Bills Digest no. 151 2007–08
Therapeutic Goods Legislation Amendment (Annual Charges)
Bill 2008
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
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Therapeutic Goods Legislation
Amendment (Annual Charges) Bill 2008
Date
introduced: 18 June
2008
House: House of Representatives
Portfolio: Health and Ageing
Commencement:
The formal provisions
commence on Royal Assent. Schedule 1 commences on a date to be
fixed by Proclamation, or six months and one day after Royal
Assent, whichever occurs first.
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The Bill amends the
Therapeutic Goods Act 1989 (Cth) (the Therapeutic Goods
Act) and the Therapeutic Goods (Charges) Act 1989 (Cth)
(the Charges Act) in relation to the imposition and collection of
annual charges (and exemption from paying a charge).
The Therapeutic Goods Administration (TGA) carries out a range
of assessment and monitoring activities to ensure therapeutic goods
available in Australia are of an acceptable standard with the aim
of ensuring that the Australian community has access, within a
reasonable time, to therapeutic advances .[1] Particularly, the TGA is responsible
for maintaining the Australian Register of Therapeutic Goods (the
Register) for the purpose of compiling information in relation to,
and providing for evaluation of, therapeutic goods for use in
humans .[2] According
to the TGA s website:
[The Register] is a computer database of
therapeutic goods. Therapeutic goods are divided broadly into two
classes: medicines and medical devices. Unless exempt, medicines
must be entered as either registered or listed medicines and
medical devices must be included before they may be supplied in or
exported from Australia.[3]
The Register includes details about product names and
formulations, and the sponsor and manufacturer of the product. As
at 23 May 2008, there were approximately 54 000 products on the
Register.[4]
Under the Therapeutic Goods Act, an annual registration charge,
annual listing charge or annual charge for inclusion in the
Register is payable by the person in relation to whom the
therapeutic goods concerned are registered, listed or included in
the Register (subsection 43(1)). In addition, an annual licensing
charge is payable by the holder of the licence to which the charge
relates (subsection 43(2)) usually a manufacturer.
The annual charges for the registration, listing or licensing of
therapeutic goods are set out in regulation 3 of the Therapeutic
Goods (Charges) Regulations 1990 (Cth).
The time for the payment of such charges is set out in section
44 of the Therapeutic Goods Act. Currently, the annual charge is
payable on the anniversary of the registration, listing or
inclusion in the Register of the relevant therapeutic goods, unless
the Secretary to the Department of Health and Ageing specifies
another day in a notice in writing to the person responsible for
paying the charge. The Therapeutic Goods Act currently makes no
provision for exemption from paying a charge under that Act.
A charge that is not a fee for service is considered to be a
tax, and section 55 of the Constitution provides (in part) that
[l]aws imposing taxation shall deal only with the imposition of
taxation, and any provision therein dealing with any other matter
shall be of no effect . The purpose of the Charges Act (as revealed
by the long title) is therefore to impose an annual charge on the
registration, listing and inclusion in the Register of therapeutic
goods, and on the licensing of manufacturers of therapeutic goods .
Subsection 5(3) of the Charges Act states that the regulations may
exempt from the payment of such charges (but not licensing charges)
persons whose turnover of those goods or devices is of low volume
and low value . It provides:
(3) The regulations shall provide that annual
charges in respect of the registration or listing of therapeutic
goods, or the inclusion of kinds of medical devices in the Register
under Chapter 4 of the Therapeutic Goods Act 1989,
are not payable by persons whose turnover of those goods or devices
is of low volume and low value.
The phrases low volume and low value are not defined in the
Charges Act. However, regulation 5 of the Therapeutic Goods
(Charges) Regulations 1990 deals with turnover of low volume and
low value. Subregulation 5(1) states:
A person who has turnover, or expects to have
turnover, of particular registered or listed therapeutic goods, or
kinds of medical devices that are included in the Register under
Chapter 4 of the Therapeutic Goods Act 1989, may apply to
the Secretary for a declaration that the turnover is of low volume
and low value.
Subregulations 5(4) and (5) set out the matters which the
Secretary may take into account in determining whether to make a
declaration that the turnover is of low volume and low value:
(4) In considering the application, the Secretary
may take into account:
(a) the value of the wholesale turnover of the
goods in the financial year immediately before the financial year
to which the charge relates; or
(b) if there was no turnover of those goods in the
preceding financial year the value of the estimated wholesale
turnover of the goods in the financial year immediately after the
financial year to which the charge relates.
