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Maxwell Newton, “Wastage of the Welfare State a national disgrace,”
The Weekend Australian, June 14-15, 1980, p. 16.

The Federal Government is at last planning a tentative attack on the frightful waste in Australia’s hospitals.

Indeed, a massive clean-up and major reduction in staff and expenditure in the hospitals is an essential ingredient in the necessary process of dismantling the crumbling, creaking apparatus of the Welfare State.

In the five years to 1976-77, the great years of Whitlamite madness, government final expenditures on goods and services for health purposes rose by 87 per cent, as against a rise of only 36 per cent in all government final expenditure on goods and services.

As a result, the proportion of gross domestic product spent on health services increased from 2 per cent to nearly 4 per cent. The vast proportion of these enormous outlays has yielded little evident improvement in the nation’s health.

Indeed, there has been a boom in the number of invalid and sickness pension beneficiaries as the expenditure on “health” by government has blown up to previously unthinkable proportions.

While government expenditure on health services has more than doubled in the past seven years, the number of invalid and sickness pensioners has risen from 160,000 in 1971 to 324,000 in January 1980. Spending on “health” doubles and so do sick and invalid pensioner numbers.

It is clear that government have had little knowledge of how to evaluate the frantic growth in spending on “health”. It is now recognised that the spending of huge sums on hospital construction has been largely ill-conceived. Occupancy rates in hospitals are well down — with a figure of less than 70 per cent occupancy overall being widely mentioned.

Many hospitals will have to close in the years to come. Hospital construction will have to be drastically curtailed. It is also evident that much of the expenditure on increased health care has simply gone to line the pockets of the greatly inflated army of doctors as well as to establish work standards and income expectations among hospital and medical staff which cannot be afforded.

Australia’s health bill is now running at more than $80000 million annually, as against a figure of only $2500 million in 1972-73. Over a period of seven years, expenditure on health services has more than trebled and Federal Government outlays on health have more than quadrupled, from $766 million in 1972-73 to about $3200 million this year.

Of the $8 billion currently being spent on health services about 90 per cent is on current expenditure and of this $3500 million, or nearly 50 per cent in on hospitals. This year the Commonwealth will provide about $1500 million for hospital services and benefits. It is an uncontrollable rush of money.

Very little is known about the efficiency of our hospitals.

But this will probably change with a Commonwealth inquiry.

We would be entitled to believe, however, that after the fantastic boom in funds for hospitals in the past seven or eight years there would be a huge residue of grotesque inefficiency.

Thanks to the South Australian House of Assembly Public Accounts Committee, we have been given a glimpse into the filthy stables which are Australia’s hospitals today.

In its spellbinding report, of February 28, 1979, the South Australian Public Accounts Committee made these observations, inter alia:

A complete lack of effective systems of budgetary control to contain spending to real needs applies to most government departments and the Hospitals Department is no exception. While the services provided by the department have increased, the Public Accounts Committee considers that the growth in total annual operating costs from $58.2 million in 1972-73 to $226.9 million in 1977-78 (an increase of 200 per cent over five years) has outstripped both growth and inflation. It appears significant that this was the period that South Australian health services increased from $8.9 million in 1973-74 to $121.3 million in 1977-78.

The staff employed in metropolitan government general hospitals incrased 159 per cent from 3981 as at June 1967 to 10,317 as at July 1978, while the average daily in-patients increased 28 per cent from 1515 to 1937.

In metropolitan psychiatric hospitals, staff increased 92 per cent from 1158 as at June 1967 to 2227 as at July 1978, while the average daily in-patients fell 26 per cent from 2164 to 1605. Office staff increased 205 per cent from 91 as at June 1967 to 278 as at July 1978. The Hospitals Department did not know how many approved staff positions there should be in the department as at February 1978. The ratio of medical staff to patients at the Flinders Medical Centre was twice that at the Royal Adelaide Hospital, where medical staff numbers are being reduced. As at July 1978, there were 2371 student nurses and trainees employed at government general hospitals, yet less that 25 per cent of the students graduating are offered positions at the hospitals.

The public accounts investigations illustrate total lack of control by the hospitals department over food costs. For several years before April 1975, wholesale pilfering of foodstuffs was taking place at the Northfield wards and in the final year losses due to pilferage and wastage were about $100,000. The Public Accounts Committee considers the Hospitals Department was blatantly irresponsible for not improving control over foodstuffs at other hospitals after the Northfield wards episode, particularly as reports had been made late in 1974 about alleged pilfering of foodstuffs from Glenside Hospital. (The head cook at Glenside had a regular weekly run taking stolen food to Ayers House Restaurant in Adelaide. After he was apprehended no further action was taken to stamp out massive thefts of food from Adelaide government hospitals.

