Bill to permit hospital boards to store funds

Press, 27 November 1982, Page 5

Bill to permit hospital boards to store funds

Parliamentary reporter A bill intended to stop end-of-year spending sprees by hospital boards has been introduced in Parliament. The Hospitals Amendment Bill (No. 2) gives hospital boards the right to carry over to the next financial year funds not spent. At present that is denied, and boards spend the money on low-priority items so grants will not be cut the next year. Introducing the bill, the Minister of Health, Mr Malcolm, said he was horrified to see the large sums of money spent by hospital boards in the last three months of the financial year. Hospital boards were rewarded for. following bad business practice, he said. This was not the fault of the boards, but of the law. The Public Expenditure Committee had recommended in 1977 that boards should be allowed to carry forward under-expenditure, and after that the Planning Council in 1979 and the Advisory Committee on Hospital Board Funding had advised similarly, Mr Malcolm said. When he became Minister of Health he “attacked the matter with some vigour,” he said. He wanted the bill in effect this financial year. At present, if a board over-spent, additional funds were provided. However, a board managing prudently could not carry forward amounts unspent.

The bill provides that boards over-spending may borrow on overdraft, on the consent" of the Minister—the amount borrowed to not exceed 1.5 per cent of the board’s base allocation, and the interest to be charged against the next year’s revenue. Under the bill, boards may seek Ministerial authority to carry forward unspent money for spending the next year on items other than salaries and wages. Boards may now go into overdraft with the consent of the Minister, but must extinguish the debt by the end of the financial year. Mr Malcolm said that the bill would allow boards to run as businesses, smoothing spending between one year and another, and not on the unreal principle of perfectlybalanced financial statements at March 31 every year. The Opposition spokesman on Health, Mrs Ann Hercus, questioned the long hiatus between the Public Expenditure Committee’s recommendation five years ago, and the bill. She asked why bulk allocations, a recommendation of the committee, were not taken up in the bill. Mr Malcolm said that until the method of equitably funding boards on a population basis was working fully, a bulk allocation would compound existing biases. Mr Malcolm said that he was considering introducing

a means for boards to invest funds from their allocations to pay for later developments. the bill had been discussed informally with the Hospital Boards Association, arid individual boards, and he had no doubt that it would be welcomed by hospital boards. The bill was referred to Parliament’s Health and Welfare Select Committee, for immediate submissions by the Hospital Boards’ Association.