Bills Digest No. 172 1997-98
Commonwealth Rehabilitation Service 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
Commonwealth
Rehabilitation Service Reform Bill 1998
Date Introduced: 26 March
1998
House: House of Representatives
Portfolio: Health and
Family Services
Commencement: Formal
and transitional provisions come into effect on Royal Assent. The remainder
of the Bill commences on a date fixed by proclamation but no later than
6 months after Royal Assent.
Purpose
These are transitional measures that
facilitate the corporatisation of the Commonwealth Rehabilitation Service
(CRS).
Background
On 22 December 1997, the Minister for Family Services,
Warwick Smith, announced that the CRS would separate from the Department
of Health and Family Services from 30 June 1998.(1)
This statement followed an announcement made on 19 November
1997 that the Government was developing initiatives intended to improve
access to employment assistance services for people with disabilities.
In this earlier announcement, Minister Smith indicated that by mid-May
1998 Centrelink would be providing a new eligibility assessment and referral
service for people with disabilities seeking employment.(2)
In late 1997, the Minister also released a guide to services
entitled: Improving Access to Employment Assistance for Job Seekers
with A Disability.(3)
The CRS
The Commonwealth Rehabilitation Service (CRS) aims to
help people with a disability or injury to get or keep employment. A key
objective of the CRS is to minimise the personal, social and financial
costs of disability by the provision of rehabilitation services.
To be eligible for assistance from the CRS, clients need:
- to be permanent residents of Australia
- to be aged between 14 and 65 years
- to have a disability either from birth or which has resulted from
sickness or injury
- to have a disability that impairs their ability to gain or keep a
job and to live independently
- to show that by being involved with CRS programs they are likely to
make a substantial gain towards being employed and being able to live
independently.
The type of support provided by the CRS is tailored to
each individual and may include services such as: work experience, on
the job training, counselling, suggestions as to how to handle their disability,
help with job applications, help with contacting community support organisations
and other support and advice. Referrals to the CRS may come from the individuals
themselves but also from medical practitioners, insurance providers and
other government departments and agencies.
The significance and scope of the operation of the CRS
is indicated by the size of its budget and the number of citizens who
benefit from the services it provides.
Each year the CRS assists approximately 30 000 people
with injury or disabilities to return to the workforce, and find and retain
jobs.(4)
The Commonwealth currently provides rehabilitation services
free-of-charge to eligible people through a nation-wide network of 170
service outlets operated by the CRS.(5)
In the 1997-98 Federal Budget in excess of $113m was
apportioned to the organisation.
Corporatisation
The CRS currently operates as a division of the Commonwealth
Department of Health and Family Services and derives its legislative authority
from Part III of the Disability Services Act 1986.
Under the current proposal, the CRS will cease to be
a Division of the Department of Health and Family Services staffed under
the Public Service Act 1922 and will become Commonwealth owned
company limited by shares, established under the Corporations Law, ie
a proprietary company.
The changes proposed are intended to create what is commonly
referred to as a 'purchaser-provider' split. The Department of Health
and Family Services will be the purchaser of services and the newly corporatised
CRS initially will be the sole service provider.
The Government has indicated that corporatisation will
open the way in the longer term for competition in the provision of services.
In his Second Reading Speech, Minister Smith indicated that from 1999
it is intended that CRS will cease to be a monopoly provider. In the interim,
however, the Department of Health and Family Services will continue to
purchase rehabilitation services from the CRS under contract.(6)
The Minister 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(7)
in response to the Report prepared by Richard Humphry for the Howard Government
in March 1997.(8) Presumably any proposed measures are to be effected
by regulation.
It is noted, however, that neither the Minister's 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 CRS arising from its status as a taxpayer funded body.
Employees
As noted above, the CRS is presently staffed under the
Public Service Act 1922. The Government proposes that CRS staff
be transferred to the new company by virtue of section 81C of the Public
Service Act which provides for the compulsory transfer of staff to 'Commonwealth
authorities'.
