Paul Fletcher (Bradfield, Liberal Party) Share this | Hansard source

I am pleased to rise to speak on the Federal Financial Relations Amendment (National Health Reform) Bill 2012 and the National Health Reform Amendment (Administrator and National Health Funding Body) Bill 2012. These bills form part of the package of bills that give effect to the National Health Reform Agreement entered into between the states and the Commonwealth last year. The first of the bills before the House this afternoon does two key things: it sets up the Administrator of the National Health Funding Pool and it sets up a separate body called the National Health Funding Body. These arrangements are part of a new funding deal, under which public hospitals around Australia will be funded with activity based payments rather than block grants. In other words, if the cost of a hip replacement is determined to be $15,000 and you as a hospital do 10,000 of them, your hospital will get $150 million. The money will come from a new national funding pool; into the pool will go money from both the Commonwealth and the states. The second bill makes some changes to the existing law governing federal financial relations—that is to say, the basis on which the Commonwealth government pays money to the states. Those changes are necessary to give effect to these new arrangements specific to the health sector. According to the minister's second reading speech, these new arrangements will 'introduce the unparalleled transparency into public hospital funding that Australians require'. Later in her speech, the minister was obviously concerned that she had not been hyperbolic enough in her description of this legislation, so she said it would bring 'complete transparency'. As is usual with this government, there is a great gap in the new arrangements between the good intentions and the troubling reality. To be clear, a number of the ideas that underpin the reform are good—activity-based costing and funding as a principle makes sense; greater transparency and accountability also make sense and are principles to which we can all sign up. But the real question before us is whether this legislative package is going to deliver on the great expectations which have been stated in the minister's second reading speech and elsewhere. I put to the House that there are good reasons to be sceptical that it will in fact live up to these great expectations. I highlight three points in the brief time available to me.

The first point is that the process to get to this stage has been typically shambolic under this government, starting with sweeping promises by former Prime Minister Rudd which have been massively underdelivered. The second point is that the arrangements, including those given effect to by the legislation before the House this afternoon, are extraordinarily complex, and that gives good reason to doubt their likely effectiveness. The third point is that there is in fact no guarantee that these complex new arrangements will improve accountability and transparency for users of the health system. In other words, from the perspective of the customers of this enormous system, there is real reason to doubt that all this complex bureaucratic rearranging of the chairs is going to make much practical difference at all.

I turn firstly to discuss in greater detail the shambolic process by which we got to this legislation before the House this afternoon. The National Health Reform Agreement is the third form of such an agreement pursued by the Rudd-Gillard government. We might all remember that former Prime Minister Rudd was going to fix the blame game in health. That is what he promised at the 2007 election, and, in March 2010, he said to the National Press Club:

Today we are delivering on the most significant reform of Australia’s health and hospital system since the introduction of Medicare almost three decades ago.

… … …

The Government will deliver better hospitals by establishing a national network, that is funded nationally, and run locally.

For the first time in history the Australian Government will take on the dominant funding role for the entire public hospital system.

For the first time, eight state-run systems will become part of one national network.

To fund this Network, the Australian Government will take around one-third of the GST revenues and place it in a new National Hospital Fund to be spent only on health and hospitals.

We would all recollect that early 2010 was a very dangerous time to be a patient in a hospital anywhere around Australia, because at any point you faced the real and practical risk of waking up from an operation only to find the then Prime Minister perched on the end of your bed, chatting cheerfully to you and surrounded by a scrum of television cameras and microphones. Happily, that danger is now past, but who can forget the little of shiver pleasure that seemed to go through the then Prime Minister's body whenever he said that the Commonwealth would be the dominant funder of the health system? Who can forget how he leapt on this issue to disguise his complete collapse on climate change, which went from being the 'greatest moral challenge of our time' to something he just dumped when it all got a bit too hard?

The long and tortuous path towards these bills being before the House this afternoon was characterised by hopeless overreaching and overpromising by the Rudd-Gillard government in its first incarnation. Who do we know this from? We know this, interestingly, from the former minister for health, who spoke publicly just a few weeks ago of the chaos behind the scenes in the lead-up to this announcement, with the then Prime Minister giving her as the minister only a few days notice of his plan to announce a federal takeover of the health system. As the historical record shows, the guts of the April 2010 plan were soon scrapped; key elements have disappeared, cast onto the scrapheap of history. The idea that the GST would be held back from the states to fund health activities and the idea that the Commonwealth would become the majority funder of public hospitals are both gone—as is, of course, the notion that there would be one national network of hospitals.

Version 2 along the lengthy and tortuous road towards the legislation before the House this afternoon came in February 2011 as the new Prime Minister sought to differentiate herself from her predecessor. But, again, a complex series of negotiations needed to occur before an announcement could finally be made in August 2011, and what was announced in August 2011 was different in form again to what had been spoken about earlier in the year.

Emerging from the potted history I have just gone through there are a number of points to bear in mind as we weigh up the merits of the bills before the House this afternoon. The first is that the chaos at the very heart of this government and at the very height of this government has affected sound administration and sound public policy in the health field as in so many other fields. Secondly, what we are seeing in the bills that the House is considering this afternoon is very different to what was originally promised. Thirdly, while this government has a strong political incentive to talk up the scope of the National Health Reform Agreement and the scope of the changes implemented in the bills before the House this afternoon, they in substance fall a great deal short of the vaunting ambition first announced by then Prime Minister Rudd and of his bold promise to end the blame game.