(5) However, the Secretary must make a declaration
if the Secretary is satisfied that the charge for registration or
listing, or inclusion in the Register under Chapter 4 of the
Therapeutic Goods Act 1989, that would be payable, if the
application was refused, is more than:
(a) 6.8% of the value of the wholesale turnover of
those goods in the financial year immediately before the financial
year to which the charge relates; or
(b) if there was no turnover of those goods in
that preceding financial year 6.8% of the value of the
estimated wholesale turnover of those goods in the financial year
immediately after the financial year to which the charge
relates.
There appears to be no press commentary on the Bill.
At the time of writing, no political
party (other than the ALP in introducing the Bill into
Parliament) has expressed any position on the Bill.
According to the Explanatory Memorandum for the Bill, the
amendments will have very low impact on business, individuals or
the economy .[5] This
is because the proposed amendments really do no more than alter the
dates for payment of annual charges, in circumstances where (a)
administrative arrangements that mirror the proposed legislative
scheme are already in place, and (b) the charges are already levied
but paid at different dates throughout the year. It may be that the
Bill will have positive financial implications. The Bill proposes
that regulations will provide for greater scrutiny of applications
for exemption from liability to pay annual charges, including the
ability to recover charges previously the subject of successful,
but presumably fraudulent or misleading, applications for
exemption. The actual financial implications will thus depend on
the extent and efficiency of the TGA s administrative cost recovery
procedures.
Item 1 of Schedule 1 repeals
current section 44 of the Therapeutic Goods Act, which, as
mentioned above, provides that an annual charge is payable on the
anniversary of the registration, listing or inclusion in the
Register of the relevant therapeutic goods, unless the Secretary to
the Department of Health and Ageing specifies another day in a
notice in writing to the person responsible for paying the
charge.
Item 1 then inserts proposed revised
section 44, which provides for the payment of all annual
charges on a date to be worked out under the regulations or 1
October each year (unless the regulations specify another
date).
This change would seem to have obvious benefits for simplifying
administrative processes for the TGA. For example, it can issue one
large batch of invoices for payment of charges due on 1 October
each year (or such other date as may be prescribed in the
regulations), rather than issuing numerous invoices throughout the
year. The TGA will be in a better position to know what its
expected income is for the coming year and when to expect the
moneys, and to take appropriate action to recover unpaid moneys in
a wholesale, rather than piecemeal, way.
On the other hand, the current arrangement provides the TGA with
year-round cashflow although admittedly, the flow may be irregular
and of varying amounts. It also has the advantage of accounts being
issued as a matter of daily (or fortnightly/monthly) routine.
However, presumably the proposed arrangement has emanated from,
or been developed in consultation with, the TGA in light of its
experience with the current arrangement. It can only be assumed
that the TGA is supportive of the proposed arrangement, whatever
its advantages or disadvantages may be. Also, according to its
website, it seems that the TGA already issues invoices in
September, and so it seems that the proposed legislative change
simply brings the legislation into line with current administrative
practice.[6]
Item 2 of Schedule 1 inserts
proposed section 44A, which deals with exemptions
from liability to pay charges. According to the second reading
speech by the Hon Bill Shorten MP, Parliamentary Secretary for
Disabilities and Children s Services:
The Australian National Audit Office also recently
raised some concerns on the lack of ability of the TGA to review
the eligibility of sponsors applying for, or who have been granted,
exemption. Under the current provisions, the TGA does not have
power to seek evidence verifying the eligibility of persons
applying for, or who have been granted, the exemption for paying
annual charges for low turnover of therapeutic goods.[7]
The Explanatory Memorandum for the Bill states that the changes
will ensure that persons who apply for or are granted the exemption
from paying annual charges have the requisite supporting evidence
that is certified by a third party .[8] It goes on to say:
This will address the concern raised by the
Australian National Audit Office in their Financial Statement Audit
Report for 2006 2007 for the Department of Health and Ageing in
relation to the lack of third party confirmation that the applicant
does meet the eligibility criteria for the low value
exemption.[9]
Proposed subsection 44A(4), for example, states
that the regulations may provide for the obtaining of additional
information or documents from applicants for exemptions or persons
granted exemptions . Proposed paragraph 44A(1)(c)
states that the regulations may make provision for cancelling an
exemption and requiring payment of that charge for the current year
. It is not clear why matters such as these are to be the subject
of regulations, rather than just being contained in the parent Act
itself.
Proposed subsection 44A(2) states that the
regulations may require an application for an exemption to be
accompanied by a fee and goes on to say that the fee must not be
such as to amount to taxation .
The TGA is a division of the Department of Health and Ageing,
which is an agency subject to the Financial Management and
Accountability Act 1997 (Cth) and is thus required to comply
with the Government s cost recovery policy, including the
imposition of fees and charges where appropriate.[10] Proposed subsection
44A(2) permits the imposition of such a fee for the
processing of an application for exemption from liability to pay a
charge. It is not clear if, or in what circumstances, such a fee
can be waived although that may be an issue for the
regulations.
