Political dispute follows failed elective surgery reform attempt

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One of the best ideas so far in this state election campaign is the Coalition’s proposal for people waiting months and in some cases, years for elective surgery to be able to have procedures done on the public tab in private hospitals.

Labor’s argument that this would “Americanise” Victoria’s health system suggests two things. The first is we should be grateful for the rude health of government MPs who clearly, aren’t hobbling around on degenerative knees waiting for a replacement. The second is they should binge-watch The Pitt to better understand the reality of US hospitals.

There is nothing ideological about wanting people who need urgent surgery to get it sooner. If it is more cost-effective to make use of surgeons, anaesthetists and nurses already employed by the private health system to take on some cases from slammed public hospitals, what exactly is the problem?

I follow the argument that public money should be spent on public hospitals but it is easier to be a policy purist when you are talking about someone else’s hernia. If it was your mum urgently needing a gastroscopy, you’d swallow any objections about her getting it in a private hospital bed.

Having given Opposition Leader Jess Wilson and health spokeswoman Georgie Crozier their due for borrowing a good policy from the Queensland government, let’s also be frank about the too-cute-by-half proposal to pay for it by getting rid of Breakthrough Victoria.

Breakthrough Victoria was the state-owned venture capital company established by the government at the height of the pandemic, when then premier Daniel Andrews and treasurer Tim Pallas were burning public money faster than the virus was spreading around the world.

From the moment that Breakthrough Victoria was established with a provisional investment profile of $2 billion over 10 years, the opposition has both despised its conception and coveted its corpus. It should surprise no one that, with an election in the offing, the opposition wants to carve off the best cuts, pick over the carcass and claim a very tasty budget saving of $1.27 billion.

This is a neat, serendipitous match with the estimated cost of paying for public patients to access 25,000 surgeries in private hospitals and clinics over the next four years. That works out to be about $50,000 per surgery. Both costings were done by the Parliamentary Budget Office.

The trouble is that, before the opposition could sharpen the knife, the government had filleted its own bird.

In June 2005, when former top bureaucrat Helen Silver completed her review of the Victorian Public Service, she recommended merging Breakthrough Victoria and another government entity, LaunchVic. Breakthrough Victoria ceased operations as a standalone company on June 30 this year.

Silver also urged the government to “reduce overall investment and the level of risk exposure from equity funds investment”. The government accepted these recommendations, merged the entities into a rebranded Innovation Victoria and, most importantly, cut by nearly 75 per cent future funds for it to invest.

Over the next four years, the government has set aside a mere $217 million for Innovation Victoria to invest – an average of $54 million a year.

These figures, which were provided to The Age along with the current budget of Innovation Victoria, were not made available to the PBO when it costed the opposition’s policies a month ago. That in itself is a worry. As much as any journalist enjoys a scoop, we shouldn’t be privy to budget information denied to an independent, statutory office established to promote financial integrity in Victorian politics.

Nonetheless, the PBO’s out-of-date costing has created something of a Neville Bartos dilemma for Jess Wilson and her elective surgery plan. Innovation Victoria receives only modest government funding and although it holds assets on its books nominally worth $824 million, most are illiquid. “There is no cash here Jess. Here, there is no cash.”

The bigger problem is one entirely of the opposition’s making. The PBO costed over four years the expense of providing additional elective surgeries. It costed over 10 years the savings from “winding up” Breakthrough Victoria.

Any numerate Treasury official will be perplexed as to how a forgone capital investment can be treated as revenue to offset an operating expense. Blind Freddy can see that savings from 10 years down the track can’t pay for tomorrow’s cataract surgery.

This is a recurring theme in the opposition’s campaign. Wilson this week claimed her election policies announced so far would generate more than $24 billion in savings. Most of this comes from her promise to save $22 billion from enforcing a back-office hiring freeze across the public service.

These savings, like those associated with Breakthrough Victoria, are calculated over 10 years. They are being used to pay for things the opposition plans to do in the first, four-year-term of a Wilson government. With due respect to dearly departed Tim Curry, you can’t budget in a time warp.

It is good for any political party that aspires to govern Victoria to be farsighted. Wilson has repeatedly said that fixing the state’s finances is a long-term proposition. She admits that under her own budgetary settings, Victoria will remain in cash deficit for the next six years.

She is also right to point out the government has so far announced no significant savings measures in this campaign or made any commitment to return the state to a cash surplus.

It is also not good enough, however, when questioned about the creative accounting behind her signature health policy, for Wilson to swear that red is black or seek refuge in whataboutism.

The opposition is promising to fill more potholes, hire more police, perform more surgeries, open new tech schools and preserve all other essential services while cutting taxes and fixing the budget. That is quite a list.

If it is to be taken seriously, the opposition’s savings need to be properly calculated and credible. And when Wilson gets her sums wrong, she should just fess up.

Chip Le Grand is state political editor.

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