A decision by the former Coalition government not to fund the My Health Record system beyond the current financial year is contributing to the “immediate” financial pressures now weighing on the federal Budget.
Ahead of the release of the Final Budget Outcome for 2021-22 next week, Finance minister Katy Gallagher on Tuesday said that around $5.5 billion in unexpected costs have emerged since the end of June.
The revelation comes as the government expects a $50 billion improvement in the budget bottom line, largely due to the spike in tax revenue from commodities in the first half of this year, as well as lower-than-budgeted payments.
While the bulk of the $5.5 billion stems from COVID-19-related costs and at least $2 billion in flood-related costs, Senator Gallagher said numerous programs that were ongoing but had only been funded for the short-term were adding to the “immediate pressures”.
“We’ve already had to make provision for costs in the order of $5.5 billion. These are costs that were not provided, or no provision was made for,” she said during an update with Treasurer Jim Chalmers on Tuesday.
Senator Gallagher pointed to the My Health Record as one of the ongoing programs that wasn’t “factored in”, which is now “creating pressures” on the budget, particularly over the forward estimates.
“Clearly, under the previous government, there was decisions taken that ongoing programs were not funded in an ongoing sense, and that is creating pressures in those forward estimate years as well,” she said.
The former government adopted a two-year funding cycle for the My Health Record in 2017, having funded the system – which was previously known as the Personally Controlled Electronic Health Records (PCEHR) – on a three or four-year basis, except for in 2014.
In 2017, the My Health Record received $374.2 million over two years – funding used to bankroll the controversial switch from opt-in to opt-out – followed by a further $200 million in 2019-20 and $301.8 million in 2021.
With funding set to expire at the end of this financial year, and a significant program of work continuing to modernise My Health Record’s underpinning platform, the government will have to dig deep in one of the next two funding rounds.
It comes at a time when the government is already facing budget pressures from other significant technology projects including the modernising business register program, which is expected to cost $1 billion more what has already been budgeted.
At the update on Tuesday, Treasurer Jim Chalmers said the upcoming Budget, slated for 25 October, was likely to be a “standard, bread and butter” one due to the various financial pressures facing the government.
The Australian Digital Health Agency (ADHA) entered into a new $100 million contract with Accenture in August to continue its support of the My Health Record until 2025. It is planning to progressively decommission legacy infrastructure supporting the system during this time.
With a recent $5.1 million amendment to the umbrella contract, which expired at the end of June, the total cost of the national infrastructure operator arrangement with Accenture sits at $746.3 million since 2012.
The AHDA has also recently migrated the system to Microsoft Azure, a move that coincides with its $27 million exit from the Global Switch Ultimo data centre in Sydney, which was briefly delayed by supply chain issues.
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