Ministerial Statement

HEALTH AND HOSPITAL REFORMS

The Hon. M.D. RANN (Ramsay—Premier, Minister for Economic Development, Minister for Social Inclusion, Minister for the Arts, Minister for Sustainability and Climate Change) (14:03): I seek leave to make a ministerial statement.

Leave granted.

The Hon. M.D. RANN: On Monday 19 April, the Prime Minister and the state and territory leaders met in Canberra for the final round of negotiations on transformational change for our nation's health and hospital system. It was the conclusion to many months of meetings and phone hook-ups between the commonwealth, state and territory health ministers, premiers, the Prime Minister and officials about what needed to happen to improve our nation's health system.

Principal among our concerns was, of course, patients and how the new system would benefit them not just now but in the decades to come. We also had to meet the expectations of the people of Australia, who actually fund the system and demand the very highest standards of care from it.

Within that context, we were being asked to make critical decisions affecting the various sectors of the health system: preventative health care, age care, primary care and our public hospitals. The COAG meeting was extended from one to two days, and became one of the toughest and most comprehensive rounds of negotiations in which I have been involved in the eight years I have been attending COAG meetings.

An honourable member interjecting:

The Hon. M.D. RANN: I don't think you've ever been to a COAG meeting. It resulted in what will be the most far-reaching reforms to our nation's health system since the Medicare reforms under the former Hawke government in the mid 1980s.

The new system, I believe, will better serve patients, and our hospitals will be better able, with improved resources and equipment, to respond quickly and efficiently to the needs of local communities.

Importantly, for the first time, the new system will involve the commonwealth committing to fund 60 per cent of all capital spending in health. As part of this new package, the state government will be negotiating with the federal government to ensure it pays its fair share of the capital cost of the new Royal Adelaide Hospital.

As many South Australians know, the new $1.7 billion Royal Adelaide Hospital is being delivered through a PPP arrangement, so the state government will not begin paying for the cost of the building until it takes control of it on completion in 2016. You would know that the new arrangements for health funding come into place in 2014-15.

The preferred consortium that will be chosen to build and maintain the new RAH will be named in November this year, and construction work will begin early next year. We will be negotiating over the coming months with the federal government for it to contribute to the stream of payments that will be made under the PPP arrangements over the life of the hospital, rather than seeking a single up-front payment.

Co-located with the new RAH site at the western end of North Terrace will be the $200 million health and medical research centre. Building works will begin next month, and it is due to be completed in 2012. The centre will be entirely funded by the commonwealth and will eventually be physically linked to the new RAH. It will accommodate more than 670 highly skilled scientists and technicians from across Australia and around the world. Together, the medical research scientists and the RAH's clinicians and patients will work to find new and better ways to treat and care for a variety of conditions and illnesses such as cancer and heart disease.

While our hospital system in its current form provides a high quality level of care that is well run by dedicated health professionals, there will always be room for improvements. No government should ever believe that it should not keep striving for a better health system, for continuous improvement, but now is the time for significant change if it is to remain sustainable and responsive to local needs into the future.

Much of this can be explained through simple mathematics. At present, the state government pays about 62 per cent of all hospital funding, while the federal government picks up about 38 per cent. There used to be a 50-50 funding split between the states and the federal government but, under the former Howard government, the proportion of federal government input began to slide, because it refused to keep up its payments to meet the real cost increases. The rate of health expenditure was growing faster—

Members interjecting:

The Hon. M.D. RANN: It's very hard to—continuing prattle.

The SPEAKER: Yes. Could we have some more order on my left side, please. I am sorry, premier.

The Hon. M.D. RANN: There used to be a 50-50 funding split between the states and federal government but, under the former Howard government, the proportion of federal government input began to slide, because it refused to keep up its payments to meet the real cost increases.

Dr McFetridge interjecting:

The SPEAKER: Order! The member for Morphett.

The Hon. M.D. RANN: The rate of health expenditure was growing faster than the standard rate of inflation in the economy. So, while the national inflation rate held roughly at about 3 per cent, health expenditure was growing each year at more than 8 per cent. There are many reasons for escalating health expenditure: an ageing population more reliant on our health system; the expense of medical research—

Mrs Redmond interjecting:

The SPEAKER: Order! Can we have some quiet on my left, please. It is very noisy today.

Mrs Redmond: It's rubbish!

The SPEAKER: Whether it is rubbish or not, the premier is entitled to be heard in silence—and it is not rubbish, if you listen carefully.

