Page 722 - Week 03 - Tuesday, 12 March 1991
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In respect of the hospital restructuring project, we have embarked on a $166m capital project to consolidate specialist services in the Royal Canberra Hospital South campus. This will both improve the quality of services and cut recurrent costs. At this stage the project is on schedule and will be completed within budget. The major component of the budget overrun is an apparent amount of some $3.5m, which appears to have been carried forward into this financial year, rather than being paid in 1989-90.
I need also to explain that, in line with the usual budgetary process, the ACT Treasury recently provided budget supplementation to the ACT Board of Health for the hospitals totalling $4.27m. The provision of supplementary funding reflects increases in expenditure, and reductions in income, which are recognised as being outside of Board of Health control. This is not unusual. For instance, following the 1989-90 Wayne Berry budget, the total amount of supplementation the hospitals received was about $5m and in the preceding year an amount of the order of $15m was provided, in part, by the Follett Government for a Health and Community Services budget. The level of supplementation presently agreed for 1990-91 includes $1.95m for award increases for staff and $2.32m to meet a revenue shortfall caused by a drop in the number of privately insured patients.
The matters still under investigation relate to the non-achievement of savings targeted by the Follett Government, and increased costs generated by visiting medical officers. The $3.5m problem is more serious. It appears that a number of accounts to this value may not have been paid when due, before the end of the 1989-90 financial year. This means that an excessive level of unpaid creditors' accounts was carried forward into this financial year.
The extent of the problem can best be described as being the equivalent of about three weeks of normal payments to creditors. The amount of money involved is significant, and the problem of overcoming the build-up is serious. The failure to pay these accounts occurred apparently without the knowledge of the interim board of directors of the hospital. I was certainly not aware it. This is a completely unacceptable situation, and I intend to act immediately to address it.
Members may recall that last week I announced that there would be an investigation into Health Board overspending. I did this on the basis of a Treasury review that indicated an inadequate level of financial management. I also took into account the fact that the ACT Board of Health, as presently constituted, only came into effect on 31 January this year. As a new board, they face an enormous number of challenges, particularly the hospital restructuring project.
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