.

The Department has not achieved the target of providing 75 Rural and Regional Teaching Infrastructure Grants (RRTIGs). RRTIGs work in partnership to stimulate the bringing forward of capital expenditure for upgrades of private health infrastructure in rural and regional Australia.

While the Department made 74 offers to successful applicants, not all RRTIGs offers were accepted. In seeking feedback, the Department understood offers were declined due to the amount of the grant offered and the limitations on how grant money could be spent by applicants. The Department has worked to reduce the administration burden on applicants as a result of this feedback.

Invest in other major health infrastructure

Funding arrangements in place for all successful projects under the 2010 and 2011 Regional Priority Round of Health and Hospitals Fund (HHF) grants. Source: 2015-16 Health Portfolio Budget Statements, p. 127

2015-16 Target 2015-16 Result

Remaining six funding agreements signed by 31 December 2015.

One of the funding agreements was signed by 31 December 2015 and a further four funding agreements were signed by 18 February 2016. The remaining funding agreement is expected to be finalised by 30 September 2016.

Result: Not met

The outstanding funding agreements all involved complex negotiations to ensure the agreed outputs for the projects would be achieved within the approved scope and budget.

Effective monitoring of HHF projects for compliance with agreed outputs. Source: 2015-16 Health Portfolio Budget Statements, p. 128

2015-16 Target 2015-16 Result

Reports are received for all projects in the required timeframe and remedial action taken as required.

357 reports were due during the period. 304 reports were submitted in the required timeframe, remedial action was taken for the 53 reports which have now been submitted.

Result: Substantially met

The majority of HHF funding recipients were compliant in providing project reports and achieving agreed project outputs within the required timeframes. Where projects were found to be non-compliant, the Department undertook remedial action in a timely manner.

This performance result of ‘substantially met’ is based on meeting 85% of the target.

144 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Improve primary health care infrastructure

Number of grants to support the provision of additional space for teaching and training to strengthen the rural workforce. Source: 2015-16 Health Portfolio Budget Statements, p. 128

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

75 43

Result: Not met

10 N/A N/A N/A

The Department has 43 RRTIGs funding agreements in place.

The Department made 74 grant funding offers to applicants, of which 20 applicants decided to withdraw from contract negotiations. The main reasons cited for withdrawal were the amount of the grant to be awarded and limitations in how the grant funds could be utilised. The Department is continuing negotiations to finalise the remaining offers.

The RRTIGs program has been streamlined to reduce administrative burden on applicants.

Analysis of performance - Program 7.6: Blood and Organ Donation The Department met all performance targets for Program 7.6: Blood and Organ Donation.

In 2015-16, the Department continued to ensure there was sufficient blood and blood products available to support Australian patients. Governments endorsed the 2016-18 Jurisdictional Blood Committee Strategic Plan which incorporates a range of activities to improve the efficiency of the national blood arrangements and ensure its financial sustainability. Embedded within the Strategic Plan are eight policy priority areas for action over the life of the Plan, covering topics such as appropriateness of use and sustainability of Immunoglobulin; blood product use and wastage within the private sector; and harmonising the provisions of the National Blood Agreement with that of the broader health sector.

The Department continued to support the Organ and Tissue Authority in implementing, coordinating and monitoring a national approach to organ and tissue donation, with the aim of increasing Australians’ access to life-saving and life-transforming transplants. This included activities in relation to the implementation of the 2014-15 Budget measure - Accelerating Growth in Organ and Tissue Donation for Transplantation.

On 1 July 2015, the Department assumed responsibility for the administration of the Supporting Leave for Living Organ Donors (SLLOD) Program, for which funding is provided until 30 June 2017. The SLLOD Program provides a financial contribution, via the donor’s employer, to alleviate the financial burden for leave taken during the living donation process and recovery period. The Department also continued to provide policy oversight and support to the Department of Human Services in administering the Australian Organ Donor Register which enables Australians to register their decision about becoming an organ and/or tissue donor for transplantation after death.

The Department continued to ensure Australian patients are able to access Australian donors/cord blood units, or matched international donors/cord blood units, for stem cell transplant purposes, as part of life-saving treatment for cancer and other serious conditions.

145 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Improve Australians’ access to organ and tissue transplants

Support the Australian Bone Marrow Donor Registry and the National Cord Blood Collection Network to identify matched donors and stem cells for transplant. Source: 2015-16 Health Portfolio Budget Statements, p. 130

2015-16 Target 2015-16 Result

Increased diversity of tissue types of donors and cord blood units available for transplant.

Diversity of donors and cord blood units available for transplant has increased.

Result: Met

The Australian Bone Marrow Donor Registry and the National Cord Blood Collection Network have been supported, and continue to identify matched donors and cord blood units for patients requiring them for transplantation. Donors from ethnically diverse backgrounds are required to increase the chance of a match being found in the Australian registry, as the Australian population profile is ethnically diverse. While the diversity of cord blood units has increased, a new donor recruitment strategy is being assessed to substantially improve the diversity of the stem cell donor pool. At present the donor pool is ageing and predominantly of north-west European descent, and needs younger donors from other backgrounds. This issue is being considered in the context of meeting the needs of Australian patients into the future.

Number of banked cord blood units. • Total • Indigenous Source: 2015-16 Health Portfolio Budget Statements, p. 130

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

Total 1,600 Indigenous 50

Total 1,700 Indigenous 60

Result: Met

1,765 119

1,957 101

523 64

810 94

Cord blood units continue to be collected and banked in the three public cord blood banks in Australia, which now have more units per head of population banked than most other countries. A review of cord blood banking in Australia has recently been completed and will inform the future direction of the cord blood banking sector in Australia.

Support provided to the Australian Bone Marrow Donor Registry to search for (and transport) matched donors and stem cells internationally, when a domestic match is unavailable for transplant. Source: 2015-16 Health Portfolio Budget Statements, p. 131

2015-16 Target 2015-16 Result

Funding is provided to meet the Commonwealth’s agreement with the Australian Bone Marrow Donor Registry.

Funding was provided as agreed.

Result: Met

The Australian Bone Marrow Donor Registry has been fully funded as per the Agreement, and stem cells from matched international donors have been transported for transplantation for Australian patients.

Demand for stem cell transplants continues to increase and international currency fluctuations impact on the cost of sourcing and transporting matched cells donated internationally.

146 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Support access to blood and blood products

Effective planning of the annual blood supply through the National Supply Plan and Budget. Source: 2015-16 Health Portfolio Budget Statements, p. 130

2015-16 Target 2015-16 Result

Implementation of the 2015-16 National Supply Plan and Budget that was agreed by all Health Ministers in 2014-15.

The 2015-16 National Supply Plan and Budget was agreed by all Health Ministers on 17 April 2015 and has been implemented.

Result: Met

The Commonwealth’s contribution in 2015-16, based on the national cost-sharing arrangements, was expected to be up to $721.3 million.60

The supply of blood and essential blood products are effectively supported in order to meet Australia’s clinical need. Source: 2015-16 Health Portfolio Budget Statements, p. 131

2015-16 Target 2015-16 Result

Funding is provided to meet the Commonwealth’s contribution under the National Blood Agreement.

Funding has been provided as agreed.

Result: Met

The supply of blood and essential blood products have been fully-funded as per the National Blood Agreement to ensure that there is a sufficient supply of blood and blood products and services in all the States and covered Territories.

This funding ensured Australians had access to blood and blood products required for treatment of numerous medical conditions in 2015-16. Conditions include cancer, heart, stomach, bowel, liver and kidney diseases. Blood and/or blood products are predominantly provided during and after surgery, for treatment of traumatic injury or burns, and for chronic conditions including blood disorders (e.g. haemophilia) and immunodeficiency conditions.

60 The Commonwealth’s contribution in 2015-16 will be reconciled approximately in December 2016 to reflect actual expenditure.

147 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Analysis of performance - Program 7.7: Regulatory Policy The Department met, or substantially met, the majority of performance targets for Program 7.7: Regulatory Policy.

The Department has continued to contribute significantly to the Government’s regulatory reform agenda with the aim to reduce the red tape burden on businesses, community organisations and individuals. The focus of the reforms has been on ensuring delivery of appropriate and effective regulation which maintains desired health outcomes, upholds public health and safety protections, and implements effective compliance regimes while reducing unnecessary regulatory and red tape burden.

The Department has been at the forefront of implementing regulatory reform initiatives such as the Regulator Performance Framework (RPF) and the adoption of international standards and risk assessment under the Government’s Industry Innovation and Competitiveness Agenda. In 2015-16, the first year of RPF implementation, departmental and portfolio regulators worked closely to develop and publish evidence metrics under the RPF. These will be used to assess regulators’ performance through annual self-assessments.

In 2015-16, to protect the health, safety and wellbeing of the Australian community, the Department continued to provide national leadership in regulatory policy in the areas of therapeutic goods, industrial chemicals and gene technology.

The Department has contributed to the achievement of significant r eductions in red tape burden. The Portfolio has reported red tape reduction savings worth $249 million since September 2013.

Continue the quality improvement and regulatory reform process

Contribute to the Government’s deregulation and red tape reduction agenda by identifying and progressing opportunities to reduce red tape. Source: 2015-16 Health Portfolio Budget Statements, p. 133

2015-16 Target 2015-16 Result

Opportunities to reduce regulatory and red tape burden are identified and contribute to the Government’s $1 billion per annum regulation reduction target.

In 2015, the Department made 40 regulatory savings decisions worth a combined total net saving of $96.8 million.

Result: Met

The Government’s red tape reduction outcomes are reported on a calendar year basis. For 2015, the Department reported gross savings decisions of $100.4 million and net savings decisions worth $96.8 million, contributing to the whole-of-government net outcome of $2.5 billion for that year. Details of specific regulatory reform activities undertaken by the Department are published in the 2015 Annual Red Tape Reduction Report.61

Further opportunities for regulatory reform have been identified, and the Department and wider portfolio will continue to promote regulatory reform, encouraging best practice in regulation and minimising unnecessary compliance burden in 2016-17 and beyond.

61 Available at: www.cuttingredtape.gov.au/annual-red-tape-reduction-report-2015

148 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

The Department is currently putting in place a detailed regulatory framework, enabling applications for licences and permits for the cultivation, production and manufacture of medicinal cannabis products.

Medicinal cannabis scheme to ease pain of suffering Australians Amendments to the Narcotic Drugs Act 1967, passed by Parliament in February 2016, will allow the domestic cultivation and manufacture of medicinal cannabis products and related research purposes after 30 October 2016. The medicinal cannabis scheme will allow medical professionals to prescribe medicinal cannabis products where appropriate and aims to help Australians who suffer from illnesses including nausea associated with cancer treatment, childhood epilepsy, multiple sclerosis and to assist those in end of life palliative care.

The Department has been working closely with State and Territory Governments to form relevant regulations and guidelines, as well as holding public consultations around the country.

The medicinal cannabis scheme has been met with enthusiasm by many who attended the information and consultation sessions with a number of attendees believing this has been a long time coming. The scheme will not only help Australians who suffer from a range of illnesses that might benefit from medicinal cannabis, but potentially give those who have turned to illegal sources in a desperate attempt to find relief an alternative, legal option.

The medicinal cannabis scheme is expected to start accepting and reviewing licence and permit applications to cultivate and manufacture after 30 October 2016, with the aim of having domestically grown products available for patients by mid-2017.

The Department, through the Therapeutic Goods Administration (TGA), continued to safeguard and enhance the health of the Australian community through effective and timely regulation of therapeutic goods, while ensuring that the goods available in Australia are safe and fit for their intended purpose. These include goods Australians rely on every day, such as vitamin tablets and sunscreens, through to goods used to treat serious conditions, such as prescription medicines, vaccines, blood products and surgical implants.

Further to publication on 24 June 2015 of the 32 recommendations in the first report of the Expert Panel Review of Medicines and Medical Devices Regulation (the Review), on 20 November 2015 the second and final report was published. This report looked at the regulatory framework for complementary medicines and the advertising of therapeutic goods and made a further 26 recommendations.

Advice to the Government in response to the recommendations of the Review was provided. Work is currently underway on implementation of the 2016-17 Budget measure - Improving the Regulation of Therapeutic Goods in Australia.

The National Industrial Chemicals Notification Assessment Scheme (NICNAS), administered by the Department, continued to aid in the protection of the Australian people and the environment. In 2015-16, NICNAS continued to disseminate high quality assessment reports that inform workers, governments, industry and community about the risks and safe use of new and existing industrial chemicals. Reports cover chemicals used in solvents, adhesives, plastics, paints, inks, fuels, or laboratory reagents, as well as in refrigeration, cosmetics and household cleaning. The Department also commenced work on the implementation of the reforms to NICNAS that had been announced by the Government in the context of the 2015-16 Budget. The Department published a series of consultation papers and convened a series of workshops to better understand and (to the extent possible within the policy parameters decided by the Government) accommodate the divergent views of different stakeholder groups in preparing advice for the Government on the practical details of a reformed scheme.

149 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

The Gene Technology Regulator, supported by the Department, administers the national gene technology regulatory scheme. In 2015-16, the Regulator continued to protect the health and safety of people, and to protect the environment, by identifying risk posed by or as a result of gene technology, and by managing those risks through regulating certain dealings with genetically modified organisms (GMOs).

There have been significant technological advances in recent years, including the development of a range of novel techniques for making precise changes to genes. Regulatory frameworks across the world were developed prior to the existence of these new technologies. The Gene Technology Regulator is working to address the challenges of keeping pace with the new techniques and their regulation.

Therapeutic goods

Regulate therapeutic goods for safety, effectiveness/performance and quality

Continue to regulate therapeutic goods for safety, effectiveness/performance and quality. Source: 2015-16 Health Portfolio Budget Statements, p. 133

2015-16 Target 2015-16 Result

Effective pre-market evaluation and post-market monitoring and assessment of therapeutic goods, as required under the Therapeutic Goods Act 1989 and associated regulations.

The TGA continued to undertake pre-market and post-market monitoring and assessment of therapeutic goods as required under the Therapeutic Goods Act 1989 and associated regulations.

Result: Substantially met

Through the TGA, the Department demonstrates regulatory performance through its reporting framework. The framework consists of various reports that focus on its performance as a regulator and engagement with stakeholders, as well as more detailed information about regulatory and corporate activities.

Performance measures surrounding pre-market application processing and post-market activities are reported below.

In addition, detailed information regarding pre and post-market statistics are reported in the TGA’s Performance Statistics Report and published on the TGA website annually.

Performance result of ‘substantially met’ is based on meeting 99.1% of the targeted 100% of Category 3 applications for prescription medicines processed within legislated timeframes.

Update and maintain the Standard for the Uniform Scheduling of Medicines and Poisons (SUSMP) for medicines. Source: 2015-16 Health Portfolio Budget Statements, p. 133

2015-16 Target 2015-16 Result

SUSMP is amended as soon as practicable after the Secretary’s delegate’s final decision under the Therapeutic Goods Regulations 1990.

The SUSMP was amended as soon as practicable after the Secretary’s delegate’s final decision. In all, there were 6 updates to the SUSMP during 2015-16.

Result: Met

All required SUSMP legislative instruments were amended as soon as practicable after the Secretary’s delegate’s final decision during 2015-16 and all are available on the Federal Register of Legislation (FRL) website for June 2015, July 2015, October 2015, February 2016, March 2016 and June 2016. This result represents an increase in SUSMP publication of 100% during the financial year to meet demand.

150 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Percentage of applications for the import, export, and manufacture of controlled substances that are assessed and processed within agreed timeframes. Source: 2015-16 Health Portfolio Budget Statements, p. 134

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

95% 99%

Result: Met

N/A N/A N/A N/A

During 2015-16, 99% of applications were completed within the requisite timeframe due to improvements to internal workflow processes.

In 2015-16, the Office of Drug Control (ODC) issued a total of 7,002 licences and permits authorising the import, export and manufacture of controlled drugs. This represents a decrease of 6% compared to 2014-15.

The ODC also provided 230 basic checks and statements to law enforcement.

Percentage of evaluations/assessments completed within legislated timeframes:62 a) Applications lodged under prescription medicines registration (Category 1 applications) processed within 255 working days; b) Quality related evaluations of prescription medicines (Category 3 applications)

processed within 45 working days; and c) Conformity assessments for medical devices processed within 255 working days. Source: 2015-16 Health Portfolio Budget Statements, p. 135

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% a) 100%

b) 99.1% c) 100% Result: a) Met

b) Substantially met

c) Met

a) 99.7% b) 98% c) 100%

a) 99.8% b) 100% c) N/A

a) 99.7% b) 100% c) N/A

a) 99.5% b) 99.4% c) N/A

Category 1 applications are for new medicines, presentations and indications. Category 3 applications are initiated by sponsors for manufacturing and quality changes and are usually to an existing, marketed medicine.

380 of 380 (100%) Category 1 evaluations for prescription medicines, 1,390 of 1,403 (99.1%) Category 3 evaluations and 186 of 186 (100%) of conformity assessment applications for medical devices were processed within legislated timeframes.

As a result of business improvement processes, all conformity assessments for medical devices have been processed in less than 200 working days throughout the reporting period.

62 Once an application has been accepted by the TGA, the approval time is defined as the number of TGA working days until a decision is made. This timeframe is underpinned by legislation and excludes public holidays, weekends, the time allocated to the applicant to provide responses to requests for information and ‘mutual clock stop’ periods agreed with the applicant. In accordance with the Therapeutic Goods Regulations 1990, a ‘submission’ may include a number of

applications submitted at the one time. The data presented relate to submissions as this best reflects the evaluation and decision-making processes.

151 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Percentage of alleged breaches of the Therapeutic Goods Act 1989 received that are assessed within 10 working days and an appropriate response initiated. Source: 2015-16 Health Portfolio Budget Statements, p. 135

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

100% 100% 100% 100%

Complaints are triaged in a risk-based regulatory compliance framework and against the scope of jurisdictional reach of Commonwealth law to determine the appropriate response in relation to risks posed by breaches of the TGA’s regulatory scheme.

Percentage of licensing and surveillance inspections closed out within target timeframes. Source: 2015-16 Health Portfolio Budget Statements, p. 135

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

85% 87%

Result: Met

N/A N/A N/A N/A

The Department reviewed the process for conducting post-inspection activities to allow a more efficient resolution of deficiencies and close-out of inspections and to align with international practice. Following a trial of the modified process, in addition to consultation with the Technical Industry Working Group on Good Manufacturing Practice, changes have been made to:

• deficiencies reported to manufacturers after the inspection in place of the inspection report;

• requirements for objective evidence required under certain circumstances e.g. critical deficiencies, initial inspection or recurring deficiencies;

• the inspection report issued to the manufacturer after the responses to the deficiencies have been addressed and closed; and

• the format and content of the inspection report.

External guidance material is available on the TGA website and continues to be updated.

152 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Participate in international regulatory convergence and work sharing activities

Implement international harmonisation and work sharing activities with comparable international regulators. Source: 2015-16 Health Portfolio Budget Statements, p. 133

2015-16 Target 2015-16 Result

Enhanced cooperation and work sharing, including increased reliance on medicines evaluation and facilities inspection information from international regulators, as outlined in TGA’s International Engagement Strategy 2013-2015.

The Department successfully continued collaboration activities with comparable international regulators through international fora as outlined in the TGA’s International Engagement Strategy 2013-15.

Result: Met

The Department promoted enhanced cooperation and work sharing, and influenced international regulatory policy, in relation to therapeutic goods, through its continued participation in fora such as the International Coalition of Medicines Regulatory Authorities and the International Medical Devices Regulators’ Forum.

Percentage of good manufacturing practice clearances of overseas manufacturers that take into account approvals by equivalent international regulators. Source: 2015-16 Health Portfolio Budget Statements, p. 134

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

85% 95%

Result: Met

N/A N/A N/A N/A

New processes have led to improvements in the TGA’s ability to issue Good Manufacturing Practice clearances in a shorter timeframe.

Continue the quality improvement and regulatory reform process

Implement reforms that enhance TGA’s current regulatory processes and are consistent with the Government’s deregulation and red tape reduction agenda. Source: 2015-16 Health Portfolio Budget Statements, p. 133

2015-16 Target 2015-16 Result

Begin implementation of the Government’s response to the Review of Medicines and Medical Devices Regulation.

Changes to the Medicines and Medical Devices Regulation in response to the Review were funded in the 2016-17 Budget and are in the process of being implemented.

Result: Met

These reforms, when fully implemented, are estimated to save around $75 million annually through removing unnecessary duplication, cutting red tape and easing the regulatory burden on the pharmaceutical and medical device industries.

153 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Number of reforms implemented to enhance TGA’s regulatory processes. Source: 2015-16 Health Portfolio Budget Statements, p. 134

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

963 2

Result: Not met

1 9 28 N/A

In December 2011, the Government released its response, TGA Reforms: a blueprint for the TGA’s future (the Blueprint), to a number of reviews undertaken of therapeutic goods regulation. It was agreed that the reforms and recommendations contained in the Blueprint would be implemented over a four year period.

To date, 40 of 48 Blueprint reference targets have been met. Implementation of a small number of recommendations was put on hold pending the Expert Panel Review of Medicines and Medical Devices Regulation. A plan to ensure information on the TGA website is current, accurate, relevant and up to date and meets the needs of its audiences has been developed.

Chemical safety

Aid in the protection of the Australian people and the environment by assessing the risks of chemicals and providing information to promote their safe use

Scientifically robust assessments of new and existing industrial chemicals. Source: 2015-16 Health Portfolio Budget Statements, p. 137

2015-16 Target 2015-16 Result

Peer review and stakeholder feedback support assessment outcomes.

Peer review and stakeholder feedback supported assessment outcomes.

Result: Met

In 2015-16, NICNAS published assessment reports for 196 new chemicals, one Priority Existing Chemical, and published three reports following secondary notifications of previously assessed chemicals and one secondary notification of a new chemical. All of these reports were peer reviewed, and stakeholder feedback was considered prior to finalising the reports. No reviews of NICNAS’s chemical assessments were conducted by the Administrative Appeals Tribunal.

NICNAS aids in the protection of the Australian people and the environment by disseminating high quality assessment reports that inform workers, governments, industry and community about the risks and safe use of new and existing industrial chemicals.

63 This target does not include one uncompleted reform from 2014-15. As at 30 June 2016, eight reforms are still to be implemented.

154 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

High quality assessment outcomes are produced through effective use of the Inventory Multi-tiered Assessment and Prioritisation (IMAP) framework. Source: 2015-16 Health Portfolio Budget Statements, p. 137

2015-16 Target 2015-16 Result

The IMAP framework will be reviewed to inform future assessment approaches for industrial chemicals already in use.

The IMAP framework was internally reviewed and found to be a suitable basis for future assessment approaches under reformed chemical assessment arrangements.

Result: Met

The IMAP framework was established in 2012 and is being implemented in a staged manner to accelerate the assessment of previously unassessed chemicals listed on the Australian Inventory of Chemical Substances (AICS).

By the end of the four years of Stage One of the application of the IMAP framework (30 June 2016), NICNAS had made 2,705 recommendations to manage newly identified risks associated with the industrial use of 2,135 unique chemicals assessed under the IMAP framework.

This includes 194 recommendations made during 2015-16. In all cases, interested parties were given the opportunity to comment on those recommendations. NICNAS staff engaged with stakeholders, and met with key Australian risk management agencies to promote the uptake of recommendations.

NICNAS staff, in consultation with Australian and international stakeholders, undertook a review of Stage One of the implementation of the IMAP program, which found that the IMAP framework is very effective overall in accelerating high quality assessment outputs for chemicals. The review found that recommendations contained in IMAP assessment reports have been taken up by relevant regulatory agencies to improve the safe use of chemicals already in use in Australia, and that more effective management of risks associated with the use of these chemicals will further aid in the protection of the Australian people and the environment. The review concluded that the tools and approaches used in the IMAP framework were aligned with international best practice and were fit for purpose.

Following this review, the Assistant Minister for Health and Aged Care approved the commencement of the second stage of implementing the IMAP framework.

Contribution to the international harmonisation of regulatory approaches and methodologies for assessing industrial chemicals by reviewing Australian processes. Source: 2015-16 Health Portfolio Budget Statements, p. 137

2015-16 Target 2015-16 Result

Regulatory approaches are reviewed and methodologies developed by the Organisation for Economic Co-operation and Development (OECD) Chemicals Committee and its key sub-committees for their application to NICNAS assessments of industrial chemicals.

Continued collaborative activities through the reviewing and consulting on international methodologies, guidance and regulation for their application to NICNAS assessments of industrial chemicals.

Result: Met

In 2015-16, NICNAS participated in the OECD Chemicals Committee and its key subsidiary committees (the Task Force on Hazard Assessment; Clearing House on New Chemicals; Working Party on Manufactured Nanomaterials) and presented a Metals Risk Assessment workshop at the Asia-Pacific Economic Cooperation (APEC) Chemical Dialogue forum in the Philippines.

155 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

NICNAS also engaged with other regulators on a bilateral and multilateral basis to further facilitate international harmonisation of NICNAS assessment methods.

Increased international harmonisation of chemical regulation reduces the regulatory burden on industry, which facilitates the availability of newer and safer chemicals in Australia.

All introducers of industrial chemicals are aware of their legal obligations. Source: 2015-16 Health Portfolio Budget Statements, p. 137

2015-16 Target 2015-16 Result

Identified introducers are registered and provided with regular information updates.

NICNAS uses a variety of means to identify chemical importers and manufacturers to promote their awareness of legal obligations, and to provide relevant information updates.

Result: Met

At the end of 2015-16, there were 6,144 companies registered with NICNAS, which is 99.7% of identified introducers. Thirteen information sessions were delivered to over 600 attendees in major capital cities and regional areas, with positive feedback received. An online questionnaire was developed to prioritise companies for further assessment of their compliance with new chemical obligations.

Update and maintain the Standard for the Uniform Scheduling of Medicines and Poisons (SUSMP) for chemical poisons. Source: 2015-16 Health Portfolio Budget Statements, p. 137

2015-16 Target 2015-16 Result

SUSMP is amended as soon as practicable after the Secretary’s delegate’s final decision under the Therapeutic Goods Regulations 1990.

The SUSMP was amended as soon as practicable after the Secretary’s delegate’s final decision. In all, there were 6 updates to the SUSMP during 2015-16.

Result: Met

All required SUSMP legislative instruments were amended as soon as practicable after the Secretary’s delegate’s final decision during the 2015-16 financial year and all are available on the Federal Register of Legislation (FRL) website for June 2015, July 2015, October 2015, February 2016, March 2016 and June 2016. This result represents an increase in SUSMP publication of 100% during this financial year to meet demand.

156 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

The costs associated with the regulation of industrial chemicals are adequately balanced against the benefits to worker health and safety, public health and the environment. Source: 2015-16 Health Portfolio Budget Statements, p. 137

2015-16 Target 2015-16 Result

Reforms to NICNAS more efficiently and effectively achieve the objects of the Industrial Chemicals (Notification and Assessment) Act 1989.

NICNAS published three consultation papers on the implementation of the NICNAS reforms, and sought input from stakeholders including international regulators and technical experts.

Result: Met

119 submissions were received in response to the three consultation papers published in 2015-16. In addition, a total of 301 people attended six stakeholder workshops to discuss the reform proposals.

Stakeholder views obtained through written submissions and workshops will be taken into account in finalising the regulatory model for industrial chemicals submitted to Government for agreement.

The NICNAS reforms will reduce regulatory burden on industry and promote the availability of safer chemicals by streamlining assessment approaches and refocussing regulatory effort on higher risk industrial chemicals, while ensuring Australia’s robust safety standards are maintained.

Effective use of international information. Source: 2015-16 Health Portfolio Budget Statements, p. 137

2015-16 Target 2015-16 Result

In order to better utilise and increase the acceptance of international risk assessment materials, the Office of Chemical Safety will work with trusted overseas regulators to harmonise assessment approaches.

Continued collaborative activities with trusted international regulators to harmonise assessment approaches.

Result: Met

Departmental regulatory scientists continued to use information on the hazards of chemicals obtained from a range of international sources in conducting assessments of the risks of the use of these chemicals in Australia. Departmental scientists engaged with their counterparts in comparable international regulatory agencies and global industry associations to obtain and review relevant information, and received ongoing professional development in a range of assessment-focussed areas. In addition, internal databases were updated with new internationally validated testing guidelines and assessment methods, to enable assessors to effectively interpret the latest information. Nineteen assessments from comparable international agencies were incorporated in NICNAS new chemicals assessments.

Effective use of international information reduces regulatory duplication, and considers relevant information in the Australian context. This reduces the regulatory burden on industry and promotes the availability of safer chemicals for use in Australia.

157 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Human health risk assessments for agricultural and veterinary chemicals are performed in a timely manner. Source: 2015-16 Health Portfolio Budget Statements, p. 137

2015-16 Target 2015-16 Result

Chemical assessments and public health regulation completed in accordance with the service level agreement between Health and the Australian Pesticides and Veterinary Medicines Authority (APVMA).

Human health risk assessments for agricultural and veterinary chemicals were performed in accordance with the service level agreement.

Result: Met

Human health risk assessments for agricultural and veterinary chemicals are performed by the Department in accordance with the service level agreement between the Department and the APVMA. The service level agreement specified the timeframes and cost recovery arrangements and quality assurance criteria for the various assessment categories.

In 2015-16, the Department continued to undertake human health risk assessments for the APVMA. The Department completed 114 assessments and the overall timeframe compliance increased to 76.3%, which is the highest timeframe compliance rate since 2009-10.

The Department recommended against granting some applications based on the potential for these chemicals to cause adverse health impacts.

Percentage of new industrial chemical assessments completed within legislated timeframes. Source: 2015-16 Health Portfolio Budget Statements, p. 138 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

96% 99%

Result: Met

98% 96% 95% 95%

NICNAS completed 292 certificate and permit assessments for new industrial chemicals, with 289 of these completed within legislated timeframes.

Timely assessment of new chemicals ensures timely access to safer and innovative chemical products for the Australian community. New chemical assessment reports, certificate and permit details are published on the NICNAS website to increase public confidence on the chemicals introduced into the country.

158 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Cumulative percentage of Stage One industrial chemicals assessed through effective application of IMAP framework. Source: 2015-16 Health Portfolio Budget Statements, p. 138

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

95% 97.3%64

Result: Met

93% 56% 24% N/A

By the end of Stage One (30 June 2016) of implementation of the IMAP Framework, NICNAS completed 5,114 human health and/or environment assessments for 3,419 unique chemicals in 2015-16 for chemicals that may already be in use in Australia. This includes 909 assessments completed in 2015-16.

Percentage of Level C and D introducers of industrial chemicals assessed for compliance with their new chemicals obligations under the Industrial Chemicals (Notification and Assessment) Act 1989 . Source: 2015-16 Health Portfolio Budget Statements, p. 138

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

45% 45%

Result: Met

40% 35% 30% 25%

During 2015-16, 45% of registrants that had introduced relevant industrial chemicals with a value above $500,000 were screened for evidence of compliance with new chemicals obligations. This resulted in 103 organisations being selected for further risk assessment. Fifty-five of these registrants were required to provide NICNAS with further information with regard to their new chemicals obligations via an online questionnaire.

Ongoing compliance monitoring raises awareness among the regulated community of their obligations under the Act and identifies non-compliance.

Gene technology regulation Protect the health and safety of people and the environment by regulating work with genetically modified organisms (GMOs)

Commence technical review of the Gene Technology Regulations 2001. Source: 2015-16 Health Portfolio Budget Statements, p. 139

2015-16 Target 2015-16 Result

Review undertaken in consultation with relevant stakeholders.

A technical review of the Gene Technology Regulations 2001 commenced.

Result: Substantially met

In 2015-16, a technical review of the Gene Technology Regulations 2001 commenced. Due to complexity of the new technologies, a discussion paper was prepared on options for a review of the regulations. During this period, the Department through the OGTR liaised with other regulatory agency stakeholders. A full consultation with all stakeholders will commence in 2016-17.

64 This total included 515 chemicals that were not on the Stage One list, that were able to be efficiently assessed due to their close similarity to chemicals already being assessed.

159 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Provide open, effective and transparent regulation of GMOs. Source: 2015-16 Health Portfolio Budget Statements, p. 139

2015-16 Target 2015-16 Result

Risk assessments and risk management plans prepared for 100% of applications for licensed dealings and made publicly available. Stakeholders, including the public, consulted on all assessments for proposed release of GMOs into the environment. Record of GMO dealings and maps of all field trial sites maintained and made publicly available on the OGTR website.

Risk assessments and risk management plans prepared for 100% of licence applications for release of GMOs into the environment. Stakeholders, including the public, consulted on all assessments of these applications. Record of GMO dealings and maps of all field trial sites maintained and made publicly available on the OGTR website.

Result: Met

The Gene Technology Regulator prepared comprehensive risk assessments and risk management plans and consulted with stakeholders, including the public, on nine GMO licence applications for intentional release into the environment (three field trials, two clinical trials, two commercial GM canola, one commercial GM cut flower and a commercial GM cancer treatment). The Regulator also prepared risk assessments and risk management plans for six licence applications for work in contained facilities. The Regulator maintained a record of approved GMOs and maps of all field trial sites, and made them available on the OGTR website.

Percentage of field trial sites and higher level containment facilities inspected. Source: 2015-16 Health Portfolio Budget Statements, p. 139

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

≥20% 46% of field trial sites

21% of higher level containment facilities

Result: Met

44%

29%

40%

25%

42%

25%

44%

33%

In 2015-16, 46% of GM field trial sites across the country were inspected to monitor compliance with licence conditions ensuring risks to human health and the environment were minimised. Sites were inspected in New South Wales, Northern Territory, Queensland, Victoria and Western Australia. Inspections included GM banana, barley, canola, cotton, safflower, sugarcane and wheat.

The Department through the OGTR also inspected 21% of higher level containment facilities to ensure compliance with certification conditions. These inspections focussed on the integrity of the physical structure of the facility and on the general laboratory practices followed.

160 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Protect people and environment through identification and management of risks from GMOs. Source: 2015-16 Health Portfolio Budget Statements, p. 140

2015-16 Target 2015-16 Result

Comprehensive and effective risk assessment and risk management of GMOs.

High level of compliance with the gene technology legislation and no adverse effect on human health or environment from authorised GMOs.

No adverse effect on human health or environment from authorised GMOs.

Result: Met

Routine monitoring of the regulated community found a high level of compliance with the gene technology legislation.

Facilitate cooperation and provision of advice between relevant regulatory agencies with responsibilities for GMOs and /or genetically modified products. Source: 2015-16 Health Portfolio Budget Statements, p. 140

2015-16 Target 2015-16 Result

High degree of cooperation with relevant regulatory agencies and provision of timely advice.

Maintained high degree of cooperation with relevant regulatory agencies.

Result: Met

In 2015-16, the Regulator continued cooperative arrangements with other Australian Government regulators to enhance coordinated decision-making and avoid duplication in regulation of GMOs and genetically modified products.

The Department through the OGTR engaged in international fora relevant to GMO regulation including the OECD Working Group on the Harmonisation of Regulatory Oversight in Biotechnology. Regulators from other countries continued to seek input from the OGTR because the Australian scheme is considered a model for robust, practical and efficient regulation of GMOs. The OGTR also provided technical support to Australian engagement for meetings under the United Nations Convention on Biological Diversity and Cartagena Protocol on Biosafety.

Percentage of licence decisions made within statutory timeframes. Source: 2015-16 Health Portfolio Budget Statements, p. 140

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

95% 100% 100% 100%

Fifteen licence decisions were made, all within the applicable statutory timeframes.

161 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Outcome 7 - Budgeted expenses and resources

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 7.1: eHealth2

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 129,182 116,697 (12,485)

Non cash expenses3 21,662 19,420 (2,242)

Departmental expenses

Departmental appropriation4 17,488 18,361 873

Expenses not requiring appropriation in the current year5 289 964 675

Total for Program 7.1 168,621 155,442 (13,179)

Program 7.2: Health Information

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 18,296 19,428 1,132

Departmental expenses

Departmental appropriation4 4,040 4,060 20

Expenses not requiring appropriation in the current year5 105 264 159

Total for Program 7.2 22,441 23,752 1,311

Program 7.3: International Policy Engagement

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 14,412 14,412 -

Departmental expenses

Departmental appropriation4 6,021 6,529 508

Expenses not requiring appropriation in the current year5 151 366 215

Total for Program 7.3 20,584 21,307 723

Program 7.4: Research Capacity and Quality2

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 79,217 78,543 (674)

Special accounts

Medical Research Future Fund - - -

Departmental expenses

Departmental appropriation4 10,957 9,698 (1,259)

Expenses not requiring appropriation in the current year5 250 630 380

Total for Program 7.4 90,424 88,871 (1,553)

162 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 7.5: Health Infrastructure2

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 11,380 9,590 (1,790)

Special appropriations 54,984 24,787 (30,197)

Special accounts

Health and Hospital Fund Health Portfolio Special Account 33,197 52,484 19,287

Departmental expenses

Departmental appropriation4 5,261 5,061 (200)

Expenses not requiring appropriation in the current year5 133 320 187

Total for Program 7.5 104,955 92,242 (12,713)

Program 7.6: Blood and Organ Donation2

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 23,084 19,509 (3,575)

Special appropriations

National Health Act 1953 - Blood Fractionation, Products and Blood Related Products - to National Blood Authority 645,262 718,382 73,120

Departmental expenses

Departmental appropriation4 4,345 4,221 (124)

Expenses not requiring appropriation in the current year5 118 277 159

Total for Program 7.6 672,809 742,389 69,580

163 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 7 HEALTH INFRASTRUCTURE, REGULATION, SAFETY AND QUALITY

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 7.7: Regulatory Policy

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 256 39 (217)

Departmental expenses

Departmental appropriation4 13,089 14,119 1,030

to Special accounts (11,612) (11,247) 365

Expenses not requiring appropriation in the current year5 - 191 191

Special accounts

OGTR Special Account6 7,882 7,599 (283)

NICNAS Special Account7 18,532 15,873 (2,659)

TGA Special Account8 138,876 133,749 (5,127)

Expense adjustment9 (5,215) (6,288) (1,073)

Expenses not requiring appropriation in the current year5 - 5 5

Total for Program 7.7 161,808 154,040 (7,768)

Outcome 7 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 275,827 258,218 (17,609)

Non cash expenses3 21,662 19,420 (2,242)

Special accounts 33,197 52,484 19,287

Special appropriations 700,246 743,169 42,923

Departmental expenses

Departmental appropriation4 61,201 62,049 848

to Special accounts (11,612) (11,247) 365

Expenses not requiring appropriation in the current year5 1,046 3,012 1,966

Special accounts 160,075 150,938 (9,137)

Total expenses for Outcome 7 1,241,642 1,278,043 36,401

Average staffing level (number) 1,049 1,039 (10)

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2 This Program excludes National Partnership payments to State and Territory Governments by the Treasury as part of the Federal Financial Relations Framework. 3

‘Non cash expenses’ relates to the depreciation of computer software. 4 Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’ and ‘Revenue from independent sources (s74)’. 5

‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees. 6 Office of the Gene Technology Regulator Special Account. 7

National Industrial Chemicals Notification and Assessment Scheme Special Account. 8 Therapeutic Goods Administration Special Account. 9

Special accounts are reported on a cash basis. The adjustment reflects the difference between cash and expenses.

164 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Improved capacity, quality and mix of the health workforce to meet the requirements of health services, including through training, registration, accreditation and distribution strategies

Analysis of performance - Outcome 8 Health Workforce Capacity In 2015-16, the Department continued working to improve the capacity, quality and mix of Australia’s health workforce. The Department has had a major focus on addressing the ongoing challenge of workforce distribution.

Through a commitment to training programs, scholarships, incentive programs and other initiatives the Department continued to encourage health practitioner students and graduates to provide services to the community with an emphasis on rural, regional and remote areas.

In addition, the Department showed its commitment to best practice and innovation, by making changes to programs to provide maximum community impact.

These activities have contributed to the Department’s achievement of objectives under Outcome 8 and Our Purpose.

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 8

Our Purpose

Outcome 8 Health Workforce Capacity

165 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 8 HEALTH WORKFORCE CAPACITY

Key community benefits for Outcome 8 in 2015-16

Supported medical practitioners to ensure the right mix of skills are available in the health workforce into the future

The Department continued to support registrars and medical students across Australia by providing over 1,500 General Practice (GP) training places and 900 specialist training places, ensuring a continued supply of qualified practitioners to provide services to the Australian community.

Supported service delivery to rural, regional and remote communities

The number of medical practitioners servicing rural, regional and remote communities was bolstered by departmental programs and incentives, resulting in more Australians having access to medical services.

Invested in broadening nurse capabilities

The Practice Nurse Incentive Program continues to broaden the roles of nurses working in general practice, with just over 4,500 practices participating in the program. The program allows for the professional development of nurses and for GPs to focus on more complex care, improving access and health outcomes for patients.

Summary of performance criteria results for Outcome 8

Met Not met Substantially met

75.0% 16.7% 8.3%

166 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Looking ahead • Establish a Rural Health Commissioner to support program delivery and policy development to best meet the health needs of rural Australians.

• Establish a national rural generalist pathway to improve access to highly skilled doctors in rural, regional and remote Australia and examine existing workforce incentives and levers to ensure support is being directed to areas of highest need.

• Expand support for the Rural Health Multidisciplinary Training Program, including establishing an additional three University Departments of Rural Health to increase clinical training capacity for nursing, midwifery, and allied health students in rural areas.

• Implement the Integrated Rural Training Pipeline Initiative, which will help retain medical graduates in rural areas.

• From 2016-17, the Department’s funding for health workforce capacity will be combined with funding for Primary Health Care (Rural Health Services) in a new Health Workforce Program. This consolidation will allow better consideration of the Government’s access, quality and health workforce distribution programs and support the role of the Rural Health Commissioner.

Programs and program objectives contributing to Outcome 8

Program 8.1: Workforce and Rural Distribution

• Redesign the supply of, and support for, health professionals in rural, regional and remote Australia

• Increase the effectiveness of medical training and education

Program 8.2: Workforce Development and Innovation

• Improve the distribution of the dental workforce

• Develop the workforce through clinical training

167 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 8 HEALTH WORKFORCE CAPACITY

Analysis of performance - Program 8.1: Workforce and Rural Distribution The Department met the majority of performance targets in Program 8.1: Workforce and Rural Distribution, with one indicator not met.

The Department continued to support health practitioners in rural, regional and remote Australia, with participation in rural health workforce initiatives surpassing targets. The Department met all targets relating to increasing the effectiveness of medical training and education, with all related initiatives reporting an increase in uptake.

Workforce incentive programs designed to increase availability of services have had a notable impact over the last decade, with recent data showing that compared to ten years ago, access to services in inner and outer regional areas are now comparable to those in the major city areas of Australia.

In addition to this, workforce training programs continue to support distribution, providing opportunities for medical students, interns and registrars to experience rural practice early in their careers.

The Department will continue to monitor the distribution of the health workforce and the effectiveness of its programs, to ensure support and incentives are targeted appropriately.

Redesign the supply of, and support for, health professionals in rural, regional and remote Australia

Consolidate Health portfolio scholarships into a streamlined Health Workforce Scholarship Program. Source: 2015-16 Health Portfolio Budget Statements, p. 144

2015-16 Target 2015-16 Result

Conduct open tender process to identify a provider to administer the Health Workforce Scholarship Program, to be completed by 31 March 2016.

Tender process on hold.

Result: Not met

The open tender process has been delayed while the Department conducts further consultation to ensure appropriate targeting of the program to areas with the most need.

The Department has continued to manage the Bonded Medical Program (BMP) and the Medical Rural Bonded Scholarship Scheme (MRBS). The 100 MRBS places have rolled into the BMP from 2016 onwards.

Scholarships were not awarded for the mid-year 2016 scholarships intake. Current scholarship holders continue to receive their benefits.

Continuation of administrative arrangements have been put in place to meet Government commitments where multi-year scholarships have been awarded.

168 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Percentage of medical students participating in the Rural Clinical Training and Support Program - 1 year rural clinical placement. Source: 2015-16 Health Portfolio Budget Statements, p. 145

Academic Year 2015 Target Academic Year 2015 Result

2014 2013 2012 2011

≥25% 33%

Result: Met

33% 33% 32% 37%

The Rural Clinical Training and Support Program, a component of the Rural Health Multidisciplinary Training Program, provided funding to participating universities for the establishment and support of medical student training in rural areas, supporting 17 rural clinical schools nationally. In the 2015 academic year, 893 medical students spent a year at a rural clinical school, equating to 33% of graduating medical students.

Number of weeks of rural multidisciplinary placements supported through the Rural Health Multidisciplinary Training Program. Source: 2015-16 Health Portfolio Budget Statements, p. 145

Academic Year 2015 Target Academic Year 2015 Result

2014 2013 2012 2011

18,113 24,290

Result: Met

N/A N/A N/A N/A

In the 2015 academic year, 11 University Departments of Rural Health, under the Rural Health Multidisciplinary Training Program, supported 5,141 undergraduate students to undertake rural clinical placements (two weeks or longer). This equates to a total of 24,290 placement weeks across rural settings.

Number of practices supported through the Practice Nurse Incentive Program. Source: 2015-16 Health Portfolio Budget Statements, p. 146 & 2015-16 Corporate Plan, p. 15

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

4,100 4,594

Result: Met

4,338 4,236 3,978 3,571

The Department continued support of expanded and enhanced roles for nurses working in general practices. Uptake for this demand-driven program has increased from 4,338 participating practices in 2014-15 to a total of 4,594 participating practices in 2015-16.

169 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 8 HEALTH WORKFORCE CAPACITY

Number of doctors supported by the General Practice Rural Incentives Program in rural and remote areas. Source: 2015-16 Health Portfolio Budget Statements, p. 146

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

6,500 6,696

Result: Met

N/A N/A N/A N/A

A redesign of the General Practice Rural Incentives Program (GPRIP) was announced in the 2015-16 Budget. The transition to the new geographical classification system (the Modified Monash Model) and updated eligibility criteria work more effectively to target financial incentives to doctors in areas experiencing greater difficulty attracting and retaining general practitioners. From August 2016, 6,696 eligible doctors received their first payments for 2015-16 under the redesigned GPRIP. An additional 150-200 doctors who provide eligible GPRIP services outside of the Medicare billing system (via the Flexible Payment System) are expected to receive their first payments by the end of 2016.

Increase the effectiveness of medical training and education

Number of commencing GP trainees funded through the Australian General Practice Training Program (AGPT). Source: 2015-16 Health Portfolio Budget Statements, p. 145

Academic Year 2015 Target Academic Year 2015 Result

2014 2013 2012 2011

1,500 1,500

Result: Met

1,192 1,108 1,000 900

In total, 1,500 new GP registrars commenced training across Australia with at least 50% of all Australian General Practice Training Program training activity being undertaken in rural, regional and remote locations.

Number of training positions funded through the Specialist Training Program. Source: 2015-16 Health Portfolio Budget Statements, p. 145

Academic Year 2015 Target Academic Year 2015 Result

2014 2013 2012 2011

900 900

Result: Met

900 750 600 518

The Department continued to support the delivery of specialist training, in expanded settings outside traditional public hospital teaching environments, such as rural, regional and remote areas. Agreements with 12 specialist medical colleges provide support for 900 (full time equivalent) training posts. In the 2015 academic year, 44% of the posts involved some training in rural and regional areas and 42% in private settings.

170 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Number of medical internship positions funded through the Commonwealth Medical Internships Program. Source: 2015-16 Health Portfolio Budget Statements, p. 145

Academic Year 2015 Target Academic Year 2015 Result

2014 2013 2012 2011

84 100

Result: Met

N/A N/A N/A N/A

The Commonwealth Medical Internships (CMI) Program supported 100 junior doctors to start work as medical interns in Australia in 2016.

All CMI doctors complete a minimum of one rotation in a rural or regional location. Of the 100 places, 26 are full regional internships, delivered in Townsville, Bundaberg and Mackay.

171 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 8 HEALTH WORKFORCE CAPACITY

Analysis of performance - Program 8.2: Workforce Development and Innovation The Department met or substantially met all performance targets in Program 8.2: Workforce Development and Innovation.

The Department realigned the Dental Relocation Infrastructure Support Scheme (DRISS) to provide greater support to those relocating to rural areas, which will improve distribution of the dental workforce.

The Department continued to manage graduate programs for both dentists and oral health therapists until the cessation of the programs at the end of 2015, through the 2015-16 Budget Measure, Rationalising and streamlining health programs.

The 2015-16 Mid-Year Economic and Fiscal Outlook measure, Streamlining Health and Aged Care Workforce Programme Funding, announced the cessation of the Clinical Training Funding program from 1 January 2016. Funding is being redirected to better target priority areas that support the future and current rural and regional health workforce.

Improve the distribution of the dental workforce

Redesign of the Dental Relocation Infrastructure Support Scheme to better match demand, and align with the new Modified Monash Model classification system. Source: 2015-16 Health Portfolio Budget Statements, p. 147

2015-16 Target 2015-16 Result

New program guidelines developed in consultation with stakeholders.

Guidelines were developed in January 2016.

Result: Met

Program guidelines have been revised to realign the program with the Modified Monash Model, and in consultation with stakeholders.

Changes to the Scheme are aimed at providing improved access to dental services for people living in rural, regional and remote communities.

Number of dental graduates participating in the Voluntary Dental Graduate Year Program.65 Source: 2015-16 Health Portfolio Budget Statements, p. 148

Academic Year 2015 Target Academic Year 2015 Result

2014 2013 2012 2011

50 48

Result: Substantially met

49 N/A N/A N/A

In 2015, 50 graduates commenced participation on the Voluntary Graduate Year Program, with two withdrawing prior to completion.

Approximately 84% of placements were in major metropolitan and inner regional areas. Of the 48, 26.25 placements were in metropolitan areas; 14 were in inner regional; four were in outer regional; two in remote Australia; and 1.75 were placed into very remote locations.

The performance result of ‘substantially met’ is based on meeting 96% of the target.

65 The 2015-16 Budget Measure, Rationalising and streamlining health programmes, announced the cessation of this program at the end of the 2015 cohort.

172 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Number of oral health therapist graduates participating in the Oral Health Therapist Graduate Year Program.66 Source: 2015-16 Health Portfolio Budget Statements, p. 148

Academic Year 2015 Target Academic Year 2015 Result

2014 2013 2012 2011

50 49

Result: Substantially met

49 N/A N/A N/A

In 2015, 50 graduates commenced participation on the Oral Health Therapist Graduate Year Program, with one withdrawing prior to completion.

Approximately 82% of placements were in major metropolitan or inner regional areas. Of the 49, 23 placements were in metropolitan areas; 17 were placed into inner regional areas; 4.5 in outer regional; 0.5 in remote areas; and four placements took place across multiple areas.

The performance result of ‘substantially met’ is based on meeting 98% of the target. 66

Develop the workforce through clinical training

The number of universities providing students with clinical training placements in priority settings. Source: 2015-16 Health Portfolio Budget Statements, p. 148

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

38 38

Result: Met

N/A N/A N/A N/A

The Clinical Training Funding program aims to assist in balancing the distribution of students and clinical placements in underserviced areas, by subsidising clinical placements and student numbers in specific health disciplines and priority settings.

66 The 2015-16 Budget Measure, Rationalising and Streamlining health programmes, announced the cessation of this program at the end of the 2015 cohort.

173 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 8 HEALTH WORKFORCE CAPACITY

Outcome 8 - Budgeted expenses and resources

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 8.1: Workforce and Rural Distribution

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 1,173,829 1,135,665 (38,164)

Departmental expenses

Departmental appropriation2 37,256 35,620 (1,636)

Expenses not requiring appropriation in the current year3 976 2,356 1,380

Total for Program 8.1 1,212,061 1,173,641 (38,420)

Program 8.2: Workforce Development and Innovation

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 46,379 19,445 (26,934)

Departmental expenses

Departmental appropriation2 5,946 5,924 (22)

Expenses not requiring appropriation in the current year3 159 390 231

Total for Program 8.2 52,484 25,759 (26,725)

Outcome 8 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 1,220,208 1,155,110 (65,098)

Departmental expenses

Departmental appropriation2 43,202 41,544 (1,658)

Expenses not requiring appropriation in the current year3 1,135 2,746 1,611

Total expenses for Outcome 8 1,264,545 1,199,400 (65,145)

Average staffing level (number) 257 259 2

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2 Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’ and ‘Revenue from independent sources (s74)’. 3

‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees.

174 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 9 Biosecurity and Emergency Response

Preparedness to respond to national health emergencies and risks, including through surveillance, regulation, prevention, detection and leadership in national health coordination

Analysis of performance - Outcome 9 Biosecurity and Emergency Response In 2015-16, the Department continued its commitment to Biosecurity and Emergency Response. Working in collaboration with stakeholders, the Department led Australia’s preparedness measures to effectively respond to the Zika virus outbreak and supported Australia’s response to Tropical Cyclone Winston in Fiji. The Department also continued working with stakeholders to prevent the introduction of mosquito-borne illnesses borne by exotic mosquitoes. The Department continued to lead the charge against antimicrobial resistance (AMR), within Australia and significantly contributing to the international effort.

These activities have contributed to the Department’s achievement of objectives under Outcome 9 and Our Purpose.

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 9

Our Purpose

175 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 9 BIOSECURITY AND EMERGENCY RESPONSE

Key community benefits for Outcome 9 in 2015-16

Ensured the Australian public is well protected from international outbreaks and disasters

Maintained Australia’s readiness to respond to national health emergencies.

Protected the public from mosquito-borne illness

Intensive control and monitoring of exotic mosquito Aedes albopictus in the Torres Strait ensured that it did not spread to the mainland of North Queensland.

Australia led the way in addressing antimicrobial resistance

Monitoring AMR allowed health system stakeholders to continue to minimise the development and spread of AMR and its impact on the health of Australians.

Summary of performance criteria results for Outcome 9

Met

71.4%

Substantially met

28.6%

Not met

0.0%

176 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Looking ahead • The focus on combatting AMR will continue in 2016-17. The Department will continue to work with national and international stakeholders to monitor levels of resistance, identify emerging issues, and collaborate to implement effective solutions.

• In 2016-17, the Government will continue to prioritise readiness to respond to national health emergencies, by providing $25.5 million for the National Medical Stockpile, ensuring it holds the necessary reserve of essential pharmaceuticals and protective equipment, and $15.7 million for the National Critical Care and Trauma Response Centre.

Programs and program objectives contributing to Outcome 9

Program 9.1: Health Emergency Planning and Response

• Provide a comprehensive and effective response to a national health emergency

• Improve biosecurity and minimise the risks posed by communicable diseases

• Replenishment and reform of the National Medical Stockpile

177 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 9 BIOSECURITY AND EMERGENCY RESPONSE

Analysis of performance - Program 9.1: Health Emergency Planning and Response The Department met or substantially met all its performance targets for Program 9.1: Health Emergency Planning and Response. Working with other Commonwealth entities and State and Territory counterparts, the Department undertook several activities to strengthen preparedness for a national health emergency. In addition to emergency response activities, the Department invested significantly in the replenishment and reform of the National Medical Stockpile, a key component of ensuring an effective response to health emergencies.

The Department also continued to focus on improvements to biosecurity and minimising risks posed by communicable diseases.

In addition to working with key stakeholders at the National AMR Forum and with the Australian Strategic and Technical Advisory Group on AMR, the Department is finalising the National AMR Implementation Plan which is expected to be available in September 2016. Further to this, the national surveillance system for AMR and antimicrobial usage in human health released its first annual report in June 2016. The report provides an important baseline measure of AMR in Australia, as well as providing international comparisons and identifies priority areas for future action.

178 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Combatting antimicrobial resistance Antimicrobial resistance (AMR) is one of the main global health challenges facing our generation, according to the World Health Organization (WHO). AMR occurs when a microorganism develops resistance to an antimicrobial (such as an antibiotic) that was previously an effective treatment. Resistant infections can have serious consequences for human health, as well as for animal health and agriculture.

To guide Australia’s response, the Government has released its first National AMR Strategy 2015-2019. This strategy draws upon expert views across animal and human health, food and agriculture sectors, and outlines how best to combat AMR in Australia. Secretaries of the Departments of Health and Agriculture and Water Resources, the Chief Medical Officer and Chief Veterinary Officer all form part of a group that oversees the implementation of the AMR strategy.

Surveillance is recognised as a critical element of any effective response to AMR. Surveillance is necessary to understand the magnitude, distribution and impact of resistant organisms and antimicrobial usage, and identifying emerging resistance and trends. The Australian Commission

on Safety and Quality in Health Care, through funding provided by the Government, established a National AMR and Antimicrobial Usage surveillance system (referred to as the AURA Surveillance System). AURA 2016: first Australian report on antimicrobial use and resistance in human health was released in June 2016, and provides the most comprehensive picture of AMR, antimicrobial usage and appropriateness of prescribing in Australia to date.

Increasing globalisation provides opportunities for AMR to spread faster and further than ever before. Given this, no country can act in isolation and significant momentum is building through international fora to ensure a coordinated global response to AMR. The Australian Government is working with the international community to reduce the spread of AMR globally. We are actively involved in the WHO Global Action Plan, the Global Health Security Agenda Action Package on AMR and the Ministerial-level Alliance of Champions on AMR.

179 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 9 BIOSECURITY AND EMERGENCY RESPONSE

Provide a comprehensive and effective response to a national health emergency

Develop, exercise and refine national health emergency policy under the National Health Emergency Response Arrangements. Source: 2015-16 Health Portfolio Budget Statements, p. 153

2015-16 Target 2015-16 Result

National Health Emergency Response Arrangements will be exercised and revised and an emergency response plan for communicable diseases and environmental health threats of national significance will be developed.

Two pillars of the National Health Emergency Response Arrangements were exercised and significant work was undertaken in progressing the communicable disease and the chemical, biological, radiological and nuclear response plans.

Result: Substantially met

In July 2015, the Department brought together stakeholders from Commonwealth, State and Territory Government entities for a discussion exercise - Exercise CURIEosity. This Exercise was used to increase preparedness for a radiological emergency and to contribute to the review of the Domestic Health Response Plan for Chemical, Biological, Radiological and Nuclear Incidents of National Consequence.

The Department also participated in a national maritime counter-terrorism exercise, whole-of-government and jurisdictional exercises to manage food incident emergencies and a jurisdictional mass casualty exercise designed to evaluate notification, escalation and response to an emergency of state significance.

The Department is currently finalising a plan to guide the health sector response to a communicable disease incident of national significance. The plan is expected to be available by December 2016.

The Department’s Smallpox Plan provides guidance in relation to the national health sector response on the management of a deliberate release of smallpox and outlines the role of the Department and the States and Territories in the emergency. A review of the Smallpox Plan has commenced.

The Abrin and Ricin Plan will provide guidance in relation to the national health sector response to a bioterrorism event involving these toxins and the clinical management of cases if poisoning occurs. Development of the Abrin and Ricin Plan has commenced.

In February 2016, the Department contracted a Prime Vendor to manage the National Medical Stockpile. Under this contract the Prime Vendor must conduct a minimum of two deployment drills per year. The first deployment drill was conducted in July 2016.

