Shadow finance Minister Rob Lucas said today the CEO of SA Health, Dr Tony Sherbon, confirmed SA Health had over spent by $210 million last year and the Sustainable Budget Commission (SBC) had told it to prepare annual budget cuts of $360 million per year.
It is clear that Treasurer Foley has lost control of his budget and that his financial mismanagement and incompetence has meant that the billions of dollars extra from GST and property taxes received over the last 6 years have been wasted.
Dr Sherbon told the Legislative Council Budget and Finance Committee today SA Health had received an extra $75 million for overspending at the time of the mid-year budget review. And since then there had been another $135 million blowout in health spending. This means the total health spending blowout for 2009/10 compared to the original budget was $210 million.
Dr Sherbon also confirmed that the SBC had told it to prepare annual savings options of $450 million per year by 2013/14 and that Cabinet would then choose $360 million of budget cuts from those options.
Dr Sherbon said 4000 health jobs would have to go if $450 million of cuts were required. On that basis if Cabinet eventually decides on $260 – 360 million per year of cuts then it would appear 2000-3000 jobs would have to go.
Dr Sherbon confirmed that any cuts above about $50-100 million per year would lead to an inevitable cut in health services in SA.
Whilst Dr Sherbon claimed the work of the SBC was ‘hypothetical’ he will be aware that in April he received a memo from the Chair of the SBC Geoff Carmody making it clear Cabinet on 6 April 2010 had endorsed the SBC process. In fact the memo stated Cabinet had:
“Approved the allocation to agencies of the centrally held savings task, already included in aggregate in the forward estimates and an additional savings task to help restore the fiscal position to enable the development by agencies of a menu of budget improvement measures (savings) and endorsed the proposed process of the SBC for the identification of a menu of savings.”
It is clear that Treasury’s advice is that Mr Foley’s budget is in such a mess that if the savings task for health is reduced to say $250 million per year then other departments will have to absorb even higher cuts to try and preserve the budget surplus.
It is also now clear that prior to the election Mr Foley has deceived ratings agencies about delivering balanced budgets by using massive unspecified savings targets over and above the $750 million over 4 years announced as the work of the SBC.
Mr Foley has described himself as not ‘the sharpest tool in the kit’ and sadly this financial mess and horror budget is the end result of leaving him in charge of the State’s budgets.