Health Minister Lawrence Springborg and Campbell Newman outside the Lady Cilento Hospital. The report reveals abject failures at every stage of the project. Source: News Limited
STATE Parliament was told today of a planning fiasco much greater than the infamous health payroll scandal with cost-blowouts at three new Queensland hospitals in excess of $2.2 billion.
The independent report by Auditor-General Andrew Greaves found a 2006 Labor election commitment to build three new hospitals at a cost of $2.87 billion blew out by 77 per cent — and ended up costing $5.08 billion.
Mr Greaves blamed poor decision-making by the previous Beattie and Bligh governments for a trail of errors that may add up to Queensland’s biggest ever fiscal folly.
The blow to taxpayers is worse than Labor’s infamous Health Payroll blunder that cost $1.25 billion or the mothballed Tugun desalination plant that cost $1.2 billion.
The report vindicates a long-running campaign by The Courier-Mail to highlight mistakes in the face of cover-ups by a series of Labor Health Ministers and spin doctors.
Auditor General Andrew Greaves’s report highlights massive cost blowouts in health Source: News Limited
Today’s Greaves report details abject failures at every stage of the Queensland Children’s Hospital, now the Lady Cilento Children’s Hospital, the Gold Coast University Hospital and Sunshine Coast University Hospital projects.
The report tabled in Parliament identifies a cover-up within Queensland Health of a secret ‘Memorandum of Understanding’ with Mater Health Services, with all records of briefings and legal and commercial advice about the deal missing from the department’s records.
Parliament heard of business cases that lacked key data; bungled announcements that jacked up land prices; car parking franchises given away for nothing; underfunded computer systems and botched provisions for future funding.
Government MPs said the scale of Labor’s failures demand a royal commission. Health Minister Lawrence Springborg was considering his options today.
Mr Greaves found that cost restraints due to poor planning meant the Gold Coast University Hospital opened last month with 122 fewer beds than expected.
He said the Lady Cilento Children’s Hospital will open next December with 71 fewer beds than expected, although the hospital believed it had sufficient bed numbers to meet current demand.
The controversial children’s hospital, built against the wishes of several prominent medical identities, wont have any more beds than those currently offered by the two hospitals it was designed to replace.
A series of problems at the Sunshine Coast Public University Hospital meant it will open two years late in 2016.
The report blamed poor decision-making by the previous Beattie and Bligh governments for a trail of errors Source: News Limited
Mr Greaves said managers grossly underestimating the impact of ICT (Information and Communications Technology) risks on all three projects.
For the Gold Coast and Brisbane projects alone, ICT costs increased $112 million.
Across all projects business cases failed to outline clear health outcomes, Mr Greaves found.
Some “solutions” were announced before other options were even considered, he said.
This led to the Government losing commercial leverage over third parties that occupied the selected sites. This alone transferred a staggering $190.4 million in economic benefit out of State coffers.
The cost to Queensland Health included paying to build a Queensland Children’s Hospital carpark, then transferring full management rights — valued at $30 million — to Mater Health Services at no cost. At the Gold Coast, another car-parking blunder transferred a loss to the State of $91.9 million. The timing of the deal meant the benefits of subsequent refinancing by the operator did not result in an automatic reduction in parking prices for users.
Mr Greaves criticised the consequences of a Labor decision to adopt a new federal funding model in 2010-11, without including the changes in its business case. The system of ‘activity based funding’ guaranteed equal funding for facilities based on actual medical activity.
Labor’s failure to accommodate this new system in any one of its three business cases meant its commitment to bed numbers was not to be supported by contemporary funding mechanisms.
As a consequence the Gold Coast and Lady Cilento have fewer overnight beds than planned.
Mr Greaves said that when the former Government gave the green light for the three hospitals, the usual “health service plans” about hospital capacity and most desirable locations did not exist.
The lack of planning left Queensland Health reliant on makeshift service solutions costing $170.8 million while the projects were under way.
Findings on individual projects
Gold Coast University Hospital Source: News Corp Australia
Gold Coast University Hospital
Original cost estimate ($1.23 billion) did not include:
· $177.4 million — to acquire the site
· $62.6 million — New Griffith University Health Centre
· $147.8 million — escalation costs.
Although $722.7 million will be provided to run the facility in ’14-’15, compared to $572.8 million in the business case, this will be insufficient to fund the 716 beds that the business case forecast. A total of 597 overnight beds are estimated for June 30, 2015 under the ABF model.
The report highlights the cost impact of the GCUH’s high proportion of single rooms (70% vs. 25-30% elsewhere)
Lady Cilento Children’s Hospital, South Brisbane. Source: News Corp Australia
Queensland Children’s Hospital (Lady Cilento)
Original cost estimate did not include
· $104.5 million — land acquisition
· $88.1 million — central energy facility
· $7.4 million — pathology services
· $73.5 million — Telstra exchange relocation (including a $28 million interest-free loan to Telstra due July 2018)
There was no analysis to confirm that a single hospital would be superior to the two it replaces. This remains an ‘open question’ according to the report.
A Memorandum of Understanding with Mater Health Services transferred $24.7 million in economic benefits from taxpayers. Although Queensland Health described the agreement as ‘clearly in the financial favour of the Mater Hospital’ there was no evidence the department had advised the former Government of the costs and risks associated with the deal.
Artist’s impression for new Sunshine Coast University Hospital at Kawana. Source: Supplied
Sunshine Coast University Hospital
Original cost estimate did not include:
· Escalation costs
· Significant changes in project scope to provide additional bed capacity.
Escalation, added to the 2006 cost estimate of $940 million, has contributed to a final project budget of $1.87 billion.
In this case, public-private-partnership costs to taxpayers will be reduced because the SCUH carpark generates revenues to offset hospital construction and maintenance costs (total $50.7 million).