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Thursday, 24 March 1994
Page: 2191


Senator NEWMAN (12.57 p.m.) —I rise to address the Health Legislation (Powers of Investigation) Amendment Bill 1993. This bill has had a long gestation period. It is founded on the back of a report of the Auditor-General of December 1992 and an accompanying consultant's report of June 1992. Before that, there were the Joint Committee of Public Accounts hearings on fraud and overservicing. These occurred in the early to middle 1980s. Since that time, there has been very little improvement in combating fraud and overservicing. The bill has now been in the Senate since 16 December last year.

  I say at the outset that the coalition strongly supports the need to address fraud and overservicing. Last year the coalition supported the government's legislation on overservicing. It is clear from the work of the Auditor-General and the Bates report that serious inadequacies exist in current arrangements for tackling fraud. For instance, the Auditor-General found that there was a lack of prosecutions and disciplinary action taken against unethical practitioners and that there has been little improvement since the early 1980s.

  The Bates report found that the responsibility for detecting and prosecuting fraud has never been successfully integrated into the commission's operation. It also found that existing legislation does not support any positive approach to fraud control. There can, therefore, be no doubt that fraud is a problem and that a legislative response from the government is necessary. There is considerable doubt, however, as to how much will be saved by the measures outlined by the government.

  At the last election, Labor claimed that its new spending promises on health could essentially be met by savings flowing from a reduction in fraud and overservicing.  This suggested savings of over $400 million over four years. In the first two years, savings of around $160 million were implied.

  The opposition immediately challenged this figure, and with some justification. By the time of the August budget last year the estimated savings for the first two years had been pared back to around $90 million. This is the amount also identified in the explanatory memorandum to the bill. It states that measures to reduce fraud and overservicing, that is, this bill and the Health Legislation (Professional Services Review) Amendment Act 1994, will save $25 million in 1993-94 and $64.9 million in the following year.

  It is very important that the government's figures are challenged, so that we get nearer the truth of the matter. As far as the government is concerned, the larger the estimated cost of fraud, the easier it is for it to take this figure and argue for quite significant legislative provisions which have serious implications in the areas of investigation and privacy.

  We saw this approach previously when the government was seeking to introduce data-matching between Commonwealth agencies, and produced quite stunning savings which it alleged could be achieved. These figures were used as a justification for the further extension of the use of the tax file number, raising serious privacy concerns. As it turned out, the actual savings achieved by the government as a result of data-matching have been dramatically less than first expected.

  This bill as presented to the Senate raised a number of concerns for members of the coalition. First, it proposed that the Health Insurance Commission officers be authorised to investigate medifraud instead of the Australian Federal Police. Second, it granted the Health Insurance Commission significant new powers to carry out such investigations. Third, in granting these new powers, it appeared to take no account of the privacy of individual patient records.

  On the basis of these concerns the coalition had the bill referred to the Senate Standing Committee on Legal and Constitutional Affairs. The committee conducted a public hearing on 11 February 1994. It was revealed quite early at this hearing that the government, 48 hours earlier, had decided that a number of amendments were needed. They were not, however, drafted in time for the public hearing.

  The point was made at the hearing—and it is one that I strongly endorse—that it was irresponsible of the government not to inform the committee of its intentions in this regard, so allowing a delay in the hearing until the amendments were ready. It meant that the committee, and even more importantly, perhaps, the witnesses appearing before it, did not have before them the amendments which had significant implications for the operation of the bill.

  I note that in the committee report on the Crimes (Search Warrants and Powers of Arrest) Amendment Bill 1993, the committee had something to say on just this very issue. The report said:

The Committee wishes to note that consideration of this Bill has raised issues about the mechanics of the Committee system. Clearly adequate time must be provided for the Committee to examine a Bill and for the Government to reflect on and respond to opportunities to remedy defects which are identified. The Committee will be making a submission to the Procedure Committee on this issue.

This point is equally valid with respect to the bill before us now. If the committee system is to operate as effectively as possible the government must treat the committee system with greater respect.

  I wish to briefly highlight another procedural matter, and this time it is with regard to the role of the Privacy Commissioner. I wrote to the Privacy Commissioner on 12 January this year requesting his comments on this bill. He wrote back to me on 25 January saying that he had provided comments to the Department of Health, Housing, Local Government and Community Services and to the Health Insurance Commission in the course of their development of the provisions.

  He further stated that it was not his practice to make his confidential comments to the government available to other members of parliament. I was very disappointed by this response. Senator Vanstone raised this response with the commissioner at the Senate committee hearing. The commissioner conceded that if the government had ignored the concerns he raised he was in a dilemma as to whom he could tell. I do not criticise the commissioner for this but I would, however, criticise the statute which sets out his various functions, with nearly all of them expressed in terms of advice to ministers or advice to the government.

  Senator Vanstone raised the question of whether it would be better for the Privacy Commissioner to report to the parliament. There is no doubt in my mind that if the government was truly concerned with protecting the privacy of individuals, the Privacy Commissioner would report directly to the parliament. While departmental officers can be made available to opposition spokesmen for briefing on legislation, surely, in this very important area of the rights to privacy of citizens, the Privacy Commissioner should be able to brief the opposition.

