The Australian National Audit Office’s scathing assessment of the Department of Health’s administration of the Community Health and Hospitals Program (CHHP) has prompted calls for restrictions on Ministerial powers and increased scrutiny of grant programs.
Some health experts have also raised questions and concerns about which communities had missed out on health funds as a result of pork barrelling of the program.
Jennifer Doggett writes:
The Community Health and Hospitals Program (CHHP) was established in 2018 by the former Federal Government with a stated purpose to “fund projects and services in every state and territory, supporting patient care while reducing pressure on community and hospital services”.
A total of $1.25 billion was allocated to CHHP across four key areas:
- specialist hospital services (such as cancer treatment, rural health, and hospital infrastructure);
- drug and alcohol treatment;
- preventive, primary and chronic disease management; and
- mental health.
Funding for CHHP was delivered through national partnership agreements with states and territories, and grants to Primary Health Networks (PHNs) and non-government organisations. By November 2022, a total of $1.05 billion had been expended on CHHP and associated projects.
In announcing the first round of grants for the CHHP, former Health Minister Greg Hunt said: “They will make a real difference in closing service gaps and meeting people’s on-the-ground health care needs. Projects and services are being supported in every state and territory, with the aim of improving patient care, and tackling the impact of a range of health and social issues, while reducing pressure on community and hospital services.”
Damning
According to the Australian National Audit Office (ANAO) report, the CHHP is unlikely to have achieved these aims.
In what the Grattan Institute’s Peter Breadon describes as “one of the most damning audit reports” he has seen, the ANAO found that only two of the 171 projects funded under the program were found to be “highly suitable” under the criteria.
Other findings included that DoH’s administration of the program was undermined by deliberate breaches of the Commonwealth Grants Rules and Guidelines and that projects funded under grant agreements with PHNs and non-government organisations were designed, assessed, established and managed in a manner that was largely inconsistent with the Commonwealth Grants Rules and Guidelines.
Health policy experts Professor Stephen Duckett and Charles Maskell-Knight were not surprised by these findings.
Duckett told Croakey: “I’m not surprised at all. It was set up as a slush fund and the audit shows it was used as a slush fund by the Minister.”
Maskell-Knight drew comparisons with other similar findings of audits into sports grants, car parks, and community safety programs, commenting that the CHHP report “doesn’t seem extraordinary” in that context.
Breadon also highlighted the broader problem of “pork-barrelling and process-shredding” in governments or all levels, discussed in more detail in this report from the Grattan Institute.
Changing role of the public service
Duckett and Maskell-Knight both see these failings as reflective of a broader trend towards a more politicised and less independent public service.
“We have seen a degradation of ethical standards in the public service under the previous Government, as public servants have sought to please ministers and do whatever was the Minister’s whim rather than being prepared to provide frank and fearless advice,” Duckett said.
Maskell-Knight attributes this trend to the former Minister and Prime Minister. He says they “created the environment that allowed this to happen”.
“Once you tell the public service that its job is to implement the decision of government, and that written advice to you is simply to outline options and not include a recommended outcome, you are assuming responsibility for all decisions,” he said.
In further defining the role of the public service, Maskell-Knight said that the idea of responsiveness should be that the public service implements decisions taken after the best advice had been considered – and that it does so in accordance with the law. “Responsiveness ought not to mean implementing decisions taken without advice in contravention of the law,” he said.
Future changes
Breadon, Duckett and Maskell-Knight all propose winding back Ministerial powers over grant programs as a key strategy to increase the integrity of the grant allocation process.
They suggest that Ministers could have a role in establishing grants programs, specifying their objectives and criteria for selection but that they should have no role in selecting recipients of the grant funding.
Duckett suggests that the Parliamentary Budget Office should independently sign off on the constitutionality of all new grant programs, and that it should be an offence for public servants to share information about the selection process with the Minister or the Minister’s Office.
One option suggested by Maskell-Knight is create two different types of grants programs through amending the Public Governance, Performance and Accountability Act.
The first type would exclude the Minister from any involvement in allocating grants, after agreeing the objectives, selection criteria, and funding available for the program. This would include penalties under the National Anti-Corruption Commission Act 2022 for anyone attempting to influence the process by Ministers or their staff.
The second would allow the Minister to award money as they saw fit. However, if the Audit Office found that the expenditure was not proper within the meaning of the PGPA Act (meaning efficient, effective, economical and ethical), the Minister would be personally responsible for re-paying the amount of the grant.
Breadon also suggests increasing parliamentary oversight, and boosting funding for Auditor Generals.
In making the point that these findings provide yet more evidence that Australia needs a better strategy to guide national investment in the health system, Breadon nominates the next National Health Reform Agreement as a mechanism to help achieve this goal. The current agreements are being reviewed and the Grattan Institute’s submission into the review argues for a number of changes, including outlining how hospitals should change, and how they should work with other parts of the system.
