Bills Digest No. 175   1997-98 Australian Hearing Services Reform Bill 1998

Numerical Index | Alphabetical Index

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.


Passage History
Main Provisions
Concluding Comments
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.


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 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).


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)


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.


  1. Parliamentary Secretary to the Minister for Health and Family Services, 'A Fair Deal for Hearing and Health Services', Media Release, 28 May 1997.

  2. Australian Hearing Services, Annual Report 1996-97.

  3. Department of Health and Family Services, Annual Report 1996-97, 217.

  4. Australian Hearing Services, 51

  5. Health and Family Services Portfolio, Portfolio Budget Statements 1997-98: 284.

  6. Australian Hearing Services, 12-13.

  7. House of Representatives, Parliamentary Debates, 25 March 1998, 1040.

  8. Ibid.

  9. In June 1997.

  10. Review of GBE Governance Arrangements, 14 March 1997.

  11. Parliamentary Debates, op cit, 1040.

  12. Report to the Commonwealth Government, June 1996, 15-16.

Contact Officer and Copyright Details

Paul Mackey &
Bob Bennett
6 April 1998
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

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and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1998

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Published by the Department of the Parliamentary Library, 1998.

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