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Staff costs the largest contributor to SA Health's budget blowout

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Salaries and wages were the most significant factor in a $467 million forecast blowout in SA Health’s budget last financial year, the Auditor-General says.

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Auditor-General Andrew Richardson revealed a $466.6 million forecast blowout in SA Health’s budget for 2017-18 in a report on the financial performance of the department, released yesterday.

“(Local Health Networks) have consistently failed to achieve budget targets and the past two state budgets have substantially increased the total health budget to address shortfalls in original estimates,” Richardson’s report reads.

“(Health services and the SA Ambulance Service) were estimated to exceed their combined 2017-18 budgets by $467 million.

“If the cost of operating the health sector is to be reined in, it is clear that the practices affecting these outcomes must change.”

The report continues: “The most significant contribution to the overspend came from salaries and wages.”

Staff costs accounted for $227 million of the total blowout.

Staff salaries and wages were the most significant component of the overspend, according to Richardson’s report.

The remainder was a $206 million overspend on services and supplies and a $33 million shortfall in revenues in 2017-18, according to the report.

The figures cited in Richardson’s report are forecasts, included in an internal SA Health report from May 2018.

However by the time Rob Lucas released the Marshall Government’s first budget last month, the blowout had reduced to $251 million (according to state budget papers).

The Government is aiming to bring SA Health’s spending in line with the national average by the end of its first term in 2021-22.

Asked whether this goal necessarily meant significant job cuts, Health Minister Steven Wade told InDaily that the government would not be sacking any doctors or nurses.

However, he offered no guarantee for any other category of employee at SA Health.

“No doctors or nurses will be sacked as a result of any plan to reign in spending,” he said.

“However, we do have important decisions to make after inheriting a financial mess from Labor.

“The Auditor General’s report is a shocking indictment on the former Labor Government’s mismanagement of the South Australian health system.”

According to Richardson’s report, most of the $467 million budget blowout occurred within CALHN, with overspending in the Southern Adelaide Local Health Network the next biggest contributor.

Most of the overspend was in CALHN, according to Richardson’s report.

Wade pinned the blame on the Weatherill Government.

“Under the previous Labor Government, the LHN Budgets blew out by an astonishing half a billion dollars in just one year,” he said.

But Labor Health spokesperson Chris Picton said the Liberal Party was focused on financial concerns rather than healthcare.

“Labor’s priority for patient health is patient care and the Liberals priority is budget cuts and savings,” he said.

 “When people come into public hospitals we didn’t turn them away, Labor believes we should continue to invest in patient care.

 “Two thirds of the health dollars spent are on doctors, nurses and other health staff.”

In August, SA Health commissioned KordaMentha to examine the cause of financial problems in the Central Adelaide Local Health Network (CALHN) – which includes the Royal Adelaide Hospital and the Queen Elizabeth Hospital.

Picton called on the Government to release the report.

“The Liberals are already sitting on a report from KordaMentha and won’t tell the people of South Australia what cuts they are proposing to health care in SA.

“While the Liberals promised ‘better services’ they haven’t implemented their election promises, and seem focused on cutting money from the health budget.”

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