180 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Containment of national health emergencies through the timely engagement of national health coordination mechanisms and response plans. Source: 2015-16 Health Portfolio Budget Statements, p. 154

2015-16 Target 2015-16 Result

National responses to health emergencies are successfully managed.

Responded to 150 health-related incidents and established effective responses to significant international incidents of concern, including Middle Eastern Respiratory Syndrome (MERS-CoV) and Zika virus.

Result: Met

The Department has continued to fulfil Australia’s obligations under the International Health Regulations through the maintenance of the National Focal Point in the National Incident Room (NIR), with the NIR responding to 150 health-related incidents in 2015-16. The most frequent type of response was to assist States and Territories and other National Focal Points conduct contact tracing of travellers exposed to disease through contact with an infected person. Tuberculosis was the most common disease that triggered contact tracing in 2015-16, followed by measles.

The Department continues to closely monitor international and national health emergencies such as MERS-CoV and Zika virus. The Department is working with the World Health Organization and Australian Government entities to ensure appropriate action is taken, including the development of effective public communications campaigns to reduce the risk of infection from communicable diseases.

Improve biosecurity and minimise the risks posed by communicable diseases

Collect and disseminate data in the National Notifiable Diseases Surveillance System and monitor data quality in accordance with the National Health Security Act 2007. Source: 2015-16 Health Portfolio Budget Statements, p. 153

2015-16 Target 2015-16 Result

Data is collected and available for regular reporting by the Commonwealth and ad hoc requests by stakeholders, including publishing in the Department’s journal Communicable Diseases Intelligence.

The National Notifiable Diseases Surveillance System received notifications of 326,395 cases of diseases diagnosed in 2015-16. Data was collected on a daily basis and made available to the public via the Department of Health’s website, through 22 data requests from stakeholders and in four issues of Communicable Diseases Intelligence.

Result: Met

Quality data is provided regularly to the National Notifiable Diseases Surveillance System from States and Territories. Throughout 2015-16, this data was made available to stakeholders upon request and published in Communicable Diseases Intelligence. Enhanced data sets for Invasive Pneumococcal Disease, Influenza and Meningococcal disease were also made publicly available.

In March 2016, Australia’s notifiable disease status, 2014: Annual Report of the National Diseases Surveillance System was published in Communicable Diseases Intelligence.

181 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 9 BIOSECURITY AND EMERGENCY RESPONSE

Manage and control exotic mosquito populations to reduce the risk of disease transmission in the Torres Strait and mainland Australia. Source: 2015-16 Health Portfolio Budget Statements, p. 153

2015-16 Target 2015-16 Result

Regular mosquito surveillance to indicate whether the mosquito population has reduced in the target areas in the Torres Strait and not spread to the mainland.

Regular surveillance was maintained.

Result: Met

Results continued to demonstrate the effectiveness of ongoing State and Territory control strategies as comprehensive surveillance detected only one adult Aedes albopictus on each of Thursday and Horn islands up to the end of April 2016. There has been no detection of Aedes albopictus in surveys conducted on the mainland of North Queensland.

Commence implementation of actions under the National Antimicrobial Resistance (AMR) Strategy. Source: 2015-16 Health Portfolio Budget Statements, p. 153

2015-16 Target 2015-16 Result

National AMR Implementation Plan is developed by 30 June 2016.

The Implementation Plan was developed by 30 June 2016, and will be provided to the Minister for Health and the Minister for Agriculture and Water Resources for noting in August 2016.

Result: Met

The National AMR Forum was held in November 2015 with over 170 stakeholders from human and animal health, food and agriculture, academic sectors and all levels of government in attendance.

Stakeholder consultation through the National AMR Forum and the Australian Strategic and Technical Advisory Group on AMR has informed the development of the Implementation Plan for the National AMR Strategy.

The Implementation Plan for the National AMR Strategy will be provided to the Australian Government in August 2016.

The national surveillance system for AMR and antimicrobial usage has been established and the first annual national report was released in June 2016.

182 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

The development and spread of antimicrobial resistance (AMR) is minimised. Source: 2015-16 Health Portfolio Budget Statements, p. 154

2015-16 Target 2015-16 Result

Progress reports indicate that actions to minimise the development and spread of AMR are being implemented in accordance with the National AMR Implementation Plan.

The development of the Implementation Plan has included a comprehensive review of current activities being undertaken by both government and non-government stakeholders to support the achievement of the National AMR Strategy.

The national surveillance system for AMR and antimicrobial usage (through the Antimicrobial Use and Resistance in Australia surveillance project) was established, and the first comprehensive surveillance report published in June 2016.

Result: Substantially met

The development of the Implementation Plan confirmed that Australia has a significant number of initiatives that are supporting efforts to minimise the development and spread of AMR, providing a good foundation for the future.

The first national comprehensive surveillance report released by the Antimicrobial Use and Resistance in Australia surveillance project in June 2016 highlights where further effort is needed to minimise the development and spread of AMR in Australia. These results will be used to target future initiatives in line with the National AMR Strategy.

Percentage of designated points of entry into Australia capable of responding to public health events, as defined in the International Health Regulations (2005). Source: 2015-16 Health Portfolio Budget Statements, p 154

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

100% 100% 100% 100%

Australia has eight international airports and six international seaports that are compliant with the International Health Regulations. The Regulations require designated ports and airports to have a range of capabilities to ensure safe transit of travellers and the ability to respond to public health events, including health emergencies.

A desktop review of designation status is scheduled for completion in 2016.

Replenishment and reform of the National Medical Stockpile There were no performance criteria for this program objective in 2015-16.

183 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 9 BIOSECURITY AND EMERGENCY RESPONSE

Outcome 9 - Budgeted expenses and resources

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 9.1: Health Emergency Planning and Response2

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 79,951 53,070 (26,881)

Non cash expenses - write down of assets3 105,379 105,319 (60)

Special accounts

Human Pituitary Hormone Special Account 160 105 (55)

Departmental expenses

Departmental appropriation4 22,110 20,811 (1,299)

Expenses not requiring appropriation in the current year5 694 1,456 762

Total for Program 9.1 208,294 180,761 (27,533)

Outcome 9 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 79,951 53,070 (26,881)

Non cash expenses 105,379 105,319 (60)

Special accounts 160 105 (55)

Departmental expenses

Departmental appropriation4 22,110 20,811 (1,299)

Expenses not requiring appropriation in the current year5 694 1,456 762

Total expenses for Outcome 9 208,294 180,761 (27,533)

Average staffing level (number) 105 103 (2)

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2 This Program excludes National Partnership payments to State and Territory Governments by the Treasury as part of the Federal Financial Relations Framework. 3

‘Non cash expenses’ relate to the write down of the drug stockpile inventory due to expiration, consumption and distribution. 4 Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’ and ‘Revenue from independent sources (s74)’. 5

‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees.

184 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 10 Sport and Recreation

Improved opportunities for community participation in sport and recreation, and excellence in high-performance athletes, through initiatives to help protect the integrity of sport, investment in sport infrastructure, coordination of Commonwealth involvement in major sporting events, and research and international cooperation on sport issues

Analysis of performance - Outcome 10 Sport and Recreation In 2015-16, the Department continued to work closely with the Australian Sports Commission, Australian Sports Foundation, Australian Sports Anti-Doping Authority (ASADA) and States and Territories to ensure a coordinated, whole-of-government approach to sports policy. The Department supported strategies, policies and projects that: boost opportunities for all Australians to participate in sport and physical activity; optimise the performance of Australia’s elite athletes; and deliver successful major sporting events.

The Department also worked to safeguard the integrity of sport domestically and on an international scale.

These activities have contributed to the Department’s achievement of objectives under Outcome 10 and Our Purpose.

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 10

Our Purpose

185 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 10 SPORT AND RECREATION

Key community benefits for Outcome 10 in 2015-16

Ensured the safe and successful delivery of the 2015 INF Netball World Cup

Over 100,000 spectators safely enjoyed the 2015 INF Netball World Cup.

Improved the safety of water and snow activities through education

Parents and communities are better placed to prevent drowning and minimise snow injuries.

Fulfilled Australia’s international anti-doping obligations, helping to safeguard the integrity of sport in Australia and internationally

Safeguarding the integrity of Australian sport has health, economic, cultural and social benefits which flow to the community.

Summary of performance criteria results for Outcome 10

Met

100%

Not met

0.0%

Substantially met

0.0%

186 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Looking ahead • In 2016-17, the Department will contribute to the staging of upcoming major international sporting events to be held in Australia, including:

- the 2017 RLIF Rugby League World Cup (co-hosted with New Zealand);

- the 2018 Gold Coast Commonwealth Games; and

- the 2020 ICC World Cup Twenty 20.

• The Department will continue to develop and implement water and snow safety initiatives to support a 50 per cent reduction in drowning deaths by 2020.

• The Department will support Australia’s participation on the World Anti-Doping Agency Executive Committee and Foundation Board.

Programs and program objectives contributing to Outcome 10

Program 10.1: Sport and Recreation

• Increase participation in sport and recreation

• Support for upcoming major sporting events

• Improve water and snow safety

• Protect the integrity of sport

Analysis of performance - Program 10.1: Sport and Recreation The Department met all performance targets for Program 10.1: Sport and Recreation.

In 2015-16, the Department continued to work closely with other Government entities, including the Australian Sports Commission and Australian Sports Foundation, to implement initiatives to improve participation in sport and physical activity. The Department aims to encourage Australian adults and children to participate in sport and connect with community sport. Challenges to increasing participation include: the increase in sedentary behaviours and competition with other types of recreation; demographic changes, particularly an ageing population; improving the status of sport in education; changes in the sport consumer market; and funding for community sport and recreation facilities.

The Department coordinated and worked closely with organisers and other Government entities to ensure the 2015 INF Netball World Cup was delivered safely and securely. The same collaborative approach continues to be implemented in preparation for upcoming sporting events held in Australia - the 2017 RLIF Rugby League World Cup and 2018 Gold Coast Commonwealth Games. Safe and successful major sporting events provide the community with social benefits and enhance Australia’s reputation as a host of major sporting events.

The Department continued to deliver initiatives to protect the integrity of sport, working closely with the States and Territories, sporting organisations, the Australian Sports Anti-Doping Authority, Australian Sports Commission and international partners. Improved sports integrity capacity provides a protective function against integrity compromises, maintains community confidence in Australian sport, and ensures Governments are better able to confront modern sports integrity threats, such as criminal infiltration of sport and increased sophistication of doping activity.

187 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 10 SPORT AND RECREATION

Increase participation in sport and recreation

Coordination across Government to support the development, implementation and promotion of strategies, policies and projects to support increased participation in sport and physical activity. Source: 2015-16 Health Portfolio Budget Statements, p. 159

2015-16 Target 2015-16 Result

Strategies, policies and projects are implemented in consultation with relevant Australian Government agencies, the Australian Sports Commission, the States and Territories and other relevant stakeholders. Strategies, policies and projects support increased participation, encompass health outcomes and deliver whole-of-government objectives.

The Department continued to work closely with the Australian Sports Commission and States and Territories to ensure a coordinated, whole-of-government approach to the implementation of strategies, policies and projects that support the increased participation in sport and physical activity.

Result: Met

The Department worked with relevant Australian Government entities, including the Australian Sports Commission and the Australian Sports Foundation. This work included continuing to implement the Play.Sport.Australia strategy which is the Australian Sports Commission’s blueprint to drive increased participation, and the Sporting Schools program.

The Department also worked closely with States and Territories through the Committee of Australian Sport and Recreation Officials, which reports to the Meeting of Sport and Recreation Ministers, to increase participation under the auspices of the National Sport and Active Recreation Policy Framework.

Support the development and implementation of strategies and policies to increase participation in sport at a community to elite level, and improve safety and health outcomes for people involved in sport through the provision of advice to Government entities and delivery of sport infrastructure projects. Source: 2015-16 Health Portfolio Budget Statements, p. 160 & 2015-16 Corporate Plan, p. 16 (abridged)

2015-16 Target 2015-16 Result

Participation strategies, policies and projects reflect whole-of-government and broader health objectives. Strategic policy advice provided to Government on matters relating to participation in sport, physical activity and recreation.

Sport infrastructure projects deliver on the Government’s objectives around increasing participation in sport, physical activity and recreation.

At the community level, programs were implemented to increase participation, including Sporting Schools.

At the elite level, Australia’s Winning Edge continues to guide our approach to high performance. The Department provided $70,000 to support a joint initiative between the Australian Institute of Sport and the Australian Medical Association on sport-related concussion.

One-off sport infrastructure projects continued to be delivered to provide high quality, accessible community sport and recreation facilities.

Result: Met

The Concussion in Sport website brings together contemporary evidence-based information for athletes, parents, teachers, coaches and medical practitioners and seeks to ensure that all members of the public have rapid access to information to increase their understanding of sport-related concussion and to assist in the delivery of best practice medical care.

188 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

The Department manages funding agreements for a small number of one-off sport and recreation infrastructure projects. Funded projects range from small community facilities in regional and urban areas, to major sporting venues. Projects are located throughout Australia and directly benefit those involved in a range of sports including hockey, swimming, soccer, netball, tennis, softball and rugby league.

Support for upcoming major sporting events

Coordination across Government entities to facilitate the implementation of strategies and policies which support the hosting of major international sporting events in Australia, including the 2015 INF Netball World Cup, the 2017 RLIF Rugby League World Cup and the 2018 Gold Coast Commonwealth Games. Source: 2015-16 Health Portfolio Budget Statements, p. 159

2015-16 Target 2015-16 Result

Strategies and policies are implemented in consultation with stakeholders, including State and Territory Governments, the New Zealand Government and event organising committees.

Strategies and policies contribute to the Australian Government’s security plan to deliver a safe and secure event environment for athletes and spectators.

The Department worked closely with organisers, State Governments, and Commonwealth entities to develop strategies and implement arrangements for the safe and secure delivery of the 2015 INF Netball World Cup, and is continuing preparations for the 2017 RLIF Rugby League World Cup (joint hosted with New Zealand) and 2018 Gold Coast Commonwealth Games.

Result: Met

Policies and strategies covered a wide array of activity: customs, immigration, biosecurity and aviation screening at airports; the importation of medical kits; the registration of team medical professionals; intellectual property rights protection; legacy, trade and tourism; and security.

189 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 10 SPORT AND RECREATION

Well-coordinated preparation for the safe and successful delivery of the 2015 INF Netball World Cup, the 2017 RLIF Rugby League World Cup and the 2018 Gold Coast Commonwealth Games. Source: 2015-16 Health Portfolio Budget Statements, p. 160

2015-16 Target 2015-16 Result

Safe and secure delivery of the 2015 INF Netball World Cup. Continued preparation to support planning for the 2017 RLIF Rugby League World Cup and 2018 Gold Coast Commonwealth Games.

Post event analysis of completed major events including analysis on whether trade, tourism, diplomatic and community objectives were achieved.

The Department supported the safe and secure delivery of the 2015 INF Netball World Cup. The Department continued to support preparation for the 2017 RLIF Rugby League World Cup and 2018 Gold Coast Commonwealth Games.

Result: Met

In the lead up to the 2015 INF Netball World Cup, the Department worked in collaboration with organisers, State Governments, and Australian Government entities to develop strategies and implement activities to ensure the delivery of a safe and secure event.

In August 2015, Netball Australia, with the assistance of the Australian and New South Wales Governments, staged a highly successful tournament at Sydney Olympic Park. 2015 INF Netball World Cup matches were attended by 102,674 spectators, and the final broke the world record for a crowd at a netball match (16,849).

With financial assistance from the Australian Government, tourism objectives were achieved through the 2015 INF Netball World Cup hosting the world’s largest netball clinic during the tournament, which saw over 550 primary school children from across New South Wales participate in fun netball based drills and exercises led by the Australian Diamonds.

Additionally, diplomatic objectives were achieved through the Australian Government funding $300,000 to ensure the participation of Zambia, Uganda, Sri Lanka, Malawi, Papua New Guinea and Botswana. These nations were at risk of not being able to attend the 2015 INF Netball World Cup due to funding constraints.

The Australian Government is continuing to support preparations for the 2017 RLIF Rugby League World Cup and 2018 Gold Coast Commonwealth Games.

190 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

The 2015 INF Netball World Cup shoots for healthy living The 2015 INF Netball World Cup was an outstanding success, both on the court and off it. Over 100,000 spectators from around Australia and the world converged on Sydney Olympic Park for the ten day tournament. In the final, a world record sell-out crowd of 16,849 witnessed the Australian Diamonds win their eleventh (and third consecutive) world title.

Netball has one of the highest participation rates in Australia amongst women, particularly girls. The 2015 INF Netball World Cup was the ideal opportunity to communicate effectively to this demographic. With funding from the Department of Health, Netball Australia not only delivered a memorable world cup, but also staged the World’s Biggest Netball Clinic on day four of the tournament. Over 550 primary school students from all over New South Wales attended the event which included participation in netball related drills, discussions regarding healthy and active living, and a Q&A session with the Australian Diamonds.

The World’s Biggest Netball Clinic combined with fan engagement activities led International Netball Federation President Molly Rhone to comment that, “Sydney organisers took the whole fan experience to another level.”

Activities such as the World’s Biggest Netball Clinic effectively complement other Departmental initiatives, most notably the Girls Make Your Move Campaign and the Australian Sports Commission’s Sporting Schools program that aim to educate and inspire young Australians to be more active, more often, developing healthy habits for life.

Image credit: David Callow

Improve water and snow safety

Develop and implement water and snow safety strategies, programs and projects to support a 50% reduction in drowning deaths by 2020. Source: 2015-16 Health Portfolio Budget Statements, p. 160

2015-16 Target 2015-16 Result

Water and snow safety programs and projects reflect whole-of-government and broader health objectives.

Strategic policy advice provided to Government on matters relating to water and snow safety.

Increased water and snow safety awareness, as reported by water and snow safety organisations.

Policy advice provided to Government on water and snow safety matters.

An independent review was undertaken on the National Recreation Safety Program and Saving Lives in the Water Element 1 which advised that these programs are an efficient and effective use of Government funding.

Result: Met

Throughout 2015-16, the Department continued to support key participation initiatives and strategies, including: water and snow safety organisations and projects through the National Recreation Safety Program; the Savings Lives in the Water (Element 1 and Element 2) initiative; and the Water Safety: Reduce Drownings program.

191 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 10 SPORT AND RECREATION

Protect the integrity of sport

Implement initiatives and facilitate stakeholder interaction with Government entities to build resilience of sporting organisations and their capacity to deliver integrity measures. Source: 2015-16 Health Portfolio Budget Statements, p. 159

2015-16 Target 2015-16 Result

Regular Australian and Jurisdictional Sports Integrity Network meetings are initiated and convened with sporting organisations, State and Territory Governments, industry stakeholders, and relevant entities.

Sports integrity education platforms are developed and supported.

Five Sports Integrity Network meetings were held during 2015-16.

A new Illicit Drugs in Sport online education program, specifically designed for athletes and sports officials, was developed and launched in April 2016. The program has over 250 registered sports users, with component modules accessed over 400 times.

Result: Met

The Australian and Jurisdictional Sports Integrity Network meetings provided regular collaborative fora for Governments, national and jurisdictional sporting organisations, and relevant stakeholders to coordinate responses to key sport integrity threats.

Australia’s sports integrity effort was further strengthened through ongoing usage of the ‘Keep Sport Honest’ match-fixing online education module, with over 9,000 registered users, and the April 2016 launch of the Illicit Drugs in Sport online education program.

Implement an Australian anti-doping legislative framework that fulfils Australia’s international anti-doping obligations. Source: 2015-16 Health Portfolio Budget Statements, p. 159

2015-16 Target 2015-16 Result

Australian anti-doping arrangements are compliant with the World Anti-Doping Code. Participation in the 5th Conference of Parties on the UNESCO International Convention against Doping in Sport is supported.

WADA identifies Australia as operating a Code-compliant anti-doping framework. Australian officials attended the 5th Conference of Parties on the UNESCO International Convention against Doping in Sport.

Result: Met

Australia tabled a key resolution to improve harmonisation of the UNESCO International Convention against Doping in Sport and the revised World Anti-Doping Code, to support a more effective global anti-doping effort. This was endorsed in 2015.

192 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Increased capacity of Australian sporting organisations to address sports integrity issues. Source: 2015-16 Health Portfolio Budget Statements, p. 161 & 2015-16 Corporate Plan, p. 16

2015-16 Target 2015-16 Result

Ongoing assessment of integrity vulnerabilities of priority national sporting organisations and delivery of support for relevant sports integrity initiatives.

Five individual Sports Integrity Threat Assessments were undertaken in 2015-16.

Two Probity Checking training courses were delivered.

Ongoing advice and support was provided for national sporting organisations on integrity matters.

Result: Met

In 2015-16, the Department undertook five individual integrity assessments of sports organisations. Assessments informed specific funding initiatives with individual sports to address vulnerabilities.

Specialised training courses to improve probity checking arrangements were conducted for national sporting organisations.

Delivery of internationally compliant Australian anti-doping arrangements. Source: 2015-16 Health Portfolio Budget Statements, p. 161 & 2015-16 Corporate Plan, p. 16

2015-16 Target 2015-16 Result

Effective operation of Australian anti-doping arrangements to address doping in the contemporary sports environment.

WADA identifies Australia as operating a Code-compliant anti-doping framework. A revised National Anti-Doping Framework was endorsed.

Result: Met

The revised National Anti-Doping Framework67 was endorsed 1 October 2015 by Commonwealth, State and Territory Ministers responsible for Sport. The Framework now provides for cooperation between jurisdictions on performance and image enhancing drugs; and supplements.

67 Available at: www.health.gov.au/internet/main/publishing.nsf/Content/anti-doping-framework

193 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 10 SPORT AND RECREATION

Outcome 10 - Budgeted expenses and resources

Budget Estimate1 2015-16 $’000

(A)

Actual 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 10.1: Sport and Recreation2

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 21,948 20,617 (1,331)

Special accounts

Sport and Recreation Special Account 378 421 43

Departmental expenses

Departmental appropriation3 9,906 9,252 (654)

Expenses not requiring appropriation in the current year4 275 617 342

Total for Program 10.1 32,507 30,907 (1,600)

Outcome 10 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 21,948 20,617 (1,331)

Special accounts 378 421 43

Departmental expenses

Departmental appropriation3 9,906 9,252 (654)

Expenses not requiring appropriation in the current year4 275 617 342

Total expenses for Outcome 10 32,507 30,907 (1,600)

Average staffing level (number) 59 55 (4)

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2 This Program excludes National Partnership payments to State and Territory Governments by the Treasury as part of the Federal Financial Relations (FFR)

Framework. 3 Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’ and ‘Revenue from independent sources (s74)’. 4

‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees.

194 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Outcome 11 Ageing and Aged Care

Improved wellbeing for older Australians through targeted support, access to quality care and related information services

Analysis of performance - Outcome 11 Ageing and Aged Care In 2015-16, the Department has continued to improve the access to and choice of aged care services for older Australians, their families and carers. This was achieved through the provision of: a range of targeted support services and programs to help older people stay independent and in their own homes longer; a range of quality care options; and accommodation for older people who are unable to continue to live independently in their own homes.

These activities have contributed to the Department’s achievement of objectives under Outcome 11 and Our Purpose.

Lead and shape Australia’s health and aged care system and sporting outcomes through evidence-based policy, well targeted programs, and best practice regulation

In 2015-16, we undertook activities which contributed to achieving Our Purpose, including under Outcome 11

Our Purpose

195 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Key community benefits for Outcome 11 in 2015-16

Improved access to aged care services and information through the My Aged Care initiative

The My Aged Care system has enabled older people, their families, and carers to access consistent information on aged care service. This has assisted people needing services to locate and access appropriate assessment and service options.

Greater power to influence design and delivery of services

Consumer-directed care has provided increased choice and control for consumers by allowing them to decide what type of care and services they can access and how they’re delivered.

Streamlined home support services into a single program

Families and individuals now receive a range of entry-level support services from a single support program. The reduction in complexity helps people get the support they need to remain independent at home.

Summary of performance criteria results for Outcome 11

73.2%

Met Not met Substantially met

17.1% 9.7%

196 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Looking ahead • In 2016-17, the Australian Government will further enhance services and programs to help older people stay independent and in their own homes longer.

• The Victorian Home and Community Care (HACC) services for Victorians aged 65 years and over (50 years and over for Aboriginal and Torres Strait Islander peoples) will become part of the Commonwealth Home Support Program (CHSP).

• From 1 July 2016, the CHSP and Multi-Purpose Services will start to be offered to all eligible residents on Norfolk Island.

• Increasing Choice in Home Care will allow funding to follow eligible consumers, and enable consumers to choose their service provider. Portable packages will allow the consumer to change their provider, including when the consumer moves to another location.

Programs and program objectives contributing to Outcome 11

Program 11.1: Access and Information

• Provide equitable and timely access to aged care assessments and make it easier for older people to find aged care services and information

Program 11.2: Home Support

• Provide high quality support, at a low intensity on a short-term or on-going basis, or higher intensity services delivered on a short term episodic basis to frail older people (65 years and over or 50 years and over for Aboriginal and Torres Strait Islander people) to maximise their independence at home and in the community for as long as they choose or are able to do so

Support frail older people through the delivery of planned respite activities which allow carers to take a break from their usual caring responsibilities

Program 11.3: Home Care

• Provide coordinated packages of services tailored to meet individuals’ specific care needs including care services, support services, clinical services and other services to support older people to remain living at home

Program 11.4: Residential and Flexible Care

• Residential aged care provides a range of care options and accommodation for older people who are unable to continue living independently in their own homes

• Flexible care caters to the needs of older people, in either a residential or home care setting, who may require a different approach than that provided through mainstream residential and home care options

Program 11.5: Workforce and Quality

• To ensure the availability of a skilled workforce, empower consumers and ensure a high quality of care to recipients of aged care services

Program 11.6: Ageing and Service Improvement

• To enable the Australian Government to better support activities that promote healthy and active ageing, to better respond to existing and emerging challenges including dementia care and to better support services targeting Aboriginal and Torres Strait Islander peoples and people from diverse backgrounds

197 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Analysis of performance - Program 11.1: Access and Information The Department met the majority of performance targets for Program 11.1: Access and Information. In 2011, the Productivity Commission identified the need for an improved entry point to the aged care system and the need for an independent assessment service. On 1 July 2015, with the introduction of the Commonwealth Home Support Program, My Aged Care was expanded to become the single entry point to the aged care system in Australia. Services were significantly enhanced to include: a central client record to facilitate the collection and sharing of client information; the Regional Assessment Service to conduct face-to-face assessments of people seeking entry-level support at home; the National Screening and Assessment Form to ensure a nationally consistent and holistic screening and assessment process; and the provision of web-based portals for clients, assessors and service providers.

Moving to a new system has taken time and 2015-16 has been a transitional year for the sector. There were some initial challenges in terms of stabilising the ICT platform, and the contact centre, assessors and providers had to adapt to new processes.

Over 3,000 aged care service providers across the nation were transitioned into My Aged Care, enabling them to directly and flexibly manage their own service information and receive client referrals.

To help ensure My Aged Care was working as it should, the Department conducted a mid-point review and enhanced a number of operational and system processes that further supported the full transition of the Aged Care Assessment Teams onto My Aged Care.

Provide equitable and timely access to aged care assessments and make it easier for older people to find aged care services and information

Establishment and operation of My Aged Care systems and workforce capable of providing aged care information, conducting needs based assessments and making referrals for services. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 93

2015-16 Target 2015-16 Result

Expanded functionality of My Aged Care systems and improved assessor training.

Functionality of My Aged Care systems and improved assessor training was delivered.

Result: Met

From 1 July 2015, My Aged Care expanded from an information service to include the creation of a client record, enhanced service finder functionality, consistent needs based home support and comprehensive assessments, and referrals to appropriate Commonwealth aged care services.

Training for the My Aged Care assessment workforce was coordinated and delivered appropriately at each transition point and is now embedded into the ongoing workforce management structure.

198 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Number of calls made to the My Aged Care Contact Centre. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 93

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

382,600 634,060

Result: Met

161,448 146,439 223,502 N/A

The number of calls68 made to the My Aged Care Contact Centre Consumer line exceeded initial forecasts following the My Aged Care functionality expansion on 1 July 2015. In addition, the contact centre received over 150,000 calls from assessors and service providers for system and process support; they also received a further 293,000 webforms and faxes, the majority being referrals for aged care services.

A proportion of this increased demand can be attributed to transition impacts as the community, providers and assessors progressively adopted the reforms.

The Department actively engaged with the sector on capacity issues experienced by the contact centre with a focus on enhancing the quality of services delivered.

Average number of unique visitors per month to the My Aged Care website. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 93

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

121,000 203,045

Result: Met

116,366 56,000 N/A N/A

The increase in website demand is reflective of the increased use of the enhanced Service Finder functionality. The My Aged Care website and Contact Centre numbers have been promoted through the year via: the distribution of printed materials such as My Aged Care branded brochures and postcards; videos played in GP surgeries; and search engine marketing.

Extent of consumer satisfaction with My Aged Care website service. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 94

2015-16 Target 2015-16 Result

Maintaining over 60% of surveyed consumers satisfied with the service provided by My Aged Care Website during the first year of operation.69

59%

Result: Substantially met

The My Aged Care website is designed to provide consumers with plain English information on ageing and aged care services to help them navigate the system. The website also includes useful tools such as service finders and fee estimators to assist consumers to find and compare services. The Department has made a number of enhancements to the usability of the website over the past 12 months to support the expansion of My Aged Care functionality and is committed to continuing to improve the user experience.

68

Number of calls to the My Aged Care Consumer and Provider lines for 2015-16. 69 HealthDirect Australia Contact Centre and Website Customer Satisfaction Survey Report.

199 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Extent of consumer satisfaction with My Aged Care Contact Centre service. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 94

2015-16 Target 2015-16 Result

Maintaining over 90% of surveyed consumers are satisfied with the service provided by My Aged Care Contact Centre during the first year of operation. 70

97%

Result: Met

Satisfaction surveys for callers (both consumers and the sector) to the My Aged Care Contact Centre are performed by Australian Market Research. Callers are asked at the end of calls if they would like to be transferred to complete a survey. They are also given an option of being called back at a later point in time to undertake the survey.

My Aged Care assessment workforce (Contact Centre, Regional Assessment Service organisations and Aged Care Assessment Teams (ACATs)) to complete mandatory training prior to undertaking screening and assessment through My Aged Care. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 94

2015-16 Target 2015-16 Result

100% of the My Aged Care assessment workforce completes the mandatory training for their screening, assessment or delegate roles.

The requirement for mandatory training is included in the Department’s agreements with all contracted assessment workforce organisations.

Result: Met

Contracted organisations report to the Department on their compliance against My Aged Care program requirements. The Department is establishing a routine method to validate this based on reports provided by the Registered Training Organisation and users within the My Aged Care system.

Number of new client registrations. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 95

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

183,800 288,649

Result: Met

N/A N/A N/A N/A

The number of new My Aged Care client registrations is greater than originally forecast, demonstrating the higher than expected demand for My Aged Care services since 1 July 2015. The benefit of the client registration process is clients no longer need to tell their story multiple times as My Aged Care builds on their individual record at each stage of the client journey.

70 HealthDirect Australia Contact Centre and Website Customer Satisfaction Survey Report.

200 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Number of assessments completed on My Aged Care.71 Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 95

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

459,300 183,887

Result: Not met

N/A N/A N/A N/A

The Aged Care Assessment Teams (ACATs) transitioned to full use of the My Aged Care system during February/March 2016. The ACATs were originally scheduled to transition in late 2015, however, the decision was made to delay the transition to early 2016 to ensure system capability. The timing of the transition impacted the number of ACAT assessments being conducted on My Aged Care in 2015-16 as the majority were conducted on the former legacy system. Regional Assessment Services (RAS) were introduced as part of the expansion of My Aged Care to conduct nationally consistent and holistic assessments for clients seeking to access entry-level home support services. As a new service, assessment numbers indicated for 2015-16 were based on forecast, not previous year assessment numbers. RAS assessment numbers were below this forecast for 2015-16.

Aged Care Assessment Program (ACAP) and Regional Assessment Service organisations training resources reflect current program operation and enable consistent decision making. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 93

2015-16 Target 2015-16 Result

All ACAP training reflects the current program operation model, with six monthly reviews of all training resources to ensure currency is maintained.

During the 2015-16 implementation period, a six monthly review of all training material was substituted with: system changes; communications; factsheets; and frequently asked questions as changes have occurred.

Result: Substantially met

Updated information is regularly provided to assessment organisations to ensure internal training material is kept up to date. A full review of Statement of Attainment training for My Aged Care assessors commenced in early 2016 and will be finalised by the end of July 2016.

71 Includes ACAT and Regional Assessment Service organisation assessments.

201 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

ACAP data is maintained to a high level of accuracy and is provided within the specified timeframe by the State and Territory Governments to the Australian Government. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 94

2015-16 Target 2015-16 Result

State and Territory Governments successfully upload data files into the Aged Care Data Warehouse in the required timeframe and format with an error rate not exceeding 0.1%.

All States and Territories have met this target.

Result: Met

Under a new agreement with the Australian Government, the State and Territory Governments transitioned their Aged Care Assessment Teams onto the My Aged Care System from February to March 2016. This involved transition from legacy reporting systems to My Aged Care.

Percentage of high priority ACAT assessments completed within 48 hours of referral. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 95

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

85.0% 96.9%

Result: Met

94.8% 89.0% 88.0% 85.0%

ACATs provide first intervention of a clinical nature within 48 hours of a referral for assessment being received.

Analysis of performance - Program 11.2: Home Support The Department met all performance targets for Program 11.2: Home Support, for criteria for which data is currently available. The Australian Government is committed to providing a range of services and programs to help older people stay independent and in their homes and communities for longer. The commencement of the Commonwealth Home Support Program (CHSP) in 2015 saw four programs being consolidated into one, which were the:

• Commonwealth Home and Community Care (HACC) Program;

• planned respite from the National Respite for Carers Program (NRCP);

• Day Therapy Centres (DTC) Program; and

• Assistance with Care and Housing for the Aged (ACHA) Program.

The CHSP benefits frail older people and carers by providing streamlined access to entry-level support services and a standardised national assessment process and entry point through My Aged Care. Continuity of service was achieved, ensuring minimal disruption to clients.

The CHSP ensures that all clients have equity of access to services that are socially and culturally appropriate and free from discrimination. Aboriginal and Torres Strait Islander people may be eligible for the CHSP from 50 years of age and over, whereas for non-Indigenous people, it is 65 years and over.

In 2016, a one-off grant was allocated to CHSP providers to contribute towards costs incurred to align their businesses to the new program taxonomy and comply with new reporting requirements. A total of 1,149 providers have received the one-off grant, totalling $18 million.

202 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Provide high quality support through the Commonwealth Home Support Program72

Continuity of services in programs being incorporated into the CHSP. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 96

2015-16 Target 2015-16 Result

New CHSP Agreements with service providers established by 1 November 2015 to maintain continuity of service.

All Agreements were with service providers by 1 November 2015.

Result: Met

The CHSP delivers entry level care to frail, older Australians living in their homes. The term ‘entry level’ refers to home support services provided at a low intensity on a short-term or ongoing basis, or higher intensity services delivered on a short-term episodic basis. Service providers continued to provide services to clients throughout the transition period.

Regular stakeholder consultation on the management of the new CHSP through formal and informal mechanisms. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 96

2015-16 Target 2015-16 Result

Timely contact and consultation with key stakeholders. Regularly contacted and consulted with key stakeholders. Result: Met

The Department conducted consultations and communications through various mediums including bulk emails, webinars and media releases to engage with stakeholders including consultation with the National Aged Care Alliance sub-group - the CHSP Advisory Group.

Funding agreements established with providers for the delivery of CHSP services. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 96

2015-16 Target 2015-16 Result

New CHSP Agreements with service providers established by 1 November 2015.

All Agreements were offered to service providers by 1 November 2015.

Result: Met

The establishment of funding agreements was achieved through regular consultation and communication with stakeholders, including the transitioning of service providers, and effective internal communication and governance.

72 Program objective has been simplified. Refer ‘Programs and program objectives contributing to Outcome 11’ on page 196.

203 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Commonwealth Home Support services delivered by contracted service providers to support frail older people and their carers to get the services they need to remain at home. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 97

2015-16 Target 2015-16 Result

Regular reporting on key milestones from contracted service providers indicate that activities are being implemented according to contractual arrangements.

Service providers are reporting on contracted activities, recognising that some service providers are still receiving support to transition to new reporting arrangements.

Result: Met

The Department supported contracted service providers, through webinars, bulk emails, training and direct engagement, to manage and report on Commonwealth Home Support service activities in line with contractual arrangements.

Number of older people receiving Commonwealth Home Support services. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 96

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

556,136 Data not available N/A N/A N/A N/A

In line with funding agreements, data collection for the CHSP commenced on 1 November 2015 and only eight months of client data was captured from 1 November to 30 June 2016. This data has not been compiled at the time of publishing. In 2016-17 a full set of the CHSP client data will be available.

Number of Commonwealth Home Support older clients receiving services as a percentage of the target population. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 97

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

≥ 87% Data not available N/A N/A N/A N/A

In line with funding agreements, data collection for the CHSP commenced on 1 November 2015 and only eight months of client data was captured from 1 November to 30 June 2016. This data has not been compiled at the time of publishing. In 2016-17, the CHSP will report on the target population.

204 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Analysis of performance - Program 11.3: Home Care The Department met or substantially met all performance targets for Program 11.3: Home Care. This program assists older Australians to remain living in their own home by providing a coordinated package of service, tailored to meet individual specific care needs. During 2015-16, the Department worked towards transitioning all Home Care Packages to a consumer-directed care basis, giving consumers more choice and flexibility in the types of care and services they access and on the delivery of those services.

Delivering the Home Care Package on a consumer-directed care basis, in line with the Home Care Agreement developed between the provider and the consumer, provides greater transparency about what funding is available under their package and how those funds are spent through the use of an individualised budget and monthly statement.

Adapting administrative systems and establishing an organisational culture that supports the consumer-directed care focus of service delivery, has been a complex process for some providers, especially smaller providers.

In 2016, a one-off grant was allocated to home care providers for the costs incurred in 2014-15 for retraining and reskilling the workforce for the transition to the consumer-directed care service delivery model. The payments were finalised in January 2016. A total of 462 home care package providers have received the one-off grant, totalling $19.7 million.

Smaller providers, including those in rural and remote areas, have required a range of support to assist with the transition. Work is continuing to support those providers in 2016-17.

205 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Consumer-directed care In 2015-16, home care packages moved towards a consumer-directed care (CDC) model. There are four levels of home care packages, ranging from level 1 for support of people with basic needs to level 4 for people with high care needs. The CDC model puts the consumer at the centre of their care, and builds a more flexible aged care system.

CDC empowers consumers to influence the delivery of the services they receive and allows them to exercise a greater degree of choice in what services are delivered, where and when. This results in a particularly positive effect on consumers with diverse needs. Emily’s story is an example of CDC in action.

It was important for Emily to stay independent and active as she got older. Emily has been able to do this with the help of her home care package. Emily realised that she was becoming isolated after the passing of her partner, Joan. She worked with her service provider to review her care plan to fix the situation. Her service provider had their staff undergo lesbian, gay, bi sexual, transgender and intersex (LGBTI) awareness training, to broaden their understanding of potential issues Emily may face.

The service provider contacted an LGBTI group, connecting her with community in her area.

During their discussions, Emily told her case manager that she used to go swimming, but had stopped going when Joan passed away. Emily’s case manager found a local swimming group, and if Emily wanted to go swimming again, transport could be organised through her home care package.

Emily has been very satisfied with the care and services, and has been spending time with the swimming group. Since she started swimming with the group, she has become stronger and has reconnected with her community.

Emily is just one of many aged care consumers who have been empowered to direct their own care and needs with the CDC model.

For more information about home care packages delivered on a CDC basis, visit: www.myagedcare.gov.au

206 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Provide coordinated packages of services tailored to meet individuals’ specific care needs including care services, support services, clinical services and other services to support older people to remain living at home

All Home Care Packages are delivered on a consumer-directed care basis. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 97

2015-16 Target 2015-16 Result

All Home Care Packages are transitioned to a consumer-directed care basis by 1 July 2015.

On 1 July 2015, some providers were still receiving support to fully transition to consumer-directed care, due to a need to adapt administrative systems and organisational culture to support operational elements of the transition.

Result: Substantially met

The majority of providers are delivering services on a consumer-directed care basis. Approximately 7.5% of home care providers are still receiving support to transition to consumer-directed care.

Consumers and providers are supported to adopt consumer-directed care approaches. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 97

2015-16 Target 2015-16 Result

All consumers and providers have access to information and material to support their adoption of consumer-directed care approaches for Home Care Packages.

All consumers and providers have access to information and material to support their adoption of consumer-directed care.

Result: Met

The Department has undertaken a strategic communication and engagement approach to ensure providers have access to information on aged care reform. The Department has funded a number of capacity building projects to develop tools and resources to support operational change required for adoption of consumer-directed care in business as usual operations.

Consumers have been provided access to a comprehensive range of materials through My Aged Care and the Department’s website. Key documents such as the Charter of Rights and Responsibilities have been translated into 18 languages, ensuring equity of access. The Department has funded project partners to provide a range of educational services. This support assists the consumer to understand the legislation that the provider operates under and also their rights and responsibilities. It enables the consumer to make fully informed choices about their care and services.

The Department has contracted Taylor Nelson Sofres (TNS) Pty Limited, an international research company with expertise in social research. TNS will conduct research on home care providers and consumers to understand their knowledge of consumer-directed care, satisfaction with the approach and perceptions of support and information provided. The results of this research will be available to the Department in August 2016, and will provide an analysis of the effectiveness of support and information provided by the Department to support delivery of consumer-directed care.

207 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Number of new Home Care Packages allocated.73 Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 98

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

6,045 6,445

Result: Met

6,653 074 5,835 1,724

The Minister for Aged Care varied the original Ministerial Determination in January 2016 to make available an additional 400 Level 4 Home Care Packages for allocation in 2015-16.

A key focus in 2015 was the release of significantly higher level Home Care Packages (i.e. Level 3 and Level 4) relative to lower level packages, in recognition of consumer demand for higher level home care.

There are four levels of a Home Care Package. Home care levels range from Level 1, for the support of people with basic care needs; to Level 2, for low level care needs; Level 3 for intermediate care needs; and Level 4, for people with high care needs. A consumer can be eligible for either low-level care (Level 1 or 2 package) or high-level care (Level 3 or 4 package). An Aged Care Assessment Team undertakes the assessment and approval of the level of care that a consumer is eligible for. The increase in level of Home Care Package is related to a person’s assessed need, level of frailty and need for more complex care services.

Home Care providers continue to deliver services. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 98

2015-16 Target 2015-16 Result

All Home Care Packages allocated are operational. 78,956 out of 79,313 allocated packages were operational at 30 June 2016.

357 allocated packages were not operational.

Result: Substantially met

Number of operational Home Care Packages at end of financial year.75 Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 98

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

78,747 78,956

Result: Met

72,702 66,149 60,308 59,201

The utilisation of Home Care Packages is dependent upon geographical demand and required level of care, resulting in under-utilisation in some locations of lower level packages.

A greater than estimated number of Home Care Packages were required to meet the needs of aged Australians.

73 As part of the aged care reforms announced by the Government in the 2015-16 Budget, from 2016-17, home care packages will no longer be allocated to providers through the Aged Care Approvals Round.

74 There was no allocation of Home Care Packages in 2013-14. 75 The total number of Home Care Packages each year is determined following the previous year’s stocktake of places.

208 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Analysis of performance - Program 11.4: Residential and Flexible Care The Department met or substantially met the majority of performance targets for Program 11.4: Residential and Flexible Care. Residential aged care provides accommodation and care for older Australians who are unable to remain living in their own homes, either permanently or on a respite basis. In 2015-16, the Australian Government funded an additional 10,940 new residential aged care places.

In 2015-16, the Government allocated $67 million in capital grants from the Rural, Regional and Other Special Needs Building Fund to 22 providers for capital works projects. This funding will support the development of 297 new residential aged care places and the upgrade of facilities to accommodate 270 existing residential aged care places. The funded projects included works to improve access to residential aged care for people from special needs groups and works to address fire safety.

In 2015, the Government announced the new Short-Term Restorative Care (STRC) Program building on the success of the existing Transition Care Program. Unlike Transition Care, STRC will be available to people without requiring a hospital stay, assisting to help older Australians live longer in their own homes. Significant progress has been made in implementing STRC Program, including an extensive stakeholder consultation process held in October 2015 and regular briefings and updates provided to interested stakeholder groups over the course of the financial year. From 2016-17, new STRC places will progressively become available with at least 2,000 places available by 2021.

The Department continued to improve access to culturally appropriate aged care services for Indigenous Australians with the establishment of a service in Kintore, Northern Territory, under the Aboriginal and Torres Strait Islander Flexible Aged Care Program.

Providing a range of residential and flexible care options and accommodation for older people who are unable to continue living independently in their own homes76

Competitive Aged Care Approvals Round. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 99

2015-16 Target 2015-16 Result

Competitive Aged Care Approvals Round undertaken with outcomes to be announced by April 2016.

Outcomes of the Competitive Aged Care Approvals Round were announced on 18 March 2016.

Result: Met

The 2015 Competitive Aged Care Approvals Round application process allowed prospective and existing approved providers of aged care to apply for a range of new Australian Government funded aged care places and financial assistance in the form of a capital grant.

76 Program objective has been simplified. Refer ‘Programs and program objectives contributing to Outcome 11’ on page 196.

209 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

All new residential Aged Care Places allocated. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 100

2015-16 Target 2015-16 Result

All new residential Aged Care Places are allocated by 30 June 2016.

All new residential Aged Care Places were allocated by 30 June 2016.

Result: Met

Through the 2015-16 Aged Care Approvals Round 10,940 new residential aged care places were allocated across Australia by 30 June 2016.

Number of operational Residential Aged Care places at end of financial year. 77 Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 100

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

198,259 199,449

Result: Met

195,953 192,834 189,761 187,941

A number of red tape reduction measures have been implemented to make it easier for approved providers to operationalise provisionally allocated places. This was achieved by reducing the associated regulatory burden, enabling approved providers to focus less on administrative processes and more on the timely delivery of care to older Australians who require it.

Expansion of the National Aboriginal and Torres Strait Islander Flexible Aged Care Program. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 99

2015-16 Target 2015-16 Result

Conduct a funding round to expand existing services funded under the National Aboriginal and Torres Strait Islander Flexible Aged Care Program, with places allocated by 31 May 2016.

A funding round is planned to occur in 2016, with places being made operational in the first half of 2017.

Result: Not met

77 The total number of Residential Aged Care places each year is determined following the previous year’s stocktake of places.

210 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Number of flexible places available for Aboriginal and Torres Strait Islander peoples through the National Aboriginal and Torres Strait Islander Flexible Aged Care Program. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 9978

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

820 820

Result: Met

802 739 679 675

All new flexible places for the National Aboriginal and Torres Strait Islander Flexible Aged Care Program allocated. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 100

2015-16 Target 2015-16 Result

All new flexible places for the National Aboriginal and Torres Strait Islander Flexible Aged Care Program are allocated by 31 May 2016.

173 of the 200 new flexible places have been allocated.

Result: Substantially met

The National Aboriginal and Torres Strait Islander Flexible Aged Care Program funds organisations to provide culturally appropriate residential and/or community care to older Aboriginal and Torres Strait Islander people.

Funding provides access to aged care services through 32 aged care facilities. Services are delivered to meet the aged care needs of this community, allowing older Aboriginal and Torres Strait Islander people to live close to home and community.

The Department did not meet its target to conduct a funding round to expand the National Aboriginal and Torres Strait Islander Flexible Aged Care Program. The scope of the funding round is under consideration by the Government, with a funding round expected to occur in 2016.

In December 2015, a new flexible aged care service was established in Kintore, Northern Territory (NT). The provider was allocated 18 home care packages to deliver aged care services in a remote, Indigenous community.

In 2012-13 funding was provided to expand the National Aboriginal and Torres Strait Islander Flexible Aged Care Program. This funding provided approximately 200 additional places over a five year period commencing in 2012-13. To date, 173 places have been allocated via inviting expressions of interest for new and additional services from communities identified through comprehensive consultation processes and departmental resources.

In addition, the Department is currently working with key partners to establish a new flexible aged care service in Nhulunbuy, NT. Up to 30 places will be made available for the establishment of this service.

78 The same performance criterion was reported in error on page 100 of the 2015-16 Portfolio Additional Estimates Statements.

211 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Number of operational Short-Term Restorative Care places (including Transition Care Places).

Source: 2015-16 Health Portfolio Budget Additional Estimates Statements, p. 9979

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

4,000 4,000

Result: Met

4,000 4,000 4,000 4,000

As at 30 June 2016, 4,000 Transition Care Places were in operation. These places are administered through State and Territory health departments. On average the Transition Care Program had a 88.1% occupancy rate during the 2015-16 financial year. The Commonwealth invested more than $254 million in transition care.

New Short-Term Restorative Care places are scheduled to be allocated as part of the 2016 Aged Care Approvals Round, and will commence operation in 2016-17.

Number of operational Multi-Purpose Services places at end of financial year. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 100

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

3,695 3,592

Result: Substantially met

3,545 3,525 3,483 3,337

Due to the changes implemented in home care and further planning required to implement changes that will take effect from February 2017, home care places were not allocated to Multi-Purpose Services (MPS) in 2015-16. There are 33 provisionally allocated MPS places which are yet to be made operational. A further funding round will be conducted in 2016-17 to allocate additional MPS places.

The performance result of ‘substantially met’ is based on meeting 97% of the target.

Analysis of performance - Program 11.5: Workforce and Quality The Department met the majority of performance targets for Program 11.5: Workforce and Quality. Australia’s aged care system has a strong quality framework, appropriately skilled and qualified workforce, and empowers consumers. The Australian Government continued to support the Community Visitors Scheme, providing one-on-one visits in residential care and home visits for those clients receiving home care packages, with a focus on special needs groups.

The Department continued to take a risk-based regulatory approach to identified non-compliance to protect the health, safety and wellbeing of care recipients. Appropriate and proportionate compliance action was undertaken to bring providers back into compliance.

79 The same performance criterion was reported in error on page 100 of the 2015-16 Portfolio Additional Estimates Statements.

212 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

To ensure the availability of a skilled workforce, empower consumers and ensure high quality of care to recipients of aged care services

Continuing uptake of new models of the Community Visitors Scheme. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 101

2015-16 Target 2015-16 Result

Increase uptake of new models of the Community Visitors Scheme. 2015-16 data indicates an increased uptake of the new models of the Community Visitors Scheme, including one-on-one home care

visits and group visits in residential care.

Result: Met

Continued support for the Community Visitors Scheme to provide one-on-one visits in residential care, home visits for people receiving home care packages and group visits (groups of two or more residents) in residential aged care settings.

This included a focus on targeting special needs groups (people from culturally and linguistically diverse backgrounds and Lesbian, Gay, Bisexual, Transexual and Intersex people).

Number of annual reviews of Aged Care Funding Instrument funding claims to ensure residents are correctly funded. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 102

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

20,000 15,763

Result:

Substantially met

20,587 20,349 21,426 18,735

Fewer reviews were conducted in 2015-16. Improved targeting and the increased use of more labour intensive comprehensive reviews resulted in a greater proportion of incorrect Aged Care Funding Instrument claims being identified.

The performance result of ‘substantially met’ is based on meeting 79% of the target.

Percentage of General Purpose Financial Reports submitted by approved providers reviewed to assess financial risk. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 102

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

100% 100% 100% 100%

Risk profiling was applied across all who submitted a General Purpose Financial Report, and a detailed risk assessment was undertaken on all those identified as being at the highest level of risk.

213 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Percentage of detailed risk assessments completed for residential aged care approved providers assessed as having a financial risk at the highest level. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 102

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

N/A N/A N/A N/A

Detailed risk assessments were undertaken on all approved providers assessed at the highest financial risk level. Compliance approaches were identified to bring those providers into compliance if required.

Extent to which the Department has taken appropriate action to identify and respond to provider financial risks where those risks have been assessed as being at the highest level. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 103

2015-16 Target 2015-16 Result

Action taken by the Department is proportionate to the level of risk and in accordance with the Aged Care Act 1997.

The Department has taken appropriate action to identify and respond to all providers assessed as being at the highest level of financial risk in accordance with the Act.

Result: Met

Following a detailed risk assessment, proportionate regulatory action is taken in accordance with the Aged Care Act 1997.

Extent to which the Department has taken appropriate action against approved providers to address serious non-compliance that threatens the health, welfare or interests of care recipients. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 103

2015-16 Target 2015-16 Result

Action taken by the Department is proportionate to the level of risk and in accordance with the Aged Care Act 1997.

The Department has taken appropriate action to respond to all providers to address serious non-compliance in accordance with the Act.

Result: Met

All instances of identified serious non-compliance were responded to appropriately and proportionately. Sanctions were imposed on all approved providers where an immediate and severe risk to the safety, health or wellbeing of care recipients was identified. Where there is identified non-compliance, the Department applies a risk based approach and following a detailed assessment, appropriate and proportionate regulatory action is taken in accordance with the Aged Care Act 1997.

214 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Percentage of occasions where the Department has taken appropriate action against approved providers to address serious non-compliance that threatens the health, welfare or interests of care recipients. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 103

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

100% 100%

Result: Met

100% 100% 100% 100%

In 2015-16, the Department imposed four sanctions on two approved providers following identification of an immediate and severe risk to the safety, health or welfare of care recipients.

Aged Care Complaints Commissioner From 1 January 2016, the Aged Care Complaints Scheme moved to the Aged Care Complaints Commissioner (Complaints Commissioner). For results on the four performance criteria below and information on complaints, please refer to the Complaints Commissioner’s 2015-16 Annual Report.

Percentage of complaints finalised by the Aged Care Complaints Scheme within 90 days. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 102

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

80% Refer to Complaints

Commissioner’s 2015-16 Annual Report.

87% 84% 85% 83%

Percentage of complaints resolved by the Aged Care Complaints Scheme at early resolution. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 102

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

64% Refer to Complaints

Commissioner’s 2015-16 Annual Report.

81% 78% 72% 61%

Timely and effective resolution of complaints through the Aged Care Complaints Scheme. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 101

2015-16 Target 2015-16 Result

Majority of complaints are resolved within 90 days, with over 64 per cent finalised at the early resolution stage.

Refer to Complaints Commissioner’s 2015-16 Annual Report.

215 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Satisfaction with the operation of the Aged Care Complaints Scheme. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 103

2015-16 Target 2015-16 Result

Results of satisfaction surveys indicate that the majority of complainants and approved providers responding to the survey are satisfied with the operation of the Complaints Scheme.

Refer to Complaints Commissioner’s 2015-16 Annual Report.

Analysis of performance - Program 11.6: Ageing and Service Improvement The Department met the majority of performance targets for Program 11.6: Ageing and Service Improvement. Dementia continues to be a challenge for the health and aged care system, with the prevalence of dementia predicted to rise significantly. The current suite of dementia support programs funded by the Australian Government will not be sufficient to deliver the same quality of service to an ever-growing client base. For this reason, during 2015-16, the Department analysed its dementia support programs and began developing improved, streamlined national services.

An element of this has been a process to establish a single national Dementia Behaviour Management Advisory Service and the new Dementia Training Program, to be launched in October 2016. These new programs will achieve efficiencies, allowing a greater number of people to access the services they need, as well as allow expansion into new services. The new programs will be available to an array of health professionals and care staff in all health and aged care settings.

A key challenge faced by residential aged care providers is the management of behavioural and psychological symptoms of dementia. The national launch of the Severe Behaviour Response Teams on 2 November 2015 created a new tier of support for residential aged care providers to manage severe and extreme cases of behavioural and psychological symptoms of dementia. While Severe Behaviour Response Teams have not been operational for a full year, feedback to date has been positive and data indicates that referrals will continue to grow to meet future targets.

216 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

To enable the Australian Government to better support activities that promote healthy and active ageing, to better respond to existing and emerging challenges including dementia care and to better support services targeting Aboriginal and Torres Strait Islander peoples and people from diverse backgrounds

Funding will be available under the Dementia and Aged Care Services Fund. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 104

2015-16 Target 2015-16 Result

An open grant funding round is advertised in 2016. An open funding round was advertised in April 2016 to seek a national provider for the Dementia Behaviour Management

Advisory Service, and a national provider to deliver a suite of dementia training and education activities.

Result: Met

The national provider for the Dementia Behaviour Management Advisory Service and dementia training programs will commence by October 2016.

Activities and projects that improve the lives of people with dementia are delivered, including as part of Severe Behaviour Response Teams. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 104

2015-16 Target 2015-16 Result

Continued Government funding of a number of programs which provide additional support for people with dementia.

Funding of $52.1 million in 2015-16 was provided for a range of existing dementia programs.

Result: Met

During 2015-16, the following activities continued to receive funding to support people living with dementia:

• Dementia Behaviour Management Advisory Service;

• Dementia Training Study Centres;

• Dementia Care Essentials;

• National Dementia Support Program;

• a number of smaller one-off projects; and

• Severe Behaviour Response Teams.

217 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Number of service episodes delivered by Severe Behaviour Response Teams. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 105

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

550 319

Result: Not met

N/A N/A N/A N/A

The Severe Behaviour Response Teams program commenced national service delivery on 2 November 2015, so has not been operational for the full 2015-16 financial year.

As part of the referrals received, there have been a total of 13,157 service activities, with an average of 42 service activities per service episode.

Feedback on the service delivery received through the program’s performance reporting and independently provided to the Department has been positive.

Number of service episodes delivered by Dementia Behaviour Management Advisory Services clinicians that support aged care staff, healthcare professionals and family carers to improve their care of people with behavioural and psychological symptoms of dementia. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 105

2015-16 Target 2015-16 Result 2014-15 2013-14 2012-13 2011-12

6,800 7,941

Result: Met

7,323 N/A N/A N/A

Performance data for the program indicates that targets for the Dementia Behaviour Management Advisory Services are being met, and in some instances exceeded. Feedback on the program indicates a high level of satisfaction with the care being delivered.

Projects to support older Aboriginal and Torres Strait Islander people and services that provide care to this group are delivered, including grants of capital assistance. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 104

2015-16 Target 2015-16 Result

An open grant funding round is advertised in 2016. An open grant funding round was not held in 2015-16. Result: Not met

Funding continues to be made available under the Dementia and Aged Care Services Fund for one-off activities such as capital funding, or under programs such as the National Aboriginal and Torres Strait Islander Flexible Aged Care Program and the Service Development Assistance Panel.

Remote Indigenous communities continued to be supported through one-off grants for items including capital assistance, security upgrades, and purchase of equipment necessary for the delivery of high quality aged care.

