Dealings of South Burnett Regional Council (SBRC)
SBRC's Private Hospital
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first published: 16th March 2016
revised and updated: 6th November 2019
Click to select, or scroll down the page:-
Overview
History of the Private Hospital
Kingaroy Shire Council
The former KSC (Kingaroy Shire Council) purchased the hospital in 2002
when it was known as St Aubyn's Hospital.
KSC set up a private company to control its private hospital.
KSC leased the hospital to its private company
which sub-leased it to a commercial hospital operator, Pulse Health.
The hospital's name was changed to
"South Burnett Private Hospital".
SBRC superseded KSC in 2008.
Pulse Health Quits
In 2013, Pulse Health announced that it was considering quitting
because the hospital was making a loss.
SBRC announced that if necessary it would run the private hospital itself.
In March 2014, Pulse Health gave notice
that it intended to cease operating the hospital.
In June 2014, SBRC renamed its private company
from "Kingaroy Private Hospital Limited"
to "South Burnett Community Hospital Foundation Limited".
However, the private hospital is not actually a community hospital
because a majority of people in the South Burnett community
do not have private health insurance.
The constitution of SBRC's private company
was substantially modified,
apparently to better enable the company to control the hospital in
a non-accountable and non-transparent manner,
and to enable it to be registered as a charity.
In May 2015,
SBRC considered business proposals
to use the hospital buildings as a day-use multi-purpose medical centre.
SBRC knocked back the proposals.
At the end of June 2015,
Pulse Health finally walked away
because the hospital could not be run profitably.
Surgical operations and overnight stays at the hospital ceased.
Some specialists continued to perform consultations at the hospital,
with the front desk operated by SBRC.
The Search for a New Hospital Operator
It soon became clear that no commercial hospital operator
was interested in taking over the hospital.
There then began a series of stunts, lobbying and spruiking
by local politicians,
at considerable expense to ratepayers.
In September 2015,
Mayor Kratzmann announced a proposal for SBRC
to become the operator of its hospital.
In October 2015,
SBRC spent $100,000 of ratepayers' money on
commissioning a revenue and cost forecast model,
also called a due diligence report.
The report took only a few weeks to be delivered.
Some local politicians incorrectly referred to the report as a feasibility study.
A revenue and cost forecast model is only part
of what a proper feasibility study should be.
Despite all commercial hospital operators having concluded that
it was not possible to operate the hospital profitably,
SBRC pressed ahead with its plans.
Opinion polls indicated that most South Burnett residents
were not in favour of SBRC running its hospital.
In January 2016,
SBRC voted to become the operator of its hospital.
Two councillors changed their minds at the last minute
and voted against SBRC taking over the hospital.
Their u-turn may have been a direct result of opinion polls
that may have led these two politicians to fear
for their chances of success in upcoming council elections.
Also in January 2016,
SBRC renamed its private hospital
from "South Burnett Private Hospital"
to "Lady Florence Bjelke-Petersen Community Hospital".
However, the private hospital is not actually a community hospital
because a majority of people in the South Burnett community
do not have private health insurance.
Not long afterwards,
the name of the hospital was changed again,
from "Lady Florence Bjelke-Petersen Community Hospital"
to "Lady Bjelke-Petersen Community Hospital".
Also in January 2016,
SBRC decided to spend $150,000 of ratepayers' money
on hiring an external consultant to prepare a business plan.
The plan appears to have been completed in
less than ten weeks.
Arrangements were made to transfer the licence
to operate the hospital from Pulse Health to SBRC.
In February 2016, it was announced in the media
that a pledge of a gift from a private donor of $600,000,
to be spread over three years,
had been made to the private hospital.
The $600,000 gift was a gamechanger for
the financial feasibility of the hospital.
It should have triggered a fresh start
in the search for a commercial hospital operator.
South Bank Day Hospital Pty Ltd Takes Over
Following the announcement of the $600,000 gift,
in March 2016, less than a week before council elections,
a proposal to operate the hospital was announced from
SBDH (South Bank Day Hospital),
a commercial hospital operator.
A swag of old and new ratepayer subsidies were to be included
as part of the deal.
The existence of the raft of subsidies suggests
that substantial negotiations must have taken place between
SBRC and SBDH before a deal was agreed.
SBDH was the employer
of the external consultant for whose services
SBRC had recently paid $150,000.
Subsidies appear to have included:-
-
$100,000 per year to buy hospital equipment.
-
$100,000 per year on building maintenance and services.
-
No rent to be charged to the hospital operator.
-
Any losses made by the hospital operator would be reimbursed
from the $600,000 donation,
until the hospital services became profitable
after which time any amounts advanced would be repaid.
There was of course no guarantee that the hospital
would ever become profitable.
-
Tenant rental income to be available for working capital.
It seems odd that it appears that no other commercial hospital operator
was given the opportunity to respond
to the change in circumstances
caused by the gamechanging $600,000 donation.
Surely the external consultant
should have been operating at arms length from SBDH?
