17 September 2021

Why the RACGP shouldn’t keep JobKeeper

Comment RACGP TheHill

When my editor first pointed me this week to the stories by Michael West Media, and subsequently Australian Doctor, on the various medical colleges, including the RACGP, deciding to keep JobKeeper, I thought it was old news.

Most people had moved on, and I didn’t want to pile on just for the sake of it.

Believe it or not, we try not to.

But then I read how the RACGP had responded to questions about why they were keeping the government handout when they had reported a significant surplus in their last annual report (to June 2020), and it became clear that things had changed since we first reported the issue in November last year.

According to Australian Doctor, an RACGP spokesperson said its surplus would be directed to a reserve fund and used to help the college “weather very uncertain times”.

“We expect the pandemic to continue to impact operations for the coming years, and given the JobKeeper scheme has ended, reserves are likely to be drawn on to maintain stability amid ongoing outbreaks.

“Qualifying for JobKeeper payments, combined with an extended period of cautious financial management and a senior-manager wage freeze, saved jobs.

“We would not have otherwise been able to keep our full national team working to support Australia’s GPs through the pandemic.”

All the colleges reported in the Michael West Media article by Callum Foote, including the RACGP, were making the same excuse.

The Australian and New Zealand College of Anaesthetists, which received $3.6 million in JobKeeper and made a $6.3 million surplus to December 2020, told Australian Doctor that its surplus was the result of a temporary reduction in operating costs, including research grants and “better than predicted returns on investments”.

“However, there have been significant additional costs incurred in 2021 that will flow into 2022 associated with the challenges of maintaining the training program and conducting exams across multiple locations in Australia and New Zealand,” it claimed.

In other words, we didn’t need JobKeeper at all at the time and still don’t – we made more than we did the year before even – but now that we’ve got it, we’re going to keep it, and we’re going to justify that somehow by saying that covid is still going and we may still need it.

And if we never need it, well, we always need more money.

Why?

Because you’re a medical college and people think or trust you do will do good things with money or you are a worthwhile cause?

On the contrary, the fact that you are a medical college representing doctors, their  brand and their reputations means that you must give the money back if it now turns out you didn’t need it for its intended purpose, which was to help you retain jobs at a specific time.

To come out publicly and admit you didn’t actually need it and that, yes, you did happen to make more money than the previous year, but you think you’ll just hold on to it anyway, just in case – what does that do for your reputation and your doctors’ in the minds of the public?

In the case of Harvey Norman, the expectation that a giant and highly profitable corporate with a less-than-stellar track record on doing public good would act in the right way was never very high.

And even then, Harvey Norman gave up and returned some of the money.

But a medical college that represents the most highly connected doctors to the community in the country, general practitioners?

The Michael West Media headline should have sent chills down the spine of the board:

“‘Everybody did it’: wealthy doctors lobbies ride JobKeeper gravy train”

Wealthy doctors’ lobbies, wealthy doctors … Does anyone think the public makes a distinction? The perceived greed of the college is going to throw a pall around their constituents – GPs – and GPs had nothing to do with the decision.

When we first reported this issue in early November last year, it appeared pretty bad already for the college. It had taken $2.8 million to date in JobKeeper, pocketed a surplus of $1.9 million, which added nicely to its reserves and surplus funds already sitting on nearly $50 million, and at that time it was sitting on $67 million in cash. Add assets, in mostly property, of almost $50 million, and, if there was really a need to break the glass at the college for bad weather one day, then they have something like $167 million to call on.

So, talk of needing more just in case is pretty lame.

The college shouldn’t think people such as Michael West can’t read your annual reports and work it out, or that they will just go away. It’s PR 101.

Notably, the college had stated in its 2020 annual report that it lost nearly $6 million as a result of having to postpone courses and exams, and this had hit hard.

But “postpone” was the operative word here. Most of the major registrar exams they had postponed during the 2020 financial year were redone during the following 2021 year.

So almost all of that revenue came back to the college in the following year. We haven’t seen it yet because we haven’t seen their 2021 annual report, but it’s going to be there. Waiting for Messrs West and Foote.

