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House of Assembly - Fifty-First Parliament, Second Session (51-2)
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STATUTES AMENDMENT AND REPEAL (INSTITUTE OF MEDICAL AND VETERINARY SCIENCE) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 9 April 2008. Page 2741.)

Ms CHAPMAN (Bragg—Deputy Leader of the Opposition) (16:44): The opposition opposes the bill. This bill was introduced on 8 April 2008, with an indication by the minister that he would like to see it pass through the parliament as expeditiously as possible (and I paraphrase for this purpose) to identify that there be a new structure to establish the single pathology entity, SA Pathology, in South Australia, to be effective for the commencement of business as of 1 July 2008. Hence we are back here, effectively on the next day of sitting after the introduction of the bill.

I indicate that I appreciate the minister providing advisers promptly to facilitate a briefing on this matter and also providing some information to enable the opposition to consider the merits (or otherwise) of this bill. The government introduced this bill following the announcement by the Treasurer in his budget presentation in September 2006 that the government wanted to establish a single statewide public pathology service called SA Pathology. It claimed that there would be a $2 million plus saving over two years with the amalgamation of three public pathology providers: the Institute of Medical and Veterinary Science, SouthPath at the Flinders Medical Centre and the Women's and Children's Hospital Division of Laboratory Medicine, which operates out of the Women's and Children's Hospital. In presenting the argument for the parliament to support the legislation necessary to establish this single statewide pathology service, they informed the parliament as follows:

The bill proposes the establishment of new governance arrangements for public policy services to ensure that these services can continue to respond to the increasing pressures on them into the future.

Whatever that means. I assume from that that there is some pressing demand in the future necessitating the establishment of this model. I will come back to that shortly.

However, it seems to the opposition that, in presenting a single statewide public pathology service, there would need to be some justification for doing that, whether it is cost savings or whether some other efficiency measure flows as a result. On the face of it, it is important for the parliament to consider whether the objective of the government in proceeding with this course has merit. If it does, it would deserve support. However, what we have found in our examination of the bill and the existing structures is that this bill is designed to do two things. First, to bring an income earning, asset rich entity under the power and control of the Department of Health.

This is Dr Sherbon's most recent acquisition. To me it is a little like the country of China deciding that it wants to take back Taiwan. Why? Because it is valuable, it is useful and they would like it under their control. This piece of legislation is designed to do just that; that is, to bring in an income earning, asset rich entity which is ripe for the taking. That is what this is all about. It is an easy way for the government to acquire a nearly $100 million asset, if you take the past 12 months and any increase in the value of those assets. It is a very significant asset rich entity which is ripe for the taking.

The Institute of Medical and Veterinary Science is an iconic institution. It is one that has served this state well for some 70 years and it is ripe for the picking. It is entirely consistent with what the government has done to date; that is, under the pretence of having a streamlined governance and review, and new structures, it will provide us with this magnificently efficient provision of health services to meet all the demands of the future—the ageing population—and, frankly, all that waffle which sits behind the argument for this new structure. It is not that the statistics on the provision of further health care are unimportant, but not one of them is supported by this new structure providing a different or better service. I will return to the organisations that this new structure will absorb as a result of this legislation.

Let us examine the history and what happened in May 2006. This is a very important month: it is two months after the state election. It is two months after the Treasurer had announced to the people of South Australia that health was a very significant cost pressure on the finances of the state. In fact, a couple of months before that, in January 2006, he had introduced a very significant bail-out of financial support for the public hospitals. Seven weeks after the state election, he said that the whole state budget was under pressure and that he would need to seek advice on the budget from some guru from New South Wales and, as a result of the need to do that, he would be delaying the delivery of the budget until September 2006, which is exactly what he did. However, we know now that, in the same month (which, incidentally, is the same month we looked at the Institute of Medical and Veterinary Science act last time in this parliament) when we were in desperate financial circumstances, the government was making a decision (as the Premier has now told the parliament and as has been confirmed by the Minister for Health) to build a $2 billion new hospital at the other end of North Terrace.

So, while the handing down of the entire state budget is put off from May to September 2006 because of health pressures, they are meeting secretly and deciding to build a $2 billion hospital. That is the truth of it. And what little ripe pieces of asset are sitting out there that can help support that? Well, we have the Institute of Medical and Veterinary Science (and what a little pearler that is), sitting there, with a significant income stream, with wholly-owned entities located next to it, and with a massive capacity to attract research funding, already having a big slice of the public hospital market and a 54 per cent slice of the general practice market out there in the private area.

This is an absolute pearler for the government to take over, and there is no problem about doing that. It does not have any shareholders; it is an institute that has been set up by statute. It has a board, but that is easily disposed of–you just get rid of it; that is what this bill will do. So, dispose of the board and get rid of the CEO—his time is up—and introduce the new structure; just slide it in and take over that asset. That is what this bill is all about.

At the very time the Treasurer was telling us that health costs are putting this state under a massive financial burden, the rest of the cabinet is working away at building a $2 billion hospital. In that very same month, the government made the decision to have a single statewide pathology service and to reel in the Institute of Medical and Veterinary Science. That is the truth of what happened.

So, in September, when the budget was handed down, there was no announcement about the hospital, but there was an announcement that we were to have a single statewide pathology service. That was the opening chapter, and that is what was announced in the budget.

Interestingly, during the period in which this was going on up to the subsequent announcement of the Marjorie Jackson-Nelson Hospital in June 2007 (there was a secret gestation period from May 2006 to June 2007) the government was looking at what they were doing down in Tasmania and how they were progressing with the building of a hospital on a railway site outside Hobart. Then we had the June announcement when, despite this huge financial pressure the government is under, it decided that it would spend all this money on building a new hospital.

Then another unbelievable and extraordinary situation occurred when the government announced, consistent with a health care plan it announced the day before the June 2007 budget, it would cherry-pick the renal transplant unit out of the Queen Elizabeth Hospital. The government is not just going to build it into the new Marjorie Jackson-Nelson Hospital: it has so much money, according to the Treasurer, that it will rip it out of the Queen Elizabeth Hospital at that time and locate it in the Royal Adelaide Hospital. The government has so much money, why wouldn't it waste $20 million on carving out a new service and a new facility in the existing Royal Adelaide Hospital, which it is going to bulldoze in a few years, to accommodate the Queen Elizabeth Hospital's renal transplant unit! How bizarre is that!

We had a treasurer screaming poverty and pressure as a result of the health budget and health costs and we had a health minister announcing a $2 billion hospital, and we had the interim arrangement of transferring a renal transplant unit, at a massive multimillion dollar cost, just to locate it in temporary accommodation until the Marjorie Jackson-Nelson Hospital is built.

While all this was going on, they were looking around to see what else they could harvest, and the IMVS is a pearler—it is an absolute ripper! It is a $100 million asset which the Treasurer has only to reach out and grab. How does he do that? He has to introduce legislation in this parliament that tells us that we have to repeal the Institute of Medical and Veterinary Science Act. The Treasurer cannot just grab it and take it over; he has to actually get rid of the act.

