WA’s recent history of rolling back privatisations could yet inform the future of the state’s ambulance services.
It would be hard to find a pundit or politician in Western Australia who opposes an inquiry into the state’s ambulance services.
Ambulance ramping, the practice of treating patients in an ambulance rather than admitting them to an emergency ward, has been a blemish on Roger Cook’s record since he took the health portfolio from Kim Hames in 2017.
In the month after Mr Cook took the job, the total of hours ramped hit 641 hours; four years later, that number had ballooned out to 4,104 hours.
That’s led a swag of critics, including opposition health spokesperson Libby Mettam, the Australian Medical Association of WA, and the Australian Nursing Federation, to frequently lambast the state government over its handling of public hospitals.
Recent moves to temporarily halt elective surgeries at public hospitals in Perth, Geraldton and Bunbury have only worsened perceptions of a health system in crisis.
A pre-budget announcement of $1.9 billion for the state’s hospitals, including funding for 500 doctors and 100 nurses, as well as $100 million for emergency department support, appeared tailored to warding off these criticisms, with Mr Cook quoted as saying they would improve patient flow and better support hospital staff.
“Like other Australian jurisdictions, the WA public health system is experiencing an unprecedented level of demand,” he said.
“We continue to stand right behind our workforce while delivering high-quality care to the WA community.”
Separate to that, an inquiry into the delivery of the state’s ambulance services launched in the Legislative Council in June is set to consider the prioritisation of 000 calls and the efficiency and adequacy of ambulance services in WA.
Consideration of alternative service delivery models is an intriguing addition, given WA is one of just two jurisdictions where ambulance services are contracted to an external provider (the other being the Northern Territory).
Some commentators have drawn a long bow in connecting committee chair Pierre Yang and Mr Cook with the United Workers Union, to which they owe their factional support, and an inquiry that puts a question mark over St John Ambulance WA’s contract with the state’s health department.
Neither Messrs Cook nor Yang have said they want these services brought in-house. The inquiry is due to wrap up next March.
Mr Hames, who was health minister during Colin Barnett’s two terms as premier, is one notable critic of the inquiry, having been quoted saying a change in providers would not address limited hospital capacity.
That’s in contrast to the position taken by key figures from UWU, with state ambulance coordinator Fiona Scanlan having previously argued St John WA’s workplace culture meant services ought to be directly handled by WA Health.
Still, that the inquiry will consider alternative service models coincides with a four-year trend whereby the current state government has wrested control of public works back from the private sector.
That’s included insourcing of millions of dollars’ worth of works across Water Corporation, the Department of Justice, and the Department of Health since 2017.
Dave Kelly, who holds the water portfolio, was a United Voice state secretary prior to entering state parliament. Photo: Gabriel Oliveira.
Usually, this has been done on the proviso that bringing work back into the public sector would be done where it is responsible and economically beneficial to do so.
Whether that has always been the case is another question.
Serco, which was the first major contractor removed from the public payroll, lost its contract managing Wandoo Rehabilitation Prison in 2017.
Fran Logan, who had held the corrective services portfolio, argued that restoring the prison to public control would save taxpayers’ money.
That was despite the inspector of custodial services saying just months earlier there was no performance-based reason for Serco not to hold the contract.
While the termination of the contract took place at the same time as the prison was turned into a women’s drug and alcohol rehabilitation facility, no business case was made public, and the auditor general’s office later found Mr Logan’s decision not to provide parliament with the cost savings was neither reasonable nor appropriate.
By contrast, the decision to bring management of Melaleuca Remand and Reintegration Facility back into departmental control aligned with findings from the inspector general that Sodexo’s contract was priced too low to meet operational requirements.
Of higher profile was the termination of two contracts with Water Corporation, including water, wastewater and drainage networks works conducted by Programmed, between 2019 and 2020.
According to the state government, bringing those services in-house was expected to lead to a $2 million reduction in annual costs for Water Corporation.