Breadon suggests that these agreements could then be used to inform grant guidelines that push the system in the right direction, instead of being highjacked by political whims. We can’t afford to waste public money on pork when the health system is under so much strain, he says, when patients are waiting too long for care, and when the health system needs structural reform to respond to the rising tide of chronic disease.
Both Duckett and Maskell-Knight nominate the Medical Research Future Fund (MRFF) as another program that should be reviewed, with a focus on the role of the Minister in making decisions on those grants (see the #MRFFtransparency investigation by Associate Professor Lesley Russell in 2021 for Croakey, examining the funding sources, expenditure patterns, governance processes and evaluation mechanisms of the MRFF)
In a timely announcement this week, the Department of Health and Aged Care and National Health and Medical Research Council called for submissions to a national consultation “to improve alignment and coordination” between the MRFF and Medical Research Endowment Account (MREA).
Rural and remote communities
Chief Executive of the National Rural Health Alliance (NRHA), Susi Tegen, said the ANAO report had particular relevance for rural and remote communities.
Commenting on what she described as a “very damning report and extremely disappointing reflection on the Department of Health”, Tegen told Croakey that taxpayers have a right to be disappointed and concerned about the politicisation of this grant process, particularly those in rural areas where hospitals are “innovation rich, but funding poor” and where the primary healthcare workforce requires “more support and long term innovative solutions.”
“Not being in a certain electorate should not determine need or funding eligibility,” Tegen said.
As with the health policy experts above, Tegen puts the blame partly on a department which she says was not prepared to take a leadership role and give “frank and fearless” advice. She believes this allowed for political decisions to be made by the leadership and/or the then Government to benefit the constituencies they wished to benefit.
Tegen also suggests some key changes that need to be made to strengthen the role of the public service, including reducing the current reliance on external consultants.
“We need the public service to be skilled in public policy and grants administration. Indeed, we would like our policy makers, and advisors to governments, to take a leadership approach, reflect on the risks, take responsibility, be willing to be innovative and bold. The outsourcing of key work to outside agencies such as consultancies has clearly eroded the capacity of the public service to manage the grants processes professionally and innovatively,” she said.
Tegen stresses that “generally speaking” she feels the Department of Health and Aged Care and Ministers for Health are ethical and have the best interests of the community at heart.
She emphasises the benefits of a “robust” relationship between the politician, parliament and the policy advisors and makers, which may involve some tension. But she also warns that “the political machine and power” is a very strong force.
While supporting a role for the public service in offering “frank and fearless advice” to government Tegen also believes that Ministers should have the freedom to support ideas coming from outside the public service, even when not current policies, as long as they do so on the basis of advice or guidance from their departments.
Tegen also stresses the broader implications of the ANAO report for the fair allocation of resources and health equity in the community
“It is well documented that rural communities receive less than their fair share of the health dollar,” she said.
“Governments must look at the heath needs across the country and allocate equitable resources in addition to need and gaps, not just the voices that scream the loudest, in places that are seen. When there is such a large part of the rural population which has an inequitable access to consistent healthcare, and the burden of disease keeps growing exponentially, we hope that the Minister for Health Mark Butler will be able to ensure that more innovation, primary care and preventative health strategies, as well as research funding will be accessible in rural Australia.”
Tegen urges the Department of Health and Aged Care to acknowledge their faults and put measures in place to ensure this does not happen again and for the Government to get on with addressing the inequities in access to the 30 percent of the population who live in rural Australia.
“We hope to continue our work with Government and Ministers to achieve the best outcome for It is a matter of equity and social contract to those people who make such an enormous contribution to the economy and wellbeing of all Australians. We trust that preventative health funding will be allocated to where it is needed, no matter what side the political leaning of the local MP or Senator is. That is why we have a democracy,” Tegen said.
Other responses
Minister for Health Mark Butler responded to the report saying that the program “exemplifies the Morrison Government’s time in office – one plagued with waste and rorts. A Government that was all announcement and no delivery”.
Butler said that he has directed the DoH to rigorously examine and go line-by-line over the projects to ensure that Australians get value for money from the remaining CHHP funds.
He also noted that the Department has accepted all the ANAO report’s recommendations, and has already strengthened its internal procedures and is taking additional and broader actions in response to the findings to support best practice administration, including a comprehensive external review of its financial controls and assurance framework to ensure it is fit for purpose and help inform the response to the ANAO’s recommendations.
Independent MPs Dr Sophie Scamps, Dr Monique Ryan, Zoe Daniel and Helen Haines also expressed strong concerns about the findings.
In a media release, Scamps said that as a doctor she found it “incomprehensible” that health funding could be rorted for a political advantage.
“Our health system is in crisis, and the fact the former Government politicised healthcare for political gain is symptomatic of just how sick and corrupted the Morrison Government was,” she said.
Scamps argued that her ‘Ending Jobs for Mates’ Private Member’s Bill would help end the “rampant cronyism” in Commonwealth agencies and called on the government to enact the Bill and “show it takes restoring integrity to our democracy seriously.”
See Croakey’s investigation of the Medical Research Future Fund