There was now a $600,000 donation
and a rich swag of subsidies and special clauses on the table.
Yet, SBRC failed to put the opportunity to run its hospital out to tender.
This fact raises serious questions about the propriety of the deal.
SBRC granted the running of the hospital to the organisation that
was the employer
of the external consultant for whose services SBRC had recently paid $150,000.
The consultant then became the manager of the hospital.
In April 2016 South Bank Day Hospital Pty Ltd
took over the running of the hospital.
An official re-opening ceremony was held in
August 2016.
Since 2016, nothing much seems to have changed.
SBRC continues to be as secretive as possible about
its private hospital.
Summary of Ratepayer Subsidies
Ongoing Unquantified Costs
There are several costs
that it is not possible for the public to quantify,
due to pathological SBRC secrecy.
Some information about the amounts of SBRC's capital expenditure
on the hospital are known from SBRC's occasional
published capex reports.
These amounts are mentioned below
for each financial year.
Operational costs expended by SBRC on its private hospital
do not show up in SBRC's published accounts
because SBRC aggregates together operational costs
from many diverse areas of operations.
The operational costs published by SBRC have little meaning
except as totals.
Thus, it is impossible to know how much money SBRC
now spends on its private hospital.
It is probably a substantial amount of money,
otherwise SBRC would publish the details to avoid criticism.
The minutes of the meetings of the board of directors of SBRC's private company
are hidden from public scrutiny.
Although some reports concerning the private hospital
are tendered at SBRC meetings,
this is now always done in secret closed sessions.
The public can no longer learn anything accurate about the hospital.
For example, on page 29 of the minutes
of SBRC's meeting of 16th January 2019,
it is stated that the meeting was closed to the public
so that SBRC could receive a report on the meeting of SBCHFL
that was held on 20th November 2018.
SBCHFL's report is not included with the minutes
of SBRC's meeting.
Maintenance of the hospital buildings continues
to be SBRC's responsibility.
It is not known how much ratepayers' money
is spent on routine maintenance at the hospital.
When some details of expenditure do emerge,
which sometimes happens when
newsworthy information is leaked to the media,
monetary figures are usually absent.
Ratepayers have to pay unknown thousands of dollars
for the costs of the time that SBRC officials,
councillors and the mayor spend on matters related to the hospital.
The existence of SBRC's private hospital
is one of the factors that have influenced
successive state governments
not to expand Kingaroy Public Hospital.
The opportunity cost to South Burnett residents of
not getting a quantum expansion of the public hospital
should be factored into this analysis
as being a notional South Burnett ratepayer subsidy.
Note that the current project of rebuilding Kingaroy Public Hospital
is fundamentally about building a new replacement hospital,
not about expanding its services.
The new hospital will only be slightly larger,
increasing from 49 beds currently to 66 beds eventually.
After the new Kingaroy Public Hospital has been completed,
many South Burnett patients who require specialist medical care
in the public healthcare system
will still have to travel to Brisbane or to Toowoomba for treatment.
Beginning at the present time and going back in time,
here are some of the costs to ratepayers
incurred as a result of the existence of SBRC's private hospital.
Financial Year 2019-20
SBRC plans to spend $123,377
on capital expenditure on its private hospital in the 2019-20 financial year.
All of this amount was carried over from the previous budget year.
SBRC used to publish a capital expenditure report at quarterly intervals.
These reports now only appear at annual intervals.
SBRC's quarterly capital expenditure reports are
a relatively recent addition to the list of items of public interest
that SBRC conceals from public scrutiny.
It would be in the public interest for SBRC to publish
its capital expenditure reports at least quarterly.
There is no reason why SBRC cannot publish them.
They are tendered to SBRC meetings, but not published.
See
SBRC's Black Strategy 5
for more information about how SBRC conceals as much information
as possible about its activities.
Financial Year 2018-19
According to the minutes of SBRC's meeting held on 18th October 2018,
SBRC originally planned to spend $170,515 of ratepayers' money
on "capital expenditure" on its private hospital in the 2018-19 financial year.
All of this amount was carried over from the previous budget year.
In early 2019 there were media reports about legionella contamination
at the private hospital.
Subsequently, on page 19 of the minutes of SBRC's meeting
held on 20th February 2019 it is stated about the hospital:-
".. pipework system contamination
with Legionella (waterbourne (sic)
bacteria)
is being managed by Council and South Bank Day Surgery.
To date Council has installed filters on the tapes (sic)
and shower roses within the area utilised for day surgery,
administration and doctor consultation rooms.
Council has engaged contractors to monthly flush
cold and hot water lines and monthly water testing.
Water Quality Management plan is being implemented ..."
Also, on the same page in the minutes it is stated that:-
"Safety switches have been upgraded to electrical switchboards in
Kingaroy Administration Office, Nanango Depot
and Lady Bjelke Petersen Community Hospital."
Nothing about the cost of these maintenance works was revealed.