Other reversals, including the decision in March 2020 to return non-clinical hospital services at Fiona Stanley Hospital to public hands, were less cost beneficial, with the state government at the time indicating additional annual costs of $8 million a year with a one-off transition cost of $13 million.
Transitioning services at Peel Health Campus back to public control also incurred $19.5 million in costs in the first half of 2021, although no ongoing impact is expected on the hospital’s operating costs.
No matter the cost, these moves represent a significant shift in political orthodoxy in recent decades, with privatised services having been warmly embraced by premiers Nick Greiner in NSW and Jeff Kennett in Victoria in the 1990s.
In WA, meanwhile, former premier Richard Court accelerated privatisation through the sale of major assets, such as Bankwest, SGIO and Alinta, to bolster the state’s finances, as well as capitalising on the WA Inc scandal to significantly reduce the cost and size of the public sector workforce.
That also included the use of competitive tendering and contracting as a way of driving efficiency and cost effectiveness across the public sector.
The economic thinking behind these moves is generally thought to be sound, with David Gilchrist, professor at the University of Western Australia’s accounting and finance school and former assistant auditor general, saying that human services, like aged care, can be delivered far more cheaply by external providers.
In addition, he argued private contracting had been useful given a growing inclination towards smaller government in recent decades.
“We hear debates about small and large government,” Professor Gilchrist said.
“Those debates essentially have the effect that, as departments grow and as government grows, there’s increasing pressure on reducing taxes in national debates, and particularly on being competitive from a tax perspective internationally.
“That [means] government needs to reduce its size.”
Others, such as UnionsWA secretary Owen Whittle, argue the opposite.
Mr Whittle told Business News that farming out government services led to less secure forms of employment as businesses embraced casualisation and term-limited contracts to cut costs.
“The methods of privatisation really lead to the need for the profit margin that’s built into the whole proposal,” Mr Whittle said.
“Privatisation normally leads to much worse outcomes for workers, as labour costs and the quality of labour is one of the easiest levers that a private provider can pull in terms of saving money.
“For us, it’s always linked to worse outcomes for working people.”
Osmond Chiu, research fellow at Melbourne-based think tank Per Capita, said there had been a broad shift away from privatising services since the 1990s.
While he said many instances of reverse privatisation in Australia coincided with contracts coming up for renewal, Mr Chiu argued policymakers had begun to appreciate the interconnectedness between quality of government services and insecure working conditions associated with the private sector.
He also said shifting opinions from establishment figures, such as Australia Competition and Consumer Commission chair Rod Sims, had shown growing discontent with privatised services.
“Towards the end of the 1990s, there was an increasing recognition that a lot of the claims that were made about the benefits of privatisation didn’t come through,” Mr Chiu said.
“From [that point] you started to see the beginnings of the reversals of some of these privatisations.”
In some instances, a change in thinking followed on from a change in government, with the Liberal Party losing power in NSW in 1995 (John Fahey) and Victoria in 1999 (Jeff Kennett).
Mr Kennett’s dalliance with privatising public transport proved the most politically unpalatable, with his Labor successor, Steve Bracks, having overseen a $105 million plan to bring train and tram operations back into public control.
NSW, meanwhile, sought to buy back Port Macquarie Base Hospital from its operator after the state’s auditor general found the department had effectively paid for the facility twice and then given it away.
In the west, though, no serious effort to roll back private delivery of public services occurred after Mr Court lost office to Geoff Gallop in 2001.
According to veteran political journalist and Political Perspective columnist Peter Kennedy, this may simply have been a function of Mr Gallop and his successor, Alan Carpenter, having bigger fish to fry.
“There was a stoush over school cleaners when Alan Carpenter was education minister, and … as the private contracts ran out, he was expected to bring them all back into the public sector, but he didn’t do that,” Kennedy said.
“His view was, ‘Let’s have a mix of public and private sector school cleaners, and we can see which is more efficient,’ which didn’t please United Voice, which covered the school cleaners.
“So, he was at odds with them.
“As far as others are concerned, I don’t recall … an effort during the Gallop-Carpenter days to push back these things.”
