//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[1983] HCA 8
High Court of Australia
1983-07-01
Deane JJ, Wilson JJ
Original judgment source is linked above.
High Court of Australia Gibbs C.J. Mason, Murphy, Wilson and Deane JJ. New South Wales v Commonwealth [1983] HCA 8
ORDER Order that the questions of law raised by the Stated Case be answered as follows: Question 1: Whether
(i) the Hospital Benefits (Levy) Act 1982, or alternatively;
(ii) so much thereof as imposes a monthly levy on organizations carrying on hospital benefits business in Victoria and imposes an additional levy for non-payment,
(i) the Health Insurance Levies Act 1982, or alternatively;
(ii) so much thereof as imposes a monthly levy on organizations carrying on hospital benefits business in New South Wales and imposes an additional levy for non-payment,
are inconsistent with the National Health Act 1953 and to the extent of that inconsistency, invalid. Answer: No. Question 2. If the answers to 1(a) and (ii) or 1(b) (i) and (ii) are in the negative whether s. 73B(1) of the National Health Act 1953 authorized the Minister to impose the conditions referred to in pars. 51 and 52 hereof as a condition of registration or continuing registration under the National Health Act 1953. Answer: No. Question 3. If the answer to 2 is in the affirmative, whether s. 73B of the National Health Act 1953 in so far as it purports to authorize the imposition of the conditions referred to in pars. 51 and 52 hereof as a condition of registration or continuing registration under the National Health Act 1953 of registered hospital benefits organizations, is beyond the power of Parliament of the Commonwealth and is invalid. Answer: Unnecessary to answer. Question 4. If the answer to 3 is in the negative, whether
(i) the Hospital Benefits (Levy) Act 1982, or alternatively;
(ii) so much thereof as imposes a monthly levy on organizations carrying on hospital benefits business in Victoria and imposes an additional levy for non-payment;
(i) the Health Insurance Levies Act 1982, or alternatively;
(ii) so much thereof as imposes a monthly levy on organizations carrying on hospital benefits business in New South Wales and imposes an additional levy for non-payment,
are inconsistent with the conditions referred to in pars. 51 and 52 hereof respectively and, to the extent of that inconsistency, invalid. Answer: Unnecessary to answer. Question 5. Whether by reason of the provisions of the Health Insurance Commission Act 1973, and in particular s. 39(1) thereof, the conditions referred to in pars. 51 and 52 hereof are void and of no effect in so far as they purport to relate to the Health Insurance Commission. Answer: Yes. Further order that the taxed costs of and incidental to the hearing of the Stated Case be paid as follows:
by the defendants in action no. S.6 of 1983, S.8 of 1983 and M.6 of 1983 to the respective plaintiffs in those actions;
by the plaintiff in action no. S.7 of 1983 to the first and third defendants in that action.
The National Health Act 1953 Cth, as amended, ("the Act" or "the Commonwealth Act") provides, inter alia, for a contributory health insurance scheme in which the insurance business in relation to hospital care is carried on by hospital benefits organizations formed pursuant to State or Territory law and registered for the purposes of the scheme under the Act. The Act controls in some detail the basic hospital care in respect of which a person may insure by contributing to a fund conducted by an organization and the management of the fund itself is also subjected to detailed regulation. By legislation enacted during 1982 the States of Victoria and New South Wales each provided for the introduction of a scheme whereby the cost of out-patient services supplied at a hospital to persons who were contributors to a hospital benefits fund managed by organizations carrying on a hospital benefits insurance business within the State would be borne by resources provided by the respective States and consequently with no fee being payable by the recipient of the service and no necessity for any refund to be provided by the organization from the fund. The New South Wales proposal included the provision of free ambulance services to contributors. Such services are not covered in the Commonwealth scheme. Each of the State Acts imposed a monthly levy calculated by reference to a prescribed formula upon any organization which carries on the business within the State of providing hospital benefits to contributors. In December 1982 the Minister administering the Commonwealth Act imposed upon each of the registered organizations operating in Victoria and New South Wales a condition that the organization not pay the levy. Both Victoria and New South Wales then instituted proceedings in this Court seeking declarations as to the invalidity of the condition while the Commonwealth in defending those proceedings has averred that each of the State Acts is inconsistent with the Commonwealth Act and therefore invalid by reason of s. 109 of the Constitution. Proceedings have also been instituted on behalf of two groups of registered organizations in New South Wales, each contending for a view as to the validity of the levy which is opposed to that contended for by the other. It is in this flurry of litigious activity that the proceedings were ordered to be consolidated and a case was stated for the consideration of the Full Court pursuant to s. 18 of the Judiciary Act 1903 Cth, as amended.
