Health on the block
By Jenny Haines
Corporatisation and privatisation
of government services in NSW
Big business and employers in Australia have brought about radical
reform of the Australian economy over the last 30 years. They have:
To bring about this radical reform, big business and the employers had
the help of successive governments of both parties. Federal Labor
deregulated the financial markets, federal Labor sold the Commonwealth
Bank and Qantas, federal Labor brought in enterprise bargaining in
1993, federal Labor reduced tariffs. The Howard Government has pushed
the full sale of Telstra, deregulated the public
service in Canberra and staff and services, and introduced individual
- Restructured industries, shutting down the
manufacturing base of this
country and largely shipping it to the Third World.
successive governments to reduce tariffs and protective payments so
that those industries that remain in this country struggle to compete
with the Third World.
- Internationalised capital, contributing to a
huge flow of profits out of the country and our current controversial
balance of payments deficit.
- Deregulated the financial markets so
that billions of dollars can flow in and out of the country in a single
day, making flights of capital easy if there is any threat to big
business investment interests.
- Deregulated industrial relations at
the federal level, and the next step is the Howard Government’s
takeover of the state industrial rlations systems and the spread of
individual workplace agreements to state-based workers.
- Sold off
public-sector and nationalised companies such as the Commonwealth Bank
and Qantas, and the next stage is the full sale of Telstra.
Of course, several union leaderships helped too. Starting with the
ALP-ACTU Prices and Incomes Accord in 1982, unions voluntarily reduced
their own power, first to a centralised system that they ought to have
known at the time would not deliver real cost of living increases, and
it didn’t. Paul Keating was able to boast in the 1990s how the Accord
had cut wages to assist business in making more profit. Later many
unions formed the large amalgamated structures that divorced union
leaderships from their members. Most unions became passive. Many union
militants faded away. When deregulation came along, there was
comparatively little strength left to fight off individual workplace
Big business and the employers now want to take the next step: the
plunder of public-sector services for even more private profit. In NSW,
they are ably assisted in their ambitions by the Carr Labor Government,
which is happily skipping down the yellow brick road, like Dorothy
heading for the land of Oz, towards corporatisation of all
public-sector services, turning them into business units with a view to
contracting out the profitable sections to the private sector. Trade
union officials of previous generations must be rolling in their graves.
In the health industry, the Financial
Review, the newspaper of the
happy capitalist, reported on May 25, 2005, that NSW Health has
ambitious plans to slash $100 million from "back-office services" and
force as many as 10,000 jobs out of the public sector.
NSW Health has been developing a four-step procurement process for its
plan to centralise finance, information technology, pathology and
warehousing services. Job cuts are to be made.
Public and health sector unions are being pacified with assurances that
these jobs will be
redistributed "to realise the NSW government's long-held goal of
redirecting $100 million into front-line health services. The
government has promised to redeploy and transfer affected staff and has
pledged there will be no forced redundancies."
The Financial Review report
The shared-services plan affects
up to 10,000 jobs and follows the
amalgamation of 17 area health services into eight, which took effect
on January 1. The procurement plan calls for the department to take the
of prefacing a call for expressions of interest with a "pre-EOI"
document, followed by an EOI.
By October, 2005, a request for proposals is expected to be circulated
to selected suppliers, with final contract negotiations slated for
early 2006. The department briefed potential suppliers on the
program late last year. The pre-EOI, originally slated for January, is
expected in the next few weeks.
Accenture is expected to be among the companies that bid for the work.
IBM is also expected to make a pitch to win back the account after
Accenture won the contract to complete a feasibility study for the
The initiative is not without its critics, and a number of concerns
have been raised over the probity of the massive project, and the
accuracy of savings estimates. NSW auditor-general Bob Sendt is
considering a number of complaints and
will shortly determine whether to conduct a review of contracting for
health department projects such as shared corporate services.
The services to be put on the block are expected to include human
resources, finance, supply, asset management and computing services, as
well as linen, food, warehousing and pathology.
The shared-services program is slated to eventually generate $58
million a year in savings, with the remaining $32 million cost
reduction to come from the amalgamation of area health services.
Departmental and area health service executives are split over the
proposed program, and a number of vendors have expressed concerns that
Accenture is free to bid for work under the controversial initiative.
The program, along with efforts to centralise computer and
communications projects, has met bitter resistance from some
departmental staff and area health service employees who are reluctant
to give up control of projects.
