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Contact Officer & Copyright Details
Date Introduced: 25 March
House: House of
Portfolio: Health and Family
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.
These are transitional measures to facilitate
the full corporatisation of Australian Hearing Services (AHS).
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
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
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).
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
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
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.
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
Clause 20 exempts the company
from State and Territory taxes. As noted in the Second Reading
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.
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
- 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
- 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
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
The maintenance of appropriate levels of
accountability for the expenditure of taxpayer funds is another
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.
- 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
- 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.
- 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 &
6 April 1998
Bills Digest Service
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