2012

LEGISLATIVE ASSEMBLY OF THE
NORTHERN TERRITORY

MINISTER FOR HEALTH

NATIONAL HEALTH FUNDING POOL AND
ADMINISTRATION (NATIONAL UNIFORM LEGISLATION) ACT 2012
SERIAL NO. 212

EXPLANATORY STATEMENT

GENERAL OUTLINE

The National Health Funding Pool and Administration (National Uniform Legislation) Bill provides for the establishment of the National Health Funding Pool (NHFP) and the appointment of the National Health Funding Pool Administrator (the Administrator) in the Northern Territory, consistent with the COAG National Health Reform Agreement. 

The Bill contains common national provisions to be enacted by the Commonwealth and all states and territories (states) (Parts 1, 2, and 5), as well as specific state provisions (Part 3) and specific Commonwealth and state provisions (Part 5).

The Commonwealth and state provisions of this Bill provide a nationally consistent basis for the Commonwealth and states to provide funding for public hospital and related services, and common laws under which the Administrator, states and the Commonwealth will interact within the financial framework. 

The provisions of the Bill provide for:
·	the establishment of the NHFP, which will comprise state and territory bank accounts held at the Reserve Bank of Australia, through which Commonwealth and state funding for hospitals will be paid to local hospital networks;
·	the establishment of the Office of the National Health Funding Pool Administrator (the Administrator), as an independent statutory officer who will monitor and report on Commonwealth and state payments into and out of the NHFP, and to act on the instructions of responsible state Ministers (or CEOs) to release hospital funding from the NHFP to local hospital networks;
·	the appointment of the Administrator by the Chair of the Standing Council on Health, after unanimous agreement of all members of the Council, which comprises all Commonwealth and state and territory Health Ministers;
·	the establishment of a State Managed Funds in each state – the Commonwealth’s and the Territory’s block funding for hospitals and funding for teaching, training and research will flow through State Managed Funds to local hospital networks and other relevant organisations;
·	the arrangements under which the Commonwealth and the Territory will make health reform payments into and out of the NHFP and State Managed Funds; and
·	the financial management and reporting requirements of the Administrator, the Territory and the Commonwealth.

NOTES ON SECTIONS

PART 1 – PRELIMINARY MATTERS

Section 1.	Short title

The Bill, when enacted may be referred to as the National Health Funding Pool and Administration (National Uniform Legislation) Act 2012.

Section 2.	Commencement

This section provides for the commencement of the Act on the date fixed by the Administrator by Gazette notice. 

Section 3.	Interpretation

This section defines the terms used for the purposes of administering the Act, including differentiating the Administrator of the NHFP and the Administrator of the Northern Territory, the relevant health agency and chief executive officer, the National Health Funding Pool, local hospital network, COAG National Health Reform Agreement, the responsible Minister, the Standing Council on Health, State Managed Fund and State Pool Account. 

Part 2 – ADMINISTRATOR OF THE NATIONAL HEALTH FUNDING POOL

Part 2 establishes the office of the Administrator and its functions. The intended role of the Administrator within the National Health Reform Agreement is to provide transparency and accountability within the hospitals system, which has been provided through the requirement for unanimous agreement on the appointment of the Administrator by Health Ministers from all jurisdictions, and the comprehensive reporting requirements and payment protocols established under Part 2. These relate to both the funding obligations of the states and the Commonwealth, and the throughput of hospital networks.

Section 4.	The office of the Administrator

Subsections (1) to (3) establish the office of the Administrator for the Northern Territory, and clarify that the National Health Funding Pool Administrator is an office established under state, territory and Commonwealth legislation. This provides that the Administrator will act as an agent of individual states on a nationally consistent basis.

Subsection (4) clarifies that references to the Administrator under this Act also pertain to relevant sections under corresponding Commonwealth and state and territory legislation. 

Section 5.	Appointment of Administrator

Subsection (1) provides that the Administrator will be appointed by the Minister of the Northern Territory who is a member of Standing Council on Health (the Standing Council).

Subsections (2) and (3) provide that each member of the Standing Council will have the opportunity to nominate an individual for appointment to the role of the Administrator, and that appointment of the Administrator will only be made by unanimous agreement of the standing Council.

Subsections (4) (5) and (6) provide that the appointment of the Administrator is to be made in writing specifying a fixed term of appointment not exceeding 5 years, the conditions of appointment, and the remuneration of the Administrator which is to be determined by the Remuneration Tribunal of the Commonwealth. 