218 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Extent of implementation of service system improvement initiatives to better support older people from diverse backgrounds and with special needs. Source: 2015-16 Health Portfolio Additional Estimates Statements, p. 104

2015-16 Target 2015-16 Result

Continued Government funding of Partners In Culturally Appropriate Care to support and promote understanding of cultural issues and accessibility of services through My Aged Care.

Seven Partners In Culturally Appropriate Care (PICAC) organisations, one in each State and Territory (including one organisation for both NSW and ACT), continue to be funded to equip aged care providers to deliver culturally appropriate care to older people from culturally and linguistically diverse (CALD) backgrounds. A project to investigate My Aged Care accessibility for these communities commenced in 2015-16.

Result: Met

PICAC organisations are funded to improve partnerships between aged care providers and CALD communities, develop and disseminate information and translated aged care resources to CALD communities, and provide culturally appropriate training to staff of aged care services. In 2015-16, one of the PICAC organisations was engaged to support and promote an understanding of cultural issues and CALD communities’ accessibility of services through My Aged Care. The organisation will continue to consult with My Aged Care and CALD communities until the project’s completion on 30 June 2017.

219 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Budget Estimate1,2 2015-16 $’000

(A)

Actual2 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 11.1: Access and Information

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 86,897 87,327 430

Departmental expenses

Departmental appropriation3 16,085 23,013 6,928

Expenses not requiring appropriation in the current year4 505 1,033 528

Total for Program 11.1 103,487 111,373 7,886

Program 11.2: Home Support5

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 1,091,321 1,064,310 (27,011)

Departmental expenses

Departmental appropriation3 23,582 16,505 (7,077)

Expenses not requiring appropriation in the current year4 525 1,076 551

Total for Program 11.2 1,115,428 1,081,891 (33,537)

Program 11.3: Home Care5

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 1,216 898 (318)

Special appropriations

Aged Care Act 1997 - home care packages 1,103,461 1,134,595 31,134

Departmental expenses

Departmental appropriation3 14,207 14,230 23

Expenses not requiring appropriation in the current year4 421 852 431

Total for Program 11.3 1,119,305 1,150,575 31,270

Outcome 11 - Budgeted expenses and resources

220 DEPARTMENT OF HEALTH Annual Report 2015-2016

PART 2 ANNUAL PERFORMANCE STATEMENTS 2.1

Budget Estimate1,2 2015-16 $’000

(A)

Actual2 2015-16 $’000 (B)

Variation $’000 (B) - (A)

Program 11.4: Residential and Flexible Care

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 93,954 60,844 (33,110)

Zero real interest loans6

- appropriation 68,451 22,289 (46,162)

- expense adjustment (63,749) (18,037) 45,712

Special appropriations

Aged Care Act 1997 - residential care 7,643,190 7,690,942 47,752

Aged Care Act 1997 - flexible care 329,144 333,891 4,747

Aged Care (Accommodation Payment Security Act 2006) 718 718 -

Departmental Expenses

Departmental appropriation3 26,781 26,452 (329)

Expenses not requiring appropriation in the current year4 756 1,592 836

Total for Program 11.4 8,099,245 8,118,691 19,446

Program 11.5: Workforce and Quality

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 9,953 12,965 3,012

Departmental expenses

Departmental appropriation4 35,068 39,296 4,228

Expenses not requiring appropriation in the current year4 1,112 2,262 1,150

Total for Program 11.5 46,133 54,523 8,390

Program 11.6: Ageing and Service Improvement

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 84,540 71,536 (13,004)

Special appropriations

- continence aids payments 35,815 17,202 (18,613)

Departmental expenses

Departmental appropriation3 23,358 21,877 (1,481)

Expenses not requiring appropriation in the current year4 685 1,341 656

Total for Program 11.6 144,398 111,956 (32,442)

221 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.1 OUTCOME 11 AGEING AND AGED CARE

Budget Estimate1,2 2015-16 $’000

(A)

Actual 2

2015-16 $’000 (B)

Variation $’000 (B) - (A)

Outcome 11 Totals by appropriation type

Administered expenses

Ordinary annual services (Appropriation Act No. 1) 1,367,881 1,302,132 (65,749)

Special appropriations 9,112,328 9,177,348 65,020

Departmental expenses

Departmental appropriation3 139,081 141,373 2,292

Expenses not requiring appropriation in the current year4 4,004 8,156 4,152

Total expenses for Outcome 11 10,623,294 10,629,009 5,715

Average staffing level (number) 777 766 (11)

1 Budgeted appropriation taken from the 2016-17 Health Portfolio Budget Statements and re-aligned to the 2015-16 outcome structure. 2 The ageing and aged care functions transferred from the Department of Social Services under the Administrative Arrangements Order issued on 30 September

2015.

3 Departmental appropriation combines ‘Ordinary annual services (Appropriation Act No. 1)’, ‘Revenue from independent sources (s74)’ and an expense adjustment due to Machinery of Government changes.

4 ‘Expenses not requiring appropriation in the budget year’ is made up of depreciation expense, amortisation, make good expense, operating losses and audit fees. 5 This Program excludes National Partnership payments to State and Territory Governments by the Treasury as part of the Federal Financial Relations Framework. 6

‘Ordinary annual services (Bill 1)’ against program 11.4 excludes amounts appropriated in Bill 1 for Zero Real Interest Loans as this funding is not accounted for as an expense.

222 DEPARTMENT OF HEALTH Annual Report 2015-2016

2.2 PART 2 ANNUAL PERFORMANCE STATEMENTS

2.2 Entity Resource Statement 2015-16

Actual available appropriation 2015-16 $’000

(A)

Payments made 2015-16 $’000 (B)

Balance remaining 2015-16 $’000

(A) - (B)

Ordinary annual services1

Departmental appropriation

Prior year departmental appropriation 99,489 59,709 39,780

Departmental appropriation2 590,444 527,148 63,296

Departmental capital budget3 12,174 11,858 316

s74 relevant agency receipts 56,407 56,407 -

Total 758,514 655,122 103,392

Administered expenses

Outcome 1 325,211 295,830

Outcome 2 627,188 578,039

Outcome 3 596,756 544,411

Outcome 4 91,927 89,178

Outcome 5 2,201,777 2,200,534

Outcome 6 2,328 2,302

Outcome 74 296,080 248,700

Outcome 8 1,220,208 1,199,681

Outcome 9 57,558 35,747

Outcome 105 26,948 19,900

Outcome 11 1,436,646 1,294,757

Payments to corporate entities 346,502 328,658

Total 7,229,129 6,837,737

Total ordinary annual services A 7,987,643 7,492,859

Other services6

Departmental non-operating

Prior year departmental appropriation 7,231 7,231 -

Equity injections7 32,290 20,110 12,180

Total 39,521 27,341 12,180

Administered non-operating

Prior year administered appropriation 18,548 3,482

Administered assets and liabilities 156,741 29,720

Total 175,289 33,202

Total other services B 214,810 60,543

Total available annual appropriations and payments 8,202,453 7,553,402

223 Annual Report 2015-2016 DEPARTMENT OF HEALTH

2.2 ENTITY RESOURCE STATEMENT

Actual available appropriation 2015-16 $’000

(A)

Payments made 2015-16 $’000 (B)

Balance remaining 2015-16 $’000

(A) - (B)

Special appropriations

Special appropriations limited by criteria/entitlement

Aged Care Act 1997 9,831,715

Health Insurance Act 1973 21,167,610

National Health Act 1953 11,798,076

Medical Indemnity Act 2002 69,264

Dental Benefits Act 2008 312,724

Private Health Insurance Act 2007 5,896,162

Public Governance, Performance and Accountability Act 2013 - s778

7,926

Total special appropriations C 49,083,477

Special accounts 9

Opening balance 84,794

Appropriation receipts10 23,055

Non-appropriation receipts to special accounts 210,381

Payments made 222,443

Total special accounts D 318,230 222,443 95,787

Total resourcing and payments11 A+B+C+D 8,520,683 56,859,322

Less appropriations drawn from annual or special appropriations above

and credit to special accounts 23,055

and credit to corporate entities 346,502 328,658

Total net resourcing and payments for the Department of Health 8,151,126 56,530,664

1 Appropriation Act (No.1) 2015-16, Appropriation Act (No.3) 2015-16. 2 This includes an amount of $132,036,000 s75 transfer under the Administrative Arrangements Order issued on 30 September 2015. This also includes an

amount of $42,000 appropriated in the 2016-17 Budget relating to 2015-16. 3 For accounting purposes this amount has been designated as ‘contributions by owners’. This includes an amount of $965,000 s75 transfer under the

Administrative Arrangements Order issued on 30 September 2015 4 This balance includes a temporarily quarantined amount of $20,253,000. 5

This balance includes a temporarily quarantined amount of $5,000,000. 6 Appropriation Act (No.2) 2015-16, Appropriation Act (No.4) 2015-16. 7

This includes an amount of $12,174,000 s75 transfer under the Administrative Arrangements Order issued on 30 September 2015. 8 This includes an amount of $7,825,174.24 transferred to Department of Human Services to refund a portion of recoveries from the Compensation for Health Care and Other Services Special Account previously returned to the Official Public Account. 9

Does not include ‘Relevant Public Money’ held in Services for Other Entities and Trust Moneys special account (SOETM). 10 Appropriation receipts from the Department of Health and special appropriations for 2015-16 included above. 11

Total resourcing excludes the actual available appropriation for all Special Appropriations.

226

234

242

246

256

272

276

282

290

PART3 Management & Accountability 3.1: Corporate Governance

3.2: External Scrutiny

3.3: Financial Management

3.4: People Management

3.5: Staffing Information

3.6: Work Health and Safety

3.7: Addressing Disability and Recognising Carers

3.8: Ecologically Sustainable Development and Environmental Performance

3.9: Advertising and Market Research

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.1

226 DEPARTMENT OF HEALTH Annual Report 2015-2016

3.1 Corporate Governance

Five senior governance committees supported the Department to achieve Our Purpose and Strategic Priorities

We continue to encourage staff to positively engage with risk and to make decisions using a risk-based approach

The senior governance committees provide advice and recommendations to the Executive to support organisational performance.

The Department’s governance committee structure is:

Figure 3.1.1: Governance committee structure

Executive Committee

Secretary

Strategic Policy Committee

Finance and Resources Committee

People, Values and Capability Committee

Audit and Risk Committee

3.1 3.1 CORPORATE GOVERNANCE

227 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Executive Committee The Executive Committee provides strategic, whole-of-organisation advice to the Secretary and the Department’s leaders to ensure effective decision-making, management and oversight of the Department’s operations and performance. It is the key forum to guide cross-portfolio issues in the Department.

The Executive Committee met 11 times in 2015-16 and comprises the Secretary, Deputy Secretaries, the Chief Medical Officer, General Counsel and the First Assistant Secretaries of the Portfolio Investment Division and the People, Capability and Communication Division. Biographies for the Senior Executive members of the Committee are located within Part 1.1: Executive.

The Department will be supported to deliver on its core business through a contemporary governance model and continued investment in corporate services that are client focussed, professional and cost effective.

Strategic Policy Committee The Strategic Policy Committee is co-chaired by two Deputy Secretaries with members chosen from the Senior Executive Service (SES). It makes recommendations to the Secretary and Executive Committee on shaping and supporting the strategic policy directions of the organisation, consistent with the Department’s Strategic Intent 2015-19.

The Committee met ten times in 2015-16. Its scope includes:

• improving organisational policy capabilities required to deliver against current and future requirements;

• providing strategic oversight and advice on the development and implementation of innovative major health policy and reform;

• enabling cross-departmental dialogue on consideration of key policy issues and projects;

• overseeing the Portfolio’s Budget strategy; and

• promoting external collaboration and coordination between the Department, other agencies and stakeholders.

Finance and Resources Committee The Finance and Resources Committee is chaired by a Deputy Secretary with members chosen from the SES. It makes recommendations to the Secretary and the Executive Committee on strategic financial and security (IT, physical and information) management policy initiatives and issues, and advises on the allocation of resources including budget adjustments.

The Committee met 11 times in 2015-16. Its scope includes:

• overseeing the development of strategies to improve the Department’s financial management framework and financial performance;

• monitoring the Department’s annual departmental capital and operating budget process and ensuring its alignment to the Department’s corporate plan and priorities;

• providing advice to the Executive Committee on forecast revenue and expenditure, budget adjustments and reallocation of resources that meet the Department’s budget appropriations;

• overseeing the planning of multi-year operating budgets consistent with the Department’s corporate plan and priorities; and

• overseeing the development and implementation of the Department’s ICT projects (including change releases) and other strategically significant projects.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.1

228 DEPARTMENT OF HEALTH Annual Report 2015-2016

People, Values and Capability Committee The People, Values and Capability Committee is chaired by a Deputy Secretary with members chosen from the SES, and a representative of the Australian Public Service Commission (APSC). It makes recommendations to the Secretary and the Executive Committee on strategies to:

• embed the Department’s values;

• ensure the Department has the people and capability it needs;

• ensure the Department’s workforce is sustainable to maintain and increase productivity and efficiency; and

• support staff health and wellbeing.

The Committee met 11 times in 2015-16, and considered the practices and policies of the Department which affect staff health and wellbeing, values and/or ethical standards, to ensure that they:

• contribute to an ethical culture;

• are consistent with the Australian Public Service Values and Code of Conduct;

• are consistent with Australian Government objectives and the Department’s Corporate Plan; and

• comply with the APSC Model of Capability and advance the overall capability of the organisation.

Audit and Risk Committee The Audit and Risk Committee comprises five members; three of whom are independent external members, including the Chair, and two SES members. It provides independent advice and assurance to the Secretary on the appropriateness of the Department’s accountability and control framework, including independently verifying and safeguarding the integrity of financial and performance reporting.

The Committee met seven times in 2015-16.

The Secretary authorises the Committee, within its responsibilities, to:

• obtain any information it requires from any employee and/or external party (subject to any legal obligation to protect information);

• discuss any matters with the external auditor, or other external parties (subject to confidentiality considerations);

• request the attendance of any employee, including the Secretary, at Committee meetings; and

• obtain external legal or other professional advice, as considered necessary to meet its responsibilities, with the approval of the Secretary.

3.1 3.1 CORPORATE GOVERNANCE

229 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Audit and Risk Committee Membership As at 30 June 2016, membership of the Audit Committee comprised:

• Ms Kathleen Conlon, independent external Chair;

• Ms Jenny Morison, independent external member;

• Mr Steve Peddle, independent external member;

• Ms Penny Shakespeare, First Assistant Secretary, Pharmaceutical Benefits Division; and

• Adjunct Professor John Skerritt, Deputy Secretary, Health Products Regulation Group.

Kathleen Conlon - Independent External Chair Kathleen Conlon commenced as the Chair of the Department’s Audit and Risk Committee on 3 June 2015. Kathleen is a professional non-executive director, with 20 years’ experience at the Boston Consulting Group (BCG), including seven years as a partner. During her time at BCG, Kathleen led BCG’s Asia Pacific operational effectiveness practice area, health care practice area, and the Sydney office.

Kathleen is a member of Chief Executive Women, and a non-executive Director of the REA Group Limited, Lynas Corporation Limited, Aristocrat Leisure Limited and The Benevolent Society. As a member of these boards, Kathleen currently chairs and serves on a number of committees. She has also previously served on the NSW Better Services and Value Taskforce, and was a senior reviewer for the Department of Communication’s Capability Review.

Jenny Morison - Independent External Member Jenny Morison is a Fellow Chartered Accountant of Australia and New Zealand, with 34 years of broad experience in accounting and commerce, including audit, taxation, management consulting, corporate advisory and consulting to Government. Jenny has held numerous board positions, and is one of the longest standing independent member and chair of Audit Committees in the Australian Government. Her experience encompasses both large Departments and smaller entities.

Since 1996, Jenny has run her own business, providing strategic financial management, governance and risk advice within the Government sector. Jenny has a Bachelor of Economics and is a Fellow of the Australian Institute of Management.

Steve Peddle - Independent External Member Steve Peddle has more than 20 years senior management experience as a Chief Information Officer (CIO), Chief Technology Officer and General Manager, covering information and communication technology service delivery and senior general management.

Steve has gained experience in private, Government and Defence industries in the areas of computer design and engineering, applications development, strategic planning, outsourcing contract management, housing management services, digital broadcast video services, network security and operations service delivery. Steve is currently the CIO for the Australian Maritime Safety Authority.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.1

230 DEPARTMENT OF HEALTH Annual Report 2015-2016

Penny Shakespeare - Internal Member Penny Shakespeare is the First Assistant Secretary of the Department’s Pharmaceutical Benefits Division, which works to provide all Australians with access to high quality, affordable and cost-effective medicines and pharmaceutical services. She has worked in the Department since 2006, previously in health workforce, Medicare benefits and private health insurance areas.

Prior to joining the Department, Penny worked as an industrial relations lawyer in the Department of Employment and Workplace Relations, and in regulatory policy roles, including as head of the ACT Office of Industrial Relations.

Penny has a Bachelor of Laws degree and a Masters in International Law, and is admitted as a Barrister and Solicitor of the ACT Supreme Court.

Adjunct Professor John Skerritt - Internal Member Adjunct Professor John Skerritt is the Deputy Secretary with responsibility for the Department’s Health Products Regulation Group. Refer Part 1.1: Executive for Adjunct Professor Skerritt’s full profile.

Accountability and risk management

Corporate Plan The Corporate Plan is the primary planning document of the Department.

The Department’s Corporate Plan 2015-16 released in August 2015, was the first Corporate Plan prepared in accordance with the requirements of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and will be replaced by the Corporate Plan 2016-17.

The four-year horizon for the Corporate Plan allows the Department to outline our medium-term direction to deliver on the Government’s health agenda, including detail about significant activities, capability and risks. While the Corporate Plan spans four reporting periods, it will be reviewed and updated annually.

Figure 3.1.2 outlines the Department’s business planning and performance reporting framework.

3.1 3.1 CORPORATE GOVERNANCE

231 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Figure 3.1.2: Business planning and performance reporting framework

• Government Priorities - Portfolio Budget Statements (PB Statements)

• Strategic Intent - Defines Our Vision, Our Purpose and Strategic Priorities

• Corporate Plan - Builds on the Strategic Intent and outlines how we will achieve our purpose, strategic priorities, build organisational capability, manage risk and performance

• Business Planning - Group, Division and Branch business plans, risk management and workforce planning

• Individual Development Plans - Identifies immediate development needs against the capabilities of the role

• Performance Measures - Outlined in PB Statements & Corporate Plan

• Performance Framework - Informed by our People Strategy, Our Behaviours in Action, APS Values and Code of Conduct

• Performance Development Scheme - Setting performance expectations and development opportunities for individuals

• Annual Report - Informs the performance of entities in relation to activities undertaken

• Annual Performance Statements - Reporting against non-financial performance criteria included in PB Statements and Corporate Plans

Plan

Perform

Report

Risk management The Department encourages staff to positively engage with risk and to make decisions using a risk-based approach.

During 2015-16, the Department identified 11 Enterprise Level Risks, developed an Enterprise Risk Appetite Statement, and updated the Risk Management Framework and Risk Management Policy to support our changing environment. In 2016-17, the Department will embed the suite of updated risk management documentation into the primary business planning process (Refer Figure 3.1.2).

The improved Risk Management Framework will assist the Department to make well-informed risk-based decisions on all aspects of business, including budget and resourcing allocations. A key focus will be the integration of risk management with our planning processes by identifying the key risks associated with our strategic objectives.

The Department has ensured that all risk documents comply with the PGPA Act, and the international standard AS/NZS ISO 3100:2009 Risk Management - Principles and Guidelines, and aligns with the Commonwealth Risk Management Policy.

In 2016, the Department saw an improvement against the Comcover Risk Management Benchmarking Survey. The Department moved to an ‘Integrated’ level of maturity, with greatest improvements related to the positive risk culture plus reviewing and continually improving the management of risk.

The decisions we make will be underpinned by a greater understanding of our risk appetite and organisational risk management approach to support innovative approaches to addressing complex issues within the health system.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.1

232 DEPARTMENT OF HEALTH Annual Report 2015-2016

Compliance reporting There have been no significant breaches of finance law by the Department during 2015-16. The Department maintains a risk-based approach to compliance with a combination of self-reporting and focussed review. Any changes to this methodology are reviewed and endorsed by the Audit and Risk Committee. All instances of non-compliance are reported to the Audit and Risk Committee.

The Department minimises non-compliance through training and publication of legislation and rules, delegation schedules and Accountable Authority Instructions, which are available to staff to inform decision-making.

Internal audit arrangements

Audit and fraud control During 2015-16, the Department strengthened its corporate governance arrangements by implementing a new structure for the provision of assurance services while maintaining audit and fraud control programs of work. With oversight by the Audit and Risk Committee, and working closely with the Australian National Audit Office, the Department:

• completed seven audits. The audits covered and supported compliance with the Department’s control frameworks for budgeting, entitlements and payments, personnel security, grants and contract management, and program performance measurement and evaluation activities; and

• received 64 fraud allegations. The Department investigated seven of these allegations, while a further 11 were referred to the Australian Federal Police or other agencies for investigation. No matters were referred for prosecution during 2015-16.

Fraud minimisation strategies During 2015-16, the Department continued to deliver the whole-of-government fraud awareness eLearning package and deliver fraud awareness presentations to staff. The program of presentations was delivered across a range of health functions.

The enterprise level fraud risk assessment was updated to reflect structure and function changes in the Department, and inform updates to the Fraud and Corruption Plan. Additionally, the Department implemented new internal and external accesses for integrity, public interest disclosure and fraud concerns.

3.1 3.1 CORPORATE GOVERNANCE

233 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Certification of departmental fraud control arrangements I, Martin Bowles, certify that:

• the Department has prepared fraud risk assessments and fraud control plans;

• the Department has in place appropriate fraud prevention, detection, investigation, and reporting mechanisms that meet the specific needs of the Department; and

• I have taken all reasonable measures to appropriately deal with fraud relating to the Department.

Martin Bowles PSM Secretary September 2016

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.2

234 DEPARTMENT OF HEALTH Annual Report 2015-2016

3.2 External Scrutiny

The Department continues to build organisational capability to achieve Our Purpose and Strategic Priorities

The Department continues to develop and implement supporting systems to enable coordinated engagement with all stakeholders to meet our legislative requirements

External scrutiny of the Department provides independent assurance that the Department’s systems, processes and controls are effective.

This section provides information on the most significant developments in external scrutiny of the Department during 2015-16.

Australian National Audit Office audits The Department works closely with the Australian National Audit Office (ANAO) to provide responses to proposed audit findings and recommendations prior to the Auditor-General presenting his reports to Parliament.

During 2015-16, the ANAO tabled four audits that involved the Department:

• Administration of the Radiation Oncology Health Program Grants Scheme;80

• Administration of the Child Dental Benefits Schedule; 81

• Records Management in Health;82 and

• Implementing the Deregulation Agenda: Cutting Red Tape.83

The other entities involved in the Cutting Red Tape audit with the Department were the Department of the Prime Minister and Cabinet, the Department of Communication and the Arts, and the Department of Industry, Innovation and Science.

The Department agreed to all audit recommendations with relevant implementation activities either underway or completed.

80 Available at: www.anao.gov.au/work/performance-audit/administration-radiation-oncology-health-program-grants-scheme 81 Available at: www.anao.gov.au/work/performance-audit/administration-child-dental-benefits-schedule 82

Available at: www.anao.gov.au/work/performance-audit/records-management-health 83 Available at: www.anao.gov.au/work/performance-audit/implementing-deregulation-agenda-cutting-red-tape

3.2 3.2 EXTERNAL SCRUTINY

235 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Audits specific to the Department

Audit: Administration of the Radiation Oncology Health Program Grants Scheme Audit Report No.35 of 2015-16, tabled 5 May 2016

Objective: The audit assessed the effectiveness of the Department of Health’ s and the Department of Human Services’ administration of the Radiation Oncology Health Program Grants Scheme.

Recommendations: The ANAO made two recommendations:

• periodically review and document reimbursement rates and the underlying variables, publish the areas of need analysis to inform stakeholder investment decisions and clarify guidance for Scheme applicants; and

• as part of a planned review of the Scheme, review the underlying program design, including mechanisms to improve pricing transparency.

Audit: Administration of the Child Dental Benefits Schedule Audit Report No.12 of 2015-16, tabled 3 December 2015

Objective: The audit assessed the effectiveness of the Department of Health’ s and the Department of Human Services’ management and administration of the Child Dental Benefits Schedule (CDBS).

Recommendations: The ANAO made four recommendations:

• identify and treat risks to the administration of the CDBS;

• evaluate the approach to program communications, and develop and promulgate a revised communications strategy;

• improve performance measurement and reporting, and provide assurance on the quality of manual data matching processes under the CDBS; and

• assist in assessing the achievement of program objectives.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.2

236 DEPARTMENT OF HEALTH Annual Report 2015-2016

Audit: Records Management in Health

Audit Report No.10 of 2015-16, tabled 1 December 2015

Objective: The audit assessed the effectiveness of the Department’s records management arrangements, including the progress in transitioning to digital records management. To assess the status of the Department’s information and records management framework and governance arrangements, and its progress towards implementing the Australian Government’s Digital Transition Policy, the ANAO examined records management (and relevant information management strategies), policies and guidelines, as well as systems and training materials relating to the creation, maintenance and destruction of records.

Recommendations: The ANAO made four recommendations:

• improve the governance of information and records management;

• place the TRIM Electronic Document and Records Management System remediation project on a sound footing;

• require preparation of guidelines for sentencing digital records upon record creation; and

• strengthen the management and control framework for the finalisation, deletion and destruction of records.

Audit: Implementing the Deregulation Agenda: Cutting Red Tape Audit Report No.29 of 2015-16, tabled 4 May 2016

Objective: The audit assessed the effectiveness of selected Departments’ implementation of deregulation initiatives.

Recommendation: No recommendations were made in relation to the Department.

Joint Committee of Public Accounts and Audit reviews During 2015-16, the Joint Committee of Public Accounts and Audit (JCPAA) tabled one review that relates to the ANAO’s audit of the Administration of the Fifth Community Pharmacy Agreement (5CPA) tabled on 5 March 2015.

Audit: Community Pharmacy Agreements Report 451, tabled 23 November 2015

Terms of reference:

The JCPAA resolved to review the ANAO’s Audit Report No.25 (2014-15) Administration of the 5CPA.

Recommendations: The JCPAA made three recommendations, requesting:

• a progress and final report on the Department’s review of remuneration and regulation of the Sixth Community Pharmacy Agreement (6CPA);

• a report on the Department’s final key performance indicators for the 6CPA; and

• that the ANAO conduct a follow-up audit on the 6CPA.

3.2 3.2 EXTERNAL SCRUTINY

237 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Other parliamentary scrutiny The Department appears before a number of parliamentary committees to answer questions about our administration of the health and ageing system.

During 2015-16, the Department received a total of 120 Parliamentary Questions on Notice from the House of Representatives and the Senate, and 647 Senate Estimates Questions on Notice.

Figure 3.2.1: 2011-12 to 2015-16 Questions on Notice

1,337

901

1,210

946

647

129 117 43 87 120 0

200

400

600

800

1,000

1,200

1,400

1,600

2011-12 2012-13 2013-14 2014-15 2015-16

Parliamentary Questions on Notice Senate Estimates Questions on Notice

Number of Questions on Notice

Attendance at Senate Estimates hearings

Senate Standing Committees on Community Affairs The Department appeared before the Community Affairs Legislation Committee (Senate Estimates) on three occasions during 2015-16 for a total of five days.

• Supplementary Budget Estimates - 21 October 2015.

• Additional Budget Estimates - 10 February, 3 March and 16 March 2016.

• Budget Estimates - 6 May 2016.

Senate Standing Committees on Finance and Public Administration The Department appeared before the Finance and Public Administration Legislation Committee on two occasions for a total of two days.

• Supplementary Budget Estimates - 23 October 2015.

• Additional Budget Estimates - 12 February 2016.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.2

238 DEPARTMENT OF HEALTH Annual Report 2015-2016

Parliamentary Committee inquiries The Department provided evidence and/or submissions to Parliamentary Committee inquiries on the following occasions.

Senate Standing Committee on Community Affairs Legislation Committee

• Social Services Legislation Amendment (No Jab, No Pay) Bill 2015.

• Inquiry into the Health Legislation Amendment (eHealth) Bill 2015.

• Health Insurance Amendment (Safety Net) Bill 2015.

• Inquiry into the Food Standards Australia New Zealand Amendment (Forum of Food Regulation and Other Measures) Bill 2015.

• Australian Radiation Protection and Nuclear Safety Amendment Bill 2015.

• Medical Research Future Fund Bill 2015 and Medical Research Future Fund (Consequential Amendments) Bill 2015.

References Committee

• Inquiry into the growing evidence of an emerging tick-borne disease that causes a Lyme-like illness for many Australian patients.

• Inquiry into medical complaints process in Australia.

• Inquiry into the future of Australia’s aged care sector workforce.

Senate Standing Committee on Economics References Committee

• Inquiry into the third party certification of food.

• Inquiry into personal choice and community impacts.

Senate Standing Committee on Legal and Constitutional Affairs References Committee

• Inquiry into the need for a nationally consistent approach to alcohol-fuelled violence.

Senate Select Committee on Health The Department appeared before the Committee on five separate occasions during 2015-16: 10 July, 26 August, 8 October, 11 December 2015 and 3 February 2016.

Senate Select Committee on Unconventional Gas Mining • Inquiry into the adequacy of Australia’s legislative, regulatory and policy framework for unconventional gas mining including coal seam gas and shale gas mining.

3.2 3.2 EXTERNAL SCRUTINY

239 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Senate Standing Committee on Foreign Affairs, Defence and Trade References Committee

• Inquiry into contamination caused by fire-fighting foams at RAAF Base Williamstown and other sites.

House of Representatives Standing Committee on Health • Inquiry into chronic disease prevention and management in primary health care.

House of Representatives Standing Committee on Social Policy and Legal Affairs • Inquiry into surrogacy.

House of Representatives Standing Committee on Agriculture and Industry • Inquiry into agricultural innovation.

Parliamentary Joint Committee on Law Enforcement • Inquiry into Crystal Methamphetamine.

• Inquiry into illicit tobacco.

Parliamentary Joint Standing Committee on Foreign Affairs, Defence and Trade • Inquiry into the role of development partnership in agriculture and agribusiness in promoting prosperity, reducing poverty and enhancing stability in the Indo-Pacific region.

Judicial Decisions and Decisions of Administrative Appeals Tribunals During 2015-16, the Department was involved in four matters in the High Court, two matters in the Full Federal Court, 11 matters in the Federal Court and 25 matters in the Administrative Appeals Tribunal. Two important decisions that affected the Department during 2015-16 are summarised below.

Judicial Decision

Commonwealth v Sanofi and Wyeth [2015] FCAFC 172 The Commonwealth is seeking compensation from two pharmaceutical companies arising from increased subsidies paid under the Pharmaceutical Benefits Scheme (PBS), when court injunctions stopped certain generic drugs being listed on the PBS during patent proceedings. The companies had given undertakings to the court to pay damages to anyone affected by the injunctions if the patents were found to be invalid, which they ultimately were. However, the companies argued the Commonwealth could not claim under the undertakings because of provisions in the Therapeutic Goods Act 1989. The Full Federal Court disagreed and leave to appeal to the High Court was refused, removing a potential barrier to the Commonwealth’s cases.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.2

240 DEPARTMENT OF HEALTH Annual Report 2015-2016

International Body Decision

PCA Case No. 2012-12 Philip Morris Asia Limited (Hong Kong) v The Commonwealth of Australia In 2011, Philip Morris Asia (PM Asia) initiated arbitration against Australia under the Australia-Hong Kong Bilateral Investment Treaty (BIT) challenging Australia’s tobacco plain packaging measures. PM Asia claimed that Australia’s measures amounted to a deliberate destruction of its highly valuable portfolio of brands by arbitrary government action, which would permanently damage its investment in Australia. The Tribunal arbitrating the proceedings bifurcated (split) the proceedings into a preliminary jurisdictional phase and subsequent merits phase.

On 18 December 2015, the Tribunal arbitrating the proceedings handed down its decision, unanimously finding that it lacked jurisdiction to hear PM Asia’s claim. On 17 May 2016, the Tribunal published its reasons for the decision, finding that PM Asia’s claim was an abuse of process because PM Asia acquired an Australian subsidiary, Philip Morris (Australia) Limited, for the purpose of initiating arbitration under the BIT. Because Australia was successful in arguing that PM Asia’s claims were outside the jurisdiction of the Tribunal, the Tribunal did not consider the merits of PM Asia’s claims.

Freedom of Information The Information Publication Scheme requires all entities subject to the Freedom of Information Act 1982 (FOI Act), under Part II, to publish information about what is available to the public. The Department’s plan showing the information published in accordance with this Act can be found at: www.health.gov.au/ internet/main/publishing.nsf/Content/foi-doh-pub-scheme-agency-plan

In 2015-16, the Department received 272 FOI requests.

Documents that the Department has released in response to FOI requests during 2015-16 can be found on the Disclosure Log at: www.health.gov.au/internet/main/publishing.nsf/Content/foi-disc-log-2015-16

Decisions of the Australian Information Commissioner All requests finalised in 2015-16 by the Australian Information Commissioner (AIC) for reviews of departmental decisions were concluded by either the AIC exercising discretion under s54W of the FOI Act to cease the review, or the applicant withdrawing their application.

3.2 3.2 EXTERNAL SCRUTINY

241 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Reports on the operations of the Department by the Commonwealth Ombudsman The Department continues to liaise with the Commonwealth Ombudsman on complaints relating to aspects of the Department’s administrative activities.

Anyone with concerns about the Department’s actions or decision-making is entitled to make a complaint with the Commonwealth Ombudsman to determine whether the Department was wrong, unjust, discriminatory or unfair. Further information on the role of the Commonwealth Ombudsman is available at: www.ombudsman.gov.au

During 2015-16, the Commonwealth Ombudsman investigated ten complaints against the Department’s administrative practices. Three of the ten complaints investigations were concluded as at 30 June 2016. None of the concluded complaints investigations resulted in a finding of administration deficiency. No investigations were carried over from 2014-15.

The Commonwealth Ombudsman’s Office did not release any reports regarding the Department during 2015-16.

Reporting Requirements under section 108 of the Tobacco Plain Packaging Act 2011 The Department pursuant to section 108 of the Tobacco Plain Packaging Act 2011 (the Act) reports that 210 potential contraventions of the Act were investigated in 2015-16. The majority of these matters were continuing investigations from the previous year. In 2015-16, one infringement notice and 60 warning letters were issued. The failure of one supplier to take appropriate action following the receipt of a warning letter resulted in the infringement notice being issued.

A copy of this report has been provided to the Minister for Health.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.3

242 DEPARTMENT OF HEALTH Annual Report 2015-2016

27 new contracts with Indigenous enterprises compared to ten in 2014-15

510 contracts with Small Business Enterprises compared to 430 contracts in 2014-15 and 459 contracts in 2013-14

Financial accountability responsibilities The Department’s financial accountability responsibilities are set out in the Public Governance, Performance and Accountability Act 2013 (PGPA Act). These responsibilities form the basis of transparent processes for efficient, effective, economical and ethical use of Commonwealth resources and related policies. The Department’s activities during 2015-16 aligned with the financial framework and ensured the efficient processing and recording of financial transactions, including the production of audited financial statements.

The reporting and analysis of financial information for each outcome supports the enhanced Commonwealth performance framework under the PGPA Act. The complete set of financial statements for the Department is provided in Part 4: Financial Statements. Refer Chief Operating Officer’s Report for an overview of the Department’s financial results for 2015-16.

The Department’s Finance and Resources Committee provides advice and makes recommendations to the Executive Committee on financial management, and oversees the development and implementation of the Department’s ICT projects and other strategically significant projects. Further detail on the Department’s governance committees is provided in Part 3.1: Corporate Governance.

This section provides information on how the Department managed its financial management obligations during 2015-16.

3.3 Financial Management

3.3 3.3 FINANCIAL MANAGEMENT

243 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Asset management The Department holds financial and non-financial assets. Financial assets include cash and receivables, which are subject to strong controls and reconciliations. The non-financial asset base consists primarily of computing software and hardware, building fit-out, and furniture and fittings. The non-financial asset portfolio is small in comparison with the Department’s operating budget.

The Department’s asset management strategy encompasses whole-of-life asset management including planning, capital budgeting, acquisition, accounting, management and disposal. Decisions about asset management are undertaken in the context of broader departmental strategic planning to ensure investment in assets supports the achievement of the Department’s outcomes.

Discussion relating to the assets administered by the Department in 2015-16 can be found in Part 4: Financial Statements.

To support effective management of the Department’s assets, several key processes are in operation:

• funding for significant new assets including property fit-out and computing applications is considered by the Department’s Finance and Resources Committee;

• stocktakes of physical assets are undertaken regularly; and

• a review of the useful lives and ongoing operation of assets is undertaken annually.

Consultants The Department engages consultants when specialist expertise or independent research, review or assessment are required. Consultants are typically engaged to:

• investigate or diagnose a defined issue or problem;

• carry out defined reviews or evaluations; or

• provide independent advice, information or creative solutions to assist in the Department’s decision-making.

Prior to engaging consultants, the Department takes into account the skills and resources required for the task, the skills available internally and the cost-effectiveness of engaging external expertise.

Decisions to engage consultants are made in accordance with the PGPA Act and related regulations including the Commonwealth Procurement Rules and other internal policies.

During 2015-16, 421 new consultancy contracts were entered into involving total actual expenditure of $22.6 million. In addition, 327 ongoing consultancy contracts were active during 2015-16 involving total actual expenditure of $23.8 million.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.3

244 DEPARTMENT OF HEALTH Annual Report 2015-2016

Figure 3.3.1: Comparison of consultancy expenditure between 2011-12 and 2015-16

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

2011-12 2012-13 2013-14 2014-15 2015-16

$39.3

$44.4

$38.0 $39.6

$46.4

Consultancy expenditure ($ million)

The increase in consultancy expenditure in 2015-16 can be attributed to the following functions being transferred to the Department from 5 November 2015 as a result of Machinery of Government changes:

• Ageing and Aged Care from the Department of Social Services; and

• Medicare Provider Compliance for the Medicare Benefits Schedule and Pharmaceutical Benefits Scheme, and allied health services from the Department of Human Services.

Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies is available on the AusTender website at www.tenders.gov.au

Grants Information on grants awarded by the Department during the period 1 July 2015 to 30 June 2016 is available at: www.health.gov.au/internet/main/publishing.nsf/Content/pfps-grantsreporting

Procurement

Purchasing The Department’s approach to procurement is drawn from the core principles of the Commonwealth’s financial framework, which encourages competition, value for money , transparency and accountability as well as the efficient, effective, ethical and economical use of Commonwealth resources. The Department complied with the purchasing policies in the Commonwealth Procurement Rules, with the exception of those instances reported in the Department’s 2015-16 Compliance Report, such as non-compliance with AusTender reporting requirements and the correct procurement method.

The Department is currently revising its processes to ensure improved compliance with the Commonwealth Procurement Rules. This includes updating training material to ensure it meets departmental objectives.

3.3 3.3 FINANCIAL MANAGEMENT

245 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Australian National Audit Office access clauses In 2015-16, no contracts were exempt from the standard clauses granting the Auditor-General access to contractor premises.

Exempt contracts In 2015-16, 207 contracts were exempt from reporting on AusTender on the basis that publishing contract details would disclose exempt matters under the Freedom of Information Act 1982. The increase of 200 contracts compared to 2014-15 figures is due to the inclusion of contracts entered into by the Therapeutic Goods Administration, which had previously been excluded.

Procurement initiatives to support small business The Department supports small business participation in the Commonwealth Government procurement market. Small and Medium Enterprises (SME) and Small Enterprise participation statistics are available on the Department of Finance’s website: www.finance.gov.au/procurement/statistics-on-commonwealth-purchasing-contracts/

The Department’s measures to support SMEs include:

• implementation of the Indigenous Procurement Policy (IPP), which supports supplier diversity to create opportunities for Indigenous businesses to grow and employ more people, noting that the Indigenous business sector is dominated by SMEs;

• Small Business Engagement Principles clearly communicated in simple language and in an accessible format as outlined in the Government’s Industry Innovation & Competitiveness Agenda;

• use of the Commonwealth Contracting Suite (CCS) implemented by the Department of Finance, which is designed to minimise the burden on businesses contracting with the Commonwealth Government; and

• internal guidance and advice providing end users with information relating to the IPP, Small Business Engagement Principles and the CCS.

The Department recognises the importance of ensuring that small businesses are paid on time. The results of the Survey of Australian Government Payments to Small Business are available on the Department of the Treasury’s website: www.treasury.gov.au

Indigenous procurement policy The Department also continues to be a Supply Nation member, supporting Supply Nation-listed Indigenous enterprises to achieve success and build vital businesses. The Department has entered into new contracts with Indigenous enterprises and receives Supply Nation self-reports regarding purchases and contracts with their listed suppliers. In 2015-16, the Department entered into 27 new contracts with Indigenous enterprises at a total value of $3.5 million compared to ten contracts valued at $630,000 entered into during 2014-15. For further information on Indigenous enterprises refer to: www.dpmc.gov.au/indigenous-affairs/economic-development/indigenous-procurement-policy-ipp

The Department is currently undertaking a series of workshops to develop an IPP Strategy to meet and exceed our targets, and it will be finalised following the endorsement of the Department’s Reconciliation Action Plan. Refer Part 3.4 People Management for details of the Reconciliation Plan.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.4

246 DEPARTMENT OF HEALTH Annual Report 2015-2016

21 Indigenous trainees - an increase of 19 trainees in the Indigenous Entry Level Program from 2014-15

Additional 698 training places, representing an increase of 29% from 2014-15

Developed the People Strategy 2016-20 with an emphasis on better quality workforce data as an integral part of workforce planning

People Strategy The Department has developed a new People Strategy 2016-20 (Strategy) to replace the People Strategy 2010-15. In developing the Strategy, the Department considered both recent organisational reviews and conducted extensive staff consultation.

We will foster leadership through all levels and invest in a capable, agile and productive workforce, supported through the Department’s People Strategy 2016-20.

3.4 People Management

3.4 3.4 PEOPLE MANAGEMENT

247 Annual Report 2015-2016 DEPARTMENT OF HEALTH

The new Strategy, endorsed by the Executive Committee on 29 June 2016, has four areas of focus:

• Managing workforce composition and agility - Evidence-based planning decisions will ensure our workforce meets the needs of the Department, remaining flexible and adaptable, by attracting and retaining the right people.

• Building the right capability - People are supported to drive their own capability development through role clarity, effective performance feedback, and flexibility in making arrangements.

• Continuing to improve our leadership and culture - We promote a culture where everyone understands how their work contributes to the strategic direction; where high performance is enabled, risk is engaged with, and diversity and innovation are respected and celebrated.

• Investing in career and succession - We actively plan for the succession of critical roles, promoting career development through innovative pathways, collaboration and sharing of professional expertise.

Managing performance The Department is committed to a culture of high performance and all staff engage in a formal Performance Development Scheme (PDS) process twice a year to discuss their achievements, work responsibility and development.

The Department is improving the process and systems that support staff to achieve the Department’s, and their own, performance goals. Improvements during 2015-16 include:

• enhancement of supporting IT systems;

• development of performance conversation tools and training; and

• implementation of targeted managing team performance training for supervisors.

The Department will continue to monitor and evaluate the impact of these initiatives, with new initiatives developed as the need is identified.

Creating a culture of high performance and an environment that provides both job satisfaction and opportunities for career growth are a continuing focus for the Department. Investing in high performance is central to the Department’s Our Behaviours in Action principles, with nurturing talent and building capability fundamental to this investment.

The five key leadership behaviours are:

• collaborate to innovate;

• invest in high performance;

• trust and empower;

• listen and appreciate; and

• walk the talk.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.4

248 DEPARTMENT OF HEALTH Annual Report 2015-2016

Workforce inclusivity The Department is committed to building an inclusive culture and to acknowledging and celebrating the diversity and differences of all staff. We appreciate how these differences contribute to our capacity to deliver health outcomes.

In 2015-16, the Department continued to undertake a number of projects to promote an inclusive workplace, including:

• Aboriginal and Torres Strait Islander workforce initiatives;

• the development of a Lesbian, Gay, Bisexual, Transgender and Intersex (LGBTI) Workforce Action Plan; and

• a rewrite of the Accessibility Action Plan.84

The Department undertook a comprehensive consultation approach to ensure these plans are reflective of staff views.

The Department also held three Multicultural Forums in July 2015, December 2015 and June 2016. These forums are an opportunity for staff to have a say on issues such as retention of multicultural staff, and to hear from senior staff in the Department who are from non-English speaking backgrounds. Staff who attended the forums noted their interest in:

• exploring mentoring;

• aged care in culturally and linguistically diverse communities; and

• intranet resources for managers and staff from multicultural backgrounds.

In May 2016, the Australian Public Service Commission (APSC) launched the APS Gender Equality Strategy: Balancing the Future (APS Strategy). The Department will continue to work with the APSC to align our work practices with the recommendations from the APS Strategy.

Reconciliation Action Plan The Department is redeveloping its Reconciliation Action Plan to focus more on individual connection to reconciliation within the Department. We are also developing the following corporate strategies designed to improve the workplace experience for Aboriginal and Torres Strait Islander employees:

• Aboriginal and Torres Strait Islander Employment and Retention Strategy;

• Aboriginal and Torres Strait Islander Cultural Capability Strategy; and

• Aboriginal and Torres Strait Islander Procurement Strategy.

Our efforts will only see us gain ground if we at Health genuinely exercise a commitment to the principles of reconciliation, in our work and in our organisation. Reconciliation is a shared journey and we are committed to walk alongside each other embracing our diversity and together achieving our goal for a more inclusive Australia.

To increase engagement at all levels with Health’s reconciliation journey, the Department held the inaugural Senior Executive Service (SES) Roundtable on Reconciliation and Respect, where the SES workshopped the Department’s Statement of Commitment and Vision for Reconciliation that will be published in 2016-17. A key highlight of the SES Roundtable was to hear from Aboriginal and Torres Strait Islander staff about their experiences and the barriers they have faced in their working lives.

84 Previously known as the Disability Workforce Action Plan. For further information on the Accessibility Action Plan, refer Part 3.7: Addressing Disability and Carer Recognition.

3.4 3.4 PEOPLE MANAGEMENT

249 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Supporting staff from Aboriginal and Torres Strait Islander backgrounds During 2015-16, the Department increased its Indigenous Entry Level Program (IELP) participation across the APS and recruited 21 Indigenous trainees through the Department of Human Services Indigenous Apprenticeship Programme, the Shared Services Centre Indigenous Australian Government Programme and the APSC Indigenous Pathways Program.

During 2015-16, the Department also increased support to IELP participants including the delivery of Indigenous leadership and mentoring training, and the launch of BlakChat.

The Department is committed to building a culturally safe workplace and increasing our cultural capability. As part of this commitment, the Australian Indigenous Leadership Centre’s BlakChat Cultural Advice Line, and face-to-face visits, have been made available for all departmental staff.

BlakChat aims to deliver practical culturally appropriate solutions to build employer cultural capability to engage effectively with Aboriginal and Torres Strait Islander staff members and communities.

The service is a new initiative and over time will provide practical solutions to building retention initiatives and improving the Department’s appreciation and understanding of Aboriginal and Torres Strait Islander cultures.

Email: BlakChat@ailc.org.au Freecall: 1800927643 or 1800YARN43

The Department has an active National Aboriginal and Torres Strait Islander Staff Network, and associate memberships are available for non-Indigenous staff in the Friends of the Network. Associate members support the Network in delivering major cultural events including National Reconciliation Week and National Aborigines and Islanders Day Observance Committee (NAIDOC) Week events and promote reconciliation in the Department. The Network also has the support of three Senior Executive Champions, who actively advocate on behalf of Aboriginal and Torres Strait Islander staff, chair key governance committees, attend and support cultural activities and celebrations, as well as representing the Department in external forums.

Senior Executive Champion, Wendy Southern’s pledge:

I pledge that as the Department’s Aboriginal and/or Torres Strait Islander Champion, as a Deputy Secretary responsible for the Indigenous Health Division and as a member of the Executive, to work with others right across the Department and in other entities to ensure that when we develop and implement health priorities in Australia we recognise and act upon the health needs of Aboriginal and/or Torres Strait Islander peoples, so that we can Close the Gap.

During the year, the Department recognised days of significance for Aboriginal and Torres Strait Islander peoples, including National Apology Day, National Reconciliation Week and NAIDOC Week. Highlights of the Department’s NAIDOC Week celebrations included:

• the annual Secretary’s NAIDOC Week Awards;

• a cultural activity where staff learnt about traditional art symbols and their meanings;

• the annual NAIDOC Cook-up Competition;

• film screenings; and

• poetry workshops.

Staff participation and engagement in activities in 2015-16 has raised awareness and appreciation of Aboriginal and Torres Strait Islander cultures.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.4

250 DEPARTMENT OF HEALTH Annual Report 2015-2016

Supporting lesbian, gay, bisexual, transgender and intersex (LGBTI) staff Two Senior Executive Pride Champions, who actively participate in and raise awareness of Health Pride events, support the Department’s Health Pride Network for LGBTI staff and their allies.

On 28 August 2015, we celebrated Wear It Purple Day, which aims to raise awareness of the challenges faced by LGBTI youth and the need to eradicate bullying based on sexuality and gender diversity. Staff were invited to a forum with guest speakers from headspace, Safe Schools Coalition ACT, ACT Sexual Health and Family Planning.

On 20 November 2015, we acknowledged International Transgender Awareness Week, which celebrates diversity and aims to educate and broaden the understanding of gender non-conforming people and the issues they face.

On 17 May 2016, we celebrated the International Day Against Homophobia, Biphobia and Transphobia. To recognise this year’s theme of ‘mental health and wellbeing’ we welcomed staff to hear from speakers from TranzAustralia and the AIDS Action Council who discussed mental health in the LGBTI community.

The Department is an ongoing member of Pride in Diversity, a member based organisation that supports the Department to meet its responsibilities to staff, by assisting them to conduct training and awareness sessions for all staff. The Department will work closely with Pride in Diversity to conceptualise its LGBTI workforce action plan, which will formalise the ways in which the Department supports its LGBTI staff and makes the workplace inclusive and equitable. In addition to consulting with Pride in Diversity, the Department will seek input from all staff through focus groups and network participation.

Championing diversity The Department is committed to reflecting the diversity of the Australian community in its workforce to build an inclusive culture. The Department acknowledges the differences in every employee and acknowledges that diversity in our backgrounds, skills, talents and views enrich our working environment and quality of work.

Champions have a range of roles including the promotion of diversity in the workplace, raising awareness and understanding, and educating colleagues within their areas and across the Department. They are available to meet with staff networks and individuals to support their work, and advocate where required in relation to diversity issues.

Champions also ensure there is a strong awareness and consideration of diversity and inclusion across the Senior Executive to ensure its importance, impact and value is recognised across the Department.

As part of this commitment, a number of SES officers have volunteered to undertake the role of Diversity Champions and Champions of our staff networks including the Staff with Disability Network, the Health Pride Network and the National Aboriginal and Torres Strait Islander Staff Network.

3.4 3.4 PEOPLE MANAGEMENT

251 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Recognising staff The Department recognises and rewards individual, team or entity performance and achievements that contribute to a productive workplace. The benefits include:

• greater job satisfaction;

• increased staff motivation;

• increased creativity and productivity; and

• improved attraction and retention rates.

The Department actively participates in the Australia Day Achievement Awards, offered by the National Australia Day Council. The awards aim to promote a sense of national pride, and a commitment to our country and its future among all Australians. In 2016, eight individual and 13 team awards were presented across the Department.

2016 Australia Day Award winner: relationships Kassmena Birch, Acting Assistant Manager

Kassmena Birch was awarded the 2016 Australia Day Award in the relationships category after representing the Department at a Prime Ministerial visit to the Torres Strait and Northern Peninsula Region in 2015.

Over the three-week trip, Kassmena demonstrated her resilience, responsiveness and ability to work collaboratively in a team under high pressure. Organising and managing over 15 stakeholder meetings across various remote locations, her excellent work was acknowledged by our Ministers, our Secretary - Martin Bowles (pictured), and the Department of the Prime Minister and Cabinet senior officials.

Employment arrangements in the Department The Department’s practices for making employment arrangements with its staff are consistent with the requirements of the Workplace Bargaining Policy 2015 (the ‘Bargaining Policy’) and the Fair Work Act 2009. The types and main features of employment arrangements either in operation or available to departmental staff during 2015-16 are outlined below.

Enterprise Agreement The terms and conditions of employment for non-SES staff are provided through the Department’s Enterprise Agreement 2016-2019, which began on 3 February 2016 and will nominally expire on 26 January 2019.

The Agreement contains an individual flexibility arrangement term, which enables the Department to vary the operation of specified terms and conditions provided under the Agreement for individual non-SES staff where necessary and appropriate. Refer Part 3.5: Staffing Information for details of the non-salary benefits and individual agreements provided to non-SES staff.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.4

252 DEPARTMENT OF HEALTH Annual Report 2015-2016

Individual determinations under the Public Service Act 1999 Comprehensive terms and conditions of employment for new departmental SES staff are provided via individual determinations made under section 24(1) of the Public Service Act 1999. The determinations are made following negotiations between the staff member and the Department. Refer Part 3.5: Staffing Information for more information on individual determinations for SES staff and equivalents.

Australian Workplace Agreements The Department does not have any Australian Workplace Agreements in place.

Common law contracts The Department does not generally use common law contracts. However, they may be used where necessary to establish and/or supplement conditions and entitlements.

Remuneration for senior officials The Department maintained a remuneration position consistent with equivalent public sector entities during 2015-16. Base salaries and inclusions, such as the allowance paid in lieu of a motor vehicle, complied with Government policy and guidelines. Individual salaries are negotiated on commencement and reviewed annually by the Department’s Executive Committee. Total remuneration for SES staff may have included non-monetary inclusions or reimbursements for mobile phones and laptops/tablets. For further details on remuneration for SES staff, refer Part 3.5: Staffing Information .

Performance pay From 1 July 2014, the Department undertook a process to remove access to performance pay for all staff in receipt of the payment (including SES staff) and no longer offers performance pay to new staff. For further details on existing performance payments for non-SES staff, refer Part 3.5: Staffing Information .

Learning and development The Department has developed a new Learning and Development Strategy 2016-2019 (Strategy) that includes three Strategic Priorities:

• Core Skills;

• Professional Capabilities and Corporate Knowledge; and

• Leadership, Culture and Talent.

The aim of the Strategy is to create a diverse learning environment that builds a capable workforce to achieve departmental outcomes. The Strategy also identifies a number of key drivers and learning principles, recognising the different influences, learning methods and future staff challenges the Department faces.

In 2015-16, the Department delivered a number of new learning and development initiatives including a monthly induction package, stakeholder engagement, mentoring and coaching programs. The monthly face-to-face induction presentation started in late February 2016 and has now been delivered to over 200 new starters. The Stakeholder Engagement Program has been delivered in capital city offices, and was attended by over 230 staff.

3.4 3.4 PEOPLE MANAGEMENT

253 Annual Report 2015-2016 DEPARTMENT OF HEALTH

The Department remains committed to the expansion of evidence-based learning and development activities that address areas of business need. In early 2016, a departmental wide Capability Needs Analysis was conducted with the goal of gaining a deeper understanding of the capability gaps and barriers across the Department in order to better address development needs and priorities.

The Department continued to deliver essential corporate training using the APSC fundamental programs. In total, 3,086 training places were filled by staff across the following subject areas:

• 1,016 staff members attended information technology training; and

• 434 staff members attended writing and communications skills training.

Online learning programs were accessed 4,567 times by staff during 2015-16, encompassing subjects such as fraud awareness; APS Values; cultural awareness; work health and safety; financial management; and knowledge management.

The Department continued to build leadership and management capability of staff during 2015-16. The existing Middle Manager Development Programs for APS, EL1 and EL2 staff were redesigned to reflect the development of Our Behaviours in Action. The programs were also offered in the Department’s Sydney and Melbourne offices for the first time to support the development of managers outside of Canberra. The programs continue to be positively evaluated and valued by participants as an important capability development opportunity.

In addition, a number of new leadership development initiatives were piloted including coaching, mentoring and change programs. A training catalogue to build diversity competence and awareness was also developed. These initiatives were positively received and will continue in 2016-17.

The Department also increased its obligation to developing the leadership capability of SES staff. SES staff participated in 360 degree feedback and new SES Development Guidelines were launched. SES staff were also supported by an expanded range of capability development options including learning circles for SES Band 1 and SES Band 2 staff, and short lunchtime sessions on key topics.

Staff Survey The Staff Survey (APS State of the Service Employee Census) continues to provide valuable insight into staff views. Seventy-four per cent of staff participated in the Survey between 9 May and 10 June 2016, compared to 73 per cent in 2015.

The Department’s average staff engagement results (job, team, supervisor and agency) increased in 2016, with a score of 6.8 compared with an APS average of 6.6 out of 10. Overall, staff’s perceptions of senior leadership are significantly above the APS average for quality (12 per cent above), visibility (12 per cent above), communication (13 per cent above) and acting in accordance with the APS Values (8 per cent above) (Refer Figure 3.4.1).

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.4

254 DEPARTMENT OF HEALTH Annual Report 2015-2016

Figure 3.4.1: Visibility of Senior Leaders - percentage comparison between 2013 and 2016

2013 2014 2015 2016

In my agency, the most senior leaders are

sufficiently visible (e.g. can be seen in action)

49% 51% 60% 60%

0%

10%

20%

30%

40%

50%

60%

70%

The Staff Survey results show the Department’s leadership and culture continues to improve, and is well placed to achieve its objectives and meet future challenges.

Figure 3.4.2: Staff feeling valued for their contribution - percentage comparison between 2013 and 2016

2013 2014 2015 2016

In general, employees in my agency feel

they are valued for their contribution

50% 43% 47% 53%

0%

10%

20%

30%

40%

50%

60%

70%

Compared to the 2015 survey results, more staff are satisfied with the recognition they receive for doing a good job (five per cent increase from 2015) and feel valued for their contribution (six per cent increase from 2015) (Refer Figure 3.4.2). More staff also agree that people in the Department are expected to admit to mistakes and learn from them (6 per cent increase from 2015).

3.4 3.4 PEOPLE MANAGEMENT

255 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Figure 3.4.3: Work-life balance - percentage comparison between 2013 and 2016

2013 2014 2015 2016

My workplace culture supports people to

achieve a good work-life balance

55% 60% 65% 70%

0%

10%

20%

30%

40%

50%

60%

70%

Ethical standards During 2015-16, the Department continued its commitment to ensuring the highest ethical standards. This included the provision of a range of behavioural and ethical education and training opportunities aimed at embedding staff knowledge and understanding of their responsibilities, and emphasising the workplace behaviours expected of all staff.

