Online version of the 2013-14 Department of Health Annual Report
In 2013-14, the Department, through its Audit and Fraud Control Branch, worked with the Australian National Audit Office (ANAO), providing responses to proposed audit findings and recommendations prior to the Auditor-General presenting his reports in Parliament.
The Department also liaised with the Commonwealth Ombudsman on complaints relating to aspects of the Department’s administrative activities.
Information on the Auditor-General’s reports and the Commonwealth Ombudsman’s complaints is set out below.
Australian National Audit Office
In 2013-14, the ANAO tabled several reports in Parliament on audits involving the Department. Included were audits specific to the Department and cross-agency audits where the Department was involved.
Audits specific to the Department
Management of the National Medical Stockpile (Audit Report No.53 of 2013-14,61 tabled 26 June 2014)
The objective of this audit was to assess the effectiveness of the Department’s management of the National Medical Stockpile (the Stockpile). The maintenance of the Stockpile is a significant Government investment in the nation’s preparedness for public health emergencies resulting from terrorist activities or natural causes such as pandemics. Over $750 million has been allocated for the Stockpile in the past decade.
In 2012-13 the Stockpile comprised 42 products and over 110 million items, with a reported value of almost $196 million. This large strategic reserve comprises pharmaceuticals and personal protective equipment with a limited shelf life and their effective management relies on planning and administrative arrangements which are geared to selecting and procuring appropriate items; warehousing and controlling stock; and managing expiring items. Effective deployment arrangements are also required to augment State and Territory reserves of items from the Stockpile in a timely manner.
Overall, the ANAO found that the Department’s management of the Stockpile has been generally effective in recent years, benefiting from improvements introduced since 2010. However, there remains scope for improving the Department’s strategic framework, operational management and deployment arrangements for the Stockpile.
The Department introduced a strategic plan in 2010, albeit some eight years after the Stockpile was established. While the plan broadly describes the governance, funding and administrative arrangements for the Stockpile, the ANAO recommended it should be updated to identify objectives, priorities and strategies for the Stockpile’s management – key elements of a strategic plan. It was also recommended that the high level outcomes for the Stockpile, that were agreed in 2011 by the then Government, should also be reflected in an updated plan.
The Department has developed a deployment framework with States and Territories, although these arrangements have not been recently tested. To provide assurance that deployment arrangements will be effective in a national health emergency, the ANAO recommended that the Department undertake planning to test deployment arrangements, in consultation with other jurisdictions.
While there remains scope for further improvement as indicated above, the Department’s work in recent years demonstrates a more active approach to management of the Stockpile, as does the recent focus on the findings of the 2011 Strategic Review.
The ANAO made four recommendations to improve the effectiveness of the Department’s management of the Stockpile, by:
- improving strategic planning and risk management;
- enhancing performance reporting by contractors;
- reviewing information management arrangements; and
- planning to test deployment arrangements.
The Department agreed with all four of the recommendations and addressed them under reform activities implemented under the 2014-15 Budget Measure ‘Reinforcing Australia’s Health Protection’.
Administering the Code of Good Manufacturing Practice for Prescription Medicines (Audit Report No.30 of 2013-14,62 tabled 7 May 2014)
The audit objective was to assess the effectiveness of the Therapeutic Goods Administration’s (TGA) application of the Code of Good Manufacturing Practice (Code of GMP) for prescription medicines.
The audit found that the TGA had been generally effective in applying the Code of GMP for prescription medicines manufactured or supplied in Australia. Further, the audit recognised that the TGA applied a well developed and structured process for licensing and monitoring manufacturing sites in Australia, and had adopted a viable approach to the certification of overseas manufacturing sites, drawing on the work of selected overseas regulators.
The TGA licenses Australian manufacturing sites and certifies overseas manufacturing sites against the Code of GMP. However, the audit identified shortcomings in the TGA’s administration of the Code of GMP, highlighting the need for greater internal discipline and management attention to strengthening the documentation of key decisions relating to licensing and certification processes; and enhancing arrangements for information security and management. There also remained scope to realise the full benefits of TGA initiatives to reduce duplicated effort in granting clearances for the supply of imported prescription medicine and implement more equitable cost recovery arrangements.
