Senate Community Affairs Legislation Committee, , 7:35:50 to 7:39:59
Senator Ruston questions the 2.55% price increase recommendation for AN-ACC, noting it appears low compared to the Fair Work Commission's wage increases. IHACPA explains their cost-based methodology and the exclusion of profit margins from their advice.
Topics: Health, Workplace relations, Cost recovery
Speakers: Prof Michael Pervan, Senator The Hon Anne Ruston, Senator Ellie Whiteaker
And Senator Ruston, over to you.
Thank you. So I'm I accept your like obviously that you know the quite extensive way you go about reaching your determination in relation to the price increase that you obviously recommend to government in relation to Annec. I mean, I suppose from the layman's perspective, given the hyper flashy environment that we're in at the moment, and of course the four point seven five percent um pay increase that we saw from the Fair Work Commission, um, and you know, a lot of the challenges of change that's um occurred in the sector. Um I I'm just interested, I mean, two point five five percent did seem a very low number to be recommending, to be fair. Um particularly as I said, you know, four point seven five percent. So where could I send somebody from the sector who raises this issue of the inadequacy of the two point five five percent for them to actually find a level of transparency about the methodology and calculations, etc. that you've used to get to that point so that they can better understand how you got there. Um, is there a place where somebody could get that information?
Thank you, Senator. And actually, I'll take um full responsibility for that. We put, as you know, we put everything on the website. Our technical specifications, the pricing frameworks, the actual pricing advice. Um, it's all there in all of its mathematical glory. But if you're running a resident care facility, you're not going to have time to spend the eight or nine hours to digest all of that. It's also written by analysts and statisticians, so it's not in a uh language that you would say is very accessible, and I haven't done my job, I think, in providing a more accessible communication. But we've got to actually get better, in fact, in similar terms to the way that I just walked you through how the price was built with a bit more detail in it so people can see what is in the pricing advice we give to government, but also what's not. So, you know, the the the most regular kind of um exchange that we have with Stuart Brown is that Stuart Brown always wants to raise the issue of margin. And we are compelled by government direction to provide pricing advice built on actual costs. And profit margin isn't a cost. It's something you generate through efficiency or through increased revenue. And so we can't build a margin into a price because that's not driven by the actual operational costs. But our component is very much boxed in to providing that cost-based price advice. Now, if anyone uh wants to have a conversation or be walked through that process, or they've got specific issues in addition to the four or five times a year that we put things out for comment and engagement, they can email me, they can email the inquiry's mailbox. In fact, a couple have and when we've talked them through how the price was built, they've understood it. They've not been happy about it, but they've still understood why the numbers come out the way they come out.