SALVAGE, Mr Wayne, Acting Executive Director, Resource Strategy, Department of Health, Western Australia

WATTS, Mr Adam, Assistant Director, Performance and Evaluation Group 1, Department of Treasury, Western Australia

Committee met at 14:16

CHAIR ( Senator Polley ): I declare open this inquiry into the National Health Reform Amendment (Administrator and National Health Funding Body) Bill 2012 Provisions. I welcome officers from the Department of Health and from the Department of Treasury, Western Australia, who are appearing via teleconference. Committee members in attendance at the moment are Senator Fierravanti-Wells and me, Senator Polley. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I remind witnesses that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officers to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. The committee has your submission, and I now invite you to make a short opening statement. At the conclusion of your remarks, I will invite Senator Fieravanti-Wells to put some questions to you.

Mr Salvage : I want to thank the committee for the opportunity to participate in your inquiry in relation to the issues and to brief you on the matters raised by the submission of the Western Australian Minister for Health. The bill you are looking at, in essence, does two things. It amends the substantive Commonwealth act to provide for the appointment of the Administrator of the National Health Funding Pool and the establishment of the National Health Funding Body. These new administrative structures are required to be established by the National Health Reform Agreement, which I will refer to as the NHRA, which was agreed to by all states and territories and the Commonwealth in August 2011, and relate to the establishment of pooled funding arrangements for state and Commonwealth funding for public hospital services. As the Western Australian minister indicates, Western Australia's support for pooled funding was, and always was, predicated on the state retaining control over its own funding for public hospital services at all times. This principle and intent is reflected in the design of the pooled funding arrangements under the NHRA in the following ways: firstly, state pool accounts are to be established and operated by each state; secondly, revenue in state pool accounts, whether sourced from the state or from the Commonwealth, is to be recognised as forming part of the state's revenue; and, thirdly, the disbursement of funds from state pool accounts to public hospitals is to be controlled by the state. These control arrangements are reflected in the mechanism agreed upon through the NHRA to select and appoint the administrator. This arrangement could be said to be complex, but was agreed upon to deliver the required state independence and oversight in relation to state pool accounts. In essence, it involves each state and territory and the Commonwealth independently appointing the same person to be the administrator of each state pool account and the national health funding pool.

Insofar as this relates to Western Australia, this arrangement is intended to ensure that when controlling funds through the WA state pool account the administrator is acting as an officer of the state of Western Australia and not as an officer of the Commonwealth, or of any other state or territory, for that matter. The core issue of concern to Western Australia, as reflected in the minister's submission, is to ensure that the administrator is unambiguously an officer of the state when performing these functions. Western Australia has participated with other jurisdictions, including the Commonwealth, in drafting legislation to achieve this intent, including a set of common provisions governing the selection, appointment and conferral of functions and powers on the administrator to be enacted by all jurisdictions. Subject to cabinet approval, Western Australia is intending to introduce this legislation into state parliament shortly.

Coming to the substantive issues raised by the minister's submission, Western Australia has two principal issues in relation to the Commonwealth amending bill. Firstly, there should be a clearer differentiation between the functions bestowed on the Commonwealth administrator by Commonwealth legislation and on the state's administrator by state legislation, consistent with clauses B26 and B27 of the National Health Reform Agreement. Of particular concern to the state is the conferral of the function of making payments from each state pool account in accordance with the direction of the state concerned, which is identified in clause 238(1)(c) of the Commonwealth bill. In Western Australia's view, this is a function that should be exercised solely and exclusively by the administrator acting under the authority of state legislation and in his or her capacity as a state office holder.

Secondly, the state is concerned by the possible consequences of clause 248 as it applies to the conferral of functions and powers on the administrator. We understand that this clause is intended to address the consequences of the High Court's decision in the case of Hughes, where it was established that a state may confer functions and powers on a Commonwealth officer only with the agreement of the Commonwealth parliament. In Western Australia's view the state's legislation appointing the administrator will not involve conferring powers or functions on the Commonwealth administrator. As the state administrator will be appointed and have state jurisdiction conferred by an enactment of the Western Australia parliament, in effect, the state will be appointing and empowering its own administrator and not conferring powers and functions on the Commonwealth administrator.

As the minister has indicated in his submission, there has been ongoing discussion among states and territories and the Commonwealth on this matter. Amendments have been prepared to clauses 238 and 248 of the Commonwealth bill, which substantively addresses Western Australia's concerns and Western Australia has confirmed its agreement to them. Their tabling in the Commonwealth parliament is a matter for the Commonwealth, but we hope that they will be brought before the parliament and we would advocate that they be supported.

CHAIR: Mr Watts, do you want to add anything to that?

Mr Watts : I have nothing further to add to Mr Salvage's statement.

CHAIR: Thank you. I will give the call to Senator Fierravanti-Wells.

Senator FIERRAVANTI-WELLS: I want to go to page 2 of the minister's submission. I guess to some extent my concern is to make sure that where there is a potential conflict of interest that the legislation makes appropriate provision for that. What is your view in relation to where there could be or do you envisage that there could be areas where there could be potential conflicts of interest that have not been addressed?

Mr Salvage : Not so much conflict of interest as clarity of role delineation. The administrator is going to be an unusual statutory appointment in that the same person is going to be appointed effectively nine times by all of the jurisdictions. The same person will do that. Our issue relates to the conferral of functions in the Commonwealth bill. We think the statement of functions in clause 238 goes too far in conferring power on the Commonwealth administrator in relation to the disbursement of funds through state pool accounts. We see that as exclusively a state responsibility. If you go back to the NHRA on which all of this is based, there was a very clear delineation of the functions to be performed by the Commonwealth administrator versus the state's administrator. We just want to adhere to intent of that. By a minor amendment to clause 238 that can be achieved.