Members interjecting:

The SPEAKER: Order! The premier.

The Hon. M.D. RANN: There are many reasons for escalating health expenditure: an ageing population more reliant on our health system, the expense of medical research, the expense of advancing and new medical equipment and technologies, the need to update ageing infrastructure, and growing salaries of medical professionals.

Under the previous Howard government—when Tony Abbott was health minister—the states were receiving from the federal government a growth rate of less than the hospital expenditure growth, so its proportion of hospital funding began to slide. The states and territories were left to pick up the difference. Over time, the state's proportion of hospital funding grew to where it is now, at about 62 per cent.

If that rate had continued on without major structural reform hospital spending would completely consume state and territory budgets within the next 30 years. There would be no money for schools, police, public transport or any other state-run services. The current slide in commonwealth contributions was simply unsustainable.

The Deputy Premier and I went to COAG in Canberra last month with one aim: to secure more money for an improved health system in a better partnership deal with the federal government. The Prime Minister, Kevin Rudd, is the first prime minister in decades to tackle this issue head on.

Members interjecting:

The Hon. M.D. RANN: I have all afternoon.

The SPEAKER: Order! Premier.

The Hon. M.D. RANN: He has demonstrated a personal commitment to reforming health and a willingness to work with the states and territories to restructure the way in which the system works and is funded. The new reforms begin in 2014-15. The commonwealth will take on full funding responsibility for aged care and for primary health care, which includes GPs, and it will fund 60 per cent of the costs of hospitals. The funding split will become 60 per cent commonwealth, 40 per cent state, and around 30 per cent of our GST money will be dedicated to health funding.

It is important to understand that more than 30 per cent of our state's GST money was already devoted to health, so there will be no negative impact on our state's finances. GST funds withheld will be returned to the state to provide for hospital services. The important feature of this new deal is that the commonwealth will be largely responsible for funding the future growth in the system; something that the states are just not able to carry.

Initially the premiers and chief ministers were not satisfied that there would be no new money for health in the next four years. We did not want to wait until 2014-15. So at COAG we pitched an argument and convinced the Prime Minister that more money was needed in the interim period for our hospitals over the next four years. We asked for a 9.3 per cent increase in health funding from the federal government each year for the next four years. I am delighted that the deal we brokered delivers an amount slightly above the 9.3 per cent increase.

Figures confirmed in last night's federal budget indicate South Australia's hospital system will get more than initially estimated at COAG, with an extra $306 million over the next four years. This includes:

$120 million for sub-acute beds, which will allow for extra beds at the Repat Hospital and more long-stay mental health beds.

$47 million to improve access to elective surgery, to contribute to additional procedures announced in the recent election campaign.

$36 million to provide more senior medical staff working after business hours in our hospitals, which will improve access to emergency departments.

$29 million for financial assistance for long-stay older patients that will ensure fewer older people are placed in acute hospital beds while waiting for a nursing home placement.

$21 million for aged care to expand multipurpose services, which will allow us to provide more country hospital places and upgrade country facilities to commonwealth standards.

$20 million for emergency department capital works to expand the number of acute beds to help relieve pressure on their services.

$17 million in flexible funding for emergency departments, elective surgery and sub-acute services.

$13 million for elective surgery capital works, to be used for additional operating theatre equipment and refurbishment of theatres at Modbury Hospital.

$3 million to expand Early Psychosis Prevention and Intervention Centre services.

While some funds were made available for mental health care, I should point out to the house that the broader issue of mental health care is something that COAG will be examining separately at a later date. When the new system of funding for our hospitals begins in 2014-15 South Australia will receive the promised 60 per cent federal, 40 per cent state funding mix, which will mean our health system will get a guaranteed minimum of $1.1 billion in extra money up to 2019-20.

Only the opposition, who failed to issue a squeak when Tony Abbott was cutting funds, would now complain that we have more than a billion dollars more for our hospitals, because they put their party before their state.

Mr Williams interjecting:

The SPEAKER: Order, deputy leader!

The Hon. M.D. RANN: This means that all up South Australia's health system is set to receive extra payments of more than $1.5 billion over the next 10 years. This new deal delivers what all Australians expect: a more efficient, responsive and better resourced high-quality health care system for now and the future. I commend the new system to the house. What a difference a change in federal government makes.

Ms Chapman interjecting:

The SPEAKER: Order, member for Bragg! I have had two complaints today from people who are not able to hear other speakers and I am not happy about that. I warn you that we won't tolerate this.