As the proposed company is not a 'Commonwealth authority',
the present Bill provides that the proposed company is to be deemed to
be a 'Commonwealth authority' for the purposes of the Public Service Act
even though it is not otherwise to be treated as such an authority (clause
16).
Main Provisions
Clause 5 outlines the new corporate structure of the
CRS and provides that it shall not come into existence until a declaration
is issued by the Minister after the company has been registered under
the Corporations Law of the Australian Capital Territory and has share
capital.
Clause 6 further provides that the CRS will remain
a Commonwealth-owned company if, and only if, all shares in the company
are beneficially owned by the Commonwealth at any time.
Clauses 10 and 12 respectively provide
for the transfer of assets and liabilities to the new company. The clauses
provide for such transfer to be effected by ministerial declaration but
transfers by other means are not precluded.
Clause 15 exempts the company from State and Territory
taxes. As noted in the Second Reading Speech, however:
The new company will pay all Commonwealth taxes.
However, consistent with current taxation policy it will be exempt
from state and territory taxes. To ensure competitive neutrality it
will instead make payments to the Commonwealth equivalent to the level
of state taxes it would otherwise have paid.(9)
As noted above, clause 16 deems the company to
be a Commonwealth authority for the purposes of the Public Service
Act 1922, but makes it plain that it is not a Commonwealth authority
for other purposes.
The schedules make consequential changes to a range of
Commonwealth laws. Clause 18 excludes the operation of the yet
to be enacted Legislative Instruments Bill 1996.
Schedule 2 includes a savings provision which seeks to
protect the rights of current CRS clients by continuing to apply repealed
provisions of the Disability Services Act 1986 to those clients
in regard to programs in force immediately prior to the new provider arrangements
coming into effect.
Concluding Comments
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.(10)
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. Of course, the Government may have reasons for
selecting this particular option rather than (say) establishing a Commonwealth
company or Commonwealth authority under its own enabling Act. A Corporations
law company may be easier to privatise and it will be plain that the provisions
of the Commonwealth administrative law will not apply to a Corporations
law entity.
Richard Humphry in his March 1997 Report to Minister
for Finance, John Fahey, (referred to above) noted that:
¼ that unlike the analogous private sector investor, there are
other relationships the Government has with its GBEs. These are:
- the Community Service Obligation purchaser-provider relationship;
- the regulatory and industry policy relationship;
- where the Government is a direct and significant consumer of GBEs
goods and services [here in relation to its own employees], it has a
consumer-producer relationship.
The requirement that the portfolio Minister balance the shareholder
interests in GBEs, with the other relationships that the Government
has with its GBEs, places that Minister in an extremely difficult position
because of the potential conflicts of interest. A more transparent arrangement
would be to remove the responsibility for the shareholder function from
the portfolio Minister altogether. That is, the function could be undertaken
by an economic Minister or the Government could appoint a Minister specifically
to act as a shareholder in the GBE.(11)
It may, of course, be that the full detail of the Government's
proposal addresses any concerns relating to the meeting of community service
obligations and potential conflicts of interest in the company's governance
structure.
Given, however, the decision to bring this Bill on for
debate in the House at relatively short notice, the above matters cannot
be explored in depth in preparing this Digest.
Endnotes
- Media Release, No.42/97.
- Media Release, No.23/97.
- Released November 1997.
- Hon Warwick Smith MP, Media Release, No.42/97.
- Ibid.
- House of Representatives, Parliamentary Debates, 26 March 1998,
1167.
- In June 1997.
- Review of GBE Governance Arrangements, 14 March 1997.
- Op cit., 1167.
- Report to the Commonwealth Government, June 1996, 15-16.
- Op cit., 3-4.
Bob Bennett
Greg McIntosh
Bills Digest Service
Information and Research Services
31 March 1998
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ISSN 1328-8091
© Commonwealth of Australia 1998
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