Financial Year 2017-18
According to the minutes of SBRC's meeting held on 11th October 2017,
SBRC originally planned to spend $237,000 of ratepayers' money
on "capital expenditure" on its private hospital in the 2017-18 financial year.
Of this, $137,150 was carried forward from the previous budget year
and $100,000 was new expenditure, although the minutes
did not state what the extra $100,000 was for.
There was also a first quarter "budget adjustment" that reduced the planned
expenditure for the year by $46,750.
The total planned capital expenditure for the year was now
$190,400 of which $137,150 had been carried forward from
the previous year.
Financial Year 2016-17
At the start of this financial year, the private hospital re-opened.
The minutes of SBRC's meeting held on 18th January 2017 show that
SBRC planned to spend $147,000 of ratepayers' money
on "capital expenditure" on its private hospital in the 2016-17 financial year.
Of this, $47,000 was carried forward from the previous budget year
and $100,000 was new planned expenditure.
The minutes of SBRC's meeting held on 14th June 2017 show that
in addition to SBRC's intention to spend $147,000 of ratepayers' money
on capital expenditure at its private hospital in the 2016-17 financial year,
a further $90,000 was also to be spent on buildings.
This $90,000 crept into the accounts by way of "adjustments"
made to SBRC's planned capital expenditure
during the second and third quarters of the financial year.
The total planned capital expenditure on the private hospital for financial year 2016-17
was therefore $237,000 ($147,000 plus $90,000).
The minutes of SBRC's meeting held on 16th August 2017 stated that
a review of SBRC's 2017/2018 capital works budget had been undertaken
to take into account the carryover projects from the financial year 2016/2017.
Here it was revealed that
the $90,000 was for an "uninterrupted power supply" and a "theatre light".
A total of $137,150 of the budgeted $237,000 capital spend for year 2016-17
was unspent at 30th June 2017 and was carried forward into year 2017-18.
Also in August 2016, SBRC's private company terminated the lease
of the Glendon Street Medical Centre,
which housed a busy bulk-billing GP medical practice.
Click here
to see a report about the closure of the medical centre.
The official reason for closing down the Glendon Street Medical Centre
was so that the building could be demolished and the private hospital expanded.
There are strong indications that the proposed expansion of the hospital
may have been just a red herring
intended to camouflage a hidden reason for the demolition.
If the hospital was expanded then ratepayers
would inevitably be slugged with a bill for millions of dollars
to pay for it.
$84,000 of a recent windfall $4.2 million
"Works For Queensland" grant to SBRC
was spent on the demolition of the hospital's Glendon Street building.
This meant that there was $84,000 less to spend on other projects
that would have been of more benefit to ratepayers.
The deliberate write-off of asset value,
caused by the decision to demolish the medical centre building,
is effectively a ratepayer subsidy for the private hospital.
The amount of the subsidy is equal to the asset amount written off,
being the book value of the building.
SBRC does not publish individual asset values for its stock of buildings.
The book value of the demolished Glendon Street building
was probably at least a six figure number.
SBRC's private company
could have continued to receive rental income from the Glendon Street property,
if it had not been so anxious to get the tenants out as quickly as possible.
The unnecessary loss of at least six months rent
was effectively a ratepayer subsidy for the private hospital.
SBRC does not publish the individual rents received from tenanted properties,
so the lost rental amount can only be guessed.
It would have been many thousands of dollars.
Financial Year 2015-16
For financial year 2015-16, SBRC allocated $40,000
for a surgical equipment upgrade
(SBRC minutes, 13th January 2016).
During year 2015-16,
SBRC spent $100,000 and $150,000 on external consultants
to produce two reports about the hospital.
After Pulse Health departed,
ratepayers had to pay unknown amounts
on security services and on maintaining the buildings and grounds.
During the time that SBRC was seeking a new hospital operator,
thousands of ratepayers' dollars were spent by the mayor and councillors
on travel and hotel bills for lobbying and marketing activities.
During this time,
thousands of ratepayers' dollars were also spent
by using SBRC staff to run the front desk of the hospital.
The minutes of a special SBRC meeting on 7th April 2016 state:-
"Council has identified South Bank Day Hospital as a partner
to deliver the Business Plan for the Lady Bjelke-Petersen Community Hospital
and to hold the Private Health Facility Licence
subject to South Bank Day Hospital finalising its due diligence on the business."
The published agenda for SBRC's special meeting on 7th April 2016
contained an interesting revelation that the $600,000 donation
could be used for :-
"... Underwriting annual losses - based on an 'open book'
business relationship with SBDH.
Any losses reimbursed would be underwritten
until the hospital services reach profitability
after which time any amounts advanced will be repaid to SBCHFL."
This type of clause is usually only used when
one of the parties to a contract is an idiot.
Every accountant knows that
a commercial company can deliberately reduce its profits
or increase its losses
simply by paying its employees and directors more.
Whether SBDH's activities at SBRC's private hospital
ever became profitable has not been revealed.
The existence of this interesting clause appears to indicate that
SBRC, in other words South Burnett ratepayers,
may have been comprehensively taken to the cleaners.
