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Thursday, 21 October 1999
Page: 10165

Senator LEES (12:08 PM) —This piece of legislation, the Health Legislation Amendment Bill (No. 3) 1999 , proposes a significant revamp of the responsibilities of the Private Health Insurance Administration Council, also known as PHIAC. The Democrats support this piece of legislation and congratulate the government on the work in it. We will also be supporting the ALP amendments. We believe that the role of PHIAC is particularly important, given the large amount of money that is now finding its way into private health insurance through the rebate—I understand it is around $1.6 billion a year. We certainly support the independence of PHIAC from both the government and the private health insurance industry, to ensure that it can operate in a transparent and accountable manner, free from any political interests and free from any pressure from the health insurance industry. We therefore support the provisions of this bill, which will protect consumers by strengthening the prudential regulation of the private health insurance industry.

We will also be moving some amendments to this bill to further strengthen the accountability and transparency of the regulation of private health insurance. These amendments relate to the appointment of members of PHIAC and the appointment of the Private Health Insurance Commissioner and the Deputy Commissioner. The Democrats are concerned to ensure that, wherever appointments are made to public authorities, the process by which these appointments are made is transparent, accountable, open and honest. The practice of `jobs for the boys' should be well and truly behind us as we move towards the year 2000, but unfortunately not much seems to have changed. Certainly in the public perception of how appointments are made, there is still a lot of work to be done. The perception is still very much one that appointments are based on anything but merit. The perception of how appointments to boards such as this are made can damage the bodies, as, in the public eye, they are seen as having in their membership people who lack the appropriate independence and possibly the appropriate skills as well.

It is still the case in Australia that appointments to statutory authorities are left largely to the discretion of the minister who has the relevant portfolio responsibility. In the absence of umbrella legislation to correct this situation in a systematic fashion, the Democrats have moved these amendments time and time again, arguing for them as each piece of legislation that deals with such bodies comes before us. We are attempting to set up an accountable regime concerning appointments made by ministers. I have forgotten how many times my colleague Senator Murray has moved a similar batch of amendments, but he has done so on many occasions.

The Nolan committee, which reviewed the process for making public appointments in the United Kingdom, led to the establishment of an Office of Commissioner for Public Appointments. That allowed for external scrutiny of how these appointments are made in the United Kingdom. The commissioner subsequently developed a code of practice for public appointments, which came into force in the UK over three years ago, on 1 July 1996. The code regulates appointments to non-departmental public bodies and sets out seven principles on which such appointments must be based: ministerial responsibility, merit, independent scrutiny, equal opportunity, probity, openness and transparency and proportionality. The code provides mandatory guidelines for the application of these principles.

A comparison of these reforms with the current practice here in the federal sphere of Australia shows very clearly that we lag well behind the United Kingdom in this respect. Not only do we lack the external scrutiny mechanisms, in the form of the Commissioner for Public Appointments, but, more fundamentally, we do not even have basic procedural safeguards. The Democrats believe that this should be addressed by government as a matter of high priority. The public must have confidence that ministers will not allow improper procedures and will not allow largely irrelevant considerations or, perhaps, personal interest to get in the way of their decisions or to influence public appointments. This relationship is, in some respects, analogous to those of a financial nature, such as the relationship between a trustee and beneficiary, in that it is founded on a high degree of trust and confidence. Where a breach of duty occurs in a fiduciary relationship, the person to whom the duty is owed has access to a range of remedies, but this is not the case where the minister acts in an improper way. There is no avenue for redress. This omission is addressed in the amendments that I will be moving and I look forward to support from other senators for these amendments.

Also in the amendments is a further provision, which requires that, even where the code of practice has been adhered to in determining an appointment, the minister be further obliged to consider the impact of the appointee on the overall complexity of the authority. In the case of PHIAC, this is particularly important. The provision prevents the capturing of a body by a particular sectional interest. Certainly the risk here is that the private health insurance industry—which has a lot to gain or, perhaps, lose—has considerable influence, and there is considerable potential for vested interest to seek to influence this regulatory regime. I say again clearly that our amendments further increase the transparency and accountability of prudential regulation of the private health insurance industry.

Question resolved in the affirmative.

Bill read a second time.