The ANAO’s review of licensing and certification records indicated that TGA staff had not always documented key decisions or consistently maintained inspection files, as required by the Standard Operating Procedures (SOPs). The ANAO recommended that the TGA should strengthen its quality assurance processes to provide greater confidence that staff formally document key decisions, particularly when discretions are exercised, and maintain complete and accurate records to enhance the transparency and accountability of the licensing and certification process.
The ANAO made two recommendations to improve the TGA’s administration of the Code of GMP for prescription medicines, focussing on:
- strengthening processes for recording key decisions and maintaining inspection files;
- refining the quality assurance process to support staff adherence to SOPs;
- reviewing information management arrangements to more effectively support the Office of Manufacturing Quality’s application of the Code of GMP; and
- improving the security of data holdings.
The Department agreed with the two recommendations, noting that the findings of the Report had informed a review of the systems and processes that underpin the TGA’s manufacturing quality inspections programme.
Administration of the Arrangements for the Management, Operation and the Funding of the Mersey Community Hospital (Audit Report No.2 of 2013-14,63 tabled 14 August 2013).
The objective of the audit was to assess the effectiveness of the administration, by the Department and the Commonwealth partners, of the 2008 and 2011 Heads of Agreement (HoA) for the management, operation and funding of the Mersey Community Hospital (MCH) in Tasmania.
The audit found that, in general, the administration of the 2008 and 2011 HoA by the Department and the Tasmanian Department of Health and Human Services (DHHS) had been effective in facilitating delivery, at the Commonwealth-owned MCH, of a range of agreed clinical services, including those specified under the HoA. Under the day-to-day management of DHHS, and more recently, the Tasmanian Health Organisation – North West (THO-NW), MCH clinical services have generally been delivered within an effective clinical governance framework. In addition, the majority of these services met or exceeded established national targets and benchmarks, particularly for the emergency department, elective surgery, inpatient management and the High Dependency Unit.
Notwithstanding these achievements, the ANAO indicated that the cost of service delivery at the MCH, while better than other Tasmanian acute hospitals, was significantly higher than comparable mainland hospitals—primarily driven by higher staff counts per units of weighted activity, more costly medical and surgical supplies, dependence on locum medical staff and higher administrative overheads.
The decision to assume ownership and continue existing service delivery at the MCH has come at an additional direct cost to the Commonwealth of $367.3 million over the six years to 30 June 2014 and resulted in greater risk exposure as hospital owner. These additional costs and risks, which arise from the unique arrangements adopted for the MCH, underline the need for effective and ongoing monitoring. System limitations made it difficult for DHHS to readily provide assurance regarding the use of some Commonwealth funds, while weaknesses in the MCH performance framework meant that the Department was not well positioned to assess whether its ownership and funding of the MCH was effective and whether the Commonwealth was receiving value for money from the arrangements.
Notwithstanding a generally sound working relationship, which has supported the ongoing administration of the arrangements governing the operation of the MCH, the ANAO found that the differing government objectives has meant that the Department and DHHS have expended significant time and resources revisiting issues relating to service changes and hospital costs. In particular, the mechanism specified in the HoA for changing its provisions—a Clinical and Financial Services Plan—has not been effective. In addition, while the HoA recognised the need to manage the MCH as part of Tasmania’s health network in the North West, how this principle should apply in practice to the integration of services between the MCH at the North West Royal Hospital at Burnie had not been settled between the parties. The ANAO reported that there continued to be disagreement between the Commonwealth and Tasmania over responsibility for funding capital works at the hospital above the threshold of $250,000 and a compromise on this issue had not resolved this disagreement. The negotiation of any new HoA from July 2014 presents an opportunity to address these issues and establish a clear and agreed strategic direction for the MCH.
Overall, the audit found that, while the MCH performs well in comparison to other Tasmanian hospitals with regard to the cost of delivered services, it did not perform as well against comparable mainland hospitals. Some costs reflected structural factors within Tasmania that contributed, in part, to the higher cost of service delivery. However, it was suggested by the ANAO that there would be benefit in further exploring options to improve the efficiency of service delivery at the MCH by reviewing costs in particular areas, such as for locum medical staff.
The Department agreed with the five recommendations, noting that the Department had made enhancements to its administration of the programme. The Department will continue its efforts in these areas, both as part of normal business practice and in the context of any future agreements with Tasmania.
