The state’s Health department has been taken to task for failing to recoup penalty payments from the consortium responsible for delivering the new Royal Adelaide Hospital.

The State Government confirmed this month the project would be delayed for seven months, at a cost to taxpayers of $34.3 million. Originally slated for an April 2016 handover, it will now be completed in July, but a transfer of resources will be put off until November to avoid complications in the busy flu season.

SA Health chief executive David Swan, giving evidence to parliament’s Budget and Finance Committee today, said the financial responsibility for the delay was carried by both the new RAH consortium SA Health Partnership and the SA Government.

But he was scrutinised by Liberal shadow Treasurer Rob Lucas about why the Government had not imposed a contractual provision, reportedly worth $25 million a month, for any delay.

“We have negotiated a settlement which has responsibility on both parties,” Swan said.

“No, you’ve just paid them $34 million,” Lucas replied.

Swan said $20 million of that payment was to cover “unforeseen remediation”, which had been the subject of an ongoing wrangle between the Government and SAHP.

“But why didn’t you whack them for penalty payments, which would in essence wipe out the $34 million?” asked Lucas.

“Surely the state didn’t just roll over and have its tummy tickled?”

Swan implied the payment was made because the state was liable for delays based on unforeseen remediation.

The Health Department is also adamant it will meet savings targets of more than half a billion dollars over the forward estimates, despite exceeding its employment cap by around 1000 full-time equivalents in the 2014-15 financial year.

The failure to meet employment targets came despite the number of medical and nursing staff decreasing in the past 12 months.

Swan said the department employed 30,991 FTEs in the year to June, well over the Treasury-imposed cap of 29,998.

However, the number of medical staff fell by 22 to 3013 in the same period, and nursing staff dropped from 12,663 to 12,651.

Swan insisted this would not preclude the agency meeting savings targets totalling $522.4 million over the next four years, saying “we’re able to get the required savings task through mechanisms other than job cut numbers”.

He said the agency expected a “small operating surplus” in the current financial year.

Despite a protracted community consultation on the contentious Transforming Health changes, he said the department was still unclear how they would impact its savings targets.

“We’ll be working through that over time,” he said.