07/04/2011 - 00:00

Core business the point for government

07/04/2011 - 00:00


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A bizarre case of theft underscores the need for the state to outsource unnecessary work.

WHEN the issue of who operates non-core services in places like hospitals rears its ugly head again, Premier Colin Barnett should look to his Corruption and Crime Commission to find just one good reason why bureaucracy doesn’t belong in the commercial world.

In poking around the state parliament website I stumbled across a CCC document entitled ‘Report on the Investigation of Alleged Public Sector Misconduct in Relation to the Activities of an Employee of the Department of Health’.

This is one of the most extraordinary tales of inept management I’ve ever heard of and offers a very good example of why the Health Department ought to stick to what it does well, and outsource where it can to commercial operators.

The investigation by the CCC reveals how a worker at a cafe in a Perth hospital apparently stole almost $200,000 over a five-year period.

The unnamed leading hand at Kite Cafe was a long-term and clearly trusted employee who pinched the money to fuel the most unusual of habits.

The CCC found that this employee spent $257,292 on Estee Lauder’s Clinique cosmetic products between April 2004 and October 2009 at Morley Galleria shopping centre.

The actual reason for the theft – the unnamed employee was given a nine-month prison sentence in September – is a colourful side issue to the real problem here: what is a hospital doing running a cafe?

If the venue, the Kite Cafe in the Princess Margaret Hospital for Children, can lose $186,812 over five years – or nearly $40,000 per annum – without noticing, you really do have to wonder what management is doing.

The worst-case scenario is that the state’s Health Department is losing money like this all over the place. Another bad outcome would be if Princess Margaret was haemorrhaging money in other operations at the same rate.

Most likely, though, is that the health system at the department and this hospital are focused on delivering services as efficiently as they can within budgetary constraints and despite rising costs. The fact is a cafe is not core business and, therefore, gets overlooked.

Let’s face it, the Labor opposition gets front pages over queues in emergency, not the waiting time for a latte with a twist of lemon.

So the cafe costs creep up and no-one suspects the extraordinarily well-coifed leading hand who always looks a million bucks (actually, that ought to be a pretty obvious give away, but no-one is looking).

And fair enough. If we are going to have a state bureaucracy we want it focused on health and finding every dollar of value for the money we believe we are spending on that sector.

What we don’t need is the bureaucrats managing cafes – or catering or cleaning or servicing the lifts if they break down.

It’s not to say those areas are not needed. They are as vital to the health sector as they are to any other operation. We all need our offices cleaned.

But the fact is the whole rest of the world gets its cleaning done by outsiders. The wheels don’t fall off when a contract cleaner is employed, even with the particularly sensitive issues that arise in a hospital.

Follow the dollars

THE development of a major city in the north-west to provide a lasting legacy from the current boom is something many leaders in the state feel strongly about.

The issue is not new. In the 1960s and 1970s, state government figures including the late Sir Charles Court tried to tie minerals development to the establishment of properly functioning, permanent towns.

The aim was to avoid the shanty towns and temporary infrastructure that popped up overnight during the population explosion of the gold rush in the 19th century, only to be left as ghost towns when the boom ended.

Part of that issue was the fact that even temporary populations needed infrastructure such as post offices and courthouses. All that came at the expense of taxpayers, and these were often the only buildings left standing after the miners had disappeared.

But the experience in the Pilbara over the past half-century has not been phenomenally better. While towns like Newman and Pannawonica were oases of suburbia in the harsh north-west landscape, they have had their own issues.

Many were company towns, which limited the opportunities for service industries to develop. The change in recent times to local government management has meant a reduction in direct spending from the miners.

Even in coastal places such as Karratha, which has grown immensely in recent years, the challenge to create a genuine metropolis is significant – from the climate to the lack of raw materials.

But as a wise person said to me last week, just follow the money.

Firstly, the state government is spending millions through its Royalties for Regions scheme. While this might seem like one giant pork barrelling rollercoaster (apologies for the mixed metaphor) there was a real need for towns in the regions where the money is earned to be upgraded.

No doubt there will be waste, the government is involved after all; but the resulting millions being spent up there on a range of projects outside mining is a positive development. It is just a pity it wasn’t done 10 years ago when the labour shortages and cost were not such an issue.

But the government could also do a lot more. A real city at Karratha doesn’t need that much land. I sat down with some leading builders recently and they reckoned 600 hectares would be enough to get things really going.

But the view is the state is drip-feeding the land supply out rather than just releasing it quickly and letting the private sector get on with it. The view is that the government doesn’t want to see land developers take the profit when it could itself. If this is the case it is causing damage to the idea of developing the north – by keeping land prices unnecessarily high. Just like Canberra’s mining tax, the state government should not be concerned about short-term gains for private operators; it ought to be encouraging development for long-term gain.

Some in business recognise the opportunity up there. Last week we reported that town planner Greg Rowe & Associates has opened a Karratha office, adding to its branch in Port Hedland.

This is a significant step for a professional services firm.

I note civil and structural engineering consultancy Pritchard Francis has done the same thing in Broome recently. There are plenty of others that recognise the opportunities the north has to offer who are putting roots down there.

That is how communities are developed. Government needs to pave the way by encouraging development and then stand out of the way when the private sector is ready to move in.

• mark.pownall@wabn.com.au.


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