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Monday, 18 June 2012
Page: 3459


Senator WONG (South AustraliaMinister for Finance and Deregulation) (18:28): I table two revised explanatory memoranda relating to the bills and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

NATIONAL HEALTH REFORM AMENDMENT (ADMINISTRATOR AND NATIONAL HEALTH FUNDING BODY) BILL 2012

This bill is the last instalment of the legislation to establish the national health reform bodies to give effect to the historic National Health Reform Agreement concluded by COAG on 2 August last year.

This Government has established the Australian Commission on Safety and Quality in Health Care as a permanent body to provide authoritative advice on the safety and quality standards our health services should meet.

We have established the National Health Performance Authority to provide regular reports on the performance of our health care system at a local level.

We have established the Independent Hospital Pricing Authority to determine what the efficient price of hospital services is.

And this bill establishes the Administrator of the National Health Funding Pool to introduce the unparalleled transparency into public hospital funding that Australians require.

For far too long the dialogue between the Commonwealth and the States on public hospital funding has been characterised by mutual blame and recrimination, with accusations of removal of funds by one level of government when additional funds were put in by another.

Under this bill the Administrator will report monthly on how much money from which government goes to which local hospital network, and why, and we will then have that total transparency.

Under the National Health Reform Agreement the amount of Commonwealth funding to flow to a local hospital network will be calculated by the Administrator, multiplying the national efficient price determined by the Pricing Authority by the expected number of hospital services to be provided to work out how much the Commonwealth will pay for services funded on the basis of activity. The Administrator will also calculate how much Commonwealth funding should be provided for small rural hospitals and other services best covered under block funding arrangements.

The Administrator will advise the Commonwealth Treasurer, who will pay into the National Health Funding Pool the amounts calculated by the Administrator. The States will pay into the Pool their contribution for activity funded services, and the Administrator will then pay it to the appropriate hospital network.

The States will pay into a separate State Managed Fund their contribution to block funded services, and the Administrator will pay from the Funding Pool the Commonwealth contribution, which will then be paid by the States to hospital networks

And every month the Administrator will produce and publish a report showing how much has flowed into and out of the Funding Pool and the State Managed Funds, and the basis of the payments.

While there may still be debate about the adequacy of the funding, there will be no room for dispute about the facts of how much has gone where and why.

I would now like to turn to the specifics of the bill, which amends the National Health Reform Act 2011.

Under the Agreement the Administrator is to be appointed by the Commonwealth and each state and territory government. The same individual is to occupy nine separate statutory offices.

This position was agreed to address the concerns of some states that only an officer of that state should deal with state money.

The provisions concerning the appointment of the Administrator and the functions of the position which will be included in Part 5.2 of the amended act will appear in the same terms in legislation to be passed by this Parliament and by state and territory Parliaments.

They provide for the Health Minister to appoint the Administrator following agreement by the COAG Standing Council on Health on the individual to be appointed.

They also provide for the Chair of the Council to suspend the Administrator from office in all jurisdictions at the request of the Commonwealth Minister, or three state or territory Ministers. However, the suspension lapses after sixty days unless the Council agrees to continue it, or else terminate the appointment of the Administrator.

If the Council agrees to terminate the appointment, whether following a period of suspension or otherwise, all Ministers must act to remove the Administrator from office in their jurisdiction.

The Administrator may resign in writing to the Chair of the Council, who must then notify all other Council members.

The Chair of the Council also acts on behalf of all jurisdictions in appointing an acting Administrator when required, although the person appointed to act must be drawn from a panel consisting of people agreed by the Council.

The functions of the Administrator are to calculate the amount of Commonwealth funding under the Agreement and advise the Commonwealth Treasurer; oversee payments into State Pool Accounts within the National Health Funding Pool; make payments from the Pool Accounts at the direction of the state Ministers; and report upon the operations of the Pool Accounts and the State Managed Funds.

While state Ministers are to direct the Administrator to make payments from the Funding Pool, under the Agreement the Ministers cannot alter the distribution of Commonwealth funding from that calculated by the Administrator. Corresponding state legislation will contain a provision to that effect. Although such a provision cannot be included in Commonwealth legislation for Constitutional reasons, Commonwealth funding under the Federal Financial Relations Act will be conditional on states adhering to the requirements of the Agreement.

No Commonwealth Minister is able to direct the Administrator in the performance of his or her functions.

While the staff of the National Health Funding Body are to assist the Administrator in carrying out her or his functions, the Administrator is not entitled to delegate any functions.

This does not mean that the Administrator has to sit with a spreadsheet program calculating the amounts of Commonwealth funding. Rather, it means that Funding Body staff can carry out calculations, but the Administrator must approve the calculations before transmitting them to the Commonwealth Minister.

The existing financial management regimes of the Commonwealth or the states will not apply to the Administrator. Instead, he or she is required under the amended act to develop and apply appropriate financial management policies and procedures, and keep proper records of the operation of the State Pool Accounts.

As I noted earlier, the Administrator is to prepare monthly reports on payments into and out of State Pool Accounts and State Managed Funds, and the basis on which the payments were made.

The Administrator is to prepare special purpose financial statements on the operation of each State Pool Account, which will be audited by state Auditors-General, and then included in the Administrator's annual report, which will be tabled in this place.

