Bills Digest No. 12 2005–06
Human Services Legislation Amendment Bill
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
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Legislation Amendment Bill 2005
Date Introduced: 23 June 2005
House: House of Representatives
formal provisions of the Act commence on Royal Assent; the
substantive provisions commence on a day to be fixed by
Proclamation or six months after Royal Assent (which ever occurs
The major purposes of the Bill
the abolition of the governance boards of Centrelink and the
Health Insurance Commission (HIC);
the replacement of HIC (an authority with separate legal
personality to the Commonwealth) with Medicare Australia (a body
which will form part of the Commonwealth);
the creation of the offices of Chief Executive Officer (CEO) of
Centrelink and Medicare Australia, with statutory functions;
the establishment of new governance arrangements under which the
CEOs will be directly accountable to the Minister.
In its 2001 election platform, the Coalition flagged its intent
to examine statutory authorities and office holders.(1)
On 14 November 2002, the Government appointed Mr John Uhrig AC to
conduct a review of the governance practices of statutory
authorities and office holders, with a particular emphasis on those
which impact on the business community. The objective of the review
was to identify issues surrounding existing governance arrangements
and to provide policy options for Government to get the best from
statutory authorities and office holders and their accountability
The review focussed on seven statutory authorities: the
Australian Taxation Office (ATO), the Australian Consumer and
Competition Commission (ACCC), the Australian Prudential Regulation
Authority (APRA), the Reserve Bank of Australia (RBA), the
Australian Securities and Investment Commission (ASIC), the Health
Insurance Commission (HIC) and Centrelink.(3)
The Uhrig Report was released by the Minister for Finance and
Administration on 12 August 2004. The Report recommended two
templates designed to ensure good governance exists: one where
governance can best be provided by executive management and the
other where it can best be provided by a board . Both templates
detail measures for ensuring the boundaries of responsibilities are
better understood and that the relationship between Australian
Government authorities, Ministers and portfolio departments is
The Report influenced the creation in October 2004 of a new
Department of Human Services(5) (DHS), under the Finance
portfolio, which brings together six agencies that administer $80
billion of human services each year: Centrelink, HIC, Child Support
Agency, Health Services Australia, Commonwealth Rehabilitation
Services and Australian Hearing. A key element in establishing the
DHS was the need to separate the bureaucracy: between those parts
which develop policy and those parts which implement the policy,
such as the delivery service of welfare payments.(6) As
a new initiative, a single Human Services Advisory Board will be
established this year, replacing the five agency
boards.(7) However, to date there has been no
announcement about the establishment of this Board.
The Bill to be introduced amends the Health Insurance
Commission Act 1973 and the Commonwealth Services
Delivery Agency Act 1997 by making changes to the
governance structures of Centrelink and the HIC.(8)
As part of the changes to be made by the Bill, Medicare
Australia and Centrelink will each consist of their respective
Chief Executive Officers (CEOs) and their staff, but legally will
be part of the Commonwealth.(9) Employees in the two
agencies will be covered by the structure, principles and statutory
powers under the Public Service Act 1999, providing them
with a generic range of employment rights and obligations. The CEOs
management reporting requirements will be clearly structured and
they will have additional support structures to the Executive and
to the Australian Public Service as detailed in specific
legislation contained in the Bill. Both bodies will be prescribed
agencies for the purposes of the Financial Management and
Accountability Act 1997(10) (FMA Act) which applies
to budget-funded authorities managed by a CEO. The FMA Act
establishes various management and reporting responsibilities for
the CEO (sections 44 46, 49 and 51), as well as allowing the
Minister to give the guidelines to the CEO (s. 64).(11)
Furthermore, it provides an accountability framework for CEOs to
manage agency resources.
