NATIONAL HEALTH FUNDING POOL ADMINISTRATION (SOUTH AUSTRALIA) BILL

Second Reading

Second reading debate resumed.

Mr TRELOAR (Flinders) (12:24): I too would like to make a contribution to this discussion regarding national health funding pool administration. My understanding is that it has been agreed to by a number of other states. Those states and territories have agreed to pass legislation to effect the establishment of a state pool account, which will become known as the national health funding pool.

It is quite obvious that health funding is the most important and most critical funding of all government's responsibilities. In fact, in this state, it requires up to 30 per cent of our state's budget and appears to be growing annually. The challenge for any government, obviously, is to provide adequate funding for health, particularly as the population ages.

The demands and expectations are much greater as we all get older, and the member for Bragg talked about baby boomers. The first of the baby boomers are reaching retiring age, and she was suggesting that they were beginning to drop off the perch as well. The reality is that the baby boomers, a significant cohort of our population demographic, are at the age where they will be requiring more and more from the health system, so demands and expectations are rising.

The purpose of this bill, as I see it, is to improve the ongoing sustainability of health funding. As I said, it is a challenge, and nowhere is it more important than in the country areas of this state. Many of my colleagues, particularly those from regional areas, have spoken today on this issue in particular.

Within the electorate of Flinders, we have two major regional hospitals; one at Ceduna has recently undergone a significant rebuild and is a marvellous facility, and Port Lincoln also is about to undergo significant extension and refurbishment. Whyalla, although just out of my electorate, also services quite a number of residents from Eyre Peninsula. As well as these significant regional hospitals with good facilities and adequate staffing, I do remind the minister and the government and the house, in fact, that across Eyre Peninsula there are eight other much smaller community-based hospitals.

The interesting thing about these hospitals is that they are very much thought of by the community as their own. In the early days, these hospitals were established, built and funded by the local communities and, to a large degree, that still occurs. They are essential to the ongoing wellbeing and good health of the communities they service. It has been suggested already today that in many cases the towns' very viability hinges on the existence of these hospitals and the ongoing provision of health care at a local level.

In recent years, we have seen significant changes in the type of service these hospitals are able to provide. I understand that the world is changing but, for example, in my local hospital in Cummins—my home town—a woman can no longer have a baby and we can no longer have minor surgery, and there are a number of reasons for this. The local doctor, I know, is qualified in obstetrics, but unfortunately we do not have the number of midwives able to support that service. Anaesthetics is another service that needs to be provided, should surgery be available. That has been an implication in my own local hospital, and it is replicated right across the state.

Attracting staff into public hospitals in the country is a challenge, to say the least. Attracting qualified medical staff and allied health professionals—doctors, in particular—remains an ongoing challenge, and some of the funding obviously needs to be directed towards that. What I have seen in recent years is that in many hospitals—and I know this well because my wife is a nurse, in fact—senior nursing staff who have previously filled senior nursing roles have actually become managers of hospitals and managers of staff and spend a lot of their time reporting to government and to their boards, rather than delivering the care that they once were able to do.

Unfortunately, the government, in its effort to drive efficiencies, has in many ways created the opposite effect: the inefficiencies have actually compounded and fewer and fewer services are actually being delivered while, more and more, people are providing management and administration. Shared Services and all the centralisation of purchases and payments have become a disaster for country hospitals. They can no longer rely on the security of local provision, local access and local administration. Once upon a time, country hospitals managed themselves. There was a local board, there was a doctor and the community raised funds.

If I can digress for a moment, I would like to talk about the Cummins Hospital. Twelve months or so ago, a dear family friend lay dying in the Cummins Hospital. It was a tragedy and it was very sad, but it is, in fact, a very good story. In his time in the hospital—ultimately, he did not come out of hospital—he noticed the dilapidated state of the rooms. He put in place a fundraising mission to raise $10,000 from the surrounding community for every ward room in the Cummins Hospital and to spend that money on upgrading, painting and refurbishing the hospital. An extraordinary vision from a very generous community contributor. I congratulate Mr Leo Haarsma on that vision, and his family and friends for ensuring that that wish is being carried out right at this moment. Fundraising efforts are going very well and I will report back to the house at a later stage on that.