It is convenient to begin with a survey of the Commonwealth Act.
An organization is defined by s. 4(1) of the act to mean -
a society, body or group of persons, whether corporate or unincorporate, which conducts a medical benefits fund or a hospital benefits fund. Part VI of the Act (ss. 66 to 82 inclusive) deals with medical and hospital benefits organizations. The case is concerned only with hospital benefit organizations and in that regard the material provisions of the Part are as follows:
68.(1) An organization may apply for registration as a registered hospital benefits organization in respect of a specified State
(2) An organization is not eligible to be registered as a registered hospital benefits organization in respect of a State unless, under the rules of the organization -
(a) a hospital benefits fund is to be conducted by the organization in respect of that State;
(b) there is to be credited to that fund the whole of the income of the organization arising out of the carrying on by the organization in that State of business as a registered hospital benefits organization ; and
(c) no amount is to be debited to that fund other than -
(i) payments by the organization of fund benefits, payable under the rules of the organization, in respect of contributors to the fund or dependants of such contributors;
(ii) costs incurred by the organization wholly and exclusively in the carrying on in that State of business as a registered hospital benefits organization ;
(iii) costs incurred by the organization wholly and exclusively in providing or arranging to provide, in that State professional services, hospital treatment, out-patient services or other allied health services for contributors, or contributors included in a class of contributors, to that fund or dependants of such contributors ;
(iv) such proportion of any costs incurred by the organization in the carrying on of business referred to in sub-paragraph (ii) or in providing or arranging to provide professional services, hospital treatment, out-patient services or other allied health services referred to in sub-paragraph (iii), not being costs incurred wholly and exclusively in relation to such business or such activities, as is approved by the Permanent Head as being an equitable proportion;
Section 69 requires applicant organizations to furnish, in accordance with the regulations, particulars relating to the affairs, finances, rules and conduct of the organization. By virtue of s. 73, the Minister may grant the application subject to such terms and conditions (if any) as he thinks fit, or he may refuse the application. In discharging that responsibility, he will have regard to criteria contained in ss. 72A, 73(2A), 73(2B). Section 73B(1) provides that the Minister may, at any time, -
(a) revoke or vary a condition imposed by the Minister as a condition to which the registration of an organization is subject; or
(b) impose a condition or a further condition as a condition to which the registration of an organization is subject.
Furthermore, the registration of an organization is deemed to be subject to the conditions set out in the Schedule to the Act (s. 73BA). These latter conditions regulate in some detail the manner in which the fund is to be conducted. Condition (b) of the Schedule provides that an organization will permit any contributor to a hospital benefits fund conducted by it to contribute for benefits in respect of himself and his dependants (if any) in accordance with a basic table. By virtue of s. 4(1) of the Act, "basic table" means a table that incorporates a range of benefits of specified kinds and no other benefits. The benefits specified include benefits in respect of out-patient services, but not in respect of ambulance services. Condition (d) of the Schedule to the Act provides that the amount of fund benefit payable to a contributor by the organization in respect of hospital treatment will not exceed the fees or charges incurred in respect of that hospital treatment. By condition (g) of the Schedule, it is provided that where the organization conducts a hospital benefits fund, the organization will not permit a person to contribute to the fund for benefits in accordance with a supplementary hospital table unless the person also contributes to that fund for benefits in accordance with a basic table.
