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HEALTH INSURANCE COMMISSION AMENDMENT BILL 2002

2002

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

SENATE

HEALTH INSURANCE COMMISSION AMENDMENT BILL 2002

EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health and Ageing,
Senator the Hon Kay Patterson)
HEALTH INSURANCE COMMISSION AMENDMENT BILL 2002

OUTLINE

AMENDMENTS TO HEALTH INSURANCE COMMISSION ACT 1973 RELATING TO FINANCE

The Bill operates to remove the special budget estimates and investment provisions applying to the Commission, and instead apply to it the general provisions of the Commonwealth Authorities and Companies Act 1997 covering non-GBE Commonwealth authorities. The Bill also enables the Commission to borrow moneys for purposes of its functions, with the written approval of the Finance Minister, but removes the ability of the Commission to enter into “hedging” arrangements.

AMENDMENTS TO HEALTH INSURANCE COMMISSION ACT 1973 RELATING TO THE NUMBER OF COMMISSIONERS

The Bill makes changes to the legislative provisions covering the number of Commissioners of the Health Insurance Commission. Under the Health Insurance Commission (Reform and Separation of Functions) Act 1997, and effective in November 2002, the number of Commissioners was to have reduced by 4 (leaving a Commission comprising the Chairperson, the Managing Director and 5 additional Commissioners). The Bill provides for a Commission comprising the Chairperson, the Managing Director and 7 additional Commissioners.

FINANCIAL IMPACT STATEMENT
The amount of investment income earned, and amount of interest payable on moneys borrowed, by the Commission under the revised financial provisions would vary from year to year. It is anticipated that investment income would be in the order of $5 million per annum. There is no financial impact associated with the removal of the “hedging” provisions.
The financial impact of the amendment relating to number of Commissioners is small (a reduced anticipated saving from November 2002 of about $60,000 per year).
NOTES ON CLAUSES

Clause 1: This clause states that the short title of the legislation is the Health Insurance Commission Amendment Act 2002.

Clause 2: This clause provides for a dual commencement regime, as set out in the table. All of the Bill commences on Royal Assent, except for the Schedule 2 provisions relating to number of Commissioners. The Commissioners amendments relate to a change made by item 81 of Schedule 1 to the Health Insurance Commission (Reform and Separation of Functions) Act 1997, which change had a delayed commencement until 11 November 2002. To accommodate the possibility that the Bill itself does not commence before 11 November 2002, the Schedule 2 amendments will commence on the later of (a) the 28^th day after Royal Assent; and (b) immediately after the commencement of that item 81.

Clause 3: The effect of this clause is that Acts specified in the Schedules to the Bill are amended in the manner there specified.

Schedule 1 – Amendments relating to finance : Health Insurance Commission Act 1973

Item 1 inserts a new definition of “Finance Minister” in the definitions provision of the Act, sub-section 3(1). Items 5 and 6, below, then substitute the new term “Finance Minister”, for the now-obsolete description, “Minister for Finance”, in subsection 32A(2) and section 33. These changes are consistent with the terminology used in the Commonwealth Authorities and Companies Act 1997.

Item 2 makes a change to the note which attaches to section 9, consequent upon the repeal of section 9A effected by Item 3.

Item 3 repeals section 9A of the Act. Section 9A had operated so as to exclude from, or narrow, the application to the Health Insurance Commission of the general provisions of the Commonwealth Authorities and Companies Act 1997 relating to estimates and investment of surplus moneys.

Item 4 is a transitional provision, ensuring the adequacy of estimates prepared by the Commission under the repealed sections 33A and 34 estimates regime, at a time when those provisions were still operative.

Items 5 and 6 relate to usage of the new term “Finance Minister” (see item 1, above).

Item 7 repeals sections 33A and 34 of the Act. Sections 33A and 34 contained a detailed budget estimates regime for the Commission. The effect of the combined operation of Items 3 and 7 is that the general (and simpler) estimates regime for non-GBE Commonwealth authorities, under section 14 of the Commonwealth Authorities and Companies Act 1997, applies to the Commission.

Item 8 replaces section 36 (which prohibited the Commission from borrowing moneys, and limited its ability to invest surplus moneys) with a provision authorising the Commission to borrow money for purposes of its statutory functions (under section 5 of the Act), provided that the Finance Minister has given written approval. However, new sub-section 36(2) ensures that the Commission’s borrowing power does not extend to enable it to borrow money for the purpose of making benefits payments (for example, medicare benefits payments); these benefits moneys are provided to the Commission by the Commonwealth under section 33 of the Act.

New sub-section 36(3) makes clear that the constraints on the Commission’s ability to enter into certain high-value contracts, set out in section 38 of the Act, do not apply to the Commission’s borrowing.
As to investment powers, section 36 no longer contains any reference to the Commission’s ability to invest surplus moneys. In combination with the change made by Item 3 above, the result is that section 18 of the Commonwealth Authorities and Companies Act 1997 will apply to the Commission (consistent with its general application to other non-GBE Commonwealth authorities). This amendment gives the Commission greater scope to invest surplus moneys, and with the benefit of such investment (subject to the operation of new section 36A, below) being returned to the Commission rather than to the Commonwealth.

Item 8 also inserts a new section 36A which provides an exception to the general rule that income deriving from the Commission’s investments is retained by the Commission. Where the Commission invests the surplus of any moneys which have been provided to it by the Commonwealth under section 33 of the Act (that is, any surplus of moneys provided for the purpose of making benefits payments), then the derived income must be returned to the Commonwealth. (This is consistent with the previous regime, under now-repealed sub-section 36(6) of the Act.)

Item 9 repeals section 36AA of the Act. This provision entitled the Commission to enter into “hedging” arrangements, in certain limited circumstances. It is no longer considered to be an appropriate feature of the Commission’s financial regime, given the Commission’s current functions.

Item 10 involves the repeal of sub-section 38(3) of the Act, consequential upon the Item 9 repeal of section 36AA.

Schedule 2 – Amendments relating to the number of Commissioners: Health Insurance Commission Act 1973

Item 1 substitutes a reference to “7” Commissioners under paragraph 10(1)(c) of the Act, for the reference to “5” such Commissioners. Under item 81 of Schedule 1 to the Health Insurance Commission (Reform and Separation of Functions) Act 1997, the number of Commissioners (in addition to the Chairperson and the Managing Director) decreases from “9” to “5”. Item 81 of the latter Act commences 5 years after Royal Assent to that Act (that is, on 11 November 2002). Upon the commencement of Item 1, the amendment means that the Commission will then comprise the Chairperson, the Managing Director and 7 Commissioners under paragraph 10(1)(c).