The Department takes all alleged breaches of the APS Code of Conduct seriously and manages these in accordance with best practice. The majority of complaints received were handled through local management action or preliminary investigation. The Department finalised eight Code of Conduct investigations during 2015-16 resulting in seven breaches of the APS Code of Conduct being determined.

Productivity gains In accordance with the Government’s Workplace Bargaining Policy 2015, the salary increases delivered to staff by the Department’s new Enterprise Agreement (EA) are funded by a range of productivity improvements. While the majority of savings are achieved through corporate initiatives, such as property and ICT efficiencies, the EA does deliver productivity improvements through the streamlining of content and removal of restrictive and/or inefficient work practices. This includes changes to the operation of the Department’s peak consultative body, the National Staff Participation Forum, which has resulted in the Department being able to update key employment guidelines and policies in a more efficient manner, while maintaining the key principle of consultation with staff regarding potential changes to their terms and conditions of employment.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.5

256 DEPARTMENT OF HEALTH Annual Report 2015-2016

108 staff identified as Aboriginal and Torres Strait Islander people representing 2.1% of our total workforce

20.5% increase in female Senior Executive Service staff compared to 2014-15

Our workforce The Department values its staff, and continues to prioritise developing and maintaining high performing leadership, culture and capability. In 2015-16, we developed a People Strategy identifying four focus areas:

• managing workforce composition and agility;

• building the right capability;

• continuing to improve our leadership and culture; and

• investing in career and succession.

Refer Part 3.4: People Management for more information on the Department’s People Strategy 2016-20.

The following section provides details on workforce demographics, such as staff numbers, locations, and aggregate information on salary, performance pay and non-salary benefits provided to staff during 2015-16.

3.5 Staffing Information

3.5 3.5 STAFFING INFORMATION

257 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Staffing As at 30 June 2016, the Department employed 5,037 staff, 21 per cent on a part-time basis. This figure compares with 3,598 as at 30 June 2015, and includes employees on leave and secondment.

Of the total 5,037 employees, 4,620 were ongoing and 417 were non-ongoing (Refer Table 3.5.1).

The following functions were transferred to the Department from 5 November 2015 as a result of Machinery of Government changes:

• Ageing and Aged Care from Department of Social Services; and

• Medicare Provider Compliance for the Medicare Benefits Schedule and Pharmaceutical Benefits Scheme, and allied health services, from the Department of Human Services.

Staffing retention The ongoing employee retention rate in 2015-16 was 88 per cent. This is a decrease from 91 per cent in 2014-15.

Staff turnover The ongoing staff turnover rate in 2015-16 was 12 per cent, an increase from 9 per cent in 2014-15. The increase in staff turnover rate was due to the recruitment controls in place across the Australian Public Service (APS) during 2014-15 being lifted in 2015-16, which in turn increased the mobility of staff between agencies.

Figure 3.5.1: Staff profile as at 30 June 2016 85

2,869

1,994

167

APS

EL

SES

85

Excludes the Secretary, Holder of Public Office and the Chief Medical Officer. Senior Executive Service (SES) staff and equivalent comprise SES Band 1-3 and Medical Officers 5-6. Executive Level (EL) staff and equivalent comprise EL 1-2, Medical Officers 2-4, Legal 1-2, Public Affairs 3, Senior Principal Research Scientist and Principal Research Scientist.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.5

258 DEPARTMENT OF HEALTH Annual Report 2015-2016

Figure 3.5.2: Comparison of gender profile at 30 June 2016 86

488

576

65

738

743 69

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

APS EL SES APS EL SES

30 June 2015 30 June 2016

1,426

956

82

2,131 1,251 98

Table 3.5.1: Staff numbers by classification at 30 June 2016

Female Male

2015-16 Total 2014-15 Total Classification

Full-time

Part-time

Full-time

Part-time

Secretary - - 1 - 1 1

Holder of Public Office 2 - 3 - 5 2

Senior Executive Band 3 2 - 5 - 7 6

Senior Executive Band 2 17 - 13 - 30 24

Senior Executive Band 1 66 3 38 - 107 95

Executive Level 2 271 54 232 8 565 491

Executive Level 1 578 288 428 33 1,327 954

APS 6 765 309 332 23 1,429 907

APS 5 415 117 179 15 726 468

APS 4 288 80 86 6 460 329

APS 3 59 24 27 7 117 110

APS 2 15 14 11 17 57 40

APS 1 1 3 6 3 13 12

86 Excludes the Secretary, Holder of Public Office and the Chief Medical Officer, Senior Executive Service (SES) staff equivalent comprise SES Band 1-3 and Medical Officers 5-6. Executive Level (EL) staff and equivalent comprise EL 1-2, Medical Officers 2-4, Legal 1-2, Public Affairs 3, Senior Principal Research Scientist and Principal Research Scientist.

31%

69%

3.5 3.5 STAFFING INFORMATION

259 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Female Male

2015-16 Total 2014-15 Total Classification

Full-time

Part-time

Full-time

Part-time

Health Entry-Level Broadband

33 - 19 - 52 40

Legal 2 12 4 6 2 24 25

Legal 1 7 4 9 - 20 17

Chief Medical Officer - - 1 - 1 1

Principal Medical Consultant - - - - - 1

Medical Officer 6 1 1 3 2 7 6

Medical Officer 5 8 - 6 2 16 16

Medical Officer 4 4 4 10 1 19 17

Medical Officer 3 6 9 8 6 29 8

Medical Officer 2 6 4 1 1 12 17

Public Affairs 3 4 2 1 - 7 7

Public Affairs 2 1 - 1 - 2 -

Professional 1 1 - - - 1 1

Senior Principal Research Scientist - - 1 1 2 2

Principal Research Scientist - - 1 - 1 1

Department total 2,562 920 1,428 127 5,037 3,598

This table includes:

• head count figures of departmental staff as at 30 June 2016; and

• staff on leave and secondment.

Note: The majority of the 2015-16 increase in staffing numbers from 2014-15 can be attributed to the 2015 Machinery of Government changes.

Table 3.5.1 continued

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.5

260 DEPARTMENT OF HEALTH Annual Report 2015-2016

Table 3.5.2: Comparison of Indigenous staff by employment status between 30 June 2015 and 30 June 2016

Indigenous Staff

Employment Status 30 June 2015 30 June 2016

Ongoing 58 102

Non-ongoing 6 6

Total Indigenous staff 64 108

Percentage of Indigenous staff in the Department 1.8% 2.1%

Table 3.5.3: Distribution of staff at 30 June 2016

Female Male

Total Unit Ongoing

Non- ongoing Ongoing Non- ongoing

Access, Quality and Compliance

98 16 42 4 160

Aged Care Complaints Commissioner

119 6 43 3 171

Aged Care Policy and Reform

45 1 33 1 80

Aged Care Reform Taskforce 26 - 8 - 34

Ageing and Aged Care Services

108 13 33 3 157

Delivery Strategy and Operations

258 15 66 7 346

Executive 30 - 10 1 41

Digital Health 32 4 15 2 53

Digital Payments Services Taskforce 15 1 5 - 21

Grant Services 273 7 85 4 369

Health Provider Compliance 198 5 128 6 337

Health Services 147 7 22 2 178

Health Systems Policy 114 7 46 2 169

Health Workforce 114 12 45 8 179

Indigenous Health 87 3 30 - 120

Information Technology 86 4 92 1 183

3.5 3.5 STAFFING INFORMATION

261 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Female Male

Total Unit Ongoing

Non- ongoing Ongoing Non- ongoing

Legal 28 3 12 - 43

Medical Benefits 152 19 73 6 250

Medical Devices Product Quality 150 9 90 6 255

Medicines Regulation 155 12 92 12 271

Office of Chemical Safety 59 5 30 1 95

Office of Drug Control 8 - 10 - 18

Office of Health Protection 97 5 27 3 132

Office of the Gene Technology Regulator

27 1 21 1 50

People, Capability and Communication

159 25 46 20 250

Pharmaceutical Benefits 132 32 59 11 234

Population Health and Sport 159 14 46 2 221

Portfolio Investment 157 42 91 28 318

Pricing Commissioner 2 3 - - 5

Regulatory Practice and Support 110 7 80 - 197

Research Data and Evaluation

55 4 40 1 100

Department total 3,200 282 1,420 135 5,037

This table includes:

• head count figures of all staff by unit as at 30 June 2016, including staff on leave and secondment; and

• non-ongoing figures include casual staff.

Table 3.5.3 continued

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.5

262 DEPARTMENT OF HEALTH Annual Report 2015-2016

Figure 3.5.3: Distribution of staff and gender by State and Territory at 30 June 2016

Note: These figures include the head count figures of all staff by State and Territory as at 30 June 2016, including staff on leave and secondment.

Table 3.5.4: Senior Executive Service staff and equivalent staff with Individual Agreements at 30 June 2016

Number of staff with Approved Individual Agreements

Nominal Classification Female Male Total

Senior Executive Band 3 2 4 6

Senior Executive Band 2 15 10 25

Senior Executive Band 1 55 35 90

Chief Medical Officer - 1 1

Medical Officer 6 2 4 6

Medical Officer 5 8 8 16

3.5 3.5 STAFFING INFORMATION

263 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Table 3.5.5: Non-Senior Executive Service staff covered by Individual Flexibility Arrangements and Enterprise Agreement at 30 June 2016

Level Number of staff covered by Enterprise Agreement

Non-Senior Executive Service staff 4,88787

Table 3.5.6: EL and APS levels salary structure

Classification

Salary ranges at 30 June 2016 $

Executive Level 2 136,453

129,902

125,705

115,252

Executive Level 1 110,173

105,813

100,804

96,599

APS 6 88,682

86,740

82,421

78,608

APS 5 75,940

72,130

70,220

APS 4 69,222

67,316

65,514

APS 3 64,094

61,187

59,462

57,825

87

This includes 414 staff covered by Enterprise Agreement and an approved Individual Flexibility Arrangement.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.5

264 DEPARTMENT OF HEALTH Annual Report 2015-2016

Classification

Salary ranges at 30 June 2016 $

APS 2 54,604

53,086

51,539

50,037

APS 1 48,083

45,846

44,327

42,813

Staff at 20 years of age 38,961

Staff at 19 years of age 34,680

Staff at 18 years of age 29,970

Staff under 18 years of age 25,689

Table 3.5.7: Health Entry-Level Broadband

Local title APS classification

Salary ranges at 30 June 2016 $

Health Entry-Level (T, I, A or G) APS 4 69,222

67,316

65,514

Health Entry-Level (T, I, A, or G) APS 3 64,094

61,187

59,462

57,825

Health Entry-Level (T, I, A, or G) APS 2 54,604

53,086

51,539

50,037

Table 3.5.6 continued

3.5 3.5 STAFFING INFORMATION

265 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Local title APS classification

Salary ranges at 30 June 2016 $

Health Entry-Level (T, I, A, or G) APS 1 (adult) 48,083

45,846

44,327

42,813

Staff at 20 years of age 38,961

Staff at 19 years of age 34,680

Staff at 18 years of age 29,970

Staff under 18 years of age

25,689

Note:

• Trainees = (T) • Indigenous Australian Government Development Program participants = (I) • Indigenous Apprenticeship Programme = (A) • Graduates = (G)

Table 3.5.8: Professional 1 salary structure

Local title APS classification

Salary ranges at 30 June 2016 $

Professional 1 APS 5 75,940

APS 5 72,130

APS 4 67,316

APS 488 65,514

APS 389 61,187

APS 3 59,462

88

Salary on commencement for a professional with a four year degree (or higher). 89 Salary on commencement for a professional with a three year degree.

Table 3.5.7 continued

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.5

266 DEPARTMENT OF HEALTH Annual Report 2015-2016

Table 3.5.9: Medical Officer salary structure

Local title

Salary ranges at 30 June 2016 $

Medical Officer Class 4 163,905

154,710

148,909

Medical Officer Class 3 142,968

136,548

Medical Officer Class 2 128,673

122,121

Medical Officer Class 1 111,598

101,097

93,935

86,712

Table 3.5.10: Legal salary structure

Local title APS classification

Salary ranges at 30 June 2016 $

Legal 2 Executive Level 2 141,229

135,099

130,732

Legal 1 Executive Level 1 119,539

110,046

100,804

APS 6 86,740

82,421

78,608

APS 5 72,758

APS 4 68,209

3.5 3.5 STAFFING INFORMATION

267 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Table 3.5.11: Public Affairs salary structure

Local title APS classification

Salary ranges at 30 June 2016 $

Senior Public Affairs 2 Executive Level 2 141,912

136,396

Senior Public Affairs 1 Executive Level 2 129,902

Public Affairs 3 Executive Level 1 118,436

112,691

105,842

Public Affairs 2 APS 6 88,774

82,421

78,608

APS 5 75,940

72,130

APS 4 69,222

APS 490 65,514

90 This level is generally reserved for staff with less than two years’ experience.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.5

268 DEPARTMENT OF HEALTH Annual Report 2015-2016

Table 3.5.12: Research Scientist salary structure

Local title APS classification

Salary ranges at 30 June 2016 $

Senior Principal Research Scientist Executive Level 2 173,295

155,885

Principal Research Scientist Executive Level 2 152,827

148,090

142,046

138,301

133,172

Senior Research Scientist Executive Level 2 138,773

129,902

125,705

115,252

Research Scientist Executive Level 1 103,803

96,599

APS 6 82,573

78,261

76,133

Table 3.5.13: Senior Executive Service staff and Senior Medical Officer indicative salary bandwidths 91

Classification

Minimum $

Maximum $

Senior Executive Band 3 270,000 330,000

Senior Executive Band 2 214,200 265,200

Senior Executive Band 1 165,240 204,000

Medical Officer Class 6 224,400 265,200

Medical Officer Class 5 195,840 224,400

91

These are indicative as the Secretary may approve salary rates outside these bandwidths.

3.5 3.5 STAFFING INFORMATION

269 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Table 3.5.14: Non-salary benefits

Non-Senior Executive Service staff

Access to engage in private medical practice for Medical Officers

Access to Individual Flexibility Arrangements (IFA)

Access to negotiated discount registration/membership fees to join a fitness or health club

Access to paid leave at half pay

Access to remote locality conditions

Access to the Employee Assistance Program

Additional cultural and ceremonial Aboriginal and Torres Strait Islander employee’s leave

ADF Reserve, full-time service or cadet leave

Annual close down and early stand down at Easter and Christmas Eve

Annual influenza vaccinations for staff

Annual leave

Bereavement and compassionate leave

Breastfeeding facilities

Community service leave

Family care rooms

Financial assistance to access financial advice for staff 54 years and older

Flexible working locations and home-based work including, where appropriate, access to laptop computers, dial-in facilities, and mobile phones

Flextime (not all non-SES employees) and time in lieu

Hepatitis B vaccinations for staff who are required to come into regular contact with members of the community classified as at increased risk with regard to hepatitis B

Miscellaneous leave with or without pay, including leave for personal compelling reasons and exceptional circumstances

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.5

270 DEPARTMENT OF HEALTH Annual Report 2015-2016

Non-Senior Executive Service staff

Parental leave - includes maternity, adoption and partner leave

Personal/carers leave

Provision of eyesight testing and reimbursement of prescribed eyewear costs specifically for use with screen based equipment

Public Transport Loan Scheme

Purchased and extended purchased leave

Recognition of travel time

Reflection room

Study assistance

Support for professional and personal development

Senior Executive Service staff

All the benefits of non-SES staff except flextime

Airport lounge membership

Car parking

IT Reimbursement Scheme

Motor vehicle allowance or private use of motor vehicle

Table 3.5.14 continued

3.5 3.5 STAFFING INFORMATION

271 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Table 3.5.15: Non-Senior Executive Service staff, performance payments, 1 July 2015 to 30 June 2016

Level Number

Aggregated amount $ Average

$

Minimum $ Maximum $

Non-Senior Executive Service staff 13 44,906 3,454 552 10,272

This table includes figures of non-Senior Executive Service staff who received performance pay. Payments have been aggregated to preserve employees’ privacy. The majority of performance payments made in 2015-16 relate to assessments for the 2014-15 cycle. A small number relate to assessments for the 2015-16 cycle. Performance bonus payments paid in 2015-16 relates to staff entitlements covered under section 72, of the Public Service Act 1999 Machinery of Government moves from the former Department of Regional Australian, Local Government, Arts and Sports.

From 1 July 2014, the Department removed access to performance pay for all staff (including Senior Executive Service staff).

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.6

272 DEPARTMENT OF HEALTH Annual Report 2015-2016

21% workers’ compensation premium reduction when compared to Commonwealth average of 7%. This follows a 42% reduction in 2014-15

87 staff have received assistance to return to work/ remain at work under the Early Intervention policy

848 ergonomic assessments were conducted between September 2015 and June 2016

Improving work health and safety (WHS) in the workplace The Department acknowledges its responsibilities under the Work Health and Safety Act 2011 (WHS Act) and the Safety, Rehabilitation and Compensation Act 1988 to ensure the health and safety of its workforce, and to assist ill and injured workers. The Department maintains a strong commitment to the health and wellbeing of all staff.

In 2015-16, new initiatives such as the in-house ergonomic team, targeted risk assessment workshops, Guardian Break software and triaging systems continued to strengthen our WHS policies, procedures and practices. The Department’s Health and Wellbeing Framework (the Framework) was developed in 2015-16 and was launched in July 2016. The Framework provides strategies for promoting wellbeing and good health.

This section details the WHS initiatives undertaken by the Department during 2015-16.

3.6 Work Health and Safety

3.6 3.6 WORK HEALTH AND SAFETY

273 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Evaluation of the Department’s WHS performance In June 2016, Comcare conducted a Work Health and Safety Management System (WHSMS) audit of the Department. The audit assessed the Department’s WHS legislative compliance and effectiveness of our health and safety policy, health and safety procedures, and health and safety management systems. The audit verifies that management systems are in place and evaluates the implementation and effectiveness of those systems. The Department’s conformance rating against the Comcare audit was 58 per cent in 2015-16.

Further work is required before the WHSMS can be regarded as fully effective. The Department will progress outcomes of the WHSMS audit during 2016-17 focussing on the key risks identified, with the aim of increasing the conformance rating.

Achievements In 2015-16, the Department revised the terms of reference for its National Work Health Safety Committee to elevate the level of senior management representatives and to ensure a more strategic approach to WHS in the Department.

Work in 2016-17 will include:

• a program of discussions across the Department to better understand the nature of work, risk profile, peaks and troughs, and what WHS assistance is required to meet business objectives. These discussions in conjunction with priorities established from the Comcare audit findings will inform the Executive in setting objectives and performance criteria for the 2017-21 WHS strategy; and

• establishing a taskforce consisting of representatives from across the Department to assist in ensuring that line managers are well aware of, and active in progressing, WHS objectives in their areas.

Initiatives taken during the year to ensure the health, safety and welfare of workers who carry out work for the Department Significant work has been undertaken throughout 2015-16, with a focus on prevention and early intervention. The following initiatives have been implemented to improve the Department’s WHS performance:

• collaboration with the Australian Taxation Office and eleven other Commonwealth entities to undertake a cooperative procurement for the selection and management of rehabilitation providers and medical services;

• continued support for work capacity certification from treating doctors with an emphasis on work capability rather than incapacity;

• introduction of a triage system for handling enquiries to improve front-end response to injuries and incidents;

• introduction of professional in-house ergonomic assessment capability through the engagement of a qualified occupational therapist and an exercise physiologist:

- 848 ergonomic assessments have been performed between September 2015 and June 2016;

- of these, 181 were related to new injury symptoms, 514 were for pre-existing injuries and 153 people were without symptoms;

• completion of best practice trials of rehabilitation case management;

• implementation of review mechanisms for monitoring the performance of long-term claims; and

• introduction of Guardian Break software across the Department to address overuse and postural injury risks.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.6

274 DEPARTMENT OF HEALTH Annual Report 2015-2016

Health and Wellbeing Framework In 2015-16, the Department developed the Health and Wellbeing Framework (the Framework).

In July 2016, the Health and Wellbeing Program and Framework was launched. The Program is available to staff irrespective of their physical location, and is designed to accommodate staff disability and diversity.

The goals of the Framework are to:

• encourage a culture that focuses on supporting employees to develop good work and personal health habits;

• improve knowledge and change attitudes to an employee’s own health; and

• improve employee engagement and productivity through the provision of activities that promote healthy practices.

The Health and Wellbeing Program and Framework forms part of the Department’s broader organisational business plan, risk management framework, People Strategy and early intervention (EI) strategies. It takes a holistic approach encompassing physical and mental health and wellbeing, prevention and early intervention, and workplace support.

In 2015-16, the Department also developed an EI policy to support early access to appropriate treatment and reduce severity of personal and business impacts. This included the successful development and piloting of an EI training program, which is recommended to become part of the Department’s learning and development core curriculum in 2016-17. This will be available as part of the Department’s Learning Management System.

Health and safety outcomes (including the impact on injury rates of workers) achieved as a result of initiatives The Department’s strong rehabilitation performance has been achieved through the effective implementation of WHS measures, with a further workers’ compensation premium reduction of 21 per cent in 2015-16 compared with the Commonwealth average of seven per cent. These figures include staff that have entered and exited the Department in the 2015 Machinery of Government changes. The reduction in the premium has been attributed to the effective implementation of WHS measures and previous year’s initiatives, as well as a strong focus on active claims management by the Department and Comcare.

Since 2012-13, the number of accepted claims for the Department has been consistently declining. In 2013-14 there were 58 claims, in 2014-15 there were 30 and there have been 2392 accepted claims for 2015-16.

92 Claims may have been submitted and not yet determined. It is also possible that claims with a date of injury that fall in this period are yet to be determined. If liability is accepted for these claims, they will be attributed to the 2015-16 injury experience year.

3.6 3.6 WORK HEALTH AND SAFETY

275 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Statistics of any notifiable incidents of which the Department became aware of during 2015-16 that arose out of the conduct of business or undertakings by the Department During 2015-16 there were three dangerous incidents including one serious personal injury notified to Comcare with respect to the Department’s statutory obligation under section 35 of the WHS Act. The serious personal injury resulted from a vehicle incident during the journey home from work, with the other two incidents being a laboratory fire and the discovery of asbestos material. A review of the asbestos incident and the laboratory fire concluded that there were no resulting injuries. A review of causative factors has been undertaken, with the primary factor for the fire being the age of the equipment. A program of removal of all legacy equipment has been implemented. A system review of response to the laboratory fire was undertaken with improvements made to information available for emergency services during an incident.

Any investigations conducted during 2015-16 that relate to businesses or undertakings conducted by the Department, including details of all notices given to the Department during 2015-16 under Part 10 of the WHS Act No notices were issued to the Department in 2015-16 and no investigations were initiated.

Such other matters as required by guidelines approved on behalf of the Parliament by the Joint Committee of Public Accounts and Audit No matters to report for 2015-16.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.7

276 DEPARTMENT OF HEALTH Annual Report 2015-2016

The Department held its inaugural Carers Week event in October — guest speakers shared their personal stories of caring for a family member to raise awareness about unpaid carers, and to recognise the outstanding contribution they make to our nation

590 new People Assist referrals were received through the Employee Assistance Program, with over 1,416 hours accessed

Increasing recognition and awareness The Department has a responsibility to create an accessible and attractive workplace for staff with disability, and carers of people with disability. Through this commitment, the Department’s Staff with Disability Network provides support and advocacy services to staff, and raises awareness of disability matters.

The Disability Network is supported by Disability Champions. These Champions represent the Network to the Department’s Executive and engage with the wider Australian Public Service (APS) through the APS Disability Champions Network.

The Department is committed to increasing awareness of the vital role that staff who are also unpaid carers play in providing daily care and support to people with disability, medical conditions, mental illness or who are frail and aged, through its obligations under the Carer Recognition Act 2010 (the Act) and the Statement for Australia’s Carers.93

The Act places a range of reporting and consultation obligations on those APS entities that have responsibility for the development, implementation, provision or evaluation of policies, programs or services directed to carers or the persons for whom they care.

The criteria in this section measures the Department’s obligations under the Act and the responses provide an overall assessment of performance in 2015-16.

93 Available at: www.legislation.gov.au/Details/C2010A00123

3.7 Addressing Disability and Recognising Carers

3.7 3.7 ADDRESSING DISABILITY AND RECOGNISING CARERS

277 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Supporting staff with disability The Department is committed to increasing the accessibility and attractiveness for staff with disability, and will work closely with the Australian Public Service Commission (APSC) to implement the As One: Australian Public Service Disability Employment Strategy launched in May 2016.

The Department’s Accessibility Action Plan (the Plan) is in consultation phase with an expected launch in late 2016.94 The Plan has been created in conjunction with input from staff across the Department and the Australian Network on Disability, of which the Department continues to be a gold member. The Plan focuses on creating an accessible workplace for staff with disability, and carers for people with disability.

The Department has two Senior Executive Service (SES) Disability Champions who participate in the APS Disability Champion Network. They also support the Staff with Disability Network in actively promoting awareness and inclusion events in the Department. Having Champions at the SES level demonstrates departmental support to our diversity groups.

Disability Champion’s personal story

On 28 October 2015, as Disability Champion for the Department, I attended the APS ‘Ten plus Ten’ meeting at the APSC along with nine other APS Disability Champions. This was the second ‘Ten plus Ten’ run by the APSC, and involved ten APS employees with disability sharing their personal stories. I attended along with a Health employee with a disability. The experience of listening to people sharing the highs and lows of their lived experience was powerful and inspiring. Ten courageous people with a range of disabilities shared details of their lives and the ways that they not only manage their disability, but flourish and contribute in the workplace. I felt very privileged to be able to listen and participate. A number of people shared their experience with mental health issues, which are not often well understood or well managed in the workplace. I was impressed by the self-awareness and frankness of these participants regarding an issue that is often considered taboo. The meeting only enhanced my conviction of the value of diversity in the workplace, and my commitment to my role as Disability Champion.

Dr Jenean Spencer Disability Champion

On 3 December 2015, the Department celebrated International Day of People with Disability, which had a theme this year of ‘Inclusion matters: access and empowerment for people of all abilities’. Staff were invited to attend and the Secretary encouraged staff to show their support by participating in ‘Walk4Ability’ to help raise funds for Boundless Canberra - ACT’s first inclusive playground.

In line with the Department’s commitment to increasing accessibility and attractiveness for staff with disability, the Department now applies the RecruitAbility Scheme to all advertised vacancies, with justification required if areas wish to opt out.

94 Previously known as the Disability Workforce Action Plan.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.7

278 DEPARTMENT OF HEALTH Annual Report 2015-2016

The National Disability Strategy Since 1994, non-corporate Commonwealth entities have reported on their performance as policy adviser, purchaser, employer, regulator and provider under the Commonwealth Disability Strategy. In 2007-08, reporting on the employer role was transferred to the annual APSC’s State of the Service Report and the APS Statistical Bulletin. These reports are available at: www.apsc.gov.au. From 2010-11, entities have no longer been required to report on these functions.

The Commonwealth Disability Strategy has been overtaken by the National Disability Strategy 2010-2020 (Strategy), which sets out a ten-year national policy framework to improve the lives of people with disability, promote participation and create a more inclusive society. A high-level two-yearly report will track progress against each of the six outcome areas of the Strategy and present a picture of how people with disability are faring. Reports can be found at: www.dss.gov.au

Access and Equity The National Disability Strategy 2010-2020 (Strategy) requires all levels of Government to work collaboratively with people with disability in the development of programs, policies and systems that affect people with disabilities. This includes engaging with representative organisations, families and carers, community service providers, advocacy and other organisations.

Under the Strategy, all Australian Government entities agreed to develop protocols for engaging with people with disability in the development of policy and programs. The Department has developed a protocol for this purpose that guides the delivery of Department business. The protocol outlines the Department’s obligations under the Strategy, and identifies and promotes activities that improve accessibility and responsiveness of our policies, programs and services. The protocol includes relevant internal and external policy considerations and case studies to demonstrate the application of health programs to people with disability. The protocol also includes guidance for engaging with Indigenous Australians with disability.

As part of the Strategy, the Department contributed to the development of a Commonwealth Action Plan by the Department of Social Services. The Department reports against its activities in the Action Plan, which will be available to staff during 2016-17.

3.7 3.7 ADDRESSING DISABILITY AND RECOGNISING CARERS

279 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Compliance with the Carer Recognition Act 2010

Measures taken by the Department to ensure employees and agents are aware of and understand the Statement for Australia’s Carers [Part 3 section 7(1)] As the Department’s Staff with Disability Network has many members who care for family with disability, a carers group was initiated to connect employees who are also carers with each other. To demonstrate their support and ensure these staff feel welcome and represented, and to better reflect the intent of the Network, the Network committee is proposing to change its name to the Disability and Carers Network.

The Department conducts awareness initiatives including all staff messages and an event during National Carers Week. During the week of 11-17 October 2015, staff were invited to a seminar to raise community awareness about unpaid carers, and to recognise the outstanding contribution they make to our nation. Guest speakers including the Secretary and members of staff shared their personal stories of caring for a family member. The event opened the eyes of many who have yet to be in a position of caring for someone else - whether it be a disabled child, an elderly parent or a close friend. Regulatory Services Group also held an event with employees from the Department, the Department of Social Services, the Australian Bureau of Statistics and the Department of the Prime Minister and Cabinet. Three guest speakers shared their personal experiences as carers.

Department’s internal human resource policies, so far as they may significantly affect an employee’s caring role, are to be developed having due regard to the Statement for Australia’s Carers [Part 3 section 7(2)] The Department’s human resource policies and guidelines comply with the principles expressed in the Statement for Australia’s Carers. The Department offers staff members a range of provisions to assist them with their caring responsibilities, including:

• access to flexible working arrangements, such as part-time employment, flex-time and home-based work;

• an Employee Assistance Program, which offers free counselling for staff and their family to assist with work or personal issues;

• paid and unpaid carers leave for various reasons, such as meeting family responsibilities and providing care and support to family or household members;

• the ability to purchase up to six weeks additional leave per calendar year;

• access to family care rooms in the workplace to enable staff to carry out work while caring for dependants, as an alternative to taking personal/carers leave; and

• providing appropriate facilities to enable mothers returning to work after maternity leave to undertake breastfeeding, lactation and associated activities.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.7

280 DEPARTMENT OF HEALTH Annual Report 2015-2016

Measures taken to ensure that employees and agents take action to reflect the principles of the Statement for Australia’s Carers in developing, implementing, providing or evaluating care supports [Part 3 section 8(1)] The Department’s commitment to the Statement for Australia’s Carers is reflected through its ongoing review process of initiatives that support carers.

The Department has established a carers group to actively promote carer issues to all staff, and works with key carer groups to improve access to carer services. Further details on the Department’s carer programs and services are identified below.

Consult carers or bodies that represent carers when developing or evaluating care supports [Part 3 section 8(2)] The Department recognises the contribution that carers make to the community by providing unpaid care and support to family and friends who are diagnosed with a life-limiting condition and require palliative care, and to clients receiving aged care services.

In 2015-16, the Department continued to consult with individual carers and representatives of carer organisations, including those with special needs, when developing support mechanisms, and implementing reforms, to ensure programs and services continue to meet the requirements of the Carer Recognition Act 2010.

Below are some examples of where the Department has worked with carer organisations:

Palliative care services • The Department sourced an external evaluation of the National Palliative Care Strategy 2010 (the Strategy).95 The evaluation commenced in 2015-16 and will analyse the goals, action areas and measures of the Strategy to determine relevance and useability. It also includes national consultation

with palliative care stakeholders, including carers, and will be finalised by September 2016.

• The Department provided funding to Carers Australia to deliver a series of workshops to train counsellors and other people to better support carers who are caring for someone with palliative care needs. Over 95 per cent of participants surveyed said the workshops improved or significantly improved their knowledge and skills in advance care planning, interdisciplinary approach to palliative care services, understanding grief and loss, carer’s experience after the death of the person for whom they were caring, understanding the caring experience, and challenges carers face and strategies to support carers.

95 The National Palliative Care Strategy 2010 - Supporting Australians to Live Well at the End of Life represents the combined commitments of the Australian, State and Territory Governments, palliative care service providers and community based organisations. It guides the development and implementation of palliative care policies, strategies and services across Australia. The Strategy is available at: www.health.gov.au/palliativecare

3.7 3.7 ADDRESSING DISABILITY AND RECOGNISING CARERS

281 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Supporting aged care services • The Department supported training for the My Aged Care96 workforce in 2015-16 to help identify the needs of older people and their carers, and to assess the type of support provided by carers, the sustainability of the caring relationship and any ongoing support that is required to maintain the caring

relationship.97

• The Department established two stakeholder working groups in April 2015 and has held two meetings for each working group in 2015-16 to guide future implementation of Culturally and Linguistically Diverse, and Lesbian, Gay, Bisexual, Transgender and Intersex strategies. The working groups facilitated the development of new, and strengthening of existing, relationships with key stakeholders within the aged care sector, including representatives of carer organisations.

Dementia support programs • In response to feedback from a range of stakeholders, the Australian Government announced in January 2016 the redesign and streamlining of dementia programs to ensure a nationally consistent approach to support for people with dementia.

• As part of this, a new national Dementia Behaviour Management Advisory Service and national Dementia Training Program will commence from 1 October 2016. In addition, the Department is redesigning existing consumer and carer support programs, and will further consult with stakeholders, including carers, on the design of these in 2016-17.

Review of Mental Health Programmes and Services • The Australian Government response to the Contributing Lives, Thriving Communities - Review of Mental Health Programmes and Services was informed by consultation with stakeholders, including consumers, carers and peak bodies.

• The mental health system changes being implemented will benefit consumers and their carers through locally commissioned and integrated mental health services that are planned around individual and community needs. The Department will implement these mental health system changes from 2016-17 onwards.

96 Available at: www.myagedcare.gov.au 97 Refer Part 2.1: 2015-16 Annual Performance Statements, Outcome 11: Ageing and Aged Care for more information on aged care services.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.8

282 DEPARTMENT OF HEALTH Annual Report 2015-2016

187.6 tonnes of recycled waste produced - 6% increase compared to 2014-15

National Australian Built Environment Rating Scheme rating of 6 out of 6 stars for the Sirius building

Ecologically sustainable practices The Department is committed to fulfilling its obligations under section 516A of the Environment Protection and Biodiversity Conservation Act 1999 through the ongoing review and administration of appropriate legislation and activities that minimise our environmental footprint.

In 2015-16, the Department continued to administer initiatives that considered the short and long-term environmental affects, while according with the principles of ecologically sustainable development (ESD).

3.8 Ecologically Sustainable Development and Environmental Performance

3.8 3.8 ECOLOGICALLY SUSTAINABLE DEVELOPMENT AND ENVIRONMENTAL PERFORMANCE

283 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Compliance with the Environment Protection and Biodiversity Conservation Act 1999

Activities of, and the administration of legislation by the Department during 2015-16 accorded with ecologically sustainable development principles [section 516A(6)(a)] The Department administers legislation that is relevant to, and meets the principles of, ESD. These include the Gene Technology Act 2000 and the Industrial Chemicals (Notification and Assessment) Act 1989 .

The National Industrial Chemicals Notification and Assessment Scheme (NICNAS), administered by the Department, aids in the protection of the Australian people and the environment by assessing the risks of industrial chemicals and providing information to promote their safe use.

NICNAS operates within an agreed framework for chemical management that is consistent with the National Strategy for ESD, its principles and policies. This framework aligns with the United Nations Conference on Environment and Development Agenda 21 (Rio Declaration), of which Chapter 19 relates to the environmentally sound management of toxic chemicals. Activities are aligned with a series of ESD principles and decision-making processes that effectively integrate both long-term and short-term environmental, social and equity-supporting considerations. Environmental risk assessments are conducted under a service level agreement with the Department of the Environment and Energy.

The Gene Technology Regulator (the Regulator) within the Office of the Gene Technology Regulator (OGTR) administers the Gene Technology Act 2000. The Act aims to protect the health and safety of people and the environment by identifying risks posed by gene technology and managing those risks through regulating activities with genetically modified organisms (GMOs).

Outcome contribution to ecologically sustainable development [section 516A(6)(b)] In 2015-16, the Department continued its commitment to ESD by ensuring that it effectively delivered corporate strategic priorities while minimising environmental impact. This included a methodical approach to planning, implementing and monitoring the Department’s environmental performance through programs and policies that are in accordance with current legislation, whole-of-government requirements and environmental best practice.

Through NICNAS, new industrial chemicals entering Australia (by manufacturing and/or importing) continued to be assessed for health and environmental risks. Administration of NICNAS also supported the Department’s contribution to ESD by assessing chemicals already in commerce, based on environmental and/or health concerns.

OGTR continued to support the Regulator in regulating activities involving live and viable GMOs. These activities ranged from contained work in certified laboratories to releases of GMOs into the environment. The Regulator imposed licence conditions to protect the environment, and used extensive powers to monitor and enforce those conditions.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.8

284 DEPARTMENT OF HEALTH Annual Report 2015-2016

The effect of departmental activities on the environment [section 516A(6)(c)] In 2015-16, the Department continued implementing its key environmental management issues that were aimed at reducing the consumption of energy, maintaining recycling efforts to minimise landfill and maximising the efficient use of resources by continuing the second-hand stationery store.

The Department is committed to making a positive contribution to sustainable practices and using whole-of-government benchmark indicators and targets to assess and monitor environmental performances.

The Department works closely with the respective building owners and managing agents for the properties we occupy to implement and manage schemes that will have a positive impact on the environment. This collaboration has seen the Sirius building achieve a 6 star National Australian Built Environment Rating Scheme (NABERS)98 rating and receive national and international recognition.

Measures the Department is taking to minimise the impact of activities on the environment [section 516A(6)(d)] During 2015-16, the Department continued to maintain an environmental management system (EMS) in accordance with the International Standard ISO 14001:2004. The EMS tool assists the Department with monitoring and managing its environmental performance impact, and complying with legal and whole-of-government requirements.

Mechanisms for reviewing and increasing the effectiveness of those measures that minimise the impact of the Department on the environment [section 516A(6)(e)] Energy performance standards The Energy Efficiency in Government Operations (EEGO) Policy contains minimum energy performance standards for Australian Government office buildings as a strategy for achieving energy targets. This ensures that entities progressively improve their performance through the procurement and ongoing management of energy efficient office buildings and environmentally sound equipment and appliances.

The Department, as part of its strategic accommodation planning, undertakes to meet the requirements of the Green Lease Schedule; that is for tenancies of greater than 2,000m2 with a lease term greater than two years, accommodation will meet the ‘A’ grade standard of the Building Owners and Managers Association International guidelines and meet a minimum NABERS rating of 4.5 stars.

The table below details the Department’s occupied buildings during 2015-16 that achieved the recommended base building NABERS ratings.

Table 3.8.1: NABERS energy rating

Property Rating

Canberra Central Office (Sirius building) 6

Canberra Central Office (Scarborough House) 4.5

Victorian State Office 4.5

Queensland State Office 4.5

Energy saving initiatives in the Department’s leased property portfolio includes T5 fluorescent and movement activated sensor lighting, double glazed windows and energy efficient heating, ventilation and air-conditioning systems.

98 NABERS measures the environmental performance of Australian buildings, tenancies and homes.

3.8 3.8 ECOLOGICALLY SUSTAINABLE DEVELOPMENT AND ENVIRONMENTAL PERFORMANCE

285 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Energy consumption and efficiency The Department’s 2015-16 energy consumption rates against the core performance indicators established under the EEGO Policy are identified below.

During 2015-16, a Machinery of Government change saw the Department assigned eight properties in the States and Territories, effective 1 January 2016. This resulted in an increase in the overall energy consumption for the Department for 2015-16.

Electricity consumption

The Department’s electricity consumption during 2015-16 was 36,229 gigajoules. This figure includes the properties that were assigned to the Department in the 5 November 2015 Machinery of Government change.

Table 3.8.2: Electricity consumption (gigajoules) 2015-1699

Gigajoules

Department total 36,229100

Office tenant light and power

The Department is required to meet the target of no more than 7,500 megajoules (MJ) per person, per annum, for office tenant light and power under the EEGO Policy.

In 2015-16, the Department more than met this requirement with only 3,649 MJ used per person, per annum, as detailed in the below table.

Table 3.8.3: Office tenant light and power 2015-16

Energy (MJ)

Area (m²)

MJ/m² People MJ/ person

Department total101 18,380,604 89,536 205 5,037 3,649102

99 The 2015-16 gigajoules figure includes the eight properties that were assigned to the Department (effective 1 January 2016). 100 The figures include 10 Rudd St Canberra tenancy, which is majority sub-leased to National Health Funding Body. 101

Total MJ/m² (205) represents the energy consumption in the Department’s office tenancies (18,380,604) divided by the entire office floor space measured in square metres (89,536). 102 Total MJ/person (3,649) represents the energy consumption by the Department (18,380,604) divided by the total number of people (5,037).

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.8

286 DEPARTMENT OF HEALTH Annual Report 2015-2016

Non-office buildings: electricity

The Department occupies a number of sites used for a purpose other than office space, these properties include testing laboratories, workshop and storage facilities. There is no target for electricity consumption for properties that fall under this category. The Department, as part of its commitment to reducing its impact on the environment, monitors the usage in these facilities and in the 2015-16 period had a further decrease in consumption of 3.6 per cent from 2014-15.

Table 3.8.4: Non-office buildings - electricity consumption 2015-16

2015-16

Energy (MJ)

Area (m²)

MJ/m²

Department total 17,847,898 19,574 912

Non-office buildings: natural gas

One of the Department’s non-office buildings uses natural gas (Symonston complex). While there is no gas consumption target for properties that fall under this category, the Department, as part of its commitment to reducing its impact on the environment, monitors the usage in the facility and in 2015-16 there was a further decrease in consumption in the order of 17 per cent from 2014-15.

Table 3.8.5: Non-office buildings - natural gas 2015-16

2015-16

Energy (MJ)

Area (m²)

MJ/m²

Department total 14,668,170 18,524 792

3.8 3.8 ECOLOGICALLY SUSTAINABLE DEVELOPMENT AND ENVIRONMENTAL PERFORMANCE

287 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Sustainable energy initiatives The Department accessed the whole-of-government electricity supply contract for the majority of its sites within the ACT and NSW, which includes 10 per cent green power.

In 2015-16, the Department improved the Information and Communication Technology (ICT) Sustainability Plan end user target of 400kWh per user per annum by implementing ICT energy saving measures that resulted in the reduction to 250kWh per user per annum. The Department will continue to investigate further opportunities to improve usage.

The Department installed and commissioned a new Building Management System. This installation has shown a significant decrease in both electricity and gas consumption at the Symonston complex.

The Department participated in Earth Hour 2016 by switching off building lights, thin terminals, monitors and office equipment for all its sites around Australia.

Waste management The Department is committed to protecting the environment through the implementation of efficient and effective waste management programs.

In the majority of the Department’s offices, waste management initiatives include segregated waste streams to improve management of general waste, commingled recycling, organic recycling, and paper and cardboard recycling. Further recycling efforts include the recycling of printer and toner cartridges, batteries and mobile phones to ensure these items are diverted from landfill and used in sustainable programs.

In 2015-16, the Department continued to recycle over half of its total waste produced with 187.6 tonnes of the total 309 tonnes (up by six per cent on 2014-15) of waste recycled, with a 20 per cent increase in paper and cardboard recycling. The general waste increased by just over four per cent and this was reflected in the slight decreases in the commingled and organic recycling streams. The Department will continue to educate staff on the importance of recycling waste.

Table 3.8.6: Waste reporting (tonnes) from 2011-12 to 2015-16103

General waste Commingled recycling

Paper & cardboard recycling

Organic recycling

Total

2011-12 108 12 81 3 203

2012-13 145 42 125 3 315

2013-14 123 41 81 3 249

2014-15 125 90 73 4 291

2015-16 130 88 88 3 309

103 Waste reports provided for Canberra sites only.

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.8

288 DEPARTMENT OF HEALTH Annual Report 2015-2016

Vehicle fleet management The Department pre-Machinery of Government change relinquished a number of vehicles after a review of the actual vehicle usage in the State and Territory offices and found that it was not value for money to retain the vehicles. As part of the Machinery of Government change, Ageing and Aged Care was transitioned to the Department. To meet the ongoing requirements of the positions transferred to the Department, 28 vehicles were transferred to Health. As at 30 June 2016, the Department had 34 vehicles.

The Department is committed to working towards meeting the Australian Government’s Green Car Challenge which states that by 2020, 50 per cent of the Government fleet’s passenger vehicles will be Australian-made, value for money and environmentally friendly. Additionally, the Australian Government Fleet requires Australian Government entities to work towards a voluntary target of 28 per cent of their leased/pool vehicles to meet the Green Vehicles Guide104 score of at least 10.5 out of 20.

The emissions of the Department’s 2015-16 fleet vehicles are reported, in accordance with the EEGO Policy (Refer Table 3.8.7).

Table 3.8.7: Fleet vehicle emissions 2015-16

Number of vehicles

Diesel oil (L)

E-10 (biofuel) (L)

Petroleum (unleaded and premium)

(L)

Total (MJ)

Distance travelled (km)

Total MJ/ km105

CO2

emissions (Tonnes)

Department total 30106 4,801 3,249 11,220 772,711 364,038 2.12 48

The Department has installed video conferencing facilities nationally and within the NICNAS office to reduce the need for travel. Teleconferencing is also used as an alternative to travel where video conferencing facilities are not available.

Follow-me printing In March 2016, the Department commenced the rollout of the follow-me printing solution that allows staff to securely release print jobs to any multi-function device within the Department.

With follow-me printing, unwanted print jobs are not automatically printed and can be deleted, and any print jobs left in the queue for more than 12 hours are deleted. This benefits the environment as less ink cartridges, toner and paper are consumed.

This paper saving initiative will continue to be rolled out incrementally through to the end of 2016.

104 Available at: www.industry.gov.au/Energy/EnergyEfficiency/Documents/energy-efficiency/FactSheet-5-GVG-survey.pdf 105 Total MJ/km (2.12) represents the Department’s total fleet vehicle emissions (772,711) divided by the total distance travelled (364,038) . 106

This data has been provided by SG Fleet. The relevant report and data from LeasePlan is unavailable at time of publication. The Department had four cars provided by LeasePlan (not included in the above total).

3.8 3.8 ECOLOGICALLY SUSTAINABLE DEVELOPMENT AND ENVIRONMENTAL PERFORMANCE

289 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Water conservation During 2015-16, the Department continued with the modifications intr oduced in the 2014-15 financial year.

The Department occupies buildings that are fitted with a range of water-saving technologies including low-flow taps and showers, dual-flush cisterns, waterless or low-flow urinals and grey water systems.

The Department’s national office (Sirius building) has a NABERS water rating 107 of 6 stars, which reflects the building’s high level of water efficiency. This is well above the current market average of two and a half stars.

The implementation of the water usage timers has shown an active decrease in the consumption of water during 2015-16.

107 NABERS water rating measures the water consumption of an office building on a scale of one to six stars reflecting the performance of the building relative to the market, from least efficient (one star) to market leading (six stars).

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.9

290 DEPARTMENT OF HEALTH Annual Report 2015-2016

Prompted awareness of the Health Star Rating system reached 60% in its second year of implementation

The Girls Make Your Move campaign was successfully launched in February 2016. The campaign aims to encourage young women aged 12 to 19 years old to be more active

In 2015-16, the Department is required to report on all payments over $12,700 (GST inclusive) to advertising agencies, market research organisations, polling organisations, direct mail organisations and media advertising organisations.

This section details these payments, along with the names of advertising campaigns conducted by the Department during 2015-16.

Advertising campaigns During 2015-16, the Department conducted the following advertising campaigns:

• BreastScreen Australia campaign;

• Girls Make Your Move campaign;

• Health Star Rating system campaign;

• National Bowel Cancer Screening Program campaign;

• National Drugs campaign; and

• National Tobacco campaign.

Further information on these advertising campaigns is available at www.health.gov.au, and in the reports on Australian Government advertising prepared by the Department of Finance and published at www.finance.gov.au/advertising /

3.9 Advertising and Market Research

3.9 3.9 ADVERTISING AND MARKET RESEARCH

291 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Particulars of payments Table 3.9.1: Advertising, market research, direct mail and media advertising payments for 2015-16

Organisation Service provided

Amount paid (GST incl)

Advertising agencies (creative advertising agencies which have developed advertising campaigns)

303 MullenLowe Health Star Rating system campaign $174,116

AJF Partnership Girls Make Your Move campaign $828,850

Carbon Media National Tobacco campaign $285,730

The Trustee for the Knowles Bristow Trust trading as BCM Partnership

National Drugs campaign $117,740

Total $1,406,436

Market research

Cultural and Indigenous Research Centre Australia Consumer research to understand Aboriginal and Torres Strait Islander community health

service needs and preferences in the western Sydney and Nepean Blue Mountains regions

$75,986

GfK Australia Evaluation research services for the Girls Make

Your Move campaign

$183,500

Hall & Partners Open Mind Consumer research for the Health Star Rating system campaign $52,060

Latitude Insights Palliative Care - Consumer Research $330,000

National Heart Foundation of Australia Consumer research for the Health Star Rating System

$52,800

ORC International Consumer research for the National Tobacco campaign $558,985

ORC International Market research (qualitative) to support the Biosimilar Awareness Initiative $243,054

Pollinate Consumer research for the Health Star Rating

System

$24,500

Pollinate Evaluation research services for the Health Star

Rating system campaign

$21,900

Snapcracker Research and Strategy Immunisation Research $416,350

PART 3 MANAGEMENT AND ACCOUNTABILITY 3.9

292 DEPARTMENT OF HEALTH Annual Report 2015-2016

Organisation Service provided

Amount paid (GST incl)

Social Research Centre Evaluation research services for the 2015 National Tobacco campaign $36,052

Stancombe Research & Planning Evaluation research services for the National Drugs campaign

$111,331

Taylor Nelson Sofres Australia Consumer research for aged care $185,900

Taylor Nelson Sofres Australia Consumer research for development of a physical activity and sports participation campaign

$367,403

Taylor Nelson Sofres Australia Evaluation research services for the National Bowel Cancer Screening Program campaign $74,250

ThinkPlace User research and usability testing with

consumers, health professionals and industry (7 projects over two websites)

$201,654

WhereTo Palliative Care - GPs Research $330,000

Total $3,265,726

Direct mail organisations108 (includes organisations which handle the sorting and mailing out of information material to the public)

National Mailing and Marketing

Early advice on 2016 National Influenza Vaccine mail out $55,890

National Mailing and Marketing

Immunisation requirements for Family Assistance Payments mail out $20,502

National Mailing and Marketing

National Diabetes Services Scheme mail out $178,100

National Mailing and Marketing

National Influenza Vaccine resources mail out $95,307

National Mailing and Marketing

No Jab No Pay mail out $47,189

National Mailing and Marketing

Whooping cough 18 month booster and schedule resources mail out $86,211

Total $483,199

Table 3.9.1 continued

108

The costs reported cover only the amount paid to the organisation and not the cost of postage or production of the material sent out. Where a creative agency or direct marketing agency has been used to create the direct mail materials, the amount paid to the agency is reported here.

3.9 3.9 ADVERTISING AND MARKET RESEARCH

293 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Organisation Service provided

Amount paid (GST incl)

Media advertising organisations (the master advertising agencies which place Government advertising in the media - this covers both campaign and non-campaign advertising)

Dentsu Mitchell Media buying for the Australian General

Practice Training Program

$29,176

Dentsu Mitchell Media buying for the BreastScreen Australia campaign $1,186,956

Dentsu Mitchell Media buying for the Girls Make Your Move

campaign

$7,505,947

Dentsu Mitchell Media buying services for the Health Star

Rating System campaign

$1,749,000

Dentsu Mitchell Media buying services for the National

Tobacco campaign

$7,425,000

Dentsu Mitchell Media buying services for the National Drugs campaign $4,378,568

Dentsu Mitchell Media buying for the National Bowel Cancer Screening Program campaign $1,881,543

Dentsu Mitchell Placing advertisements regarding regulatory activities $20,210

Total $24,176,400

Grand total $29,331,761

Table 3.9.1 continued

Financial Statements 4.1: 2015-16 Financial Statements Independent Auditor’s Report

Statement by the Secretary and Chief Financial Officer

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Cash Flow Statement

Administered Schedule of Comprehensive Income

Administered Schedule of Assets and Liabilities

Administered Reconciliation Schedule

Administered Cash Flow Statement

Notes to and Forming Part of the Financial Statements

296

297

299

300

301

302

304

305

306

307

308

310

PART4

PART 4 FINANCIAL STATEMENTS 4.1

296 DEPARTMENT OF HEALTH Annual Report 2015-2016

2015-16 Financial Statements

Financial statements process In accordance with the Public Governance, Performance and Accountability Act 2013 (PGPA Act), the Department is required to prepare annual financial statements. The statements must be prepared in accordance with the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) and Australian Accounting Standards. Additional financial reporting requirements are detailed in Resource Management Guide No. 125 released by the Department of Finance.

The FRR applicable to 2015-16 does not mandate separate preparation of financial statements for the Therapeutic Goods Administration (TGA) special account, in addition to the financial statements of the Department. In previous years separate disclosure was required. The Department has provided additional disclosure for the TGA special account in the notes to the Department’s financial statements provided for the consolidated entity.

In preparing the 2015-16 financial statements, the Department applied professional judgement to ensure that the financial statements fairly present the financial position, financial performance and cash flows. The Department developed formal position papers to detail issues where professional judgement was required.

Detailed cross references have been provided to guide readers to other relevant disclosures within the financial statements.

The Department’s quality assurance framework applied to the financial statements includes independent advice from the Audit and Risk Committee to the Secretary on the preparation and review of the financial statements. The financial statements are audited by the Australian National Audit Office.

For further information, refer to the Chief Operating Officer’s Report , which contains a summary of the Department’s 2015-16 financial results.

4.1 4.1 DEPARTMENT OF HEALTH

297 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Independent Auditor’s Report

PART 4 FINANCIAL STATEMENTS 4.1

298 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Independent Auditor’s Report

4.1 4.1 DEPARTMENT OF HEALTH

299 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Statement by the Secretary and Chief Financial Officer

PART 4 FINANCIAL STATEMENTS 4.1

300 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Statement of comprehensive income for the period ended 30 June 2016

Original Variance Revised Variance

Notes 2016 2015 2016 2016 2016 2016

$'000 $'000 $'000 $'000 $'000 $'000

NET COST OF SERVICES EXPENSES Employee benefits 2A 464,527 373,865 419,648 44,879 520,497 (55,970)

Suppliers 2B 304,416 252,073 181,675 122,741 238,010 66,406

Depreciation and amortisation 2C 23,984 43,953 31,143 (7,159) 21,851 2,133

Write-down and impairment of assets 2D 2,745 3,268 - 2,745 252 2,493

Other expenses 2E 1,105 11,531 2,856 (1,751) 4,054 (2,949)

Total expenses 796,777 684,690 635,322 161,455 784,664 12,113

OWN-SOURCE INCOME Own-source revenue Sale of goods and rendering of services 3A 174,561 165,362 160,884 13,677 171,211 3,350

Other revenue 3B 2,063 2,226 15,004 (12,941) 2,407 (344)

Total own-source revenue 176,624 167,588 175,888 736 173,618 3,006

Gains Sale of assets 3C 78 - - 78 - 78

Other gains 3D 370 3 1,050 (680) - 370

Total gains 448 3 1,050 (602) - 448

Total own-source income 177,072 167,591 176,938 134 173,618 3,454

Net cost of services 619,705 517,099 458,384 161,321 611,046 8,659

Revenue from Government 3E 594,997 479,885 433,784 161,213 594,997 -

Surplus/(Deficit) attributable to the Australian Government (24,708) (37,214) (24,600) (108) (16,049) (8,659)

OTHER COMPREHENSIVE INCOME Items not subject to subsequent reclassification to net cost of services Changes in asset revaluation surplus - 16,395 - - - -

Total other comprehensive income - 16,395 - - - -

Total comprehensive surplus/(loss) attributable to the Australian Government (24,708) (20,819) (24,600) (108) (16,049) (8,659)

The above statement should be read in conjunction with the accompanying notes.

For budgetary reporting information refer to Note 29. The original budget is the budget published in the 2015-16 Portfolio Budget Statements and the revised budget is the estimated actuals from the 2016-17 Portfolio Budget Statements. The budget statement information has been reclassified and presented on a consistent basis with the corresponding financial statement.

ACTUAL BUDGET ESTIMATE BUDGET ESTIMATE

4.1 4.1 DEPARTMENT OF HEALTH

301 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Statement of financial position as at 30 June 2016

Original Variance Revised Variance

Notes 2016 2015 2016 2016 2016 2016

$'000 $'000 $'000 $'000 $'000 $'000

ASSETS Financial assets Cash and cash equivalents 5A 90,672 79,631 71,089 19,583 82,989 7,683

Trade and other receivables 5B 137,120 120,769 116,122 20,998 139,713 (2,593)

Accrued revenue 8,649 5,505 6,173 2,476 5,257 3,392

Total financial assets 236,441 205,905 193,384 43,057 227,959 8,482

Non-financial assets Land and buildings 6A 53,278 53,027 32,321 20,957 58,139 (4,861)

Property, plant and equipment 6A 6,316 7,065 6,085 231 9,058 (2,742)

Intangibles 6A 106,146 91,405 94,389 11,757 121,664 (15,518)

Other non-financial assets 6C 11,729 3,804 7,796 3,933 5,288 6,441

Total non-financial assets 177,469 155,301 140,591 36,878 194,149 (16,680)

Assets held for sale - 9,131 - - --

Total assets 413,910 370,337 333,975 79,935 422,108 (8,198)

LIABILITIES Payables Suppliers 7A 61,620 61,882 61,801 (181) 75,737 (14,117)

Other payables 7B 45,196 51,409 69,445 (24,249) 46,611 (1,415)

Total payables 106,816 113,291 131,246 (24,430) 122,348 (15,532)

Provisions Employee provisions 8A 152,143 115,972 106,786 45,357 146,963 5,180

Other provisions 8B 28,560 22,017 23,272 5,288 28,244 316

Total provisions 180,703 137,989 130,058 50,645 175,207 5,496

Total liabilities 287,519 251,280 261,304 26,215 297,555 (10,036)

Net assets 126,391 119,057 72,671 53,720 124,553 1,838

EQUITY Parent entity interest Contributed equity 246,925 217,325 236,944 9,981 263,746 (16,821)

Asset revaluation reserve 30,436 30,507 14,112 16,324 30,507 (71)

Accumulated deficit (150,970) (128,775) (178,385) 27,415 (169,700) 18,730

Total parent entity interest 126,391 119,057 72,671 53,720 124,553 1,838

Total equity 126,391 119,057 72,671 53,720 124,553 1,838

The above statement should be read in conjunction with the accompanying notes.

ACTUAL BUDGET ESTIMATE BUDGET ESTIMATE

For budgetary reporting information refer to Note 29. The original budget is the budget published in the 2015-16 Portfolio Budget Statements and the revised budget is the estimated actuals from the 2016-17 Portfolio Budget Statements. The budget statement information has been reclassified and presented on a consistent basis with the corresponding financial statement.

