A remarkable grab for power that needs to be properly scrutinised

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Any proposal to legislate significant changes to a government program should be scrutinised by the parliament, as a matter of course, because that is its job and primary purpose.

Scrutiny of change is a fundamental tenet of our system of parliamentary democracy. It is protective of the community, programs and the people they are designed to serve.

It is bad enough when the parliament chooses not to properly scrutinise legislation. It is made worse by the fact governments are increasingly drafting legislation so that their subsequent policy decisions are permanently excluded from parliamentary review.

This makes parliamentary scrutiny of new enabling legislation more important than ever.

In fact, this issue was the focus of frustrated debate in the Senate last night, with the chamber having already resolved that all legislation that involves the delegation of ministerial power should be subject to sunset clauses with clear explanations required when it is not.

In the debate, ministers were challenged over their consistent presentation of legislation that fails to meet this requirement.

The pharmaceutical industry has learnt the importance of parliamentary scrutiny the hard way.

Excepting a small number of companies, who had their prescient concerns dismissed, the industry opposed a Senate inquiry into the enabling legislation for the new PBS pricing framework.

It was a truly terrible mistake that has delivered enduring negative consequences for so many, including patients, not least because most of the powers to implement the pricing framework have been explicitly excluded from parliamentary and merits review.

Is history about to repeat?

Parliamentary scrutiny can raise uncomfortable questions for certain stakeholder groups. Yet is seeking to avoid scrutiny a sustainable strategy, particularly if it only results in other bad outcomes?

It provides an important lesson to other stakeholder groups.

Scrutiny is an uncontroversial, non-threatening and entirely standard process that ensures the parliament is able to make informed decisions about the consequences of proposed changes. Inquiries provide a platform for the scrutiny of intentions, which means detail, and can result in amendments to make legislation better. This can include a proper role for the parliament and sunsets on new powers.

They are particularly important processes when a piece of legislation is proposing to give a government and its officials extensive new powers.

This is the case with three pieces of legislation currently before the parliament that propose a bureaucratic 'grab for power' over the making of policy in an important area of health. 

They have navigated the House of Representatives and were tabled in the Senate last night.

The three pieces of legislation impact the Prostheses List (PL) which is the federal government's framework for the private funding of medical devices.

The PL has been the focus of reform efforts for several years. There is widespread acceptance of the need for reform but almost no agreement amongst stakeholders on what form it should take.

This disagreement has been public and, at times, very fierce because it is a highly contested area of policy. The medical device sector has agreed to tranches of price reductions but private health insurers argue that more needs to be done.

The former and current governments agree that more needs to be done.

The legislation currently before the parliament might be seen as a response to the disagreement and contested reform process. The explanatory memorandum acknowledges the difficulty in securing wide stakeholder agreement on reform.

The government might be sick of all the consultation and lack of progress so it is just changing the rules to make it easier.

There is minimal detail in the legislation beyond a description of the new powers it will grant health ministers and more worryingly their officials.

According to the explanatory memorandum, which describes the legal intent of the legislation, "The practical effect of these amendments is to clarify that set benefits are only payable for medical devices or human tissue products that meet these definitions (in addition to other criteria which will be set out in the legislative instrument)."

The concern should focus on the bracketed section.

The enabling legislation will "better define the products that may be eligible for inclusion" on the PL but the government is giving itself the power to amend that definition based on any "other criteria" that it deems to be appropriate at any time in the future.


It will also have more power over pricing and the power to introduce and modify cost recovery arrangements for the PL, all of which will be excluded from any merits review.

The PL's current legal framework under the PHI Act does grant the minister powers to create and modify 'rules' for medical devices. 

An important point of difference is that the proposed new powers have the specifically stated intent of reducing the cost and scope of items covered by the PL.

In other words, the law is being changed to make it permanently much easier for the government and its officials to alter what devices qualify and do not qualify for the PL, and this is what needs to be scrutinised.

How these powers are exercised in 2023 is important but stakeholders should contemplate how they might evolve and be exercised in 2025 or 2030 and beyond.

Who can dismiss the possibility that these powers could be used by a future government to dramatically expand the devices included in the PL?

Calling for proper scrutiny is not criticising, opposing, or seeking to delay any change.

It is simply making the case for the parliament to do its job by taking the time to better understand changes that propose granting decision-makers, including officials, extensive and permanent new powers over an important health program.

This is not a theoretical concern because when it comes to government, everything happens for a reason. Does anyone really believe that the government is proposing to give itself these new powers and then not make extensive use of them?

The parliament might ask why the government and its officials even need these permanent new powers. Which of its desired reforms cannot be implemented under the existing legal framework?

The government or at least its officials clearly have something in mind because it will fundamentally change the decision-making framework for the private funding of medical devices. The community along with every stakeholder has a basic right to understand the impact of this change beyond references to lower prices.

This is not an argument against lower prices for medical devices. It is simply an argument for proper scrutiny of the changes designed to deliver that outcome.

Any real leverage over the implementation process ends with the 'first tranche'.

A new consultation paper on PL reform describes the legislation currently before the parliament as "first tranche Act amendments" that "insert new definitions, amend the name of the legislative instrument, and establish the authority for new fee for service cost recovery arrangements."

It is a case study in understatement.

It then says the "Second tranche" will "amend the legislative instruments to give effect to the measures in the first tranche bills. These amendments will include the name change, updated listing criteria for Parts A and C, cost recovery provisions and associated fees, and other changes as they are required to support the reforms."

A third tranche will involve legislation to "include data sharing and compliance provisions."

The critical point is that the second tranche, which is implementation, simply involves the administrative exercise of power gained by the legislative changes in the first tranche. The first tranche is the point at which proper parliamentary scrutiny is required because it will be significantly excluded from the second tranche.

If the parliament is not being encouraged to closely scrutinise legislation, why would it have any interest in taking the unusual step of disallowing any related legislative instruments?

Asking the parliament to scrutinise the real extent and implication of these changes is not controversial.

An inquiry might decide that the changes are positive and necessary, but the area of the health department responsible for policy over medicines, vaccines and medical technology, has a mixed recent record when it comes to the development and implementation of reforms in highly complex program areas.

The fact it has been unable to secure stakeholder agreement on PL reform, to the extent it is now seeking the power to simply impose change, should be a 'red flag' for the parliament.

Are legislative workarounds to address process failures really the solution?

The legislating of more powers in this area based on minimal detail is no way to reform any government program, let alone one in health, but it happens because officials understand that the point at which parliament considers the enabling legislation is precisely the moment at which stakeholders have maximum power. They withhold the detail and rely on the parliament to not bother.

This paradigm for making policy leads to bad outcomes.

Everyone has a stake in securing good policy outcomes.

Changes to the PL will not happen in isolation from other programs, including the PBS and National Immunisation Program, because what works in one program can be easily applied to another.

The new cost recovery arrangements applied to the PL can be extended to the PBS. The outcomes of the health technology assessment review, which is significantly focused on medicines, will obviously impact the PL and other medical technologies.

The Medical Technology Association of Australia, which represents medical device companies, says it opposes the legislation because of the lack of detail.

The Coalition says it does not oppose the legislation but has expressed concern over the absence of detail on how the new powers will be exercised.

Of course, the detail that will be administratively implemented in the second tranche is already worked out, and it is simply implausible to suggest otherwise. Officials overseeing this reform know exactly how they will exercise these powers, and the parliament should take the opportunity to properly scrutinise their plans.

The simple solution is a reference to a Senate Committee for inquiry.