In a news report in SBRC-friendly website www.southburnett.com.au
published on 7th April 2016,
it was stated that:-
"[SBRC's private company]
will contribute $100,000 per year to buy hospital equipment,
which will be owned by
[SBRC]."
and
"No rent will be charged to the hospital operator."
and
"Tenant rental income from QML and the Glendon Street Medical Practice,
who both lease areas at the hospital,
will now ... be used to provide working capital."
and
"Council will continue to spend about $100,000 per year
on building maintenance and services,
which will be paid for out of its existing
$12 million depreciation fund
as part of Council's normal asset maintenance program."
South Bank Day Hospital Pty Ltd
took over the operation of the hospital.
It has not been revealed whether SBRC continued to pay for
security services after South Bank Day Hospital
commenced its tenure.
The cost of maintenance of the hospital buildings and grounds
continued to be SBRC's responsibility.
Financial Year 2014-15
In financial year 2014-15, SBRC spent $281,548 on repairs,
renovations and an electrical upgrade of the private hospital,
including $94,000 for a surgery equipment upgrade.
Financial Year 2013-14
In financial year 2013-14, SBRC spent $413,000 of ratepayers' money
on repairs and refurbishment of the private hospital,
including $80,000 to replace electrical wiring.
Donations
Since 2016, some hospital costs have been met from donations
rather than from ratepayer-funded subsidies.
SBRC's private company,
SBCHFL, is a registered charity.
A gamechanging pledge of $600,000 was made in 2016,
to be spread over three years.
It is not clear whether SBCHFL received the $600,000
or whether SBRC received it.
A report available on ACNC's website reveals that
SBCHFL received only $2445 in donations and bequests
in financial year 2017-18.
Also in year 2017-18, the charity spent $10,603 on "employee benefits",
even though it has no employees.
It appears that no explanation for this paradox has been published.
Hospital Foundation Company is Unnecessary
SBCHFL's Main Functions
SBRC owns a private company called
"South Burnett Community Hospital Foundation Limited", or SBCHFL.
SBRC leases SBRC's private hospital to SBCHFL at zero rent.
SBCHFL therefore controls the hospital.
SBCHFL sub-leases the hospital
to a commercial hospital operator at zero rent.
SBRC and SBCHFL pay for all maintenance costs and and all capital costs
related to the hospital.
SBCHFL has two main functions.
It controls SBRC's private hospital
and it acts as a charity fundraiser for the hospital.
Some people may argue that the existence
of SBCHFL is essential for the existence of the hospital.
Such arguments are flawed.
SBCHFL's role as the controller of SBRC's private hospital
is separate from,
and is independent of,
SBCHFL's role as a charity.
If SBRC wishes to operate a hospital charity then there is absolutely
no reason why the charity should
be given control of the hospital
or any other of SBRC assets.
There is no law that obliges a charity to have control
over anything that it supports.
Therefore, there is no genuine reason why
SBCHFL should control SBRC's private hospital.
SBCHFL is registered as a charity.
If no charity existed to support the hospital,
then charitable donors would still be able
to donate money to the hospital via SBRC.
The only drawback would be that donations
would not be tax-deductible.
More realistically,
SBRC could operate its private company
as purely a fund-raising charity,
with donations being tax-deductible.
SBCHFL's annual report for 2017-18
reveals that SBCHFL raised only $2445
in donations and bequests in financial year 2017-18.
With such a low income from donations,
SBCHFL cannot be taken seriously
as a fundraising organisation.
Therefore, there is no genuine reason why
SBCHFL needs to be registered as a charity.
In summary,
SBCHFL appears to have two main functions,
neither of which appears to be essential.
There appears to be no genuine reason
for the existence of SBCHFL,
with all the unnecessary additional work and expense that it entails.
SBRC's Hidden Agenda
SBCHFL appears to serve no useful purpose
in the public interest.
On the contrary, it appears to serve SBRC's hidden agenda
by providing a mechanism for concealing
SBRC's dealings in relation to the hospital
and for allowing non-SBRC personnel to control
SBRC's hospital-related spending.
SBCHFL appears to be a vehicle designed
for SBRC to be able to transfer control of its assets
to non-elected non-accountable people.
It appears to be a major cog
in SBRC's preferential dealing,
asset-stripping and social engineering machine.
It is thought by some that
the rationale for the existence of SBCHFL
appears to be easily explained by SBRC's black strategies.
Click here
to see a detailed report about SBRC's black strategies.
scam 1:
"Community" Scam
What's in a Name?
Answer: A Scam
SBRC owns a private hospital.
SBRC also owns a private company to which it leases its private hospital
at zero rent.
SBRC's private company sub-leases SBRC's private hospital
to a commercial hospital operator at zero rent.
Both SBRC's private hospital and SBRC's private company have the
word
"Community" in their names.
In June 2014, SBRC renamed its private company
from "Kingaroy Private Hospital Limited"
to "South Burnett Community Hospital Foundation Limited".
