NATIONAL HEALTH FUNDING POOL ADMINISTRATION (SOUTH AUSTRALIA) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 17 July 2012)

The Hon. J.M.A. LENSINK (21:34): I rise to make a few brief remarks in relation to this bill which I understand has been the subject of much negotiation at COAG and which is based on agreements which have been reached at that level, and I congratulate the officers for having achieved agreement between commonwealth and all jurisdictions which cannot be an easy thing.

This particular legislation was introduced into the House of Assembly in May. It gives effect to financial management and reporting mechanisms which have been agreed to and commits federal and state governments to a model known as activity-based funding rather than block funding and special-purpose payments. Again, I would like to place on the record my appreciation to the minister's office and to the officers of his department for the comprehensive briefing that they provided to me. I understand that this form of funding is similar to what South Australia has in the past known as case-mix.

The commonwealth has agreed in principle to fund half of all future growth in health funding and establish a national pool which will fund each state. Our health spokesperson, the member for Waite, Mr Martin Hamilton-Smith, has advised that under the current model the commonwealth's share of health funding has been in decline. I think it is important that this point is made, because health is one of those areas that has an inflation factor which is certainly well above CPI. I think it might be in the order of 11 per cent these days, particularly as our population ages, so obtaining a greater proportion of commonwealth funding to be able to fund our hospitals into the future will be very important.

This government anticipates that the current level of commonwealth funding of 40 per cent will increase to 45 per cent by 2014-15 and to 50 per cent by 2017-18. There will be a new health administration structure which will be required to administer the pooled funding, and that will be an administrator who is an independent statutory officeholder. The position must be agreed by all ministers and separately appointed, which may be an interesting exercise.

The role of the administrator will be to calculate the amount of commonwealth funding into the state pool account and to make payments to local hospital networks in accordance with service agreements. The state pool account and the state managed funds consist of block funding and teaching and training funds. So, overall, there is to be greater transparency of funding and service agreements, with the administrator auditing activity. There will be no penalties to states until 1 July 2014.

I understand that the first stage in terms of determining activity funding will be acute in-patients, emergency departments and outpatient departments, which are known as eligible non-admitted, as these are the ones that are easiest to calculate in terms of a per service fee. Block funding will continue at that stage and all activity-based funding goes into that pool. I welcome these revised arrangements and look forward to the committee stage of the debate.

The Hon. R.P. WORTLEY (Minister for Industrial Relations, Minister for State/Local Government Relations) (21:38): I would like to thank the Hon. Ms Lensink for her contribution to this bill. This bill is technical in detail, giving effect to those clauses agreed by the Council of Australian Governments National Health Reform Agreement on 2 August 2011. The essence of the agreement, and hence this bill, is to ensure that the commonwealth and state governments work in partnership to ensure the financial sustainability of the public hospital system.

The funding arrangements as outlined in this bill will provide for greater transparency and accountability on how public hospitals are funded and managed. Information on the services provided by each local hospital network and the money allocated by the commonwealth and state governments for public hospital services and the amounts spent will be publicly available.

I acknowledge there have been some concerns raised about the plethora of national bodies that have been established under the National Health Reform Agreement and how they will interact. As the minister in the other place stated, this legislation forms part of a very complex process of reform. The agreement and these bodies are the result of all parties wishing to ensure that their interests are protected. How the arrangements under the agreement will play out will become clearer over the next couple of years as the transition is made to activity-based funding.

I would like to reiterate again that the cost of establishing these national bodies and that ongoing cost will be met by the commonwealth government. In using the existing health services regions (renaming them as local health networks) and existing Department of Health and Ageing staff for reporting and the administration of accounts, the government has ensured that health funding continues to be used for service delivery and not setting up bureaucracies. I commend the bill to the chamber.

Bill read a second time.

Committee Stage

Bill taken through committee without amendment.

Third Reading

The Hon. R.P. WORTLEY (Minister for Industrial Relations, Minister for State/Local Government Relations) (21:42): I move:

That this bill be now read a third time.

Bill read a third time and passed.