EXPLANATORY STATEMENT
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 Rules 2011 (No.1)
Authority for the Rules
Section 9A of the Private Health Insurance (Council Administration Levy) Act 2003 (the Act) provides that the Minister may, by legislative instrument, make Private Health Insurance (Council Administration Levy) Rules providing for matters required or permitted by the Act, or necessary, or convenient to carry out or give effect to the Act.
The Act provides for the Rules to specify the rate of the Council administration levy, the Council administration levy days and the census day.
Pursuant to section 307-10 of the Private Health Insurance Act 2007 (PHI Act) the purpose of the Council administration levy is to meet the general administrative costs of the Private Health Insurance Administration Council (PHIAC). The Council administration levy is imposed on registered private health insurers conducting health insurance business. An increase in the Council administration levy will support PHIAC’s role under the PHI Act.
Purpose of the amendment
The purpose of this amendment is to increase the Council administration levy by 2.5% ($131,000) ongoing from the 2011-12 financial year. The increase will be implemented by an amendment to the numerator in the formula applied to calculate the amount of the Council administration levy.
The Council administration levy, imposed on registered private health insurers conducting health insurance business, funds the day to day costs associated with PHIAC undertaking its functions as required by legislation. The amendment will increase the total amount collected from the industry per annum to fund PHIAC’s operations ongoing from the 2011-12 financial year from $5.235 million to $5.366 million.
Rules 6 and 7 of the Private Health Insurance (Council Administration Levy) Rules 2007 contain a formula specifying the rate of the Council administration levy.
The amendment substitutes the formulas in sub-rules 6 (1) and 7 (1) of the Rules with new formulas. In effect, the change amends the numerator in the formulas setting the rate of the Council administration levy, changing them from 130,875,000 to 134,150,000.
The Private Health Insurance (Council Administration Levy) Amendment Rules 2011 (No.1)
(the amendment rules) commence on 1 July 2011. Details of the amendment rules are set out in the Attachment.
The amendment rules are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Consultation
Industry and consumers have not been consulted in relation to the proposed increase in the Council administration levy. This is a decision of Government having regard to the needs of PHIAC and the importance of appropriately resourcing prudential regulators.
Advice received from the Office of Best Practice Regulation (OBPR) has confirmed that the change to the Rules is considered minor and machinery in nature and has been exempt from the Regulation Impact Statement requirements - RIS ID No: 12406.
As the Council administration levy falls outside the remit of the Australian Government Cost Recovery policy, a Cost Recovery Impact Statement is also not required for the Council administration levy.
Authority: Section 9A of the Private Health
Insurance (Council Administration Levy) Act 2003
ATTACHMENT
DETAILS OF THE Private Health Insurance (Council Administration Levy) Amendment Rules 2011 (No. 1)
1. Name of Rules
Rule 1 provides that the Rule is the Private Health Insurance (Council Administration Levy) Amendment Rules 2011 (No. 1).
2. Commencement
Rule 2 provides that the Amendment Rules commence on 1 July 2011.
3. Definitions
Rule 3 provides that Schedule 1 to the Private Health Insurance (Council Administration Levy) Amendment Rules 2011 (No. 1) amends the Private Health Insurance (Council Administration Levy) Rules 2007.
4. Schedule 1 Amendment
Schedule 1 substitutes the formulas in subrules 6(1) and 7(1) of the Private Health Insurance (Council Administration Levy) Rules 2007 with new formulas as follows:
Subrule 6(1), formula
134,150,000
single coverage policies + (2 x joint coverage policies)
Subrule 7(1), formula
2 x 134,150,000
single coverage policies + (2 x joint coverage policies)