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2002-2003
THE PARLIAMENT OF THE
COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health and Ageing,
Senator the Hon. Kay Patterson)
The Australian National Audit Office Audit Report No. 32 1999-2000:
“Management of Commonwealth Non-Primary Industry Levies”, identified
issues with the Private Health Insurance Administration Council (Council)
administration levy (established via subparagraph 82G(1)(h)(i) of the
National Health Act 1953) having regard to the operation of section 55 of
the Commonwealth of Australia Constitution (the Constitution).
Section
55 provides that laws imposing taxation shall deal only with the imposition of
taxation, and any provision therein dealing with any other matter shall be of no
effect.
This Bill, together with three other Bills, reimposes four health
insurance industry levies (and validates previous impositions of the levies)
having regard to section 55 of the Constitution with a view to removing any
doubt regarding the technical validity of the levies.
The four private
health insurance industry levies being reimposed
are:
§ the Private Health Insurance
Administration Council administration levy (subparagraph 82G(1)(h)(i)
National Health Act 1953);
§ the collapsed organization levy (paragraph
82G(1)(j) National Health Act 1953);
§ the Acute Care Advisory Committee (ACAC)
review levy (subparagraph 82G(1)(h)(ii) National Health Act 1953);
and
§ the
Reinsurance Trust Fund levy (section 73BC National Health Act
1953).
These levies are to be reimposed via the following
Bills:
§ Private Health Insurance (Council
Administration Levy) Bill 2003;
§ Private Health Insurance (Collapsed
Organization Levy) Bill 2003;
§ Private Health Insurance (ACAC Review
Levy) Bill 2003; and
§ Private Health Insurance (Reinsurance
Trust Fund Levy) Bill 2003.
The National Health Amendment (Private Health
Insurance Levies) Bill 2003 amends the National Health Act 1953 making
changes ancillary to, or consequential to, the reimposition of four private
health insurance industry levies.
The reimposition effects a technical
change in process. The changes effectively repeal the existing levy mechanisms
replacing them having regard to section 55 of the Constitution. While the
levies will still be administered by the Council, the money collected under the
levies will be placed into the consolidated revenue fund and then appropriated
for the purposes of those levies.
These levies only apply to the private
health insurance industry. Only registered health benefits organizations are
required to meet liabilities imposed via the levies. The purpose of the
reimposition of the levies is not to increase the financial burden on the
private health insurance industry. This proposal does not involve a change in
policy but rather corrects a technical defect to ensure that the legislation
functions as intended.
Doubt in relation to the validity of the Council
administration levy has the potential to substantially reduce or impede Council
in undertaking its functions including the prudential regulation of the private
health insurance industry. Given the role of Council its financial basis should
not be compromised by doubt in relation to section 55 of the
Constitution.
Council administration levy
This Bill
reimposes the Council administration levy. The purpose of the reimposed Council
Administration Levy is the same as in the current provision in subparagraph
82G(1)(h)(i) of the National Health Act 1953. A levy is imposed on each
registered health benefits organization, to be calculated on the number of
contributors of each organization, for the purpose of meeting the general
administrative costs of Council.
The Council is the prudential regulator
of the private health insurance industry. Monies paid pursuant to this levy
meet the day to day costs associated with the Council undertaking its functions
as required by the National Health Act 1953.
The reimposed Council
administration levy will be able to be applied on each day specified in the
regulations or, in relation to the supplementary power, on each day determined
by the Minister.
The regulations are limited to imposing the Council
administration levy a maximum of four times a year. However, a supplementary
power has also been provided for the Minister to determine (via disallowable
instrument) up to two supplementary impositions per year. The supplementary
power may only be used to levy monies from the industry for unexpected
administration costs associated with Council undertaking its functions.
Before the Minister may invoke the supplementary power, the Council must
provide the Minister with written justification as to why the additional
imposition is required. Advice from Council must include: the proposed rate of
imposition, the total amount proposed and a justification for the additional
impost.
This Bill sets the maximum rate for the imposition of the Council
Administration Levy to ensure certainty, without limiting or compromising the
operational ability of Council. The day to day rate will be set in the
regulations or, if in relation to the supplementary power, set by Ministerial
determination. The cumulative total of the Council administration levy and the
supplementary Council administration levy may not exceed the maximum set in this
legislation.
The original intent of the Council administration levy has not changed.