I think that as long as in all of our legislative arrangements across the Commonwealth and states and territories we are adhering to frameworks and principles set out in the national health reform agreement we should be able to produce a workable scheme and one that does not involve conflicts of jurisdictional interests between different states and territories and the Commonwealth.

Senator FIERRAVANTI-WELLS: Have you identified the amendment that you would like to make to clause 238?

Mr Salvage : The specific amendment is the deletion of clause 238(1)(c) which goes to the issue of conferring jurisdiction to control payments from the state pool account.

Senator FIERRAVANTI-WELLS: I see. In other words, each of the states would then legislate to cover that themselves.

Mr Salvage : That is right. So there will be parallel state legislation authorising the administrator to do certain things. In this particular case we think that the Commonwealth legislation deviates from the intent of the NHRA by conferring a function on the Commonwealth administrator to make payments from each account. We think that that is exclusively a state responsibility.

Senator FIERRAVANTI-WELLS: So this is ultra vires the agreement that you say the Commonwealth has come to with the states?

Mr Salvage : I am not sure that 'ultra vires' would be the term, but it is inconsistent with the national health reform agreement.

Senator FIERRAVANTI-WELLS: What about the other provision? You mentioned—

Mr Salvage : Clause 248? This relates to the Hughes matter. As I have tried to indicate, our view is that, when we pass state legislation providing for the appointment and exercise of functions by the administrator, that person will be acting as an officer of the state appointed by and exercising powers conferred by state legislation. The Hughes provision, if it is applied to the administrator's position, has the potential to confuse policy intent related to the NHRA in that it is intended to cover a situation where the states ask a Commonwealth officer to do certain things on their behalf. Essentially the provision confirms the acquiescence of the Commonwealth parliament to the states asking a Commonwealth officer to do certain things on behalf of the states.

Senator FIERRAVANTI-WELLS: What would you change in 248?

Mr Salvage : I would remove the reference to 248 applying to the appointment of the Commonwealth administrator. Clause 248 will need to be retained to deal with those provisions in the state legislation where Commonwealth officers are being asked to do things for the state. For example, we will be adopting through state legislation the Commonwealth's Freedom of Information Act provisions in relation to the activities of the administrator. That is simply to recognise that, although the person concerned is going to be appointed nine times over, they need to be acting within a common set of administrative law arrangements. We have all agreed that the Commonwealth freedom of information legislation can be applied as state law in relation to the state's administrator, and clause 248 needs to be retained for that purpose. However, in relation to the administrator's appointment, we think it is unhelpful because we are not in any way conferring or intending to confer powers and functions on the Commonwealth appointed administrator. We are doing that in our own right under our own state enactment.

Senator FIERRAVANTI-WELLS: What sections? Can I just ask you, just going through 248, what specific changes do you believe should be made to 248?

Mr Salvage : Sure. In the amendments that have been shared with the state over the last week—and I appreciate they have not been tabled as yet and that is a matter for the Commonwealth—the amendment that we agreed to is essentially to remove the reference to the administrator from clause 248(1).

Senator FIERRAVANTI-WELLS: So 1(a), remove the word administrator?

Mr Salvage : Correct. That would leave 248 continuing to apply to the funding body, but the funding body will be recognised in state legislation as doing things to support the state administration and will also apply to an officer of the Commonwealth. For example, if there is an officer working under the Freedom of Information Act, a Commonwealth officer supporting the administrator in that role, then we need to provide the coverage for that officer. Essentially, we remove references from that clause to the administrator to recognise it still needs to be applied to other Commonwealth officers.

Senator FIERRAVANTI-WELLS: It is your understanding that these amendments will be put by the Commonwealth?

Mr Salvage : That is a matter you would need to put to the Commonwealth officers, who I think are appearing subsequent to this hearing, but there was a process over the last couple of weeks where amendments to address the concerns raised by Western Australia and other jurisdictions were shared. I can confirm that Western Australia was in agreement with those amendments to the Commonwealth bill and that they substantively deal with the issues that we have raised and that the minister has raised in his submission.

Senator FIERRAVANTI-WELLS: What about the funding for the administrator and the funding body? Are you aware of those arrangements or have you had any input in relation to that?

Mr Salvage : No. If you look at the National Health Reform Agreement, the arrangements in relation to funding for the administrator and the funding body are exclusively the responsibility of the Commonwealth. The Commonwealth will be meeting the cost of both the administrator and the funding body.

Senator FIERRAVANTI-WELLS: Just in relation to the state managed funds, your legislation will also report on how much, where it is spent, and those sorts of details you will cover by your own state legislation?

Mr Salvage : That is correct.

Senator FIERRAVANTI-WELLS: That will be publicly available?

Mr Salvage : Yes.

CHAIR: There do not appear to be any further questions. In relation to your discussions to those amendments, have they been agreed to?

Mr Salvage : There has been quite a deal of discussion between the Commonwealth and states and territories on these issues. Amendments were circulated by the Commonwealth and my understanding is that all states and territories have agreed to them, but whether they find their way into the Commonwealth parliament is a matter for Commonwealth process.

CHAIR: Thank you for that. There are no further questions. Please thank the Deputy Premier of WA and Minister for Health and Tourism for the submission and we thank you both for appearing via teleconference this afternoon.