The opposition has been informed that, if this does not work, the government intends to exercise the power of control under the Public Corporations Act. That may not be necessary because the parliament, at least in this house, has the numbers to pass this bill. However, it will not be with the opposition's support. This is a damning indictment on the government's rip-roaring attempt to carve out and pull across assets, which are iconic institutions and which have served this state for generations, because the government wants the money and it will harvest and take whatever it can. This is the first of a series of assets it is going to take.

Today, I will not go into all the other assets or income streams the government can save or second in the country structure because that is another huge area. But, just in the metropolitan area, the government is going to sell off 42 per cent of Glenside Hospital—another little winner in the sense of being a capital asset. So, let us be under no illusion: South Australians will have to pay for this new hospital, and one of the ways we will pay is by sacrificing these iconic institutions that have served us so well.

I would be the first to support this bill if the government told us that there is a major crisis and that financial mismanagement is going on in the pathology industry in relation to the services available. We have three significant private pathology providers in South Australia, namely, Abbotts, Clinpath and Gribbles. So, that might be one option. If there was a complete mess in relation to the management of the services that are in place to provide for our public hospital sector, you might go to the private sector and say, 'We will contract you guys to do it.' That is one option.

If it was such in such an appalling mess, one would have to wonder why it had been going on for so long. But, when we look at the books of account of these institutes and entities that currently provide this service, it is quite the reverse, particularly in the case of the IMVS. The other two maybe, but I will explain why the transparency of their financial information is so blurred that you cannot tell, anyway.

Let us assume, for the moment, that SouthPath and the Women's and Children's services are as efficient as the others. The truth is that the IMVS is an entity which has a stunning financial record. It would be hard to imagine how we could get a better service. The opposition is puzzled at how the government can justify the need to take this over as a statewide single entity, with the Department of Health to take control, and Dr Sherborn to take this little pearl into his oyster, when there is absolutely no financial basis to support it.

The Women's and Children's Hospital pathology service operates out of the Women's and Children's Hospital. For those who remember its history, the Adelaide Children's Hospital was, of course, another great icon with a history going back to the century before last. It has been a magnificent service for South Australia. Until the time of Dr Cornwall (who was the minister for health in the 1980s) the Queen Victoria Hospital was the principal public maternity hospital in South Australia.

A decision was made that the Queen Victoria Hospital and its own in-house pathology services (if I can describe it that way) would be relocated in an extension to the Adelaide Children's Hospital and the two hospitals would be amalgamated. There was some discussion at the time about whether the Queen Victoria Hospital would be transferred to the Royal Adelaide Hospital site but, in fact, that was not the option that the government of the day decided upon. So, the Queen Victoria Hospital with its pathology services was moved, and those services have continued to be provided in the amalgamated hospital that has operated on that site for the past 20 years or so.

The second significant entity is SouthPath, which provides pathology services to what is now called the Southern Adelaide Health Service and is based, essentially, at the Flinders Medical Centre. For those of you who remember the history of medicine in South Australia's public hospitals, when the Flinders Medical Centre was built in the 1970s I think it is fair to say that there was an enormous rivalry between the universities and the Royal Adelaide Hospital, which was the premier tertiary teaching hospital in South Australia and affiliated with the Institute of Medical and Veterinary Science and the University of Adelaide.

The Flinders University was established and there was a desire to build a new medical school and, in fact, a whole new hospital adjacent to it—the Flinders Medical Centre. A significant tertiary hospital was to be developed there, and that is exactly what happened. That hospital has quite a proud history not only in acute medicine and as a teaching hospital but, little known to me, it is quite well recognised in the area of research. However, it wanted to have its own pathology service. It was all part of the carving out of a new identity, all the politics of what happens with these things, and so it was developed.

Meanwhile, the Institute of Medical and Veterinary Science (which has provided pathology and other services to South Australia since 1938) continues to provide the overwhelming majority of pathology services to our public health and hospital sector and, as I have indicated, to the private medical sector and veterinary work, as well. They are the three entities.

With reference to the first one—the service operating out of the Women's and Children's Hospital—I asked the minister's advisers to provide me with the financial accounts of this entity to 30 June 2007. At the briefing I was advised that they did not have that information; that it was in the financial report of the Children, Youth and Women's Health Service, which is the regional body under which the Women's and Children's Hospital sits. That is interesting because, in the last two years that I have been the shadow minister for health, under freedom of information I have applied for the financial accounts of each of the entities that sit within these regional services and, after a big fight with the department and a ruling by the Ombudsman, we now get them—and I keep asking for them.

The reason they are available is because, even in public hospitals, there has to be some level of accountability of each department and of each entity within it. That information is provided to the Department of Health, so I was shocked to hear the minister's advisers say, 'Well, we don't have this; it's actually all in the middle of this other report.' The minister provided me with the website address which contains the regional report (which he tabled today) on the Children's, Youth and Women's Health Service but, of course, you can guess that there is not one mention of the pathology service in the report. It is not identified anywhere in the whole report.

We do not know how efficient its operations are; we have no idea. How are we expected to identify whether this is a disaster or whether it is a very efficient service that currently supports this important public hospital? We do not have a clue, because that information is not available. So, in the Department of Health (with 800 people in Hindmarsh Square) nobody seems to know whether this is operating well or not. It is a complete mystery. I suppose when the minister tells us that it is operating nicely we just have to assume that it is. However, it is a relatively minor player.

Let us then consider the Southern Adelaide Health Service. This report has also been tabled as a regional report. It accommodates within it a number of entities, including the Flinders Medical Centre and SouthPath. Somewhere in here are the SouthPath figures. Where those figures are is another mystery; they are completely unidentified in this report. How can we know whether SouthPath is functioning well, or poorly, hopelessly, or is completely insolvent? We do not have a clue. So, we rely on the minister again, assuming he is keeping an eye on these things. Remember that he forwarded a letter to me last week incorporating certain information but just giving me a website and asserting that the information is in there somewhere. It is not in there, minister. The detail is not there and, if you do not know where it is in your own department, then God help us all when it comes to having to determine this legislation.

Let us assume that they are functioning okay, because there is no indication by the government that they are a mess. Let's go to the Institute of Medical and Veterinary Science. As an entity established under statute, it is required to provide an annual report to the minister who, in turn, is required to table a copy of that report in the parliament. The annual report ending 30 June 2007 was tabled today at my request and the minister kindly provided a copy of this to me last week. As annual reports do, it sets out all the good news first and then it sets out the financial accounts and identifies the highlights and so on for this entity.

I note from reading certain notations by the Auditor-General in this report that all seems to be in order; in fact, this report tells us that this is a stunning little entity. It has a massive income stream. When we come back to look at the calculations of how to expand the opportunity for income saving by the government in consolidating these services, it is expected that, in fact, a huge extra income stream is going to come in over the next two years which the government knows about and is going to pick up on. So, we know that is the little entity that is going so well and, of course, it is something that is worth bringing across.