I turn now to discuss in more detail the second proposition I put to the House this afternoon. It is that the arrangements embodied in the bill before the House today and in other parts of this legislative scheme are extraordinarily complex and involve the establishment of a plethora—a multiplicity—of new bureaucratic organs. Three new statutory bodies have already been established to implement this package of reforms. The first is the Australian Commission on Safety and Quality in Healthcare; the second is the National Health Performance Authority; and the third is the Independent Hospital Pricing Authority. The bill before the House this afternoon brings into being two more bureaucratic bodies. Lest we be troubled that we have an inadequate supply of such entities, this bill comes to the rescue with, first, the administrator of the National Health Funding Pool; and, secondly, the National Health Funding Body. I particularly commend the imaginative person who came up with the term 'national health funding body'. They were on fire that day!

Why are there two separate entities established? It is quite mystifying. They have the same essential function—they dole out the money from the National Health Funding Pool—and yet we have two separate entities. It is almost as if some demented professor of public administration had set himself the personal challenge of coming up with the most complex scheme he could possibly imagine. But the sad reality for taxpayers is that all of us will be paying for the new public servants to be hired and employed by these two new entities as well as the plethora and multiplicity of other entities which I have already described.

The Department of Health and Ageing told the Senate Finance and Public Administration Legislation Committee that the national health funding body will have a staff of approximately 120—'But don't worry,' said the department of health to the Senate committee. They assured the Senate committee that they are going to get much bigger savings in head count from the department's strategic review, so there will be overall head count savings in the health bureaucracy. I have to inform the House that I do not believe it for a second. New bodies mean new bureaucrats, more money spent on overhead, more money spent on administration, new empires being built, scope for new turf battles and new and blurred accountabilities, and taxpayers up for paying more to fund this elaborate new structure.

Surprisingly, even such an unlikely authority as the former Minister for Health and Ageing agrees with my scepticism about this new elaborate bureaucratic administration. This is what she said last year:

It's not appropriate for us to—and we've made it very clear we don't want to increase the size of the bureaucracy—it's not appropriate for us to establish an authority where there is not a need to do so. There will need to be people who can process essentially the cheques that need to be paid through to local hospital networks, but it doesn't require an authority.

Subsequently there was a change in policy, I regret to say. For one brief, shining moment I thought the member for Gellibrand was going to establish herself as somebody who cares about cost efficiency and sound financial management. Tragically, this brief burst of sunshine did not last for long and this government soon returned to its overwhelming love of establishing new bureaucratic organs and entities.

Indeed, I have asked a question on notice in parliament of every parliament minister asking how many new departments, agencies, commissions, government owned corporations or such bodies have been created in their portfolios since the election of the Rudd government. Not all of them have fessed up, you will not be surprised to hear, but so far they have admitted to 34 new bodies across the spectrum of government activity and it is clear the new health minister is going for gold. She is determined to establish a plethora of new bodies such that her ministerial colleagues can only shake their heads in envy.

As any expert in organisational behaviour will tell you, complex structures, unclear lines of authority, duplication of functions and lack of clarity about who is responsible for what are a recipe for terrible organisational performance. If you look at the complex structures set up with the so-called national health reforms, you will see that is exactly what we have. There are, let me remind you, eight new bodies: independent hospital pricing authority, national health performance authority, Australian commission on safety and quality in health care, national preventative health agency, mental health commission, Medicare local Australia and administrator of the National Health Funding Pool—not to be confused with my favourite, the national health body. With the simultaneous establishment of so many new organisations, the scope for confusion and turf war is extraordinary.

Even more troublingly, key details of the new arrangements are not yet finalised. For example, the Commonwealth has set itself the task of devising by December 2012 a national strategic framework to set out agreed future policy directions and priority areas for GP and primary health care. You can only imagine the joy that that particular task would bring to any self-respecting bureaucrat's heart. The Australian Medical Association had this to say:

The real health reform will come with system redesign and proper service planning at the local level through the local hospital networks—

in other words making the point that, for all of this creation of new boxes in the organisational structure, the real work has not yet been done despite the bold promises from this government.

I turn lastly to the question of whether any of this is likely to actually improve accountability and transparency for health consumers. I modestly submit that there are very good reasons to be sceptical that it will. I predict there will continue to be squabbles about whether the Commonwealth is paying enough to the states. It is true that we have some new interposed bureaucratic agencies through which money will flow from the Commonwealth to the states. It is true that we have a new formula in accordance with which the money is paid. But I put to you that, if a hospital in a state does 10,000 hip replacements—to continue the example I gave at the start—but actually spends $20,000 per hip replacement, it will have spent $200 million and the relevant state health minister will be pointing the finger at the Commonwealth minister when only $150 million is supplied. This bureaucracy will create enormous distraction and will impose a burden of compliance on the customer-facing end of the system: the hospitals. At the end of the day, all of this will largely be invisible to patients, who will see very little difference in what they get.

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