PART 4 FINANCIAL STATEMENTS 4.1

302 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Statement of changes in equity for the period ended 30 June 2016

Original Variance Revised Variance

Notes 2016 2015 2016 2016 2016 2016

$'000 $'000 $'000 $'000 $'000 $'000

ACCUMULATED DEFICIT Opening balance Balance carried forward from previous period (128,775) (116,440) (153,785) 25,010 (153,651) 24,876 Adjustments for errors - 24,879 - - - -

Adjusted opening balance (128,775) (91,561) (153,785) 25,010 (153,651) 24,876

Comprehensive income Deficit for the period (24,708) (37,214) (24,600) (108) (16,049) (8,659)

Total comprehensive income (24,708) (37,214) (24,600) (108) (16,049) (8,659)

Transfers between equity components 2,513 - - 2,513 - 2,513

Closing balance as at 30 June (150,970) (128,775) (178,385) 27,415 (169,700) 18,730

Closing balance attributable to the Australian Government (150,970) (128,775) (178,385) 27,415 (169,700) 18,730

ASSET REVALUATION RESERVE Opening balance Balance carried forward from previous period 30,507 14,112 14,112 16,395 30,507 -

Adjusted opening balance 30,507 14,112 14,112 16,395 30,507 -

Comprehensive income Other comprehensive income - 16,395 - - - -

Total comprehensive income - 16,395 - - - -

Transfers between equity components (71) - - (71) - (71)

Closing balance as at 30 June 30,436 30,507 14,112 16,324 30,507 (71)

Closing balance attributable to the Australian Government 30,436 30,507 14,112 16,324 30,507 (71)

CONTRIBUTED EQUITY Opening balance Balance carried forward from previous period 217,325 202,477 217,325 - 223,835 (6,510)

Adjusted opening balance 217,325 202,477 217,325 - 223,835 (6,510)

Transfers between equity components (2,442) - - (2,442) - (2,442)

Transactions with Owners Contributions by owners Equity injection - appropriations 20,034 8,820 8,410 11,624 32,290 (12,256)

Equity injection - restructuring2 12,256 - - 12,256 - 12,256

Departmental capital budget 6,656 6,028 11,209 (4,553) 7,621 (965)

Departmental capital budget - restructuring2 965 - - 965 - 965

Restructuring3 (7,869) - - (7,869) - (7,869)

Total transactions with owners 32,042 14,848 19,619 12,423 39,911 (7,869)

Closing balance as at 30 June 246,925 217,325 236,944 9,981 263,746 (16,821)

Closing balance attributable to the Australian Government 246,925 217,325 236,944 9,981 263,746 (16,821)

BUDGET ESTIMATE ACTUAL BUDGET ESTIMATE

4.1 4.1 DEPARTMENT OF HEALTH

303 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Statement of changes in equity for the period ended 30 June 2016

Original Variance Revised Variance

Notes 2016 2015 2016 2016 2016 2016

$'000 $'000 $'000 $'000 $'000 $'000

BUDGET ESTIMATE ACTUAL BUDGET ESTIMATE

TOTAL EQUITY Opening balance Balance carried forward from previous period 119,057 100,149 77,652 41,405 100,691 18,366

Adjustments for errors1 - 24,879 - - - -

Adjusted opening balance 119,057 125,028 77,652 41,405 100,691 18,366

Comprehensive income Other comprehensive income - 16,395 - - - -

Deficit for the period (24,708) (37,214) (24,600) (108) (16,049) (8,659)

Total comprehensive income (24,708) (20,819) (24,600) (108) (16,049) (8,659)

Transactions with Owners Contributions by owners Equity injection - appropriations 20,034 8,820 8,410 11,624 32,290 (12,256)

Equity injection - restructuring2 12,256 - - 12,256 - 12,256

Departmental capital budget 6,656 6,028 11,209 (4,553) 7,621 (965)

Departmental capital budget - restructuring2 965 - - 965 - 965

Restructuring3 (7,869) - - (7,869) - (7,869)

Total transactions with owners 32,042 14,848 19,619 12,423 39,911 (7,869)

Closing balance as at 30 June 126,391 119,057 72,671 53,720 124,553 1,838

Closing balance attributable to the Australian Government 126,391 119,057 72,671 53,720 124,553 1,838

2

This relates to Appropriation Receivable transferred under the Administrative Arrangements Order issued on 30 September 2015 from the Department of Social Services and Department of Human Services through Appropriation Acts No. 3 and 4. Refer to Note 9: Restructuring for details.

3 This relates to the residual assets and liabilities assumed/relinquished under the Administrative Arrangements Order issued on 30 September 2015. Refer to Note 9: Restructuring for details. The Restructuring net assets/(liabilities) figure differs from the Statement of changes in equity, as this has been adjusted for appropriations received through the budgetary process and inter-agency transfers for which a formal agreement has not yet been approved 'under section 75 of the PGPA Act'.

The above statement should be read in conjunction with the accompanying notes.

For budgetary reporting information refer to Note 29. The original budget is the budget published in the 2015-16 Portfolio Budget Statements and the revised budget is the estimated actuals from the 2016-17 Portfolio Budget Statements. The budget statement information has been reclassified and presented on a consistent basis with the corresponding financial statement.

1 For adjustments for errors in refer to Note 1: Overview (1.7 Transactions with the Australian Government as Owner).

PART 4 FINANCIAL STATEMENTS 4.1

304 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Cash flow statement for the period ended 30 June 2016

Original Variance Revised Variance

Notes 2016 2015 2016 2016 2016 2016

$'000 $'000 $'000 $'000 $'000 $'000

OPERATING ACTIVITIES Cash received Appropriations 678,390 545,728 532,479 145,911 609,225 69,165

Sale of goods and rendering of services 161,373 210,257 188,519 (27,146) 210,972 (49,599)

Net GST received 25,816 24,518 19,946 5,870 24,946 870

Other 2,063 1,176 11,790 (9,727) 1,085 978

Total cash received 867,642 781,680 752,734 114,908 846,228 21,414

Cash used Employees (471,954) (372,598) (433,472) (38,482) (463,516) (8,438)

Suppliers (339,331) (318,939) (204,756) (134,575) (305,461) (33,870)

Net GST paid - - (20,113) 20,113 (4,349) 4,349

Section 74 receipts transferred to OPA (58,550) (69,808) (76,558) 18,008 (63,558) 5,008

Other (1,105) (11,531) (6,046) 4,941 (1,095) (10)

Total cash used (870,940) (772,876) (740,945) (129,995) (837,979) (32,961)

Net cash from operating activities 10 (3,298) 8,804 11,789 (15,087) 8,249 (11,547)

INVESTING ACTIVITIES Cash received Proceeds from sales of property, plant and equipment 9,210 - - 9,210 9,200 10

Total cash received 9,210 - - 9,210 9,200 10

Cash used Purchase of property, plant, equipment and intangibles (35,438) (30,137) (35,289) (149) (54,002) 18,564

Total cash used (35,438) (30,137) (35,289) (149) (54,002) 18,564

Net cash used by investing activities (26,228) (30,137) (35,289) 9,061 (44,802) 18,574

FINANCING ACTIVITIES Cash received Appropriations - Equity injection 27,341 15,757 19,619 7,722 39,911 (12,570)

Appropriations - Departmental capital budget 13,226 2,215 - 13,226 - 13,226

Total cash received 40,567 17,972 19,619 20,948 39,911 656

Net cash received from financing activities 40,567 17,972 19,619 20,948 39,911 656

Net increase in cash held 11,041 (3,361) (3,881) 14,922 3,358 7,683

Cash and cash equivalents at the beginning of the reporting period 79,631 82,992 74,970 4,661 79,631 -

Cash and cash equivalents at the end of the reporting period 5A 90,672 79,631 71,089 19,583 82,989 7,683

For budgetary reporting information refer to Note 29. The original budget is the budget published in the 2015-16 Portfolio Budget Statements and the revised budget is the estimated actuals from the 2016-17 Portfolio Budget Statements. The budget statement information has been reclassified and presented on a consistent basis with the corresponding financial statement.

BUDGET ESTIMATE ACTUAL BUDGET ESTIMATE

The above statement should be read in conjunction with the accompanying notes.

4.1 4.1 DEPARTMENT OF HEALTH

305 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Administered schedule of comprehensive income for the period ended 30 June 2016

Original Variance Revised Variance

Notes 2016 2015 2016 2016 2016 2016

$'000 $'000 $'000 $'000 $'000 $'000

NET COST OF SERVICES Expenses Suppliers 17A 676,768 453,604 497,579 179,189 506,481 170,287

Subsidies 17B 9,290,201 126,703 104,067 9,186,134 9,189,162 101,039

Personal benefits 17C 39,507,641 36,560,965 39,124,195 383,446 38,582,700 924,941

Grants 17D 5,818,319 5,412,211 5,971,750 (153,431) 6,163,976 (345,657)

Depreciation and amortisation 17E 20,383 19,272 19,272 1,111 22,625 (2,242)

Write-down and impairment of assets 17F 107,326 3,858 101,656 5,670 105,379 1,947

Payments to corporate Commonwealth entities 17G 328,658 300,847 346,502 (17,844) 346,502 (17,844)

Other expenses 17H 10,149 450,900 - 10,149 4,702 5,447

Total expenses 55,759,445 43,328,360 46,165,021 9,594,424 54,921,527 837,918

Income Revenue Taxation revenue Other taxes 18A 17,799 16,906 26,036 (8,237) 15,000 2,799

Total taxation revenue 17,799 16,906 26,036 (8,237) 15,000 2,799

Non-taxation revenue Interest 4,757 - - 4,757 5,839 (1,082)

Recoveries 18B 2,556,834 781,007 1,013,159 1,543,675 1,591,786 965,048

Other revenue 18C 252,222 1,375,055 913,627 (661,405) 82,305 169,917

Total non-taxation revenue 2,813,813 2,156,062 1,926,786 887,027 1,679,930 1,133,883

Total income 2,831,612 2,172,968 1,952,822 878,790 1,694,930 1,136,682

Net cost of services 52,927,833 41,155,392 44,212,199 8,715,634 53,226,597 (298,764)

Deficit (52,927,833) (41,155,392) (44,212,199) (8,715,634) (53,226,597) 298,764

OTHER COMPREHENSIVE INCOME Items not subject to subsequent reclassification to net cost of services Changes in asset revaluation reserves 9,692 - - 9,692 - 9,692

Changes in administered investment reserves (9,906) (134,806) - (9,906) - (9,906)

Total other comprehensive income (214) (134,806) - (214) - (214)

Total comprehensive loss (52,928,047) (41,290,198) (44,212,199) (8,715,848) (53,226,597) 298,550

ACTUAL BUDGET ESTIMATE BUDGET ESTIMATE

For budgetary reporting information refer to Note 29. The original budget is the budget published in the 2015-16 Portfolio Budget Statements and the revised budget is the estimated actuals from the 2016-17 Portfolio Budget Statements. The budget statement information has been reclassified and presented on a consistent basis with the corresponding financial statement.

The above schedule should be read in conjunction with the accompanying notes.

PART 4 FINANCIAL STATEMENTS 4.1

306 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Administered schedule of assets and liabilities as at 30 June 2016

Original Variance Revised Variance

Notes 2016 2015 2016 2016 2016 2016

$'000 $'000 $'000 $'000 $'000 $'000

ASSETS Financial assets Cash and cash equivalents 20A 171,579 336,648 13,312 158,267 336,648 (165,069)

Personal benefits receivable 20B 748,121 148,511 183,131 564,990 148,511 599,610

Trade and other receivables 20C 625,396 171,851 383,661 241,735 891,227 (265,831)

Other investments 20D 380,117 390,024 342,124 37,993 512,249 (132,132)

Total financial assets 1,925,213 1,047,034 922,228 1,002,985 1,888,635 36,578

Non-financial assets Land and buildings 21 33,197 24,468 23,505 9,692 23,505 9,692

Computer software 21 48,823 36,617 43,125 5,698 39,772 9,051

Inventories held for distribution 111,265 210,005 117,148 (5,883) 111,550 (285)

Total non-financial assets 193,285 271,090 183,778 9,507 174,827 18,458

Total assets administered on behalf of Government 2,118,498 1,318,124 1,106,006 1,012,492 2,063,462 55,036

LIABILITIES Payables Suppliers 22A 9,881 7,110 12,071 (2,190) 7,110 2,771

Subsidies - external parties 263,538 2,708 2,634 260,904 154,334 109,204

Personal benefits - indirect 898,425 915,091 1,173,946 (275,521) 942,069 (43,644)

Grants 22B 378,070 375,162 232,586 145,484 370,716 7,354

Total payables 1,549,914 1,300,071 1,421,237 128,677 1,474,229 75,685

Provisions Subsidies - external parties 22C,D 425,000 413,000 359,787 65,213 406,975 18,025

Personal benefits - indirect 1,280,045 1,011,494 1,027,297 252,748 1,011,494 268,551

Total provisions 1,705,045 1,424,494 1,387,084 317,961 1,418,469 286,576

Total liabilities administered on behalf of Government 3,254,959 2,724,565 2,808,321 446,638 2,892,698 362,261

Net liabilities 1,136,461 1,406,441 1,702,315 (565,854) 829,236 307,225

ACTUAL BUDGET ESTIMATE BUDGET ESTIMATE

For budgetary reporting information refer to Note 29. The original budget is the budget published in the 2015-16 Portfolio Budget Statements and the revised budget is the estimated actuals from the 2016-17 Portfolio Budget Statements. The budget statement information has been reclassified and presented on a consistent basis with the corresponding financial statement.

The above schedule should be read in conjunction with the accompanying notes.

4.1 4.1 DEPARTMENT OF HEALTH

307 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Administered reconciliation schedule

2016 2015

$'000 $'000

Opening assets less liabilities as at 1 July (1,406,441) (1,381,555)

Adjusted opening assets less liabilities (1,406,441) (1,381,555)

Net cost of services Income 2,831,612 2,172,968

Expenses Payments to entities other than corporate Commonwealth entities (55,430,787) (43,027,513)

Payments to corporate Commonwealth entities (328,658) (300,847)

Other comprehensive income Revaluations transferred from reserves (214) (134,806)

Net assets assumed from portfolio agencies - 484

Transfers (to)/from Australian Government Appropriation transfers from OPA Administered assets and liabilities appropriations 33,202 3,713

Annual appropriations Payments to entities other than corporate Commonwealth entities 6,619,347 5,341,376

Payments to corporate Commonwealth entities 328,658 300,847

Special appropriations (unlimited) Payments to entities other than corporate Commonwealth entities 48,149,354 36,638,318

Payments to corporate Commonwealth entities - 445,538

Special appropriations (limited) Refund of receipts (section 77 of the PGPA Act ) 7,926 737

Net GST appropriations 25,875 9,644

Appropriation transfers to OPA Transfers to OPA (2,135,107) (1,475,345)

Restructuring 168,773 -

Closing assets less liabilities as at 30 June (1,136,461) (1,406,441)

PART 4 FINANCIAL STATEMENTS 4.1

308 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Administered cash flow statement for the period ended 30 June 2016

Note 2016 2015

$'000 $'000

OPERATING ACTIVITIES Cash received Interest 3,130 -

Taxes 17,799 16,906

Net GST received 359,467 315,084

Health and hospital fund receipts 54,984 716,916

Recoveries 2,301,933 784,495

Transfers from Private Health Insurance Administration Council - 445,538

Other 117,687 237,123

Total cash received 2,855,000 2,516,062

Cash used Grants (6,204,054) (5,642,752)

Subsidies (9,180,995) (108,669)

Personal benefits (39,613,098) (36,497,460)

Suppliers (684,997) (462,230)

Payments to corporate Commonwealth entities (328,658) (300,847)

Transfers to Private Health Insurance Administration Council - (445,538)

Total cash used (56,011,802) (43,457,496)

Net cash used by operating activities 23 (53,156,802) (40,941,434)

INVESTING ACTIVITIES Cash received Repayments of advances and loans 16,402 -

Total cash received 16,402 -

Cash used Advances and loans made (22,298) -

Purchase of intangible assets (31,626) -

Total cash used (53,924) -

Net cash used by investing activities (37,522) -

Net decrease in cash held (53,194,324) (40,941,434)

4.1 4.1 DEPARTMENT OF HEALTH

309 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Administered cash flow statement for the period ended 30 June 2016

Note 2016 2015

$'000 $'000

Cash and cash equivalents at the beginning of the reporting period 336,648 13,254

Cash from Official Public Account Appropriations 55,105,285 42,726,816

Special Accounts 10,093 5,345

Capital appropriations 33,202 3,713

Administered GST appropriations 380,296 328,505

Total cash from Official Public Account 55,528,876 43,064,379

Cash to Official Public Account Special Accounts (10,093) (5,345)

Private Health Insurance Administration Council transfers - (445,538)

Return of GST appropriations to the Official Public Account (354,421) (318,861)

Other (2,135,107) (1,029,807)

Total cash to Official Public Account (2,499,621) (1,799,551)

Cash and cash equivalents at the end of the reporting period 20A 171,579 336,648

This statement should be read in conjunction with the accompanying notes.

PART 4 FINANCIAL STATEMENTS 4.1

310 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Table of contents - notes to and forming part of the financial statements

Note 1: Overview Note 2: Expenses Note 3: Income Note 4: Operating Result Reconciliation Note 5: Financial Assets Note 6: Non-Financial Assets including Fair Value Measurements Note 7: Payable Note 8: Provisions Note 9: Restructuring Note 10: Cash Flow Reconciliation Note 11: Contingent Assets and Liabilities Note 12: Senior Management Personnel Remuneration Note 13: Financial Instruments Note 14: Therapeutic Goods Administration Note 15: Remuneration of Auditors Note 16: Regulatory Charging Summary Note 17: Administered - Expenses Note 18: Administered - Income Note 19: Administered - Fair Value Measurements Note 20: Administered - Financial Assets Note 21: Administered - Non-Financial Assets Note 22: Administered - Payables and Provisions Note 23: Administered - Cash Flow Reconciliation Note 24: Administered - Contingent Assets and Liabilities Note 25: Administered - Financial Instruments Note 26A: Appropriations Note 26B: Compliance with Statutory Requirements for Payments from the Consolidated Revenue Fund Note 27: Special Accounts Note 28: Reporting of Outcomes Note 29: Explanation of Budget Variances

4.1 4.1 DEPARTMENT OF HEALTH

311 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

1.1 Objectives of the Department of Health

The Department of Health (the Department) is an Australian Government controlled entity which is a not-for-profit entity. The objective of the Department to lead and shape Australia’s health system and sporting outcomes through evidence based policy, well targeted programs and best practice regulation and in 2016 was structured to meet the following 11 outcomes:

Outcome 1 Population Health;

Outcome 2 Access to Pharmaceutical Services;

Outcome 3 Access to Medical and Dental Services;

Outcome 4 Acute Care;

Outcome 5 Primary Health Care;

Outcome 6 Private Health;

Outcome 7 Health Infrastructure, Regulation, Safety and Quality;

Outcome 8 Health Workforce Capacity;

Outcome 9 Biosecurity and Emergency Response;

Outcome 10 Sport and Recreation; and

Outcome 11 Ageing and Aged Care.

Outcome 11: Ageing and Aged Care is included in 2015-16 as the result of the transfer of the function to the Department under the Administrative Arrangement Order issued on 30 September 2015. The Medicare Provider Compliance function was transferred into Outcome 3. Refer to Note 9: Restructuring.

The continued existence of the Department in its present form and with its present programs is dependent on Government policy and on continuing funding by Parliament for the Department’s administration and programs.

Department activities contributing toward these outcomes are classified as either departmental or administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the Department in its own right. Administered activities involve the management or oversight by the Department, on behalf of the Government, of items controlled or incurred by the Government.

The Department is responsible for the following administered activities on behalf of the Government:

 payment of subsidies for residential, aged care and community programs;  payment of personal benefits for Medicare services, pharmaceutical services and affordability, and choice of health care initiatives; and  payment of grants, with the majority of these made to non-profit organisations.

1.2 Basis of Preparation of the Financial Statements

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

The financial statements and notes have been prepared in accordance with:

 Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (the FRR); and  Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements and notes have been prepared on an accrual basis and are in accordance with the historical cost convention, except for certain assets at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian Dollars.

Administered revenues, expenses, assets, liabilities and cash flows reported in the administered schedules and related notes are accounted for on the same basis and using the same policies as for Departmental items, except as otherwise stated in Note 1.18.

The Department’s financial statements include the financial statements of the Department of Health and three Departmental special accounts, the Therapeutic Goods Administration (TGA), the Office of the Gene Technology Regulator (OGTR) and the National Industrial Chemicals Notification and Assessment Scheme (NICNAS).

PART 4 FINANCIAL STATEMENTS 4.1

312 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

All transactions between the Department and the special accounts have been eliminated from the departmental financial statements.

Comparative Figures

Comparative figures have been adjusted, where required, to conform to changes in presentation of the financial statements.

1.3 New Australian Accounting Standards

Adoption of new Australian Accounting Standard requirements

The Department adopted all new, revised and amending standards and interpretations that were issued by the Australian Accounting Standards Board (AASB) prior to the sign-off date and are applicable to the current reporting period. The adoption of these standards and interpretations did not have a material effect, and are not expected to have a future material effect on the Department’s financial statements.

During the period, the department adopted early AASB 2015-7 Amendments to Australian Accounting Standards - Fair Value Disclosures of Not-for-Profit Public Sector Entities. The result of this early adoption of the standard has had an immaterial effect on the fair value disclosures included in the financial statements.

Future accounting standard requirements The following new, revised and amending standards and interpretations were issued by the AASB prior to the signing of the statement by the Accountable Authority and Chief Financial Officer, for which the Department is still assessing the potential impact on the financial statements:

 AASB 15 Revenue from Contracts with Customers  AASB 16 Leases  AASB 124 Related Party Disclosures

All other new, revised, and amending standards or interpretations that have been issued by the AASB prior to sign off date that are applicable to the future reporting period(s) are not expected to have a future material financial impact on the Department’s financial statements.

1.4 Significant Accounting Judgements and Estimates

Departmental

In the process of applying the accounting policies listed in this note, the Department has determined that no accounting assumptions and estimates have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period.

Administered

The following assumptions and estimates have been identified that may have a significant risk of causing material adjustments to the carrying amounts of administered assets and liabilities within the next accounting period.

Medical Indemnity

Medical indemnity schemes are administered by the Department under the Medical Indemnity Act 2002 and the Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010. The Department administers the following medical indemnity schemes:

 Incurred But Not Reported Scheme (IBNRS);

 High Cost Claims Scheme (HCCS);

 Exceptional Claims Scheme (ECS);

 Run-Off Cover Scheme (ROCS);

 Premium Support Scheme (PSS);

 Midwife Professional Indemnity (Commonwealth Contribution) Scheme (MPIS); and

 Midwife Professional Indemnity Run-off Cover Scheme (MPIRCS).

Further detail on each of these schemes is provided at Note 22D.

The payments for medical indemnity are managed by the Department of Human Services (DHS), the service delivery entity, on behalf of the Department through its Medicare program.

The Australian Government Actuary (AGA) estimated the provision for future payments for the medical indemnity schemes administered by the Department. At the reporting date, provision for future payment was recognised for IBNRS, HCCS, and ROCS. No provision was recognised for ECS, MPIS or MPIRCS as, to date, no payment has been made against these schemes and

4.1 4.1 DEPARTMENT OF HEALTH

313 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

they could not be reliably measured and are reported as a contingent liability in Note 24. No provision was recognised for the PSS as the nature and timing of payments associated with this scheme are based on a relatively predictable pattern of annual payments that must be settled within 12 months of the end of a premium period.

The nature of the medical indemnity liability estimates is inherently, and unavoidably uncertain.

The uncertainty arises for the following reasons:

 it is not possible to precisely model the claim process, and random variation both in past and future claims have or will have adverse consequences on the model;

 there can be a long delay between incident occurrences, to notification and to settlement, making the projection of timing very uncertain;

 the nature and cause of injury is difficult to determine and prove;

 the claims experience can be very sensitive to the surrounding factors such as technology, legislation, attitudes and the economy; and

 in general, these schemes have a small number of large claims which account for a substantial part of the overall cost. This is associated with large expected random variation. It follows that a wide range of results can be obtained with equal statistical significance which differs materially in the context of a Schedule of Assets and Liabilities. This is a common situation with liabilities of this nature.

The methods used by the AGA to estimate the liability under the different schemes are as follows:

• General:

The AGA has relied on projections that have been prepared by the appointed actuaries to the five medical indemnity insurers (MIIs) and provided to the Commonwealth under the relevant provisions of the Medical Indemnity Act 2002 and the Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010. Payment information from the Medicare program complemented the projection. Where appropriate, adjustments have been made to those projections as described below.

• IBNRS:

The AGA has carried out chain ladder modelling using the payments data. The results of this analysis have been compared to the projections prepared by the industry actuaries. The results closely match and as a result, the AGA has largely relied on industry projections to estimate the liability.

• ROCS:

The AGA has developed an independent ROCS actuarial model which estimates the total annual accruing ROCS cost to the Australian Government. The model output is used to check against industry actuaries’ projections. For the estimate of the outstanding ROCS liability as at 30 June 2016, the AGA has relied on the projections from the actuary of each of the MIIs, but has adjusted the IBNRS component on comparison with the projections from its own ROCS internal model. Given that the majority of the claims anticipated under this scheme have not yet made, the AGA noted a relatively high level of uncertainty in the estimate.

PART 4 FINANCIAL STATEMENTS 4.1

314 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

• HCCS:

The AGA has relied on the projections of the industry actuaries but has made adjustments in respect of claims which are also eligible for the IBNRS and/or ROCS to ensure overall consistency of the estimates.

The experience of the medical indemnity claims cycle indicates that claims and subsequent payments can take a number of years to mature and settle. The Department has used a 1.7% per annum discount rate in the calculation of the estimate for the current year. This discount rate was derived from the Commonwealth bonds yield curve based on the revised average observed liability duration of 5 years for the medical indemnity payments. This discount rate is deemed to be more appropriate than the 10 year bond yield at 30 June 2016, which was 2%. A discount rate of 2.4% was used last year, which was derived using the same method.

A sensitivity analysis was undertaken by moving the discount rate either up or down to the nearest full percentage point. Increasing the discount rate to 2% would result in a discounted liability estimate which is about 1.9% ($8m) less than the base estimate. On the other hand, decreasing the discount rate to 1% would result in a discounted liability estimate which is about 3.5% ($15m) higher than base estimate.

2015-16 2014-15

discounted discounted discounted discounted

1% 1.7%1 2% 2.4%

$'m $'m $'m $'m

Incurred But Not Reported

29 28 27 34

High Cost Claims Scheme

325 316 311 300

Run-Off Cover Scheme 86 81 79 79

Total 440 425 417 413

1 1.7% was used as the basis of estimation in 2015-16, see note 22D.

Medicare Outstanding Claims

Medicare payments processed by the DHS on behalf of the Department are either reimbursement to patients, made after medical services have been received from a doctor, or payments made directly to doctors through the bulk billing system. At any point in time, there are thousands of cases where a medical service has been rendered, but the Medicare payment has not yet been made. The DHS has been using the ‘Winters’ methodology to estimate the value of these outstanding claims.

Under the Winters methodology, a number of models are used to estimate the outstanding Medicare claims liabilities. The model preferred by the industry, and consistently applied in past financial statements of the Department, is Model 5. Model 5 comprises two major components: chain ladder modelling and time series modelling.

Under Model 5, user defined parameters are applied to smooth the time series observations and make predictions about future payment values. As the parameters are user defined it is reasonable to assume that different users of the model may make different choices, and therefore arrive at different estimates of the outstanding liability. In order to validate the parameters used, actual payment data has been compared to previous estimates using various parameters to predict the liability. The model weight recent payment experience more heavily and is therefore self adjusting for emerging trends.

The AGA was engaged to analyse the monthly Medicare payment data from June 2015 to June 2016 across a range of reasonable choices for the smoothing parameters. A range of estimated liabilities from these scenarios, for each month, was then compared with the estimated liability under the Model 5 smoothing parameters. This sensitivity analysis indicates that under a reasonable range of smoothing parameter scenarios, the estimated liabilities vary by up to plus or minus 5%.

1.5 Revenue

Revenue from the sale of goods is recognised when:

 the risks and rewards of ownership have been transferred to the buyer;  the Department retains no managerial involvement or effective control over the goods;  the revenue and transaction costs incurred can be reliably measured; and  it is probable that the economic benefits associated with the transaction will flow to the Department.

4.1 4.1 DEPARTMENT OF HEALTH

315 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when the:

 amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and  probable economic benefits associated with the transaction will flow to the Department.

Receivables for goods and services, which have 30 day terms (note the TGA operates on terms in accordance with the Therapeutic Goods Regulations 1990), are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

On 1 July 2015 TGA introduced a new scheme to provide relief from annual charges for products with low value turnover. The scheme, which is detailed in the regulations covering therapeutic goods, allows for charges in respect of 2016 to be determined after 1 July 2016. This introduces a level of uncertainty into the revenue calculation for the financial year, the uncertainty will reduce in subsequent years as data about the uptake of the scheme is accumulated.

Revenue from Government

Amounts appropriated for Departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the Department gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

1.6 Gains

Resources Received Free of Charge

Resources received free of charge are recognised as gains when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Resources received free of charge are recorded as either revenue or gains depending on their nature.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government entity as a consequence of a restructuring of administrative arrangements (refer to Note 1.7).

Sale of Assets

Gains from disposal of non-current assets are recognised when control of the asset has passed to the buyer.

1.7 Transactions with the Australian Government as Owner

Equity Injections

Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year.

Restructuring of Administrative Arrangements

Net assets received from or relinquished to another Government entity under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.

Under the Administrative Arrangements Order issued on 30th September 2015:  responsibility for aged care programs and functions was transferred to the Department from the Department of Social Services (DSS). This included the Australian Aged Care Quality Agency;  the statutory offices of the Aged Care Commissioner and the Aged Care Pricing Commissioner transferred to the Department;

and

 Medicare Provider compliance for the Medicare Benefits Schedule and Pharmaceutical Benefits Schedule and allied health services transferred to the Department from the Department of Human Services (DHS).

Refer to Note 9: Restructuring for the details of assets and liabilities transferred between the affected agencies which occurred in 2015-16.

In addition, following the passing of required legislation, the Private Health Insurance Administration Council and the Private Health Insurance Ombudsman, entities within the Health Portfolio, were closed and their functions transferred to the Department and other Australian Government entities.

PART 4 FINANCIAL STATEMENTS 4.1

316 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

Independent Reviews Prior Year Funding

During the current period, the Department identified a prior period error. The error has been corrected by retrospectively restating the affected comparative items in the current year. It was identified that certain unspent departmental funding, appropriated between 2005-06 and 2013-14 was recognised as a liability payable to the Department of Finance (Finance). In 2015-16, the Department determined that there was no obligation to return the unspent funding to Finance. No transactions have impacted the liability reported in error since 2013-14. The effect of derecognising the liability to comparative amounts for 2015-16 has reduced Suppliers by $24.879m in the Statement of Financial Position. The effect of recognising the accumulated funding between 2005-06 and 2013-14 to comparative amounts for 2015-16 has reduced the Accumulated Deficit by $24.879m within the Statement of Financial Position and the Statement of Changes in Equity.

Other Distributions to Owners

The FRR requires that any distribution to owners be debited to contributed equity unless it is in the nature of a dividend.

1.8 Employee Benefits

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of the end of reporting period are measured at their nominal amounts.

Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Leave

The liability for employee benefits includes provisions for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Department is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the Department’s employer superannuation contribution rates to the extent that leave is likely to be taken during service rather than paid out on termination. The liability for long service leave and annual leave expected to be settled outside of 12 months of the balance date has been determined by reference to the work of an actuary as at June 2016. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments, as shown at Note 8A: Employee Provisions. The Department recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation

Under the Superannuation Legislation Amendment (Choice of Funds) Act 2004, staff of the Department are able to become a member of any complying superannuation fund. A complying superannuation fund is one that meets the requirements under the Income Tax Assessment Act (1997) and the Superannuation Industry (Supervision) Act 1993.

The Department’s staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other compliant super funds with the rates of contribution being set by the Department of Finance on an annual basis.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap and other compliant superannuation funds are defined contribution schemes.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

The Department makes employer contributions to the employee superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government. The Department accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the number of days between the last pay period in the financial year and 30 June.

1.9 Leases

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.

Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

4.1 4.1 DEPARTMENT OF HEALTH

317 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

Surplus Lease Space

Future net outlays in respect of surplus space under non-cancellable lease agreements are expensed in the period in which the spaces are identified as becoming surplus.

Lease Incentives

Lease incentives taking the form of ‘free’ leasehold improvements and rent holidays are recognised as liabilities. These liabilities are reduced on a straight-line basis by allocating lease payments between rental expense and reduction of the lease incentive liability.

Provision for Restoration Obligation

Where the Department has a contractual obligation to undertake remedial work upon vacating leased properties, the estimated cost of that work is recognised as a liability. An equal value asset is created at the same time and amortised over the life of the lease of the underlying leasehold property.

1.10 Cash

Cash and cash equivalents include:

 cash on hand;  demand deposits in bank accounts with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value; and  cash in special accounts includes amounts that are banked in the Australian Government’s Official Public Account. Overdrafts

An overdraft occurs when the amount withdrawn from the Department’s administered bank account by the DHS, due to an agreed sweeping arrangement, is greater than the original estimated payments. A debit balance of the bank account as a result of an inaccurate estimate is authorised by the Finance Minister’s delegations under section 53 (2) of the PGPA Act.

1.11 Financial assets

The Department classifies its financial assets in the following categories:

 available-for-sale financial assets; and  loans and receivables.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date.

Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss.

Available-for-Sale Financial Assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.

Available-for-sale financial assets are recorded at fair value. Gains and losses arising from changes in fair value are recognised directly in the reserves (equity) with the exception of impairment losses. Interest is calculated using the effective interest method and foreign exchange gains and losses on monetary assets are recognised directly in profit or loss. Where the asset is disposed of, or is determined to be impaired, part (or all) of the cumulative gain or loss previously recognised in the reserve is included in surplus and deficit for the period.

Loans and Receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period.

Financial assets held at amortised cost - if there is objective evidence that an impairment loss has been incurred for loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of comprehensive income.

PART 4 FINANCIAL STATEMENTS 4.1

318 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

Available-for-sale financial assets - if there is objective evidence that an impairment loss on an available-for-sale financial asset has been incurred, the amount of the difference between its cost, less principal repayments and amortisation, and its current fair value, less any impairment loss previously recognised in expenses, is transferred from equity to the Statement of comprehensive income.

1.12 Financial Liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit and loss’ or ‘other financial liabilities’. Financial liabilities are recognised and derecognised upon trade date.

The Department does not hold any financial liabilities at ‘fair value through profit and loss’.

Other financial liabilities are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

1.13 Contingent Liabilities and Contingent Assets

Contingent liabilities and contingent assets are not recognised in the Statement of financial position but are reported in the relevant notes. They may arise from uncertainty as to the existence of a liability or asset, or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not certain, and contingent liabilities are disclosed when settlement is greater than remote.

1.14 Acquisition of Assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring, refer also Note 1.7.

1.15 Property, Plant and Equipment

Asset Recognition Threshold

Purchases of property, plant and equipment are recognised initially at cost in the Statement of financial position, except for information technology equipment purchases costing less than $500 (TGA $2,000), leasehold improvements costing less than $50,000 (TGA $10,000), and all other purchases costing less than $2,000, which are expensed in the year of acquisition (other than when they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions in property leases taken up by the Department where there exists an obligation to restore the property to prescribed conditions. These costs are included in the value of the Department’s leasehold improvements with a corresponding provision for the ‘make good’ recognised.

Revaluations

Following initial recognition at cost, property, plant and equipment are carried at latest value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.

An independent valuation of all property, plant and equipment was carried out by Australian Valuation Solutions Pty Ltd on 30 June 2015. The desktop review of assets undertaken as at 30 June 2016 indicated that the carrying value of departmental assets did not materially differ from fair value.

Revaluation adjustments are made on a class basis. Any revaluation increment was credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reversed a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset is restated to the revalued amount.

Any class of asset not formally revalued in a given year has been subject to a management assessment (or a desktop review) to ensure the carrying value does not materially differ to its fair value.

4.1 4.1 DEPARTMENT OF HEALTH

319 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

An independent valuation of administered land and buildings was carried out by Australian Valuation Solutions Pty Ltd on 30 June 2014. The 2016 desktop valuation of administered buildings indicated that a revaluation as at 30 June 2016 was required to align the carrying value with the fair value. Refer also Note 19.

Depreciation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Department using, in all cases, the straight-line method of depreciation. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease, including any applicable lease options available.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are made in the current, or current and future reporting periods, as appropriate.

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

2016 2015

Buildings on freehold land 20 to 25 years 20 to 25 years

Leasehold improvements The lower of the lease term or the

estimated useful life

The lower of the lease term or the estimated useful life

Plant and equipment 3 to 20 years 3 to 20 years

Impairment

All assets were assessed for impairment at 30 June 2016. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

1.16 Intangibles

The Department’s intangibles comprise internally developed software for internal use and purchased software. These assets are carried at cost less accumulated amortisation and accumulated impairment losses. The Department recognises internally developed software costing more than $100,000 and purchased software costing more than $500 (TGA $100,000.)

Software is amortised on a straight-line basis over its anticipated useful life.

The useful lives of the Department’s software are:

2016 2015

Internally developed software 2 to 10 years 2 to 10 years

Purchased software 2 to 7 years 2 to 7 years

All software assets were assessed for indications of impairment as at 30 June 2016.

1.17 Taxation

The Department is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Revenues, expenses, assets and liabilities are recognised net of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office; and for receivables and payables.

1.18 Reporting of Administered Activities

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes.

Except where otherwise stated below, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

PART 4 FINANCIAL STATEMENTS 4.1

320 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

Administered Cash Transfers to and from the Official Public Account

Revenue collected by the Department for use by the Government rather than the Department is administered revenue. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by the Department on behalf of the Government and are reported as such in the Administered cash flow statement and in the Administered reconciliation schedule.

Revenue

All administered revenues are revenues relating to the course of ordinary activities performed by the Department on behalf of the Australian Government. As such, administered appropriations are not revenues of the individual entity that oversees distribution or expenditure of the funds as directed.

Recoveries are recognised on an accrual basis and relate to:

 recoveries under the Medical Benefits, Pharmaceutical Benefits and Health Rebate schemes after settlement of personal injury claims;  recoveries for services provided under the National Disability Insurance Scheme and for young people in residential care;  rebates associated with high cost drug recoveries; and  recoveries from the DHS Recovery of Compensation for Health Care and Other Services Special Account.

Inventories

The Department’s inventories relate to the National Medical Stockpile (the Stockpile). The Stockpile is a strategic reserve of medicines, vaccines, antidotes and protective equipment available for use as part of the national response to a public health emergency. It is intended to augment state and territory government reserves of key medical items in a health emergency, which could arise from terrorist activities or natural causes.

Inventories held for distribution are valued at cost, adjusted for any loss of service potential. Not all inventories are expected to be distributed in the next 12 months.

Costs incurred in bringing each item of the Stockpile to its present location and condition include purchase cost plus other reasonably attributable costs, such as overseas shipping and handling and import duties, less any bulk order discounts and rebates received from suppliers.

During 2016, $105.4m of inventory held for distribution was recognised as an expense (2015: $5.1m) of which $105.4m was obsolete stock (2015: $3.2m).

Administered Investments

Administered investments represent Corporate Commonwealth entities within the Health portfolio. Administered investments in subsidiaries, joint ventures and associates are not consolidated because their consolidation is only relevant at the Whole of Government level.

Administered investments other than those held for sale are classified as available-for-sale and are measured at their fair value as at 30 June 2016. Fair value has been taken to be the Australian government’s proportional interest in the net assets of each organisation as at the end of the reporting period.

4.1 4.1 DEPARTMENT OF HEALTH

321 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

Personal Benefits

Personal benefits are the current transfers for the benefit of individuals or households, directly or indirectly, that do not require any economic benefit to flow back to Government. The Department administers a number of personal benefits programs on behalf of the Government that provide a range of health care entitlements to individuals. These include, but are not limited to:

 Pharmaceutical Benefits (the primary means through which the Australian Government ensures Australians have timely access to pharmaceuticals);  Medical Benefits (provide high quality and clinically relevant medical and associated services through Medicare);  Private Health Insurance Rebate (helps make private health insurance more affordable, provides greater choice and

accessibility to access private health care options, and reduces pressure on the public hospital system);  Primary Care Practice Incentives (support activities that encourage continuing improvements, increase quality of care, enhance capacity, and improve access and health outcomes for patients);  Targeted Assistance (support the provision of relevant pharmaceuticals, aids and appliances); and  Hearing Services (reduce the incidence and consequences of avoidable hearing loss in the community by providing access to

high quality hearing services and devices).

Personal benefits are assessed, determined and paid by DHS in accordance with provisions of the relevant legislation under delegation from the Department. Unless stated otherwise, all personal benefits liabilities are expected to be settled within 12 months of the balance date.

In the majority of cases the above payments are initially based on the information provided by customers and providers. Both the Department and DHS have established review mechanisms to identify overpayments made under various schemes. The recognition of receivables and recovery actions take place once the overpayments are identified.

Refer to Note 1.4 for significant accounting judgements and estimates relating to personal benefits.

Grants and Subsidies

The Department administers a number of grant and subsidy schemes on behalf of the Government.

Grant and subsidy liabilities are recognised to the extent that (i) the services required to be performed by the grantee have been performed or (ii) the grant eligibility criteria have been satisfied, but payments due have not been made. A commitment is recorded when the Government enters into an agreement to make these grants but services have not been performed or criteria satisfied. Unless stated otherwise, all grants and subsidies liabilities are expected to be settled within 12 months of the balance date.

Refer to Note 1.4 for significant accounting judgements and estimates relating to subsidies.

Payments to corporate Commonwealth entities

Payments to corporate Commonwealth entities from amounts appropriated for that purpose are classified as administered expenses, equity injections or loans to the relevant portfolio entity. The appropriation to the Department is disclosed in Table A of Note 26A. Payments to corporate Commonwealth entities are disclosed in Note 17G.

1.19 Events After the Reporting Period

TGA special account annual charges 2015-16 Sponsors of certain products on the Australian Register of Therapeutic Goods during 2015-16 have until 15 September 2016 to apply for exemption for 2015-16 annual charges. The amounts recognised as revenue in these financial statements may be subject to change should sponsors successfully apply for reinstatement of exempt status.

Outcome restructure Effective 1 July 2016, the Department’s Outcome and Program structure has been revised and the number of Outcomes has been reduced from 11 to 6. Details of the revised Outcome and Program structure are included in the 2016-17 Health Portfolio Budget Statements.

Administered Inventory

$10.117m of Administered inventory held in the National Medical Stockpile will pass its expiry date during the period July to September 2016 (2015: $20.703m).

Portfolio Agencies

The National Health Performance Authority has closed and its activities and capabilities transferred to the Australian Institute of Health and Welfare and the Australian Commission on Safety and Quality in Health Care on 1 July 2016.

PART 4 FINANCIAL STATEMENTS 4.1

322 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 1: Overview

The functions of the Independent Hospital Pricing Authority (IHPA) have been transferred to the Department effective 1 July 2016, with the Board, Chief Executive Officer and associated functions retained. The Department will provide all support for IHPA from 1 July 2016.

Digital Health

The Government announced in the 2015-16 Budget that in response to the Review of the Personally Controlled Electronic Health Record (PCEHR) it would redevelop the system to improve its usability and clinical utility, strengthen digital health governance and operations, and trial new participation arrangements. The PCEHR was then renamed to become the My Health Record and the Australian Digital Health Agency (ADHA) was established during 2016 to manage the governance, operation and ongoing delivery for digital health with the transfer date of 1 July 2016. My Health Record software will be transferred to ADHA with an effective date of 1 July 2016.

4.1 4.1 DEPARTMENT OF HEALTH

323 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 2: Expenses

2016 2015

$'000 $'000

Note 2A: Employee benefits Wages and salaries 321,540 258,503

Superannuation:

Defined contribution plans 27,876 20,979

Defined benefit plans 39,785 34,137

Leave and other entitlements 71,506 55,209

Separation and redundancies 3,820 5,037

Total employee benefits 464,527 373,865

Note 2B: Suppliers Goods and services supplied or rendered Contractors and consultants 84,532 59,236

Information technology costs 79,888 53,798

Contracted services 25,478 10,064

Property 11,195 6,922

Travel 9,577 7,107

Training and other staff related expenses 6,646 5,826

Legal 5,920 4,455

Committees 3,967 3,363

Other 17,788 16,965

Total goods and services supplied or rendered 244,991 167,736

Other suppliers Operating lease rentals in connection with Minimum lease payments 49,146 71,402

Contingent rentals 3,257 3,061

Workers compensation premiums 7,022 9,874

Total other suppliers 59,425 84,337

Total suppliers 304,416 252,073

Note 2C: Depreciation and amortisation Depreciation Property, plant and equipment 2,259 8,371

Buildings - leasehold improvements 7,269 9,648

Total depreciation 9,528 18,019

Amortisation Computer software - internally developed 14,216 25,400

Computer software - purchased 240 534

Total amortisation 14,456 25,934

Total depreciation and amortisation 23,984 43,953

Note 2D: Write-down and impairment of assets Impairment on financial instruments 366 2,019

Impairment of property, plant and equipment 28 238

Impairment on intangibles 2,351 1,011

Total write-down and impairment of assets 2,745 3,268

PART 4 FINANCIAL STATEMENTS 4.1

324 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 2: Expenses

2016 2015

$'000 $'000

Note 2E: Other expenses Payments made on behalf of Portfolio agencies 1 1,077 1,150

Act of Grace payments 28 31

Other - 10,350

Total other expenses 1,105 11,531

1 Payments made on behalf of Portfolio agencies are recovered, refer Note 3B.

Note 2F: Lease Commitments Operating leases2 345,780 610,528

Total leases 345,780 610,528

Minimum lease payments expected to be settled

Within 1 year 53,296 100,361

Between 1-5 years 188,734 355,425

More than 5 years 103,750 154,742

Total leases 345,780 610,528

2

The operating lease commitments relates to property lease payments. Note: Commitments disclosed for Financial year 2014-15 are inclusive of all operating expense lease commitments.

4.1 4.1 DEPARTMENT OF HEALTH

325 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 3: Income

2016 2015

$'000 $'000

OWN-SOURCE REVENUE

Note 3A: Sale of goods and rendering of services Sale of goods in connection with Sale of goods 1,449 1,716

Rendering of services 173,112 163,647

Total sale of goods and rendering of services 174,561 165,363

Note 3B: Other revenue Recoveries received from Portfolio agencies1 1,077 1,150

Resources received free of charge Remuneration of auditors 975 1,050

Other revenue 11 26

Total other revenue 2,063 2,226

GAINS

Note 3C: Gains from sale of assets Infrastructure, Plant and Equipment Proceeds from sale 9,209 -

Less: Carrying value of assets sold 9,131 -

Total gain from sale of assets 78 -

Note 3D: Other gains Other gains 370 3

Total other gains 370 3

Note 3E: Revenue from Government Appropriations Departmental appropriations 594,997 479,885

Total revenue from Government 594,997 479,885

1 For payments made on behalf of Portfolio agencies refer Note 2E.

PART 4 FINANCIAL STATEMENTS 4.1

326 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 4: Operating Result Reconciliation

2016 2015

$'000 $'000

Total comprehensive loss - as per the Statement of Comprehensive Income (24,708) (37,214)

Plus: depreciation/amortisation expenses previously funded through revenue appropriation1 19,177 38,015

Total comprehensive profit/(loss) less depreciation/amortisation expenses previously funded through revenue appropriations 2 (5,531) 801

Included in the Total comprehensive loss - as per the Statement of Comprehensive Income are the following:

A significant element of supplier expenses includes an amount of $12.315m paid to the Department of Social Services for the continued development of information technology systems utilised by the Department's ageing and aged care functions. The amount had been transferred to the Department as an equity contribution via the Machinery of Government changes for the financial year. The transfer of the amount as an equity contribution through capital rather than revenue therefore did not compensate the Department for the additional expense incurred.

$2.881m in expenses for the year.

In addition, the application of prevailing bond rates to the Department's employee provisions also contributed a further

1 Depreciation/amortisation expense for NICNAS and the TGA have been excluded where assets have been acquired from Industry funds.

2 From 2010-11, the Government introduced net cash appropriation arrangements, where revenue appropriations for depreciation/amortisation expenses ceased. Entities now receive a separate capital budget provided through equity appropriations. Capital budgets are to be appropriated in the period when cash payment for capital expenditure is required.

4.1 4.1 DEPARTMENT OF HEALTH

327 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 5: Financial Assets

2016 2015

$'000 $'000

Note 5A: Cash and cash equivalents Special accounts 5,574 7,459

Cash on hand or on deposit 1,854 762

Cash in special accounts 83,244 71,410

Total cash and cash equivalents 90,672 79,631

Note 5B: Trade and other receivables Receivables in connection with:

Goods and services receivable 16,242 10,963

Appropriations receivables

Existing programs 103,076 93,132

Undrawn equity injection 12,180 9,673

Departmental capital budget 316 5,922

Total appropriations receivable 115,572 108,727

Other receivables GST receivable from the Australian Taxation Office 5,974 2,584

Total other receivables 5,974 2,584

Total trade and other receivables (gross) 137,788 122,274

Less impairment allowance Goods and services (668) (1,505)

Total impairment allowance (668) (1,505)

Total trade and other receivables (net) 137,120 120,769

Trade and other receivables (net) are expected to be recovered No more than 12 months 136,651 120,213

More than 12 months 469 556

Total trade and other receivables (net) 137,120 120,769

Not overdue 130,013 120,078

Overdue by 0 to 30 days 5,747 595

31 to 60 days 1,048 94

61 to 90 days 458 153

More than 90 days 522 1,354

Total trade and other receivables (gross) 137,788 122,274

The impairment allowance aged as follows Not overdue - (67)

Overdue by:

0 to 30 days (20) (52)

31 to 60 days (28) (24)

61 to 90 days (98) (117)

More than 90 days (522) (1,245)

Total impairment allowance (668) (1,505)

Trade and other receivables are aged as follows

PART 4 FINANCIAL STATEMENTS 4.1

328 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 5: Financial Assets

Reconciliation of the impairment allowance Movements in relation to 2016

Goods and services Total

$'000 $'000

Opening balance (1,505) (1,505)

Amounts written off 584 584

Amounts recovered and reversed 803 803

Increase recognised in net surplus (550) (550)

Closing balance (668) (668)

Movements in relation to 2015

Goods and services Total

$'000 $'000

Opening balance (3,460) (3,460)

Amounts written off 2,063 2,063

Amounts recovered and reversed 806 806

Increase recognised in net surplus (914) (914)

Closing balance (1,505) (1,505)

The impairment allowance for amounts not overdue related to the TGA for disputed debts.

Credit terms for goods and services were within: the Department 30 days (2015: 30 days), TGA 28 days (2015: 28 days). Appropriations receivable undrawn, are appropriations controlled by the Department but held in the Official Public Account under the Government's just-in-time drawdown arrangement.

4.1 4.1 DEPARTMENT OF HEALTH

329 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Note 6: Non-Financial Assets including Fair Value Measurements Note 6A: Reconciliation of the opening and closing balances of land and buildings and property, plant, equipment and intangible for 2016

Land and buildings Property, plant and equipment Computer Software - Internally Developed

Computer Software - Purchased Total Intangibles

$'000 $'000 $'000 $'000 $'000

As at 1 July 2015 Gross book value

53,196 7,065 194,072 5,867 199,939

Accumulated depreciation/amortisation and impairment

(169) - (103,268) (5,266) (108,534)

Total as at 1 July 2015 53,027 7,065

90,804 601 91,405

Additions

Purchase or internally developed

2,143 1,001 31,790 - 31,790

Acquisitions of entities or operations (including restructuring)

6,240 50 - --

Depreciation/Amortisation

(7,269) (2,259) (14,216) (240) (14,456)

Reclassification

(245) 487 (157) (85) (242)

Assets held for sale

- 9,131 - --

Disposals

From disposal of entities or other operations (including restructuring)

(618) - - --

Other - (9,159) - --

Impairment

- - (2,351) - (2,351)

Total as at 30 June 2016 53,278 6,316

105,870 276 106,146

Total as at 30 June 2016 represented by Gross book value

1

60,676 8,564 221,220 4,652 225,872

Accumulated depreciation/amortisation and impairment

(7,398) (2,248) (115,350) (4,376) (119,726)

Total as at 30 June 2016

53,278 6,316 105,870 276 106,146

1 Closing gross book value includes Work in Progress of Leasehold Improvement of $1.170m and Intangible Work in Progress of $49.695m.

Department of Health Notes to and forming part of the financial statements

PART 4 FINANCIAL STATEMENTS 4.1

330 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements Note 6: Non-Financial Assets including Fair Value Measurements Note 6A: Reconciliation of the opening and closing balances of land and buildings and property, plant, equipment and intangible for 2015

Land and buildings Property, plant and equipment Computer Software - Internally Developed

Computer Software - Purchased Total Intangibles

$'000 $'000 $'000 $'000 $'000

As at 1 July 2014 Gross book value 67,772 27,424 180,072 6,145 186,217

Accumulated depreciation/amortisation and impairment (21,347) (12,622) (82,707) (5,009) (87,716)

Total as at 1 July 2014 46,425 14,802 97,365 1,136 98,501

Additions Purchase or internally developed 721 2,396 26,592 - 26,592

Revaluations recognised in other comprehensive income 16,169 224 -

Depreciation/Amortisation (9,648) (8,371) (25,400) (534) (25,934)

Reclassification

- 6,743 (6,742) (1) (6,743)

Disposals -

From disposal of entities or other operations (including restructuring)

(454) (8,677) - - -

Impairment

(186) (52) (1,011) - (1,011)

Total as at 30 June 2015 53,027 7,065 90,804 601 91,405

Total at 30 June 2015 represented by Gross book value

1

53,196 7,065 194,072 5,867 199,939

Accumulated depreciation/amortisation and impairment

(169) - (103,268) (5,266) (108,534)

Total as at 30 June 2015

53,027 7,065 90,804 601 91,405

1 Closing gross book value includes Work in Progress of Leasehold Improvement of $1.173m and Intangible Work in Progress of $56.019m.

4.1 4.1 DEPARTMENT OF HEALTH

331 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements Note 6: Non-Financial Assets including Fair Value Measurements Note 6B: Fair Value Measurements

2016 $'000

2015 $'000

Category

(Level 1, 2 or 3

4 )*

Valuation technique(s)

2

Inputs used

Non-financial assets

3

Leasehold Improvements

1,169 - Level 2

Replacement Cost

63 80 Level 2

Market Approach Adjusted market

52,046 51,773 Level 3

Depreciated Replacement Cost (DRC)

Replacement Cost New

(price per square metre

)

Consumed

economic benefit / Obsolescence o

f

asset

Property, plant and equipment

2,757 2,362 Level 2

Market Approach Adjusted market transactions

58 69 Level 3

Market Approach Adjusted market transactions

3,501 4,635 Level 3

Depreciated Replacement Cost (DRC)

Replacement Cost New

Consumed

economic benefit / Obsolescence o

f

asset

Total non-financial assets

59,594 58,919

Total fair value measurements of assets in the statement of financial position

59,594 58,919

Note 6B(i): Fair Value Measurements,

Valuation Techniques and Inputs Used

Fair value measurements at the end of the reporting period using For Levels 2 and 3 fair value measurements

The following tables provide an analysis of assets

and liabilities that are measured at fair value.

The different levels of the fair value hierarchy are defined below.

Level 1: Quoted prices (unadjusted) in active markets for id

entical assets or liabilities that the entity can access at measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directl

y or indirectly.

Level 3: Unobservable inputs for the asset or liability.

PART 4 FINANCIAL STATEMENTS 4.1

332 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements Note 6: Non-Financial Assets including Fair Value Measurements Assets not measured at fair value in the statement of financial position: Intangibles

56,451 35,386

Asset Under Construction - Intangibles

49,695 56,020

Asset Under Construction

- Leasehold Improvement - 1,173

Assets held for sale

- 9,131

Total assets not measured at fair value in the statement of financial position

106,146 101,710

Total non-financial assets (excluding prepayments) stated in the statement of financial

165,740 160,629

4 Recurring and non-recurring Level 3 fair value measurements - valuation processes

The Department of Health's assets are held for operational purposes and not held for the purposes of deriving a profit. The cur

rent use of all NFAs is considered their highest and best use.

The Department tests the procedures of the valuation model as an

asset materiality review at least once every 12 months (with a formal revaluation undertaken once every three years). If a

particular asset class experiences significant and volatile change

s in fair value (i.e. where indicators suggest that the value of the class has changed materially since the previous reporting period),

that class is subject to specific valuati

on in the reporting period, where practicable, regardless of the timing of the last specific valuation. The Department engaged Australian Valuation Solutions (AVS) to

undertake a full revaluation and confirm that the models developed comply with AASB 13.

The weighted average is determined by assessing the fair value measurement as a proportion of the total fair value for the clas

s against the total useful life of each asset.

5 Significant Level 3 inputs utilised by the entity are derived and evaluated as follows:

Property, Plant & Equipment - Adjusted Market Transactions

The significant unobservable inputs used in the fair value measurement of PPE assets relates to the market demand and valuers j

udgement to determine the fair value measurement

of these assets. A significant increase (decrease) in this input would result in a significantly higher (lower) fair value mea

surement.

Leasehold Improvements, Property, Plant and Equipment - Consumed economic benefit / Obsolescence of asset Assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market

evidence have been measured utilising the cost

(Depreciated Replacement Cost or DRC) approach. Under the DRC approach the estimated cost to replace the asset is calculated an

d then adjusted to take into account its consumed

economic benefit / asset obsolescence (

accumulated depreciation). Consumed economic benefit / asset obsolescence has been determined based on professional judgement

regarding physical, economic and external obsolescence factors relevant to the asset under consideration. For all Leasehold Imp

rovement assets, the consumed economic benefit/

asset obsolescence deduction is determined based on the term of the associated lease. 1 The Department measured non-financial assets at fair value as at March 2015 on non-recurring assets held for sale. 3 Fair value measurements - highest and best use differs from current use for non-financial assets (NFAs) 2 There has been changes to the valuation techniques for assets in the property, plant and equipment class. In instances where s

ufficient observable inputs, such as market transactions of similar assets, were (not)

identified in this financial year, the valuation technique was changed from a DRC (Market) approach to a Market (DRC) approach.