I want to place on record briefly the development of the Institute of Medical and Veterinary Science because, before we crucify and cut down an iconic institution in this state, members should understand what we are getting rid of and what we are stripping off so that it can be taken into the government's clutches, leaving the carcass in the wind. Professor Brendon Kearney described how this institute has served South Australia. It is an institute in Adelaide, South Australia, which began in 1938 as a development from the Royal Adelaide Hospital laboratories largely because Sir Trent Champion de Crespigny, an eminent physician and medical superintendent of the Royal Adelaide Hospital and dean of medicine from 1929 to 1947, had a vision for an institute which combined laboratory services, teaching and research. In this respect, the IMVS differs from pure research institutes and has continued to emphasise integration of service, teaching and research in clinical medicine.

The steady development of the IMVS was interrupted in the late 1970s by a series of inquiries into management efficiency, services provided and internal policies, as well as a critical review of the care and control of animals used in scientific experiments. The result was a major redefinition of core services. The division of forensic pathology and the division of biology became the Forensic Science Centre and relocated elsewhere in Adelaide, and the division of veterinary pathology was transferred to the South Australian department of agriculture.

In July 1982, a new act with a new council defined and strengthened the relationships of the IMVS, the RAH and the University of Adelaide, allowing it to concentrate on mainstream areas of medical pathology and their application to research, teaching and service. In 1986, an integral report ('Review of Research') on the IMVS/RAH campus by professors David Penington and Gustav Fraenkel outlined a framework for the development of research. The integration of service, teaching and research with the outcome of high quality care provided by clinicians actively engaged in research was endorsed in the report, but they also suggested the creation of separate basic science laboratories to support research and avoid disparate and duplicated facilities on the campus.

They recommended that this development should be part of the IMVS/RAH campus because the benefits of a separate research centre would be diminished by the separation of research activities from service functions. The IMVS and RAH accepted the challenge and, by 1990, funds had been raised and the Hanson Centre (now the Hanson Centre for Cancer Research) had been established.

Over the past decade, the IMVS has organised itself along business lines and become reliant on its ability to provide high quality patient services, attract grants and contract for services and research. About 80 per cent of its $55 million expenditure annually is derived from contracts or grants for public and private pathology services on a fee-for-fee service basis. The remaining 20 per cent is derived from direct grants from the South Australian government for statewide or specific pathology services. Therefore, the IMVS differs from pure research institutes that rely on government grants, research grants and donations. While this adds a complexity to its management, it is also a strength in ensuring the IMVS remains competitive, efficient and relevant to the services for which it contracts.

The strength of the IMVS is its collocation on the RAH and University of Adelaide medical school campus. This allows for easy collaboration, integration and coordination with both the hospital and university, which has a symbolic effect on achievement. This integration between hospital, university, service and research is exemplified by the organisational structure of the IMVS.

That description I have given of the IMVS's background was taken from a passage written by Professor Brendon Kearney, who is the current Chief Executive of the Institute of Medical and Veterinary Science. He wrote that some 10 years ago in 1997 about its history up to that point. It had been reviewed; it was functioning extremely well. It provided an excellent service and it had three core bases of existence: the provision of a service, research and training. The Queen Elizabeth Hospital has a Latin phrase which means to heal, to seek and to teach. They are core elements of a tertiary institution providing a medical or (in this case) principally a pathology service, and when they take on these three functions, we should remind ourselves of the importance of the location of the service. The Institute of Medical and Veterinary Science is collocated on the Royal Adelaide Hospital site, next to the Medical School and the Hanson Institute and across the road from the rest of the University of Adelaide. That was very important in the provision of its three-way service to the community of South Australia.

What does the government need to do if it is to move the Royal Adelaide Hospital down to the other end of North Terrace? It has to be able to sever the nexus between the Institute of Medical and Veterinary Science and the hospital—not straight away, but down the track. They will be able to, of course, having absorbed the Institute of Medical and Veterinary Science into their asset holdings even if they continue operations while the Royal Adelaide Hospital continues to operate on North Terrace. That can continue on that site—and doubtless it will—while the new hospital is being built under the government's proposal. It can sell the lot if it wants to; it is a valuable asset. I will come back in a moment to what is in the balance sheet; however, it is a very significant asset and the government can dispose of it.

The opposition believes that IMVS is not just of historical significance to South Australia but, as has been pointed out in these reviews, being so collocated, it has had a very major impact on assisting in research and teaching. All of this will be destroyed if we ever move to the government's proposed new hospital. I certainly hope we do not, but that is what the government has announced it intends to do. Once it owns IMVS, the government can deal with it as it wishes. It can strip it, it can sell bits off if it wants to, it can sell the land. There is one little piece, a $5 million rental property on Dalgleish Street, which is available and which the government could easily sell as soon as the bill is passed, if it wishes.

However, there is one impediment at the moment: IMVS has a workforce and it has a board. Now, the government can make a commitment regarding the workforce and say,' We need pathologists, we need all of you, so we will take you with us and guarantee you a position in the new structure. You will be welcome, you will be provided with all the same benefits you've had from whichever of the three pathology units you operate in', etc. As for the board, it can be disposed of very simply. Repeal the act and their jobs go—just like that.

I wish to place on the record, on behalf of the opposition, my appreciation of those who have served on these boards. I will not name all those who have served since the commencement of the institute (and many South Australian luminaries have served on this board); however, the current chairman, Mr Kevin Kelly, has served on the board for (I think) 10 years. He is a person of high repute who, since his retirement from the business world, has applied his extraordinary intellect and business experience to his role at the helm of this board, and I thank him for that.

Other members include Ms Karen Thomas (the deputy chair), Ms Jenny Richter, Mr Geoff Coles AO, Associate Professor Peter Devitt, Associate Professor Anne Tonkin, Dr Ian Carmichael, Dr Leslye Long, Professor Mary Barton, Professor Derek Frewin AO, and the Chief Executive, Professor Brendon Kearney AM. These names are well known to the parliament, and these are people who have served with distinction in the general community and on a number of other boards, both voluntary and at very high levels of governance, in both the business and government spheres.

It will be a sad day when we lose that expertise, but these people have to go, because you cannot have anyone who could actually interfere with the operation conducted by Dr Sherbon, who will, of course, have complete control through the Central Northern Health Service, which is to be the host of the structure and which will have control. This is what will be captured into the Sherbon camp when we finish with this bill. I do thank these people to whom I have referred, because, for what is really marginal remuneration, they have served on this body with distinction. I believe they should have the gratitude of the parliament; certainly, the opposition endorses that sentiment.

I want to say a little about Professor Brendon Kearney, presently the Chief Executive, who I believe may still actually be in the job but whose term is about to expire. Professor Kearney has also had a distinguished career in medicine and medical administration both here and interstate, and I think the Institute of Medical and Veterinary Science has been extremely well served during his term as chief executive officer.

Dr Kearney is South Australian by birth. He trained at the University of Adelaide and in New Zealand. He has held various positions of distinction, including as the visiting physician and medical superintendent of the Royal Adelaide Hospital from 1977-80. He was appointed deputy chief executive officer in 1980 and chairman of the South Australian Health Commission from January to July 1983. He was appointed director of the Institute of Medical and Veterinary Science from 1983 and subsequently also chief executive officer of the Royal Adelaide Hospital in 1984.

