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Thursday, 30 March 2006
Page: 122


Ms GILLARD (10:14 AM) —Mr Deputy Speaker, I hope you will allow me a minute of indulgence in order to say that I have just come from the Juvenile Diabetes Research Foundation event in Parliament House, where the government announced some additional money for research into a cure for diabetes. I offer my congratulations to the government on the making of this announcement. This is truly a bipartisan cause, which I think was best demonstrated by the number of parliamentarians from all sides of politics who were present at the launch. I note that the member for Fairfax, who will speak after me in this debate, was at the launch; in part, he was there as a result of his personal experience with diabetes. I am sure everybody here knows of someone who suffers with diabetes, and particularly knows of children who suffer with type 1 diabetes. We are seeing unexplained increases in type 1 diabetes, and we know that the incidence of type 2 diabetes is on the rise because of modern lifestyles. So this research is very important and the quest for a cure is a vital one.

With those few words, I turn to the substance of the Health and Other Services (Compensation) Amendment Bill 2006, which is before the House today. This bill makes amendments to the Health and Other Services Compensation Act. The amendments mean that, if you have been injured and have received compensation for this injury, any benefits or subsidies paid, for example, from an insurer or company or individual in relation to that injury, must be paid back to the Commonwealth to prevent so-called double dipping. That is where a person who has been injured has been extended support through our Medicare system, or perhaps has had access to a nursing home bed because their injuries are so severe, and the ordinary Commonwealth payment arrangements have occurred for that. If, at some time, a compensation settlement is made which covers those costs, it is appropriate for the Commonwealth, which has paid those costs, to recover the amount involved.

The original act was introduced after longstanding provisions in the Health Insurance Act 1973 and the National Health Act 1953 were seen to be ineffective in the recovery of moneys owed to the Commonwealth in such situations. The act was passed with bipartisan support and took effect from 1 January 1996. Obviously, with that date on the act, we can all see that there were bipartisan endeavours extended here, as the whole process was dealt with at the time of a change of government.

The act allows for the recovery of moneys from a claimant for Medicare, nursing home or residential aged care services received in relation to an injury which is subject to a compensation claim. All compensation or settlements of $5,000 or less are exempt from the act. This is due to the considerable administrative cost of recovering moneys, which it is estimated costs Medicare Australia more than it recovers for claims below $5,000.

The program is administered by Medicare Australia, formerly the Health Insurance Commission. Once an injury or compensation case reaches judgment or settlement, the act requires insurers and other compensation payers to advise Medicare Australia of any claims where the compensation provided amounts to more than $5,000 inclusive of all costs. Medicare Australia then determines the amount of Medicare benefits, nursing home benefits and/or residential care subsidies that have been paid out in the course of treating the compensable injury or illness and collects the repayment of this amount. In 2004-05, the HIC recovered $24 million under the compensation recovery program. So, clearly, with a statistic like that, this is not a huge program, but $24 million is not an insignificant amount of money. It is small compared to the size of the Commonwealth budget sector but not small in the eyes of many Australians.

Since the act was passed in 1995, a series of amendments have been made to refine the operation of the act and, in particular, to overcome administrative complexities and implementation problems which were the source of much criticism from the insurance and legal fraternities, not to mention claimants. The act has also proved to be onerous for Medicare Australia. In 1998-99, the HIC recovered $31.9 million under the program but spent $14.7 million—almost half the total recovered amount—in administrative costs in doing so. So, clearly, for any program where the costs of recovery are running at around 50 per cent, there are issues that need to be addressed. Since the act was passed in 1995, a series of amendments have been made to refine the operation of the compensation recovery program and, in particular, to overcome administrative complexities and implementation problems which proved cumbersome for insurers, claimants and the HIC in administering the program.

In the 2001 review, a key shortcoming of the act was found to be its administrative complexity which, as I said, resulted in almost 50 per cent of benefits recovered by the Commonwealth being subsumed by the administrative costs associated with the recovery process. The amendments proposed in this bill build on amendments in 2001 which sought to further clarify administrative complexities in the bill. However, some of the proposed amendments do seem at odds with previous views on improving aspects of the bill—in particular, with regard to advance payment options. On this issue, it appears the government is satisfied with retaining the status quo, which does deliver certainty for Medicare Australia but may result in overpayment to the Commonwealth rather than make improvements which could benefit the administration of the act and which could potentially benefit claimants. Labor is prepared to support this bill but believes there is further work to be done to ensure that these recovery mechanisms are in the best possible shape.

I will now canvass the specifics of what is comprehended in the bill before the Chamber today. The act provides for the recovery of moneys by the Commonwealth, as I have said. The bill makes a number of amendments to this process: one of them is substantive and the others are for the purpose of clarification. The main amendments are, firstly, removing a sunset provision which is currently operative until 1 July 2006, which applies to the advance payment option so that this option still applies—that is, without this amendment in the bill before the Chamber, the advance payment option would cease to exist on and after 1 July 2006.

Secondly, this bill repeals section 4(2)(d) of the act to clarify that all claims, even in the case of fatalities, are subject to recovery under this act. The first amendment will repeal section 4(2)(d) to clarify this issue. This means that all compensation claims which include past Medicare costs and any nursing home or residential care costs which involved fatal injury or disease are now clearly covered under the definitions.