Section 73BB requires a registered hospital benefits organization to establish and maintain a Reinsurance Account in the fund to which may be debited payments of hospital benefits where within a period of twelve months a contributor or his dependants receive treatment beyond a prescribed level; a corresponding proportion of contributions received is then credited to the fund. Section 73BC makes provision for registered organizations that conduct hospital benefits funds and the Commonwealth to share the burden of meeting any deficits in Reinsurance Accounts in any of the funds. The section provides that the Commonwealth shall pay into a Hospital Benefits Reinsurance Trust Fund, out of such moneys as are appropriated by the Parliament from time to time for the purpose, such amounts as the Minister determines from time to time. This aspect of the Act may not be of any relevance to the case stated save to identify it as the only way in which, under the scheme of the Act, Commonwealth moneys may become directly involved in the operation of the hospital benefits funds. On the other hand, there are substantial tax advantages to be derived by both the organization and its contributors from the fact of registration pursuant to the Act: Income Tax Assessment Act 1936 Cth, as amended, ss. 23(eb), 159XA. These advantages operate as a strong incentive for an organization to seek registration.
Quite apart from the imposition of conditions to which the registration of an organization is subject, the Act confers extensive powers on the Minister to give directions to a registered organization in relation to the rates of contributions, the scope and level of benefits and other matters touching the operation of the fund (ss. 73BE, 73BF, 73BFA, 73BFB). He may also give directions to prevent a registered organization other than a friendly society from carrying on a business other than its business as a registered organization (s. 73BEA(1) and (2)). Finally, in this regard, the Minister is empowered to give a registered organization directions with respect to the management of its business as a registered organization (s. 73BEA(3) and (4)).
Section 74A provides that a registered organization shall not, so long as it continues to be a registered organization, be wound up under a law of the Commonwealth or of a State but the Minister shall cancel that registration if the hospital benefits fund conducted by it has been wound up in accordance with Pt VIA of the Act (s. 79(3)).
The Health Insurance Commission Act 1973 Cth, as amended, establishes the Health Insurance Commission. It is empowered, inter alia, to conduct a hospital benefits fund (s. 8A(1)). It may be registered under the National Health Act as a registered hospital benefits organization and thereupon the provisions of that Act and the regulations apply to the Commission in the same manner as they apply to any other registered hospital benefits organization. The Commission conducts a hospital benefits fund under the name of Medibank and is registered in accordance with the Act. Section 39(1) provides that the Commission "shall pay all rates, taxes and charges under any law of the Commonwealth, a State or a Territory".
There are twenty-eight registered hospital benefits organizations operating in Victoria and twenty-five such organizations operating in New South Wales. In each State, there are some who carry on, and derive income from, business activities other than the business of a registered organization under the Act. The Health Insurance Commission is among the organizations operating in each State.
On 1 August 1982 the Hospital Benefits (Levy) Act 1982 Vict. ("the Victorian Act") came into operation in Victoria. Section 3 provides that any organization which carries on the business in Victoria of providing hospital benefits to contributors shall be liable to pay to the Comptroller of Stamps each month a monthly levy. The monthly levy is defined in terms of a formula AC/B where
A is the total amount of contributions received from contributors to the organization in the month which is three months immediately prior to the month in which the monthly levy is payable for the purpose of securing entitlement to basic hospital benefits;
B is the amount of weekly contribution as at the fifteenth day of the month to which A applies required to be paid to the organization by a single person for the purpose of securing entitlement to basic hospital benefits; and
Section 2(1) of the Victorian Act contains other material definitions as follows: "Basic hospital benefits" means those benefits payable to a contributor by an organization in accordance with the basic hospital benefits table of the organization.
"Organization" means a society, body or group of persons whether corporate or unincorporate which conducts a hospital benefits business.
"Prescribed rate" means such amount as may be prescribed in the regulations from time to time being an amount not greater than 40 cents.
