Bills Digest No. 175 1997-98
Australian Hearing Services Reform Bill 1998
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Date Introduced: 25 March 1998
House: House of Representatives
Portfolio: Health and Family Services
Commencement: On Royal Assent except for amendments
to the Australian Hearing Services Act 1991 and the Hearing
Services Administration Act 1997 which operate from the 'transfer
time' to be notified by the Minister in the Gazette.
Purpose
These are transitional measures to facilitate the full
corporatisation of Australian Hearing Services (AHS).
Background
Measures in the Australian Hearing Services Reform Bill
1998 (the Bill) complete a sequence of key reforms to the role of the
Commonwealth Government in the provision of hearing services. The Government
outlined in the 1996-97 Budget its intention to introduce progressively
major reforms to services for people with hearing impairments. The first
set of reforms was contained in the Hearing Services Administration
Act 1997 and the Hearing Services and AGHS Reform Act 1997.
These reforms aimed to introduce a greater degree of
contestability into the provision of hearing services and to limit the
hitherto dominant role of the Commonwealth Government instrumentality,
AHS. The reforms also transferred responsibility for the regulation of
hearing services from AHS to the newly created Office of Hearing Services
(established March 1997) within the Commonwealth Department of Health
and Family Services. The Office of Hearing Services also administers the
voucher scheme for pensioners and eligible veterans which was a central
element of the 1997 reforms. AHS competes with private sector providers
in supplying services to the holders of these vouchers.
Welcoming the passage of this legislation in May 1997,
the then Parliamentary Secretary to the Minister for Health and Family
Services, Senator Ellison, stated that:
the hearing services legislation gives eligible people
reliable, quality hearing services, a greater choice of service providers
and will lead to a new competitive environment between service providers.(1)
In his Second Reading Speech on the Hearing Services
and AGHS Reform Bill 1997, the Minister for Health and Family Services,
Dr Wooldridge, foreshadowed the Government's intention to establish Australian
Hearing Services as a Government Business Enterprise on or before 30 June
1998. The Australian Hearing Services Reform Bill 1998 proposes to implement
this measure.
Australian Hearing Services
AHS is currently a statutory authority within the Health
and Family Services portfolio. It employs over 700 staff and in 1996-97
provided hearing services to 178 000 clients through its network of 60
Hearing Centres and 185 visiting clinics.(2) The Department of Health
and Family Services estimates that some 600 000 hearing impaired Australians
are eligible for assistance under the hearing services program.(3)
The AHS has two key functions: it provides a range of
services to eligible hearing impaired clients through its Hearing Services
Program and also conducts a research program through its National Acoustic
Laboratories (NAL).
Eligible pensioners and veterans constituted the overwhelming
majority of AHS clients in 1996-97 (73 per cent) while children accounted
for a further 23 per cent. In addition to the introduction of a voucher
system for eligible pensioners and veterans, the 1997 reforms included
'the exclusive retention by AHS of services to children, clients with
special needs and remote and indigenous clients and research'.(4) AHS
continues to receive budget funding for these community service obligations,
under contractual arrangements with the Department of Health and Family
Services.
In the 1997-98 Budget, the Commonwealth Government provided
an estimated total of $91.4 million ($95.3 million in 1996-97) for the
provision of hearing services, of which approximately $19.5 million ($21.3
million in 1996-97) was to support the community service obligations of
AHS.(5)
In 1997, AHS celebrated 50 years in research and delivery
of services to hearing impaired people. A snapshot of the key milestones
during the 50 years since the establishment of the Commonwealth Acoustic
Laboratories in 1947, its renaming as the National Acoustic Laboratories
in 1973 and the establishment of Australian Hearing Services as a statutory
authority in 1992, can be found in the AHS Annual Report for 1996-97(6).
Employees
Staff of AHS ceased to be covered by the Public Service
Act with effect from 1 July 1997 as a result of the first stage of the
reforms to hearing services. A certified agreement was subsequently negotiated
between the AHS Board and AHS staff. The Second Reading Speech on this
Bill states that:
Under the restructure, staff will be transferred to
the employ of the new company under the provisions of this Bill. Their
existing entitlements will be preserved and they will continue to be
covered by the current Australian Hearing Services certified agreement.(7)
Corporatisation
As noted above, the AHS currently operates as a statutory
authority within the Commonwealth Department of Health and Family Services
and derives its legislative authority from the Australian Hearing Services
Act 1991.
The AHS will cease to be a statutory authority and will
become a Commonwealth owned company limited by shares, established under
the Corporations Law.
The new company is one of a number of accredited service
providers under the Hearing Services Program and will remain the principal
provider for the delivery of important community service obligations (CSOs).