  A wide cross-section of those with an interest in this bill presented evidence to the committee. As well as professional groups such as the AMA, the Australian Association of General Practitioners and the Royal Australian College of General Practitioners, representatives of the Australian Federal Police presented evidence, as did the Privacy Commissioner and the Vice-President of the Queensland Council for Civil Liberties. With one exception—a representative of the Health Issues Centre—every witness highlighted concerns with the bill.

  The major issues were those which I identified earlier. Division 3 of the bill came in for particular attention. This division as presented extends enormous new powers to the Health Insurance Commission. It allows authorised officers of the HIC to enter the premises of a doctor or pharmacist, search the premises, take photographs and take extracts or copies of books or documents. To all intents and purposes, as the Privacy Commissioner pointed out, these are search and seizure powers without a warrant. No regard is paid to the confidentiality of individual patient records. As well, under the bill as presented, the HIC would need no justification for entering the premises—an extraordinary situation, given the history of parliamentary and community concern on this issue. Not surprisingly, these provisions came in for widespread criticism at the committee's public hearing.

  As I mentioned earlier, the departmental representative indicated at the hearing that amendments were being drafted. In particular, he indicated that amendments to sections 8N and 8S, the two sections of most concern, would be forthcoming. On 21 February the minister provided to the committee a copy of the proposed amendments. The witnesses provided further comments to the committee in writing on the amendments. The amendments address to some extent concerns with the bill. They make clear that the confidentiality of patient records is not to be breached under the provisions of 8N and 8S. This was welcomed by the Privacy Commissioner; it is also welcomed by the coalition.

  The amendments also require that the HIC officers may not enter premises for the purposes of compliance unless there are reasonable grounds for believing that an offence is being, or has been, committed. This is an improvement but it is still not entirely adequate, as I will explain later. The amendments to section 8T restrict to some extent the powers which may be exercised by officers of the HIC in searches allowed under division 3. Despite these improvements, the coalition, along with the Privacy Commissioner and many of the professional groups, still believed that more needed to be done in some areas. These areas were highlighted in the dissenting report of the coalition members of the Senate Standing Committee on Legal and Constitutional Affairs.

  The principal issues were as follows. Firstly, section 8S should reflect the administrative reality of officers of the HIC obtaining access to desired information by agreement with the occupier of the premise. Secondly, entry to premises should be on the basis of fraud which is suspected of being committed not which has been committed. Thirdly, a warrant provided under section 8W should specify whether or not it is to cover access to clinical records. Fourthly, the HIC should include in its annual report information on activities conducted under the powers introduced by this bill. Fifthly, consideration should be given to whether division 3 of the bill was justifiable at all.

  The minister responded to the concerns raised in the dissenting report on 18 March 1994. He has accepted many of the suggestions, and I welcome this. However, two issues remain outstanding. The first is the inclusion of the words `has been or' in section 8S. Proposed section 8S as amended states that if an authorised officer has reasonable grounds for believing that a relevant offence has been or is being committed, he or she may enter the premises and exercise certain powers. The coalition believes that if section 8S is to stand, the words `has been or' should be removed. If HIC officers are able to enter premises without a search warrant, to leave the words `has been or' in the section is to make it too wide. It should be noted that the police are able to enter premises without a warrant only where they believe an offence is being committed.

  The coalition believes that if the HIC has been unable to obtain access to desired information by way of agreement with the occupier of the premises, then a warrant should be obtained to conduct a search. This would still preserve the powers available to HIC officers under section 8T. There is ample precedent in other Commonwealth legislation for this sort of arrangement, and I will outline some examples in the committee stage of the bill, where I will be moving amendments requiring a warrant for the powers under division 3 to be exercised.

  The coalition believes that the provisions of this bill are serious ones. We recognise and support the need to address fraud in Medicare. We recognise and support the need for a legislative response. There can be no doubt that present arrangements for the investigation of medifraud are inadequate. But there can also be no doubt that this bill raises fundamental questions in regard to civil rights.

  In protecting the interests of the taxpayer we must not violate the rights of patients, health care professionals and health care organisations. That is why the coalition has approached this bill in a very rigorous manner. We have had the bill referred to the Standing Committee on Legal and Constitutional Affairs. We have consulted widely. We have pressed the government to address shortcomings identified in the original bill.

  Where the government has not been prepared to meet us on outstanding issues we will move our own amendments. Apart from the amendments already flagged, I will be moving an amendment to include a sunset provision in the bill. Given the nature of this bill, and the largely unchartered territory that the HIC will find itself in, we in the coalition believe that it is reasonable that a sunset provision be included in the bill. No reasonable person or government could oppose such a suggestion. It will allow the parliament to evaluate, after a reasonable period, the effectiveness of the legislation, and the effectiveness of the HIC in administering it.

  In conclusion, I believe that the coalition has approached this bill in a spirit of cooperation, as has the government. Nonetheless, we still have outstanding concerns, and we will be pressing hard to address them in the committee stage.