Apart from numerous different professional affiliations, he has been president of the Royal Australian College of Medical Administration from 1988-91 and a member of the Faculty of Medicine at the University of Adelaide in 1977, and from 1982-85. He has been a consultant or chairman of numerous state or national organisations, committees or working parties from 1976-95, and Dr Kearney is the author or co-author of numerous publications, papers, reports and reviews. He is described in a medical publication as, 'He is the doyen of medical administration in Australia and enjoys an international reputation.'

He is a man of extraordinary capacity of which the Institute has been the beneficiary with him as the administrative head. Again, the opposition thanks him for his service. His position becomes defunct and, as I understand it, the government has advertised already for a new person to take this role. Why it did not snap him up is beyond me. In any event, he has of course given an extraordinary service to this organisation.

We have had a very experienced board. I am informed that, in the last 25 years, the Institute has had balanced books each year, and that is an extraordinary thing. I do not know of too many health facilities that actually balance their books every year. This is one which has been proud to be able to do so and, of course, it continues to grow and accumulate a capital base and maintain a profitable income stream.

The current core activities of the institute are in diagnostic pathology and this provides the pathology testing principally of blood and, as I have indicated, it meets a significant portion of the public hospital service requirements in that regard. It also provides DNA testing services for genetic disorders and family cancers. Some members will be aware that they provide services for paternity testing and the like. These are services provided both to public institutions and to the private sector.

It has regional services throughout South Australia in rural and remote areas and some interstate regions. In the country, it has online results for pathology tests, blood supply and products management for regional hospitals and blood transfusion services, to name a few.

For public health, we have its microbiological testing for food and water, infection surveillance—not just in hospitals, but in food management and the like—metals and drugs monitoring for industry and communities, a reminder service for cancer and infectious diseases, outbreak tracing and epidemiological data for a range of diseases. It has screening kits for bowel cancer, which was a process developed by the IMVS. So, in public health it is also a major contributor.

In training and teaching, I think that speaks for itself. I will shortly refer to the extraordinary number of professionally-trained pathologists and medical scientists, but its education of undergraduates and postgraduates in medicine, dentistry and other health-related fields is well-known and well-recognised. There are also research studies for PhD, MD and other higher university degrees.

Its research is an Australian leader in laboratory and clinical research to improve patient care, biological research leading to new drug development for biotechnical industries and clinical trials to develop new improved drugs in the laboratory and other research facilities to research groups from universities and pharmaceutical industries.

Last but not least, I think that a very important aspect has been their service and support to health professionals: expert professional advice, call centre to manage requests for information, diagnostic teaching and research activities in the university teaching hospitals, tissue collection and storage supporting transplant services, specialised facilities for processing stem cells for cancer treatment, instruments and other items for specimen collection by medical practitioners, newsletters and other information resources for medical practitioners, specimen collection services in the home and incapacitated patients.

The institute is a major service provider to private practitioners as well. Some 54 per cent of the total general practitioner market is serviced by the Institute of Medical and Veterinary Science and that is a massive slice of the private market. All credit is due to them because there are not a lot of public institutions that you can think of that are government-owned and managed to whom the private sector come rushing to buy services. That is how confident they are in service delivery and how well-regarded it is.

So, apart from achieving balanced books, which I think is an amazing accolade in itself, in the 2006-07 year it has secured $8.82 million for its research arm in the Hanson Institute, from other external sources. It trained 15 medical pathologists, supervised 38 PhD students and completed 127 research papers published in medical and scientific journals.

In growth, it has increased test numbers by 6 per cent, now at a high of 4.14 million tests a year, which was proudly recorded I might say in the Department of Health's annual report as one of the key statistics for health. It has expanded its growth in private pathology tests, as I have indicated, and it has completely refurbished its Victor Harbor laboratory and opened two new collection centres at Clare and Aldinga. It still maintains a network of 14 laboratories offering after-hours blood transfusion and microbiology services and the support to country hospitals and local acute care services that I referred to.

Incidentally, but importantly, it received a silver award from the Australasian Reporting Awards Inc. for the 2005-06 annual report. This report has only just been published, so we will see what happens in recognition of it, but interestingly it is one of the few reports—and I read plenty of them—where the information is transparent. It proudly displays what has been achieved, which most entities do, of course, but this is not just a snapshot on one page, this is a very significant report into the work that the IMVS does over the myriad different services that it provides.

It also has, I think, one of the best and most transparent financial accounting records. All of them have to have certain standards for the purposes of reporting to parliament and all of them have to tell us how much money they spent on overseas trips and how many people they pay over $100,000 a year, and all these other things that have to be reported as a matter of legislation or regulation, but I think it does a very thorough job.

The other entity that I wish to mention as part of the consolidated accounts, which is a wholly owned subsidiary, a private company wholly owned by the Institute of Medical and Veterinary Science, is Medvet Science Pty Ltd. That entity alone had an annual profit last year of $8.2 million. As an indication of how well the company is going, it has retained profit of $21.8 million; an increase of 38 per cent over the result for the previous year, and its net assets grew 60 per cent, from $16 million in 2006 to nearly $26 million in 2007. So this little gem is steaming along beautifully. It has very significant income growth, it is very efficiently run and it has had a massive increase in its capital base, and that is a credit to the members of the board who operate that entity, comprising Mr Kelly and some of the members of the board of the IMVS, but it sits as a separate unit and it is a very successful entity.

The other, I suppose, ancillary institute is the Hanson Institute, which I referred to in the history I have mentioned. That institute, which is the research division of the IMVS, was established in 1991 in conjunction with the Cancer Council and it encompasses all the research of the IMVS. As I indicated, it works collaboratively with the universities of Adelaide and South Australia and involves 350 full-time researchers and 100 post graduate students. There are 80 laboratories and groups, many working in close collaboration and largely associated with four main research centres focusing on cancer, bone and joint and neurological diseases, as well as clinical studies.

I particularly mention this entity because this is also a little gem that is physically located in the grounds of the Royal Adelaide Hospital by the new car park near the rear of the property and in behind the Institute of Medical and Veterinary Science. It is a relatively new building. National funding for medical research by NHMRC will double between 2006 and 2011, reaching an annual budget of $900 million. Although grants are sought after in every competitive environment, increased funding offers the Hanson Institute a unique opportunity to continue its strong growth. Between the years 2000 to 2005—I mention this because of the huge pool of research money out there—the level of funding to the Hanson Institute research increased 330 per cent. That is fantastic and it is a great tribute to those who are successful in applying for and receiving this funding. It is just one indicator of the high regard in which research at this institute is held across Australia and, I suggest, internationally.

Regarding staff at the IMVS I just want to briefly say this: the government has given an assurance that their positions are secure in the new structure and that they will not lose any benefits. In fact, by the nature of the entity coming under the new corporate structure, they will be able to receive some other fringe benefit elements as part of their salary package that they currently do not enjoy. We accept what the government has said in this regard. That is a commitment it has made, it is on the record, and we wish the staff well. To give members an illustration of the importance of the people who work in the IMVS to the institute itself, its annual report records and annually recognises those who have given service for 30 years or more in the institute, and some people have given 40 years or more service in the institute, and they are still there and that is fantastic. Those recognised in last year's financial report for having completed 40 years' service were Roy Ellis, John Glasson, Sandra Stuart and Bernard Chamberlain. Those recognised for 41 years' service were Susan Fulop and Margaret Elemer; and, for 42 years' service, Glenn Smythe. Of course, there are many others listed. It is a great credit to the institute that it has been able to maintain the loyalty and service of those employees. I think the celebration of that by publication in the annual report is quite unique, and it is a great testament to the relationship and loyalty that these people have with respect to the institute.