Academics within the public administration discipline have
commented on the Uhrig Report which had influenced the
establishment of the DHS, of which Centrelink and the HIC are a
part. Roger Wettenhall commented that at the outset the Uhrig
inquiry denied itself the possibility of meeting up with people who
could have established links for the inquiry and widened its
horizons.(12) Ian Holland considered that the Uhrig
Report had four major flaws. The inquiry had not considered what
direction to take for governance of statutory authorities;
secondly, it avoided examining the governance of highly autonomous
statutory authorities ;(13) thirdly, it incorrectly
assumed that a legislative framework protects the operational
independence of a statutory authority; and fourthly, it paid no
attention to overseas experience or models of
governance.(14) Stephen Bartos considered the Uhrig
Report barely addressed questions of ethics nor did it address the
role of statutory authorities in managing risk and, in particular,
However, significant interest groups have not announced
positions against the introduction of this Bill.
Press commentary has been limited and concerned mainly with the
Prime Minister s announcements, on 22 October 2004, of the
appointment of Joe Hockey as the Minister for Human
Services,(16) and Patricia Scott as the Secretary of the
DHS.(17) After that date there were three controversial
issues covered by the press.
In May 2005, the Australian Financial Review commented
on the impact of policy matters on the Department of Human Services
and Minister Hockey s focus on improved IT
structures.(18) The article also suggested there were
some transitional clashes between portfolios relating to six
agencies under the DHS and that relevant Ministers had sought legal
advice as to the extent of their powers under the new portfolio
In July 2005, the Australian Financial Review commented
on Centrelink s call for bids for a $100 million high-speed network
upgrade. The article alleged that two years after the initial bids
were called the process was still unresolved with resulting impact
on 400 Centrelink offices and service delivery problems for
recipients of child support, disability support pensions and
The third issue covered was a demarcation dispute between two
Government Ministers regarding responsibility for policy and
service delivery matters. An article in The Australian in
March 2005 suggested there were mounting problems with the
Government s attempts to reform the federal bureaucracy,
particularly in the delivery of human services. The article alleged
that Minister Hockey was being cut off from key welfare delivery
agencies he was meant to control and that Senator Patterson was
reluctant to share control with Mr Hockey, who is meant to oversee
delivery of services. (20)
cons of Executive devolution of decision-making
This Bill attempts to implement a new service delivery model in
response to perceived public frustrations: Citizens are demanding
seamless services and are frustrated with duplications, gaps and
lack of integration. (21) Therefore, there is a need to
strike an optimal balance between devolution and coordination to
achieve whole of government activities and service-wide capability
On the debit side, to some observers this management approach to
service delivery masks a different issue. Some have argued that the
public service in Australia is well reformed and has become
something of a beacon for other nations (23), however
John Wanna considers the terms whole of government and joined-up
approaches are euphemisms: the Executive does not want too much
decision-making devolved too far down the line.(24)
Prime Minister Howard has made it clear that some advisory
boards to statutory authorities will go.(25) Existing
boards will continue to provide advice to the Minister with the aim
of establishing a single Advisory Board on Human Service
(26) The Advisory Board of Human Services will advise
the Secretary of DHS, who will in turn advise the
Minister,(27) as well as coordinate the operations of
the six agencies.(28) In the long term however, this
public sector management approach might have negative cumulative
effects on public and business interests. The Uhrig Report
recommends that statutory agencies and office holders be required
to provide to departmental heads the same accountability
information they currently provide to ministers.(29) In
response, the changes made by this Bill would place the power to
appoint, direct and control the CEO of Centrelink and Medicare
Australia directly in the hands of the Minister for Human
It might be time to look at whether there is to be a correlation
between tighter government control of regulators and public
servants, and decreased public confidence in the
Government.(30) There will always be some tensions with
some of the conventions of our system of government, but it has
been argued that this does not mean that public opinion or
specialist advice should be ignored.(31) In abolishing
the advisory boards of the HIC (Medicare Australia) and Centrelink,
it is possible that the sounding board of advice on delivery issues
and service improvement proposals in human services,(32)
which are currently available to the Minister for Human Services,
would be diminished. By significantly reducing the number of
advisory board members, the opportunity for public consultation
with board members is curtailed. Furthermore, it could be argued
that with fewer individuals able to comment on Human Services
matters, there will be a limited range of opinion available to the
It could also be argued that with the new powers available to
the Minister for Human Services, there will be an increased level
of responsibility for matters touching on other portfolios. The
changes made by the Bill would empower the Minister for Human
Services to direct specific CEOs, but it would also mean that the
Minister is responsible if service delivery is not implemented or
In this situation, it would be the Minister for Human Services
who would be directly responsible and accountable to Parliament and
not the Ministers responsible for policy development.