Section 6.	Suspension of the Administrator 

Subsection (1) specifies that the Chair of the Standing Council is required to suspend the Administrator if requested by three or state Ministers that are members of the Standing Council, or one Minister of the Commonwealth that is a Minister of the Council.

Subsections (2) and (3) set out the terms upon which members of the Council can request the suspension of the Administrator, which include physical or mental incapacity to perform satisfactorily, failure to comply with the obligations of the office of the Administrator, conviction or accusations of committing an offence that carries a penalty of imprisonment and bankruptcy. The Chair of the Council will notify all members of the Council of the suspension and that the suspension is to be made in writing. 

Subsection (4) provides that the suspension will be terminated after 60 days unless a majority of members of the Standing Council extend the suspension or terminate the suspension, or if the Administrator is removed or resigns. 

Subsection (5) provides that despite subsection (1), a subsequent suspension can not occur within 90 days of the first suspension, unless a majority of Standing Council members request the Chair to do so. 

Section 7.	Removal or resignation of Administrator 

Subsection (1) and (2) provides that the Northern Territory Minister that is a member of the Standing Council must remove the Administrator from office if a majority of members of the Standing Council agree to the Administrator’s removal, with the removal to occur via an instrument in writing. 

Subsections (3) to (4) provide for the Administrator to resign by notice in writing to the Chair of the Standing Council, with the Chair to notify Standing Council members accordingly. 

Section 8.	Acting Administrator

This section provides for the Chair of the Standing Council to appoint an acting Administrator during any period the office is vacant or the holder of the office is suspended or absent. Such appointments may be made from a panel of persons agreed to by all the members of the Standing Council. 

Section 9.	Provision of staff and facilities for Administrator

This section pertains to the establishment of the National Health Funding Body to assist the Administrator, established under the National Health Reform Act 2011 of the Commonwealth. It prevents the Administrator from delegating his or her duties established under this Act.

Section 10.	Functions of Administrator for National Health Reform Agreement

Subsections (1a) to (1e) set out each of the functions of the administrator, which include:
·	Calculating and advising the Commonwealth Treasurer of the amounts required to be paid by the Commonwealth to each State Pool Account under the COAG National Health Reform Agreement;
·	making payments from each State Pool Account to local hospital networks, State Managed Funds and other bodies in accordance with directions of the relevant state or territory;
·	monitoring and reporting on state and Commonwealth payments made into and out of each State Pool Account; 
·	any other function stipulated under this Act.

Subsection (2) provides that Administrator and the body and staff assisting the Administrator are not subject to the control or direction of any Commonwealth Minister. 

Subsection (3) qualifies subsection (2) stating that the Administrator is required to comply with the directions of COAG in relation to the manner in which the Administrator exercises or performs his or her functions, such as the preparation or provision of annual or monthly reports and financial statements.

Subsections (4a) to (4c) provide that when COAG directs the Administrator, the directions must be given in accordance with a written resolution of COAG, be notified in writing, and made publicly available to the Administrator. 

Subsections (5a) and (5b) clarify that the Act is not intended to give the Commonwealth ownership or control of money in States’ Pool Accounts or to affect the obligation of the Administrator to make payments from State Pool Accounts in accordance with the directions of the relevant state.

Subsection (6) provides that the Administrator may utilise information obtained from performing functions under the law of another jurisdiction in exercising financial management and reporting functions outlined in Part 4.   

Part 3 – STATE POOL ACCOUNTS – THE NATIONAL HEALTH FUNDING POOL

Part 3 establishes the financial structure, which is intended to promote greater transparency of funding flows, and establishes the laws governing the processes for states and the Commonwealth to transact within the new structure. The establishment of State Pool Accounts which collectively form the National Health Funding Pool will provide a nationally consistent financial structure through which all hospital and related funding will flow. 

Section 11.	Establishment of State Pool Accounts with Reserve Bank

Subsection (1) provides that the chief executive officer of the agency administered by the Minister who is a member of the Standing Council on Health (CEO of the Northern Territory Department of Health) will open and maintain a state account at the Reserve Bank of Australia to receive Commonwealth and state funds in line with states’ commitment to form a National Health Funding Pool under the COAG National Health Reform Agreement.

Subsection (2) clarifies that the state account opened at the Reserve Bank of Australia will be the State Pool Account established for the purposes of this Act. 