As the opposition member who represents health issues, I have had occasion to speak to a number of people who have previously worked, trained or have had the benefit of work done at the IMVS. It has a proud tradition and a proud association of former and current staff and associates, and I wish them well in whatever this new structure will be. I cannot imagine how this new structure will be able to supersede the excellent level of loyalty and service that the institute has enjoyed. However, if it does, we certainly will be pleased to see that.

Members will recall that a little earlier this afternoon I spoke about the decision-making that was taking place in the cabinet back in May 2006. Members of cabinet were sitting around discussing how they would manage this huge cost pressure with respect to health and the delay in bringing down the budget, and also planning the new hospital and making other decisions—for example, that they would take over the entity at the IMVS.

On 3 May 2006 (which can only have been days before the decisions were made in cabinet about spending all this money on a new hospital), the Minister for Health was in the parliament amending the IMVS Act. He was doing so because, as some of you will remember, this was after the horrible tsunami in the Asian region, which stretched across to Chennai and India, causing massive devastation, and South Australia's Institute of Medical and Veterinary Science was an institute to the rescue.

Not only was it well-known for its expertise in contagious diseases, for example, and many waterborne viruses that had been a problem in the whole of that region, but the institute also came to the rescue in how to manage water contamination and restrict the distribution of disease and the like. It was a hero in this regard. So, the minister was in here proposing an amendment to the act to make sure that we maintained the commercial security of contracts that the IMVS was entering into and, in particular, interstate and overseas. The integrity of those contracts was potentially at risk and, therefore, the government felt that it was wise to come into the parliament and secure that, and we agreed.

I was the opposition's newly appointed shadow representative for health, and I think it was the very first health bill that I came to deal with. On that occasion, we raised a number of questions about what would happen with the board and whether, in the amendments that were being proposed—which were to transfer from hospital boards to regional boards under the regional structure—there would be any diminution of their powers, and the like. But, no, everything was all right.

There was no mention in the parliament at that stage that the poor old IMVS was about to bite the dust; that it was going to be thrown into oblivion. However, clearly, days later, that decision had been made. There was no mention here in the parliament; not a word. It was just: 'We need to tidy this up. Yes, the board members will continue.' Even at that stage, the minister recognised the work of the IMVS. When commending the work that was being done by the institute, he said:

Since its establishment, the IMVS has been involved in the provision of services to other Australian states and the international community. This has enabled the Institute to develop an enviable reputation both nationally and internationally. Currently pathology services are provided to the Northern Territory and some parts of Victoria. Following the recent tsunami, assistance was provided to the Aceh province in establishing pathology laboratories.

He also detailed the great work done by the institute as adviser to the World Health Organisation. The government is telling us in this bill that it has to take over this institute because it has to have something that will be more efficient, and it has to save money for the future. What a joke! The institute has an international reputation, which was recognised by the minister here only two years ago, and now he wants to suffocate it and bring it in under the clutches of Dr Sherbon. That is almost laughable.

So, where do we go for some guidance as to the justification for this? The government paid $234,000 to a Melbourne consulting company to come over and prepare a report—the Paxton report—which we have here. It is a little thicker than the other document that was tabled in the parliament the other day. The report I have here looks at the IMVS, and the one we received the other day involving five institutions was about a quarter of the thickness of this one.

This report, which is dated 15 June 2007, is the Paxton Consulting Report for the Establishment of a Single Statewide Pathology Service. I thought, 'Well, this will have it. This will tell me why it is so important that the government has made this decision to act in this way.' However, this report starts with the government's announcement. That consulting company was instructed after the government had made an announcement that it wanted to have a single pathology service, and this report was written, essentially, to identify options that needed to be taken into account and what the legal process was, and so on. So, far from being a document that tells us why it is so important that we have a single pathology unit, this is a report that outlines the recommendations and how they achieved the government's decision. That is what it is all about.

It does not tell us a lot, I might say, to enlighten us about why this is such an important decision to make. Its terms of reference were to look at the options of governance and management structures for the new service; that is, not whether or not you have one but what are the options as to how the model would work. The terms of reference included:

Identify the range of laboratory and clinical services currently provided and provide advice on the future requirements of these services.

In other words, pick out any that are duds, or that we do not need, or whatever. The report continues:

Identify areas to improve performance, including the identification of areas for efficiencies in the short and longer term.

Opportunities to improve service delivery taking account of the views of the stakeholders reference group.

A framework for consolidation of financial arrangements across the three services.

The business model to be used within the new service and in relation to other public health and hospital services that intersect with the new service.

Identification of marketing and branding issues with specific reference to the IMVS.

The role of the Chief Executive Officer in the new organisation.

The development of performance criteria for the new organisation.

The change of management strategies for a successful service development.

It was their job to work all that out. They provided several pages of recommendations and a report.

Some of their recommendations, as you would expect, had to be consistent with other state plans and those sorts of things. In relation to the service elements, they suggested the government take all of them. That is very interesting, because I will come to another report that has been prepared about whether or not that will remain the position. A number of recommendations were made as to how this will happen. For instance, the IMVS act will need to be amended because you have to repeal this piece of legislation and so on. The report about the implementation cost $235,000—I am not sure whether that was debited out of the $2.35 million saving we are supposed to get out of this consolidation.

Then we had the employment of KPMG to undertake a due diligence. This is very interesting, because this exercise took place late last year and a report has been provided. Whenever an entity is to be transferred or sold, it is important to have a due diligence. Part of the exercise, for example, is to ensure that, when you take over an entity, buy a business, buy an income stream, or even buy an asset that is on the books, you get what you pay for and what has been identified matches with what you are going to get, and the income stream they say they have on the books correlates with that.

First, it is interesting why you would need to undertake a due diligence on three entities which currently are wholly owned by the government (that is, the health department) and/or in this case with the IMVS, an entity which has to be audited every year and which is reportable to the parliament. Certainly, for the moment, it is necessary to ensure that, when the government captures these little entities in its clutches, it is getting what the books say. Let us assume that that is necessary; that is, some auditor's requirement or Treasurer's direction says that we need to do that.

Why then is it secret? Why is it that, in the haste to have this legislation pass the parliament, the opposition was not allowed to look at it to confirm whether the written down value of the assets is correct and whether the information in the annual accounts is accurate? All this is part of the due diligence exercise. KPMG has done its report, but we were not allowed to look at it. Notwithstanding that the government has told us that it is planning to take over this entity, in a letter dated 24 April 2008 the minister said:

KPMG was engaged in late November 2007 to undertake a financial and operational due diligence of the three pathology services. The KPMG report contains considerable information of a commercially sensitive nature in relation to the private commercial activities of both the IMVS and its wholly owned Corporations Act company 'Medvet Sciences Pty Ltd'. Therefore I am advised that it would be inappropriate to release this report.