As part of this scenario, associated policy turf wars might also
increase as a result of six statutory authorities being managed by
the one Advisory Board.
Furthermore, weakly developed cross-cutting
measures(33) across portfolios could lead to inadequate
performance management.(34) For example, the recent
demarcation dispute between Ministers Patterson and
Hockey(35) has highlighted the difficulties which some
Government members have experienced in relinquishing control over
specific policy and service delivery matters. Therefore, it could
be argued that the medium-term effect of seeking to address one
management issue by means of legislation and reporting requirements
might create a new set of difficulties which would later need to be
addressed by the Government.
There will be no financial impact to the Government from the
introduction of the Bill.(36) However, public funds
would be used for public information campaigns and branding issues
associated with the Department of Human Services and, in
particular, with Medicare Australia.(37)
Schedule 1 to the Bill provides for amendments relating to
Centrelink. Part 1 of Schedule 1 deals with amendments to the
Commonwealth Services Delivery Act 1997, and Part 2
contains consequential amendments to other legislation arising from
the amendments to the Commonwealth Services Delivery Act
1997. Part 3 contains transitional provisions to ensure that
governance changes do not disrupt Centrelink s service delivery to
customers and to cover other transitional issues such as
Schedule 2 to the Bill provides for amendments relating to the
Health Insurance Commission. Part 1 of Schedule 2 deals with
amendments to the Health Insurance Commission Act 1973,
and Part 2 contains consequential amendments to other legislation
arising from the amendments to the Health Insurance Commission
Act 1973. Part 3 contains transitional provisions to ensure
that governance changes do not disrupt HIC s service delivery to
customers and to cover other transitional issues such as
The Government considers it is appropriate to rename the HIC
because, once the changes have been made by the Bill, the successor
body to HIC will no longer be a commission. The naming of the new
body Medicare Australia was selected and is supported by the
Government as it reflects one of the key roles of the HIC which is
the delivery of the Medicare program. Medicare is also a name
commonly known by many Australians.(38)
Overall the intention of the Bill is to resolve perceived
service delivery problems for the two statutory authorities. The
Bill aims to develop clear lines of accountability from the
Minister down to the agency. This is designed to implement better
corporate governance in the public sector.(39) The
changes to be made by the Bill would clarify lines of reporting and
accountability for the Secretary, including relevant Ministers,
Departmental Secretaries and public servants. In essence, the
changes would mean formal accountability upwards to Ministers who
in turn are accountable to Parliament.(40)
Whilst this is a worthy
goal, the mechanisms adopted by the Bill might be difficult to
implement. Turf wars over resourcing issues between Ministers,
which have already received press coverage, could continue with
resulting public and administrative loss of confidence in
Ministerial abilities to effectively manage organisational change.
Tighter government control of the service delivery processes means
that those areas responsible for policy matters, and those areas
responsible for operational elements, will need to be structurally
separated. This will mean that the relevant departments and
statutory authorities involved will need to devote considerable
efforts to implement the structural changes mandated by the Bill
which might come at the cost of effectively implementing current
human service delivery.