4.1 4.1 DEPARTMENT OF HEALTH

333 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements Note 6: Non-Financial Assets including Fair Value Measurements Note 6B(iii): Reconciliation for recurring Level 3 fair value measurements

2016 $'000

2015 $'000

2016 $'000

2015 $'000

2016 $'000

2015 $'000

Opening balance

1

51,773 45,736 4,704 6,726 56,476 52,462

Total gains/(losses) recognised in net cost of services

(7,252) (9,825) (1,394) (1,645) (8,646) (11,471)

Total gains/(losses) recognised in other comprehensive income

2

- 16,167 - 320 - 16,487

Purchases 91 148 - 1,520 91 1,668

Transfers to Assets Held for Sale

- (453) - (2,218) - (2,671)

Transfers/operations including restructuring

5,621 - 4 - 5,625 -

Reclassification

1,813 - 245 - 2,058 -

Transfers into Level 3

3

- - - 115 - 115

Transfers out of Level 3

4

- - - (115) - (115)

Closing balance

52,046 51,773 3,559 4,704 55,604 56,476

Changes in unrealised gains/(losses) recognise

d 5

- - - - - -

5 The presentation of unrealised gains/(losses) in the Statement of Comprehensive Income will depend on the entity.

Non-financial assets

Note 6B(ii): Level 1 and Level 2 transfers for recurring fair value measurements There have been no transfers of NFAs between level 1 and 2 of the hierarchy during the year.

Recurring Level 3 fair value measurements - reconciliation for assets

Leasehold Improvements Property, Plant and Equipment Total

1 Open balance as determined in accordance with AASB 13 2 The presentation of these gains/(losses) in the Statement of Comprehensive Income will depend on the entity. 3 There have been transfers of property, plant and equipment asset fair value measurements into level 3 during the year due to changes in the valuation technique from a market approach to DRC. 4 There have been transfers of property, plant and equipment asset fair value measurements out of level 3 during the year due to changes in the valuation technique from DRC to a market approach. Fair value measurements have been determined without the use of significant unobservable inputs.

PART 4 FINANCIAL STATEMENTS 4.1

334 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 6: Non-Financial Assets including Fair Value Measurements

2016 2015

$'000 $'000

Note 6C: Other non-financial assets Prepayments 11,729 3,804

Total other non-financial assets 11,729 3,804

Other non-financial assets are expected to be recovered No more than 12 months 11,668 3,651

More than 12 months 61 153

Total other non-financial assets 11,729 3,804

Note 7: Payables

Note 7A: Suppliers Trade creditors and accruals 61,620 61,882

Total suppliers 61,620 61,882

Settlement is usually made within 30 days.

Wages and salaries 2,926 11,248

Superannuation 187 2,086

Other employee payables 74 73

Lease incentives 23,656 16,998

Unearned income 18,353 21,004

Total other payables 45,196 51,409

Total other payables Other payables expected to be settled No more than 12 months 25,382 36,217

More than 12 months 19,814 15,192

Total other payables 45,196 51,409

Note 7B: Other payables

No indicators of impairment were found for other non-financial assets.

4.1 4.1 DEPARTMENT OF HEALTH

335 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 8: Provisions

2016 2015

$'000 $'000

Note 8A: Employee provisions Leave 151,721 110,972

Separations and redundancies 422 5,000

Total employee provisions 152,143 115,972

Employee provisions expected to be settled No more than 12 months 43,133 38,430

More than 12 months 109,010 77,542

152,143 115,972

Note 8B: Other provisions Provision for surplus lease space1 - 1,000

Provision for restoration2 3,079 598

Provision for lease straightlining3 25,481 20,419

Total other provisions 28,560 22,017

Other provisions expected to be settled No more than 12 months 1,647 7,830

More than 12 months 26,913 14,187

28,560 22,017

Provision for surplus lease space1

Provision for restoration2 Provision for lease

straightlining3

Total

$'000 $'000 $'000 $'000

As at 1 July 2015 1,000 598 20,419 22,017

Additional provisions made - 2,716 6,152 8,868

Amounts used 1,000 235 1,090 2,325

Total as at 30 June 2016 - 3,079 25,481 28,560

Total other provisions

Total employee provisions

1 The Department took up a provision for surplus lease space on Anne St, Brisbane in the 2013-14 financial year for a two year period. This space will be occupied by the Aged Care staff during the 2016-17 financial year.

2 The Department currently has 7 (2015: 3) agreements for the leasing of premises which have provisions requiring the entity to restore the premises to their original condition at the conclusion of the lease. The Department has made a provision to reflect the present value of this obligation.

3 The Department holds a provision for lease straightlining on the existing 11 leases.

PART 4 FINANCIAL STATEMENTS 4.1

336 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 9: Restructuring

Note 9: Restructuring - Machinery of Government Changes

2016 2016 2016 (Administered)

Functions in relation to: Aged Care and

Population Ageing, Department of Social Services1

Medicare Provider Compliance, Department of Human Services2

Ageing and Aged Care, Department of Social Services1

$’000 $’000 $’000

FUNCTIONS ASSUMED Assets recognised Appropriation receivable 25,973 8,814 -

Departmental Capital Budget (DCB) receivable4 639 326 -

Equity injection4 12,256 - -

Other Receivable - -

Prepayments 6 - -

Receivables - - 63,801

Advances and loans - - 268,008

Other non-financial assets - - 1,324

Property, plant and equipment 14 36 -

Leasehold improvements 6,240 - -

Total assets recognised 45,128 9,176 333,133

Liabilities recognised Trade creditors and accruals 175 - -

Provisions for make-good, lease incentives and straightlining 9,759 - -

Employee provisions 27,282 11,118 -

Supplier payable - - 3,405

Subsidies payable - - 149,514

Grants payable - - 11,441

Total liabilities recognised 37,216 11,118 164,360

Net assets/(liabilities) recognised3 7,912 (1,942) 168,773

Income assumed Recognised by the receiving entity - - 921,950

Recognised by the losing entity 509 - 1,425

Total income assumed 509 - 923,375

Expenses assumed Recognised by the receiving entity 95,734 27,269 10,478,225

Recognised by the losing entity 32,354 15,826 3,668,712

Total expenses assumed 128,088 43,095 14,146,937

FUNCTIONS RELINQUISHED Assets relinquished Leasehold improvements5 618 - -

Total assets relinquished 618 - -

Net assets/(liabilities) relinquished 618 - -

Note: In respect of functions assumed, the net book values of assets and liabilities were transferred to the entity for no consideration.

By agreement, the transfer of leases from DSS was effective from 1 January 2016.

By agreement, staff transferred from DSS and DHS on 5 November 2015.

No comparatives are detailed given that no Machinery of Government changes were made during the 2014-15 year.

4 Appropriation received amounting to $12.175m as Bill 2 and $0.139m as Departmental Capital Budget were paid to DSS, refer also Note 4.

3 The net assets assumed from Department of Social Service (DSS) is $168.000m for Adminstered and $6.588m for Departmental.

5 Leasehold improvement relinquished relate to the property at 2 Lonsdale Street, Melbourne being transferred back from DSS.

1 Responsibility for Ageing and Aged care functions was assumed from the DSS under the Administrative Arrangements Order issued on 30 September 2015. 2

Responsibility for Medicare provider compliance functions was assumed from the DHS under the Administrative Arrangements Order issued on 30 September 2015.

4.1 4.1 DEPARTMENT OF HEALTH

337 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 10: Cash Flow Reconciliation

2016 2015

$'000 $'000

Reconciliation of cash and cash equivalents as per Statement of Financial Position to Cash Flow Statement Report cash and cash equivalents as per Cash Flow Statement 90,672 79,631

Statement of Financial Position 90,672 79,631

Discrepancy - -

Reconciliation of net cost of services to net cash from operating activities Net cost of services (619,705) (517,099)

Add revenue from Government 594,997 479,885

Adjustment for non-cash items Gain on sale of assets /Net loss from sale of assets and Other gains (448) -

Depreciation/amortisation 23,984 43,953

Net write-down of non-financial assets 28 3,269

Decrease in net assets from restructure (13,541) 15,743

Movements in assets and liabilities Assets Decrease/(increase) in net receivables (19,218) (673)

Decrease/(increase) in other financial assets (3,144) (83)

Decrease/(increase) in other non-financial assets (7,925) 3,992

Liabilities Increase/(decrease) in employee provisions/payables 30,972 4,158

Increase/(decrease) in supplier payables 152 (2,014)

Increase/(decrease) in other payables 4,007 (19,947)

Increase/(decrease) in other provisions 6,543 (2,379)

Net cash from operating activities (3,298) 8,804

PART 4 FINANCIAL STATEMENTS 4.1

338 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

2016 2015 2016 2015 2016 2015

$'000 $'000 $'000 $'000 $'000 $'000

Contingent assets Balance from previous period

- - 238 238 238 -

New contingent assets recognised

- - 9 - 9 238

Re-measurement

- - (178) - (178) -

Rights expired

- - (50) - (50) -

Total contingent assets

- - 19 238 19 238

Contingent liabilities Balance from previous period

5,000 27,600 4,630 1,768 9,630 29,368

New - - - 2,630 - 2,630

Re-measurement

- (22,600) 550 232 550 (22,368)

Obligations expired

- - (170) - (170) -

Total contingent liabilities

5,000 5,000 5,010 4,630 10,010 9,630

Net contingent liabilities

(5,000) (5,000) (4,991) (4,392) (9,991) (9,392)

Note 11: Contingent Assets and Liabilities

Total Claims for damages or costs Guarantees

4.1 4.1 DEPARTMENT OF HEALTH

339 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 11: Contingent Assets and Liabilities

Quantifiable Contingencies

Quantifiable Contingent Assets

Quantifiable Contingent Liabilities

Claims for damages and costs

Guarantees

Unquantifiable Contingencies

Unquantifiable Contingent Assets

Unquantifiable Contingent Liabilities

Significant Remote Contingencies

The Department has a quantifiable contingent asset as at 30 June 2016 of $0.190m (2015: $0.240m).

The Schedule of Contingencies reports contingent liabilities in respect of claims for damages/costs of $5.010m (2015: $4.630m). The amount represents an estimate of the Department’s liability based on precedent cases. The Department is defending the claims.

The Department has provided an indemnity to its transactional bankers in relation to any claims made against the bank resulting from errors in the Department’s payment files. There were no claims made during the year.

The Department did not have any significant remote contingencies in either reporting year.

The Schedule of Contingencies reports a contingent liability in respect of claims for payments made for Price Disclosure Services of $5.000m (2015: $5.000m). This represents the maximum exposure to the Commonwealth in the event that the current contractor is unable to deliver.

At 30 June 2016, the Department was involved in a number of litigation cases before the courts. The Department has been advised by its solicitors that it is not possible to quantify amounts relating to these cases. Therefore, in accordance with Accounting Standard AASB 137 Provisions, Contingent Liabilities and Contingent Assets, the information is not required by the Standard on the grounds that it may seriously prejudice the outcomes of these cases.

At 30 June 2016, the Department was involved in a number of litigation cases before the courts. The Department has been advised by its solicitors that it is not possible to quantify amounts relating to these cases. Therefore, in accordance with Accounting Standard AASB 137 Provisions, Contingent Liabilities and Contingent Assets, the information is not required by the Standard on the grounds that it may seriously prejudice the outcomes of these cases.

PART 4 FINANCIAL STATEMENTS 4.1

340 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 12: Senior Management Personnel Remuneration

2016 2015

$ $

Short-term employee benefits:

Salary 27,196,217 22,647,935

Performance bonuses 1,618 -

Allowances 4,732,175 4,017,741

Total short-term employee benefits 31,930,010 26,665,676

Post-employment benefits:

Superannuation 5,191,049 4,314,012

Total post-employment benefits 5,191,049 4,314,012

Other long-term employee benefits:

Annual leave 2,414,887 2,191,540

Long service leave 977,524 963,072

Total other long-term employee benefits 3,392,411 3,154,612

Termination benefits Voluntary redundancy payments 1,549,881 854,629

Total senior executive remuneration expenses 42,063,351 34,988,929

Notes:

The total number of senior management personnel that are included in the above table is 195 (2015:164) and represents the nominal positions for the current year. The current year number has been impacted by the transfers of SES positions which took place during the year as a consequence of the Machinery of Government. Average Staffing Levels (ASL) for the current year is 154 (2015:128).

4.1 4.1 DEPARTMENT OF HEALTH

341 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 13: Financial Instruments

2016 2015

$'000 $'000

Note 13A: Categories of financial instruments Financial Assets Loans and receivables Cash and cash equivalents 90,672 79,631

Goods and services receivable 15,574 9,458

Accrued revenue 8,649 5,505

Total loans and receivables 114,895 94,594

Total financial assets 114,895 94,594

Financial Liabilities Financial Liabilities measured at amortised cost Trade creditors 61,620 (61,882)

Total financial liabilities measured at amortised cost 61,620 (61,882)

Total financial liabilities 61,620 (61,882)

Note 13B: Net income and expenses from financial instruments Loans and receivables:

Impairment expense 366 2,019

Net expense from loans and receivables 366 2,019

Net expense from financial assets 366 2,019

Note 13C: Liquidity risk

The maturities for non-derivative financial liabilities amount to $61.620m (2014-15: $86.758m).

The Department has no derivative financial liabilities in both the current and prior year.

Note 13D: Market risk The Department's financial instruments are of a nature that does not expose the Department to certain market risks.

The Department is not exposed to 'currency risk' or 'other price risk'.

The Department has no interest bearing items on the Statement of Financial Position.

There was no interest income from financial assets not at fair value through profit or loss in the year ending 2016(2015: $NIL).

The Department's financial liabilities are payables. The exposure to liquidity risk is based on the notion that the Department will encounter difficulty in meeting its obligations associated with financial liabilities.

This is highly unlikely due to appropriation funding and mechanisms available to the Department (e.g. Advance to the Finance Minister) and internal policies and procedures put in place to ensure there are appropriate resources to meet its financial obligations. The Department has no prior experience of default.

PART 4 FINANCIAL STATEMENTS 4.1

342 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 13: Financial Instruments

Note 13E: Credit risk

2016 2016 2015

$'000 $'000 $'000

Financial assets carried amount not best representing maximum exposure to credit risk Goods and services receivable 16,242 16,242 10,963

Accrued revenue 8,649 5,505

24,891 16,468

The Department holds no collateral to mitigate against risk.

Credit quality of financial assets not past due or individually determined as impaired

2016 2015 2016 2015

$'000 $'000 $'000 $'000

Loans and receivables

Goods and services receivable 8,467 8,443 7,775 2,263

Accrued revenue 8,649 5,505 - -

Total 17,116 13,948 7,775 2,263

Ageing of financial assets that were past due but not impaired in 2016

0 to 30 days 31 to 60 days 61 to 90 days 90+ days Total

$'000 $'000 $'000 $'000 $'000

Goods and services receivable 5,727 1,020 360 - 7,107

Total 5,727 1,020 360 - 7,107

Ageing of financial assets that were past due but not impaired for 2015

0 to 30 days 31 to 60 days 61 to 90 days 90+ days Total

$'000 $'000 $'000 $'000 $'000

Goods and services receivable 543 70 36 109 758

Total 543 70 36 109 758

Loans and receivables

Loans and receivables

Total financial assets carried at amount not best representing maximum exposure to credit risk

Not past due nor impaired Not past due nor impaired

Past due or impaired

The Department was exposed to minimal credit risk as loans and receivables are cash and trade receivables. The maximum exposure to credit risk was the risk that arises from potential default of a debtor. The amount was equal to the total amount of trade receivables of $24.891m in 2016 (2015: $16.468m). The entity managed its credit risk by establishing policies and procedures with regard to debt management and recovery techniques that were to be applied.

The following table illustrates the Department's maximum exposure to credit risk (excluding any collateral or credit enhancements).

Past due or impaired

4.1 4.1 DEPARTMENT OF HEALTH

343 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 14: Therapeutic Goods Administration Note 14A: Objective

2016 2015

$'000 $'000

Note 14B: Comprehensive Income

Expenses Employee benefits 79,193 84,612

Consultants and Contractors 16,940 14,154

Property (including lease payments) 14,906 14,391

Other 12,967 13,923

Depreciation and amortisation 4,672 5,620

Write-down and impairment of assets 105 2,205

Total expenses 128,783 134,905

Sale of goods and rendering of services 141,539 130,764

Other revenue and gains 148 200

Total own-source revenue 141,687 130,964

Revenue from Government 3,177 8,579

Surplus on continuing operations 16,081 4,638

Changes in asset revaluation surplus - 824

Total comprehensive income 16,081 5,462

The Therapeutic Goods Administration (TGA) is a part of the Department of Health, which is an Australian Government controlled not for profit entity. The TGA contributes to Outcome 7 of the Department of Health - health infrastructure, regulation, safety and quality. The Australian Government, through Outcome 7, aims to support a sustainable world class health system in Australia through support for deregulation, effective regulation, quality and safety, and strategic investments in health infrastructure and research.

Therapeutic goods are regulated to ensure that medicinal products and medical devices in Australia meet standards of safety, quality and efficacy at least equal to that of comparable countries. These products and devices should be made available in a timely manner and the regulatory impact on business kept to a minimum. This is achieved through a risk management approach to pre-market evaluation and approval of therapeutic products intended for supply in Australia, licensing of manufacturers and post market surveillance.

The continued existence of the TGA in its present form and with its present priorities is dependent on Government policy. The TGA is reflected as a departmental special account in the Department of Health’s statements.

Pursuant to Division 3 of the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR), the TGA is not an applicable entity within the Department and as such is not deemed to be a reporting entity. TGA operates via a special account. Included below is financial information for the TGA. The balance of the special account represents a standing appropriation from which payments are made for the purposes of the special account. As a significant part of the Department, the TGA accounts are subject to annual audit by the Australian National Audit Office.

TGA receives payment for evaluation services in advance of service delivery, which can extend across financial years. TGA estimates the stage of service completion and recognises the matching revenue. Revenue reported for 2016 includes an estimate for annual charges, refer Note 1.5.

The TGA recovers the cost of all activities undertaken within the scope of the Therapeutic Goods Act 1989 from industry through fees and charges.

PART 4 FINANCIAL STATEMENTS 4.1

344 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 14: Therapeutic Goods Administration

2016 2,015

$'000 $'000

Note 14C: Financial Position

Assets

Financial assets1 78,142 67,272

Non-financial assets 25,022 21,846

Total assets 103,164 89,118

Liabilities Payables (24,457) (24,353)

Provisions (23,781) (25,917)

Total liabilities (48,237) (50,270)

Equity Contributed equity 2,029 2,029

Asset revaluation reserve 4,217 4,217

Retained surplus 48,680 32,602

Total Equity 54,926 38,848

Note 14D: Commitments Capital Commitments Property, Plant and Equipment (72) (1,652)

Other Commitments Operating Leases (9,405) (20,084)

Total Capital and Lease Commitments 2 (9,477) (21,736)

1 Cash balance is disclosed in Note 27 Special Accounts 2 Included in Note: 2B Suppliers.

4.1 4.1 DEPARTMENT OF HEALTH

345 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 15: Remuneration of Auditors

2016 2015

$'000 $'000

Fair value of services received Financial statement audit services - Department 827 1,303

Financial statement audit services - TGA 148 200

Total fair value of services received 975 1,503

No other services were provided by the auditors of the financial statements.

Financial statement audit services were provided free of charge to the Department by the Australian National Audit Office (ANAO).

PART 4 FINANCIAL STATEMENTS 4.1

346 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 16: Regulatory Charging Summary

2016 2015

$'000 $'000

Amounts applied Departmental Annual appropriations 2,141 23,376

Special appropriations (including special account) - 141,226

Own source revenue 165,882 -

Administered Annual appropriations 2,243 2,594

Total amounts applied 170,266 167,196

Expenses Departmental 164,874 166,796

Administered 2,250 2,592

Total expenses 167,124 169,388

Revenue Departmental 164,367 150,159

Administered 14,906 16,213

Total external revenue 179,273 166,372

Amounts written off Departmental 565 3,723

Administered 58 -

Total amounts written-off 623 3,723

Regulatory charging activities:

Therapeutic Goods Administration (TGA)

Registration levies charged for registration of chemicals across Australia. Assessment fees charged on assessment of chemicals.

Department of Health

http://www.pbs.gov.au/publication/factsheets/shared/cost-recovery-implementation-statement-2015-2016.pdf

http://www.health.gov.au/internet/main/publishing.nsf/Content/phib-njrr

Private Health Insurance Ombudsman Levy - Administered Revenue only.

TGA undertakes cost recovered activities to evaluate the safety, quality and efficacy of medicines, medical devices and biologicals available for supply in, or export from Australia. Regulation activities include: • Pre-market assessments • Post-market monitoring and enforcement of standards • Licensing of Australian manufacturers and verifying overseas manufacturers’ compliance with the same standards as their Australian counterparts.

Further details regarding TGA cost recovery arrangements are available at http://www.tga.gov.au/cost-recovery-implementation-statements.

National Industrial Chemicals Notification and Assessment Scheme (NICNAS)

Prostheses List: The prostheses listing arrangements refer to the activities involved in listing prostheses and their benefits for the purposes of private health insurance reimbursement.

Private Health Insurance Ombudsman Levy - Administered Revenue only.

Listing of medicines on the Pharmaceutical Benefits Scheme and designated vaccines on the National Immunisation Program.

https://www.nicnas.gov.au/about-nicnas/cost-recovery/cost-recovery-impact-statement

4.1 4.1 DEPARTMENT OF HEALTH

347 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 17: Administered - Expenses

2016 2015

$'000 $'000

Note 17A: Suppliers Services rendered Consultants 16,034 13,984

Contract for services 606,068 385,993

Travel 653 485

Communications and publications 26,831 24,776

Committee related expenses 2,366 1,450

Other 24,816 26,916

Total services rendered 676,768 453,604

Note 17B: Subsidies Subsidies in connection with Aged care 9,161,229 -

Medical indemnity 81,517 83,920

Mental health 33,897 32,735

Other 13,558 10,048

Total subsidies 9,290,201 126,703

Note 17C: Personal benefits Indirect Medical services 21,428,064 20,470,868

Pharmaceuticals and pharmaceutical services 10,832,702 9,072,126

Private health insurance 5,887,067 5,804,467

Primary care practice incentives 340,120 228,069

Hearing services 475,905 443,628

Targeted assistance 405,287 441,984

Other 138,496 99,823

Total personal benefits 39,507,641 36,560,965

Note 17D: Grants Public sector Australian government entities (related entities) 730,250 672,200

Health and hospital fund 44,391 661,980

Private sector Profit and non-profit organisations 5,025,630 4,000,865

Health and hospital fund 8,201 57,436

Overseas 9,847 19,730

Total grants 5,818,319 5,412,211

PART 4 FINANCIAL STATEMENTS 4.1

348 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 17: Administered - Expenses

2016 2015

$'000 $'000

Note 17E: Depreciation and amortisation Depreciation Buildings 963 963

Total depreciation 963 963

Amortisation Intangibles 19,420 18,309

Total amortisation 19,420 18,309

Total depreciation and amortisation 20,383 19,272

Note 17F: Write-down and impairment of assets Impairment on financial instruments 1,950 626

Write-off of inventories 105,376 3,232

Total write-down and impairment of assets 107,326 3,858

Note 17G: Payments to corporate Commonwealth entities Australian Institute of Health and Welfare 15,625 15,800

Food Standards Australia New Zealand 17,257 17,479

Australian Sports Commission 253,646 267,568

Independent Hospital Pricing Authority 25,877 -

National Health Performance Authority 16,253 -

Total payments to corporate entities 328,658 300,847

Note 17H: Other expenses Act of Grace payments 50 12

Foreign exchange losses (net) - non-speculative 1 -

Cost of inventory distributed 5 5

Transfers to Private Health Insurance Administration Council - 445,538

Payments to Special Accounts 10,093 5,345

Total other expenses 10,149 450,900

4.1 4.1 DEPARTMENT OF HEALTH

349 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 18: Administered - Income

2016 2015

$'000 $'000

Revenue Taxation revenue

Note 18A: Other taxes Medical indemnity levy 15,561 14,744

Other 2,238 2,162

Total other taxes 17,799 16,906

Non-taxation revenue

Note 18B: Recoveries Medical and pharmaceutical benefits and health rebate schemes 72,904 59,793

High cost drug recoveries 1,576,230 721,214

Aged care recoveries, cross-billings and budget neutrality adjustments 907,700 -

Total recoveries 2,556,834 781,007

Note 18C: Other revenue Transfers from Private Health Insurance Administration Council - 445,538

Health and hospital fund 54,984 716,916

Other 197,238 212,601

Total other revenue 252,222 1,375,055

PART 4 FINANCIAL STATEMENTS 4.1

350 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements Note 19: Administered - Fair Value Measurements

2016 2015

$'000 $'000

Financial assets

3

Other investments

380,117 390,024 Level 3 Net assets

Total financial assets

380,117 390,024

Non-financial assets

1

Land 605 605 Level 2

Land 1,290 1,290 Level 3

Buildings 690 677 Level 2

Buildings 30,612 21,896 Level 3

Total non-financial assets

33,197 24,468

Total fair value measurements

of assets in the administered

schedule of assets and liabilities

413,314 414,492

The following tables provide an analysis of assets

and liabilities that are measured at fair value.

The different levels of the fair value hierarchy are defined below.

Level 1: Quoted prices (unadjusted) in active markets for id

entical assets or liabilities that the entity can access at measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directl

y or indirectly.

Level 3: Unobservable inputs for the asset or liability.

Note 19A: Fair value measurements, valuation techniques and inputs used

Adjusted market transactions

Adjusted market transactions

Valuation technique(s) Inputs used

Market approach

Depreciated Replacement Cost (DRC)

Net assets position of each entity

Current costs per square metre of floor relevant to the location of the asset, adjusted for the estimated rate of physical depreciation and obsolescence

Market approach

Adjusted market transactions Market approach

For Level 2 and 3 fair value measurements

Fair value measurements at the end of the reporting period

Category (Level 1, 2 or 3

2 )

4.1 4.1 DEPARTMENT OF HEALTH

351 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements Note 19: Administered - Fair Value Measurements Land and Buildings - general The Department engages an independent valuer to undertake valuations of Administered land and buildings. The Department tests t

he procedures of the valuation model as an internal

management review at least once every 12 months, with a formal revaluation undertaken once every three years. If a particular a

sset class experiences significant and volatile changes in fair

value (i.e. where indicators suggest that the value of the class has changed materially since the previous reporting period), t

hat class is subject to specific valuation in the reporting period,

where practical, regardless of the timing of the last specific valuation. The Department procured services of the Australian Va

luation Solutions Pty Ltd (AVS) to undertake a valuation of

Administered land and buildings as at 30 June 2014. However, sufficient evidence was available during the 2016 desktop valuatio

n, such as the recent hospital construction contracts across

Australia, to warrant further quantitative analysis to be carried out and a subsequent revaluation of the buildings to be recog

nised. AVS provided written assurance to the Department that the

valuation models developed are in compliance with AASB 13.

Land and buildings - Adjusted market transactions

The Department controls land and buildings assets situated in Latrobe, Tasmania. Reference was made to available sales evidence

together with other relevant information related to local

economic and property market conditions. Market transactions for the main hospital site and ancillary car parks (CP zoned) had

been scarce, and the valuer has used significant professional

judgement in determining the fair value measurements.

Buildings - Consumed economic benefit / Obsolescence of asset

Mersey Community Hospital is an asset that is held to provide health-related services to the Northern Region of Tasmania. Asset

s of this nature are not transacted with by market participants

with sufficient frequency or transparency to develop objective opinions of value from observable market evidence. Therefore, va

lue has been measured utilising the cost (Depreciated

Replacement Cost or DRC) approach. Under the DRC approach the es

timated cost to replace the asset is calculated and then adjusted to take into account its consumed economic benefit / asset

obsolescence. Consumed economic benefit / asset obsolescence has been

determined based on professional judgement regarding physical, economic and external obsolescence factors relevant

to the asset under consideration.

Other investments - Net assets

The value of investments is estimated annually on the basis of

net asset position of each entity, as obtained from management accounts.

3. Recurring and non-recurring Level 3 fair value measurements

- sensitivity analysis for financial assets and liabilities

2. Recurring and non-recurring

Level 3 fair value measurements - valuation process

Note 19A: Fair value measurements, valuation techniques and inputs used (continued) Other investments - Net assets Significant unobservable inputs used in the fair value measurement of other investments relate to the assets and liabilities re

ported in the management accounts of each entity. A significant

increase / (decrease) in this input would result in a significantly lower / (higher) fair value measurement.

4. The remaining assets and liabilities reported by the Department

in the Administered Schedule of Assets and Liabilities are not measured at fair value.

1. Fair value measurements - highest and best use di

ffers from current use for non-financial assets (NFAs)

The highest and best use of all non-financial assets is the same as their current use.

PART 4 FINANCIAL STATEMENTS 4.1

352 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements Note 19: Administered - Fair Value Measurements Note 19B: Reconciliation for recurring Level 3 fair value measurements

2016 2015 2016 2015

$'000 $'000 $'000 $'000

As at 1 July

390,024 524,830 23,186 24,121

Total gains recognised in other comprehensive income

1

- - 9,651 -

Total losses recognised in other comprehensive income

2

(9,906) (134,806) - -

Total losses recognised in net cost of services

3

- - (935) (935)

Total as at 30 June

380,117 390,024 31,902 23,186

3 These losses are presented in the Administered Schedule of Comprehensive Income under depreciation and amortisation (Note 17E)

.

1 Gains recognised in 2016 relate to the revaluation of Mersey hospital buildings as at 30 June 2016.

Financial assets Non-financial assets

2 Losses recognised in 2016 relate to the elimination of investme

nt in PHIAC following its merger with the Australian Prudential Regulation Authority effective 1 July 2015 and the annual revaluation of other

investments. Of the total losses recognised in 2015, $184.200m is

the result of elimination of investments in HWA and GPET following the abolition of these agencies. The remainder is the result of revaluation of

administered investments as at 30 June 2015. The full value of losses has been taken to the Administered Schedule of Comprehens

ive Income.

Land and buildings Other investments

Recurring Level 3 fair value measurements - reconciliation for assets

4.1 4.1 DEPARTMENT OF HEALTH

353 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 20: Administered - Financial Assets

2016 2015

$'000 $'000

Note 20A: Cash and cash equivalents Cash on hand or on deposit 164,509 331,001

Cash in special accounts 7,070 5,647

Total cash and cash equivalents 171,579 336,648

Note 20B: Personal benefits receivable Pharmaceutical benefits 712,796 97,236

Medicare benefits 34,828 51,258

Other personal benefits 497 17

Total personal benefits receivable 748,121 148,511

Note 20C: Trade and other receivables Goods and services receivable Subsidies - -

Medical indemnity 10,933 11,187

Aged care 78,117 -

Other 49 -

Other - recoveries and miscellaneous receivables 210,582 127,168

Total goods and services receivables 299,681 138,355

Advances and loans Aged care facilities 271,352 -

Total advances and loans 271,352 -

Advances and loans represented by Nominal value 306,696 -

Less: Unexpired discount (35,344) -

Carrying amount 271,352 -

Other receivables GST receivable from the Australian Taxation Office 62,000 41,171

Total other receivables 62,000 41,171

Total trade and other receivables (gross) 633,033 179,526

Less impairment allowance Goods and services (7,637) (7,675)

Total impairment allowance (7,637) (7,675)

Total trade and other receivables (net) 625,396 171,851

Trade and other receivables (net) expected to be recovered No more than 12 months 347,166 171,851

More than 12 months 278,230 -

Total trade and other receivables (net) 625,396 171,851

Loans were made to approved providers under the Aged Care Act 1997 for an estimated period of 12 years. No security is generally required. Interest rates are linked to the Consumer Price Index. Interest payments are due on the 21st day of each calendar month. These loans were transferred to the Department from the DSS during 2016 for no consideration under the Administrative Arrangements Order issued on 30th September 2015.

PART 4 FINANCIAL STATEMENTS 4.1

354 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 20: Administered - Financial Assets

2016 2015

$'000 $'000

Trade and other receivables (gross) aged as follows Not overdue 605,413 165,140

Overdue by:

0 to 30 days 5,797 4,606

31 to 60 days 8,596 134

61 to 90 days 2,774 134

More than 90 days 10,453 9,512

Total trade and other receivables (gross) 633,033 179,526

The entire impairment allowance relates to debts aged more than 90 days.

Reconciliation of the Impairment Allowance

Movement in relation to 2016

Goods and Services Receivable $'000

As at 1 July 2015 (7,675)

Amounts written off 1,760

Amounts recovered and reversed 362

Increase recognised in net cost of services (2,084)

Total as at 30 June 2016 (7,637)

Movement in relation to 2015

Goods and Services Receivable $'000

As at 1 July 2014 (11,132)

Amounts written off 222

Amounts recovered and reversed 3,951

Increase recognised in net cost of services (716)

Total as at 30 June 2015 (7,675)

Credit terms for goods and services were net 30 days (2015: 30 days).

4.1 4.1 DEPARTMENT OF HEALTH

355 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 20: Administered - Financial Assets

2016 2015

$'000 $'000

Note 20D: Other investments Equity interest - Australian Institute of Health and Welfare (i) 6,723 5,880

Equity interest - Food Standards Australia New Zealand (ii) 7,745 7,592

Equity interest - Private Health Insurance Administration Council - 2,774

Equity interest - Australian Commission on Safety and Quality in Health Care (iii) 2,136 1,774

Equity interest - Australian Sports Commission (iv) 310,208 315,108

Equity interest - Australian Sports Foundation Ltd (v) 4,375 15,889

Equity interest - Independent Hospital Pricing Authority (vi) 24,125 17,500

Equity interest - National Health Performance Authority (vii) 24,805 23,507

Total other investments 380,117 390,024

None of the investments are expected to be recovered within 12 months.

Transferred entities The Private Health Insurance Administration Council regulates the financial performance of the private health industry, calculates the reinsurance pool, reviews pricing applications, registers health insurance organisations, and provides information relating to membership in private health insurance and the benefits paid by the industry. Private Health Insurance Administration Council was merged with the Australian Prudential Regulation Authority effective 1 July 2015, and the value of investment was reduced to nil.

(ii) The Food Standards Australia New Zealand protects and informs consumers through the development of effective food standards, in a way that helps stimulate and support growth and innovation in the food industry.

(iii) The Australian Commission on Safety and Quality in Health Care works to lead and coordinate national improvements in safety and quality in health care across Australia.

(vi) The Independent Hospital Pricing Authority was established on 1 July 2014 to contribute to significant reforms to improve Australian public hospitals. A major component of these reforms is the implementation of national Activity Based Funding (ABF) for Australian public hospitals. The implementation of ABF provides incentives for efficiency and increases transparency in the delivery and funding of public hospital services across Australia.

(vii) The National Health Performance Authority was established on 1 July 2014 to monitor and report on the performance of local health care organisations including Local Hospital Networks, public and private hospitals, and primary health care organisations such as Medicare Locals and other organisations that provide health care services to the community. It provides nationally consistent, locally relevant and comparable information about Australia’s health system to inform consumers, stimulate and inform improvements and increase transparency and accountability.

(i) The Australian Institute of Health and Welfare informs community discussion and decision making through national leadership and collaboration in developing and providing health and welfare statistics and information.

(iv) The Australian Sports Commission manages, develops and invests in sport at all levels. It works closely with a range of national sporting organisations, state and local governments, schools and community organisations to ensure sport is well run and accessible.

(v) The Australian Sports Foundation Ltd assists sporting, community, educational and other government organisations to raise funds for the development of sports infrastructure.

The Department classifies these investments as ‘available for sale’ and they were measured at fair value as at 30 June 2016. Fair value has been taken to be the unaudited net assets of the entity as at the end of the reporting period.

PART 4 FINANCIAL STATEMENTS 4.1

356 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Reconciliation of the opening and closing balances of property, plant and equipment and intangibles for 2016 Land Buildings Total land

and buildings Computer Software

Total

$'000 $'000 $'000 $'000 $'000

As at 1 July 2015 Gross book value 1,895 23,536 25,431 91,544 116,975

Accumulated depreciation, amortisation and impairment - (963) (963) (54,927) (55,890)

Total as at 1 July 2015 1,895 22,573 24,468 36,617 61,085

Additions Internally developed - - - 31,626 31,626

Revaluations and impairments recognised in other comprehensive income - 9,692 9,692 - 9,692

Depreciation and amortisation - (963) (963) (19,420) (20,383)

Total as at 30 June 2016 1,895 31,302 33,197 48,823 82,020

Total as at 30 June 2016 represented by Gross book value 1,895 31,302 33,197 123,170 156,367

Accumulated depreciation, amortisation and impairment - - - (74,347) (74,347)

Total as at 30 June 2016 represented by 1,895 31,302 33,197 48,823 82,020

No indications of impairment were found for land, buildings and software.

Reconciliation of the opening and closing balances of property, plant and equipment and intangibles for 2015 Land Buildings Total land and buildings Computer

Software

Total

$'000 $'000 $'000 $'000 $'000

As at 1 July 2014 Gross book value 1,895 23,536 25,431 91,544 116,975

Accumulated depreciation, amortisation and impairment - - - (36,618) (36,618)

Total as at 1 July 2014 1,895 23,536 25,431 54,926 80,357

Depreciation and amortisation - (963) (963) (18,309) (19,272)

Total as at 30 June 2015 1,895 22,573 24,468 36,617 61,085

Total as at 30 June 2015 represented by Gross book value 1,895 23,536 25,431 91,544 116,975

Accumulated depreciation, amortisation and impairment - (963) (963) (54,927) (55,890)

Total as at 30 June 2015 represented by 1,895 22,573 24,468 36,617 61,085

Note 21: Administered - Non-Financial Assets

No land and buildings are expected to be sold or disposed of within the next 12 months. All of the computer software balance (comprising My Health Record ) will be transferred to the Australian Digital Health Agency at cost, effective 1 July 2016.

4.1 4.1 DEPARTMENT OF HEALTH

357 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 22: Administered - Payables and Provisions

2016 2015

$'000 $'000

Note 22A: Suppliers Trade creditors and accruals 9,881 7,110

Total suppliers 9,881 7,110

All suppliers payable are expected to be settled within 12 months.

Settlement is usually made within 30 days.

Note 22B: Grants Australian Government entities (related entities) 32,244 15,101

Profit and non-profit organisations 345,826 360,061

Total grants 378,070 375,162

All grants payable are expected to be settled within 12 months.

Notes 2016 2015

$'000 $'000

Medical Indemnity provision Incurred But Not Reported Scheme 22D 28,000 34,000

High Cost Claims Scheme 22D 316,000 300,000

Run-Off Cover Scheme 22D 81,000 79,000

Total subsidies 425,000 413,000

Subsidies expected to be settled No more than 12 months 61,438 51,363

More than 12 months 363,562 361,637

Total subsidies 425,000 413,000

The reconciliation of this provison is disclosed in 22D.

Note 22C: Subsidies - external parties

Settlement is made according to the terms and conditions of each grant. This is usually within 30 days of performance or eligibility.

PART 4 FINANCIAL STATEMENTS 4.1

358 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 22: Administered - Provisions

Note 22D: Medical Indemnity Provision

Balance as at 30 June 2015

Claims paid Administered Schedule of Comprehensive Income Impact

Balance as at 30 June 2016

$'000 $'000 $'000 $'000

Medical Indemnity Liabilities Incurred But Not Reported Scheme 34,000 (5,907) (93) 28,000

High Cost Claims Scheme 300,000 (49,911) 65,911 316,000

Run-Off Cover Scheme 79,000 (4,123) 6,123 81,000

Total 413,000 (59,941) 71,941 425,000

Run-Off Cover Scheme (ROCS) ROCS provides free run-off cover for specific groups of medical practitioners including those retired and over 65, on maternity leave, retired for more than three years, retired due to permanent disability or the estates of those that have died. This scheme is funded through the collection of support payments imposed as a tax on MIIs.

Midwife Professional Indemnity (Commonwealth Contribution) Scheme (MPIS) Under this scheme, Medical Insurance Australia Pty Ltd (MIGA) is reimbursed for part of the costs of claims notified to MIGA on or after 1 July 2010. MIGA will pay the first $0.100m of each eligible claim, plus 20 cents in the dollar for claims costs between $0.100m and $2m. The Government will contribute the remaining 80 cents in the dollar for claims costs between $0.100m and $2m (i.e. Level 1 Commonwealth contributions) and will meet 100% of that part of the cost of any claim which exceeds the $2m threshold (i.e. Level 2 Commonwealth contributions). Midwife Professional Indemnity Run-off Scheme (MPIRCS) Under this scheme, MIGA is fully reimbursed for the costs of claims made by midwives who have ceased practice. The MPIRCS applies to claims (including incidents) notified to MIGA on or after 1 July 2010 by midwives.

Premium Support Scheme (PSS) The PSS helps eligible doctors with the costs of their medical indemnity insurance. Under this scheme, if a doctor's gross medical indemnity costs exceed 7.5% of his or her gross private medical income, he or she will receive a subsidy towards the cost of the premium beyond that threshold limit.

Exceptional Claims Scheme (ECS) The ECS provides coverage for practitioners for the cost of medical indemnity claims that exceed the limit of their contract of insurance. To be covered by the ECS, the practitioner must have medical indemnity insurance cover to at least $15m for the period 1 January to 30 June 2003 and $20m from 1 July 2003.

The table below provides a summary of the movement of medical indemnity provisions in the Department’s Administered Schedule of Assets and Liabilities for the financial year ended 30 June 2016.

Medical Indemnity is administered by the Department under the Medical Indemnity Act 2002 and the Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010 . The Department administers the following medical indemnity schemes: • Incurred But Not Reported Scheme (IBNRS); • High Cost Claims Scheme (HCCS); • Exceptional Claims Scheme (ECS); • Run-Off Cover Scheme (ROCS); • Premium Support Scheme (PSS); • Midwife Professional Indemnity (Commonwealth Contribution) Scheme (MPIS); and • Midwife Professional Indemnity Run-off Cover Scheme (MPIRCS). In accordance with Note 1.4, a liability can only be recognised for IBNRS, HCCS and ROCS. A summary of each of the schemes is provided below:

Incurred But Not Reported Scheme (IBNRS) The IBNRS provides for payments to Avant Mutual Group for claims made in relation to its IBNR liability at 30 June 2002. Some claims that will be payable under the IBNRS may also be eligible for payment under the HCCS.

High Cost Claims Scheme (HCCS) Under HCCS, the Government pays 50% of the cost of claims made to all Medical Indemnity Insurers (MIIs) that exceed a specified threshold, up to the limit of the practitioner’s insurance. The threshold to be applied depends on the date of notification of the claim, as follows: - from 1 January 2003 to 21 October 2003 - $2m; - from 22 October 2003 to 31 December 2003 - $0.500m; and - on or after 1 January 2004 - $0.300m.

4.1 4.1 DEPARTMENT OF HEALTH

359 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 23: Administered - Cash Flow Reconciliation

2016 2015

$'000 $'000

Reconciliation of cash and cash equivalents as per Administered Schedule of Assets and Liabilities to Administered Cash Flow Statement

Cash and cash equivalents as per:

Administered Cash Flow Statement 171,579 336,648

Administered Schedule of Assets and Liabilities 171,579 336,648

Discrepancy - -

Reconciliation of net cost of services to net cash used by operating activities Net cost of services (52,927,833) (41,155,392)

Adjustment for non-cash items Depreciation and amortisation 20,383 19,272

Net write-down of assets 107,326 3,858

Inventory adjustments 5 5

Foreign exchange losses (net) 1 -

Concessional loans discount and unwinding 2,552 -

Movements in assets and liabilities Assets Decrease/(increase) in net receivables (718,628) 34,419

Decrease/(increase) in inventories (6,642) (5,373)

Liabilities Increase/(decrease) in suppliers payable (634) (3,082)

Increase/(decrease) in subsidies payable 111,316 74

Increase/(decrease) in personal benefits payable (16,666) 64,363

Increase/(decrease) in grants payable (8,533) 98,225

Increase/(decrease) in subsidies provision 12,000 18,000

Increase/(decrease) in personal benefits provision 268,551 (15,803)

Net cash used by operating activities (53,156,802) (40,941,434)

PART 4 FINANCIAL STATEMENTS 4.1

360 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Contingent Assets

There were no quantifiable administered contingent assets as at 30 June 2016 (2015: Nil).

2016 2015 2016 2015 2016 2015 2016 2015

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Contingent liabilities Balance from previous period 52,000 53,000 81 263 - - 52,081 53,263

New contingent liabilities recognised - - 22 50 208 - 230 50

Re-measurement 8,000 (1,000) (13) - - - 7,987 (1,000)

Liabilities recognised - - - (4) - - - (4)

Obligations expired - - - (228) - - - (228)

Restructure - - - - - - - -

Total contingent liabilities 60,000 52,000 90 81 208 - 60,298 52,081

Net contingent liabilities 60,000 52,000 90 81 208 - 60,298 52,081

Note 24: Administered - Contingent Assets and Liabilities

Indemnities Claims for costs Total Aged Care

Accommodation Bond Guarantee Scheme

4.1 4.1 DEPARTMENT OF HEALTH

361 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 24: Administered - Contingent Assets and Liabilities

Claims for Costs The table also reports a contingent liability in respect of claims for costs payments related to medical benefits of up to $0.090m (2015: $0.081m).

Aged Care Accommodation Bond Guarantee Scheme The Department is currently aware of the potential for the accommodation bond scheme to be activated. If this occurs, the maximum payments required to be made by the Commonwealth under the scheme is estimated at $0.208m.

Quantifiable Contingent Liabilities

Unquantifiable Contingent Assets

Unquantifiable Contingent Liabilities

Tobacco plain packaging litigation The Australian Government will continue to fund the defence of legal challenges to the tobacco plain packaging legislation in international forums. Further information about these cases has not been disclosed on the grounds that it may prejudice the outcomes of these cases or may relate to commercial information.

From the latest available information, the maximum contingent liability, in the unlikely event that all providers defaulted, is $18.340 billion. Since the scheme was introduced it has been activated nine times requiring payment of $41.045m. It is difficult to predict if the past patterns of payments are indicative of future payments. The scheme was activated during the period ended 30 June 2016, with $0.125m refunded and another $0.593m accrued as at 30 June 2016.

Responsibility for the Guarantee Scheme was transferred to the Department from DSS during 2016 under the Administrative Arrangements Order issued on 30th September 2015

Compensation from Wyeth The Department has initiated legal action to seek compensation from Wyeth, the original patent owner of venlafaxine (Efexor®), for additional costs to the Pharmaceutical Benefits Scheme (PBS) resulting from a delay in listing a generic version of venlafaxine. Listing a generic form of venlafaxine on the Australian market in 2009 would have triggered an automatic reduction to the price paid by the Government for venlafaxine through the PBS. The first generic version of this medicine was listed in 2012.

Indemnities The table on the previous page reports a contingent liability in respect of medical indemnity payments under the High Cost Claims Scheme of up to $60m (2015: $52m).

Diagnostic Products Agreement The Australian Government has provided an indemnity to a review of certain matters in relation to the Diagnostics Products Agreement. The indemnity provides certain specified members of the review the same level of indemnity as Australian Government officers for the purpose of the review. For the period ended 30 June 2016 no claims have been made (2015: Nil).

Aged Care Accommodation Bond Guarantee Scheme A Guarantee Scheme has been established through the Aged Care (Accommodation Payment Security) Act 2006 and Aged Care (Accommodation Payment Security) Levy Act 2006 . Under the Guarantee Scheme, if a provider becomes insolvent or bankrupt and is unable to repay outstanding bond balances to aged care residents, the Australian Government will step in and repay the bond balances owing to each resident. In return, the residents' rights to pursue the defaulting provider to recover the accommodation bond money transfer to the Government. In the event the Government cannot recover the full amount from the defaulting provider, it may levy all providers holding accommodation bonds to recoup the shortfall. It is not possible to quantify the Australian Government's contingent liability in the event that the Guarantee Scheme is activated. The Department has implemented risk mitigation strategies which should reduce the risk of default and thereby activation of the Guarantee Scheme.

Compensation from Sanofi The Department has initiated legal action to seek compensation from Sanofi, the original patent owner of clopidogrel (Plavix®), for additional costs to the Pharmaceutical Benefits Scheme (PBS) resulting from a delay in listing a generic version of clopidogrel. Listing a generic form of clopidogrel on the Australian market in 2008 would have triggered an automatic reduction to the price paid by the Government for clopidogrel through the PBS and is likely to have resulted in a Price Disclosure reduction in 2010. The first generic version of this medicine was listed in 2010 and the first Price Disclosure reduction occurred in 2012.

PART 4 FINANCIAL STATEMENTS 4.1

362 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 24: Administered - Contingent Assets and Liabilities

2018 Commonwealth Games The Australian Government has provided guarantees in support of the Gold Coast bid to host the 2018 Commonwealth Games.

Australian Red Cross Blood Service The Deed of Agreement between the Commonwealth and the Australian Red Cross Society (ARCS) and the National Blood Authority (NBA) in relation to the operations of the Blood Service, includes certain indemnities and limited liability in favour of ARCS. These cover a defined set of potential business, product and employee risks and liabilities arising from the operation of the Blood Service. The indemnities and limitation of liability only operate in the event of the expiry and non-renewal, or the early termination of the Deed, and only within a certain scope. They are also subject to appropriate limitations and conditions including in relation to mitigation, contributory fault, and the process of handling relevant claims.

Under certain conditions the Australian Government, States and Territories jointly provide indemnity for the Blood Service through a cost-sharing arrangement in relation to the National Managed Fund claims, both current and potential, regarding personal injury and loss or damages suffered by a recipient of certain blood and blood products where other available mitigation or cover is not available. Under a Memorandum of Understanding between governments and the Blood Service, the blood and blood products liability cover for the Blood Service remains in force until all parties agree to terminate the arrangements from an agreed date.

For the period ended 30 June 2016 no claims have been made (2015: Nil).

CSL Ltd Under existing agreements, the Australian Government has indemnified CSL Ltd for certain existing and potential claims made for personal injury, loss or damage suffered through therapeutic and diagnostic use of certain products manufactured by CSL Ltd. For the period ended 30 June 2016 no claims have been made (2015: Nil).

The Australian Government has indemnified CSL Ltd for a specific range of events that occurred during the Plasma Fractionation Agreement from 1 January 1994 to 31 December 2004, where alternative cover was not arranged by CSL Ltd. For the period ended 30 June 2016 no claims have been made (2015: Nil).

Vaccines Under certain conditions the Australian Government has provided an indemnity for the supply of certain vaccines to the suppliers of the vaccines. The contract under which contingent liability is recognised will expire in September 2016. However, until replacement stock is sourced the contingent liability for use of the vaccine currently held remains with the Commonwealth. For the period ended 30 June 2016 no claims have been made (2015: Nil).

Medical Indemnity DHS delivers the Incurred But Not Reported Scheme (IBNRS) on behalf of the Australian Government. Eligibility for claim payments under this scheme is dependent on whether the Medical Indemnity Insurer (MII) is deemed to be a participating Medical Defence Organisation under the Medical Indemnity Act 2002 and the Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010 .

DHS also delivers the Exceptional Claims Scheme (ECS) on behalf of the Australian Government. Under this scheme, the Australian Government will be liable for the cost of medical indemnity claims that exceed certain thresholds. The Consolidated Revenue Fund is appropriated to make payments under this scheme. To be covered by the ECS, practitioners must have medical indemnity insurance cover to at least a threshold of $15m for claims arising from incidents notified between 1 January to 30 June 2003 and $20m for claims notified from 1 July 2003. At 30 June 2015, the Department had received no notification of any incidents that would give rise to claims under this scheme. However, the nature of these claims is such that there is usually an extended period between the date of the medical incident and notification to the insurer. For the period ended 30 June 2016 no claims have been made or notified (2015: Nil).

The Australian Medical Association This is an agreement between the Australian Medical Association Ltd (AMA), the Commonwealth, Australian Private Hospitals Association Ltd and Private Healthcare Australia for participation in and support of the Private Mental Health Alliance. In respect of identified information collected, held or exchanged by the parties in connection with the National Model for the Collection and Analysis of a Minimum Data Set with Outcome Measures in Private, Hospital-based Psychiatric Services each party has agreed to indemnify each other in respect of any loss, liability, cost, claim or expense, misuse of Confidential Information or breach of the Privacy Act. The AMA's liability to indemnify the other parties will be reduced proportionally to the extent that any unlawful or negligent act or omission of the other parties or their employees or agents contributed to the loss or damage. For the period ended 30 June 2016 no claims have been made (2015: Nil).

Human Pituitary Hormone Program Under certain conditions the Australian Government has provided indemnity for the supply of growth hormones manufactured from human pituitary glands and human pituitary gonadotrophin manufactured before 31 December 1985. For the period ended 30 June 2016 no claims have been made (2015: Nil).

4.1 4.1 DEPARTMENT OF HEALTH

363 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

2016 2015

$'000 $'000

Note 25A: Categories of financial instruments Financial Assets Loans and receivables Cash and cash equivalents 171,579 336,648

Personal benefits receivable 741,254 121,996

Goods and services receivable 202,945 119,493

Advances and loans 271,352 -

Total loans and receivables 1,387,130 578,137

Available-for-sale financial assets Equity interest - Australian Institute of Health and Welfare 6,723 5,880

Equity interest - Food Standards Australia New Zealand 7,745 7,592

Equity interest - Private Health Insurance Administration Council - 2,774

Equity interest - Australian Commission on Safety and Quality in Health Care 2,136 1,774

Equity interest - Australian Sports Commission 310,208 315,108

Equity interest - Australian Sports Foundation Ltd 4,375 15,889

Equity interest - Independent Hospital Pricing Authority 24,125 17,500

Equity interest - National Health Performance Authority 24,805 23,507

Total available-for-sale financial assets 380,117 390,024

Total financial assets 1,767,247 968,161

Financial Liabilities Financial liabilities measured at amortised cost Trade creditors 9,881 7,110

Grants payable 378,070 375,162

Total financial liabilities measured at amortised cost 387,951 382,272

Total financial liabilities 387,951 382,272

Note 25B: Net gains or losses on financial assets Loans and receivables Interest revenue 4,757 -

Impairment (1,950) (626)

Net losses on loans and receivables 2,807 (626)

Net losses on financial assets 2,807 (626)

Note 25C: Net gains or losses on financial liabilities Financial liabilities measured at amortised cost Exchange loss (1) -

Net losses on financial liabilities measured at amortised cost (1) -

Net losses on financial liabilities (1) -

Note 25: Administered - Financial Instruments

PART 4 FINANCIAL STATEMENTS 4.1

364 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 25: Administered - Financial Instruments

Note 25D: Credit risk

Maximum exposure to credit risk

2016 2015

$'000 $'000

Financial assets carried at amount not best representing maximum exposure to credit risk Personal benefits receivable 741,254 121,996

Goods and services receivable 210,582 127,168

Advances and loans 271,352 -

Equity interest - Australian Institute of Health and Welfare 6,723 5,880

Equity interest - Food Standards Australia New Zealand 7,745 7,592

Equity interest - Private Health Insurance Administration Council - 2,774

Equity interest - Australian Commission on Safety and Quality in Health Care 2,136 1,774

Equity interest - Australian Sports Commission 310,208 315,108

Equity interest - Australian Sports Foundation Ltd 4,375 15,889

Equity interest - Independent Hospital Pricing Authority 24,125 17,500

Equity interest - National Health Performance Authority 24,805 23,507

Total 1,603,305 639,188

The Administered activities of the Department are not exposed to a high level of credit risk as the majority of financial assets were goods and services receivables and shares in Government controlled and funded entities. The Department has policies and procedures that outline the debt recovery techniques to be applied. The Department has assessed the risk of default on payment and has allocated $7.637m in 2016 (2015: $7.675m) to an impairment allowance account for 'Goods and services receivables'. The Department held no collateral to mitigate against credit risk.

4.1 4.1 DEPARTMENT OF HEALTH

365 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 25: Administered - Financial Instruments

Note 25D (Continued): Credit risk

Credit quality of financial instruments not past due or individually determined as impaired

2016 2015 2016 2015

$'000 $'000 $'000 $'000

741,254 121,996 - -

182,962 112,782 27,620 14,386

271,352 - - -

Total 1,195,568 234,778 27,620 14,386

Ageing of financial assets that were past due but not impaired in 2016

0 to 30 days 31 to 60 days 61 to 90 days 90+ days Total

$'000 $'000 $'000 $'000 $'000

5,797 8,596 2,774 2,816 19,983

Total 5,797 8,596 2,774 2,816 19,983

Ageing of financial assets that were past due but not impaired in 2015

0 to 30 days 31 to 60 days 61 to 90 days 90+ days Total

$'000 $'000 $'000 $'000 $'000

4,606 134 134 1,837 6,711

Total 4,606 134 134 1,837 6,711

Note 25E: Liquidity risk

Note 25F: Market risk

The Department is not exposed to ‘currency risk’ or 'other price risk'.

Goods and services receivable

The Department holds financial instruments that are of a nature that do not expose the Department to certain market risks. Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The only interest bearing items in the Administered Schedule of Assets and Liabilities were zero real interest loans, disclosed as advances and loans. These loans have an interest rate linked to Consumer Price Index and will not fluctuate for changes in market interest rates.

The Department's administered financial liabilities are suppliers payable and grants payable. The exposure to liquidity risk is based on the notion that the Department will encounter difficulty in meeting its obligations associated with its administered financial liabilities. This is highly unlikely due to appropriation funding and mechanisms available to the Department (e.g. Advance to the Finance Minister) and internal policies and procedures put in place to ensure there are appropriate resources to meet its financial obligations. The Department has no past experience of default. All liabilities related to suppliers payable and grants payable are expected to be settled within one year.

Past due or impaired

Personal benefits receivable Goods and services receivable

Not past due nor impaired

Past due or impaired

Goods and services receivable

Advances and loans

Not past due nor impaired

PART 4 FINANCIAL STATEMENTS 4.1

366 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Table A: Annual Appropriations ('Recoverable GST exclusive')

2016 2015

$'000 $'000

DEPARTMENTAL Ordinary Annual Services Annual appropriation1,2 458,366 480,321

Capital budget 11,209 6,028

Receipts retained under PGPA Act - Section 74 56,407 50,746

Transfers of appropriations under PGPA Act - Section 75 - annual appropriation 132,036 -

Transfers of appropriations under PGPA Act - Section 75 - capital budget 965 -

Total appropriation 658,983 537,095

Appropriation applied (current and prior years) (655,122) (546,682)

Variance3 3,861 (9,587)

Other Services - Equity Annual appropriation 20,034 8,820

Transfers of appropriations under PGPA Act - Section 75 12,256 -

Total appropriation 32,290 8,820

Appropriation applied (current and prior years) (27,341) (15,757)

Variance3 4,949 (6,937)

3 The variance of $3,861,000 for departmental ordinary annual services primarily represents the timing difference of payments to suppliers or employees. The variance of $4,949,000 for departmental equity primarily represents the timing difference of payments on asset acquisition. The administered ordinary annual services items variance of $693,453,000 relates to the utilisation of retained funding from 2015 during 2016 (the former section 11 of the Appropriation Acts). The administered other services payments to corporate Commonwealth entities variance of $17,844,000 relates to the National Health Performance Authority appropriations. The administered other services assets and liabilities variance of $123,539,000 relates to funding for the investment in the Biomedical Translation Fund.