In December last year, a group of disgruntled NSW Health executives
lodged an unofficial report criticising technology project management
at the department and levelled serious allegations against the
program's feasibility planning process. "Accenture carried out at least
four strategic reviews of the
shared-services proposal in 2003 and 2004," the executives' report
says. "Accenture produced various recommendations from analysis that is
based on a set of poorly constructed services."
They also alleged that the department "ignored" concerns from Ernst and
Young over the speed with which the project was executed. Ernst and
Young had been contracted to help prepare the business case for the
The report was filed with the Independent Commission Against
Corruption, the NSW Auditor-General and Health Minister Morris Iemma.
The Auditor-General is considering whether to conduct a formal review
of the matter.
An executive from one hospital software vendor, who declined to be
named, also expressed concerns over the probity of Accenture carrying
out the feasibility study as well as bidding for tenders, but
acknowledged NSW Health had limited choice.
"The reality is, hopefully, NSW Health will have satisfied themselves
that the Chinese walls [at Accenture] are up and that the same people
aren't working on the response to the shared services as were working
on the specification," he said.
Well, well! This is only the planning stage, and already the Auditor
General is involved and ICAC has been briefed. I can’t wait for the
rest of this program!
For big business this is only the beginning. Standing on the sidelines
waiting, with million-dollar signs in their eyes, they are going to
want more than is planned for here. Much more!
How will all of this affect nurses in NSW?
Initially the current leadership of the NSW Nurses Association took an
ostrich approach, ie head in the sand, to this, the biggest
restructuring of the NSW health system in recent times. At the
November 2004 meeting of delegates from all over NSW, the attitude of
the leadership was "this is nothing to do with us, it's a Health
Services Union HSU matter" (the HSU covers administrative and
non-medical staff in the health service).
A resolution moved by my branch opposing the program was lost
50 to 70 at the November delegates' meeting. However, at the January
meeting of the association's committee of
delegates, Royal Prince Alfred Hospital and Concord branches sent the
following resolution to the delegates' meeting:
The NSWNA opposes the
corporatisation and contracting out of ancillary
services and administrative functions in the NSW public health system.
The moves currently under consideration, and the moves towards
implementation of these proposals, are contrary to the fundamental
policy objectives of the NSWNA. This branch calls on the Department of
Health, the Minister for Health and the Premier to ensure that these
proposals do not proceed, are withdrawn and the services continue as
publicly managed services with public sector employees. This resolution
to be sent to the Minister for Health and the Premier.
This resolution was carried by an easy majority, about 60 per cent in
favour 40 per cent against at the delegates' meeting despite opposition
to the resolution from some officers and councillors. There were a
number of middle managers in the health system at that meeting whose
interests and, maybe, jobs are directly and indirectly affected by this
The basic arguments of those who opposed the resolution were:
1. That the issue did not affect
nurses, that it was primarily a
campaign for the HSU. But nurses will be directly and indirectly
affected if these services are corporatised and PPPed. Nurse managers
in the health system often manage or partly manage these services.
Nurses are employed in these services. If these services are contracted
out to the private sector and the private sector does not perform to
expectations, the experience of the health system over and over again
is that nurses are the most affected, being the largest group of
365-day-a-year employees in the system. It is the nurses who will have
to pick up the slack and make the system work. Two basic and essential
services on the list to be PPPed are food
and linen. Are we going to have nurses going to the shops after hours
to buy patients food because the contractor can’t deliver? Are we going
to have nurses doing the patients' linen or taking it home to wash
because it’s a weekend and the state-contracted linen service in Orange
is closed until Monday?
2. That on the basis of
assurances from the Minister for Health that
"it is not the NSW Government's intention to undergo privatisation of
hospital services" (letter from Health Minister Morris Iemma to Michael
Williamson, secretary of the HSU, November 16, 2004), the HSU's council
has decided not to campaign in opposition to the program.
However NSWNA assistant general secretary Judith Kiejda noted in a
report: "the HSU Council has decided that while opposing shared
services, the HSU will not be campaigning against the progress of
Health Support on the basis that it has received a written commitment
that it is not privatisation or contracting out and that the staff will
be public health employees with all their current award and public
All the HSU has, however, is a piece of paper, just like
British Prime Minister Neville Chamberlain had on his return from
Germany in 1939, with a guarantee of peace in our time – and we all
know what that led to!
Anyone who believes the current moves are not just the first stage of a
privatisation program is naive in the extreme! The private sector has
million-dollar signs in their eyes when they look at the NSW public
hospital system. They are rubbing their hands in glee.