Section 12.	Payments into State Pool Account

Subsections (a) to (d) set out the sources of payments into the Territory’s State Pool Account (as will similarly occur in other states). Commonwealth Treasury will be obliged to pay requisite Commonwealth contributions into each state’s State Pool Account. Once a deposit has been made into a State Pool Account, it is considered the revenue of that state. Sources of revenue into the Territory’s State Pool Account (and other state’s State Pool Accounts) include:
·	Commonwealth health reform funding to the Territory, paid under the COAG National Health Reform Agreement;
·	the Northern Territory Government’s contribution to activity based hospital funding;
·	funding from other states to the Territory, for cross border and other purposes; and
·	interest payments from the Reserve Bank of Australia for interest earned on deposits in the Territory’s State Pool Account.

Section 13.	 Payments from State Pool Account

This section sets out the services to be funded by payments flowing through State Pool Accounts and the process for releasing funds from a State Pool Account.

Subsections (1a) to (1c) provide the services eligible to be funded from payments out of State Pool Accounts are: services provided by local hospital networks; health teaching, training and research provided by local hospital networks or other organisations; and any other matter outlined in the National Health Reform Agreement that is to be funded from the National Pool. 

Subsection (2) provides that payments out of the pool are to be made by the Administrator in strict accordance with the instructions of the responsible Minister of the state, which will include: the amount to be paid; the party or account to which it is to be made; and the timing of the payment. For the Northern Territory the responsible Minister will be the Minister for Health.

Subsection (3) provides that the Administrator must personally authorise each payment made from a State Pool Account.

Subsection (4) provides that overpayments made by a state into its State Pool Account are to be repaid to the state by the Administrator at the direction of the responsible state Minister. 

Subsection (5) clarifies that this Section does not inhibit states from making payments from State Pool Accounts to the Reserve Bank of Australia for fees and charges incurred on State Pool Accounts.   

Subsection (6) clarifies that payments for services and matters listed at subsection (1) can be made from sources other than through State Pool Accounts.

Subsection (7) allows that for the purposes of this section, funding of a local hospital network can include payments to third parties (including state health departments) for services (such as corporate services) rendered on behalf of the local hospital network. 

Subsection (8) provides that in the absence of an Administrator, or the inability of the Administrator to make a payment from a State Pool Account, an officer of the state may make a payment from the State Pool Account under the direction of the responsible minister. 

Section 14.	State Managed Funds

Subsections (14a) to (14c) set out that the role and responsibilities of relevant the Chief Executive Officer regarding the establishment of State Managed Funds are to: open and maintain a separate bank account or fund or designate an existing bank account or fund as the State Managed Fund for the state, for the purposes of health funding under the National Health Reform Agreement.

Section 15.	Distribution of Commonwealth funding

Subsection (1) provides that, in relation to the Commonwealth’s contribution to hospitals funding, the responsible state Minister’s (or CEO’s) directions to the Administrator on the distribution of payments from State Pool Accounts must be consistent with the Administrator’s directions to Commonwealth Treasury on the basis for Commonwealth payments to State Pool Accounts. That is, Commonwealth payments to State Pool Accounts which were made, for example, for block funding (or teaching, training, research or activity-based hospital funding) must be paid out of State Pool Accounts for block funding (or teaching, training, research or activity-based hospital funding).

Subsection (2) provides that, notwithstanding subsection (1), the Administrator must make payments from State Pool Accounts in accordance with the directions of the responsible state Minister (or CEO).

Part 4 – financial management and reporting

Part 4 enacts the financial management and reporting requirements and processes for the Administrator, the states and the Commonwealth as set out under the COAG National Health Reform Agreement. The financial management and reporting requirements are intended to ensure financial accountability and transparency of the Administrator, the states and the Commonwealth, and will allow public reporting on each state’s and the Commonwealth’s contributions to hospital and related funding, on a nationally consistent basis. 

Section 16.	Financial management and reporting 

Subsections (16a) to (16c) set out the financial management obligations of the Administrator, which include:
·	implement policies and procedures to ensure that payments from State Pool Accounts are in accordance with the directions of the responsible state Minister; 
·	keeping administrative records of payments into and from State Pool Accounts, and the basis for which payments were made; and
·	preparing financial statements required under Part 4 of the Act; and
·	arranging audits of financial statements in accordance with Part 4 of the Act. 