Furthermore, there is a danger that the Advisory Board to be
established will not be effective in providing advice and guidance
to the Government unless it seeks and receives current, timely and
relevant information on service delivery initiatives conducted by
Medicare Australia and Centrelink with support from the DHS. This
information could be more readily achieved by ensuring that
sufficient opportunities are provided for members of the public to
be consulted on the implementation of human service delivery
R. Grant, The Uhrig Review and the future of statutory
authorities , Research Note no. 50, Parliamentary Library,
Canberra, 2004-05 p. 2.
J. Uhrig, Review of the corporate governance of statutory
authorities and office holders, June 2003, Commonwealth of
accessed on 28 July 2005.
S. Bartos, The Uhrig Report: Damp Squib or Ticking Timebomb?,
Australian Journal of Public Administration 64 (1), p.
N. Minchin (Finance Minister), Australian Government Response to
Uhrig Report , media release 57/04, 12 August 2004, http://www.finance.gov.au/scripts/Media.asp?Table=MFA&Id=550,
accessed on 27 July 2005.
J. Howard (Prime Minister) Fourth Howard Ministry , 22 October
accessed on 26 July 2005.
E. Colman, Hockey fights for power in super-portfolio , The
Australian, 15 March 2005, p. 2.
P. Malone, Boards go in Public Service changes , The
Canberra Times, 23 October 2004, p. 1.
Hon J. Hockey MP, Minister for Human Services, Second Reading
Speech, Human Services Legislation Amendment Bill 2005, House of
Representatives, Debates, 23 June 2005, 11.01am.
Human Services Legislation Amendment Bill 2005 Explanatory
Memorandum, p. 1.
R. Grant, loc. cit.
R. Wettenhall, Statutory Authorities, The Uhrig Report and the
Trouble with Internal Inquiries , Public Administration
Today, Issue 2, December February 2004, p. 65.
I. Holland, The Review of the Corporate Governance of Statutory
Authorities and Office Holders , Public Administration
Today, September-November 2004, p. 65.
S. Bartos, op. cit. p. 96.
See P. Starick, PM trumpets girl power , Hobart
Mercury; 23 October 2004, p. 5; P. Starick, Women play a vital
role in Howard team , Adelaide Advertiser; 23 October
2004, p. 9; P. Malone, Shake-up for Public Service , The
Canberra Times, 23 October 2004 p. 1; and M. Metherell and L.
Dodson, New super agencies in reshuffle , Sydney Morning
Herald, 22 October 2004, p. 4.
See K. Murphy, Ascent of Howard s femocrats , Weekend
Australian, 13 November 2004, p. 21; and P. Malone, loc.
A. Fabro and C. Murphy, Hockey flags portfolio changes ,
Australian Financial Review, 21 April 2005, p. 4.
A. Woodhead, It s a high-speed go-slow at Centrelink ,
Australian Financial Review, 20 July 2005, p. 53.
E. Colman, loc. cit.
Commonwealth of Australia, Connecting Government: op.
cit., p. 226.
Commonwealth of Australia, State of the Service Report
2002-03, State of the Service Series 2002-03, p. 198,
J. Wanna, Prospects for Regeneration in Government What we Talk
about is More Important than What we Do or How we Do it ,
Australian Journal of Public Administration, 64(2), p. 20,
J. Wanna, op. cit p. 21.
P. Malone, Boards go in Public Service changes , The
Canberra Times, 23 October 2004, p. 5.
J. Howard (Prime Minister) Fourth Howard Ministry , loc.
R. Grant, loc. cit.
J. Uhrig, loc. cit.
Hon J. Hockey MP, loc. cit.
ross-cutting Issues: To integrate indigenous, gender,
disability, youth, human rights, community strengthening,
multicultural, environment, rural and regional issues into policy
activities. Quoted from
T. Ling Delivering joined-up government in the UK , Public
Administration, Vol. 80. No. 4, 2002, p. 619.
E. Colman, op. cit., p. 2.
Human Services Legislation Amendment Bill 2005
Explanatory Memorandum, p. 1.
N. Minchin, loc. cit.
T. Ling, op. cit., p. 617.
8 August 2005
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