How can we as a parliament be expected to deliberate on and even be asked to support something when we cannot even see the report?

I hate to think how much this report cost. I suppose we will have to wait until the report for the financial year ending 2008 is published. I expect that we will probably get the current accounts in May 2009. If we are lucky, it might be a little earlier. Perhaps I will know the answer to that question in a year's time. In the meantime, that is a mystery—not so much how much it cost, but what it says. All we are left with is a report that is secret. We are not allowed to look at it. It also begs the question: if it is commercially sensitive, why is it commercially sensitive?

If the government is saying that it will take over these entities and bring them into one consolidated unit and therefore they will be accountable as part of the financial accounts of the Health Commission or the Central Northern Health Service next year, why is it so secret? The only possible explanation is that the government's full intention is to strip off some of these assets and to sell them. There could be no other possible reason, as duplicitous as that would be, for the government to have told us that it is doing it for the meritorious reason of its becoming an efficient organisation for pathology services in hospitals, but the truth is that it is clearly going to pick out bits and flog it off. They have not told us that, but that could be the only possible explanation that a due diligence report has been done.

The only other possible reason would be that the Auditor-General called for it or there was some inquiry, but then we would know about it. There would be some comment in the 2007 annual report of the Auditor-General, would there not, if there had been some dodgy dealing (or whatever) about which we needed to know? Again why would the government not rush in here with this report and say, 'Here we are parliament, we are here to explain to you why we have undertaken this due diligence; that is, so that the people of South Australia are not ripped off when we bring these entities back under our control.' In those circumstances, there is every good reason why they would table it, but, no, it is a secret. Who knows how long it will stay a secret, but it is a secret.

The other thing which we asked the government to explain, given that we were being asked to set up this single pathology unit was: what has happened interstate? Almost every other Labor government around the country has introduced this—I think the most recent was Western Australia in 2005—and the minister reminded me of that in his letter to me after I had my briefing earlier in the week.

So, if the other states have had it for the last few years, they think it is a pretty good idea and it has worked well, and they have some assessment, review or report on how well their pathology service as a single entity has worked, let's have a look at it. This may be persuasive enough for our suspicions behind the real reasons for this measure to evaporate, and we might be convinced that this would be an appropriate course of action to take on behalf of the people of South Australia. But, no, we have not received one single report, review or document about what has been happening in the other states that suggests that this is actually a good thing to do or, more importantly, that it has provided a superior service and/or a financial saving—and the government has trotted out the latter (and the former, to some degree) as its excuse for going down this path.


[Sitting extended beyond 18:00 on motion of Hon. J.D. Hill]


Ms CHAPMAN: So, in the absence of that information, I have written to the Minister for Health in New South Wales and invited her to forward to me any review of their single statewide pathology services. Of course, the debate will have concluded in this house before I receive that information but, if that does become available, I will certainly make it available to our colleagues in another place so that they can be briefed as to how successful or otherwise it has been in providing a superior service or a more efficient and/or cost-saving service.

When I asked the minister to identify, through his advisers, how the $2.177 million (I think I have said previously in this debate that it is $2.35 million, but it should be $2.177 million) has been calculated as the saving Treasurer Foley had in the budget when he announced this measure in September 2006. In the Budget Overview, as one of those little highlights of savings initiatives, I think they are called, it is stated that this will be a saving over two financial years, and it is identified as being as one of two categories, actual savings and increased revenue.

I think this is the interesting bit that tells us the truth about this entity and why the government is doing this. This entity is such a little money spinner and, if it is able to maintain the standard set by the IMVS, it will provide the government with a very significant income stream. So that this is clear to honourable members, that is because pathology tests carried out at the request of a medical practitioner earn income from the federal government per unit of test. The federal government pays a fee for providing that service as part of the Medicare structure. So, the government does not have to get money out of the patients per se as public patients, but it gets an income stream from the commonwealth government.

When enough of the service units have been reached each year (and it is 4 million just for the IMVS), because of the turnover, the government can require the IMVS to provide that service at some of its hospitals at a reduced rate, as it currently does. So, there is an even bigger bonus for them at the moment. The $2.177 million is calculated as follows:

1. Centralisation of tumour markers, $150,000.

2. Centralisation of thyroid function tests, $100,000.

3. Introduce total laboratory automation, $400,000.

4. In-house microbiological testing, $200,000.

5. Automation of tissue pathology and cytology, $300,000.

I have no reason to doubt that they are not reasonable estimates; it is not very much, overall. The cost of the KPMG report and the Paxton report would have soaked up that money.

The next one is the 'Savings from revenue growth', which is the increased income the government will earn from this entity (that is, $1.2 million over two years). It is interesting when you have an opportunity to have a look at what the savings are, because it provides some interesting information about the real reason for the government's move to take over this entity.

The other matter I want to place on the record relates to what the government will be getting when it takes over these assets. As I have indicated, SouthPath and Women's and Children's Services are already in-house and in situ, and their plant and equipment are already on the books in the Central Northern Health Service and the Southern Health Service accounts. They are somewhere in there; I do not know where they are, but let's assume for the moment they are in there.

However, the IMVS has quite a significant asset base, which is worth noting because not only is Medvet Science Proprietary Limited, for example, a healthy income earner for the institute but it is also an asset base for the institute as the parent entity. It has investments of $1.15 million with the South Australian government, with the Commissioner of Charitable Funds; it has shares in listed corporations and securities totalling nearly $22 million; it has total land and buildings at their written down value as at 30 June 2007 of nearly $47 million; it has plant and equipment, again described as fair value after depreciation, of $31.1 million; and a total net asset value of $62.9 million in property and plant.

Its other investment property (20 Dalgleish Street, Thebarton) has a value, as at 30 June, of $5.3 million. The asset base of this entity, as its financial accounts tell us, has a net value of $94.7 million as at 30 June 2007. As a very substantial portion of that is property, it would be a best guess that the real property value has increased and the plant and equipment has decreased. However, given the proportion of what is identified, even with no other assets being acquired in the past 12 months, that is a $100 million asset sitting there which can be liquidated if the government wishes to do so.

About two-thirds of it is real estate, one property being located at Thebarton, which could be sold off tomorrow. There is a large asset base, of course, sitting on Frome Road. If the government's plan comes to fruition and the Royal Adelaide Hospital is closed down and moved to the other end of North Terrace, the Frome Road property will be available. A portion of that (the facade, as I understand it) is under heritage listing but, otherwise, what a nice little piece of property that is! Of course, that will not escape the government's attention. It would be interesting to see what is in the KPMG report to identify what is actually there as at the date of their report which, as I have indicated, is six months later.

One of the staff quotes that I heard during the consultation on this matter related to the IMVS and the department's action in promoting this single model and the demise of the Institute of Medical and Veterinary Science as an institute. The department was like 'nasty, mischievous kittens unravelling a fine tapestry'. I thought to myself that that was a very apt description of what is happening.