Section 17.	Monthly reports by the Administrator

Subsections (17.1a) to (17.1f) require monthly reporting by the Administrator and specify that the content of the Administrator’s monthly reports to the Commonwealth and each state will include:
·	the amounts and basis for payments by Commonwealth and states into State Pool Accounts and from State Pool Accounts to local hospital networks; 
·	the amount and basis for state’s payments into State Managed Funds;
·	the amount and basis for payments from State Managed Funds to local hospital networks or other organisations; 
·	the number of public hospital services funded for each local hospital network in accordance with the system of activity based funding; and
·	the number of other public hospital services and functions funded from a State Pool Account or State Managed Fund. 

Subsection (2) provides that monthly reports will be provided to the responsible Minister or body or officer specified to the Administrator by the responsible Minister.

Subsection (3) provides that the Administrator’s monthly reports will be made public.  

Section 18.	Annual report by Administrator

Subsection (1) provides that the Administrator must prepare an annual report on his or her performance of functions under this Act within four months of the end of each financial year, and provide the report to responsible Ministers.

Subsections (2a) to (2f) set out the required scope of the Administrator’s annual report, which must include consolidated annual information from the Administrator’s monthly reports, as outlined under subsections (17.1.a) to (17.1.f).

Subsections (3a) and (3b) require that the annual report be accompanied by an audited financial statement for each State Pool Account and a financial statement that combines the audited financial statements for each State Pool Account. 

Section 19.	Administrator to prepare financial statements for State Pool Accounts

Subsections (a) and (b) require that the Administrator must, after each financial year prepare financial statements for each State Pool Account that details financial transactions during that financial year and a combined statement that consists of the financial statements for each State Pool Account for the financial year. 

Section 20.	Audit of financial statements

Subsection (1) provides that a financial statement for the State Pool Account of a state is to be audited by the Auditor-General of that State in accordance in accordance with the relevant legislation of the state relating to financial audit by the Auditor-General. 

Subsection (2) clarifies that the relevant legislation of the Territory is the Audit Act

Section 21.	Performance Audits

Subsection (1) provides for state Auditors-General to conduct performance audits of the functions of the Administrator in relation to that jurisdiction to determine whether the Administrator is acting effectively, economically, efficiently and in compliance with all relevant laws. 

Subsection (2) provides that the Auditor-General of a jurisdiction must notify all other Auditors-General of his/her intention to conduct a performance audit prior to commencement.
Subsection (3) directs that Auditors-General that are conducting audits at the same time are to make arrangements to co-ordinate the conduct of audits in relation to any requirements imposed on the administrator.

Subsection (4) provides that performance audits by the Auditor-General of this jurisdiction must be conducted in accordance with the Audit Act.

Section 22.	States to provide Administrator with information about State Managed Funds

Sub-sections (1a) to (1c) direct that the responsible state Minister will provide information on its State Managed Fund to the Administrator to enable the preparation of financial statements and reports. This information must include: 
·	the amounts paid by the state into the State Managed Fund and the basis on which the payments were made;
·	the amounts paid by the state from the State Managed Fund to local hospital networks or other organisations or funds and the basis on which the payments were made;
·	public hospital services and functions that are funded from the State Managed Fund.  

Section 23.	Provision of information generally

Subsection (1) provides that the Administrator is required to provide to the responsible Minister any requested information relating to the Minister’s jurisdiction.

Subsection (2) clarifies that the information must be provided in the time requested by the responsible Minister.

Subsection (3) requires the Administrator to provide responsible state Ministers with a copy of advice made to the Treasurer of the Commonwealth regarding the calculation of amounts required to be paid by the Commonwealth into each State Pool Account, referred to at Section 10 (1a).
Subsection (4) provides that the Administrator may at any time provide any information that relates to a jurisdiction to the responsible Minister for that jurisdiction. 

Subsection (5) provides that information provided to one jurisdiction regarding another jurisdiction may only be publicly released in accordance with arrangements approved by the responsible Minister of the jurisdiction to which the information relates.

Part 5 – Miscellaneous matters

Section 24.	Exclusion of legislation of this jurisdiction 

Subsections (1a) to (1c) provide the Northern Territory legislation that does not apply to or in respect of the Administrator, or any function exercised or performed by the Administrator. This includes the Interpretation Act, the Ombudsman’s Act and the Information Act. The Bill also provides for other legislation to be disapplied by way of Regulation.

Subsections (2a) to (2c) provides that the Interpretation Act does not apply to or in respect of this Act except for provisions for making and tabling subordinate legislation, provisions relating to the NT Administrator, and prescribed Interpretation Act provisions. 

