Health bungle ... the Pharmacy Guild was paid $30 million in administration but can't say how many people it employed with the money. Picture Thinkstock Source: Supplied
The Pharmacy Guild of Australia was paid $29.3 million in administrative fees by taxpayers and refuses to say how many staff it employed with the money.
The money was to administer just $67 million worth of professional programs relating to rural pharmacy, Aboriginal pharmacy services and research under a $15 billion government agreement.
The staggering administrative costs mean taxpayers paid 43 cents for the Pharmacy Guild to administer every dollar spent.
The Guild's administrative costs amounted to 29 per cent of the total $96 million cost of the programs.
Questions unanswered ... the Pharmacy Guild could not tell the audit office how many people it employed with government administration money. Picture Getty Images Source: Getty Images
This compares to the 8 cents in every premium dollar it costs health funds to administer health insurance policies on average.
It also compares to the Human Services Department which received $16.4 million to administer $583 million worth of pharmacy program payments over five years
The department employed 123 staff with that money over a five-year period.
Consumer's Health Forum chief Adam Stanevicius says community groups in receipt of government funding are told their administrative fees can't go above 15 per cent of program costs.
"For us this highlights the lack of application by the department of broad financial guidelines," he said.
News Corp Australia revealed last week the current pharmacy agreement has turned chemists into millionaire businesses because it protects them from competition with supermarkets and even prevents new chemists opening within 1.5 kilometres of an existing chemist.
The shocking new administrative costs are revealed in an Australian National Audit Office report into a five year $15.4 billion government pharmacy agreement and come as the government is negotiating a new pharmacy agreement.
"Health entered into 62 contracts with the Pharmacy Guild, which provided the Guild with Commonwealth funding of $29 million to provide advisory services and administer program payments of $67 million over five years," the audit report says.
The Audit Office asked the Pharmacy Guild how many staff it employed with the money it received to administer the funds.
Bad medicine ... the Phamracy Guild was unable to supply the Australian National Audit Office with employment figures. Source: ThinkStock
"The Pharmacy Guild was unable to provide ASL (staffing) figures," an audit office report into a government pharmacy agreement reports.
The Guild also refused to supply staffing numbers when asked by News Corp but it says its administrative costs were only three per cent.
"Much of the money referred to in the global five-year $31 million "administration" amount is in fact distributed by the Guild to third parties as intended under the Agreement," a spokesman said.
"As a rule of thumb, the component paid to the Guild to employ staff and give them a desk to sit at was around 3 per cent of the program value — at or below the public sector average," the spokesman said.
The audit report provides a scathing insight into slack administration in the Department of Health which failed to take any notes during negotiations on the pharmacy agreement, and lost contracts it made with the Guild.
The audit concluded administration of $15.4 billion of public money under the agreement was so poor "the department is not well positioned to assess whether the Commonwealth is receiving value for money".
Despite the Guild's high administrative costs in March 2014 the government handed over, without tender, administration of more pharmacy programs to the Guild in a single $259 million contract.
The new contract gave the guild a further $1.8 million in administrative funding — bringing their total payments to $31 million — and provision to make use of $7.2 million in unexpended funds.
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