Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Hansard source

I thank Senator McLucas for her contribution. This package of bills will transfer the Private Health Insurance Administration Council's prudential regulation functions to the Australian Prudential Regulation Authority, APRA, from 1 July 2015. The consolidation of the council's functions within APRA as the current financial services regulator will reduce duplication, improve coordination and increase government efficiency.

The approach outlined in the legislation is intended to minimise the disruption to the private health insurance industry and ensures that sound prudential supervision will be maintained from 1 July 2015. It will not fundamentally change the regulatory framework faced by the industry. APRA will continue to provide the industry with the services that the council previously provided, and there will be no substantive changes to the supervisory approach to private health insurers. That means that private health insurers who are compliant with the current prudential framework will not need to take any steps in order to be compliant with the new prudential framework on 1 July.

This package of bills sets out the prudential regulation framework to enable APRA to supervise the private health insurance industry and with some exceptions will be the same as the existing prudential framework. The exceptions include aligning certain provisions to APRA's existing supervision regime, which will help APRA to remain efficient and cost effective. APRA will remake the existing prudential standards and rules to ensure they align with the bill, but the substance of those rules and standards will not materially change.

I also want to assure colleagues that the valuable knowledge held by the council on supervising the industry will not be lost; around 80 per cent of staff will transfer to APRA. It is also important to note that the current collection of industry data and the production of reports will be maintained by APRA, ensuring continuity. The transfer of the council's prudential regulation functions to APRA will over time result in savings to industry. These savings will be reflected in reduced annual supervisory levies payable by the private health insurance industry. I should reiterate that under these changes overall policy responsibility for private health insurance policy will remain with the Minister for Health under the Private Health Insurance Act 2007.

With this package of bills the government is fulfilling its commitment to smaller government. I commend the bills to the Senate.

Question agreed to.

Bills read a second time.