Address to Australian Pharmacy Professional Conference

Minister for Health Peter Dutton Address to the Australian Pharmacy Professional Conference

Page last updated: 13 March 2014

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13 March 2014

Check Against Delivery

Thank you for the invitation to be here with you today.

I want to start by acknowledging George Tambassis (National President, Pharmacy Guild of Australia), Kos Sclavos (Chairman, Australian Pharmacy Professional Conference) and Tim Logan (Queensland Branch President, Pharmacy Guild of Australia). Ladies and gentlemen.

In particular thank you George for the way in which you have been able to engage on difficult issues. You continue the fine tradition of Presidents past – we have an open dialogue and I look forward to building on what I believe has been a productive start.

Pharmacy has a bright future in our country and our Government is intent on doing what we can to secure that future. But I want to start today by acknowledging that it has been a tough period for a number of pharmacies over recent years.

People have been caught with the pressures of high rents, rising wages and other input costs and uncertainty and in some cases unmanageable levels of debt as a result of dealings with the former Government’s CPA and accelerated price disclosure.

Many pharmacists are understandably anxious about the business model going forward and so today, I want to outline some of the ways we can work with the sector to ensure that future, but just as importantly I also want to outline some of the ways in which the Government cannot provide support.

It is only six months since the election, but already this Government has become a significant contrast to the previous Government in a number of ways. As many commentators have lamented, the adults are back in charge, and as a Cabinet we have made tough decisions – particularly in relation to SPC, Holden and most recently Qantas. Not because we are anti-business. Indeed the complete opposite - because we want business, including your sector, to grow and be profitable in their own right.

The upcoming budget will also be tough, particularly given the mess we inherited and the reality is, without any corrective action, our country is marching towards $667 billion of debt.

Yes the Government is again open for business, not at any cost, but by helping to strip costs and the bureaucratic regulation which is not conducive to the expansion of business and to employing more Australian’s.

We are determined to reward effort and facilitate - not frustrate - the nation’s families toiling to not only secure their own future, but that of the employees and their families in their millions.

As you would be well aware, there are 5350 pharmacies approximately employing 55,000 staff. These, plus many more Australians indirectly employed in pharmacy can pay their mortgage, put food on the table and educate their children because of the decision many of you have taken to run your own small business. And of that we should be grateful.

This should be front of mind for all of us as we approach the negotiations in the 6th CPA.

My starting point is that pharmacy is a cornerstone to the delivery of not just medications but on a daily basis, patient care, and not just in rural and regional communities.

I don’t believe pharmacists want to be doctors, nor retailers. Your workforce is professional and tertiary trained with significant professional development and post graduate studies making pharmacists qualified and trusted in the delivery of patient care.

So the time is right to commence a discussion about the future of pharmacy.

In many ways this agreement is more important than any of its predecessors because it provides the opportunity to look at innovative ways of funding and continuing to help pharmacy develop. Pharmacy has evolved and adapted over generations. But so has every small business. Change management and risk for any small business person has always been a part of the model.

I can help you with that risk so far as your interaction with Government is concerned, but risks otherwise are a natural part of doing business. It is a stark contrast to being in a salaried position without your home and assets being on the line.

I want to demonstrate the point with a brief reflection in time.

Last weekend by chance I drove past the local chemist where I grew up in the 70s and 80s. Now I’m the eldest of five and I had bad asthma as a child, so we spent plenty of time in that chemist.

To this day, in my mind I can picture the floor plan and layout of that shop at Boondall, about 110 kilometres north of where we meet today.

As it was then, Boondall is an aspirational working class suburb, and Sues Korner, Korner spelt with a K, is a little strip shopping centre on Sandgate Road. Peter Lee was the chemist. Although he was only ever referred to as Mr Lee.

If only Mr Lee knew I would one day be Health Minister, I suspect the Guild would have had him indoctrinating me from that early age.

Ironically in many ways through the relationship he had with our family he did just that.