The tragedy is that I cannot, for one moment, imagine that the government will be able to do things any better. It is possible the government will do it as well but, given the government's management of other entities in the past (and I can think of two immediately: the State Bank and the WorkCover Corporation), I am not confident that it will operate anywhere near as successfully as the institute is currently operating: 25 years of balancing the books; major profit and income stream; an accumulation of assets to boot; and an international reputation without peer in the operation of the three services it provides. Regrettably, I am not filled with confidence that this will be achieved.

The other aspect I wish to raise in relation to this new statewide pathology service is my concern that the savings referred to in the budget (which is the only financial information we are given about savings in the September 2006 budget) do not explain to me, when I look at the Paxton Consulting Report as to the efficiencies of the three entities that are there, the efficiency gains overall. Information has been provided to me, some of which involves the 2005-06 statistics referred to in the Paxton Consulting Report.

In that year SouthPath did 672,510 tests, the Women's and Children's did 250,071, and the IMVS did 4,053,922. The number of tests done per employee–that is, the employees that they had in their three entities—at SouthPath was 3,321; at Women's and Children's, 1,388; and at IMVS, 3,600. If the Women's and Children's improves its output to 3,600 tests (the same as the IMVS) it would only require 70 staff, and that would represent a reduction over time of 110 staff. With an average cost per employee of $76,000 that amounts to $8,400,000 per annum. Why would it not do that? Why would there not be a major cost saving by doing that?

Of course, the alternative is simply to ask the IMVS to commit to a million dollars a year savings. The cost reduction and efficiency here does not seem to make any sense. The objectives outlined by the government, of a single statewide model, are to improve safety and quality, to improve service integration and coordination, to improve efficiency of services, to improve recruitment and retention opportunities, to improve coordination of equipment procurement, and to improve research and teaching opportunities. There is not one shred of evidence in the Paxton Consulting Report of those objectives being achieved—none of them.

They are all stated, because they are stated objectives of the government. It is not identified as to how that is going to be achieved. If the government really wanted to be cost efficient, why did it not ask the most efficient of the three services to do that job? Why not give the IMVS all the work? That would seem to be one logical answer.

I am informed by the calculations that have been done via the Paxton Consulting report about test analysis as at 2005-06, because we did not have the figures for 2007 at that stage, and they may not have either at the time of doing their report. The cost per test for indices of efficiency at IMVS is $25 per test; Paxton Consulting identified that at SouthPath it is $31 per test; and at the Women's and Children's it is $71 per test. So, why are we even looking at trying to have a cost saving by a single model the detail of which has not yet been worked out? I asked about this at the briefing a week ago and they have not actually worked out how they will operate this year.

Why wouldn't they just ask the IMVS, who do it cheapest and best, it seems, on the face of it? It might not be the best service, so I will take that back because I do not know that. It is certainly the cheapest and has an international reputation. They get a lot of accolades even from the Minister for Health, yet this seems to be overlooked. So, it concerns me that there has been no analysis as to how those objectives will be achieved.

It has not been identified how they will secure the private sector work because, once the government takes it over, I would be very surprised—pleasantly, if it occurs—if the general practitioner market (54 per cent of which currently put their tests through IMVS) goes to the government, rings up the Department of Health, to say to SA Pathology that they will keep using its services. You have to be kidding me. The truth is that Gribbles, Clinpath and Abbott will be out there offering a service as soon as this comes to fruition. They will say, 'Stick with us, independent of government, and we will make this provision of service for you.' I do not doubt for one moment that they will be crawling all over the opportunity to expand their service, and good luck to them.

The point is that there is nothing in the Paxton Consulting report, and they raised the question, mind you, on the basis that the government says it is going to keep that business and that it is going to expand it and increase its revenue, so then this is the logical extension. But they do not actually identify the basis upon which that is going to be secured and to ensure that that income stream is maintained, developed and enhanced so that it will provide the savings that Mr Foley identified in September 2006. This is a very concerning aspect of this whole process.

We get an objective that sounds good; we look at the financial accounts; we puzzle over how this could possibly be the viable option. We look at Paxton Consulting for advice and really they have just implemented the government's decision and what the options are. It does not help us much; in fact, it raises more questions than it answers, and then, when we asked for the due diligence report, we were not allowed to look at it. When we asked to look at the assessment of all of the other single models around the country, we were not provided it. We just have to rush this legislation through and deal with this so that it can be operational by 30 June for the implementation of SA Pathology as of 1 July 2008.

All those issues raise concerns in the mind of the opposition. It is not just a question of losing a state icon. I think that is tragic enough, but if it was not performing, if it was under-performing or it was inadequately providing a service, the opposition would be the first to look at it; but it is performing above par. The government is just going to slice it up, carve it up, cherry pick out the good bits, flog off what it does not want and make this just one more financial disaster to follow in the footsteps of the WorkCover Corporation and the State Bank. It will be just one hell of a mess that we will have to clean up come 21 March 2010.

The Hon. J.D. HILL (Kaurna—Minister for Health, Minister for the Southern Suburbs, Minister Assisting the Premier in the Arts) (18:11): I thank the member for Bragg for her contribution to this debate. I acknowledge that she has indicated that the opposition will be opposing the government's legislation. I am disappointed that she has taken that position, but it is consistent with the position that the opposition has taken to all the reform measures proposed by this government—reform measures to make our system work in a better way, reform measures that are taken to make it more efficient and reform measures that have been introduced to make the system sustainable.

I will not attempt to go through all the points made by the Deputy Leader of the Opposition, but, for the benefit of readers of Hansard and for the house, I would briefly like to explain why and what we are doing. It is not as the Deputy Leader of the Opposition suggests—a takeover by the government, the dismantling of a service, a flogging off of parts of it, and the other terms she used. In fact, this service is already owned by the government. It is a government service. It is managed through—

Ms Chapman interjecting:

The Hon. J.D. HILL: I did not once interrupt the deputy leader. In the two hours the Deputy Leader of the Opposition spoke, not once did I interject, not once did I comment and not once did I behave in a way that was boorish or rude. I would ask the deputy leader to give me the same courtesy. The government is not taking over something that it does not already own. We own this entity. It is part of the services of this state. It is arranged through a particular piece of legislation, and it provides those services in a particular way. I agree with much of what the deputy leader said in terms of the level of service the IMVS has provided, the intentions of the original proponents of the service, the admirable ideals they brought together and the way in which the service attempted over the years to demonstrate those ideals through the services, the research and the teaching that it has done.

I also commend the board and those officers who led that service over a period of time. They have done a good job. However, we must move forward and look to the future. We have three sets of pathology services in South Australia. Let us put aside the IMVS for one moment. To have three sets of services providing pathology to the public of South Australia is inefficient, and the honourable member highlighted that fact very clearly by pointing out the various costs associated with providing those services through each of those institutions. It is not an efficient way of doing it.

Bulking up services and doing them on a statewide basis provides efficiencies, and our goal is to have an efficient service which best spends the taxpayers' money. One option we had—and this option was certainly advocated by representatives of the IMVS when we looked at these matters—was for the IMVS to take over the other services and to incorporate them into the IMVS so that the IMVS ran all the pathology services.