Section 6(1) provides that the monthly levy shall be deemed, when it becomes due and payable, to be a debt due to Her Majesty and payable to the Comptroller of Stamps. An additional levy is payable if a monthly levy is not paid by an organization on or before the due date. All moneys recovered under the Victorian Act shall be paid by the Comptroller of Stamps into the Consolidated Fund and on the last day of the month a sum equivalent to that amount will be transferred from the Consolidated Fund to the Hospitals and Charities Fund (s. 9). Finally, a person who receives out-patient services at a hospital and who is a contributor to an organization to which the Victorian Act applies and who makes a declaration in the prescribed form to that effect is not obliged to pay any fee chargeable for that service.
In New South Wales an Act to substantially the same effect as the Victorian Act (Health Insurance Levies Act 1982 N.S.W. ("the New South Wales Act") came into operation on 1 January 1983. In that State, the levy is payable to a Commissioner for Health Insurance Levies and thence into the Consolidated Fund. The prescribed rate employed in the formula for calculating the levy is increased from forty cents in January 1983 to seventy cents in February 1983 subject to any later adjustment in accordance with Schedule 2 to the Act. In addition to being freed from payment of a fee in respect of an out-patient service, no fee is payable by a contributor who makes the necessary declaration in respect of an ambulance service provided pursuant to the Ambulance Services Act 1976 N.S.W..
The facts contained in the stated case reveal that very substantial sums of money are involved in the levy. In Victoria the receipts between August and December 1982 have fluctuated between $3 million and $3.6 million each month. In New South Wales it is estimated that the monthly levy payable for the month of January 1983 will approximate $4.5 million and for subsequent months $8 million.
It is also agreed between the parties to those proceedings which originated in the Sydney office of the Registry that at the date of the enactment of the New South Wales Act the twenty-five hospital benefits organizations registered pursuant to the Act were the only organizations in New South Wales conducting funds out of which payments of benefits were from time to time made to contributors in accordance with a basic hospital benefits table.
On or about 30 and 31 December 1982 the Minister administering the Commonwealth Act purported pursuant to s. 73B(1) of the Act to impose upon each of the registered hospital benefits organizations operating in Victoria a condition to which its registration was subject. The condition was in the following terms:
That the organization will not pay the monthly levy imposed and required to be paid to the Comptroller of Stamps under the Victorian Hospital Benefits (Levy) Act 1982 or under that Act as it may be amended from time to time. The condition was expressed to come into force and effect on 1 March 1983. At the same time, in purported pursuance of the same power, the Minister imposed upon each of the registered hospital benefits organizations operating in New South Wales a condition to which its registration was subject in the following terms: That the organization will not pay the levy imposed and required to be paid to the Commissioner for Health Insurance Levies under the New South Wales Health Insurance Levies Act, 1982 or under that Act as it may be amended from time to time. This condition shall come into force and effect on 1 January 1983.
The questions which the stated case requires the Court to answer are as follows:
(a)(i) the Hospital Benefits (Levy) Act 1982, or alternatively; (ii) so much thereof as imposes a monthly levy on organizations carrying on hospital benefits business in Victoria and imposes an additional levy for non-payment; (b)(i) the Health Insurance Levies Act 1982, or alternatively; (ii) so much thereof as imposes a monthly levy on organizations carrying on hospital benefits business in New South Wales and imposes an additional levy for non-payment, are inconsistent with the National Health Act, 1953 and to the extent of that inconsistency, invalid.
If the answer to 2 is in the affirmative, whether s. 73B of the National Health Act 1953 in so far as it purports to authorize the imposition of the conditions referred to in pars. 51 and 52 hereof as a condition of registration or continuing registration under the National Health Act 1953 of registered hospital benefits organizations, is beyond the power of the Parliament of the Commonwealth and is invalid.