Not only that, these exams were done online, not in person, for the first time.

At the time, we asked the college to detail what the cost differences might be between on and offline execution, given they didn’t discount any of the exam fees. They said to us the two things cost the same.

They don’t.

Online exams, well executed, are  always going to cost you significantly less.

Then the college executed its online exams really badly.

Its major registrar exams cascaded into a failure that still resonates today in the detrimental effect it had on that crop of registrars.

Fixing this surely did cost the college a lot extra, but this was the fault of the college, not the pandemic. The college can’t say we had to do online exams twice because of the pandemic, so it’s the pandemic’s fault.

There is a very real danger now that the college is going to pay for several major failures in management – the registrar exams being a major example – using JobKeeper. That seems extraordinarily wrong.

Now that CPD has been reorganised by the Medical Board of Australia in a manner that you no longer have to be a member of the college to complete your CPD, and presumably some members have taken advantage of this new regime and left the college, there is a lot of ongoing uncertainty about revenues from the college for membership remaining stable.

Is something like this, completely unrelated to the pandemic, what the RACGP spokesperson had in mind when he or she told Australian Doctor that the college was choosing to retain JobKeeper in order to “weather very uncertain times”?

Times are uncertain for the college, but virtually none of that uncertainty has much to do with the pandemic.

The college is facing some of the biggest challenges of its history in issues such as the introduction of new CPD homes that might compete with it for offering CPD and membership, and taking on all the organising of training of registrars currently managed by a network of RTOs, from 2023. And of course, it has no CEO after the replacement for its last long-term CEO lasted only one year.

That’s a lot of bad weather.

How do you try to convince the government and the public that you’re keeping JobKeeper for the pandemic mainly, when all of these other issues are really what is going to put pressure on the finances of the college at some point soon?

A lot will be told by the college’s next annual report, reporting the financial year 2020-21, which is due out soon.

But it’s not going to be that hard to mix up losses associated with the pandemic with these myriad other issues.

Which is perhaps the major reason the college needs to think carefully about coming clean soon.

When push comes to shove, trust between the community and a GP is perhaps the most important element of the college’s function.

Reputation. Brand. Trust. Community – all elements vital to enabling GPs to get their job done more easily.

In the lead-up to the last federal election, there was some consternation that the college was spending so much on its “Your specialist in life” campaign to lift the image of GPs in the eyes of the public.

Whether or not you thought the campaign was good, at least the college was trying.

In that financial year, the college spent more than $4 million on marketing, much of it directed at spending on this campaign.

That $4 million spend, and many millions before it in previous years, are all at risk of being wiped out now, and worse.

In the year to June 2020, the college took $2.8 million in JobKeeper.

Given JobKeeper was not tested until after September, we can assume that it took a further $2.8 million in the July-to-September period last year.

I’m going to assume that some of JobKeeper was actually used for the right reasons in the early months of the pandemic.

In March and April of 2020, there was a significant degree of panic among workplaces, and staff, and the ability to make assurances quickly in this very uncertain time would have saved jobs from being cut at the college almost certainly.  

But it would not have been that long before the college was out of this period of uncertainty and realised that the bulk of their JobKeeper payments would not be needed for what they were granted.

So maybe out of $5.6 million, the college would need to pay back say $4 million.

What if they did that?

What if they came out next week and said they’d done some further analysis on the effects and likely effects and felt that it was best to give this money back for the greater good of the community that its GPs were serving.

There’s $4 million in marketing that would buy the college a reputation and brand rescue that I don’t think you could put a price on.

It would surely be the most-effective $4 million advertising campaign the college had ever undertaking in its history.

Ironically, in this coming annual report you are likely to see a spend on marketing something like that anyway.

Well managed – it won’t be all easy sailing managing the message now given it is so late – it would give the college a boost out of the realm of “those greedy doctors, don’t they have enough money already”, that Michael West is painting, and which is where all the medical colleges have positioned themselves by publicly by choosing to keep JobKeeper without proper reason.  

It would be both smart business and the right thing to do.

How often do you get that opportunity?

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