4 DHS spent money from the CRF on behalf of the Department under a payment authority. The money spent has been included in the table above.

5 Departmental capital budgets are appropriated through Appropriation Acts (No.1,3). They form part of ordinary annual services and are not separately identified in the Appropriation Acts.

Note 26A: Appropriations

1 There were no amounts temporarily quarantined from 2016 or 2015 departmental appropriations. In administered a total of $25,253,000 has been temporarily quarantined against 2016 ordinary annual services appropriations and another $44,800,000 has been temporarily quarantined against 2015 ordinary annual services appropriations. An additional $3,000,000 has been temporarily quarantined in administered from the 2015 appropriation balances transferred to the Department from the Department of Social Services under the Administrative Arrangements Order issued on 30th September 2015. These amounts have been disclosed as available in Note 26A, Table B. 2

There were no amounts withheld under section 51 of the PGPA Act from 2016 departmental appropriations. In administered a total of $430,172,000 has been permanently quarantined against 2016 appropriations for ordinary annual services. In 2015 appropriations a total of $624,163,183.83 has been permanently quarantined against administered appropriations for ordinary annual services and $436,000 has been permanently quarantined against departmental appropriations for ordinary annual services. These amounts have been witheld under section 51 of the PGPA Act which represents a loss of control. Therefore, these amounts have not been disclosed as available in Note 26A, Table B.

4.1 4.1 DEPARTMENT OF HEALTH

367 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Table A: Annual Appropriations ('Recoverable GST exclusive')

2016 2015

$'000 $'000

Note 26A: Appropriations

ADMINISTERED Ordinary Annual Services - Administered items

Annual appropriation1,2 5,804,936 5,837,790

Receipts retained under PGPA Act - Section 74 107,701 44,248

Transfers of appropriations under PGPA Act - Section 75 1,507,863 -

Total appropriation 7,420,500 5,882,038

Appropriation applied (current and prior years) (6,727,047) (5,385,625)

Variance3 693,453 496,413

Ordinary Annual Services - Payments to corporate Commonwealth entities Annual appropriation 346,502 299,363

Total appropriation 346,502 299,363

Appropriation applied (current and prior years) (328,658) (299,347)

Variance 17,844 16

Other services - Administered assets and liabilities Annual appropriation 156,741 5,682

Total appropriation 156,741 5,682

Appropriation applied (current and prior years) (33,202) (3,713)

Variance3 123,539 1,969

Other Services - Payments to corporate Commonwealth entities Annual appropriation - 1,500

Total appropriation - 1,500

Appropriation applied (current and prior years) - (1,500)

Variance - -

2

There were no amounts withheld under section 51 of the PGPA Act from 2016 departmental appropriations. In administered a total of $430,172,000 has been permanently quarantined against 2016 appropriations for ordinary annual services. In 2015 appropriations a total of $624,163,183.83 has been permanently quarantined against administered appropriations for ordinary annual services and $436,000 has been permanently quarantined against departmental appropriations for ordinary annual services. These amounts have been witheld under section 51 of the PGPA Act which represents a loss of control. Therefore, these amounts have not been disclosed as available in Note 26A, Table B.

3 The variance of $3,861,000 for departmental ordinary annual services primarily represents the timing difference of payments to suppliers or employees. The variance of $4,949,000 for departmental equity primarily represents the timing difference of payments on asset acquisition. The administered ordinary annual services items variance of $693,453,000 relates to the utilisation of retained funding from 2015 during 2016 (the former section 11 of the Appropriation Acts). The administered other services payments to corporate Commonwealth entities variance of $17,844,000 relates to the National Health Performance Authority appropriations. The administered other services assets and liabilities variance of $123,539,000 relates to funding for the investment in the Biomedical Translation Fund. 4

DHS spent money from the CRF on behalf of the Department under a payment authority. The money spent has been included in the table above.

1 There were no amounts temporarily quarantined from 2016 or 2015 departmental appropriations. In administered a total of $25,253,000 has been temporarily quarantined against 2016 ordinary annual services appropriations and another $44,800,000 has been temporarily quarantined against 2015 ordinary annual services appropriations. An additional $3,000,000 has been temporarily quarantined in administered from the 2015 appropriation balances transferred to the Department from the Department of Social Services under the Administrative Arrangements Order issued on 30th September 2015. These amounts have been disclosed as available in Note 26A, Table B.

5 Departmental capital budgets are appropriated through Appropriation Acts (No.1,3). They form part of ordinary annual services and are not separately identified in the Appropriation Acts.

PART 4 FINANCIAL STATEMENTS 4.1

368 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 26A: Appropriations

Table B: Unspent Annual Appropriations ('Recoverable GST exclusive')

2016 2015

$'000 $'000

DEPARTMENTAL Appropriation Act (No. 2) 2012-13 - 2,919

Appropriation Act (No. 1) 2013-14 - Departmental Capital Budget (DCB) - 871

Appropriation Act (No. 2) 2013-14 - 1,780

Appropriation Act (No. 3) 2013-14 - Departmental Capital Budget (DCB) - 585

Appropriation Act (No. 4) 2013-14 - 2,444

Appropriation Act (No. 1) 2014-15 1 33,134 86,922

Appropriation Act (No. 1) 2014-15 - Cash at Bank - 762

Appropriation Act (No. 1) 2014-15 - Departmental Capital Budget (DCB) - 4,466

Appropriation Act (No. 2) 2014-15 - 2,530

Appropriation Act (No. 3) 2014-15 6,646 6,646

Appropriation Act (No. 1) 2015-16 38,672 -

Appropriation Act (No. 1) 2015-16 - Cash at Bank2 1,859 -

Appropriation Act (No. 1) 2015-16 - Departmental Capital Budget (DCB) 316 -

Appropriation Act (No. 2) 2015-16 556 -

Appropriation Act (No. 3) 2015-16 24,624 -

Appropriation Act (No. 4) 2015-16 11,624 -

Total departmental 117,431 109,925

ADMINISTERED Appropriation Act (No. 1) 2012-13 3 3,323 3,323

Appropriation Act (No. 1) 2013-14 3 26,391 26,391

Appropriation Act (No. 2) 2013-14 3 14,226 14,226

Appropriation Act (No. 1) 2014-15 1,4 213,993 721,216

Appropriation Act (No. 2) 2014-15 840 4,322

Appropriation Act (No. 3) 2014-15 - 6,168

Appropriation Act (No. 5) 2014-15 46,689 -

Appropriation Act (No. 1) 2015-16 1,5 366,133 -

Appropriation Act (No. 2) 2015-16 2,021 -

Appropriation Act (No. 3) 2015-16 7,415 -

Appropriation Act (No. 4) 2015-16 125,000 -

Total administered 806,031 775,646

2

Cash at bank mainly relates to deposits made on 30 June that are subject to Section 74 of the PGPA Act (annotated Appropriation Act 1).

3

These balances have been temporarily quarantined. This does not represent a loss of control of the appropriations and therefore these amounts were reported as available in the above table.

4

This balance includes temporarily quarantined amounts to the total of $47,800,000. This does not represent a loss of control of the appropriations and therefore these amounts were reported as available in the above table. Of these quarantines, $44,800,000 was in place in 2015, and an additional $3,000,000 applied to the 2015 appropriation balances transferred to the Department from the DSS during 2016 under the Administrative Arrangements Order issued on 30th September 2015. 5

This balance includes temporarily quarantined amounts to the total of $25,253,000. This does not represent a loss of control of the appropriations and therefore these amounts were reported as available in the above table.

1

In administered a total of $618,915,913.02 of the Appropriation Act (No. 1) 2014-15, $5,247,270.81 of the Appropriation Act (No. 3) 2014-15 and $430,172,000 of the Appropriation Act (No. 1) 2015-16 has been permanently quarantined under section 51 of the PGPA Act . In departmental a total of $436,000 has been permanently quarantined under section 51 of the PGPA Act . This represents a loss of control of the appropriations and therefore these amounts were not reported as available in the above table.

4.1 4.1 DEPARTMENT OF HEALTH

369 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 26A: Appropriations

Table C: Special Appropriations Applied ('Recoverable GST exclusive')

2016 2015

Authority $'000 $'000

Aged Care (Accommodation Payment Security) Act 2006 - -

Aged Care Act 1997 9,831,715 -

Health Insurance Act 1973 21,167,610 20,160,432

National Health Act 1953 11,798,076 9,989,313

Medical Indemnity Act 2002 69,264 66,001

Private Health Insurance Act 2007 5,896,162 5,783,998

Dental Benefits Act 2008 312,724 311,647

Private Health Insurance Act 2007 - 440,874

Private Health Insurance Act 2007 - 4,664

Health and Other Services (Compensation) Act 1995 - -

Medical Indemnity Agreement (Financial Assistance - Binding Commonwealth Obligations) Act 2002 - -

Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010 - -

Public Governance, Performance and Accountability Act 2013 s.77 1 7,926 737

Total special appropriations applied 49,083,477 36,757,666

Table D: Disclosure by Agent in Relation to Annual and Special Appropriations ('Recoverable GST exclusive')

2016 2015

$'000 $'000

Department of Social Services Total receipts 6,127 4,992

Total payments (6,127) (4,992)

The Department made wage supplementation payments from the Social and Community Services Pay Equity Special Account administered by the Department of Social Services (DSS) to eligible social and community services workers during 2016 and 2015.

Appropriation applied

2 DHS drew money from the CRF on behalf of the Department against the following special appropriations: Aged Care Act 1997; Health Insurance Act 1973; National Health Act 1953; Medical Indemnity Act 2002; Dental Benefits Act 2008; and Private Health Insurance Act 2007.

1 This amount included $7,825,174.24 transferred to DHS to refund a portion of recoveries from the Compensation for Health Care and Other Services Special Account previously returned to the OPA.

PART 4 FINANCIAL STATEMENTS 4.1

370 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

 

Note 26B: Compliance with Statutory Requirements for Payments from the Consolidated Revenue Fund  

Section 83 of the Constitution provides that no amount may be paid out of the Consolidated Revenue Fund except under an appropriation made by law.

The Department has primary responsibility for administering legislation related to health care. Payments totalling approximately $49 billion each year are authorised against Special Appropriations by the Department in accordance with a range of frequently complex legislation. Most of the payments are administered by the DHS under the Medicare program, on behalf of the Department. In the vast majority of cases DHS relies on information or estimates provided by customers and medical providers to calculate and pay entitlements. Despite future payments being adjusted to recover any overpayment, a breach of section 83 could nevertheless result. In addition, simple administrative errors can also lead to breaches of section 83.

Due to the number of payments made, the reliance that must be placed on external control frameworks and the complexities of the legislation governing these payments, the risk of a section 83 breach cannot be fully mitigated. However, the reported section 83 breaches represent only a very small portion of payments, both in number and in value, and the Department is committed to implementing measures to ensure that the risk of unintentional breaches of section 83 is as low as possible.

The Department has developed an approach for assessing the alignment of payment processes with legislation. This approach is reviewed annually. During 2015-16, the Department:

 reviewed legislation (including administrative processes) enacted since 1 July 2013 that creates or modifies payment eligibility as to whether processes are in place to minimise the risk of breaches of section 83;  received assurance from DHS that action has been undertaken to detect and prevent any potential breaches of section 83;  continued its ongoing reviews of special accounts by internal audit as part of its rolling compliance program;  obtained legal advice, as appropriate, to resolve questions of potential non-compliance; and  identified legislative/procedural changes to reduce the risk of non-compliance in the future.

Special Accounts

Currently the Department has nine Special Accounts, as per Note 27. Eight are assessed as low risk and one, the Sport and Recreation Special Account, is assessed as medium risk for non-compliance with section 83.

Special Appropriations

The Department administers 13 pieces of legislation, as disclosed in Note 26A Table C, as having Special Appropriations involving statutory requirements for payments. Of these legislations, some payments under the following legislation have been identified as having either actual or potential breaches of section 83 of the constitution.

Health Insurance Act 1973

In 2015-16, there were 29 cases of non-compliance under the Chronic Disease Dental Scheme totalling $3.536m.

These breaches have been confirmed by the Australian Government Solicitor and the related debts have been waived on the basis that it would be inequitable to recover the debts owed by various patients and providers of medical services, as they received the payments in good faith and would have been eligible for the benefit had the intended amendments to the legislation had been correctly implemented.

Corrective action involving regulatory amendments and the enactment of legislative instruments has been implemented where appropriate.

In addition to the above, DHS has estimated overpayments resulting in potential breaches of the Health Insurance Act 1973 of $95.254m (or approximately 0.45% of total payments under this Act). These in the main reflect payments made to claimants that have subsequently been found to not meet the definition under section 10AC and 10AD.

DHS have also advised that potential breaches of the Health Insurance Act 1973 relating to Medicare Easyclaim occur in instances where DHS make payments to financial institutions greater than the amount recorded by DHS as being owed to the financial institutions. The current process is necessitated by the settlement arrangements with the financial institutions which see a $5,000 “difference” cap to cater for ‘small’ differences which happen regularly and stopping any settlement where a ‘larger’ difference applied. DHS advised that during 2015-16, 106 instances occurred where such small differences existed totalling $17,627.

4.1 4.1 DEPARTMENT OF HEALTH

371 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

 

Note 26B: Compliance with Statutory Requirements for Payments from the Consolidated Revenue Fund  

Continued Focus

The Department will continue to review legislation (including any related administrative processes) that creates or modifies payment eligibility as it is enacted to determine whether process are in place to minimise the risk of breaches of section 83. It will continue with an ongoing review program that involves reviewing legislation, New Policy Proposals, business rules and payment processes. In addition, the Department will continue ongoing reviews of special accounts by internal audit as part of its rolling compliance program.

Expenditure in 2015-16

$’000

Review complete?1

(Yes/No)

Breaches identified to date2 Potential breaches yet to be resolved

(Yes/No)

Remedial action taken or proposed3

Appropriation identified as subject to conditions

Actuals

$’000

Potential

$’000

Recovered

$’000

Special Appropriations

Health Insurance Act 1973 21,167,610 Yes 3,536 95,271 - No Ongoing

21,167,610 3,536 95,271

1. Reviewed legislation (including any administrative processes) enacted since 1 July 2012 that creates or modifies payment eligibility as to whether processes the risk of breaches of section 83. 2. Recoveries can relate to prior periods. 3. Ongoing reviews through payment accuracy reviews.

 

PART 4 FINANCIAL STATEMENTS 4.1

372 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

2016 2015 2016 2015 2016 2015 2016 2015

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Balance brought forward from previous period

13,849 16,246 2,258 2,442 2,675 2,857 714 5,187

Increases

Appropriation credited to special account

11,870 7,340 7,270 5,802 - - - -

Other increases 12,609 9,731 4,060 3,705 - - 331 7,439

Total increases

24,479 17,071 11,330 9,507 - - 331 7,439

Available for payments

38,328 33,317 13,588 11,949 2,675 2,857 1,045 12,626

Decreases Administered - - 9,712 9,691 105 182 421 11,912

Total administered decreases

- - 9,712 9,691 105 182 421 11,912

Relevant Money

19,555 19,468 - - - - - -

Total relevant money decreases

19,555 19,468 - - - - - -

Total decreases

19,555 19,468 9,712 9,691 105 182 421 11,912

Total balance carried to the next period

18,773 13,849 3,876 2,258 2,570 2,675 624 714

Note 27: Special Accounts Note 27: Special Accounts ('Recoverable GST exclusive')

Services for Other Entities and Trust Moneys Account

1

Australian Childhood Immunisation Register Account

2

Human Pituitary Hormones Account

3

Sport and Recreation Account

4

4.1 4.1 DEPARTMENT OF HEALTH

373 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements Note 27: Special Accounts 1

2

3

4

Establishing Instrument: Public Governance, Performance and Accountability Act 2013;

section 78

Appropriation:

Public Governance, Performance and Accountability Act 2013

; section 78

Purpose: to disburse amounts held on trust or otherwise for the benefit of a person other than the Commonwealth; disburse amounts in connection with services performed on behalf of other government bodies that are not non-corporate Commonwealth entities (formerly FMA Act agencies); to repay amounts where an Act or other law requires or permits the repayment of an amount received; to reduce the balance of the special account (and, therefore the available appropriation for the special account) without making a real or notional payment. Under the Administrative Arrangements Order issued on 30 September 2015, $3.171m was transferred to Health into the Services for Other Entities and Trust Monies Special Account.

Establishing Instrument: Public Governance, Performance and Accountability Act 2013;

section 78

Appropriation:

Public Governance, Performance and Accountability Act 2013

; section 78

Purpose: to undertake sport and recreation related projects of common interest to the Sport and Recreation Ministers' Council, its successor or subordinate bodies, and that benefit all or a majority of members. The Sport and Recreation Special Account will cease on 1 October 2016 under Part 6 (sunsetting) of the

Legislative Instruments Act 2003 . A new special account will be established to replace it.

Establishing Instrument: Public Governance, Performance and Accountability Act 2013;

section 78

Appropriation:

Public Governance, Performance and Accountability Act 2013

; section 78

Purpose: for expenditure through grants and other payments for: - counselling and support services to recipients of pituitary-derived hormones and their families; and - medical and other care to people treated with pituitary-derived hormones should they contract Creutzfeldt-Jakob disease as a result of the treatment; and - one-off payments for recipients of pituitary-serviced hormones who can demonstrate that they have suffered a psychiatric illness prior to 1 January 1998 due to their having been informed that they are at a greater risk of contracting Creutzfeldt-Jakob disease; and - one-off payments for the children of recipients of pituitary-derived hormones who can demonstrate that they have suffered a psychiatric illness as a consequence of the death of their parent from Creutzfeldt-

Jakob disease. The Human Pituitary Hormones Special Account ceased on 1 October 2015 under Part 6 (sunsetting) of the

Legislative Instruments Act 2003 . A new special account was established to replace it.

Establishing Instrument: Public Governance, Performance and Accountability Act 2013;

section 78

Appropriation:

Public Governance, Performance and Accountability Act 2013

; section 78

Purpose: for expenditure relating to the operations of the Australian Childhood Immunisation Register, including payments to providers for the provision of information. The Australian Childhood Immunisation Register Special Account will cease on 1 October 2016 under Part 6 (sunsetting) of the

Legislative Instruments Act 2003 . A new special account will be established to

replace it.

PART 4 FINANCIAL STATEMENTS 4.1

374 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

2016 2015 2016 2015 2016 2015 2016 2015 2016 2015

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Balance brought forward from previous period 61,059

63,329 7,585 7,042 10,503 11,069 - - - 1,261

Increases

Appropriation credited to special account

4,177 8,579 7,734 7,814 3,874 354 - - - -

Other increases 134,552 126,650 152 116 16,302 13,433 54,984 716,916 - -

Total increases

138,729 135,229 7,886 7,930 20,176 13,787 54,984 716,916 - -

Available for payments

199,788 198,558 15,471 14,972 30,679 24,856 54,984 716,916 - 1,261

Decreases Departmental 133,749 137,499 7,599 7,387 15,873 14,353

Total departmental decreases

133,749 137,499 7,599 7,387 15,873 14,353 - - - -

Administered 54,984 716,916 1,261

Total administered decreases

- - - - - - 54,984 716,916 - 1,261

Total decreases

133,749 137,499 7,599 7,387 15,873 14,353 54,984 716,916 - 1,261

Total balance carried to the next period

66,039 61,059 7,872 7,585 14,806 10,503 - - - -

Note 27: Special Accounts Note 27: Special Accounts ('Recoverable GST exclusive')

Therapeutic Goods Administration Account

5

Gene Technology Account

6

Industrial Chemicals Account

7

HHF Health Portfolio Account

8

Local Hospitals Network Account

9

4.1 4.1 DEPARTMENT OF HEALTH

375 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements Note 27: Special Accounts 5

6

7

8

9

The Local Hospitals Network Special Account ceased from 1 July 2014. Remaining funds were returned to contributors.

The Medical Research Future Fund Special Account (

Medical Research and Future Fund Act 2015 ) was established on 26 August 2015. No financial activity has occurred for the year ended 30 June 2016.

Establishing Instrument: Public Governance, Performance and Accountability Act 2013;

section 78

Appropriation:

Public Governance, Performance and Accountability Act 2013

; section 78

Purpose: to make grants of financial assistance to Local Hospital Networks, in accordance with agreements entered into between them and the Commonwealth, for the provision of hospital and pharmaceutical benefits, and medical and dental services.

Establishing Instrument

: Therapeutic Goods Act 1989

Appropriation:

Public Governance, Performance and Accountability Act 2013

; section 80

Purpose: The purpose has been set out in section 45 of the

Therapeutic Goods Act 1989 and are:

- to make payments to further the objects of the Act; and - to enable the Commonwealth to participate in the international harmonisation of regulatory controls on therapeutic goods and other related activities.

Establishing Instrument:

Gene Technology Act 2000

Appropriation:

Public Governance, Performance and Accountability Act 2013

; section 80

Purpose: for the receipt of all moneys and payment of all expenditures and disbursements related to all operations of the Gene Technology Regulator.

Establishing Instrument: Industrial Chemicals (Notification and Assessment) Act 1989

Appropriation:

Public Governance, Performance and Accountability Act 2013

; section 80

Purpose: for the receipt of all moneys and payment of all expenditures and disbursements related to all operations of the National Industrial Chemicals Notification and Assessment Scheme.

Establishing Instrument:

Nation Building Funds Act 2008

Appropriation:

Public Governance, Performance and Accountability Act 2013

; section 80

Purpose: the main purpose of the Health and Hospitals Fund Special Account is to make payments in relation to the creation or development of health and infrastructure. The HHF Health Portfolio Special Account ceased from 29 October 2015. Account balance was nil at the time of abolition.

PART 4 FINANCIAL STATEMENTS 4.1

376 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 28: Reporting of Outcomes

The Department allocates shared items to outcomes in proportion to the employee costs directly assigned to outcomes in the 2015-16 financial year.

2016 2015 2016 2015 2016 2015 2016 2015

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Expenses

Employee benefits 36,540 38,951 37,110 29,734 56,431 31,541 5,163 12,972

Suppliers 20,267 22,405 30,290 32,061 31,865 19,841 24,419 28,422

Depreciation and amortisation 1,061 3,359 2,445 4,026 2,919 2,736 5,620 13,554

Other 261 47 247 38 456 44 25 17

Total expenses 58,129 64,762 70,092 65,859 91,671 54,162 35,227 54,965

Own-source income

Other 1,554 2,307 1,003 1,604 1,758 1,594 163 714

Total own-source income 1,554 2,307 1,003 1,604 1,758 1,594 163 714

Expenses

Suppliers 367,838 251,718 15,626 11,733 9,232 7,959 2,741 8,636

Subsidies 9,711 9,692 - - 81,517 83,920 - -

Personal benefits 8,565 429 11,237,989 9,514,110 21,970,005 20,982,489 - -

Grants 177,797 176,895 470,913 577,661 10,461 13,846 87,113 86,376

Other 977 668 - - 2,002 58 963 963

Total expenses 564,888 439,402 11,724,528 10,103,504 22,073,217 21,088,272 90,817 95,975

Income

Taxation revenue - - - - 15,561 14,744 - -

Recoveries - - 1,576,230 721,214 72,952 59,753 - -

Other 8,292 5,678 11,828 37,171 (13,935) 15,161 - 145

Total income 8,292 5,678 1,588,058 758,385 74,578 89,658 - 145

Net cost of outcome delivery 613,171 496,179 10,205,559 9,409,374 22,088,552 21,051,182 125,881 150,081 Assets

Cash and cash equivalents - - - - - - - -

Trade and other receivables 1,685 1,826 1,326 1,392 2,612 1,485 242 665

Land and buildings, property plant and equipment and intangibles 7,819 12,230 10,547 15,405 27,670 27,362 39,815 23,735

Other 1,087 1,571 855 1,195 1,685 1,276 156 571

Total assets 10,591 15,627 12,728 17,992 31,967 30,123 40,213 24,971

Liabilities

Suppliers 5,361 7,944 4,218 6,046 8,313 6,452 771 2,888

Other payables 2,771 4,184 2,181 3,185 4,298 3,399 398 1,521

Employee provisions 10,322 11,208 9,274 9,955 22,960 10,496 1,148 5,379

Other provisions 2,881 3,071 2,267 2,336 4,468 2,493 415 1,116

Total liabilities 21,335 26,407 17,940 21,522 40,039 22,840 2,732 10,904

Assets

Cash and cash equivalents 3,876 2,258 - - - - - -

Loans and receivables 1,111 302 898,936 208,039 44,203 61,433 - 91

Other investments - - - - - - 48,930 41,007

Other non-financial assets - - - - - - 33,197 24,468

Total assets 4,987 2,560 898,936 208,039 44,203 61,433 82,127 65,566

Liabilities

Suppliers 1,759 3,054 265 - 87 - 58 -

Subsidies - - - - 425,000 413,000 - -

Personal benefits - - 624,845 352,494 1,016,532 1,044,205 - -

Grants 46,080 30,483 58,608 38,252 3,003 3,673 695 4,250

Total liabilities 47,839 33,537 683,718 390,746 1,444,622 1,460,878 753 4,250

Outcome 1 Outcome 2 Outcome 3 Outcome 4

4.1 4.1 DEPARTMENT OF HEALTH

377 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 28: Reporting of Outcomes

The Department allocates shared items to outcomes in proportion to the employee costs directly assigned to outcomes in the 2015-16 financial year.

2016 2015 2016 2015 2016 2015 2016 2015

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Expenses

Employee benefits 62,375 68,529 4,571 6,825 127,437 136,812 28,110 26,314

Suppliers 36,010 40,477 4,323 5,412 71,123 74,867 15,153 15,147

Depreciation and amortisation 1,974 6,125 135 580 5,844 9,253 824 2,271

Other 450 76 35 568 348 2,450 203 31

Total expenses 100,809 115,207 9,064 13,385 204,752 223,382 44,290 43,763

Own-source income

Other 1,956 3,452 4,508 4,829 159,300 146,781 882 1,327

Total own-source income 1,956 3,452 4,508 4,829 159,300 146,781 882 1,327

Expenses

Suppliers 45,006 35,356 60 84 104,282 92,968 4,369 1,995

Subsidies 33,897 32,735 - - 31 356 3,815 -

Personal benefits 374,878 251,221 5,887,067 5,804,467 11,935 8,249 - -

Grants 1,742,388 1,783,782 2,243 2,162 932,999 1,446,308 1,146,876 1,273,786

Other 4,378 483 7 445,535 24,044 22,859 50 227

Total expenses 2,200,547 2,103,577 5,889,377 6,252,248 1,073,291 1,570,740 1,155,110 1,276,008

Income

Taxation revenue - - 2,238 2,162 - - - -

Recoveries - - - - - - (48) 40

Other 86,337 21,155 2,235 448,130 132,674 718,893 10,982 119,144

Total income 86,337 21,155 4,473 450,292 132,674 718,893 10,934 119,184

Net cost of outcome delivery 2,213,063 2,194,177 5,889,460 5,810,512 986,069 928,448 1,187,584 1,199,260 Assets

Cash and cash equivalents - - - - 88,813 78,869 - -

Trade and other receivables 2,903 3,215 214 316 11,755 6,369 1,307 1,236

Land and buildings, property plant and equipment and intangibles 13,394 21,668 3,670 2,113 34,306 33,316 6,028 8,269

Other 1,873 2,761 138 271 1,985 3,333 844 1,061

Total assets 18,170 27,644 4,022 2,700 136,859 121,887 8,179 10,566

Liabilities

Suppliers 9,240 13,967 681 1,372 13,553 13,315 4,165 5,368

Other payables 4,776 7,358 352 723 20,349 25,824 2,153 2,828

Employee provisions 15,434 18,676 1,516 2,137 38,509 40,242 7,737 8,161

Other provisions 4,966 5,397 366 530 2,725 3,249 2,238 2,074

Total liabilities 34,416 45,398 2,915 4,762 75,136 82,630 16,293 18,431

Assets

Cash and cash equivalents - - - - - - - -

Loans and receivables 515 1,412 287 637 6,073 6,508 8,603 686

Other investments - - - 2,774 16,604 15,246 - -

Other non-financial assets - - - - 48,823 36,617 - -

Total assets 515 1,412 287 3,411 71,500 58,371 8,603 686

Liabilities

Suppliers 1,539 3,941 - - 502 79 - -

Subsidies 4,167 2,708 - - - - - -

Personal benefits 60,050 44,007 476,400 485,495 606 384 - -

Grants 21,716 52,691 - - 29,769 26,513 161,749 194,115

Total liabilities 87,472 103,347 476,400 485,495 30,877 26,976 161,749 194,115

Outcome 5 Outcome 6 Outcome 7 Outcome 8

PART 4 FINANCIAL STATEMENTS 4.1

378 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 28: Reporting of Outcomes

The Department allocates shared items to outcomes in proportion to the employee costs directly assigned to outcomes in the 2015-16 financial year.

2016 2015 2016 2015 2016 2015 2016 2015

$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Expenses

Employee benefits 13,876 14,616 6,166 7,571 86,748 - - -

Suppliers 7,780 8,732 3,455 4,709 59,731 - - -

Depreciation and amortisation 511 1,369 204 680 2,447 - - -

Other 100 19 44 9 604 - - -

Total expenses 22,267 24,736 9,869 12,969 149,530 - - -

Own-source income

Other 3,140 4,127 189 856 2,619 - - -

Total own-source income 3,140 4,127 189 856 2,619 - - -

Expenses

Suppliers 41,745 30,994 939 12,161 84,930 - - -

Subsidies - - - - 9,161,230 - - -

Personal benefits - - - - 17,202 - - -

Grants 11,368 8,663 20,099 42,732 1,216,062 - - -

Other 105,381 3,237 - - 56 - 328,658 300,847

Total expenses 158,494 42,894 21,038 54,893 10,479,480 - 328,658 300,847

Income

Taxation revenue - - - - - - - -

Recoveries - - - - 907,700 - - -

Other 37 1,347 4,278 8,185 14,251 - - -

Total income 37 1,347 4,278 8,185 921,951 - - -

Net cost of outcome delivery 177,584 62,156 26,440 58,821 9,704,440 - 328,658 300,847

Assets

Cash and cash equivalents - - - - - - - -

Trade and other receivables 643 687 281 356 3,889 - - -

Land and buildings, property plant and equipment and intangibles 3,281 5,020 1,296 2,379 17,914 - - -

Other 415 591 181 305 2,510 - - -

Total assets 4,339 6,298 1,758 3,040 24,313 - - -

Liabilities - -

Suppliers 2,049 2,985 895 1,545 12,374 - - -

Other payables 1,058 1,573 463 814 6,397 - - -

Employee provisions 5,393 7,171 1,882 2,547 37,968 - - -

Other provisions 1,101 1,154 481 597 6,652 - - -

Total liabilities 9,601 12,883 3,721 5,503 63,391 - - -

Assets

Cash and cash equivalents 2,570 2,675 624 714 - - - -

Loans and receivables - - 2 45 352,800 - - -

Other investments - - 314,583 330,997 - - - -

Other non-financial assets 111,265 210,005 - - - - - -

Total assets 113,835 212,680 315,209 331,756 352,800 - - -

Liabilities

Suppliers 570 6 - 30 5,097 - - -

Subsidies - - - - 259,371 - - -

Personal benefits - - - - 37 - - -

Grants 20,143 24,175 324 928 35,733 - - -

Total liabilities 20,713 24,181 324 958 300,238 - - -

Outcome 9 Outcome 10 Outcome 11

Payments to corporate Commonwealth entities

4.1 4.1 DEPARTMENT OF HEALTH

379 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 28: Reporting of Outcomes

The Department allocates shared items to outcomes in proportion to the employee costs directly assigned to outcomes in the 2015-16 financial year.

2016 2015 2016 2015

$'000 $'000 $'000 $'000

Expenses

Employee benefits - - 464,527 373,865

Suppliers - - 304,416 252,073

Depreciation and amortisation - - 23,984 43,953

Other 1,077 11,500 3,850 14,799

Total expenses 1,077 11,500 796,777 684,690

Own-source income

Other - - 177,072 167,591

Total own-source income - - 177,072 167,591

Expenses

Suppliers - - 676,768 453,604

Subsidies - - 9,290,201 126,703

Personal benefits - - 39,507,641 36,560,965

Grants - - 5,818,319 5,412,211

Other - - 466,516 774,877

Total expenses - - 55,759,445 43,328,360

Income

Taxation revenue - - 17,799 16,906

Recoveries - - 2,556,834 781,007

Other - 46 256,979 1,375,055

Total income - 46 2,831,612 2,172,968

Net cost of outcome delivery 1,077 11,454 53,547,538 41,672,491

Assets

Cash and cash equivalents 1,859 762 90,672 79,631

Trade and other receivables 118,912 108,727 145,769 126,274

Land and buildings, property plant and equipment and intangibles - - 165,740 151,497

Other - - 11,729 12,935

Total assets 120,771 109,489 413,910 370,337

Liabilities

Suppliers - - 61,620 61,882

Other payables - - 45,196 51,409

Employee provisions - - 152,143 115,972

Other provisions - - 28,560 22,017

Total liabilities - - 287,519 251,280

Assets

Cash and cash equivalents 164,509 331,001 171,579 336,648

Loans and receivables 60,987 41,209 1,373,517 320,362

Other investments - - 380,117 390,024

Other non-financial assets - - 193,285 271,090

Total assets 225,496 372,210 2,118,498 1,318,124

Liabilities

Suppliers 4 - 9,881 7,110

Subsidies - - 688,538 415,708

Personal benefits - - 2,178,470 1,926,585

Grants 250 82 378,070 375,162

Total liabilities 254 82 3,254,959 2,724,565

Not attributed Total

PART 4 FINANCIAL STATEMENTS 4.1

380 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 29: Explanation of Budget Variances

The following provides a comparison of the 2016 final outcome to the 2015-16 Portfolio Budget Statements (PBS) in accordance with Australian Accounting Standard Board (AASB) 1055: Budgetary Reporting. Disclosures made in accordance with this standard provide information relevant to assessing performance of the Department, including accountability for resources entrusted to it.

General Commentary AASB 1055: Budgetary Reporting requires explanations of major variances between the original budget as presented in the 2015-16 PBS and the 2016 final outcome. The information presented below should be read in the context of the following:

1. The 2016 year saw two significant functions transferred to the Department as part of the Machinery of Government (MOG) changes detailed in Note 9. These two functions are: - Ageing and Aged Care; and - Health Care Provider Compliance.

The impact on the Department of these transfers was significant in terms of the resources utilised in undertaking its activities. Where those activities are for the Department in its own right, they are reflected in the departmental statements. Where those activities are for the Department to provide management or oversight of, on behalf of the Government, they are reflected in the administered statements.

As a result of the financial significance upon departmental resources of the transfer of these functions, the Department has included the 2015-16 Estimated Actuals in the financial statements to provide a more reflective comparative of the Department and its activities for 2016. While not required by AASB 1055, it is considered appropriate for the additional disclosures to be included.

2. It should be noted that the original Budget was prepared before the 2015 final outcome could be known. As a consequence, the opening balance of the Statement of Financial Position needed to be estimated and in some cases variances between the 2016 final outcome and budget estimates can be at least in part attributed to unanticipated movement in the prior year period figures.

Variances attributable to factors which would not reasonably have been identifiable at the time of the budget preparation, such as revaluation or impairment of assets or reclassifications of asset reporting categories have not been included as part of the analysis.

3. The Department considers that major variances are those greater than 10% of the original estimate. Variances below this threshold are not included unless considered significant by their nature.

Variances relating to cash flows are a result of the factors detailed under expenses, own source income, assets or liabilities. Unless otherwise individually significant or unusual, no additional commentary has been included.

The departmental activities of the Department, net of unfunded depreciation, presumed a balanced operating result in 2016 consistent with the requirement under the Commonwealth budgeting framework to work within the resources provided by Government and revenues received from cost recovered activity.

4. The Budget is not audited.

4.1 4.1 DEPARTMENT OF HEALTH

381 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 29: Explanation of Budget Variances

Note 29(i): Major Departmental Budget Variances for 2016

Net cost of services

The total variation in departmental expenses for 2016 was in excess of $160m higher than 2015-16 PBS. As outlined above, the MOG changes were the principal reasons for the significantly higher levels of expenditure, reflective of the additional resources required in undertaking the Department's activities, with employee and supplier expenses being the highest. The increase in supplier expenses was in part a result of an expense incurred for the development of aged care intangibles which would normally have been reflected as

an asset to the Department however the nature of the transaction necessitated in the amount being expensed in 2016.

Broadly, the Department received additional appropriation revenue to meet in part the cost of the additional resources utilised.

After making an adjustment for the impact of the MOG, 2016 saw a significant reallocation of resources between employees and suppliers. This reallocation was necessary due to the Department's delay to recruit and higher attrition rate. As a result resources were reallocated into areas such as short term labour contracts as well as other supplier expense categories. The two main factors for the slower than anticipated rate of recruitment were the limitations imposed on the public sector as well as the impact from an organisational perspective as the Department realigned priorities to take account of MOG changes and the resultant structural adjustments.

The other key event occuring during the year was the activity undertaken as part of the reconfiguration of the State/Territory network which also contributed to the higher level of supplier expenses for the year.

While not as significant as the events outlines above, the Department did redirect unfunded resources into areas such as the Cancer Screening Register, which resulted in higher levels of operational expenditure across a range of supplier expenses.

Departmental non-financial assets The total variation in departmental non-financial assets for 2016 between the original budget estimate and the actual outcome is approximately $37 million or 26%. The main contributor to this variance is the MOG change resulting in the Department assuming assets principally utilised by the Ageing and Aged care function from 1 October 2015, and changes to the 2015 final outcome was after the 2015-16 PBS was finalised. The transfer of these functions resulted in the Department recognising $7.4 million of property, plant and equipment and leasehold improvements for additional intangible assets for information technology systems. The 2015 final outcome included an amount of $16.4 million for an increase in the fair value of land and buildings. This amount was not included in the original budget as it was unknown at the time the budget was prepared.

Departmental payables The total variation in departmental payables for 2016 between the original estimate published in the 2015-16 PBS and the final outcome resulted in a reduction of approximately 20% and is principally as a result of the change in recognition of amounts previously received for the funding of independent reviews.

Departmental provisions The total variation in departmental provisions for 2016 between the original budget estimate and the final outcome is $50.6 million or 39%. The main contributor to this variance is the MOG through the transfer of employee provisions and property related provisions which saw the Department recognising $38.4 million of employee provisions for the 1,363 staff transferred to the Department as well as provisions for make-good, leases incentive and straightlining to the value of $9.7 million.

PART 4 FINANCIAL STATEMENTS 4.1

382 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 29: Explanation of Budget Variances

Departmental cash flows The Department makes payments when due and obtains funds from the Official Public Account in a just-in-time manner to make these payments as they fall due. Cash receipts and payments are therefore similar. The timing of payments, particularly for suppliers, will be dependent on the receipt of the goods and services and their related invoices and so can vary between reporting periods. The variation between the initial budget estimate for operating activities is an increase in cash received and paid. This increase is attributable to the MOG which resulted in additional cash transactions for the Department.

Cash flows from investing activities includes a cash inflow of $9.2 million that was not included in the original 2015-16 PBS. This inflow is attributable to a transaction that occurred after the original budget was developed. It relates to the sale of the Department's information technology assets to the new service provider for the 2016 year. The cash flows from investing activities included outflows relating to the purchase of intangible assets.

Actual cash flows from financing activities are higher then the original 2015-16 PBS. This increase is attributable to additional equity injections and Departmental Capital Budgets being utilised by the Department as a result of the MOG.

Note 29 (ii): Major Administered Budget Variances for 2016

Administered expenses

Total administered expenses for 2016 were approximately $9,594m higher than the original budget. This variance was driven by a significant overspend in subsidies ($9,186m), relating to the Residential and Flexible Care and Home Care subsidies. Responsibility for the aged care program subsidies was transferred to Health from the DSS during 2016, and the original budget for these subsidies against Health was nil.

This overspend was contributed to by overspends in personal benefits ($383m) and suppliers ($179m). Personal benefits expenses relate to a range of program groups, most of which are funded by significant special appropriations, including but not limited to the Pharmaceutical Benefits Scheme, Medicare Benefits Scheme, Dental Benefits and Private Health Insurance Rebate. The most significant elements of the 2016 overspend were:

- Pharmaceuticals and Pharmaceutical Services: overspending by $1,062m; and - Ageing and Service Improvement: overspending by $17m.

Conversely, the following program groups reported underspends against the original budget:

- Dental Services: underspending by $293m; - Private Health Insurance: underspending by $235m; - Hearing Services: underspending by $56m; - Targeted Assistance - Aids and Appliances: underspending by $48m; and - Primary Care Practice Incentives: underspending by $28m.

The core reason for the overspend in personal benefits was the high demand for new Hepatitis C drugs since their introduction in March 2016. Expenditure for these drugs has exceeded $1 billion during the first four months, while only $282m was budgeted for 2016.

The overspend in suppliers was largely attributable to the aged care programs ($85m), which were not included in the original budget, and eHealth ($60m) which related to the non-capital portion of work carried out on enhancements to the My Health Record software. These variances remained consistent when measured against the revised budget as well.

4.1 4.1 DEPARTMENT OF HEALTH

383 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 29: Explanation of Budget Variances

The above overspends were reduced by a range of underspends in grants ($153m), comprised of overspends across the Aged Care program groups ($1,212m) and underspends across most of the other grants-based program groups. The biggest contributors to the underspends included:

- Private Health Insurance - Transfers to PHIAC: underspending by $563m due to PHIAC being merged into the Australian Prudential Regulation Authority (APRA) effective 1 July 2015, with the entire budget for transfers to PHIAC being reported as a variance;

- Health Infrastructure: underspending by $249m, largely due to the abolition of the Health and Hospitals Fund (HHF) Health Special Account early in the year; - Workforce Development and Innovation: underspending by $199m, largely due to a range of savings across the clinical training programs within this program group, as well as withholding of payments to the recipients holding surplus funds; - Community Pharmacy and Pharmaceutical Awareness: underspending by $123m, due to better targeting of premium free

dispensing (a component of the 6CPA), which led to a reduction of expenditure against this program; and - eHealth: underspending by $79m, due to the classification difference between grants and suppliers, with this program group reporting a large overspend against supplier expenses.

The remainder of the grants underspend against the original budget was spread across most grants-based program groups, and was due to savings delivered, new measures implemented and grant programs reduced or terminated post budget.

Concerning the revised budgets, personal benefits expenses reported an even larger overspend ($925m), which is consistent with a substantial overspend in the Pharmaceuticals and Pharmaceutical Services program group in connection with Hepatitis C drugs and relatively minor underspends across a number of other program groups.

For grants, whilst the overall grants budget has increased, this was represented by an increase in aged care program grants and a substantial decrease in grants across other program groups - taking into account the abolition of the HHF special account, the merger of PHIAC into APRA and other large underspends against the original budget. As a result, the most significant contributors to the grants underspend against the revised budget were:

- eHealth: underspending by $73m, due to the classification difference between grants and suppliers, with this program group reporting a large overspend against supplier expenses; - Workforce and Rural Distribution: underspending by $45m, largely in relation to the Australian General Practice Training Program, which was due to a combination of recovery of surplus funds from training providers no longer continuing on the

program, withholding of payments from organisations holding surplus funds, and lower agreement values following negotiations with providers; and - Workforce Development and Innovation: underspending by $28m, largely in relation to the Dental Relocation Incentive Support Scheme, which was due to a combination of withholding of payments from recipients holding surplus funds, savings

delivered for a number of clinical training programs within this program group, and some slippage in rolling out the new measures.

The remainder of the grants underspend against the revised budget was spread across a range of program groups, and was due to a range of factors, including but not limited to the deliverables not being completed or accepted for payment prior to year-end, delays in contract negotiations, and the general slowing down of the grants activity during the caretaker period of Government.

Administered revenues

Total administered revenue for 2016 was $887m (45%) above the original budget. The two key contributors to this result were recoveries ($1,544m over budget) and other revenue ($661m under budget).

The main driver behind the increase in recoveries was the value of aged care recoveries from the States and Territories for the Younger People in Residential and Home Care as well as the cross-billings and budget neutrality recoveries from the States and Territories in connection with implementation of the National Disability Insurance Scheme (NDIS). In aggregate such recoveries reached $908m during the year, with the entire amount reported as a variance, as the relevant functions were transferred to Health from the DSS during 2016 and did not form part of the original budget for 2016.

PART 4 FINANCIAL STATEMENTS 4.1

384 DEPARTMENT OF HEALTH Annual Report 2015-2016

Department of Health Notes to and forming part of the financial statements

Note 29: Explanation of Budget Variances

Another key contributor to the overall increase in recoveries was the value of high cost drugs recoveries ($588m of the variance), which are collected in accordance with cost-sharing agreements between the Commonwealth and pharmaceutical companies, with the latter required to contribute to the cost of providing certain listed drugs when specified conditions are met. Furthermore, the thresholds which must be reached before the pharmaceutical companies are liable to contribute to the costs also vary for different listed drugs and between the different agreements. As a result, actual recoveries in a given year fluctuate with no predictable patterns. However, a significant contributor to the increase in 2016 was the high demand for the new Hepatitis C drugs following their introduction in March 2016.

The most significant contributors to the decrease in other revenue were: - the merger of PHIAC into APRA, resulting in nil transfers from PHIAC to Health during 2015-16 (budgeted at $557m); and - the abolition of the Health and Hospital Fund (HHF) Health Special Account early in the year, resulting in only $52.6m worth of transfers from this account to Health during 2015-16 (budgeted at $240m).

Both the merger of PHIAC and the abolition of the HHF Health Special Account were incorporated in the revised budget, eliminating these variances. The value of both the aged care and high cost drugs recoveries were still substantially higher than the budgeted amounts. Other revenue exceeded the revised budget, largely due to a one-of receipt of $76m from the National Blood Authority following completion of the 2015 Annual Supply Plan reconciliation.

Administered assets

Total assets administered on behalf of the Commonwealth at 30 June 2016 were $1,012m (92%) greater than the original budget estimate.

The highest contributors to this variance were personal benefits receivable ($565m), relating to the High Cost Drugs recoveries. Due to the nature of these recoveries, the value of these receivables can fluctuate with no predictable pattern from one year to another. A significant contributor to the increase in 2016 was the high demand for the new Hepatitis C drugs following their introduction in March 2016.

This was followed by the increase in the value of trade and other receivables ($242m), due largely to the value of aged care concessional loans receivable transferred to Health from the DSS during 2016.

Cash and cash equivalents also reported a significant increase ($158m). This mainly related to the cash balances from the banking arrangements for the Pharmaceutical Benefits Scheme, the Medicare Benefits Scheme and the aged care subsidy programs. While a balance of around $150m is maintained to facilitate the timely payment of benefits and subsidies, the actual balance of this account fluctuates from month to month and year to year.

Other notable variances in assets included:

- investments held in corporate entities, being adjustments relating to the inclusion, exclusion and revaluation of portfolio entities; the revised budget also incorporated $125m relating to the value of expected investment in the Biomedical Translation Fund, which did not eventuate;

- increase in computer software, relating to the additional releases capitalised for the My Health Record software; and - increase in land and buildings, following a revaluation of Mersey community hospital at the end of the year.

4.1 4.1 DEPARTMENT OF HEALTH

385 Annual Report 2015-2016 DEPARTMENT OF HEALTH

Department of Health Notes to and forming part of the financial statements

Note 29: Explanation of Budget Variances

Administered liabilities

Total liabilities administered on behalf of the Commonwealth at 30 June 2016 were $447m (15.9%) higher than the original budget estimate. Subsidies payable were the biggest contributor to this variance ($261m), largely driven by the value of Home Care subsidies outstanding at the end of the year. This was followed by an increase in grants payable ($145m), brought about by the value of additional payables relating to the aged care programs and an overall increase in grant expenditure this year. As both of these items related to the aged care functions transferred to Health from the DSS during 2016, they did not form part of the original budget for 2016. Subsidies provisions, which relate entirely to the Medical Indemnity schemes, were also substantially in excess of the original budget due to the value of actuarial adjustments following a review by the Australian Government Actuary at the end of the year.

When measured against the revised budget, grants payable reported only a minor variance, whilst subsidies payable still showed a significant increase. Additionally, combined personal benefits liabilities (payables and provisions) were substantially higher than the revised budget, driven by the increase in the value of outstanding claims provisions for the Pharmaceutical Benefits Scheme. The increase in the provision is consistent with the increase in personal benefits expenditure described earlier. It should also be noted that the value of subsidies and personal benefits liabilities has been calculated and assured during the biannual sign-off process between Health and DHS and does not appear unreasonable in light of actual monthly expenditure during 2016.

The remaining variances represent normal fluctuations in payables, provisions and accruals and are not considered significant.

388

394

403

410

424

Appendices Appendix 1: Processes Leading to PBAC Consideration - Annual Report for 2015-16

Appendix 2: Report from the Director of the National Industrial Chemicals Notification and Assessment Scheme

Appendix 3: Health Provider Compliance Report

Appendix 4: Australian National Preventive Health Agency Financial Statements

Appendix 5: Australian Digital Health Agency 2015-16 Annual Report

APPENDICES

388

A1

DEPARTMENT OF HEALTH Annual Report 2015-2016

Appendix 1 Processes Leading to PBAC Consideration - Annual Report for 2015-16

Introduction This is the seventh annual report to the Parliament on the processes leading to the consideration by the Pharmaceutical Benefits Advisory Committee (PBAC) of applications for recommendation for listing of items on the Pharmaceutical Benefits Scheme (PBS). This report covers the 2015-16 financial year.

This annual report has been prepared pursuant to subsection 99YBC(5) of the National Health Act 1953 (the Act), under which it is required that:

The Secretary must, as soon as practicable after June 30 each year, prepare an annual report on the processes leading up to Pharmaceutical Benefits Advisory Committee consideration, including:

a) the extent and timeliness with which responsible persons are provided copies of documents relevant to their submissions to the Pharmaceutical Benefits Advisory Committee;

b) the extent to which responsible persons exercise their right to comment on these documents, including appearing at hearings before the Pharmaceutical Benefits Advisory Committee; and

c) the number of responsible persons seeking a review of the Pharmaceutical Benefits Advisory Committee recommendation.

PBAC Cost Recovery Reform Cost recovery for processes leading to PBAC consideration commenced on 1 January 2010.

Background Cost recovery policy is administered by the Department of Finance and is outlined in the Australian Government Cost Recovery Guidelines. The underlying principle of the policy is that entities should set charges to recover all the costs of products or services where it is efficient and effective to do so, where services will be provided to an identified group and where charging is consistent with Australian Government policy objectives.

PBS Cost Recovery Regulations Section 140 of the Act provides in part, that the:

Governor-General may make regulations, not inconsistent with the Act, prescribing all matters which by this Act are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for carrying out or giving effect to the Act.

APPENDIX 1 PROCESSES LEADING TO PBAC CONSIDERATION - ANNUAL REPORT FOR 2015-16

389

A1

Annual Report 2015-2016 DEPARTMENT OF HEALTH

Division 4C of Part VII of the Act enables fees to be charged for certain services provided by the Australian Government in order to recover the cost to the Commonwealth of providing those services. Those services relate to the exercise of certain powers of the Minister for Health under section 9B of the Act (which relates to the National Immunisation Program (NIP)) and under Part VII of the Act (which relates to the PBS). The services include the functions of PBAC and its sub-committees; and related functions performed by officers, administrative staff, contractors and sub-contractors of the Department.

Section 99YBA of the Act provides for regulations to set out the fees that are payable for those services, as well as other matters relating to the payment of those fees and the provision of those services, including some consequences of failing to pay a fee.

The regulations prescribe application categories, fees and application procedures to applicants seeking a new or amended inclusion in the PBS or NIP. The regulations also provide for the exemption from fees, waiver of fees, and for review rights and procedures. The fees and procedures are administered by the Department of Health.

PBAC The PBAC is established under section 100A of the Act and is an independent expert body appointed by the Australian Government. Members include doctors, health professionals, health economists and a consumer representative. In 2015, provision was made for appointment of an industry representative and additional consumer representative. Its primary role is to recommend new medicines for listing on the PBS and the inclusion of vaccines on the NIP. No new medicine can be listed unless the committee makes a positive recommendation to the Minister for Health. The PBAC holds three scheduled meetings each year, usually in March, July and November.

When recommending a medicine for listing, the PBAC takes into account the medical condition(s) for which the medicine was registered for use in Australia and its clinical effectiveness, safety and cost-effectiveness (‘value for money’) compared with other treatments, including non-medical treatments.

The PBAC has two sub-committees to assist with analysis and advice in these areas. They are:

• The Economics Sub-Committee (ESC) which assesses clinical and economic evaluations of medicines submitted to the PBAC for listing, and advises the PBAC on the technical aspects of these evaluations; and

• The Drug Utilisation Sub-Committee (DUSC) which assesses estimates on projected usage and the financial cost of medicines. It also collects and analyses data on actual use (including in comparison with different countries), and provides advice to the PBAC.

Roles of the PBAC The PBAC performs the following roles:

• recommends medicines and medicinal preparations to the Minister for Health for funding under the PBS;

• recommends vaccines to the Minister for funding under the NIP (since 2006);

• advises the Minister and Department about cost-effectiveness;

• recommends maximum quantities and repeats on the basis of community use, and any restrictions on the indications where PBS subsidy is available;

• regularly reviews the list of PBS items; and

• advises the Minister about any other matters relating to the PBS, including on any matter referred to it by the Minister.

APPENDICES

390

A1

DEPARTMENT OF HEALTH Annual Report 2015-2016

Requirements of section 99YBC of the Act a) Extent and timeliness of the provision of relevant documents to responsible persons Subsection 99YBC(5)(a) of the Act requires that the Minister report to the Parliament on the extent and timeliness of the provision of relevant documents to responsible persons. The PBAC provides responsible persons with documents relevant to their submissions in an orderly, timely and transparent fashion. This is achieved through the well-established practice of providing responsible persons with documents relevant to their submissions six weeks before the applicable PBAC meeting. These documents are referred to as ‘commentaries’.

Applicants’ pre-sub-committee response(s) are received by the PBAC Secretariat five weeks before the relevant PBAC meeting. Following the meeting of PBAC sub-committees, the PBAC Secretariat provides relevant sub-committee papers to responsible persons two weeks before the relevant PBAC meeting. Sponsors then provide their responses to the PBAC Secretariat one week before the PBAC meeting.

Following the PBAC meeting the PBAC Secretariat provides verbal advice on the outcomes of PBAC consideration to the relevant sponsor half a week after the meeting, with written advice provided three weeks (positive recommendations) and five weeks (all other recommendations) after the relevant PBAC meeting.

Where requested, the PBAC Secretariat, the PBAC and its sub-committees provide informal access to departmental officers and formal access to the PBAC for responsible persons or their representative, including the option for the sponsor to appear before the PBAC in person.

b) Extent to which responsible persons comment on their commentaries Subsection 99YBC(5)(b) of the Act requires that the Minister report to the Parliament on the:

‘…extent to which responsible persons exercise their right to comment on these documents, including appearing at hearings before the Pharmaceutical Benefits Advisory Committee;’

During 2015-16, the PBAC held three ordinary meetings (as is usual practice) and considered a total of 97 major submissions. For the:

• July 2015 PBAC meeting, 27 responsible persons lodged major submissions. 27 sponsors responded to their commentaries.

• November 2015 PBAC meeting, 34 responsible persons lodged major submissions. 34 sponsors responded to their commentaries.

• March 2016 PBAC meeting, 36 responsible persons lodged major submissions. 35 sponsors responded to their commentaries and one sponsor withdrew its submission before responding to its commentary.

Consequently, of the 96 major submissions considered by PBAC in 2015-16, 96 responsible persons exercised their right to respond to their commentaries.

c) Number of responsible persons seeking a review of PBAC recommendations Subsection 99YBC(5)(c) of the Act requires that the Minister report to the Parliament on the:

‘…number of responsible persons seeking a review of the Pharmaceutical Benefits Advisory Committee recommendation.’

During the 2015-16 financial year, there were no requests to the PBAC for an Independent Review.

APPENDIX 1 PROCESSES LEADING TO PBAC CONSIDERATION - ANNUAL REPORT FOR 2015-16

391

A1

Annual Report 2015-2016 DEPARTMENT OF HEALTH

Number and category of applications for each PBAC meeting in 2015-16

July 2015 PBAC Meeting

Category Number Comments

Major 27 -

Minor 26 Included 1 secretariat listing

November 2015 PBAC Meeting

Category Number Comments

Major 34 -

Minor 43 Included 4 secretariat listings

March 2016 PBAC Meeting

Category Number Comments

Major 36 -

Minor 38 Included 2 secretariat listings

Secretariat listings are not considered as a separate agenda item at a meeting of the Committee as they are very minor amendments to existing listings. However, all secretariat listings are still decided by the Committee on the merit of each application based on the papers provided to the Committee.

Withdrawn applications for each PBAC meeting in 2015-16 by category and reasons for withdrawal of applications for each meeting July 2015 PBAC Meeting

Category Number Reasons for withdrawal

Major 0 -

Minor 1 Decision by applicant - no reason provided

APPENDICES

392

A1

DEPARTMENT OF HEALTH Annual Report 2015-2016

November 2015 PBAC Meeting

Category Number Reasons for withdrawal

Major 0 -

Minor 2 Decision by applicants - no reason provided

March 2016 PBAC Meeting

Category Number Reasons for withdrawal

Major 1 Decision by applicant - no reason provided

Minor 1 Decision by applicant - no reason provided

Number of responsible persons that responded to their commentaries, including appearing before PBAC meetings All of the responsible persons who submitted a major submission to PBAC during 2015-16 responded to their commentary.

July 2015 PBAC Meeting

Number of major submissions

Number of responsible persons that responded to their commentaries

Number of responsible persons that appeared before PBAC

27 27 6

November 2015 PBAC Meeting

Number of major submissions

Number of responsible persons that responded to their commentaries

Number of responsible persons that appeared before PBAC

34 34 9

March 2016 PBAC Meeting

Number of major submissions

Number of responsible persons that responded to their commentaries

Number of responsible persons that appeared before PBAC

36 (1 subsequently withdrawn) 35 16

APPENDIX 1 PROCESSES LEADING TO PBAC CONSIDERATION - ANNUAL REPORT FOR 2015-16

393

A1

Annual Report 2015-2016 DEPARTMENT OF HEALTH

Number of pre-submission meetings held in 2015-16

Pre-submission meetings per month Meetings held

2015

July 0

August 10

September 6

October 2

November 0

December 5

2016

January 4

February 2

March 2

April 6

May 7

June 3

Total 47

Figures do not take into account extended meetings where two or more drugs are discussed within one meeting date.

APPENDICES

394 DEPARTMENT OF HEALTH Annual Report 2015-2016

A2

About NICNAS The National Industrial Chemicals Notification and Assessment Scheme (NICNAS) is established by the Industrial Chemicals (Notification and Assessment) Act 1989 (the ICNA Act). The scheme aids in the protection of the Australian people and the environment by assessing the risks of industrial chemicals and providing information to promote their safe use.

