EXPLANATORY STATEMENT

 

Select Legislative Instrument 2005 No. 114

 

Issued by the Authority of the Minister for Health and Ageing

 

Private Health Insurance (Council Administration Levy) Act 2003

 

Private Health Insurance (Council Administration Levy) Amendment Regulations 2005 (No. 1)

 

Subsection 10(1) of the Private Health Insurance (Council Administration Levy) Act 2003 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

The purpose of the Private Health Insurance Administration Council administration levy (the levy) is to meet the general administrative costs of the Private Health Insurance Administration Council.  The Private Health Insurance (Council Administration Levy) Regulations 2004 (the Principal Regulations) currently implement the levy scheme established by the Act.

 

Item 1 of the table in subsection 7(1) of the Act provides that the rate of the levy imposed on a levy day is the rate that is specified in the regulations and applies on that day.  Subsection 7(2) sets out requirements which must be met in determining the rate of the levy.  The levy paid by each organization will be based on the number of contributors to the health fund, with a different rate for each contributor type.  The different rates for a single contributor and those who contribute in relation to more than one person are determined by a formula which has regard to the total number of contributors to health benefits funds conducted by registered health benefits organizations.  The formula has been structured to ensure that the rate set for the levy will collect the total amount required despite potential variations in the number and types of contributors.

 

The purpose of the Regulations is to amend the formula which is used to calculate the levy, as the total amount that is required to be collected for a financial year has increased from $4,189,601 to $4,435,000.

 

Paragraph 7(2)(c) of the Act provides that the rate of levy must not exceed $2 for a single contributor and $4 for those who contribute in respect of more than one person for a financial year.  The rate of the levy which would be prescribed by the Regulations would continue to comply with the limits prescribed by paragraph 7(2)(c) of the Act.

 

Subsection 10(2) of the Act provides that, before the Governor-General makes regulations under subsection 10(1) of the Act, the Minister must take into consideration any relevant recommendations made to the Minister by the Private Health Insurance Administration Council (the Council). The Minister has received advice from the Council recommending that the total amount collected by the levy be increased to $4,435,000. The changes are consistent with the Council’s recommendation.

 

Details of the Regulations are set out in the Attachment.

 

The Regulations commence on 1 July 2005.

 

 

 

Consultation

 

The increase in the levy rate is minor and machinery in nature, and so consultation with the private health industry was considered to be unnecessary.   However, the Council wrote to registered private health insurance organizations to advise them of the increase in the levy rate.  

 

The Office of Regulation Review was consulted, and advised that a Regulation Impact Statement was not required.  The total amount to be collected for a financial year was calculated by the Private Health Insurance Administration Council in consultation with the Department of Finance and Administration.

 

 

ATTACHMENT

 

DETAILS OF THE PRIVATE HEALTH INSURANCE (COUNCIL ADMINISTRATION LEVY) AMENDMENT REGULATIONS 2005 (No. 1)

 

Regulation 1 provides for the Regulations to be referred to as the Private Health Insurance (Council Administration Levy) Amendment Regulations 2005 (No. 1)

 

Regulation 2 provides for the Regulations to commence on 1 July 2005.

 

Regulation 3 provides for Schedule 1 to amend the Private Health Insurance (Council Administration Levy) Regulations 2004 (the Principal Regulations).

 

 

Schedule 1 – Amendments

 

Items [1] and [2]

Item [1] amends the rate of the Private Health Insurance Administration Council administration levy (the levy) for single contributors.  Item [2] amends the rate of the levy for family contributors (where there are contributions in relation to more than one person). 

 

The rates have been formulated having regard to the total number of contributors in the industry.  The rates have been established so that the total amount for a financial year, $4,435,000, would be collected despite variations in the number of contributors to each health fund.  This amount was calculated by the Private Health Insurance Administration Council in consultation with the Department of Finance and Administration.