Evidence given today to a Parliamentary Committee by the Health Department Chief Executive has cast further doubt on Rann Government claims of $130 million in savings from a proposed Shared Services Centre.
The CEO of the Department of Health, Dr Tony Sherbon, gave evidence to the Legislative Council’s Budget and Finance Committee this week that some of the department’s budget cuts (such as reduction in payroll costs) were exactly the same as budget cuts included in the Government’s Shared Services proposal.
Dr. Sherbon told the committee that as part of his department’s savings task he was already cutting the number of payroll offices:
“Currently, we are reducing for instance, the number of payroll offices. Currently, there are 22 sites for payroll within the South Australian health care system. We would like to see that reduced to one,” Dr Sherbon said.
Liberal Member of the Legislative Council, Rob Lucas, said today that Dr Sherbon’s evidence is consistent with similar evidence given by the CEO of the Department of Families and Communities, Sue Vardon.
In last year’s budget, Mr Foley outlined $130 million in savings over four years from Shared Services, but in addition to that, each department was required to implement budget cuts to increase ‘efficiency dividends’ or ‘operational efficiencies.’
“For example, in the last two budgets Health has been told to implement budget cuts of about $270 million over the period 2006-2011,” Mr Lucas said.
“The evidence from Dr Sherbon and Ms Vardon now confirms that there is a budget ‘black hole’ due to ‘double counting’ of savings included in the budget papers. For example, Dr Sherbon’s cuts in ‘payroll costs’ are already included in Mr Foley’s Shared Services savings targets.
“Therefore, it is highly unlikely that Mr Foley and the Rann Government will be able to achieve its claimed $130 million in savings from its Shared Services proposal.”
Dr. Sherbon also told the committee that there had been a further $24 million blow out in last year’s health portfolio budget, partly caused by the failure of the department to meet Treasury imposed savings targets. This meant the total budget blow out for health last year had been $227 million.