In January 2016,
SBRC renamed its private hospital
from "South Burnett Private Hospital"
to "Lady Florence Bjelke-Petersen Community Hospital".
Not long afterwards,
the name of the hospital was changed again,
from "Lady Florence Bjelke-Petersen Community Hospital"
to "Lady Bjelke-Petersen Community Hospital".
SBRC's private hospital,
the same as for any other private hospital,
exists for the benefit of
those members of the community who have private health insurance
or who can afford to pay private hospital fees.
If there were no wealthy people in the South Burnett
then there would not be a private hospital in Kingaroy.
SBRC's private hospital has never been a community hospital.
It is a hospital for the benefit of the wealthy and the privileged.
The pretence by SBRC that the private hospital
is a community hospital is a deliberate misrepresentation.
A few of the diagnostic tests available in rooms at the hospital
might be bulk-billable for poorer patients.
However, these types of diagnostic tests do not require hospital facilities
and are easily performed in day-use rooms at other facilities.
The list of services at the private hospital that are not bulk-billable includes
all surgical procedures, all hospital stays
and most consultations with specialist consultants and surgeons.
There is only one aspect of the hospital
that applies to the whole community.
The whole community is forced to subsidise the hospital.
It appears to be false and misleading to have the word community
in the name of SBRC's private hospital
and in the name of SBRC's private company.
The use of the "Community" word appears to be a scam.
scam 2:
Feasibility Study Scam
Feasibility Study Scam
This scam relates to the 2015 plan for SBRC
to take over the running of its private hospital.
SBRC eventually decided not to carry out its plan.
Instead SBRC gave the hospital to a commercial hospital operator.
Although this scam appears to no longer be relevant,
it is included here
because it has the potential to quickly become relevant again.
The current profits, or losses, of the hospital
are concealed from public scrutiny.
If the hospital operator walks away at any time in the future,
then SBRC can resurrect its plan to run the hospital itself.
This scam consisted of SBRC failing to carry out a proper
feasibility study,
while pretending that it had done so.
Failure to Carry Out a Proper Feasibility Study
A proper feasibility study into SBRC's plan to
become the operator of its private hospital was not performed.
It is probable that if a proper feasibility study had been performed
then it would have concluded that the hospital
was not feasible from the point of view of ratepayers.
Nearly every commercial hospital operator in the country
had researched the issue and concluded that
operating the hospital was not a viable proposition.
It can be concluded that the only reason
why SBRC did not perform a proper feasibility study
is that it was clearly not feasible for SBRC to operate its hospital.
SBRC spent $100,000 of ratepayers' money
on external consultants to produce a revenue and cost forecast model
that has also been called a due diligence report.
Some local politicians referred to this as a feasibility study.
A proper feasibility study would analyse all aspects of operating a hospital,
not just operational costs and revenues.
SBRC then spent $150,000 of ratepayers' money
on a business plan.
A business plan is not a feasibility study.
Ratepayers were not permitted to see the revenue and cost forecast report.
Ratepayers were not permitted to see the business plan.
Even the terms of reference for these two studies were top secret.
Any proper feasibility study must be open to public scrutiny.
Secret feasibility studies in the South Burnett
are not worth the paper they are hidden on.
SBRC's pretence that the $100,000 cost/revenue study
and the $150,000 business plan
represented a proper feasibility study
appears to have been part of the scam.
What should be in a Feasibility Study?
Here are some examples, by no means a complete list,
of some of the issues that ought
to be included in a proper feasibility study
of SBRC running its hospital itself:-
A proper feasibility study would include a detailed analysis
of the costs, benefits and risks of operating the hospital,
in qualitative and quantitative terms, complete
with discounted cash flows and estimates of
social costs/benefits and opportunity costs.
A feasibility study would include
the issues examined in the two reports commissioned by SBRC
at a cost of $100,000 and $150,000 respectively,
but would also contain a substantial amount of additional relevant information.
For example, what are the costs and benefits of the hospital
to the residents of the South Burnett,
split into socio-economic groups so that effects
on poor people can be contrasted with the effects on wealthy people?
For example, what is the effect of
the private hospital on the priority
for a much-needed upgrade of the Kingaroy Public Hospital,
and what will be the additional delay in years
that residents will now have to wait for such an upgrade?
For example, what will be the cost of purchasing medical equipment?
For example, what will be the year-by-year capital costs
of maintaining the infrastructure of the hospital?
For example, what are the costs for all the time
that SBRC elected representatives and salaried staff
will have to spend on matters related to the hospital
instead of spending their time on normal council activities?
For example, what are the risks to ratepayers
that SBRC might never become competent
at operating a private hospital?
For example, given that ratepayer funds
are used to subsidise the private hospital,
what is the risk that there might be future legal action
aimed at shutting the private hospital down,
on the grounds that the private hospital is unethical
and does not serve either the public interest or the community?
For example, what is the risk for each year into the future
that a council election or by-election
might tilt the balance of power within SBRC,
resulting in a decision to close the hospital?