The Second Reading Speech commits the Government to continue funding CSOs
through appropriations.(8)
The Government has further indicated that the company
will be designated a Government Business Enterprise (GBE). This would
appear to have implications in relation to the accountability mechanisms
established under the Commonwealth Authorities and Companies Act 1997
which makes special provision in relation to Commonwealth companies which
are GBEs. This designation may also have implications for the proposed
company in relation to the Governance Arrangements for Commonwealth Government
Business Enterprises which were issued by the Department of Finance(9)
in response to the Report prepared by Richard Humphry for the Howard Government
in March 1997.(10) Presumably any proposed measures are to be effected
by regulation.
It is noted, however, that neither the Second Reading
Speech nor the Explanatory Memorandum, detail the precise nature of any
special governance arrangements and accountability measures that are to
apply to the AHS arising from its status as a taxpayer funded body.
Main Provisions
Clauses 7 and 8 together with the Explanatory
Memorandum provide an outline of the proposed corporate structure of the
AHS. AHS functions, staff and assets are to be transferred to a body already
incorporated under the Corporations Law.
Clause 9 provides that the Minister may, before
the time that existing functions are transferred to the new company, transfer
specified liabilities of the present Authority to the Commonwealth.
Clause 10 provides for the automatic transfer
of assets and liabilities (other than specified liabilities) to the new
company at the transfer time.
Clause 12 exempts the transfer of assets and liabilities
to the new company from stamp duty.
Clauses 15-19 deal with the rights and entitlements
of staff compulsorily transferred from the present statutory authority
to the new company. As previously noted, these employees were removed
from Public Service Act coverage in 1997. The proposed provisions appear
to retain existing staff entitlements. Conditions generally will in time,
of course, be subject to variation by the usual processes of workplace
bargaining.
Clause 20 exempts the company from State and Territory
taxes. As noted in the Second Reading Speech, however:
The authority is currently exempt from the payment
of state and territory taxes. This arrangement will be continued under
the new Commonwealth company. However, to ensure competitive neutrality
between the company and its private sector competitors, the company
will pay to the Commonwealth amounts equivalent to taxes otherwise payable
to states and territories. It will also pay all relevant Commonwealth
taxes.(11)
The schedule makes changes to the Australian Hearing
Services Act 1991 and the Hearing Services Administration Act 1997.
These changes are of a consequential and transitional nature.
Clause 24 excludes the operation of the yet to
be enacted Legislative Instruments Bill 1998 in relation to instruments
made under this Act other than regulations made under proposed section
25.
Concluding Comments
As noted, these proposals will conclude the current phase
in restructuring the means by which Commonwealth services are delivered
to the hearing impaired.
Earlier elements in the reform program involved the institution
and formalisation of a purchaser/provider split between the Department
and service providers including AHS.
The purchaser/provider model has the potential to lead
to greater efficiency in service delivery. The National Commission of
Audit identified the following potential benefits of this approach to
service provision:
- policy priorities are better specified and hence clearer
- working relationships can be improved because expectations and responsibilities
are clarified
- conflicts of interest can be minimised because providers are not the
sole source of advice on targets, evaluation and standards - the balance
of power is not weighted in favour of the provider
- contestability can be enhanced because potential providers are exposed
to competition
- accountability can be heightened because a purchaser may specify what
performance information is expected from the provider
- managerial autonomy can be increased because relevant roles and structure
can be clarified
- responsiveness to clients can be improved because purchase agreements
require the provider to meet client needs.(12)
A purchaser/provider split can be achieved using a variety
of different entities and it is not necessary to achieve the intended
result by incorporating the service provider as a Corporations law company
and designating it a GBE.
In the case of the AHS, elements of competition in service
provision have operated since 1997, ie before full corporatisation.
This experience serves as a reminder of the range of
options available to government in putting the delivery of public services
on a more business-like footing. In choosing between those competing options,
however, the goal of increased efficiency is only one of a number of factors
that need to be considered.
The maintenance of appropriate levels of accountability
for the expenditure of taxpayer funds is another important goal.
It may be that the present proposal is backed by sufficiently
rigorous accountability measures and that these will fully meet the requirements
of the Parliament. As already noted, the Government has recently streamlined
and strengthened controls over the operations of GBEs. It is not clear
from the documentation provided to date, however, how those accountability
measures will apply to the corporatised AHS. This is an issue that may
be the subject of further elaboration during debate on the Bill.
Endnotes
- Parliamentary Secretary to the Minister for Health and Family Services,
'A Fair Deal for Hearing and Health Services', Media Release,
28 May 1997.
- Australian Hearing Services, Annual Report 1996-97.
- Department of Health and Family Services, Annual Report 1996-97,
217.
- Australian Hearing Services, 51
- Health and Family Services Portfolio, Portfolio Budget Statements
1997-98: 284.
- Australian Hearing Services, 12-13.
- House of Representatives, Parliamentary Debates, 25 March 1998,
1040.
- Ibid.
- In June 1997.
- Review of GBE Governance Arrangements, 14 March 1997.
- Parliamentary Debates, op cit, 1040.
- Report to the Commonwealth Government, June 1996, 15-16.
Paul Mackey &
Bob Bennett
6 April 1998
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 1998
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