That was a model we could have adopted, but if we had done so it would have had two detrimental effects. Those who worked at SouthPath and those who worked at the Women's and Children's Hospital would have thought that their work, their culture, their aspirations and goals, their intelligence, their research activities and their creativity would have been treated as being of no value, while all of those aspects of the IMVS would have been given a high value. That would have been unfair, and I told the IMVS that I would not be doing it for that reason.

Of course, had we adopted that approach all those who provide pathology services in South Australia would have missed out on the very good tax benefits associated with those who provide services to hospitals. The workers in SouthPath and in the Women's and Children's Hospital who provide pathology services benefit from working in a hospital setting and are able to enjoy salary sacrifice to a level greater than others who work in the Public Service. There is a distinct financial advantage to them, and it is an advantage we want to keep.

By adopting the model that we have adopted—which is to bring together the three pathology services into one new service under the control of the Central Northern Area Health Service—we will not only maintain the salary sacrifice arrangements of the SouthPath and Women's and Children's Hospital workers but those who work at the IMVS would have their benefits retained.

So, it is of considerable financial advantage to the people who work in the service, and I am sure they would be horrified to think that the opposition is opposed to this reform, which will be worth thousands of dollars to them over the course of their careers at the IMVS. For those two reasons we decided to bring the services together rather than have the IMVS take over the existing services.

The new service we are creating will be called SA Pathology but it will trade as IMVS because we recognise that IMVS has performed very strongly in the private sector and has a very strong market penetration, particularly in rural South Australia, in the provision of pathology services. We congratulate it on that, and we intend to build upon that strength by retaining the IMVS brand-name, so the new service will trade as IMVS. The benefits and strengths of the IMVS, SouthPath and the Women's and Children's Hospital will be worked on in this new organisation.

The big difference, of course, is that the individual board which currently manages the IMVS will disappear, and all those units will be answerable to me, ultimately, through the Central Northern Area Health Service. I would like to point out to the house that under the current rules, if one looks at the powers the government has in relation to the current IMVS board, if I and the Treasurer were to choose, between us we could instruct the IMVS board to do pretty well any of the things I have described. However, that would be a second-rate way of doing it, and would lead to the disbenefit of workers in the pathology services, who would lose their salary sacrifice benefits.

Savings from the merger of about $1.15 million are expected over two years as a result of more efficient testing procedures and, therefore, reduction in expenditure, and, from revenue growth, of approximately $1.2 million over this period. The main area of advantage is in the longer term, coming from better management of the increasing demand for services. This demand for pathology services will be unavoidable, and having a single public pathology service instead of three will enable the public health system to be better placed to manage this now and into the future.

Obtaining and training pathologists is an expensive and difficult matter. As is already apparent in South Australia, interstate and internationally, there is an increasing demand for more diagnostic services from an increasing population, and an increasingly older population associated with greater longevity who often require more diagnostic services. There is also pressure for new, high-cost diagnostic technology for specialised areas and to enable more efficient testing methodologies. A single service is better placed to resource these new technologies and manage the demand and the cost by providing for more efficient use of services.

A single service will also enable better workforce planning as the demand for more interpretive advice from clinical pathologists and laboratory testing increases. Other expected benefits are: access for patients to a broader range of clinicians and expertise; integration of IT systems; and standardisation of pathology reporting across the state.

I point out to the house that these kinds of benefits have already been demonstrated in similar mergers in Western Australia (with the establishment of PathWest) and internationally, in Lincolnshire in England, for example, where five pathology services were merged. I will leave my comments at that.

This is an important piece of legislative reform. It modernises the delivery of pathology services; the research and teaching capacity, and all those other good things IMVS does, including through the Hanson Institute, will continue. This merely changes the relationship between the department and me as minister and the various providers of pathology services. It brings them together into one service and provides a distinct financial benefit to those who work at the IMVS.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

Ms CHAPMAN: When this bill is passed, is there any proposal to sell the land at Thebarton?

The Hon. J.D. HILL: I am not aware of any proposal by anybody to sell land at Thebarton or any of the other resources owned by the IMVS. I honestly cannot rule it out, but it is certainly not a proposition. I do not have a proposition before me, it has not been discussed with me, and I have no plans to do it. I want to make the point that, as we bring this service together, we will look at the best way of delivering the services and, if there are efficiencies and more contemporary ways of doing things, we will certainly do them.

For example, during the development of the Marjorie Jackson-Nelson hospital, a pathology service will obviously have to be brought into that site. So, there will be some transfer of activity from other places into that site and, I would expect, in an expanded sense compared with where they are now. We are not anticipating the IMVS leaving, at least in the short term, Frome Road or, indeed, any of the other locations. The simple answer is: no.

Ms CHAPMAN: The second question relates to the Frome Road property. We note the government's intention to vacate the Royal Adelaide Hospital site, which is located next to the IMVS. What is the government's intention in respect of that site?

The Hon. J.D. HILL: In part, I have answered that question. We will go through a proper due diligence process in relation to the IMVS site, and I will certainly be making some announcements in the next week or so about research generally in South Australia. If we look at the Hanson Institute, which is the research element, it is a virtual institute and there are bits of it all over the place. We certainly want to strengthen research, and obviously it is part of that. We would expect the Hanson Institute as a named organisation to continue and perhaps be part of a broader research focus in South Australia.

In relation to the IMVS buildings on Frome Road, we have examined the question, and some of the activity which is hospital-specific, such as 'Tell me what is wrong with this blood,' you would want to have that in situ as it is in many other hospitals in the state; and other activities for which you need a unique provider and one location where certain activities occurred, at this stage we would expect them to stay at Frome Road. There is no intention to move them out of Frome Road, but what stays there and what goes into the new hospital will have to be worked through, so it needs to be elaborated.

Ms CHAPMAN: In relation to the proposed structure and my understanding from what the minister said in his second reading explanation—and at the time of the briefing this information was not confirmed—is it accurate that the director of the Central Northern Health Service is likely to be an approved person by the commonwealth as an authorised person to be the titular head of the structure in that sense? Has that actually been confirmed?

The Hon. J.D. HILL: Yes. The advice I have is that the commonwealth has already advised that the head of the Central Northern Adelaide Health Service, Karleen Edwards, can be an APA (approved pathology authority). With respect to the changes we are making, I have to say to the Deputy Leader of the Opposition that we wanted to bring them together, but how we brought them together was, in a very large part, driven by the desire to make sure that the people who worked in the service maintained their tax benefits. In fact, through the method I have described we have been able to extend them to those who currently work in the IMVS and who would otherwise have lost them, so to them it is a considerable advantage.

Clause passed.

Remaining clauses (2 to 12), schedule and title passed.

Bill reported without amendment.

Third Reading

The Hon. J.D. HILL (Kaurna—Minister for Health, Minister for the Southern Suburbs, Minister Assisting the Premier in the Arts) (18:28): I move:

That this bill be now read a third time.

In so doing, I take this opportunity to thank the officers who have worked on this for the health system, in particular, Rob Smetak, Christine Dennis, Jane Cox, Robert Nelson, David Paterson; and Mark Emery of the parliamentary counsel.

Bill read a third time and passed.

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