On September 19, 1974 the Parliamentary Standing Committee on Public Works approved the building of a $4.5 million frozen foods factory to produce 25,000 complete meals a day to supply metropolitan government hospitals on the justification supplied by the department that savings of more than $1 million a year, based on 1971-72 costs, would be achieved in metropolitan government hospitals. The factory cost $9.2 million, equipping of hospitals is estimated to cost $1.9 million, the latest revised demand from metropolitan hospitals requires a production of about 10,000 complete meals a day, as against estimated savings by the Royal Adelaide Hospital of $539,000 a year from the changeover, it is now evident that based on three months usage the hospital will have estimated additional catering costs, since the changeover to frozen meals, of $126,000 for the three months to December 1978, while the frozen food factory has budgeted for an operating deficit of $700,000 this financial year.

One could go on and on and on quoting from this astounding report, which lays bare the grotesque inefficiency and indeed criminal negligence of the bureaucrats administering the hospitals of Adelaide.

A torrent of Commonwealth money has merely flooded away what pockets of efficiency there were in the Adelaide hospitals system and has left a vast flood plain of destruction, twisted trees, dead bodies and filthy stinking waste.

Yet I do not forecast with any confidence that the current Federal Government inquiry into hospitals will bring up as much filth as that dredged up by the excellent South Australian Public Accounts Committee.

In a recent knock-down drag-out fight between the Federal Auditor-General and the A.C.T. Health Commission lasting nearly three years, the Auditor-General was finally defeated in his attempt to force the commission to present its accounts in the normal form of accrual accounting used by all business firms in Australia. The commission won this bloody and bruising struggle to retain the system of penny notebook cash accounting which assists greatly in hiding from the public gaze the true state of the hospital finances of the A.C.T.

The Health Department officials were thus able to retain a system of financial reporting which prevents any true and fair assessment of the cost of running the hospitals under their control.

It’s enough to make one sick (if a lingering sense of patriotism did not prevent one from imposing yet another burden of waste and inefficiency on the nation’s long-suffering taxpayers).

(in order of appearance on Economics.org.au)
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  2. The Economic Guerrillas: A lecture in honour of Maxwell Newton
  3. Maxwell Newton Audio at Mises.org
  4. Max Newton on Video at first Mises Institute Conference (1983)
  5. Up the Workers! Bob Howard's 1979 Workers Party Reflection in Playboy
  6. Max Newton stars in Ron Paul video
  7. Bunny of the Welfare State
  8. The Crumbling Oligarchies
  9. Is Australia So Bad That It Can't Get Worse?
  10. Max Newton: Cauldron-Journalist
  11. Max Newton: a muckraker makes good
  12. An open letter to Bob Hawke, B. Litt., Oxon; from Maxwell Newton, B. A., Cantab.: In black and white
  13. Welfare Creates Poverty
  14. Welfare State a National Disgrace
  15. A "spy" replies
  16. Ron Manners on the Workers Party
  17. Josh Frydenberg vs Maxwell Newton on Sir Robert Menzies
  18. The traumatic birth of a daily
  19. The Bulletin on Maxwell Newton as Workers Party national spokesman on economics and politics
  20. Menzies: A Legacy of Lies and Legislation Limiting Liberalism
  21. Max Newton: Maverick in Exile
  22. King Leonard of Hutt River Declares Defensive Just War Against Australia the Aggressor
  23. Crying in the wilderness
  24. State aid and the privileged
  25. Maxwell Newton on Reg Ansett
  26. How to stop Labor running wild
  27. 1975 Max Newton-Ash Long interview on the Workers Party
  28. The Working Journalist in Public Administration
  29. Max Newton: controversy is an asset
  30. Maxwell Newton chapter of Clyde Packer's No Return Ticket (1984)
  31. The "irresponsible" way is the only way
  32. Maxwell Newton on Moral Hazard
  33. Maxwell Newton on Handout America and unbridled Welfare Mania in 1980 New York Post
  34. Tony Dear on Paul Krutulis, the Workers Party and murder
  35. Max Newton on the gold standard
  36. Maxwell Newton on ideas for cutting government waste
  37. Maxwell Newton on Bureaucracy
  38. Maxwell Newton measures bullshit tertiary schooling
  39. Australia's biggest newspaper insider on manipulating the media
  40. Never put your faith in politicians
  41. Profiting from propaganda
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