What will be the costs of shutting the hospital down,
if for any reason SBRC becomes obliged to shut it down?
For example, if the hospital is shut down again in a few years time,
then how much money will be wasted now on the hospital?
Among the features of a proper feasibility study
would be the ability for any member of the community
to make submissions and to raise issues that are relevant.
scam 3:
Cost-Neutral Scam
Cost-Neutral Scam
Pretending that its private hospital is cost-neutral to ratepayers
appears to be a deliberate and blatant SBRC scam.
Under the hospital's current funding model,
it appears to be impossible for it to be cost-neutral to ratepayers.
The hospital can only be a moneypit.
The manner in which SBRC's private company, SBCHFL,
has been structured as a "not-for-profit" charity
compels it to act like a financial one-way valve.
Money can only flow through it in one direction.
SBCHFL is obliged by its constitution
to spend all the money it receives on SBRC's private hospital.
This is so,
even if it receives money from commercial transactions,
for example rent money or (hypothetically) a share of profits.
SBRC gives heaps of money to SBCHFL,
but SBCHFL can never under any circumstances
give money to SBRC,
because a not-for-profit charity
cannot give money to its owner.
The private hospital is a financial drain on SBRC
because, at a minimum,
SBRC incurs administration costs performing its
ownership and controlling functions.
SBRC is also wholly responsible for maintenance
of the hospital buildings and is also responsible for capital expenditure.
Because of the cloak of secrecy surrounding the contract between SBRC
and the commercial hospital operator,
and because of the cloak of secrecy that SBRC
has thrown around the dealings of its private company,
it is not known what other costs related to the hospital
SBRC is liable for.
Over the years, there have been many well-documented costs
to ratepayers.
Even in the highly unlikely event that generous benefactors
were to make enormous perpetual gifts to the hospital charity,
gifts so lavish that all imaginable costs
related to the hospital site, buildings and equipment were covered for ever,
the salaries of SBRC councillors and officials would still
be paid by ratepayers.
Some SBRC councillors and officials
spend part of their working lives overseeing the hospital.
SBRC councillors and officials work for SBRC and are paid by SBRC.
To avoid breaching anti-corruption laws,
it is unlikely that SBRC could accept donations
made directly to SBRC for the purpose of paying councillors and officials.
So therefore, even in the most optimistic hypothetical scenario possible,
ratepayers will always have to subsidise the hospital,
even if it is only a portion of SBRC salaries that are the subsidies.
Of course, in reality there are no enormous perpetual gifts
and ratepayer subsidies for the private hospital
are substantial.
The Cost-Neutral Song
South Burnett politicians and media organisations
repeatedly chant a "Cost-Neutral" mantra.
It is suspected that a sudden increase in popularity of the song in early 2016
was due to council elections scheduled for March 2016.
Versions of the cost-neutral song:-
"But we've been left to try to keep this hospital open and running ever since 2002.
And we've done that at no cost to ratepayers, but it's not really our job."
(Mayor Kratzmann said, as reported by local news website southburnett.com.au,
15th May 2015)
In the previous two years before Mayor Kratzmann made his remark about there having been
"no cost to ratepayers",
SBRC had spent nearly $700,000 of ratepayers' money on capital works at the hospital
plus unquantified costs for the time and resources spent
by SBRC representatives and staff on hospital matters.
"A business plan be developed that ensures the revised model
operates on a cost-neutral basis."
(Minutes of SBRC meeting, 21st January 2016)
" ... investing $150,000 to develop a business plan that must show
a cost-neutral bottom line as a minimum, and a profit if at all possible."
(Deputy Mayor Campbell before voting in favour of the hospital,
local news website southburnett.com.au, 21st January 2016)
"She wanted to give it every possible chance to be reopened,
providing it could be done in a way that was cost-neutral to ratepayers"
(about Councillor Palmer before voting in favour of the hospital,
local news website southburnett.com.au, 21st January 2016)
"The council still faces a number of hurdles ...
including ... working out a business plan that is cost neutral to ratepayers."
(website of newspaper South Burnett Times, 21st January 2016)
[The private hospital]
"shouldn't have any impact on the Budget"
(Mayor Kratzmann, local news website southburnett.com.au,
9th February 2016)
[SBRC]
"voted to allocate $150,000 for the development of a business plan
to ensure the hospital could be re-opened and run at no cost to ratepayers"
(local news website southburnett.com.au, 26th February 2016)
[She]
"supported the decision providing it could be run at no cost to ratepayers"
(about Sheena Lindholm, who had stepped aside from her SBRC job
as personal assistant to Mayor Kratzmann to stand
as a mayoral election candidate, local news website southburnett.com.au,
10th March 2016)
"But I voted against the Private Hospital ..."
"But if Council can run it cost-neutral to ratepayers, let's do it."