Subsections (3), (3a) and (3b) set out the definitions applying to the provisions of Subsections (2a) to (2c).

Section 25.	Application of Commonwealth Acts 

Subsections (1a) to (1e) set out Commonwealth legislation to be applied as Northern Territory legislation (as per all other states) in relation to the Administrator. This provides one set of legislation that will apply to the Administrator, and avoids the need to align the relevant legislation of each state. 

The Commonwealth legislation that will apply to the Administrator in the Northern Territory is: the Archives Act 1983 (Cth); the Australian Information Commissioner Act 2010 (Cth); the Freedom of Information Act 1982 (Cth); the Ombudsman Act 1976 (Cth); and the Privacy Act 1998 (Cth).

Subsection (2) provides that the above Acts apply, subject to modifications under the National Health Reform Act 2011 (Cth) with agreement of all members of the Council. 

Section 26.	Extraterritorial operation of Act 

Subsections (a) to (c) stipulate that the provisions of this Act have application both within and outside of the Northern Territory. 

Section 27.	Act binds Crown 

Section 27 stipulates that the Crown is bound by this Act. 

Section 28.	Delegation of functions of responsible Minister 

Subsections (1) and (2) provide the responsible Minister with the capacity to delegate authority provided to the responsible Minister under this Act excluding those at Part 2.

Section 29.	Declarations for the Act

Section 29 declares that for the Financial Management Act, the State Pool Account and State Managed Fund are Operating Accounts for the Agency (Health).

Section 30.	Transitional and validation provisions

Subsections (1) and (2) provide transitional arrangements for the enactment of this legislation until enacted by all jurisdictions. It acknowledges that the responsible state Ministers’ roles as the responsible Ministers prior to the enactment of the Legislation and thereafter. 

Section 31.	Regulations

Section 30 provides the Administrator with the capacity to make regulations under this Act. 

Part 7 – amendment of financial management act

Part 7 sets out the amendments to the Financial Management Act necessary in order for the relevant provisions of the Financial Management Act to apply to this Act. These include providing clarification of definitions of terms used in relation to National Health Reform related entities, bank accounts, and payment types. 

Section 32.	Act Amended

Section 32 states that Part 7 of this Act amends the Financial Management Act.

Section 33.	Amendment of Section 3. 

Section 33 outlines the amendments to Section 3 of Financial Management Act for application to this Act. 

Subsection (1) omits Section 3(1) the definition Operating Account under the Financial Management Act from application to this Act.

Subsection (2) amends Section 3(1) of the Financial Management Act to include terms relevant to this Act, which are: National Health Reform Agreement, NHFP Account, NHFP Act and Operating Account and provides definitions of each.

Subsection (3) provides that the text ‘see section 27(7)’ be inserted at the end of Section 3(1) of the Financial Management Act.

Section 34.	Amendment of section 6

Section 34 outlines the amendments to Section 6 of the Financial Management Act for application to this Act. 

Subsection (1) provides that the text ‘Note for subsection (1) - The definition of Operating Account in section 3(1) includes each of the NHFP accounts. However, a reference to an Operating Account established under this Act is a reference to an account established under subsection (1)’ be inserted after section 6(1) of the Financial Management Act

Subsection (2) outlines the provisions of Section 6(2) and (3) of the Financial Management Act to be amended, which will outlines the types of payments, and purposes for health reform related payments into and out of an Operating Account of the Department of Health.

Subsection (3) provides that the text ‘established under this Act’ be inserted after ‘Agency Operating Account’ in section 6(4) of the Financial Management Act.

Subsection (4) provides that the text ‘established under this Act’ be inserted after ‘Operating Account’ in section 6(5) of the Financial Management Act.

Section 35.	Amendment of section 13

Section 35 outlines the text ‘In complying with subsections (1) and (2), the Accountable Officer of the Agency responsible for  administering the NHFP Act may rely on records kept under Part 4 of that Act about the NHFP accounts’ be inserted after Section 13(4) of the Financial Management Act. 

Section 36.	Amendment of section 15

Section 36 outlines the text ‘(3) In complying with subsections (1) and (2), the records kept under Part 4 of the NHFP Act about the NHFP accounts may be relied on’ be inserted after Section 15(2) of the Financial Management Act.

Section 37.	Amendment of section 27

Section 37 outlines the text ‘(7) This section does not apply to a bank account opened and maintained as required under the NHFP Act’ be inserted after Section 27(6) of the Financial Management Act.