GRANTS AND SUBSIDIES

101 Mr HAMILTON-SMITH (Waite) (17 July 2012). With respect to 2012-13 Budget Paper 6, vol. 3, p. 67—

1. Why did grants and subsidies for 2011-12 budgeted at $177.8 million blow out to $229.8 million?

2. How will a reduction from $229 million in 2011-12 to $180 million in 2012-13 be achieved?

3. Do these figures include payments to NGOs, and are the effectiveness of grants and subsidies assessed to determine which ones will be renewed or discontinued?

4. What action has been taken to correct weaknesses in financial management identified on page 14 of the Auditor-General's Supplementary Report to ensure grants and subsidies to NGOs are properly managed, including properly executed funding agreements, a register of contracts, contracts to support performance monitoring and proper processes to evaluate service providers?

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

1. The 2011-12 original budget for grants and subsidies (including grants to non-government entities) was $177.9 million for the health portfolio (Department for Health and Ageing and Local Health Networks).

During 2011-12, this budget was revised to $229.9 million primarily to reflect the distribution of the proceeds from the one-off sale of intellectual property for certain technologies relating to the drug being marketed as Naglazyme ($58.3 million) which was budgeted as grant payments in 2011-12.

2. The total health portfolio (Department for Health and Ageing and Local Health Networks) grants and subsidies budget (including grants to non-government entities) for 2012-13 is $184.8 million.

This reflects a decrease of $45.1 million from the 2011-12 Estimated Result and primarily relates to the sale of intellectual property referred to in my response to the first question. In essence, removing this one-off event reflects grant payments increasing from $177.9 million in 2011-12.

3. These figures do include payments to non-government organisations (NGOs). Each program management unit responsible for managing agreements with NGOs evaluates the effectiveness of grants and subsidies to determine which service agreements will be renewed or discontinued. SA Health is currently reviewing existing policies and procedures that support the management of ongoing NGO activity.

4. SA Health is taking steps to ensure the issues identified in the Auditor-General's Supplementary Report regarding NGOs are addressed. A number of enhancements have been made to SA Health's Procurement and Contract Management System to improve usability and workflow processes and to ensure greater controls are in place for NGO funding.

A Liaison Group has been established with representatives from across SA Health to support the improvements required for the effective management of NGO contracts, including the development of a performance management framework and the required policies and procedures that support the management of NGO activity.