NICNAS assessment reports are used by a range of Government entities that regulate the control, use, release and disposal of industrial chemicals. NICNAS also informs workers, industry and the community about the safe use of industrial chemicals.

NICNAS achieved all of its key performance targets for 2015-16 within the available budget, as detailed in Part 2.1: 2015-16 Annual Performance Statements, pages 153-158.

Figure 1: Description of functions under the ICNA Act

Collect statistics on the use of industrial chemicals in Australia

Obtain information on industrial chemicals from importers and/or manufacturers

Register importers and/or manufacturers of industrial chemicals

Functions under the ICNA Act

Ensure Australia meets obligations under international agreements for industrial chemicals

Maintain the Australian Inventory of Chemical Substances

Assess industrial chemicals for human health and environmental impacts

Appendix 2 Report from the Director of the National Industrial Chemicals Notification and Assessment Scheme

APPENDIX 2 REPORT FROM THE DIRECTOR OF THE NATIONAL INDUSTRIAL CHEMICALS NOTIFICATION AND ASSESSMENT SCHEME

395 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A2

Registration of importers and/or manufacturers of industrial chemicals The registration of importers and/or manufacturers of industrial chemicals helps NICNAS to monitor the introduction of industrial chemicals in Australia, communicate effectively with the regulated industry and maintain public confidence that the chemical industry is awar e of and complying with its regulatory obligations.

There are four different registration levels (Levels A to D) with levies for each level set according to the value of relevant industrial chemicals introduced.

Key registration statistics during 2015-16:

• 6,144 businesses were registered with NICNAS.

• Over 300 new businesses registered as a result of compliance monitoring activities.

• More than 600 people attended 13 NICNAS education and outreach sessions.

Figure 2: Registered businesses by industry sector (2015-16)

Wholesale trade

Manufacturing

Other services

Retail trade

No data

39%

23%

21%

11%

6%

Source: NICNAS internal data

Compliance monitoring NICNAS undertakes a range of compliance monitoring activities to assist importers and manufacturers of industrial chemicals to be aware of and comply with their obligations under the ICNA Act.

Key compliance statistics during 2015-16:

• 45% of all high volume importers and/or manufacturers were surveyed, with 55 businesses required to provide further information to NICNAS for potential non-compliance.

• 80 cases of potential non-compliance were identified, with 54 cases resolved within the financial year.

• As a result of resolved non-compliance:

- 12 new industrial chemicals were notified or reported.

- Introduction of 8 chemicals ceased.

APPENDICES

396 DEPARTMENT OF HEALTH Annual Report 2015-2016

A2

Figure 3: Three-year trend data for NICNAS registrations

1,356

1,449

1,428

2,862 3,035

3,387

910

964

970 337

337

361

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2013-14 2014-15 2015-16

Registration

Level D

Registration

Level C

Registration

Level B

Registration

Level A

Registration Year

Number of registered businesses

Source: NICNAS Annual Reports and internal data

Australian Inventory of Chemical Substances The Australian Inventory of Chemical Substances (AICS) lists industrial chemicals that may be manufactured and/or imported in Australia without notification to NICNAS. Chemicals on the AICS are known as ‘existing’ industrial chemicals. If a chemical is not listed on the AICS, it is considered to be a ‘new’ industrial chemical. New industrial chemicals assessed by NICNAS are listed on the AICS five years after an assessment certificate has been issued.

The AICS consists of a non-confidential (public) and confidential section. Applications for confidential listing are subject to a statutory public interest test. A chemical that satisfies this test is listed on the confidential AICS for five years, after which time the chemical is transferred to the public AICS unless another application is received, which again satisfies the public interest test.

Key AICS statistics during 2015-16:

• 40,061 chemicals were on the public AICS, with 81 chemicals on the confidential AICS.

• 138 chemicals for which an assessment certificate had been issued five years previously, or had been listed on the confidential AICS for five years, were due to transfer to the public AICS.

• 21 of these chemicals were considered for confidential listing/re-listing: nine chemicals were approved for confidential listing, one was withdrawn by the applicant and 11 r emained under consideration at the end of the financial year.

• 56% of approved applications for confidential listing were for polymers of low concern.

• 222 requests were received from bona fide introducers for a search of the confidential section of the AICS.

APPENDIX 2 REPORT FROM THE DIRECTOR OF THE NATIONAL INDUSTRIAL CHEMICALS NOTIFICATION AND ASSESSMENT SCHEME

397 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A2

Figure 4: Outcomes of applications for confidential listing on the AICS received from 2011-12 to 2015-16

0

5

10

15

20

25

30

2011-12 2012-13 2013-14 2014-15 2015-16

Rejected

Withdrawn

Approved

In progress Number of applications

Source: NICNAS internal data

Figure 5: The original assessment categories for confidential listing applications from 2011-12 to 2015-16

0

5

10

15

20

25

30

2011-12 2012-13 2013-14 2014-15 2015-16

Standard

Limited

Self-assessment

for Polymer of

Low Concern

Polymer of

Low Concern

Number of applications

Source: NICNAS internal data

APPENDICES

398 DEPARTMENT OF HEALTH Annual Report 2015-2016

A2

New imported and/or manufactured industrial chemicals Unless a chemical is eligible under the ICNA Act for an exemption, all new industrial chemicals must be notified for assessment by NICNAS for risks to human health and the environment before they can be manufactured or imported into Australia. NICNAS assessments of new industrial chemicals lead to the issuing of permits and certificates. Chemicals introduced under a permit are not eligible for listing on AICS.

Key assessment statistics during 2015-16:

• 11,688 new industrial chemicals introduced under exemptions were reported by 208 introducers.

• 311 new industrial chemicals were assessed prior to introduction into Australia.

The following figures describe trends in the assessment of new chemicals notified by industry:

Figure 6: Certificates and permits issued 1998-99 to 2015-16

0

50

100

150

200

250

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

Number of certificates/permits

Number of certificates Number of permits

Source: NICNAS Annual Reports and internal data

APPENDIX 2 REPORT FROM THE DIRECTOR OF THE NATIONAL INDUSTRIAL CHEMICALS NOTIFICATION AND ASSESSMENT SCHEME

399 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A2

Figure 7: Standard, Limited and Polymer of Low Concern Certificates issued by use category from 1998-99 to 2015-16

0

20

40

60

80

100

120

140

160

180

200

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

Number of certificates

Domestic/Cleaning

Mining & metal extraction

Engineering

Other

Plastics

Fuel and oil

Printing/Photographic/Inks & office supplies

Cosmetics/Personal

Surface coatings

Note: The areas display trends over time and are stacked so that each series adjoins but does not overlap the preceding series.

Source: NICNAS Annual Reports and internal data

Assessment of existing industrial chemicals On 30 June 2016, NICNAS completed Stage One of the application of the Inventory Multi-tiered Assessment and Prioritisation (IMAP) framework, which had commenced 1 July 2012. The application of the IMAP framework increased the availability of chemical safety information, leading to improved advice to risk management agencies about the measures that should be undertaken to help protect the Australian people and the environment.

By 30 June 2016, NICNAS had completed 5,114 human health and environment assessments for 3,419 unique industrial chemicals, exceeding the target of 2,850 chemicals set at the start of the program (95 per cent of the 3,000 chemicals prioritised for assessment in Stage One). This total includes 909 assessments completed in 2015-16. Greater program efficiency was gained by assessing 515 chemicals that were not included on the Stage One list, due to chemical similarities with other chemicals under assessment.

2,705 recommendations for 2,135 unique chemicals (including 194 for 2015-16) were identified for risk management or further assessment by NICNAS. NICNAS collaborated with its international counterparts, Australian risk management agencies (such as Safe Work Australia, the Chemicals Scheduling Delegate for the Poisons Standard and the Australian Competition and Consumer Commission), industry bodies and community groups to enable accurate and relevant information to be considered in undertaking IMAP assessments.

1,019 chemicals were recommended for classification for carcinogenicity, mutagenicity or toxicity to reproduction (CMR) - 71 per cent of these chemicals did not have equivalent classification overseas. 258 new entries or amendments to the Poisons Standard were recommended, with 40 per cent now aligned with international regulatory authorities. No direct equivalent restriction internationally was available for the remainder.

APPENDICES

400 DEPARTMENT OF HEALTH Annual Report 2015-2016

A2

A six-to-eight week public comment period after the publication of each tranche of assessment reports enabled the provision of further information that added important value to the assessment reports.

A review of Stage One of the IMAP framework was completed in 2016, which identified opportunities to enhance the IMAP framework and adapt it to support assessments under the NICNAS reforms. The outcomes of the review have been published on the NICNAS website.109

IMAP review findings:

• The IMAP framework is very effective in accelerating high quality assessment outputs for existing chemicals.

• Tools and approaches used in the IMAP framework are aligned with international best practice and are fit for purpose.

• Data from international sources are fundamental to IMAP’s success. Significant diversity in the scope of international data demonstrated the important role of the framework in identifying potential risks associated with the use of industrial chemicals in Australia.

NICNAS reforms The reforms to NICNAS aim to streamline assessment processes, focus regulatory effort on higher risk chemicals, and maintain Australia’s robust health, safety and environmental standards.

The implementation of the reforms is being developed in consultation with industry, community and government stakeholders.

Stakeholder views will be considered in finalising the regulatory model submitted to Government for introduction into Parliament, with a view to full implementation by July 2018.

109 Available at: www.nicnas.gov.au/chemical-information/imap-assessments/imap-review-2016

Figure 8: Outcomes of IMAP Stage One

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

1 2 3 4

Number of assessments/chemicals/recommendations

Year

PBS Target for Stage One

chemicals

IMAP Stage One chemicals*

Total IMAP chemicals (+ additional chemicals)*

Total IMAP assessments (Health + Environment)

Total IMAP recommendations

*Assessed for human health and/or environment Source: NICNAS Annual Reports, internal data and 2015-16 Health Portfolio Budget Statements

APPENDIX 2 REPORT FROM THE DIRECTOR OF THE NATIONAL INDUSTRIAL CHEMICALS NOTIFICATION AND ASSESSMENT SCHEME

401 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A2

Key NICNAS reform statistics during 2015-16:

• Three public consultation papers were released, with 119 written submissions received in response.

• Over 300 people attended six stakeholder workshops.

• Over 100 organisations were consulted.

Stakeholder advice The NICNAS Strategic Consultative Committee (SCC) first met in August 2015. The SCC has representation from peak industry and community groups, is chaired by the Director of NICNAS, and its membership and Terms of Reference were approved by the (then) Assistant Minister for Health.

The SCC held four meetings in 2015-16 (August, November, March and May), and two working groups were convened to consider the approaches proposed under the NICNAS reforms to introduce new chemicals at a concentration of up to one per cent in formulated products, and to implement transitional arrangements.

The SCC was consulted in advance of the publication of the three consultation papers describing the proposed approach to implementing the NICNAS reforms. The Committee also discussed:

• the management of Confidential Commercial Information by NICNAS;

• chemicals introduced under exemptions from notification and assessment;

• tattoo inks;

• the review of the IMAP framework;

• NICNAS involvement in the Organisation for Economic Co-operation and Development (OECD) Working Party on Manufactured Nanomaterials; and

• NICNAS regulatory and financial performance results.

Digital services A review of the NICNAS website was completed in 2015-16 to explore options for improving navigation, usability and design. An upgrade of the website’s search engine saw the introduction of an improved search results display and ability to search both the AICS and website content.

International engagement NICNAS contributes to and benefits from international collaboration through increased understanding and agreement on international risk assessment approaches, principles and practices.

In 2015-16, NICNAS maintained its active engagement with trusted international regulators. The OECD Chemicals Committee and its key subsidiary committees are the main mechanisms through which NICNAS engages multilaterally.

Engagement with regional jurisdictions through the Asia Pacific Economic Cooperation Chemical Dialogue continued. Ongoing dialogue between NICNAS and its Canadian, European and US counterparts through existing cooperative arrangements was valuable, as this facilitated access to scientific expertise, assessment tools and methodologies, enabling Australian industrial chemicals regulation to remain at world’s best practice.

APPENDICES

402 DEPARTMENT OF HEALTH Annual Report 2015-2016

A2

Financial performance

Table 1: Five year comparison of NICNAS revenue and expenses

2011-12 $’000 2012-13 $’000

2013-14 $’000 2014-15 $’000

2015-16 $’000

Industry cost recovered revenue 9,014 11,089 12,819 13,045 16,324

Other revenue 836 2,809 2,094 1,023 493

Total revenue 9,850 13,898 14,913 14,068 16,817

Total expenses 10,004 13,074 13,906 13,764 14,602

Operating surplus/(deficit) (154) 824 1,007 304 2,215

Compared with 2014-15, total revenue and expenses have increased by $2.749 million and $0.838 million, respectively.

Industry cost recovered revenue was $16.324 million, which is $3.279 million higher than the previous year. 2015-16 revenue was affected by changes to registration fees and charges, which were increased to fund the implementation of the NICNAS reforms in accordance with the NICNAS Cost Recovery Implementation Statement.

Net revenue from other sources was $0.493 million, which is $0.530 million lower than the previous year, due to the completion of an external project.

Total expenses were $14,602 million, which is $0.838 million higher than the previous year. This result is due to operational costs associated with the NICNAS reforms, net of a $0.502 million decrease in costs of an external project.

The NICNAS final net result for 2015-16 was a surplus of $2.215 million, which will be retained in the NICNAS Special Account to provide for business continuity requirements, future capital projects and to fund staff entitlements, in accordance with relevant Government policies.

Acknowledgements NICNAS is administered by highly skilled and dedicated staff in both the Department of Health and the Department of the Environment and Energy, with advice from the NICNAS Strategic Consultative Committee and its working groups. Many stakeholders provided thoughtful and constructive input into the implementation of the reforms to NICNAS that were announced in the context of the 2015-16 Budget. I sincerely appreciate the efforts of staff and stakeholders in the work of the scheme.

Dr Brian Richards Director of NICNAS

Contact details Address: GPO Box 58, Sydney NSW 2001 Australia Lvl 7, 260 Elizabeth St, Surry Hills NSW 2010 Phone: (02) 8577 8800 Freecall: 1800 638 528 NICNAS website: www.nicnas.gov.au Email address: info@nicnas.gov.au

APPENDIX 3 HEALTH PROVIDER COMPLIANCE REPORT

403 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A3

Machinery of Government change On 30 September 2015, the Prime Minister, the Hon Malcolm Turnbull MP, announced that a Machinery of Government transfer would occur, with responsibility for the Medicare Provider Compliance function transferring from the Department of Human Services to the Department of Health. The transfer was recommended by the Health Functional and Efficiency Review.

Achievements The Department of Health continues to achieve results with several matters referred to the Commonwealth Director of Public Prosecutions. The following three cases, amongst others, were finalised in the courts during 2015-16:

• 13 November 2015, a health professional was convicted and sentenced to three years imprisonment for fraudulently obtaining Medicare benefits of $854,188. The health professional had submitted false claims for over 14,000 services that were not provided to patients in Victoria between December 2006 and September 2013.

• 15 January 2016, a former medical receptionist was convicted and sentenced to three years imprisonment for fraudulently obtaining Medicare benefits of $189,316. The medical receptionist had submitted 771 false claims for services which were not provided to patients at two medical practices in Queensland between May 2011 and November 2012.

• 22 March 2016, a former medical receptionist was convicted and sentenced to six months imprisonment for fraudulently obtaining Medicare benefits of $44,134. The former medical receptionist had submitted 345 false claims for services not provided to patients at a medical centre in New South Wales between December 2008 and May 2013.

Improve billing practices within public hospitals The Fraud Prevention and Compliance — improve billing practices within public hospitals measure, which concluded in 2015-16, identified further areas for education about Medicare billing practices within public hospitals. Information was published on the Department’s website to help health professionals and hospital administrators understand their legal responsibilities and requirements when billing under Medicare in public hospitals.

Appendix 3 Health Provider Compliance Report

APPENDICES

404 DEPARTMENT OF HEALTH Annual Report 2015-2016

A3

Looking ahead

Enhanced compliance Budget measure The Healthier Medicare — enhanced Medicare compliance program will enhance health provider compliance with funding of $48 million over four years. Efficiencies will be achieved by introducing an advanced data analytics capability to better target providers who make Medicare claims that are inconsistent with existing rules and introducing changes to improve low rates of debt recovery from providers. The savings of $66.2 million over four years from this measure will be redirected by the Government to fund Health policy priorities.

Education and stakeholder engagement Education and engagement assists health professionals meet their compliance obligations through a range of activities and information.

General education and targeted feedback letters In 2015-16, 417 general education and targeted feedback letters were sent to health professionals covering a range of issues, such as checking concession entitlement of patients when claiming bulk bill incentive items.

Health Professional Guidelines Developed in consultation with peak bodies, Health Professional Guidelines (HPGs) help educate regarding the documents that can be used to substantiate services. At 30 June 2016 there were 19 HPGs published on the Department of Health website.

Health compliance professionalism survey The professionalism survey invites health professionals to provide feedback about their experience during Health Provider Compliance audits. The survey is sent following the completion of an audit and feedback guides training initiatives and improvements to business processes. In 2015-16 the Department received completed surveys from 409 health professionals, showing an overall satisfaction level of 91.1 per cent.

Audit and review activities Audits and reviews are planned compliance activities on individuals or businesses that support payment integrity. They include general audits, practitioner review or criminal investigation.

Table 1: Completed health compliance audits and reviews

Programs/groups 2015-16

Medicare Benefits Schedule 3,399

Pharmaceutical Benefits Scheme 291

Health support programs 66

Child Dental Benefits Schedule 156

Total 3,912

APPENDIX 3 HEALTH PROVIDER COMPLIANCE REPORT

405 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A3

The 2015-16 work program focussed on priority risks in the following areas:

Pharmaceutical Benefits Scheme (PBS) • Unapproved pharmacies: reviewed claims from approved pharmacies when allegations were made that they had claimed for medicines supplied by another pharmacy not approved to supply under the PBS.

• Multiple payments: reviewed approved suppliers when claims are made more than once for the same authorised supply of a PBS medicine or when claims are made for the supply of two identical prescriptions where only one is valid for PBS subsidy.

Medicare Benefits Schedule (MBS) • GPs bulk billing incentive payments: recovered benefits from GPs who continued to claim incorrectly after receiving targeted letters in 2014-15 about claiming for patients who did not have a valid concession card on the date of service.

• Specialists-referred consultations: audited specialists’ claiming of referred consultations to determine if they had a valid referral before claiming the consultation.

• Specialists-assisted reproductive technology: audited specialists to determine if they have incorrectly claimed Medicare benefits for services related to Assisted Reproductive Technology) treatment cycles.

• Pathology services: carried out an end-to-end audit of selected approved pathology authorities to ensure that pathology tests/services requested were the tests performed and claimed by the approved pathology practitioner.

• Diagnostic imaging: audited computed tomography and/or diagnostic radiology services to ensure that the services requested were performed and claimed by the billing practitioner.

Incentive programs • Practice Incentives Program and Practice Nurse Incentive Program: activities in 2015-16 focused on redrafting of the guidelines for the programs to provide increased clarity for practices and better support for future compliance activity.

Child Dental Benefit Schedule (CDBS) • Targeted audits: identified dental practitioners for audit through analysis of CDBS claims data to ensure all requirements for payment of benefits had been met.

• Education: provided education material to all dental practitioners eligible to claim under the CDBS.

• Voluntary acknowledgements: processed repayments of debts from incorrect claiming that were acknowledged voluntarily by dental practitioners.

• Monitoring: reviewed the claims data of all dental practitioners who provided services under the CDBS.

Practitioner Review Program The Department monitors Medicare claims to identify medical practitioners whose servicing or ordering of tests, or prescribing under the PBS, appears abnormal when compared with their peers. Whilst this may reflect the nature of the practice, it may also indicate inappropriate practice. When the Department has concerns about a practitioner’s Medicare claims the practitioner is reviewed under the Department’s Practitioner Review Program. At interview with one of the Department’s health professional advisers, the practitioner is provided with an opportunity to explain why their profile is different to that of their peers. If concerns remain, including after a possible period of review, the Department may request the Director of

APPENDICES

406 DEPARTMENT OF HEALTH Annual Report 2015-2016

A3

Professional Services Review (PSR) to review the practitioner’s provision of services.

During 2015-16, 80 such requests were made to the Director of PSR.

During 2015-16, issues discussed during practitioner interviews included, but were not limited to:

• daily servicing;

• prescribing of drugs of addiction under the PBS; and

• initiation of pathology or diagnostic imaging.

During 2015-16, 472 practitioners were interviewed by professional advisers.

Under the Health Insurance Act 1973 (the Act) general practitioners or other medical practitioners who render 80 or more professional attendances on 20 or more days in a 12 month period (a prescribed pattern of services) are deemed to have engaged in inappropriate practice (the 80/20 rule) and must be reviewed by the Director of PSR. During 2015-16, the Director of PSR was requested to review the provision of services of five practitioners who breached the 80/20 rule.

Practitioners identified as approaching the 80/20 service level without yet breaching the rule were reminded of their obligations by letter, or at a Practitioner Review Program interview. During 2015-16, 77 practitioners were advised in writing to review their Medicare servicing levels.

Internal reviews In 2015-16, the Department completed 69 reviews of decisions, including 44 legislative reviews and 25 administrative reviews. The original decision was upheld in approximately 39 per cent of cases. Of those cases where the original decision was varied or revoked, 85 per cent involved consideration of new evidence.

Table 2: Health internal reviews

2015-16 2014-15 2013-14

Allied health providers 4 6 12

Pharmacies 1 1 0

Dentists 6 2 2

General practitioners and specialists

39 42 9

Incentive payments 19 12 3

Total 69 63 26

APPENDIX 3 HEALTH PROVIDER COMPLIANCE REPORT

407 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A3

Debts

Health programs debt In 2015-16, the Department worked with the Department of Human Services to raise debts of more than $18.6 million in incorrect MBS and other health support payments. This was through:

• identifying recoverable amounts from audits and investigations;

• practitioners acknowledging incorrect billing at a Practitioner Review Program interview or during an audit;

• payment orders resulting from successful prosecutions or from determinations under the Professional Services Review scheme; and

• penalties, including civil, criminal and administrative.

Table 3: Debts raised for recovery of benefits incorrectly paid

Program 2015-16 2014-15 2013-14

Number $ million Number $ million Number $ million

Medicare Benefits Schedule

1,924 16.3 1,760 61.4 970 9.8

Pharmaceutical Benefits Scheme 222 1.6 211 1.2 146 0.7

Health support programs 39 0.74 39 1.3 35 0.2

Total 2,185 18.6 2,010 64.0110 1,151 10.7

Fraud

Fraud investigations The Department investigates fraud and refers matters to the Commonwealth Director of Public Prosecutions (CDPP) where appropriate relating to PBS, MBS, and other Health support programs. The Department’s fraud control processes are deliberately focused on the most serious cases of non-compliance, not on people making honest mistakes.

In 2015-16, the Department conducted 190 investigations into fraud compared to 169 investigations in 2014-15.

110 Total has been rounded to the nearest decimal point.

APPENDICES

408 DEPARTMENT OF HEALTH Annual Report 2015-2016

A3

Tip-offs In February 2016, the Department launched the Health Provider Compliance Hotline. Previously tip-offs associated with claiming by health providers were managed through the Australian Government Fraud Tip-off Line in the Department of Human Services. Since February 2016, the Department has received approximately 850 tip-offs from members of the public and health providers about potential provider non-compliance or fraud. Tip-offs can be lodged by:

• telephoning the Provider Compliance Hotline on 1800 314 808;

• email at health.provider.compliance@health.gov.au; and

• web form under the ‘reporting suspected fraud’ quick link on the home page of the Department’s website: www.health.gov.au

Referrals Medicare Participation Review Committees Medicare Participation Review Committees (MPRCs) are independent statutory committees established on a case-by-case basis under Part VB of the Health Insurance Act 1973. They make determinations about whether to disqualify practitioners from participating in the Medicare program for a period up to five years.

Practitioners are referred to MPRCs following: the making of pecuniary penalty orders in respect of civil contraventions of the legislation; the commission of relevant criminal offences; or, breaches of a pathology undertaking. No practitioners were referred to MPRCs in 2015-16.

Table 4: Cases referred to MPRCs

2015-16 2014-15 2013-14111

Open matters at start of year 0 1 7

Matters referred 0 0 0

Determinations finalised 0 1 6

Open matters at end of year 0 0 1

Hearings conducted 0 0 6

Commonwealth Director of Public Prosecutions The Department and the Commonwealth Director of Public Prosecutions (CDPP) continued to work together to respond to fraud against health programs. The Department detects and investigates potential fraud and refers matters involving criminal offences relating to the MBS, PBS, or other related Health support programs to the CDPP, which decides whether to prosecute in line with the Prosecution Policy of the Commonwealth.

In 2015-16, the Department referred 35 matters to the CDPP including:

• 3 matters relating to health professionals;

• 1 matter relating to pharmacists; and

111

Since December 2013, practitioners who have been referred to the Director of Professional Services Review on two or more occasions are no longer referred to MPRCs.

APPENDIX 3 HEALTH PROVIDER COMPLIANCE REPORT

409 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A3

• 31112 matters relating to corporate entities/employers, employees (such as receptionists), or their associates.

This compares to 94 such matters referred to the CDPP in 2014-15.

• 46113 cases had a successful prosecution outcome during 2015-16. These outcomes included:

- 36 reparation orders for the repayment of $1,462,706 in funds;

- 12 custodial sentences ranging from one month to three years;

- 24 orders relating to good behaviour and community service; and

- 10 fines iss ued by the court.

112 This includes two matters that were referred to the CDPP prior to Machinery of Government changes that have since been referred to the Department of Human Services, Business Integrity Branch for management.

113 This includes eight public fraud matters that were finalised by the CDPP prior to Machinery of Government changes.

APPENDICES

410 DEPARTMENT OF HEALTH Annual Report 2015-2016

A4

Essential functions of the Australian National Preventive Health Agency (ANPHA) transferred to the Department of Health from 1 July 2014.

Appendix 4 contains the complete set of financial statements for ANHPA.

Contents Independent Auditor’s Report 411

Statement by the Secretary and Chief Financial Officer 413

Statement of Comprehensive Income 414

Statement of Financial Position 415

Statement of Changes in Equity 416

Cash Flow Statement 417

Administered Schedule of Assets and Liabilities 418

Administered Reconciliation Schedule 419

Administered Cash Flow Statement 420

Overview 421

Notes to and Forming Part of the Financial Statements 423

Appendix 4 Australian National Preventive Health Agency Financial Statements

APPENDIX 4 AUSTRALIAN NATIONAL PREVENTIVE HEALTH AGENCY FINANCIAL STATEMENTS

411 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A4

Australian National Preventive Health Agency Independent Auditor’s Report

INDEPENDENT AUDITOR’S REPORT

To the Minister for Health and Aged Care

I have audited the accompanying annual financial statements of the Australian National Preventive Health Agency for the year ended 30 June 2016, which comprises the Statement by the Secretary and Chief Financial Officer, Statement of Comprehensive Income,

Statement of Financial Position, Statement of Changes in Equity, Cash Flow Statement; Administered Schedule of Assets and Liabilities, Administered Reconciliation Schedule, Administered Cash Flow Statement and Notes to and forming part of the financial statements, comprising significant accounting policies and other explanatory information.

Opinion

In my opinion, the financial statements of the Australian National Preventive Health Agency:

(a) comply with Australian Accounting Standards and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and

(b) present fairly the financial position of the Australian National Preventive Health Agency as at 30 June 2016 and its financial performance and cash flows for the year then ended.

Accountable Authority’s Responsibility for the Financial Statements

The Secretary of the Department of Health is responsible under the Public Governance, Performance and Accountability Act 2013 for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards and the rules made under that Act. The Secretary is also responsible for such internal control as the Secretary determines is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

My responsibility is to express an opinion on the financial statements based on my audit. I have conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. These auditing standards require that I comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

GPO Box 707 CANBERRA ACT 2601 19 National Circuit BARTON ACT Phone (02) 6203 7300 Fax (02) 6203 7777

APPENDICES

412 DEPARTMENT OF HEALTH Annual Report 2015-2016

A4

Australian National Preventive Health Agency Independent Auditor’s Report

entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Accountable Authority of the entity, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Independence

In conducting my audit, I have followed the independence requirements of the Australian National Audit Office, which incorporate the requirements of the Australian accounting profession.

Australian National Audit Office

Brandon Jarrett

Executive Director

Delegate of the Auditor-General

Canberra

31 August 2016

APPENDIX 4 AUSTRALIAN NATIONAL PREVENTIVE HEALTH AGENCY FINANCIAL STATEMENTS

413 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A4

Australian National Preventive Health Agency Statement by the Secretary and Chief Financial Officer

APPENDICES

414 DEPARTMENT OF HEALTH Annual Report 2015-2016

A4

Australian National Preventive Health Agency Statement of comprehensive income for the period ended 30 June 2016

Notes 2016 2015

$’000 $’000

NET COST OF SERVICES EXPENSES Employee benefits - 171

Supplier 20 57

Impairment of other Commonwealth entity travel debts 18 -

Total expenses 38 228

OWN-SOURCE INCOME Gains Other Gains - FBT refund 15 -

Total own-source revenue 15 -

Other revenue Resources received free of charge 19 65

Total other revenue 19 65

Total own-source income 34 65

Net (cost of) services (4) (163)

Surplus (Deficit) (4) (163)

Surplus (Deficit) attributable to the Australian Government 1.3 (4) (163)

The above statement should be read in conjunction with the accompanying notes.

APPENDIX 4 AUSTRALIAN NATIONAL PREVENTIVE HEALTH AGENCY FINANCIAL STATEMENTS

415 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A4

Australian National Preventive Health Agency Statement of financial position as at 30 June 2016

Notes 2016 2015

$’000 $’000

ASSETS Financial assets Cash and cash equivalents 1.3 18 2

Departmental appropriation receivable 1,347 1,347

Other receivables to Commonwealth entities - 20

Total financial assets 1,365 1,369

Total assets 1,365 1,369

LIABILITIES Total liabilities - -

Net assets 1,365 1,369

EQUITY Accumlated surplus 1,365 1,369

Total equity 1,365 1,369

The above statement should be read in conjunction with the accompanying notes.

APPENDICES

416 DEPARTMENT OF HEALTH Annual Report 2015-2016

A4

Australian National Preventive Health Agency Statement of changes in equity for the period ended 30 June 2016

2016 2015 2016 2015

$’000 $’000 $’000 $’000

Opening balance Balance carried forward from previous period 1,369 1,532 1,369 1,532

Opening balance 1,369 1,532 1,369 1,532

Comprehensive income Deficit for the period (4) (163) (4) (163)

Total comprehensive income 1,365 1,369 1,365 1,369

Closing balance as at 30 June 1,365 1,369 1,365 1,369

The above statement should be read in conjunction with the accompanying notes.

Total equity Retained earnings

APPENDIX 4 AUSTRALIAN NATIONAL PREVENTIVE HEALTH AGENCY FINANCIAL STATEMENTS

417 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A4

Australian National Preventive Health Agency Cash flow statement for the period ended 30 June 2016

Notes 2016 2015

$’000 $’000

OPERATING ACTIVITIES Cash received Prepayment paid back from Department of Health - 379

Net GST received 1 47

FBT Refund 15 31

Total cash received 16 457

Cash used Employees - 510

Suppliers - 24

Total cash used - 534

Net cash from operating activities 1.3 16 (77)

Net (decrease) in cash held 16 (77)

Cash and cash equivalents at the beginning of the reporting period 2 79

Cash and cash equivalents at the end of the reporting period 1.3 18 2

The above statement should be read in conjunction with the accompanying notes.

APPENDICES

418 DEPARTMENT OF HEALTH Annual Report 2015-2016

A4

Australian National Preventive Health Agency Administered schedule of assets and liabilities as at 30 June 2016

2016 2015

$’000 $’000

ASSETS Financial assets Trade and other receivables 12,383 12,383

Total financial assets 12,383 12,383

Total assets administered on behalf of Government 12,383 12,383

Net assets 12,383 12,383

APPENDIX 4 AUSTRALIAN NATIONAL PREVENTIVE HEALTH AGENCY FINANCIAL STATEMENTS

419 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A4

Australian National Preventive Health Agency Administered reconciliation schedule as at 30 June 2016

2016 2015

$’000 $’000

Opening administered assets less administered liabilities as at 1 July 12,383 12,894

Surplus (deficit) items:

Transfers to OPA - (511)

Administered assets and liabilities appropriations - -

Closing administered assets less administered liabilities as at 30 June 12,383 12,383

The above schedule should be read in conjunction with the accompanying notes.

APPENDICES

420 DEPARTMENT OF HEALTH Annual Report 2015-2016

A4

Australian National Preventive Health Agency Administered cash flow statement for the period ended 30 June 2016

2016 2015

$’000 $’000

OPERATING ACTIVITIES Cash received Sale of goods and rendering of services - -

Net GST received - 511

Other - -

Total cash received - 511

Cash to Official Public Account:

- Appropriations - 511

Total cash to official public account - 511

Cash and cash equivalents at the end of the reporting period - -

This schedule should be read in conjunction with the accompanying notes.

APPENDIX 4 AUSTRALIAN NATIONAL PREVENTIVE HEALTH AGENCY FINANCIAL STATEMENTS

421 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A4

Australian National Preventive Health Agency Overview

Abolition of the Australian National Preventive Health Agency

In the 2014-15 Budget papers the Australian Government announced as part of its Smaller Government initiative that it would abolish the Australian National Preventive Health Agency (ANPHA) and integrate its ongoing functions into the Department of Health, including the administration of social marketing activities and the provision of grants to third parties for preventive health activities.

A bill to abolish ANPHA was introduced to Parliament on the 15 May 2014 by the Australian Government. The bill was referred to the Senate Community Affairs Committee on the 15 May and on the 14 July 2014, the Committee recommended that the Bill be passed. The House of Representatives passed the bill on the 3 June 2014 and the bill was introduced to the Senate on the 16 June 2014 and was negatived by the Senate on the second reading on the 25 November 2014. There is currently no bill before Parliament to

abolish ANPHA.

The Department of Health was provided funding in the 2014-15 Budget to integrate and transition the ongoing functions of ANPHA into the Department of Health. All ongoing administered grants to third parties are being managed by the Department of Health.

ANPHA was not provided any annual appropriations in 2014-15, 2015-16 or 2016-17, Appropriation Acts. At 30 June 2016, ANPHA’s total financial assets are in excess of its total liabilities as reported in the statement of financial position and ANPHA has no debts. At 30 June 2016, ANPHA has no employees. The Chief Executive Officer was the only employee of ANPHA during 2014-15 financial year and resigned effective 5 January 2015.

The Secretary of the Department of Finance, pursuant to subsection 17A(3) of the Public Governance, Performance and Accountability Rule 2014 has instructed the Secretary of the Department of Health to produce the financial statements for ANPHA as would have been required by the accountable authority.

ANPHA is an Australian Government Agency and does not have a separate legal personality to the Australian Government.

Objectives of the Australian National Preventive Health Agency

ANPHA is listed as a non-corporate Commonwealth entity under the Public Governance, Performance and Accountability (PGPA) Act 2013, and its role and functions are set out in the Australian National Preventive Health Agency Act 2010.

The Australian Government established ANPHA on 1 January 2011 to provide a new national capacity to drive preventive health policy and programs.

ANPHA will not continue to exist in its present form and will not continue its programs. Government policy is to abolish ANPHA and funding has not been provided by Parliament for ANPHA’s administration and programs.

ANPHA was structured to meet one outcome:

Outcome 1: A reduction in the prevalence of preventable disease, including through research and evaluation to build the evidence base for future action, and by managing lifestyle education campaigns and developing partnerships with non-government sectors.

ANPHA activities that contributed toward this outcome are classified as either departmental or administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by ANPHA in its own right. Administered activities involve the management or oversight by ANPHA, on behalf of the Government, of items controlled or incurred by the Government.

Basis of Preparation of the Financial Statements

The financial statements are general-purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The financial statements have been prepared in accordance with: a) Financial Reporting Rule (FRR) for reporting periods ending on or after 1 July 2015; and b) Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

Unless an alternative treatment is specifically required by an accounting standard or the FRR, assets and liabilities are recognised in the statement of financial position when and only when it is probable that future economic benefits will flow to the entity or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets

and liabilities arising under executory contracts are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the schedule of commitments or the contingencies note.

ANPHA had no departmental or administered commitments or contingencies as at 30 June 2015 or 30 June 2016.

Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the Statement of Comprehensive Income when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured.

Significant Accounting Judgements and Estimates

No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next reporting period.

APPENDICES

422 DEPARTMENT OF HEALTH Annual Report 2015-2016

A4

Australian National Preventive Health Agency Overview

New Australian Accounting Standards

Adoption of New Australian Accounting Standard Requirements

No accounting standard has been adopted earlier than the application date as stated in the standard.

Revised standards that were issued prior to the sign-off date and are applicable to the current reporting period did not have a financial impact, and are not expected to have a future financial impact on the Agency. AASB 1055 'Budgetary Reporting' has no impact on ANPHA's reporting requirements, as ANPHA did not receive any budget for the 2014-15 financial year or beyond and did not present a budget to Parliament.

Future Australian Accounting Standard Requirements

No new standards, revised standards, interpretations and amending standards that were issued by the Australian Accounting Standards Board prior to the sign-off date, are expected to have a material financial impact on the Agency for future reporting periods.

Revenue

Resources Received Free of Charge

Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature.

Revenue from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when ANPHA gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

Employee Benefits

There were no person's engaged or reportable to ANPHA as at 30 June 2016.

Cash

Cash is recognised at its nominal amount. Cash and cash equivalents include: a) cash on hand, and b) cash in special accounts.

Financial Assets

Loans and Receivables

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period.

Financial assets held at cost - If there is objective evidence that an impairment loss has been incurred, the amount of the impairment loss is the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate for similar assets.

Contingent Liabilities and Contingent Assets

As at 30 June 2016 and at 30 June 2015, there were no contingent assets or liabilities.

Property, Plant and Equipment

ANPHA has no Property, Plant or Equipment.

Taxation / Competitive Neutrality

ANPHA is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Revenues, expenses and assets are recognised net of GST except: a) where the amount of GST incurred is not recoverable from the Australian Taxation Office; and b) for receivables and payables.

Events after the Reporting Period

Departmental

There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of the entity.

Administered

There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of the entity.

Reporting of Administered Activities

There were no Administered activities to report during 2015-16 in relation to ANPHA.

APPENDIX 4 AUSTRALIAN NATIONAL PREVENTIVE HEALTH AGENCY FINANCIAL STATEMENTS

423 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A4

Australian National Preventive Health Agency Notes to and forming part of the financial statements

2016 2015

$ $

DEPARTMENTAL Appropriation Act (No.1) 2013-2014 1,347 1,347

Total departmental 1,347 1,347

Note 1.2: Special Accounts

Special Accounts (Recoverable GST exclusive)

2016 2015

$'000 $'000

Balance brought forward from previous period 12,383 12,383

Available for payments 12,383 12,383

Total balance carried to the next period 12,383 12,383

Notes:

Note 1.3: Cash Flow Reconciliation

2016 2015

$’000 $’000

Reconciliation of cash and cash equivalents as per Statement of Financial Position to Cash Flow Statement

Cash and cash equivalents as per:

Cash flow statement - 2

Statement of financial position - 2

Difference - -

Reconciliation of net cost of services to net cash from operating activities:

Net cost of services - (163)

Revenue from Government - -

Adjustment for non cash items Depreciation / amortisation -

Net write down of non-financial assets - -

Movement in assets / liabilities Assets (Increase) / decrease in net receivables 20 26

(Increase) / decrease in prepayments received - 379

Liabilities Increase / (decrease) in employee provisions - (292)

Increase / (decrease) in supplier payables - (16)

Increase / (decrease) in other payable - (10)

Net cash from operating activities 20 (77)

Unspent Annual Appropriations ('Recoverable GST exclusive')

Authority

Note 1.1: Appropriations

(c) meeting the expenses of administering the Account.

The Australian National Preventive Health Agency Special Account (Administered)1

1. Appropriation: Public Governance, Performance and Accountability Act 2013 , Section 80.

3. Purposes of the Account:

(a) paying or discharging the costs, expenses and other obligations incurred by the Commonwealth in the performance of the CEO's functions;

(b) paying any remuneration and allowances payable to any person under the Australian National Preventive Health Agency Act 2010 ; and

2. Establishing Instrument: Australian National Preventive Health Agency Act 2010 , Section 50.

APPENDICES

424 DEPARTMENT OF HEALTH Annual Report 2015-2016

A5

Appendix 5 Australian Digital Health Agency 2015-16 Annual Report

APPENDIX 5 AUSTRALIAN DIGITAL HEALTH AGENCY 2015-16 ANNUAL REPORT

425 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A5

Background In November 2013, the Australian Government commissioned a review of the Personally Controlled eHealth Record (PCEHR) to assess the status of the PCEHR implementation and to work with health professionals and industry to prioritise further implementation. The Review was released on 19 May 2014.

The 2015-16 Federal Budget measure My Health Record - A New Direction for Electronic Health Records in Australia provided funding to strengthen eHealth governance arrangements consistent with the Review recommendations.

This included the transition of relevant activities and resources from the National E-Health Transition Authority (NEHTA), and also from the national My Health Record system operation activities managed by the Department of Health, to a new entity called the Australian Digital Health Agency (the Agency).

Purpose, enabling legislation and functions The Agency is a Corporate Commonwealth entity under the Public Governance, Performance and Accountability (PGPA) Act 2013, and was established under the PGPA (Establishing the Australian Digital Health Agency) Rule 2016.

The Agency reports to the Minister for Health, The Honourable Sussan Ley MP, and to State and Territory Health Ministers through the Council of Australian Governments (COAG) Health Council.

The Agency commenced operations on 1 July 2016. NEHTA and Department of Health functions and resources transferred to the Agency on this date.

There are offices in Brisbane, Canberra, Melbourne and Sydney.

About the Australian Digital Health Agency The Agency is the national body responsible for the strategic management and governance of the national digital health strategy and the design, delivery and operations of the national digital health care system. The Agency will provide the leadership, coordination and delivery of a collaborative and innovative approach to utilising technology to support and enhance a clinically safe and connected national health system to improve health service delivery and health outcomes for the Australian community.

There are three main objectives:

1. building foundations for better health outcomes through improved governance, and management and delivery of national digital health services;

2. promoting and facilitating user communication, engagement and collaboration through open innovation; and

3. operating an effective and secure digital health care system.

APPENDICES

426 DEPARTMENT OF HEALTH Annual Report 2015-2016

A5

To achieve these, the following functions will be performed:

• coordinate and provide input into the ongoing development of the National Digital Health Strategy;

• implement those aspects of the National Digital Health Strategy that are agreed or directed by the COAG Health Council;

• develop, implement, manage, operate, continuously innovate and iteratively improve specifications, standards, systems and services in relation to digital health, consistent with the National Digital Health Work Program;

• develop, implement and operate comprehensive and effective clinical governance, using a whole-of-system approach, to ensure clinical safety in the delivery of the National Digital Health Work Program;

• develop, monitor and manage specifications and standards to maximise effective operation between public and private sector digital health care systems;

• develop and implement compliance approaches in relation to the adoption of agreed specifications and standards relating to digital health; and

• liaise and cooperate with overseas and international bodies on matters relating to digital health.

The Board Mr Jim Birch AM, Chair is also Chair of the Australian Red Cross Blood Service, Deputy Chair of the Independent Hospital Pricing Authority, Chair of Mary MacKillop Care SA and a board member of the Australian Red Cross Society, the Little Company of Mary Health Care and Cancer SA. He was formally a Partner in Ernst and Young having been the Global Health Leader. He has also been the Government and Public Sector Leader from 2012 until the end of 2014. Formerly, Mr Birch was also the Lead Partner in Health and Human Services for Asia Pacific. He has over 35 years experience in planning, leading and implementing change in complex organisations transcending such areas as health care, justice and human services. Mr Birch has been a Chief Executive of the Human Services and Health Department (South Australia), Deputy Chief Executive of Justice and Chief Executive of major health service delivery organisations, including teaching hospitals. Mr Birch has previously been Chair of the Australian Health Ministers’ Advisory Council, a member of the Australian Commission on Safety and Quality in Health Care, and was a Board Member of the National E-Health Transition Authority and Chair of Rural Health Workforce Australia. He has a Bachelor of Health Administration from the University of New South Wales.

Mr Robert Bransby has been Managing Director of HBF Health Limited since January 2008 having been appointed Chief Executive Officer in 2007 and Group General Manager in 2005. He was formerly a Director of HealthGuard Health Benefits Pty Ltd and was Director of HBF Insurance Pty Ltd before the sale of HBF’s general insurance business in 2011. During his term HBF has consolidated its position as Western Australia’s leading health fund, reaffirming its focus on member health and embarking on an ambitious strategy to become a valued health partner to HBF members. Mr Bransby has long held a leadership position within the health insurance sector and is President of the industry association, Private Healthcare Australia. He is well known for championing the interests of health fund members, and as an advocate for not-for-profit health insurers. Prior to working at HBF, Mr Bransby enjoyed a successful career in banking, holding positions including Corporate Finance Manager, Corporate Banking Western Australia and Head of Business Financial Services in New South Wales during 25 years at the National Australia Bank Ltd. He is President of Private Healthcare Australia (PHA), Pioneer Credit Ltd, Synergy, Commonwealth Financial Planning Limited, BW Financial Advice Limited, Count Financial Limited and Financial Wisdom Limited. He is also a Commissioner of the Insurance Commission of WA.

Dr Eleanor Chew is a specialist general practitioner and medical educator, with extensive experience representing the role of primary care in the health services profession. A graduate of the University of Queensland, Dr Chew has worked as a GP in Brisbane, Darwin, Perth and Canberra in a variety of practice settings including solo, small practices, and corporate practice. Dr Chew is a past Vice President and Chair of

APPENDIX 5 AUSTRALIAN DIGITAL HEALTH AGENCY 2015-16 ANNUAL REPORT

427 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A5

the Royal Australian College of General Practitioners RACGP, and is an experienced leader with strategic vision and a solid understanding of governance responsibilities. Through her roles with the RACGP, Dr Chew has interacted extensively with other Colleges, the AMA, Medical Board, Medical Defence Organisations, and State and Commonwealth departments, advocating for general practitioners and gaining valuable insights into the many challenges facing the health care system. Dr Chew serves on a range of committees and working groups focussed on the advancement of quality primary care, in both the private and government sectors.

Dr Elizabeth Deveny is the Chief Executive Officer of the South Eastern Melbourne Primary Health Network. She was previously the Chief Executive Bayside Medicare Local and Acting Chief Executive Officer Northern Melbourne Medicare Local. She has worked as a Research Fellow in both the Department of Ophthalmology and the Department of Paediatrics at the University of Melbourne. Dr Deveny has a Doctor of Philosophy, a Master’s Degree in Health Education, and a Bachelor of Training and Development from the University of Melbourne.

Mr Paul Madden is the Strategic Health Systems and Information Management Special Adviser with the Commonwealth Department of Health. His role includes supporting the Government in leading the national rollout of digital health initiatives including foundation technologies and related services across Australia, the continued and improved operation of the My Health Record system, and the trials of opt-out participation arrangements. He is a member of the Department of Health Executive Committee. He is responsible for the setting and operation of governance policies and processes for data and information management. Prior to joining the Department, Mr Madden was Program Director of the Standard Business Reporting Program led from the Australian Treasury from 2007-2010.

Ms Lyn McGrath is the Executive General Manager, Retail Sales at the Commonwealth Bank of Australia (CBA), leading the largest distribution business within CBA; a team of over 10,000 people across Australia, the UK and China. She has been in her current position since 2010, promoted from her previous role of Regional General Manager, Sydney Region. Prior to this, Ms McGrath held roles with St George in the Retail Bank as Head of Customer Experience and as Regional Manager, Northern Sydney. She has extensive senior management experience in strategic and operational roles within the utilities and media industries and over 20 years experience in Financial Services. Ms McGrath is highly regarded for her transformational leadership and customer experience strategy. She holds an MBA and BA from Macquarie University as well as a Dip PR (Hons). She is a Graduate of the Australian Institute of Company Directors and currently holds Board positions at Commonwealth Financial Planning and the Evidence for Learning Board, a joint initiative with Social Ventures Australia and the Commonwealth Bank. Ms McGrath is a Senior Fellow with FINSIA and a Fellow with the Australian Institute of Management. In 2012, she was named as one of the 100 Most Influential Women in Australia by the Australian Financial Review.

Mr Stephen Moo is the Chief Information Officer for the Northern Territory Department of Health. He has been employed in the health sector for over 34 years, with the last 16 years having direct responsibility for the design, development, implementation and on-going systems management for major corporate client and clinical information systems, and information communications and infrastructure. He has overseen the Northern Territory’s eHealth program for the past 11 years and is the principal architect and sponsor for the development and implementation of a comprehensive eHealth program that is widely regarded as one of the most advanced of its kind in Australia. As Chair of the National Health Chief Information Officer Forum for the past eight years, Mr Moo has played a key role in the development of the National eHealth Strategy and national eHealth foundation services and standards with the previous National E-Health Transition Authority. Mr Moo was appointed by the Australian Health Ministers’ Advisory Council as the Jurisdictional ICT representative on the eHealth Implementation Taskforce Steering Committee, which assisted to establish the Australian Digital Health Agency. Mr Moo is a strong advocate for ensuring clinical information systems and eHealth solutions development have appropriate expert clinical sponsorship and actively involves clinical business analysts, clinical educators and clinical champions with the necessary expert knowledge and skills in information management to deliver clinically appropriate information technology solutions. Mr Moo has recently overseen the development of NT Health’s Strategic Information Plan and the original Core Clinical System Renewal Programme (CCSRP) Business Case that will support the replacement of NT Health’s Core Clinical Information Systems over five years. With many years of experience as the Chief Information Officer of NT Health, he will be a major contributor to the CCSRP over the next five years. This will see the development and implementation of a state-of-the-art electronic clinical Health Record to be used across all areas of NT Health service delivery.

APPENDICES

428 DEPARTMENT OF HEALTH Annual Report 2015-2016

A5

Ms Stephanie Newell is a facilitator, educator and health care consumer advocate who is highly regarded across multiple industry sectors for her collaborative and innovative approach. Ms Newell works in partnership across all levels of health care so that health services and health systems are safe, consumer focussed and are informed by, and designed with, health care consumers for health care consumers. Ms Newell is currently the Consumer and Community Engagement Coordinator with the Health Consumers’ Council of Western Australia, the state’s peak body for health consumers. Her previous work as a consultant educator and facilitator includes six years developing and facilitating the ‘Partnering with Consumers to Achieve Quality Outcomes in Healthcare’ & ‘Patient-centred Care’ workshops across Australia for The Australian Council on HealthCare Standards. Ms Newell is a foundational member and a designated ‘Patients for Patient Safety Champion’ of the World Health Organization’s Patients for Patient Safety program and a member of the Global Patient and Family Advisory Group of the Beryl Institute for Patient Experience. She also contributes to a number of Australian and international health care policy and research groups and initiatives in areas which include consumer engagement, patient experience, patient safety, quality improvement, accreditation and standards development. Ms Newell holds post graduate qualifications in Entrepreneurship, Commercialisation and Innovation from the University of Adelaide and is currently undertaking a Master of Clinical Science by Research.

Dr Bennie Ng is the General Manager, Partnerships and Strategy at Healthscope, a leading healthcare provider in Australia. He commenced his career as a General Practitioner, and has most recently been the Head of Social Policy at the Office of the Prime Minister. In addition to a health advisory role to the Australian Government, he has held other senior positions in strategy, services planning and general management including the Head of Clinical Services Planning at the Hong Kong Hospital Authority, the General Manager Cancer Medicine and Director of Medical Services at the Peter MacCallum Cancer Centre in Melbourne. Dr Ng has a Bachelor’s Degree in Medicine and Surgery from the University of Western Australia and a Masters of Business Administration from Curtin University. He is a Fellow of the Royal Australasian College of Medical Administrators and the Royal Australian College of General Practitioners.

Professor Johanna Westbrook is Professor of Health Informatics and Director, Centre for Health Systems and Safety Research, Australian Institute of Health Innovation, at Macquarie University. She is internationally recognised for her research evaluating the effects of information and communication technology (ICT) in health care and has published over 300 papers. This research has led to significant advances in our understanding of how clinical information systems deliver (or fail to deliver) expected benefits and supported translation of this evidence into policy, practice, and IT system changes. In 2014 Professor Westbrook was awarded Australian ICT Professional of the Year by the Australian Information Industry Association. She has a PhD in Epidemiology from the University of Sydney, a Masters in Health Administration from the University of New South Wales, and a Bachelor of Applied Science (with Distinction) from the University of Sydney. She is a Fellow of the American College of Medical Informatics and the Australasian College of Health Informatics.

Mr Michael Walsh is the Director-General Queensland Health where he leads a public health and hospital system for a population of 4.7 million people. Prior to this role, he was the inaugural Chief Executive / CIO of eHealth NSW, providing eHealth and ICT services to the NSW Health System. Mr Walsh has also worked as Chief Executive of HealthShare NSW, the NSW Health shared service provider. He has extensive experience at the Government Senior Executive level in both NSW and Queensland and has worked in the private sector including for a leading consulting firm. Mr Walsh has led large organisational strategy and change programs including major departmental integrations; significant ICT programs; and, large hospital infrastructure programs such as the $10 billion Queensland Hospital rebuilding program including the Gold Coast University Hospital, Sunshine Coast University Hospital and Queensland Children’s Hospital. Mr Walsh has a strong background in public sector governance and leadership. He also has strong experience in portfolio, program and project management, business case development and implementation of major government initiatives.

APPENDIX 5 AUSTRALIAN DIGITAL HEALTH AGENCY 2015-16 ANNUAL REPORT

429 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A5

Organisational structure The organisation is structured into five divisions:

• Innovation and Development Division - coordinates strategic, innovation and technical aspects of the digital health program. It focuses on the strategic leadership coordination and management of the digital health strategy and associated work program, open innovation, design authority and design integration, specifications and standards, product development, benefits evaluation programs of work and provision of Program Management Office services.

• Core Services Systems Operations Division - operates and ensures that all of the national digital health operational systems meet the agreed performance standards; and provides leadership for cyber security, privacy, fraud, compliance and risk management, eHealth reference platform, clinical informatics, terminology and tooling.

• Clinical and Consumer Engagement and Clinical Governance Division - leads the active and consistent engagement of the health care provider community, health care provision researchers and members of the public. It also manages the clinical and clinical informatics input to the design of the digital health system as well as the development, implementation, operation and monitoring of a clinical governance framework, clinical functional assurance, clinical incident management and safety review programs.

• Government and Industry Collaboration and Adoption Division - is responsible for leading and driving, collaboration and education, and the non-clinical input to the strategy, design, implementation of the national digital health systems and non-clinical adoption approaches. The division takes a key role in the management of strategic relationships with consumers, State and Territory, Federal Government, Health Sector Business Non-Government Organisations (NGO), software vendors and professional association stakeholders. Additionally, it oversees the development and provision of public information strategies and campaigns and closely links communication strategies and priorities with the Minister’s, the Department of Health’s and the Agency’s objectives.

• Organisational Capability and Change Management Division - is responsible for the provision of quality strategic and operational delivery of a significant program of organisational capability and change management, and communications and media, as well as financial services, people and capability management, knowledge management and information and communications technology support, Agency performance reporting (including reporting to COAG) and Board and Committee Secretariat and Legal Services. It also leads and collaborates with internal and external stakeholders to manage the day-to-day operations of the Agency.

APPENDICES

430 DEPARTMENT OF HEALTH Annual Report 2015-2016

A5

Performance While the Agency was established as a Corporate Commonwealth entity on 30 January 2016 (following registration of the PGPA (Establishing the Australian Digital Health Agency) Rule 2016 on 29 January 2016), it was not due to commence operations until 1 July 2016.

The only significant activity by the Agency between 30 January and 1 July 2016 was to establish the Board of the Agency in April 2016. All Board members are non-executive members.

The Board convened on four occasions during this period to position the Agency to become operational on 1 July 2016.

All members of the board attended those four meetings, with the exception of Michael Walsh (who attended one of the meetings), Stephen Moo and Stephanie Newell (who attended two meetings), and Lyn McGrath (who attended three meetings).

Board members and the CEO are paid in accordance with Remuneration Tribunal determinations as provided by the PGPA Act 2013.

No Board member or CEO has received or become entitled to receive a benefit by reason of a contract made by the Agency with the Board member or CEO or with a related entity of the Board member or CEO.

Financial management

Overview During 2015-16, Agency activity was delivered by the Department of Health. These services included the financial management of the Agency.

The Agency did not have a budget for 2015-16. All expenditure relating to the Agency for this period was met by the Department of Health. The charges have been included in the financial statements as resources free of charge.

The Agency’s financial statements reflect the six months from January 2016 to June 2016.

In November 2013, the Australian Government commissioned a review of the Personally Controlled eHealth Record (PCEHR) to assess the status of the PCEHR implementation and to work with health professionals and industry to prioritise further implementation. The Review was released on 19 May 2014.

The 2015-16 Federal Budget announcement My Health Record - A New Direction for Electronic Health Records in Australia provided funding to strengthen eHealth governance arrangements consistent with the Review recommendations.

This included the transition of relevant activities and resources from NEHTA, and also from the national My Health Record system operation activities managed by the Department of Health to the new Agency.

APPENDIX 5 AUSTRALIAN DIGITAL HEALTH AGENCY 2015-16 ANNUAL REPORT

431 Annual Report 2015-2016 DEPARTMENT OF HEALTH

A5

GPO Box 707 CANBERRA ACT 2601 19 National Circuit BARTON ACT Phone (02) 6203 7300 Fax (02) 6203 7777

INDEPENDENT AUDITOR’S REPORT

To the Minister for Health and Aged Care

I have audited the accompanying annual financial statements of the Australian Digital Health Agency for the period ended 30 June 2016, which comprise:

 Statement by the Chair of the Board, Chief Executive Officer and Chief Financial Officer;  Statement of Comprehensive Income;  Statement of Financial Position; and  Notes to and forming part of the financial statements comprising a summary of significant

accounting policies and other explanatory information.

Opinion

In my opinion, the financial statements of the Australian Digital Health Agency:

(a) comply with Australian Accounting Standards and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and

(b) present fairly the financial position of the Australian Digital Health Agency as at 30 June 2016 and its financial performance and cash flows for the period then ended.

Board Members’ Responsibility for the Financial Statements

The Members of the Australian Digital Health Agency’s Board are responsible under the Public Governance, Performance and Accountability Act 2013 for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards

and the rules made under that Act and are also responsible for such internal control as the Board Members determine is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

My responsibility is to express an opinion on the financial statements based on my audit. I have conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. These auditing standards require that I comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s prepar