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Legislative Assembly for the ACT: 2002 Week 14 Hansard (10 December) . . Page.. 4076 ..

MS DUNDAS (continuing):

The implementation of the purchaser/provider model in the ACT public health sector was clearly driven by ideology, and it is obvious why the model failed. There were none of the elements necessary to actually make it succeed. We do not have a health sector at a size where economies of scale can be achieved by a number of providers. We struggle to maintain our capacity in all medical specialities. We do not even have a large enough range of health providers to make true competition possible, except in a few small segments of the sector.

Separation of policy administration from service delivery led to some duplication in the policy and research area-and to the exclusion of health professionals from health policy formulation. These outcomes were clearly to the detriment of the ACT public. Time, energy and money were wasted on protracted contract negotiations and on corporate branding to create identities for the distinct entities created to enable the purchaser/provider model to operate.

The Reid review went on to list even more problems with the model as it has been operating. The contracts were narrowly focused on outputs, and the quoted contract prices did not fully reflect the cost of production. Departmental access to health data was slower and more limited under the arm's-length purchaser/provider model, and contract penalties for missing targets were not imposed in practice, so theoretical cost savings were not actually realised.

Hopefully, with the passing of this bill the experiment will be over-having allowed us enough time for it to become abundantly clear that the model was not going to bring any benefits to ACT residents. I hope that all these problems will be behind us by the end of the next year when the changed arrangements will have been fully implemented. I also hope that the Stanhope government takes the lessons from the health sector on board when considering the introduction of competition in other areas.

I understand that there is a hope that the new structure for the public health system will create an unprecedented new era of coordination, accountability, efficiency and collegiality, and I sincerely hope it does succeed.

MR STANHOPE (Chief Minister, Attorney-General, Minister for Health, Minister for Community Affairs and Minister for Women) (11.34), in reply: Mr Speaker, the aim of this bill, as members have indicated, is to enact the recommendations of the recent review of governance arrangements in health. The bill sweeps away the vestiges of the purchaser/provider system in health.

It's ironic that the key benefits supposedly to be derived from purchaser/provider turned out in fact to be precisely those areas where our performance was found to be wanting. Purchaser/provider is supposed to deliver role clarity. The Reid review found confusion. It was supposed to deliver improved accountability, yet both Reid and Gallop reported that accountability in the system was diffused and weakened. It was supposed to deliver efficiency through competition in the marketplace. Ms Dundas has just quite rightly said that, in a jurisdiction the size of the ACT, this market is virtually non-existent and the goal unrealistic, and I think the best example of that, of course, is the power of the Canberra Hospital. In a purchaser/provider role, the provider, the Canberra Hospital, simply through its status as the major trauma hospital and major public hospital in the

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