Auditor critical of $5b Labor health fund

The national auditor has criticised the federal government’s advance payment of $170 million towards the redevelopment of a Hobart hospital, which was part of a deal with independent MP Andrew Wilkie.

The Australian National Audit Office (ANAO) also took aim at the selection process used to allocate $5 billion worth of grants from Labor’s Health and Hospitals Fund (HHF).

The Royal Hobart Hospital project received an advance payment of $170 million in June 2011 which amounted to 70 per cent of its HHF funding.

The auditor, in a report released on Wednesday, said the payment was made after a request by the Tasmanian premier that the funding be paid in 2010/11.

The federal health department didn’t provide “substantive reasons” for the early payment, the ANAO report states.

“Further, the decision to make such a substantial advance in funding has constrained (the department’s) ability to manage risk in future through regular means such as withholding payments in the event of poor progress,” it says.

There have been four funding rounds under the HHF to date, and the audit report notes that in rounds one and three some 14 projects were provided with payments ahead of when the money was actually required.

The ANAO estimates that this has resulted in the commonwealth losing interest revenue worth $145 million.

The ANAO also questioned the selection process which determines which projects receive funding.

An advisory board tells the federal health minister whether or not a project is eligible for funding but doesn’t rank the projects.

“The health minister was only provided with limited information on each eligible proposal and could have been supported further by being given advice on the relative merits of the eligible applications,” the audit report says.

Nevertheless, the ANAO makes clear the Gillard government hasn’t favoured Labor seats when it comes to doling out cash.

“The distribution of projects and funding over the first three HHF rounds has not resulted in any federal electorate type being favoured over others,” it states.

The fourth round is yet to be audited.

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