Thirdly, the bill ensures consistency of trigger dates for the provision of benefits statements by Medicare. Section 17(6)(a) will be changed so that the date of the accident becomes the trigger for which Medicare must provide a statement of benefits. This is being done to ensure that section 17(6)(a) and another section of the act which also refers to the trigger date, section 23(3)(b), are consistent.

Fourthly, the bill provides for an internal review to take place prior to consideration by the Administrative Appeals Tribunal. This process would prevent the AAT review taking place until the internal process is concluded. This amendment provides for a process of internal review by Medicare Australia in relation to the statement of benefits. There is, I must say, little information in the bill on how this might affect the rights of claimants and how delays by Medicare Australia might jeopardise an action in the AAT. In that regard, it may be that further consideration of this amendment by a Senate committee could assist with clarification of the bill.

Clearly, there are many other sections of government where an internal review process must be undertaken before an affected person can take a claim to the AAT. Certainly, as a matter of principle, there is nothing wrong with that process; indeed, it might streamline issues and mean that a lot of matters which otherwise would have gone to the AAT are resolved at an earlier stage. So, as a matter of principle, Labor has no problem with the amendments. But, of course, it is important when you are in effect putting into place an internal review process—in which, until it is completed, the applicant cannot approach the AAT—that the internal review process is rigorous and is pursued in a timely fashion. That means Medicare Australia should not artificially or incompetently hold up the internal review process and therefore delay people’s access to the Administrative Appeals Tribunal. Labor would seek some clarification of these matters. Whilst this is ultimately a decision for the other place, it may be that a Senate committee could assist with the clarification of this matter.

On the question of the advance payment option, the concern about the sunset clause coming into operation on 1 July 2006 is clearly the main reason for bringing the bill before the parliament. Without this bill abolishing that sunset clause, people would lose access to the advance payment option. The explanatory memorandum of the 2006 bill states that the advance payment option:

... allows compensation payers and insurers to pay 10 per cent of the judgment or settlement to Medicare Australia to cover the Commonwealth debt, allowing claimants immediate access to the remaining 90 per cent of their money.

That is, it is a specification of a fixed percentage rather than delaying the payment of the compensation settlement to allow a precise calculation to occur. Currently over 80 per cent of the 50,000 judgments or settlements recorded per annum under the act are finalised under the advance payment option pathway. This is then clearly a pathway that is being heavily used. It would be inappropriate for it to come to an end on 1 July 2006. Labor supports the amendment to keep the advance payment option in operation beyond that.

It should be noted that, in addition to the advance payment option, Medicare Australia can be repaid using the non advance payment option and the section 23A statement procedure. As the name clearly suggests, the non-advance payment option means that, if the amount of compensation is known, the amount payable to Medicare Australia must be reimbursed before the balance of the settlement can be paid to the claimant. The section 23A option is available only to those who believe that no reimbursement to the Commonwealth is required—that is, that they have not been paid any benefits or subsidies in relation to their accident or injury which would be truly repayable to the Commonwealth. Clearly, this mechanism will continue to exist for those who are disputing the recovery question which is dealt with under this bill.

It should be noted that the act and the compensation recovery program were subject to a review by Mr George Pooley in 2001. He considered whether the advance payment arrangements should continue to operate. The arrangements were originally introduced as a temporary measure to deal with a backlog of cases that had built up after the initial recovery regime commenced on 1 January 1996. The second reading speech at that time indicates that the streamlined processes envisaged under the provisions of this bill, together with earlier streamlining, mean that the advance payment option was required. As noted, because it was viewed to be a temporary measure, there was a sunset clause. It is the removal of that sunset clause that we are dealing with today.

We know that in the second reading speech the minister stated that, without this repeal, claimants will not have access to the majority of their compensation at the time of settlement. Labor acknowledges that this statement by the minister is true and that past experience has shown us that the administration of this act has been costly both to the Commonwealth and to claimants. The status quo—that is, if the non advance payment option method is used—shows that there can be large delays in claimants accessing their compensation payments. It would, therefore, be inappropriate to throw everybody onto this track by not having the advance payment method in operation.

I note that the 2001 review recommended that a sliding scale be established for the advance payment option arrangements whereby for judgments or settlements between $5,000 and $10,000 the advance payment option would be five per cent, for judgments or settlements between $10,000 and $50,000 the amount would be three per cent, and for judgments or settlements in excess of $50,000 the advance payment option would be one per cent. There needs to be further consideration of these issues in terms of a sliding scale. It may be that in the future an opportunity can be taken to further improve the regime that is comprehended by this bill.

Labor supports this legislation. Clearly, the compensation recovery mechanisms were first implemented with bipartisan support. Whilst the measures in this bill are an improvement, we suggest there is probably some further work to do to further improve recovery mechanisms to make them as efficient as possible. There are outstanding recommendations from the Pooley review which we believe have merit and ought to be further considered. At some later point, the government ought to consider those recommendations and assess whether or not they should be implemented. We do not view the passage of this bill as precluding that process, and we trust the government would take that on board as a way of further improving this system. With those words, I repeat that Labor support the bill, and it will be dealt with this morning.