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LEGISLATIVE ASSEMBLY Thursday, 14 April 1994 ______ Mr Speaker (The Hon. Kevin Richard Rozzoli) took the chair at 9 a.m. Mr Speaker offered the Prayer. HOSPITAL DEVELOPMENT PROJECTS REVIEW BILL Second Reading Debate resumed from 17 March. Mr HATTON (South Coast) [9.0]: The Government, in introducing the forerunner to this bill, gave an undertaking of "a limit of three further projects to be developed or examined for the viability of the private sector involvement over the course of the current term of office". This falls far short of the original goal of $1.5 billion worth of privatisation of public hospitals in New South Wales. Because this bill is in many ways identical to the Government's original bill, I quote from the second reading speech of the Minister for Health in introducing that bill on 11 March 1993, when he said: . there is a need for a process - one that is transparent, open to scrutiny and clear for all to understand; one that sets out guidelines to be followed, so that everyone with an interest in the process - to let the Government, the Parliament, the communities who will ultimately benefit from this policy initiative, and the contractors and private sector operators associated with any specific project know what the process is and where a development stands at any stage. He continued: It was clear towards the end of last year that the honourable member for Manly had an interest in this area. He also wanted to see a process established that would open up a proposal to the scrutiny of the Public Accounts Committee. I have no argument with that. I am perfectly happy to be accountable to the Parliament in this regard. The Minister explained the purpose of his bill, which is identical in some respects to the bill before the House, by saying: Very simply, the bill provides that a draft proposal for a hospital project with the participation of the private sector - which is aimed at delivering public health services - will be referred to the Public Accounts Committee for review. This reference would occur before expressions of interest are called for the project. The Public Accounts Committee reviews the proposal, then reports to Parliament. The Legislative Assembly then considers the committee's report, and Parliament has the opportunity at this stage of debating the proposal if honourable members wish. However, absent from his bill - but a vital part of this bill - is a provision that the Parliament will decide whether the privatisation goes ahead. The Minister continued: The bill further provides that the Minister make a final detailed report to the committee before entering into any agreement for such a project. In making the final report, the Minister must address any recommendations made by the committee. Later, he said: It allows for the accountability that the honourable member for South Coast was attempting to achieve with his private member's bill. I want to make it clear that I am in complete agreement with the passages I have read from the Minister's second reading speech of 11 March 1993. However, the Minister and the Government would not agree to an amendment that would have given Parliament sanction over privatisation of public hospitals. I am not talking about privatisation of services. Some services obviously can, are, and should be privatised; for example, I am concerned by the excess profiteering that occurs because some private groups in the X-ray business take too many X-rays, and thereby expose patients to unnecessary radiation. Such groups make unnecessary profits. I also have concerns. Because the amendment that would have given Parliament the right to sanction privatisation of public hospitals was likely to be carried - a matter near to the public heart - the Government withdrew the bill. Effectively, I have reintroduced the same bill but incorporating a provision that will require Parliament to agree to any proposal to privatise a public hospital. This bill is intended to ensure scrutiny by the Public Accounts Committee; accountability to Parliament; and, through scrutiny by the Parliament, accountability to the people of New South Wales, in order to protect assets owned by the people and vital health services to the people. I now turn to the provisions of the bill. Because many aspects of this bill are identical to those of the Government's original bill, I agree with statements of the Minister for Health who, on 11 March 1993, in his second reading speech stated: Under the bill, the Minister for Health is required to refer any such proposed project to the Public Accounts Committee, which is to review the proposed project and report to the Legislative Assembly. Clause 4 defines health services and other terms used in the proposed Act. A public patient within the meaning of the relevant Commonwealth legislation is an inpatient in respect of whom a hospital provides comprehensive care, including all necessary medical, nursing and diagnostic services. Clause 5 describes the kinds of projects - called hospital development projects - to which the proposed Act applies. Such a project involves a proposal that a private person or persons will, under an agreement or agreements with the Government or a public hospital authority, develop and operate a private hospital for the purpose of providing health services to public patients at the private hospital. Clause 6 requires the Minister, before expressions of interest are invited from the private sector in relation to a hospital development project, to cause a document containing sufficient detail to enable the Public Accounts Committee to conduct a proper review of the project to be referred to that committee. What we are talking about is a procurement feasibility study that sets out a review of the options available for a development that will meet the projected health care demands for the community, or the catchment area, that the new hospital will serve. Page 1170 This procurement feasibility study outlines the range of services that will be required at the new hospital, and will review the options of constructing a new facility, refurbishing an existing facility, transferring the services to another location, or contracting with the private sector to deliver the services. The various options are defined, and financial appraisals are set out for them all. The Public Accounts Committee will be able to examine the procurement feasibility study before expressions of interest are called. The procurement feasibility study includes the department's recommendation on which option appears to be the most appropriate, and if that option involves contracting a private sector operator to deliver the services, it is subject to the process set out in this bill. The procurement feasibility study is required to comply with established Treasury procedures as set out in the principles and procedures to be followed in preparing an economic appraisal of capital works and the guidelines for private sector participation in infrastructure provision. The document itself may be anywhere between 30 to 100 pages, and if the recommendation is for a services contract model, or some other model involving the private sector, it would outline what sort of model is recommended, what type of private operator is envisaged, and what sort of financial structure is proposed. Ample detail - And I interpose my own word here, "must": - be provided to the Public Accounts Committee for its consideration. Clause 7 provides that the Public Accounts Committee is to review any hospital development project referred to it and report to the Legislative Assembly on the project within 60 days after receiving the document specified in Clause 6. We have come a long way since the first steps were taken by this Government towards hospital privatisation. I compliment my parliamentary Independent colleagues and, in particular, the honourable member for Manly who pushed so hard for accountability at the Public Accounts Committee level. I was unhappy with the process pertaining at that time; I am still unhappy with that process. We were not shown the last set of figures. I am a lot happier with the report of the Public Accounts Committee on infrastructure. That report makes recommendations which, if adopted, would tighten up a lot of the procedures in regard to commercial in confidence and openness of the process. The Minister continued: Clause 8 provides that any agreement in relation to a hospital development project is not to be entered into unless the project has been reviewed by the Public Accounts Committee within 60 days and until after the Legislative Assembly has considered the committee's report or 14 sitting days have elapsed. It is intended that during this 14-day period a member, if he or she so wished, could put a substantive motion to be considered or debated by this House. The Minister is then required to make a final detailed report back to the committee on the progress of the project before entering into any such agreement. In making the final detailed report the Minister must address any recommendations made by the committee in relation to the project and the financial feasibility of the project. Clause 9 of this bill differs from the Government's original bill in that it will prevent a hospital development project from proceeding unless it has been authorised by both Houses of Parliament. Clause 10 declares that the proposed Act has effect, regardless of the terms of any agreement entered into after the Act commences. Clause 11 provides that the proposed Act will bind the Crown, which, as honourable members are aware, under the Interpretation Act 1987, means the Crown in right of New South Wales. Clause 12 will enable the Governor to make regulations for the purposes of the proposed Act.

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