Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Chair of the Joint Committee of Public Accounts and Audit, I present Report 451: Community Pharmacy Agreements: Review of Auditor-General Report No. 25 (2014-15) as well as executive minutes on report No. 447. I move:

  That the Senate take note of the report.

I seek leave to incorporate the tabling statement into Hansard.

Leave granted.

The statement read as follows—

Mr President, I present the report from the Joint Committee of Public Accounts and Audit, entitled Fifth Community Pharmacy Agreement: Review of Auditor-General Report No 25 (2014-15).

On 4 June 2015, the Committee selected this ANAO Audit Report for further review and scrutiny at public hearings.

The Australian Government provides subsidised medicines to Australians and eligible overseas visitors through the Pharmaceutical Benefits Scheme. In 2013–14, the PBS subsidised over 210 million prescriptions at a reported cost to government of over $9 billion. The Government also subsidised an additional 12.4 million prescriptions to the veteran community, at a cost of almost $400 million.

Since 1990, the Australian Government funding has helped maintain a national network of approximately 5,460 retail pharmacies as the primary means of dispensing PBS medicines to the public.

The Fifth Community Pharmacy Agreement covered the period July 2010 to June 2015, and was primarily a partnership with the Pharmacy Guild of Australia. The Agreement involved the delivery of $15.4 billion in funding.

The ANAO report uncovered a number of failings within the Fifth Pharmacy Agreement's implementation and administration. There were shortcomings in key aspects of Health's administration at the development, negotiation and implementation phases. The ANAO identified key issues relating to: the clarity of the Agreement and related public reporting; record-keeping; the application of financial framework requirements; risk management; and seeking Ministerial approvals.

It was originally stated that the agreement would result in net savings of $600 million over its term. However, ANAO analysis indicated that the net savings estimated should have been closer to $400 million — due to shortcomings in Health's estimation methodology. The principle issues related to: unexplained increases in the baseline cost of professional programs; the application of inappropriate indexation factors; and the treatment of patient co-payments.

Given the experience the Department of Health has had with the previous four Pharmacy Agreements, the failures of process observed are very disappointing.

The failure to provide suitable records for public accountability and the breach of the Financial Management and Accountability Act governing public expenditure were particularly egregious.

The ANAO report's eight recommendations have been agreed to by all parties, and Health has given assurances that the Sixth Community Pharmacy Agreement has incorporated ANAO's advice. Given the size of the expenditure for this new Agreement – some $18.9 billion over the next five years – the Committee is of the view that its implementation should be closely scrutinised to ensure that the lessons learnt from the previous agreement and the ANAO report are not lost.

In addition to the ANAO's advice, the Committee made three further recommendations directed at:

In conclusion, I thank Committee Members for their deliberation on these significant matters. I also thank departmental representatives who appeared at public hearings for assisting the Committee.

I commend the report to the Senate.

I seek leave to continue my remarks.

Leave granted.

Debate adjourned.