The Administrator is to provide state Ministers with a copy of her or his advice to the Commonwealth Treasurer on the calculation of Commonwealth payments, and may provide other relevant information to Ministers. In addition, the Administrator must provide information to Ministers at their request.

Division 3 of Part 5.2 of the amended act contains a set of provisions intended to ensure the Constitutional validity of these arrangements in the light of the judgement of the High Court in the Hughes case in 2000 which dealt with state law imposing duties on Commonwealth officers. Similar provisions appear in legislation supporting other Commonwealth-State schemes, such as the Therapeutic Goods Act.

Part 5.3 of the amended act establishes the National Health Funding Body, with the sole function of assisting the Administrator in carrying out his or her functions.

The Funding Body is to be staffed under the Public Service Act, and together with its CEO will constitute an agency under that act.

The CEO is to be appointed by the Minister, but the Minister must consult with the Administrator in appointing the CEO, and in relation to other matters including termination, acting appointments, approval of outside employment, and determination of terms and conditions.

The government intends to make regulations prescribing the Funding Body as an inter-jurisdictional agency under Part 6A of the Financial Management and Accountability Act, ensuring that state Ministers will have access to information about the operations of the Funding Body on the same basis as the Commonwealth Minister.

The act currently contains provisions ensuring that information relating to the affairs of a person held by the existing statutory bodies is handled appropriately. These provisions are replicated in Part 5.4 of the amended act to apply to the Administrator and to officials of the Funding Body.

I should say that the inclusion of these provisions is essentially precautionary, as it is highly unlikely that the Administrator or the Funding Body will hold information about the affairs of a person.

The bill re-enacts as Chapter 6 the existing Chapter 5 of the act, which includes a number of miscellaneous provisions. The only amendment of substance in these provisions relates to the regulation making power, which includes a provision allowing regulations to be made modifying the operation of the Commonwealth administrative law regime as it applies to the Administrator or the Funding Body.

This is necessary to deal with the multi-jurisdictional nature of the Administrator. As an officer of nine jurisdictions, she or he would be subject to nine different freedom of information laws, ombudsman laws and so on.

State legislation establishing the office of the Administrator will dis-apply all relevant state laws, and adopt the Commonwealth laws. However, the Commonwealth laws are not suitable to apply as state laws without some modification.

For example, it is not clear that the exemption in section 34 of the FOI Act for Cabinet documents would apply to state Cabinet documents, in the absence of a modification to the that act. The conditional exemption in section 47B of the FOI Act applies to documents which if disclosed would cause damage to relations between the Commonwealth and a state, but does not address potential damage to relations between states. Similarly, the conditional exemption in section 47C of the FOI Act applies to documents which if disclosed would disclose matter in the nature of, or relating to, the deliberative processes involved in the functions of the Commonwealth government, but does not extend to state governments.

The regulation making power to be included in the amended act will allow the FOI and other acts to be amended to address these issues. State law will adopt the acts as modified by the regulations, ensuring that there will be a consistent and appropriate regime applying to the Administrator under both Commonwealth and state law.

The regulations may only be made with the agreement of state Ministers.

Finally, the bill includes transitional provisions dealing with the situation where not all jurisdictions pass equivalent legislation at the same time. The effect is to allow all jurisdictions to take part in a decision on the appointment of the Administrator, even if legislation has not been passed in all jurisdictions.

This legislation will allow the National Health Reform Agreement to begin operation on 1 July 2012.

The Agreement will result in vastly improved transparency about the performance of the health system at a local level, through the operations of the National Health Performance Authority. It provides for Commonwealth hospital funding based on an efficient price for hospital services, developed by the Independent Hospital Pricing Authority at arm's length from Commonwealth and state governments.

And the legislation I am introducing today will allow for complete transparency about funding flows from the Commonwealth and the states down to local hospital networks.

As the Prime Minister said when the outline of these changes was agreed at COAG in February last year,

People want to know what is happening with the money that goes in to fund health. They do not want it beyond their line of sight; they do not want to wonder whether when one level of government is stepping up to putting more in, perhaps another level of government is taking some out.

This legislation solves that problem.

FEDERAL FINANCIAL RELATIONS AMENDMENT (NATIONAL HEALTH REFORM) BILL 2012

The Federal Financial Relations Amendment (National Health Reform) Bill 2012 delivers a central component of the Gillard Government's National Health Reform.

Payment Arrangements

This bill amends the Federal Financial Relations Act 2009 to enable the Commonwealth to make payments into the new National Health Funding Pool, in accordance with the National Health Reform Agreement.

The new arrangements will see Commonwealth and State Government funding for Local Hospital Networks channelled through a single pool, the National Health Funding Pool, a joint intergovernmental funding authority, with transparent reporting of both Commonwealth and State funding to individual Local Hospital Networks.

Under the National Health Reform Agreement, Local Hospital Networks will be funded for the services they provide and funding will be transparently reported.

In some circumstances, such as in rural and remote areas, block funding will be provided through the States to ensure all Australians receive appropriate access to health services.

The bill also provides for the new payment arrangements associated with the transitioning of responsibilities for aged care and disability services.

The bill includes some minor technical amendments to the GST determination. These changes will not impact on the total amount of revenue paid to the States and Territories.

Ordered that the resumption of the debate be made an order of the day for a later hour.