ACT Health Minister accused of ‘bad faith’ in hospital negotiations prior to takeover

ACT Health Minister Rachel Stephen-Smith has been accused of ‘bad faith’ negotiations in the lead-up to the compulsory acquisition of Calvary Catholic ­public hospital.

The former Calvary Public Hospital, now named North Canberra Hospital. Picture: Facebook

The ACT government faces renewed pressure over its forced takeover of Calvary Catholic ­public hospital, with Health Minister Rachel Stephen-Smith accused of “bad faith” negotiations in the lead-up to the compulsory acquisition.

Based on Freedom of Information documents and correspondence tabled in the territory’s Legislative Assembly, the ACT opposition claims Ms Stephen-Smith did not warn Calvary that failure to reach agreement last year during negoti­ations over sharing land on the Calvary site could lead to a government takeover.

The ACT government announced in May this year that it would compulsorily acquire Calvary, prompting a storm of protest from the Catholic Church and Coalition MPs about the possible precedent for forced takeovers of religious-run government services.

Calvary, renamed North Canberra Hospital in July, began operating as a public hospital run by the Catholic Church in 1979 under an agreement reached with the commonwealth before self-government was granted to the ACT.

Last year, Ms Stephen-Smith and Calvary’s management started several months of formal negotiations over the government’s request to use some of the land leased to Calvary to build a separate new government-owned public hospital to help cope with Canberra’s demand for health services.

Opposition health spokes­woman Leanne Castley claims Ms Stephen-Smith never warned Calvary hospital’s management that forced acquisition of Calvary was on the cards if there was no agreement over the transfer of some land on the Calvary site for the new hospital.

Ms Stephen-Smith rejects the allegation. She says Calvary’s management and especially its legal team knew or should have known from the start that proposed “special legislation” terminating Calvary’s Crown lease would automatically cancel Calvary’s “network agreement” to operate as a public hospital in the ACT.

To support her position, Ms Stephen-Smith has cited a letter she sent to Calvary chief executive Martin Bowles in April last year, shortly before negotiations began. In that letter, now tabled in the ACT Legislative Assembly, she told Mr Bowles that the government was drafting “special legislation” to give speedy effect to an agreed transfer of land on the leased Calvary site for its proposed new hospital.

The letter made no mention of a Calvary takeover. Instead, Ms Stephen-Smith said the special legislation to allow ACT government title to the land was “in parallel with our discussions” and “the most straightforward way to give effect to any agreement reached between the government and Calvary”.

ACT Health Minister Rachel Stephen-Smith.

Ms Stephen-Smith said the ACT government’s “preference” was to work “collaboratively” with Calvary and any arrangement would be agreed “in good faith”. She also gave an assurance that “Calvary remains a valued partner in delivering excellent hospital care for residents of the ACT and surrounding region”.

If there was “no in-principle agreement” with Calvary, she said the government “would consider its next steps”. The only next step mentioned in her letter was a “greenfield” option to build a new hospital at a different site in the Canberra suburb of Belconnen.

Calvary hospital’s management expressed “shock” in May this year when the ACT government announced a full takeover.

Calvary has since claimed that hospital management had no inkling in September last year, when it rejected an ACT government demand to reduce Calvary’s lease from 76 years to 25 years, that this was the government’s “final offer” and would be used to break off negotiations and later seize control.

ACT Opposition health spokes­woman Leanne Castley. Picture: Julia Kanapathipillai

Ms Castley said the government gave Calvary no sense of the full threat it faced, telling the Legislative Assembly last week that Calvary was “strung along” because it was not told at any time during negotiations that the “special legislation” could cancel Calvary’s “network agreement” as a public hospital.

“It was bad faith,” she said.

Ms Castley said she had found no record of Calvary being told at the start that the ACT government wanted a reduced 25-year services agreement with Calvary.

She said Ms Stephen-Smith’s decision to put special legislation regarding Calvary’s future on the spring 2022 legislative program while negotiations were continuing – and then remove it – showed she “wasn’t seriously entertaining other options”.

The Australian sought comment from Ms Stephen-Smith and her office referred to what she had said previously.

In those comments, she said Calvary knew from the first day of negotiations last year that the government wanted to reduce the hospital’s lease to 25 years.

She claimed Calvary knew government cancellation of its lease on crown land meant cancellation of the “network agreement” as a public hospital – and Calvary’s legal team should have known this.

She agreed that putting special legislation on the 2022 spring program while negotiations were continuing was “inappropriate” but said it was removed because she thought an agreement with Calvary remained possible.