Many of the matters contained in proposed section
44A are currently contained in the Therapeutic Goods
(Charges) Regulations 1990. However, the difficulty is that those
regulations are made under the Therapeutic Goods (Charges) Act, not
the Therapeutic Goods Act itself. Amendments will be required to
the Therapeutic Goods Regulations 1990 and the existing regulations
(in the Therapeutic Goods (Charges) Regulations 1990) dealing with
charges may need to be repealed (unless there is no possibility of
inconsistency between the two). In some instances, a proposed
amendment to the Therapeutic Goods Act is meaningless without new
regulations being made. For example, the term turnover in
proposed subsection 44A(9) is defined by
cross-reference to the definition of the term prescribed by the
regulations . However, the term is not currently defined in the
Therapeutic Goods Regulations 1990.
Item 3 provides that the amendment made by
item 1 applies in relation to the financial year
beginning 1 July 2009. Persons who are liable to pay annual charges
and licensing fees are thus given just over 12 months notice of the
proposed change to the invoice and payment arrangement (from the
time of the introduction of the Bill).
Items 4 and 5 of Schedule 1
contain proposed amendments to the Charges Act. The proposed
changes seem to be little more than consequential amendments to the
Act which ought properly to have been made in 2002 (or shortly
thereafter) when the Therapeutic Goods and Other Legislation
Amendment Act 2002 (Cth) was passed. By that Act,
section 6A of the Therapeutic Goods Act was repealed, and
sections 6AAA 6AAE were enacted in its place.[11] It is not clear why the proposed
amendments did not occur in 2002 or at some other time in the past
five or six years. It is also not clear what effect the delay in
making these consequential amendments may have on the validity of
charges imposed under the Charges Act in the intervening period.
Neither the second reading speech nor the Explanatory Memorandum
for the Bill mentions these issues.
Item 4 repeals subsections 4(3) to (6) of the
Charges Act and inserts proposed subsections 4(3) to
(7). Ostensibly, apart from tidying up some language,
item 4 replaces references to the repealed section
6A of the Therapeutic Goods Act with references to sections 6AAA
6AAE of that Act where appropriate.
Item 5 repeals subsection 5(3) of the Charges
Act. As quoted above, subsection 5(3) provides that the regulations
may exempt from the payment of such charges persons whose turnover
of those goods or devices is of low volume and low value .
Proposed subsection 44A of the Therapeutic Goods
Act will perform this function instead (see above discussion in
relation to item 2 of the Bill).
Item 6 provides that current section 5(3) of
the Charges Act (which is to be repealed by item
5) continues to apply when working out annual charges
payable in respect of the financial year beginning on 1 July 2008
and all earlier financial years.
Concluding comments
None of the amendments in the Bill appears to be controversial.
The proposed amendments to the Therapeutic Goods Act dealing with
changes to dates for the payment of annual charges simply bring the
legislative framework into line with administrative practice,
noting that while this order seems to be the reverse of the usual
situation, it was permissible under the current legislative
framework. The proposed amendments dealing with exemptions from
liability to pay such charges expand on the requirements currently
set out in regulations, and also give the TGA the power to require
applicants for exemptions (or persons granted exemptions) to
provide additional information or documents. Such amendments
empower the TGA to implement fully its obligations to comply with
the Government s cost recovery guidelines, particularly by enabling
it to verify information supplied by applicants and to require
applicants to provide additional information not previously
supplied by them.
The proposed amendments to the Charges Act are a somewhat
delayed response to the passage of the Therapeutic Goods and
Other Legislation Amendment Act 2002 (Cth). The amendments are
also consequential upon the passage of item 2 of
the Bill.
[11]. The text of the Therapeutic Goods and
Other Legislation Amendment Bill 2002 is available electronically
at: http://www.austlii.edu.au/au/legis/cth/bill/tgaolab2002470/
(accessed on 24 June 2008).
Morag Donaldson
27 June 2008
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
This work is copyright. Except to the extent of uses permitted
by the Copyright Act 1968, no person may reproduce or transmit any
part of this work by any process without the prior written consent
of the Parliamentary Librarian. This requirement does not apply to
members of the Parliament of Australia acting in the course of
their official duties.
This work has been prepared to support the work of the Australian
Parliament using information available at the time of production.
The views expressed do not reflect an official position of the
Parliamentary Library, nor do they constitute professional legal
opinion.
Feedback is welcome and may be provided to: web.library@aph.gov.au. Any
concerns or complaints should be directed to the Parliamentary
Librarian. Parliamentary Library staff are available to discuss the
contents of publications with Senators and Members and their staff.
To access this service, clients may contact the author or the
Library’s Central Entry Point for referral.
Back to top