The point is that, unfortunately, the neglect and lack of funds was so noticeable that those small communities, once again, took it upon themselves to fund their own hospital buildings. With those few words, I will wrap up. I would like to say that country people expect, and deserve, equivalent health outcomes to their city cousins. Funding will always be an issue but, unfortunately, and quite sadly at the moment, those people are not getting that.

Mr GRIFFITHS (Goyder) (12:32): I also wish to make a contribution on the National Health Funding Pool Administration (South Australia) Bill 2012, and I do so from a variety of aspects.

Mr Treloar: Ardrossan.

Mr GRIFFITHS: Well, no; Balaklava. In my previous role within the Liberal Party as shadow treasurer, I was involved in some discussions, during the caretaker period, about the first proposal for this. At that time, the then treasurer, the member for Port Adelaide, Kevin Foley, rang me to outline the basis of it to me. Without trying to lead me in a particular direction, he did indicate that he thought it would be worthy of our serious consideration.

I was surprised, as was the Leader of the Opposition (now and then), as she has indicated today, with the quickness with which premier Rann indicated South Australia's support for that from a Labor government perspective. It surprised the Leader of the Opposition and that is why it was an appropriate action for her to go to Canberra to attempt to have a meeting with the federal minister, Nicola Roxon, to ensure that she had the full details available to her so that she could debate it in the public realm and the community would hear what, potentially, were both sides of the argument.

It did involve, at that early stage, the relinquishing of 30 per cent of GST revenue, and some modelling was provided to me to consider what the impact would be. There is no doubt in my mind, and minister Hill, as the man who has been responsible for quite some time now, refers quite often to the argument about the challenges that South Australia faces. I know that every treasurer or shadow treasurer has had similar dilemmas and a lot of grey hair out of the action of considering what the impact will be on health costs moving forward into the future. We probably face it more than most other states because of our age demographic and profile.

There was a story in The Advertiser yesterday confirming the opposition's support for this bill. The member for Morphett has put that on the record. Every member in the chamber who has spoken has spoken of support for the bill because it allows for more funds, but then it all comes down to a determination of the use of those funds: are they going in the most appropriate way? Are they being invested fairly so as to return some form of benefit to all South Australians?

I want to focus on the Balaklava situation, if I may. I think it is relevant to this. The recent announcement of the temporary suspension of surgical procedures and the transfer of those procedures to Clare has come as a great concern to the community. I had contact this morning from a constituent who was booked in for arthroscopic knee surgery on 16 July. They had their pre-op appointment last Friday with the local GP, who told them then—they did not know this beforehand—that the procedure was now cancelled and transferred to Clare. They do not know what the alternative date is. My office will be contacting the minister's office today to try to find out on behalf of that constituent when the alternative date is.

I have also had other calls from people who want their hospital to remain open with the full variety of services it provides, because for them it is everything. As a self-declared brat of country hospitals, my mother having actually worked her last shift as a nurse at the Flinders Medical Centre last weekend at the age of 68—

Members interjecting:

Mr GRIFFITHS: That is why I am taking her out to dinner tonight, to celebrate 50 years of nursing services. I think she is worthy of retirement. She works at the Flinders Medical Centre, minister. Even though she will be on the books for a little while yet, she has done her last shift. She has seen nursing over 50 years. I was involved in Yorketown Hospital as a kid, going in to see what they do there, too. I know how important country hospitals are to our community: they are everything. That was really emphasised to me when we held public meetings following the country health mark I version of 2008 and the eventual reversal of those proposals.