Cross agency audits where the Department was involved
- Managing Conflicts of Interest in FMA Agencies (Audit Report No.47 of 2013-14,64 tabled 27 June 2014); and
- The Confidentiality in Government Contracts: Senate Order for Departmental and Agency Contracts Calendar Year 2012 Compliance (Audit Report No.4.65 tabled 26 September 2013).
Other Parliamentary Scrutiny
During 2013-14, the Department received a total of 43 Parliamentary Questions on Notice from the House of Representatives and the Senate, and 1,210 questions from three Senate Estimates hearings.
Senate Community Affairs Committee
The Department appeared before the Senate Community Affairs Legislation Committee (Senate Estimates) on three occasions during 2013-14 for a total of 4 days:
- Supplementary Budget Estimates – 20 November 2013;
- Additional Budget Estimates – 26 February 2014; and
- Budget Estimates – 2 and 3 June 2014.
Senate Finance and Public Administration Committee
The Department appeared before the Senate Finance and Public Administration Committee on three occasions during 2013-14 for a total of 3 days:
- Supplementary Budget Estimates – 22 November 2013;
- Additional Budget Estimates – 28 February 2014; and
- Budget Estimates – 30 May 2014.
The Department also gave evidence and/or made submissions to a number of Parliamentary Committee inquiries:
Senate Community Affairs Committee
- Inquiry into the out-of-pocket costs in Australian healthcare.
- Inquiry into the Health Insurance Amendment (Extended Medicare Safety Net) Bill 2014.
- Inquiry into the Australian National Preventive Health Agency (Abolition) Bill 2014.
- Inquiry into the Health Workforce Australia (Abolition) Bill 2014.
- Inquiry into the Private Health Insurance Amendment (GP Services) Bill 2014.
- Inquiry into the prevalence of different types of speech, language and communication disorders and speech pathology services in Australia.
- Involuntary or coerced sterilisation of people with disabilities in Australia.
- Inquiry into grandparents who take primary responsibility for raising their grandchildren.
Senate Finance and Public Administration Committee
- Inquiry into the Implementation of the National Health Reform Agreement.
Senate Rural and Regional Affairs Transport Committee
- Beef Imports.
Standing Committee on Health
- Inquiry into skin cancer.
Joint Select Committee on Northern Australia
- Development of Northern Australia.
Senate Select Committee into the Abbott Government’s Commission of Audit
- Commission of Audit established by the Commonwealth Government.
Judicial Decisions and Decisions of Administrative Appeals Tribunals
During 2013-14 the Department was involved in three matters in the Full Federal Court, 16 matters in the Federal Court, one matter in the Federal Circuit Court and 24 matters in the Administrative Appeals Tribunal (AAT).
Freedom of Information
The Information Publication Scheme is a requirement under Part II of the Freedom of Information Act 1982 (FOI Act) that requires all agencies subject to the FOI Act to publish information about what is available to the public. See the Department of Health website for information published in accordance with this requirement.
Documents that the Department has released in response to FOI requests can be found on the Disclosure Log.
Decisions of the Australian Information Commissioner
The Australian Information Commissioner made eight decisions on applications for review of FOI decisions by the Department: two decisions were affirmed; one was set aside; one was referred to the AAT; one being outside of jurisdiction; and three were not reviewed on discretionary grounds.
Anyone with concerns about the Department’s actions or decision-making is entitled to make a complaint with the Commonwealth Ombudsman, to determine whether the Department was wrong, unjust, discriminatory or unfair. Further information on the role of the Commonwealth Ombudsman can be obtained from the website.
During 2013-14, the Commonwealth Ombudsman investigated nine complaints against the Department’s administrative practices. Eight investigations carried over from 2012-13 but were subsequently closed by the Ombudsman’s Office. Of the nine new complaints investigations commenced in 2013-14, two remain open as at 30 June 2014.
Reporting Requirements Under Section 108 of the Tobacco Plain Packaging ACT 2011 (the Act)
The Department, pursuant to section 108 of the Tobacco Plain Packaging Act 2011 (the Act), reports that in the financial year 2013-14, 59 alleged contraventions of the Act were investigated. Of those matters investigated, none have resulted in criminal prosecutions or civil penalty orders. In this period, 19 warning letters were issued.
A copy of this report has been provided to the Minister for Health.