Home' Future Building Australian Infrastructure Review : Volume 3 Number 2 Contents 74 futurebuilding Volume 3 Number 2
Public Sector Reform Panel
competition for healthcare was readily acceptable in
third-world countries and worked a dream. But it was
not acceptable in any more developed countries, and
you've got to ask yourself why.
TM: Activity-based funding, which is really the
working through of management accounting into
bundled services delivered by public hospitals, has
been successful in Victoria for 15 years, and it's the
reason why delivery of hospital services in Victoria
is, on several measures, much more ef cient than in
Activity-based funding, together with the sort of
radical devolution of responsibility out to the local
hospitals that New South Wales and other states are
implementing, will pull back the inef ciencies within
the hospitals over time and provide the basis for then
going to a much more competitive environment.
You can't go there without the intermediate
step, because in some states, people don't know
what it costs to deliver certain services in certain
hospitals. Until you do that, you don't have the
basis for competition.
For some time now in Victoria, because of this
benchmarking, many public patients are being put
into private hospitals quite satisfactorily.
The other point is that Victoria has had more
successes than failures in PPPs for hospitals.
The Royal Children's was a PPP success, along
with the Comprehensive Cancer Centre, which
is now underway.
Early on, there were some smaller hospitals that
failed, and I think it was a question of scale and,
frankly, a bit too much risk. But the bigger PPPs have
worked, and they have produced terri c buildings
and terri c operations.
You could even have more PPPs in education.
New South Wales has done it with schools, and
Victoria, I think, has done it with groups of schools,
rather than individual schools.
BL: Kerry, any views on health?
KS: The activity-based funding model being
introduced to New South Wales is driving a lot of
change, including such novel things that a hospital
should actually know, like how much running a
I'm relatively relaxed about the operating costs
in health, and the role that the Commonwealth is
playing in picking up a lot of the growth funding
after 2014. There is a lot of pressure on budgets
before that date.
With school PPPs, it's really important when a
successful PPP is being done that the community
gets involved in what has happened and what the
outcomes have been. We are not very good at telling
people what's been done, and how the teachers like
it better or what's working well. We really need to put
a bit more effort into that.
BL: I'd like to touch on the NBN. What are your
thoughts on its model and ultimately the market
structure it's going to create?
GS: The process that's been established for
the investment in that network is the only one that
could've been done. It's well-known that several
of us at the ACCC had argued for the structural
separation of Telstra in order to enhance competition
in the future.
I'm relatively relaxed about the
operating costs in health, and
the role that the Commonwealth
is playing in picking up a lot of
the growth funding after 2014
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