But today on one side of the pharmacy is a newsagency, which I suspect is only still open because of the income of those mobile phone antennas that now protrude above the shop. Deregulation and the internet have reduced that sector to a fraction of what it once was. There are about 10 other tenancies in that strip of which about 4 are vacant. The butcher shop where I used to work after school until I started uni has long closed, as has the video shop, grocery store, delicatessen and bread shop which in the 1980’s were all thriving businesses.

The pharmacy remains in the same shop.

The point is that pharmacy shares many of the same pressures as these other small business owners, including input costs and variables, pharmacy occupies a unique status given the level of trust we place in you to dispense an essential medical service.

Now I don’t know the margins Mr Lee was making in those days, but I suspect they were significantly more than might be the case for many pharmacy owners today.

Nonetheless pharmacy has been able to morph into a different business model and Government must provide certainty in the arrangements we enter in to with the sector.

Some markets have chosen a nationalised model where pharmacists are essentially Government employees, whilst others have completely liberalised markets. It is my belief that if we have a well balanced model in Australia and it should be preserved.

I have met with hundreds of pharmacists in recent years and there are a number of propositions that have been put to me about how Government should be providing support, which clearly is not within the remit of Government.

The rent at Sues Korner would be a fraction of what is being paid in a modern day shopping centre, but the Government can’t regulate rents nor can Government underwrite financing arrangements with banks, or pay a subsidy for staff. To many in this audience it will sound a statement of the obvious but people have strongly argued these cases to me and I don’t believe that is the way of the future.

I can, though, recommit to our election commitment that the Coalition will not allow the retail giants into pharmacy.

We should be supporting your investment through fair remuneration for the work you undertake on behalf of Government, but we will be doing it transparently, particularly in the modern age and where billions of taxpayers’ dollars are involved.

Pharmacists should receive a fair and proper return on their capital investment, and financiers should know that is a key objective of the Government.

So I am open to discussions about an agreement which pays for tangible services and interventions that will provide better patient outcomes.

I have, now on a number of occasions, highlighted how unprecedented cost and other pressures mean that our 1980s Medicare model health system is tracking on an unsustainable path – our spiralling health bill offering no prospect of meeting the health care needs of 21st century Australia. So we need to strengthen and modernise Medicare.

Over the last decade, the cost of the MBS has increased 124 per cent, hospital costs are up 83 per cent and projected to go up another 50 per cent over the next four years whilst the PBS is up 90 per cent over that period, the numbers have stabilised and indeed in the last 12 months gone backwards.

Australian Government spending on health care has more than doubled in the past decade. $62 billion the Government currently spends each year on health will blow out another $13 billion over the next four years.

But the question is really about the rate of growth, which is why we need to be more outcome focused across the system.

We are spending as a nation around $120 a week on average on health care for each man, woman and child in this country.

I want to make sure that people who visit pharmacies - and pharmacies are the most visited health care destination in this country – that those people visiting the footprint of community pharmacy reaching into every corner and making it a powerful tool, can continue to have a growing relationship. So it follows that you are central to any discussion we have and as I say I look forward very much to discussing that future with George, with the Guild and with pharmacy around the country.

Our objective is your objective to deliver better and more cost-effective health outcomes for all Australians.

In discussing where the sector might go in the future, I think it’s interesting to see how much pharmacy has changed over the last 25 years, but since I was at Mr Lee’s pharmacy and since the first Community Pharmacy Agreement was signed under the Hawke Government.

In 1990, prescriptions were mostly written by hand and labels were done on a typewriter. Self-adhesive sticky labels were the latest thing.

Your average pharmacy was dispensing around 500 prescriptions a week – that has now grown to 1000. And there are almost 20,000 pharmacists across the country.

Ladies and Gentlemen, in closing I want to make sure that as we go forward the future will be bright for pharmacy.

It is an incredible opportunity for us to discuss the way in which services can be provided through pharmacy going forward so that we can address issues around technology and other threats that may come in to the pharmacy space over coming decades.

And I look forward very much to continuing productive discussions about ways in which we can see your sector grow and our country benefit as a result of that growth.

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