(Councillor Heit, local news website southburnett.com.au, 13th March 2016)
The melody of the Cost-Neutral song may have been borrowed
from a song whose words had the opposite meaning:-
"impossible to keep operating the hospital at a loss"
(Pulse Health CEO Phillipa Blakey, ABC News, 19th May 2015)
scam 4:
Democracy Scam
(Undemocratic Spending Power)
Power to spend SBRC's money is outside of SBRC
Secrecy
The selection of SBCHFL directors by SBRC
appears to take place in backrooms away from public scrutiny.
Currently, two directors are SBRC elected representatives.
One director is an employee of SBRC.
Some directors are professional medical practitioners.
Board meetings of SBRC's private company are kept secret.
For all that anybody knows,
if the wall of secrecy surrounding the private company was to be removed,
then the external directors might be revealed to be performing an excellent job,
or maybe not.
A private company legally
does not have to publish information about its financial dealings,
even if the company is wholly owned by a local council.
Registered charities do have to lodge reports and accounts annually with ACNC.
However, the level of detail required is minimal,
a single figure aggregates most expenditure for one year.
In keeping with its secret board meetings,
SBCHFL seems to publish nothing more than the minimum details
that are required by law.
Ratepayers receive little information
about what SBCHFL spends money on.
It is possible to think of many potential types of financial transactions
that could take place when people are allowed to control funds
about which they are not required to publish detailed information.
Directors of SBCHFL
The names of the nine current directors
of SBRC's private company can be found on the
ACNC website.
(Enter the name
"South Burnett Community Hospital Foundation Limited"
and follow the relevant links.)
Existence of SBCHFL Circumvents Democracy
The appointment of external directors to the private company
raises an issue about democracy.
By giving control of SBRC's private company
to directors of SBCHFL who are not elected by the public,
SBRC has made a mockery of democracy.
The proper role of SBRC's elected councillors,
except for the two councillors who are on the board,
has been abrogated.
The power to spend SBRC's money appears to have been given to
people who are neither SBRC councillors nor SBRC officers.
SBRC councillors and officers constitute only three members
of SBCHFL's nine-member board.
SBRC spends money directly on its private hospital.
It also gives money to SBCHFL to spend.
Because of SBRC secrecy, it is difficult to estimate
how much money SBRC spends directly on its hospital,
but the amount of money that SBRC gives to SBCHFL to spend
appears in SBCHFL's annual report to ACNC.
Also, SBCHFL collects rent money that should
belong to ratepayers who are the ultimate owners of SBRC's assets.
Overall, substantial amounts flow from ratepayers' pockets
into SBCHFL's coffers.
Conflicts of Interest
Several members of the board are medical professionals.
There is a question about how can the interests
of medical professionals with vested interests
be aligned with the best interests of ratepayers?
The answer to this question is quite simple.
There appears to have never been any intention
to align any interests.
Board members have a duty
only to act in accordance
with the constitution of the private company.
Legally, they do not appear to have even the slightest duty or obligation
to act in the best interests of ratepayers.
SBCHFL's power to spend SBRC's money extends
even beyond the money SBRC gives to SBCHFL
Despite their duty being to act in accordance with the constitution
of the private company,
there is nothing to prevent directors from
doing whatever they like.
Their duty of acting in accordance with the company's constitution
does not appear to actually be a mandatory obligation under the law.
There are no penalties for board members who ignore their duty.
The worst that can happen to them is that they
might get sacked from the board.
If it wishes, the board can make legally-binding spending decisions
that are not in accordance with the company's constitution.
Under the Corporations Act,
a person dealing with a company is entitled to assume that
a contract entered into by the company's directors may not be invalid
even if the directors had no authority under the company's constitution
to enter into the contract.
It appears that it might be perfectly legal for SBCHFL to
make binding commitments to spend millions
of dollars of ratepayers' money.
SBRC is the financial guarantor of its private company.
If SBCHFL needs money for its secret dealings
then SBRC must give SBCHFL the money,
because as the guarantor of the company
SBRC is obliged by law to do so.
In other words,
if they choose to do so,
the directors of the private company could incur
all kinds of expenditure
without taking into consideration the interests of ratepayers.
Ratepayers would then have to pay for it.
This appears to be a subversion of democracy.
scam 5
Charity Registration Scam
SBCHFL's Constitution
To ascertain whether SBCHFL is genuinely entitled to be registered
as a charity,
it is necessary to examine SBCHFL's objects
which are stated in its constitution.
The constitution of SBRC's private company can be downloaded
as a pdf file (568 KB) from
ACNC's website.
(Enter the name
"South Burnett Community Hospital Foundation Limited"
then follow the relevant links to "documents"
and then download "governing document".)
ACNC is an acronym for the
Australian Charities and Not-for-Profit Commission.
The objects of the company can be found near the end
of its constitution:-
"The principal object of the Company
is the operation and management of the
Business for the benefit of the residents of the Region.
