House of Representatives

Human Services Legislation Amendment Bill 2005

Second Reading Speech

Mr Hockey (Minister for Human Services)

I move:

That the bill be now read a second time.

I have great pleasure in introducing the Human Services Legislation Amendment Bill 2005.

This bill amends the Health Insurance Commission Act 1973 and the Commonwealth Services Delivery Agency Act 1997 by making changes to the governance structures of Centrelink and the Health Insurance Commission.

These changes form part of the implementation of the government's response to the review of corporate governance of statutory authorities and office holders that was conducted by Mr John Uhrig.

The primary purpose of the report by Mr Uhrig was to identify ways in which corporate governance might be improved and to provide the government with options for increasing accountability and ensuring high levels of performance of government agencies.

As part of his report, Mr Uhrig developed two templates for assessing statutory authorities-a 'board' template for use when the government was prepared to delegate full power to the statutory authority to act independently from government and an 'executive management template' for use in other cases.

Mr Uhrig recommended that a governance board should only be utilised in relation to a statutory authority where the government was willing to delegate 'full power to act' to the authority.

The government released its response to Mr Uhrig's report on 12 August 2004. The government endorsed Mr Uhrig's recommendation that governance boards should be utilised only where they can be given full power to act. The government also announced that it would assess all statutory authorities and other bodies using the Uhrig templates.

Mr Uhrig said in his report:

The HIC and Centrelink are both established to provide services to the community on behalf of government, through Commonwealth Agencies. However the HIC is established with a Board and is covered by the CAC Act, while Centrelink is covered by the FMA Act and unusually, is also governed by a Board. Apparently, given the need to strengthen the government's power of the Centrelink Board, the Financial Management and Accountability Regulations 1997 establish the chairman of the board as the chief executive for FMA Act accountability purposes. However the actual chief executive officer is the Agency head for PS Act purposes. This situation creates an anomaly of having two chief executives for accountability and governance purposes.

That is quite absurd, as you would agree, Mr Deputy Speaker.

Centrelink and the Health Insurance Commission are service delivery organisations that are funded from the public purse.

The organisations are responsible for the delivery of very large and important government programs, worth over $82 billion annually. Through this delivery, Centrelink and the HIC touch the lives of almost every Australian. The programs and services they deliver are the essential glue that keeps the social fabric of the Australian community together.

Because of this vital role, these agencies need to move closer to government to ensure that their daily operations deliver the outcomes that government and taxpayers expect.

Indeed, it is important that the organisations be brought under strong ministerial control. With this in mind, the government assessed both Centrelink and the Health Insurance Commission against Mr Uhrig's executive management template. This assessment suggested that a number of governance changes should be made to both organisations. This bill implements the changes that require legislative amendment.

A key change made by this bill is the removal of the governance boards for Centrelink and the Health Insurance Commission. Both boards have served their organisations diligently over many years, and the government is grateful for the commitment of the current and former members of the boards who have contributed so much of their time and expertise. However, neither board can be fully effective, as neither board has, or could realistically be given, full power to act completely independently of government when they are delivering core government services.

Following the changes to be made by the bill, the management of both organisations will be vested in a chief executive officer. These chief executive officers will have clear and direct accountability for the performance of their organisations.

Efficient organisations are professional, are well organised, have excellent management control, are able to remedy problems quickly and are responsive to customer and stakeholder concerns.

Through these changes there must be a greater focus on cost effectiveness and better management of financial resources-in particular, using purchasing power to produce better outcomes for less money.

A significant challenge is to ensure the agencies in Human Services continue to deliver the already long list of existing government programs whilst undertaking the changes necessary to achieve our goals.

Simplicity in both service and vernacular should help us achieve our goals. For example, given that the Health Insurance Commission will no longer be a commission, it is appropriate to change its name. This bill will establish Medicare Australia to replace the Health Insurance Commission. The Medicare name is well known by almost all Australians and the new name will help customers to identify readily with the organisation.

Mr Uhrig also recommended that, generally, the Financial Management and Accountability Act 1997 financial framework should be applied to bodies which do not require a governance board. The government has accepted this recommendation and, accordingly, the new Medicare Australia will be a prescribed agency under the Financial Management and Accountability Act 1997. The bill will also provide that the staff of Medicare Australia will be engaged under the Public Service Act 1999, along with the majority of other public servants.

By bringing Centrelink and the Health Insurance Commission as well as my other agencies under the one umbrella of Human Services, we have the opportunity for the first time to review how they operate from a customer perspective. We must repeatedly ask whether the original policy intention is carried through in the delivery of the programs.

Part of this process is pinpointing each agency's core functions and constantly measuring its performance against the objectives of the government's commitment to efficient service delivery.

As Mr Uhrig said:

Departments are the primary source of public sector advice to ministers and are best placed to support ministers in the governance of statutory authorities. In this respect, the portfolio secretary has a role akin to an advisory function within a parent company in providing advice to the CEO about the activities of the company's subsidiaries.

The governance changes to be made by the bill will be complemented by other changes that do not require legislation.

The government will be issuing statements of expectation to the chief executive officers of Centrelink and Medicare Australia to clarify expectations, and the chief executives will be replying with statements of intent. These documents will be made public.

The Department of Human Services will analyse information about the performance of Centrelink and Medicare Australia and provide advice to the government. The chief executive officers will report to me through the Secretary of the Department of Human Services.

The government will also, at the appropriate time, be establishing a Human Services Advisory Board to ensure that it receives advice from relevant sectors of the community about delivery issues and service improvement proposals in the human services area. All of these initiatives form part of the government's implementation of the Uhrig report.

Our 20 million customers have little regard for sectoral and bureaucratic differences. Instead they just expect the government to deliver services in a timely, efficient, cost-effective and easily understandable manner. Changes brought into effect by this bill will assist the government to deliver on that expectation.

The changes made by the bill will improve accountability and enhance the performance of both of these important organisations. The outcome will be a better level of service to Australians.

I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr McClelland) adjourned.