Indeed, at one public meeting held at Maitland, 400 people attended. Mr Rod Gregory, otherwise known as The Old Fella from Australia's Got Talent, a resident of Maitland—he did not tell jokes at that stage; it was before he went into show business—stood up and confirmed to the public meeting that he had been on the board of the Maitland Hospital for 25 years. He had retired before this public meeting. He confirmed to me that he had been the chairperson for about 20 of those years and, in that time, the community had raised something like $2 million—$100,000 on average per year—to go to country hospitals.

The member for Flinders has talked about Mr Haarsma and what he did at the Cummins Hospital, too. That shows the degree of passion that exists in people. My only hope is that this bill and the flow-through funds that will come from it will be shared equally in order for regional people to get services, for all hospitals services to be the best they can possibly be, to improve our primary healthcare opportunities, to prevent people from going to hospital and to actually get some outcomes that will make us a healthier state.

The member for Bragg talked about the highest number of people in health care as being in the 75 to 85 age bracket. It must be scary for a health administrator trying to look after people of that age profile. We need to get ourselves healthier. I readily admit that I need to improve a lot, and the member for Finniss (Michael Pengilly) talks to me all the time about that. However, let us get it right and let us make sure that the benefits that come through from this are for all South Australians, no matter where they live or how old they are.

The Hon. J.D. HILL (Kaurna—Minister for Health and Ageing, Minister for Mental Health and Substance Abuse, Minister for the Arts) (12:37): I thank all members for their contribution and I thank the opposition for indicating its support of this measure, which is really a technical matter but which has given members opposite an opportunity to make a number of other claims. With your indulgence, Mr Deputy Speaker, I will speak briefly on some of the broader claims before I get into the legislation itself.

Principally I want to speak about the claims made about Country Health and the repetition of claims that somehow or other there has been a reduction in services across country. For the benefit of the house and for the benefit of the record, I just remind members that there has not been a reduction in services in the country: there has in fact been an increase in services in the country.

The amount of elective surgery now done in country South Australia has gone up dramatically over the last few years—I think it is about 15 per cent from memory. The amount of renal service provided in the country has increased, the amount of mental health services provided in the country has increased, and we are in the process of increasing quite dramatically the amount of chemotherapy in the country. As the member for Morphett said, you cannot do everything in every hospital, but you can have a networked approach, which is the strength of the Country Health Local Health Network. You can have a networked approach to make sure that across country generally you can improve services.

There will always be from time to time—and Balaklava is a recent example—a hospital where services for various reasons need to be suspended. I have just been informed that, in the case of Balaklava Hospital, the reason the service was suspended was for safety. The implication of those opposite in their arguments was that if the local boards had not been taken away and if local management was still there the services would not be suspended. I am horrified to think that you would be making that claim.

If that is really the basis of your argument, that local boards would not have suspended the service, that means they would have maintained services to patients that were being delivered in an unsafe way. The reason those services were suspended was that the clinical advice was that they could no longer be delivered in a safe way. I am advised that Country Health has committed to resolving the issues, and the services should be back available in August this year, so I hope the member is pleased about that.

Members have to understand that from time to time a proper analysis will be done of country hospitals, as indeed is done in the city, and sometimes you have to stop services if they cannot be delivered safely while you work out how to properly deliver them. That could be in some cases because the volume of a particular type of service cannot be done safely. It does not matter whether or not the equipment is there, but if there are not enough babies to be delivered in a community to have safe practice, then sometimes the decision will be made not to continue birthing.

Sometimes it is because there is not enough staff to deliver the services (and the member mentioned that in one of his contributions), but generally we try to maintain services where we have the staff and where there is a demand for them, even if there is an alternative service just half an hour away. Balaklava is a good example of where a decision was made on the basis of safety, and once those safety issues have been resolved the service, to the extent that it can, will be reapplied.

Just in relation to the legislation, I will return to that. This is not a terribly complex bit of legislation, but it is a technical element that is part of a very complex process of reform. The commonwealth government, under both sides, has been struggling to get a better resolution of the relationship between the commonwealth and the states in terms of funding hospital services. Under the Medicare agreement originally, the commonwealth committed to funding 50 per cent of the cost of provision of hospital services if the states did not charge patients when they came to hospitals.

