Josh Frydenberg (Kooyong, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

I would like to thank those members who have contributed to the debate on the Private Health Insurance (Prudential Supervision) Bill 2015 and related bills. This package of bills will transfer the Private Health Insurance Administration Council's prudential regulation functions to the Australian Prudential Regulation Authority, which I will refer to from here on as APRA, from 1 July 2015. With this package of bills the government is continuing to deliver on its commitment to a smaller, more rational government. This will over time result in lower costs for the private health insurance industry while ensuring that the industry continues to remain stable and well regulated.

The consolidation of the council's functions within APRA as the current financial services regulator will reduce duplication, improve coordination and increase government efficiency. This is consistent with the government's commitments to its deregulation agenda. The approach outlined in the legislation is intended to minimise the disruption to the private health insurance industry and ensure that sound prudential supervision will be maintained from 1 July 2015. It will not fundamentally change the regulatory framework faced by the industry.

The government has extensively consulted the private health insurance industry and the broader health community on the new bills. 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 when the new prudential framework begins 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 you that the valuable knowledge held by the council on supervising the industry will not be lost. Around 80 per cent of staff in the first instance 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 reiterate that, under these changes, overall policy responsibility for private health insurance policy, including premium setting, will remain with the Minister for Health under the Private Health Insurance Act. With this package of bills we are fulfilling our commitments to a smaller government. I commend these bills to the House.

Question agreed to.

Bill read a second time.