The Company is incorporated also to pursue the following objects:-
(1) conducting fundraising activities and any activities
ancillary to the operation and management of the Business;
(2) promoting and advancing health and
providing care to sick, aged, inform (sic),
afflicted or incorrigible persons"
SBCHFL's objects also include statements
that it should conduct itself as:-
-
a charitable institution for the Income Tax Acts
-
a charity registered with the Australian Charities and Not for Profits Commission
-
a deductible gift recipient (DGR)
-
a public benevolent institution (PBI)
Misleading Principal Object
The existence of SBRC's private hospital
appears to be contrary
to the principal object of SBRC's private company,
because the principal object requires that
the
"business" be operated and managed
"for the benefit of the residents of the region.
In the company's constitution,
the definition of
"business"
includes
"managing the future operation of the hospital
for the benefit of the residents of the region".
For years, the hospital has been a liability, not a benefit,
to the majority of residents in the region.
If all ratepayers have to subsidise a hospital that exists
for the benefit of only a minority of the wealthiest residents,
then clearly it would be impossible for the hospital ever to be operated
for the benefit of a majority of the residents of the region.
It appears that
the majority of ratepayers can never benefit from the hospital
under any circumstances.
Even if the commercial hospital operator were to pay a commercial
rent to SBCHFL for the use of the hospital,
the money could not be transferred from SBCHFL to SBRC
because SBCHFL is a
not-for-profit organisation that cannot distribute profits to its owner.
The principal object of the company
appears to be misleading.
SBCHFL's Eligibility for Charity Status
The main factor determining SBCHFL's eligibility
for charity status appears to be whether
SBCHFL qualifies to be a
"public benevolent institution" or PBI.
For example, ACNC's website states:-
"If you want your organisation to be endorsed
as a DGR under the public benevolent institution category,
your charity must first be registered as a charity
with the subtype of 'public benevolent institution'
with the ACNC and satisfy other requirements of the ATO."
What is a Public Benevolent Institution?
Here are a few example guidelines of what a PBI is,
taken from from ACNC's website.
Specific links are not provided here because
such links tend to become broken.
A PBI
"is a type of charitable institution whose main purpose is to relieve poverty or distress."
"In simple terms, a PBI must have benevolent relief as its main purpose,
and that relief must be specifically targeted at people in need
and provided to relieve the needs of those people."
"Your charity must also show that it works
for a section of the community that clearly needs help,
in other words 'people in need'.
Homeless young people who live on the streets
will generally be considered 'people in need'."
"Poverty and distress are relative.
To qualify as a PBI,
the poverty or distress that is relieved must be
'of such seriousness as will arouse community compassion
and thus engender the provision of relief'."
In case there is any doubt about what is meant
by the words "poverty or distress",
ACNC is very specific about the the type of people
to whom benevolent relief should be provided.
ACNC's website states:-
"The relief provided must only be for people.
Your charity must also show that it works for a section of the community
that clearly needs help, in other words 'people in need'.
General or abstract purposes such as
benefiting the whole community is not enough."
Yet, the description of SBCHFL's "activities and outcomes"
in ACNC's website states:-
"Enable the Lady Bjelke-Petersen Community Hospital
to remain open and provide vital medical services
to benefit the South Burnett community as a whole."
Registration as a Charity
The eligibility of an organisation to be registered as a charity
appears to depend on whether the organisation
has been granted the status of a PBI.
From the foregoing, it is quite clear what a PBI is.
The question is,
does the hospital charity genuinely "relieve poverty or distress"?
The existence of the private hospital
appears to do the opposite of relieving poverty because
SBRC compels the poorest of ratepayers to subsidise it.
However, the hospital charity is not the hospital itself.
It would not be fair to blame the charity for SBRC's actions.
So, it appears that the hospital charity may have some
significant way of relieving poverty
that is not obvious
and that is not known to kingaroar.com.
If so, then kingaroar.com would like to know what it is.
That just leaves distress.
It is certainly more convenient to have to travel shorter
distances to attend medical appointments.
However, if a patient had to travel to a hospital that was further away
then it would be quite a stretch to categorise
the extra inconvenience as distress.
Most South Burnett patients routinely travel to public hospitals
and do not have the option of travelling to a private hospital
that might be closer.
Perhaps by donating money to the charity,
wealthy people can relieve the terrible distress they suffer as a result of being
able to afford private health insurance.
Kingaroar.com thinks that It is impossible to understand how SBCHFL
could have been granted the status of a PBI.
Who to Contact - For Those who are Not Happy
The federal government is responsible
for the registration of charities.
If any South Burnett resident is unhappy because:-
-
they are forced to subsidise a private hospital
against their will
-
or if they think that SBCHFL's constitution
is misleading
-
or if they think that the use of the word "community" is misleading
-
or if they think that SBCHFL
acts in the interests of a wealthy subsection of the community
against the overall public interest
-
or if they think that a director of SBCHFL
may have a conflict of interest
-
or if they think that SBCHFL behaves in an uncharitable manner
-
or if they think that SBCHFL does not merit being registered as a charity
-
or if for any other reason they are unhappy about SBCHFL
then they should contact the complaints department at
ACNC
(Australian Charities and Not-for-Profit Commission).
ATO (Australian Taxation Office)
might also like to know.