We committed to that, and over time we saw as a result of that, principally during the period that Tony Abbott was health minister in the Howard government, the percentage of commonwealth funding coming into hospitals declined, so now in South Australia we are just getting over 40 per cent of the cost of the provision of hospital services provided by the commonwealth, which was a complete reneging of a promise that went back to the early 1980s, where we were to get 50 per cent of the cost of running the hospital service.

If you are looking for a reason why there is a pressure on the health budget, or looking for a reason why there is pressure on the state budgets, it is because commonwealth governments have cheated the states in terms of the original commitments they made to fund 50 per cent of the hospital services. Our state has had to put in the extra 10 per cent, as have all the other states around Australia, as pressure was building. To the credit of the Rudd and Gillard governments, they decided to do something about that.

The basis of their doing something about it changed over time, but what we have signed up to is not the 50-50 we had back in the halcyon days, but a commitment by the commonwealth government to fund 50 per cent of the growth over a period of time. That is real money to us because it establishes a base below which we will not go, and any new growth in demand for services will be funded on that 50-50 basis.

There are a number of commitments the commonwealth made to the states or pressures the commonwealth placed on the states—things we had to agree to in order for it to commit that level of funding—and one was to do with accountability and transparency: we had to commit to publishing a whole lot of information. That was not something I had any objections to, but a number of the states objected quite strongly to the publishing of information about performance. We certainly have committed to that, and we publish I think far more than the commonwealth requires.

Secondly, they required a system that was transparent and open. Basically, they did not trust the states not to cost shift, referring to one of the arguments made by the member for Bragg. This is principally what this legislation deals with. It is to have an open process so that both the state and the commonwealth can look at each other's funding (and the public can look at it too) to make sure it is not being misused. Essentially it is a mechanism by which the state and federal funds are put into one account and then that account is used for the purposes of funding the hospital services in a particular region.

As I understand it, the funds are put in on a monthly basis by the commonwealth—if it is not monthly, it is certainly regularly—and, I guess, the state would do the same thing. If we took the Central Adelaide Local Health Network, for example, whatever the budget is—let us say for ease of managing the conversation it is $1 billion—the commonwealth will put in, I guess, about $400 million, we will put in $600 million and then the growth funding will be 50 per cent in the future. That money would go in and then the local health network would draw down on that over the course of the year, and that would mean paying salaries, procuring and doing all the things that local health networks do. That is how I understand it would work.

The cost of that bureaucracy that administers that joint-funding arrangement is borne completely by the commonwealth. In answer to one of the questions raised on the other side, there will not be any transfer of state effort into that. It does not cost us at all and, as far as we are concerned, the funding arrangements we have currently got in place will continue. It is just that the starting point will be in this commonwealth-funded body and, once the money is put in there, it will transfer into the state system and be spent in the way that we would normally spend it.

In terms of what is covered, there is still a bit of discussion around the edges but, principally, the funds that the commonwealth is committing to are funds for hospital services or hospital-like services. If they are hospital avoidance programs, like palliative care or home-based care following surgery, they would be funded by the commonwealth, but they will not fund us to run primary healthcare functions, which are principally the functions that the commonwealth funds through Medicare. There is a bit of discussion around the edges. I think I can write to the opposition and give them a list. We have that list, so I can provide that list to the extent that it is available.

There was an issue around the block funding of small country hospitals; that will be the case. There are a number of community services which will be block funded. There is a table which shows the services which can be block funded. I am happy, if the opposition is in agreement, to seek leave to incorporate it into Hansard.

Leave granted.

The Hon. J.D. HILL: The majority of our country hospitals, in fact, are small hospitals so they would be block funded.

In relation to indexation, there is a complex formula. I am happy to write to the opposition about that formula. I think we can probably do that. If I try to explain it to you, I am sure I would not only confuse you but I would completely confuse myself, but there is a formula which explains how that works.

