By Annika Smethurst and Broede Carmody
The state health minister sought more than $50 million in extra funding for hospitals including the Victorian Comprehensive Cancer Centre to cover the government’s share of public-private partnership blowouts after inflation soared to levels “not seen for decades”.
The revelation, contained in documents released under freedom of information laws, further exposes the precarious state of health funding in Victoria last year.
The $1.3 billion Victorian Comprehensive Cancer Centre is part of a public-private partnership.Credit: Chris Hopkins
In September, The Age revealed that the state government was within days of being unable to pay the bills at public hospitals last year.
Now, a ministerial briefing – released to the state opposition – shows that in May 2023, Health Minister Mary-Anne Thomas requested a $56.8 million top-up from Treasurer Tim Pallas. The money was needed to meet “increased costs” at some of the state’s biggest hospitals – including the Royal Children’s, Royal Women’s and the Comprehensive Cancer Centre.
The blowout was blamed on the surging consumer price index (CPI) at the time. It rose 5.6 per cent in the 12 months to May 2023.
The minister cited models by Treasury Corporation Victoria (TCV), which supports the state government by managing financial risk, including interest rate changes, credit and liquidity.
According to the brief, TCV confirmed that there was a “significant increase in actual and forecast CPI” compared with its modelling from 18 months earlier.
The ministerial brief warned that the extra cash injection might need to be as high as $185 million across the forward estimates, but that there could be a potential recouping of costs if inflation fell. While inflation has remained stubbornly high, the most recent data shows the rate inflation is at its lowest level in three years.
The state government has long blamed soaring inflation caused by COVID-19 and the war in Ukraine for “smashing” the economy and triggering a raft of spending blowouts, including taxpayers footing the bill for an additional $840 million on the Metro Tunnel project.
But the Coalition says the economic situation would be better if the government had not spent “recklessly” over the past decade.
Coalition health spokeswoman Georgie Crozier.Credit: Joe Armao
Opposition health spokeswoman Georgie Crozier said the extra hospital spend was yet another sign that Labor couldn’t manage money and Victorians were “paying the price”.
Coalition finance spokeswoman Jess Wilson questioned what other blowouts had occurred in recent months.
“With the finances of our health system in disarray, it should be no surprise Labor has kept the annual reports of Victoria’s health services hidden,” Wilson said.
The state government last week warned that more than 100 annual reports – including documents for health agencies – would not be published on time.
The Department of Health’s annual report – which was released on Thursday – confirmed that just 71.1 per cent of all patients presenting to emergency departments were seen on time in the 12 months to June 30, 2024.
Under public-private partnerships, the state government contracts the private sector to design, build and finance state infrastructure – such as hospitals – for a set period of time.
In the case of the Victorian Comprehensive Cancer Centre, about an extra $36 million was needed to cover increased fees for services such as cleaning.
Victorian Allied Health Professionals Association secretary Craig McGregor said the ministerial brief raised concerns about the government needing to funnel extra money into its private ventures, when those extra funds could have been given to the public system.
“We struck a deal with the state government around funding 100 clinical educator positions, as well as 300 backfill positions, for the massively understaffed allied health workforce,” McGregor said.
“These were public positions. It was a really important initiative that has just gone missing. People are waiting up to two years to take annual service leave. The stress is very real.
“And yet, they’re funnelling money into private coffers. I find the whole thing pretty frustrating.”
A Victorian government spokesman stressed that the extra $56.8 million was taken from the state accounts and so did not affect the 2023-24 budget.
“Health services across Australia have been dealing with rapid increases in the cost to deliver care due to record inflation – which is why we delivered this additional funding – ensuring every Victorian got the healthcare they need,” the spokesman said.
“[Opposition Leader] John Pesutto [last] week unveiled his policy for cuts, closures, sell-offs and an American-style debt ceiling, which means we will end up with an American-style health system – as well as doctors, nurses and ambos being sacked by the Liberals.”
In September, this masthead revealed that Thomas bypassed the cabinet and went directly to the treasurer to seek an urgent $422 million cash bailout for the state’s hospitals so that staff and suppliers could be paid on time.
That ministerial brief – from June 9 last year – identified more than 20 health services that were forecast to finish the 2022-23 financial year in the red.
The document, which was also released to the opposition under freedom of information laws, warned that without additional funding, the hospitals would be unable to make payroll payments and would have insufficient operating cash to pay creditors.
While the May budget tipped a record $13 billion into the public health system, hospitals were also told their future budgets would be locked in for the first time since the pandemic – with no top-ups.
However, the state government walked back its tough budget talk in August, following warnings of bed closures, surgery delays and the end of some services, including breast screening and kidney dialysis.
Premier Jacinta Allan instead announced an extra $1.5 billion in health funding, while retreating from a plan to restructure and amalgamate all the state’s health services to save money.
Pallas has not ruled out extra taxes to pay for the new spending.
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