That’s not to say WA’s recent history of reversing privatisations is unprecedented.
Labor-led governments across Australia have shown an increasing willingness to terminate contracts with the private sector in recent years, with Queensland’s current state government tearing up two separate prison management contracts with Serco and Geo Group in 2019.
That was despite those contracts having been signed under a previous Labor government.
While that move followed a corruption watchdog investigation that criticised the disconnect between the state and the prison’s operations, Queensland’s state government was not directly advised to bring operations in-house.
Still, at a cost of $111 million over four years, that’s exactly what the state government did, explaining the move was done to ensure prisoner safety.
Pledges to insource services are also not limited to state’s governed by Labor.
In South Australia, where Labor is in opposition, the party has pledged to rip up contracts with Downer and French business Keolis for the operation of Adelaide’s tram and train services if it wins next year’s state poll.
Overall, researchers like Mr Chiu cast doubt on the notion that reversing privatisation is radical or exceptional.
He said his research had turned up more than 40 instances of reverse privatisation of assets or services in the past 20 years.
Still, he believes the actual number is likely to be much higher.
“If a bit of a department has decided a function should be done in-house now, as opposed to outsourced, unless there’s media coverage or a media release from a union or an MP it might not be well known,” Mr Chiu said.
“Five or ten years later, it’s just seen as something that’s always been done because there’s been that loss of corporate memory.”
Even if these moves have precedent across Australia, WA’s efforts to curb the private sector’s encroachment on the public service appears to have garnered fervent critics and supporters.
Mr Whittle counts himself as a supporter, commending the state government for an agenda he said would realise better outcomes for workers in WA.
“I think [WA is] one of few jurisdictions in Australia, let alone the world, that has led the way in bringing services back in-house,” he said.
“This is something that’s definitely not automatic and it’s certainly not something that’s really occurred at this sort of scale in WA before.”
Kennedy argued the increased representation of leaders from the union movement, as well as the strength of their political donations and the weight of their endorsements in preselection battles, had pushed the issue to the forefront.
“The extraordinary thing is that, as the proportion of union membership has declined, the influence of the unions in Labor politics has increased,” he said.
“So, they are now saying to the government, ‘You’ve got to deliver for us’.”
Whether this influence drives ambulances back into the health department’s hands remains up in the air.
Mr Cook’s office was asked whether cabinet had ever discussed or considered the possibility of bringing ambulance services in-house, however, no response was given in time for publication.
Ms Mettam, the opposition’s health spokesperson, told Business News there was the potential for ramping figures to be buried if services were brought in-house, given St John Ambulance independently publishes data on ramping at present.
She said ramping was a result of emergency department admissions as opposed to the ambulance provider.
“We certainly would welcome a look at what the real issues are that are causing record levels of ambulance ramping,” Ms Mettam said.
She said she favoured an inquiry with far broader terms of reference than at present.
“There are significant inefficiencies within the health system which the government has been unable to address,” Ms Mettam said.
“I would suggest … it would be much better use of resources for such a committee to look at some of the challenges within our hospital system, given that is where we are seeing the significant issues of a system significantly challenged.”
Mr Whittle brushed aside criticisms linking the union movement’s political weight and moves to transition workers to the public sector, arguing most of these workers were already unionised.
“What the unions are campaigning for is to ensure that the quality of services is improved,” he said.
“Where we’ve got the pockets of unionised workers … we are really campaigning to ensure there is a well-run public sector that is ensuring good jobs and good services for the community.
“We believe the government is best placed … to run those programs.”
When asked whether he would like to see the Department of Health directly manage the state’s ambulance services, Mr Whittle said UnionsWA would like all government services to be brought back into public hands.
That included Serco’s contract to operate Acacia Prison, which the most recent budget papers estimate was worth $885 million in the year to June.
“Any of these privately run contracts we want to see come back into public hands,” Mr Whittle said.
“Whether that’s ambulances, prisons or services within hospitals, as a general policy we believe outsourcing and privatisation has not worked.”