In terms of commonwealth micromanaging, which I think somebody raised as an issue, the administrator is not subject to the direction by the commonwealth. This will not be micromanaged: it is really a funding mechanism to allow the commonwealth and the states to look at each other honestly and say, 'Yes, the money is being put in.' The money is then given to our existing managers who will allocate it according to the purposes for which it has been given.

In relation to the IHPA calculations, I am told that IHPA (the pricing authority) uses commonwealth Treasury economic projections, the ABS labour price index, public health care and social assistance component for wages growth and ABS CPI for non-wage costs. In doing this, IHPA also takes into consideration state government public wages policies, the national hospital costs data collection report of public hospital non-wage cost grants and so on. There was an issue that the opposition raised; I am just struggling to remember what it was now.

Dr McFetridge: Casemix.

The Hon. J.D. HILL: Casemix, thank you. That was exactly the point I wanted to raise. The opposition raised the issue of casemix, which was introduced by Michael Armitage, who was the health minister, I think, in the Brown government. I think it was one of the early reforms. The Kennett government in Victoria introduced it around about the same time, and I commend both the governments for doing that. I think that it put us in a good position. The basis on which funding will be provided to the states will be on a national benchmark casemix kind of formula, which they are still working out. We are therefore still waiting to see how that would go, but it will be different from the formula we have currently in South Australia, as understand it.

We think the fact that we have been working on a casemix basis will put us in a pretty good position to manage. The one concern I have, and it is something that someone on the other side mentioned, too, is that, given that we are a relatively small state in terms of population but a large state in terms of geography, our cost structures are as they are, and states like Victoria, I think, have huge advantages in terms of delivering things in a cost-effective way given the concentration of population centres and the relatively small parts of the state which could be called remote or rural.

New South Wales is somewhere between South Australia and Victoria in terms of concentration, but it does have big population centres and it does have some of those advantages, so I guess that is one of the issues we would want to consider. Just finally I would say that this is a reform process and, like all reforms that involve the states and the commonwealth, it has been the subject of a whole lot of compromises, discussions and negotiations. It is definitely a camel and not a horse. It is not something that any single player would have come up with.

I have certain things about it that I do not like. I would much prefer that the commonwealth gave us the funds and then allowed us to determine how they should be spent according to the priorities that we have. However, the commonwealth would say, 'Well, we don't trust the states. You've got to show that you're spending it in the way that we've all agreed.' I accept that that is part of the process we have to go through.

I am confident, though, that the system that has been set up is relatively minimal. It will not create a burden for us, it will not cost us anything and I do not think it will delay the application of budgets. It does have the advantage that the commonwealth and the state funds have to be as we promised—we cannot back away from that. It therefore makes it difficult for any government in the future on either side, really, to play around with those things.

It will be interesting to see how it rolls out. It goes through a couple of years when it is really a shadow arrangement I understand (I think that is the language they are using), and then in a couple of years' time it will come into practice for real. I do thank the opposition. I hope that I have covered most of the arguments; if I have not, I am happy to get a briefing for the opposition before it is dealt with in the other place—which is really this place—at some stage in the future. With that, I commend the bill to the house.

Bill read a second time.

Committee Stage

In committee.

Clauses 1 to 28 passed.

Clause 29.

The Hon. J.D. HILL: I move:

Page 14, line 7—Delete 'Committee' and substitute 'Council'

There is a typing error where the word 'council' should have been used and 'committee' was used instead. It really just corrects that error.

While I am on my feet, once again, I thank parliamentary counsel Richard Dennis and my departmental officers, Kathy Ahwan and Barbara Renton, for their assistance with this legislation.

Amendment carried; clause as amended passed.

Remaining clauses (30 to 34), schedule and title passed.

Bill reported with amendment.

Third Reading

The Hon. J.D. HILL (Kaurna—Minister for Health and Ageing, Minister for Mental Health and Substance Abuse, Minister for the Arts) (12:56): I move:

That this bill be now read a third time.

Bill read a third time and passed.

[Sitting suspended from 12:57 to 14:00]