Richard Di Natale (Victoria, Australian Greens) Share this | Hansard source

I rise to speak on the Auditor-General report No. 25 2014-15: Performance audit:administration of the fifth community pharmacy agreementbetween the Commonwealth of Australia and the Pharmacy Guild of Australia. I move:

That the Senate take note of the document.

This is a highly complex agreement, so it is important to understand what it does. It is an agreement between the Minister for Health, representing the Commonwealth, and the Pharmacy Guild of Australia, who represent the majority of retail pharmacy owners. It started in 1990 when the Commonwealth established a community pharmacy agreement to run for five years. It sets out how much the government and patients pay for the dispensing of prescription medicines. There is also funding for government funded professional programs and funding for a community service obligation. The pharmacy agreement extends to services that enhance patient medication management—a home medicines review and the like—and it is meant to support rural pharmacies and the rural pharmacy workforce along with the funding of research on evidence based best practice in the delivery of pharmacy services.

In July 2010 the government signed the fifth community pharmacy agreement. This is not just some small agreement between government and the Pharmacy Guild. This is an agreement worth a staggering $15.4 billion. When the previous government signed the fifth community pharmacy agreement, they made it clear that their aim was to achieve $1 billion in budget savings. We have now seen the Australian National Audit Office conduct an audit of the fifth community pharmacy agreement. I have to say that in my time in this place I have never read such a damning assessment of a government process, particularly when you consider the scale of taxpayer money that is being spent on this agreement.

I will go through some of the auditor's findings in a moment; but, as I said, this is a complex agreement. The critical thing here is that it is between the government—the Department of Health, which as the auditor pointed out has overarching responsibility for the administration of the agreement—and, of course, the guild. For those who do not know, the guild is an industry association body. It is an advocate that represents the majority of pharmacy owners—just the owners, not pharmacists. It acts to administer elements of the fifth CPA and sometimes acts as the agent for the Department of Health. It is acting, effectively, on behalf of the Commonwealth. It receives Commonwealth grants and does other things through the implementation of that agreement.

The Auditor-General's report is a shock to me. They found enormous numbers of flaws with the way health negotiated and managed the fifth community pharmacy agreement. Let's look at just a few things that the Audit Office found. They found that there was a limited basis for assessing the extent to which the agreement met its objectives. In other words, this is $15 billion that we were spending to achieve a certain number of objectives, but we have no idea whether it achieved those objectives. There was no straightforward means for the parliament and other stakeholders to know the expected or actual costs of the key components of the agreement. We just do not know. The initiatives in the fifth community pharmacy agreement, as I said earlier, promised $1 billion in savings over the term of the agreement. We now know that it delivered $400 million in savings. We do not know where $600 million went. What we do know is it is likely that, due to the shortcomings in the way the health department administered the agreement, those $600 million never materialised. A number of the key objectives were only partially realised, and there were shortcomings, in the Auditor-General's words, in aspects of health administration with the development, negotiation and implementation phases. There were failures in record keeping. The Department of Health failed to keep a record of their meetings with the guild. They did not take minutes. They did not prepare notes. They did not prepare an official record of issues under negotiation, which was not consistent—again, in the Auditor-General's words—with 'sound practice'. They did not develop a risk management plan or a probity plan. They did not complete specific conflict-of-interest declarations—the list goes on and on. Even more worrying, $5.8 million of funds were reallocated within the agreement without ministerial approval. They went to the guild and we do not know why. Another $7.3 million again did not get ministerial approval before it was reallocated—there are so many questions that need answers. Another $277 million for professional programs was reallocated.

We are now negotiating a sixth Community Pharmacy Agreement. Let's stop doing that. Let's put a freeze on it and let's make sure that the findings of this report are implemented.