Bills Digest No. 139 2002-03
National Health Amendment (Private
Health Insurance Levies) Bill 2003
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
National Health Amendment
(Private Health Insurance Levies) Bill
2003
Date Introduced: 26 March
2003
House: House of Representatives
Portfolio: Health and
Ageing
Commencement: 1 July
2004
To make
amendments to the National Health Act 1953 in relation to
the reimposition of four private health insurance levies.
In
a report(1) in 1999-2000 the Australian National
Audit Office ('ANAO') questioned the
constitutional validity of the Private Health Administration
Council ('PHIAC') levy.
PHIAC is the prudential regulator of the
private health insurance industry. The PHIAC Levy is authorised
under section 82G(1)(h) of the National Health Act 1953
and funds the general administrative costs of PHIAC.
The ANAO report queried whether the PHIAC Levy
was a 'tax' rather than a 'fee for service'. As the ANAO noted, to
raise a tax in accordance with the Constitution requires both an
Act to impose the tax and a separate Act to authorise its
collection.(2) There is currently no Act imposing the
PHIAC levy.
The current Bill replaces provisions in the
National Health Act authorising the PHIAC Levy and three other
levies administered by PHIAC that private health insurers are
liable for, namely:
- The Collapsed Organization levy. This levy is designed
to protect contributors to private health insurance funds. If a
fund is unable to meet liabilities to its members, the Minister for
Health may impose a levy on each other registered organisation to
help meet those liabilities. This levy has not been imposed to
date.(3)
- The Acute Care Advisory Committee ('ACAC')
review levy. A levy is imposed on each registered health
benefits organization to meet the administrative costs of reviews conducted by
Acute Care Advisory Committees under section 3B of the
Health Insurance Act
1973.(4)
- The Reinsurance Trust Fund levy. A levy is imposed on
each registered health benefits organization to provide for
internal cross-subsidisation within the private health insurance
industry for aged, chronic and long-term acute care patients.
The current Bill authorises collection of the
four levies, with separate bills for imposition of each
levy.(5) This ensures compliance with section 55 of the
Constitution.(6)
The Bill also adds new provisions to the
National Health Act authorising PHIAC officers to enter and search
premises of private health insurance funds to locate documents
related to payment of the various levies. The new powers are in
addition to existing provisions requiring private health insurance
bodies to provide information to PHIAC and authorising PHIAC to
appoint inspectors to investigate the financial affairs of these
organisations.
Schedule 1 repeals existing
provisions in the National Health Act requiring private health
insurance providers to pay the four levies. It substitutes new
provisions re-authorising collection of the levies, linked to
separate bills imposing each of the four measures.
Item 24 of Schedule 1 inserts
new Part VID in the National Health Act covering
the revised arrangements for private health insurance levies.
New section 83D states that 'a private health
insurance levy that is due and payable' must be paid to PHIAC.
'Private health insurance levy' is defined in Item
12 to mean:
-
An ACAC review levy
-
A Collapsed Organization levy
-
A Council Administration levy, or
-
A Reinsurance Trust Fund levy.
In accordance with section 81 of the
Constitution, items 18 and 23 appropriate the
Consolidated Revenue Fund for payment to PHIAC of amounts collected
under the four levies.(7)
New Division 4 in
Part VID confers on officers of PHIAC the power to
enter premises and search for 'levy-related documents'. New
section 83K defines 'levy-related documents' as any
document related to the liability of a health benefits organization
to pay a private health insurance levy. Under new
section 83M, if the owner of premises refuses
access, PHIAC staff can apply to a magistrate for a search warrant.
The warrant must 'authorise the officers to use such assistance and
force as is necessary and reasonable' to enter the premises and
search for documents. New section 83O requires an
officer using a warrant to make a copy available to the occupier of
the premises, show the occupier an identity card and inform the
occupier that they are entitled to observe the execution of the
warrant provided they do not impede the search for documents.
The provisions in the current
Bill designed to ensure the constitutional
validity of the four levies on private health insurance providers
do not appear to raise any issues.
In relation to the extra search powers
in Division 4 of new Part VID, neither the
Explanatory Memorandum or the Second Reading Speech explain why
these are needed in addition to the powers that PHIAC already
has.
Under existing section 82K of the
National Health Act, the PHIAC Commissioner can authorise a PHIAC
staff member or an external consultant to examine and report on the
'records, books and accounts' of a private health insurance
provider. The authorised person is to have 'full and free access to
any premises in which the records, books and accounts are
kept'.
Section 82K also gives the Commissioner
power to issue a written notice requiring an officer or agent of a
private health insurer to:
-
give specified information to PHIAC
-
appear before a PHIAC meeting to be questioned under oath about the
insurer's affairs, or
-
produce all records, books and accounts under the person's control
relating to the affairs of the insurer.
It is an offence not to comply with such
a notice, with a penalty of $1,000 or six months imprisonment or
both. The offence is one of 'strict liability', meaning the onus is
on the recipient of the notice to show 'reasonable cause' for not
complying.
In addition to these powers, section 82R
authorises PHIAC or the Minister to appoint an inspector to
investigate the affairs of a private health insurer. This can be
done if there is reason to suspect that the insurer's affairs are
not being carried on 'in the best interests of the contributors to
the fund' or that the insurer 'has contravened, or failed to comply
with, a provision of this Act'. An inspector can require any person
'with knowledge of the affairs' of the insurer to provide records,
appear before the inspector and/or provide 'all reasonable
assistance' in connection with an investigation (section 82S). If
access to premises is refused, the inspector can obtain a warrant
authorising entry from a magistrate (section 82V). Obstructing an
inspector or failing to comply with an inspector's requirements
invokes a penalty of $1,000 and/or six months imprisonment
(sections 82U and 82R).
The Explanatory Memorandum notes in
relation to the measures proposed in the current Bill that 'the
inclusion of a power to enter premises and search for documents is
important to ensure compliance with the payment requirements of
these levies'.(8) It appears, however, that such
material could be obtained by PHIAC using the powers it already has
under the National Health Act. If the drafters of the
Bill felt that the current regime was
inadequate, it might have been expected that details would have
been provided for the benefit of Parliament either in the
Explanatory Memorandum or in the Second Reading Speech.
- ANAO Report No. 32 1999-2000, Management
of Commonwealth Non-Primary Industry Levies, at:
http://www.anao.gov.au/WebSite.nsf/Publications/4A256AE90015F69B4A256903001679A5
- Section 55 of the Constitution states that
'Laws imposing taxation shall deal only with the imposition of
taxation '
- National Health Act paragraph 82G(1)(j);
Private Health Insurance (Collapsed Organization Levy) Bill 2003,
Explanatory Memorandum, p. 2.
- Private Health Insurance (ACAC Review Levy)
Bill 2003, Explanatory Memorandum, p. 2.
- Private Health Insurance (Council
Administration Levy) Bill 2003; Private Health Insurance (Collapsed
Organization Levy) Bill 2003; Private Health Insurance (ACAC Review
Levy) Bill 2003; Private Health Insurance (Reinsurance Trust Fund
Levy) Bill 2003.
- Section 55 also requires that each bill
imposing taxation 'deal with one subject of taxation only'.
- Section 81 states that 'All revenues or
moneys raised by the Executive Government of the Commonwealth shall
form one Consolidated Revenue Fund, to be appropriated for the
purposes of the Commonwealth '. The disbursement of revenue paid
into Consolidated Revenue must by authorised by an appropriation
Act.
- Explanatory Memorandum, p. 14.
Peter Prince
30 April 2003
Bills Digest Service
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ISSN 1328-8091
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