National Health Funding Pool Administration (South Australia) Bill

This speech is in relation to the National Health Funding Pool Administration (South Australia) Bill. This bill is in relation to financial management and reporting mechanisms in regards to the national health funding pool. it focusses on the health administration structure which distributes the pooled funding and aims to develop an administrator who is an independent statutory officeholder.

The Hon. J.M.A. LENSINK (21:34): I rise to make a few brief remarks in relation to this bill which I understand has been the subject of much negotiation at COAG and which is based on agreements which have been reached at that level, and I congratulate the officers for having achieved agreement between commonwealth and all jurisdictions which cannot be an easy thing.

This particular legislation was introduced into the House of Assembly in May. It gives effect to financial management and reporting mechanisms which have been agreed to and commits federal and state governments to a model known as activity-based funding rather than block funding and special-purpose payments. Again, I would like to place on the record my appreciation to the minister's office and to the officers of his department for the comprehensive briefing that they provided to me. I understand that this form of funding is similar to what South Australia has in the past known as case-mix.

The commonwealth has agreed in principle to fund half of all future growth in health funding and establish a national pool which will fund each state. Our health spokesperson, the member for Waite, Mr Martin Hamilton-Smith, has advised that under the current model the commonwealth's share of health funding has been in decline. I think it is important that this point is made, because health is one of those areas that has an inflation factor which is certainly well above CPI. I think it might be in the order of 11 per cent these days, particularly as our population ages, so obtaining a greater proportion of commonwealth funding to be able to fund our hospitals into the future will be very important.

This government anticipates that the current level of commonwealth funding of 40 per cent will increase to 45 per cent by 2014-15 and to 50 per cent by 2017-18. There will be a new health administration structure which will be required to administer the pooled funding, and that will be an administrator who is an independent statutory officeholder. The position must be agreed by all ministers and separately appointed, which may be an interesting exercise.

The role of the administrator will be to calculate the amount of commonwealth funding into the state pool account and to make payments to local hospital networks in accordance with service agreements. The state pool account and the state managed funds consist of block funding and teaching and training funds. So, overall, there is to be greater transparency of funding and service agreements, with the administrator auditing activity. There will be no penalties to states until 1 July 2014.

I understand that the first stage in terms of determining activity funding will be acute in-patients, emergency departments and outpatient departments, which are known as eligible non-admitted, as these are the ones that are easiest to calculate in terms of a per service fee. Block funding will continue at that stage and all activity-based funding goes into that pool. I welcome these revised arrangements and look forward to the committee stage of the debate.