The functions Council performs and have performed have been at the behest of the
Australian Parliament. This legislation addresses a technical concern
identified by the Australian National Audit Office. As such this Bill validates
the previous purported impositions of the Council Administration Levy by
Council.
The Private Health Insurance (Council Administration Levy) Bill 2003 is
not expected to have any significant impact upon the finances of the
Commonwealth.
NOTES ON CLAUSES
This clause provides that upon enactment this Act may be cited as the
Private Health Insurance (Council Administration Levy) Act 2003.
This clause provides for the commencement of the Act on 1 July 2004 to
enable a seamless transition in the reimposition of the Private Health Insurance
Administration Council (Council) administration levy between financial
years.
This clause provides that this Act binds the Crown in each of its
capacities.
This clause provides that this Act extends in its application to the
Territory of Cocos (Keeling) Islands and to the Territory of Christmas
Island.
This clause provides a range of definitions for the purposes of the Act.
In particular this clause defines Council as the Private Health Insurance
Administration Council established by section 82B of the National Health Act
1953. The functions of the Private Health Insurance Administration Council
are set out in section 82G of the National Health Act 1953.
This clause enables the Council administration levy to be imposed on each
registered health benefits organization
on:
• Each day specified in the regulations
as a Council administration levy day for a financial year;
and
• Each day (if any) determined in writing by
the Minister as a supplementary Council administration levy day for a financial
year.
Sub-section 2 of this clause provides that the regulations may not
impose more than four Council administration levy days for a financial
year.
Sub-section 3 of this clause provides for the setting via
Ministerial determination of a maximum of two supplementary Council
administration levy days for a financial year.
Sub-section 4 of this
clause provides that the Minister’s determination in relation to the
imposition of the supplementary Council administration levy is a disallowable
instrument for the purposes of section 46A of the Acts Interpretation Act
1901.
The purpose of the Council administration levy is to meet the
administrative costs of Council. The purpose is set out in the National
Health Amendment (Private Health Insurance Levies) Bill
2003.
Clause 7: Rate of Council administration levy
This
clause provides that the rate of the Council administration levy to be imposed
on the Council administration levy day is the rate that is specified in the
regulations. This clause also provides that the rate of the supplementary
Council administration levy is the rate determined by the Minister and applies
on the supplementary Council administration levy day.
Subclause 2 of this
clause sets out that the rate of the levy (including the supplementary levy)
must be based on the number of contributors who contribute to the health
benefits fund conducted by a registered health benefits organization. As is
currently the case a different rate may be set for contributors who contribute
in respect of a single person and contributors who contribute in respect of more
than a single person.
Paragraph 2(c) of this clause provides for the
rate to be set at zero. The rate must not exceed the maximum rate (cumulative
of both the Council administration levy and the supplementary Council
administration levy). The maximum rate is set
at:
§ $2.00 for a financial year per contributor
who contributes in respect of one person; and
§ $4.00 for a financial year per contributor
who contributes in respect of more than one person.
The maximum has been
set to enable Parliament to be certain as to the maximum rate. The day to day
rate for the Council administration levy will be set by regulation to enable
flexibility whilst enabling Parliamentary scrutiny.
Sub-clause 3 provides
that a Ministerial determination in relation to the supplementary levy is a
disallowable instrument for the purposes of section 46A of the Acts
Interpretation Act 1901. This retains a level of administrative flexibility
as the supplementary power is to be used only for unexpected costs associated
with the Council undertaking its functions. However, Parliament is able to
scrutinise the use of the power.
Clause 8: Minister to obtain
advice from Council
This clause provides that before the Minister
makes a determination in relation to the supplementary levy power, the Minister
must obtain and take into account advice from Council in relation to the
following:
• whether to make a determination
imposing the supplementary Council administration levy, including a
justification as to why the additional impost is
required;
• the day or days to be specified as
the supplementary Council administration levy day or days for a financial year;
• the rate that is to be specified as the rate
of the supplementary Council administration
levy;
• the day or days to be specified as the
census days or days for the supplementary Council administration levy day or
days.
Clause 9: Validation of Council administration levy
This clause
validates all previous Council administration levy payments.
This clause provides for the Governor-General to make regulations
prescribing matters:
§ required or permitted by this Act to be
prescribed; or
§ necessary or convenient to be prescribed
for carrying out or giving effect to this Act.
Subclause 2 of this clause
provides that prior to the Governor-General making regulations under the
previous sub-section the Minister must take into consideration any relevant
recommendations made to the Minister by the Council.