Long strapped for cash, the Queen Elizabeth Hospital (QEH) could face financial “disaster” with the five-percent pay hike for public officers that has been back-dated to the start of the fiscal year last April 1, an independent senator warned today.
Senator Dr Christopher Maynard argued that any hike in salary would have to come from the hospital’s current budget, which would have preceded the pay raise. The QEH, which is already coping with the government’s slash of transfers to state agencies, has not requested a subvention to cover the increase, estimated to cost the hospital as much as six million dollars a year, he told the Senate.
Speaking on the Public Service (General) Orders 2018, the parliamentary resolution ordering the salary increase, Senator Maynard said this could spell disaster, especially because it was coupled with the introduction of a new payroll tax to pay for health care, which is to take effect on October 1.
“So one would expect that at the end of 12 months, the QEH will pay out an additional $5.6 million from a short budget and it will cause pain,” said the ear, nose and throat specialist.
It was in her June 11 mini-budget that Prime Minister and Minister of Finance Mia Mottley announced that public servants would get a five per cent salary increase across the board, to be applied from April 1, 2018 to March 31, 2019.
She also announced that the Health Service Contribution would be implemented in October at a rate of 2.5 per cent, with employers paying 1.5 per cent and employees paying 1 per cent. The government is hoping to raise $45 million a year.
While he would usually be pleased about a pay increase, he believed it would “bring some pain” for the QEH, Senator Maynard told the Upper Chamber.
“Over the last several years our major health care institution, the QEH, has had a deficit in terms of what its subvention has been and what has been requested and what’s possible,” he said.
“It has only been one year, I think, in the last five years when the QEH received a little bit more than requested. So it runs a deficit of millions of dollars every year. We had the repeal of the NSRL [National Social Responsibility Levy], which thankfully reduced the QEH’s expenses by just over a $1 million.
[But], the five per cent salary upgrade will cost the QEH some money, probably close to $5 million, from a budget that is already strained and short,” said the senator, adding that the new levy to be implemented in another two months’ time would cost the hospital an estimated $1.3 million and therefore add “on the strain that it already has”.
The QEH usually runs on approximately $200 million annually, but its budget for the 2017/2018 financial year was approximately $155 million.
Of that amount the hospital itself received $146 million, the Emergency Ambulance Services received $3.1 million, while $1.2 million was allocated to the medical scheme and $4.7 million to capital projects.
The pay increase and the levy meant “further problems” for suppliers to the hospital who were “already stressed because they are not being paid”, Senator Maynard said.
Querying whether the $45 million to be raised from the Health Service Contribution was “additional money” earmarked for the hospital, Senator Maynard said he was worried that if it was not then the lone general hospital could find itself in deeper financial difficulties.
“If we have a health care system and an acute care hospital that is already cash-strapped and its creditors are crying out, when we extract another $5.6 million from its budget it will add to the difficulties for the people who come to the institution to receive care. So while we might have a five per cent increase and we feel happy, we have to bear in mind that we may have some pain at a time when we can’t bear it,” warned Senator Maynard.