KordaMentha

The Hon. T.T. NGO (15:20): I seek leave to make a brief explanation before asking a question of the Minister for Health and Wellbeing regarding KordaMentha.

Leave granted.

The Hon. T.T. NGO: The minister singled out KordaMentha on ABC radio this morning when he said the Central Adelaide Local Health Network plan 'will be rolled out by KordaMentha or whoever'. My question to the minister is: is it appropriate for a minister to second-guess the result of KordaMentha winning a government consultancy tender?

The Hon. S.G. WADE (Minister for Health and Wellbeing) (15:21): KordaMentha has been contracted for phases 1 and 2 of the organisational and financial recovery of the Central Adelaide Local Health Network. The phase 3 consultancy is the subject of a current tender process. There have been nine applications, and due diligence is currently being given in the consideration of these applications. My understanding is that KordaMentha is one of the nine applicants. I'm not aware of the remaining applicants, but that will go through a due process.

I think it somewhat ironic that the opposition in estimates was critical of SA Health management for the way that KordaMentha was engaged in phases 1 and 2, and now that we are going through a diligent procurement process they want to cast aspersions on that. But let us remember why we even need to think about a consultancy in this area.

In the last financial year, the Labor Party left us a deficit—a budget overspend—in the Central Adelaide Local Health Network of almost $300 million. KordaMentha estimates that, considering the trajectory of the finances in that network, in the next financial year we would have been facing even more if we didn't take action. So that is why the Central Adelaide Local Health Network originally engaged KordaMentha. That's why we're looking for a phase 3 partner to implement the finalised plan.

In terms of the KordaMentha consultancy to this point, we are spending in the order of $2 million—$2 million in the context of a budget overspend per year of $300 million. If we can eliminate the budget overspend, a KordaMentha phase 1 and phase 2 consultancy would pay for itself in 2½ days. In other words, if we started delivering savings today, we would get our money back by Saturday afternoon.

Let's look at Labor's record in contrast. The former Labor government, in five years, spent $80 million on consultancies with only five firms—the four big accounting firms and McKinseys. So $80 million in five years. Part of that spending was in relation to Transforming Health. You remember when Tom Koutsantonis was offended by Tony Abbott's budget? He said, 'We will break all our promises. We will set up Transforming Health and we will fix it.' What happened? They spent tens of millions of dollars—tens of millions of dollars—on Transforming Health consultancies. What did they deliver?

What the Auditor-General found is that in two years of the Transforming Health program, they actually lost money. They went backwards by $47 million. To spend tens of millions of dollars and actually find the hole gets deeper rather than shallower demonstrates the appalling management of the former Labor government.

I can assure you that we will be closely monitoring whichever partner comes out of the phase 3 procurement process. We will be making sure that we get value for money, and considering that we have hundreds of millions of dollars of budget overspend that needs to be addressed, I believe that we will work diligently with this partner to try to stabilise a network that was left in both a parlous and operationally very challenged state.