If, after 2007, we have a Liberal government in NSW, they won't have to
change a word of the legislation that passed the NSW Parliament on
December 7, 2004, and they can privatise the lot. John Brogden recently
announced that if the Liberals were elected in 2007, he had $20 billion
worth of PPP projects ready to go.
He has promised to hand over the NSW industrial relations system to the
Commonwealth. Stand by for deregulation and lower living standards for
NSW workers if a Brogden government is in power after 2007.
I would like to share with you a gem from Brett Holmes, the
current general secretary of the NSWNA. This comes from a press release
issued by Holmes on December 23, 2004, following the state government’s
of Port Macquarie Hospital, which had been privatised
Public hospitals are not about
profit they are about providing
essential services to the community. That is why they should always
stay in government hands. Governments are accountable to the people for
the quality of the services they provide. Private corporations are not
subject to the same level of public accountability.
Well said Brett! Now actions have to match words!
On December 6, 2004, the following resolution was carried
unanimously by the Marrickville state electorate council of the Labor
Party, in the presence of Andrew Refshaughe the local member, who did
not argue against the resolution:
The Marrickville SEC opposes the
corporatisation and contracting out of
ancillary services and administrative functions in the NSW public
health system. The moves currently under consideration, and the moves
towards implementation of these proposals, are contrary to the
fundamental values, principles and ideals of the ALP. These proposals
should not proceed, should be withdrawn, and the services should
continue as publicly managed services with public sector employees.
On December 15, the same resolution was endorsed unanimously by the
Socialist Left caucus of the ALP in the presence of a number of members
of the Legislative Council, who did not argue against the resolution.
On December 16, 2004, the same resolution was endorsed unanimously by
the combined meeting of the Annandale-Leichardt-Lilyfield branches of
the ALP in the presence of federal members, state members and a
minister, who did not argue against the resolution.
The NSW Government passed, on the December, 7, 2004, legislation
enabling the Minister for Health, on his own, to corporatise and
contract out ancillary and administrative services in the NSW health
system. This legislation established the body to oversee the
corporatisation of the relevant services, Health Support.
Since the legislation was passed we have not heard much from Health
Support but we know there is plenty going on behind the scenes. I am
going to a joint consultative committee meeting tomorrow that may tell
me more about the plans.
The above potted history of Sydney inner-city branches' responses to
the Carr Government’s proposals to corporatise, contract out health
services, or tie them up in PPP projects, shows that significant
sections of the ALP have shown by their unanimous endorsement of the
resolution that there is disquiet in the ALP about the Government's
actions and direction.
That disquiet surfaced again at the 2005 NSW ALP conference, where
there was a lot of anger from the right and left unions about the
Government’s proposals. John Robertson and Unions NSW harnessed that
anger in a resolution that called on the Government to immediately
establish an independent inquiry into PPP projects planned for the NSW
There was no doubt at that conference that this resolution would be
passed with right and left union support. Tim Ayres of the AMWU called
on the Government to accept the findings of this inquiry whatever the
That inquiry could bury these proposals, but that would only happen as
a result of a strong, united push by unions, right and left, the
Greens, progressive independents and socialists to ensure that outcome.
This may be an historic and vital opportunity, in the interests of the
viability and the efficiency of the health system, for all of these
forces to work co-operatively.
Let me say this without reservation. We have a Prime Minister who says
there is no crisis in the health system. He is delusional, and that’s
the nicest thing I can say about him.
The health system has huge problems: structural problems, financial
problems, staffing shortages. Sometimes it all seems overwhelming and
unsolvable. The last thing the health system needs now is this program
of corporatisation, contracting out and use of PPPs on the scale being
proposed, for the services it is being proposed for.
There is a very real danger that whatever efficiency is left in the
system will be lost. There is great concern among administrators
in the health system that the integrity of the policy directive system
will be lost.
When the policies of NSW Health are not integrated and followed by area
health services, situations like the horrors of Campbelltown
How are the bureaucrats going to maintain financial control over the
system? What happens when a contractor does not perform but has a
contract for specified period? Who pays out the contract? Are area
health services going to be asked
to meet those costs from within their budgets? That will take funds
away from patient care to pay out underperforming contractors! Not good
value for the taxpayers' dollar.
Great care has to be taken when in managing the health service. We are
dealing with people’s lives. Get it wrong and lives can be seriously
damaged or even lost, as Campbelltown and Camden showed us.
Based on a talk to a forum on
the corporatisation of NSW health services, sponsored by the NSW Greens
at Parliament House, Sydney, on June 23, 2005.