If the answer to 3 is in the negative, whether (a)(i) the Hospital Benefits (Levy) Act 1982, or alternatively; (ii) so much thereof as imposes a monthly hospital benefits business in Victoria and imposes an additional levy for non-payment; (b)(i) the Health Insurance Levies Act 1982, or alternatively; (ii) so much thereof as imposes a monthly levy on organizations carrying on hospital benefits business in New South Wales and imposes an additional levy for nonpayment, are inconsistent with the conditions referred to in pars. 51 and 52 hereof respectively and, to the extent of that inconsistency, invalid.
Whether by reason of the provisions of the Health Insurance Commission Act 1973, and in particular s. 39(1) thereof, the conditions referred to in pars. 51 and 52 hereof are void and of no effect in so far as they purport to relate to the Health Insurance Commission.
The conditions referred to in pars. 51 and 52 are the conditions which the Minister purported to impose on or about 30 and 31 December 1982 to which reference has already been made.
We come now to a consideration of the issues raised by the case and turn first to the question of the validity of the State Acts, leaving aside for the time being the new condition sought to be imposed on each of the registered organizations by the Minister. It is argued that the State Acts are invalid by reason of the application of s. 109 of the Constitution. The argument takes a number of forms. In the first place, it is said that the State legislation intrudes into a field which is exhaustively and exclusively covered by the National Health Act. In the second place, it is said that the State Acts are in direct conflict with the Commonwealth Act. Further, it is argued that the discriminatory character of the tax is such as render the legislation inconsistent with the law of the Commonwealth.
The first of these submissions requires that the field said to be exhaustively covered by the Commonwealth law be clearly identified and that the State laws be shown to enter upon that field. Mr. Hughes described the field in somewhat general terms as the operation of Commonwealth law in its relation to registered hospital benefits organizations. If that is the field, then it is quite clear from the Act that there is no intention on the part of the Parliament to cover it. The Act does not create the organizations. It does not prescribe exhaustively the rules that will govern the conduct of the fund. The most that can be said is that it authorizes the Minister to receive applications for registration from an organization which conducts a hospital benefits fund and after receiving a report from a registration committee to grant or refuse the application. The criteria to which the committee and the Minister are to have regard in considering the application provide some indication of the diversity of circumstances that may attend the conduct of such a fund. The conditions and directions of which the Act speaks and to which the registration is subject provide as it were a skeleton framework which must be observed by a registered organization. They do not deny the freedom of the organization to adopt, subject to such conditions and directions, rules of its own choosing and thereby to add by its own prescription the flesh to the skeleton. The Act proceeds upon the assumption that within the limits which it imposes an organization will function under and in accordance with the general law.
The learned Solicitor-General of the Commonwealth was more specific. He submitted that the Commonwealth had legislated so as to define the relationship between the contributor and the benefit and to ensure that the contributor is protected, in the obtaining of his benefit, by preserving the financial stability of the fund. By way of illustration he referred to the registration committee's scrutiny of the rules of an organization applying for registration (s. 72A) and to the provisions of s. 78 of the Act outlining the procedure to be followed if a registered organization changes its constitution or rules. With respect, the Solicitor-General's point is well made. The Act provides, in the provisions to which he referred, clear evidence of a legislative concern that the Minister supervise closely the rules of a registered organization and its conduct of the fund in order to protect the contributor and to safeguard the financial stability of the fund. But the subject with which the Act reveals an intention to deal exclusively or exhaustively is the relationship between the organization and the contributor, particularly the nature and amount of the benefits to be provided to contributors and the purposes for which moneys in the fund may be applied. Not only does the Act not evince any intention to exclude all operation of State laws on registered organizations but it expressly recognizes the continued operation of such laws and their capacity to make an impact on the fund. Section 68(2)(c)(ii) authorizes a registered organization to debit to the fund costs incurred by it wholly and exclusively in carrying on business in the State as a registered hospital benefits organization. It is conceded that such costs would include outgoings required by State law such as land tax, rates, payroll tax and so on. In our opinion the concession had to be made. Confirmation of such a view is to be found in s. 39 of the Health Insurance Commission Act. The policy of that Act is clearly to assimilate the operations of the Commission in the exercise of its function as a hospital benefits organization to the position in all respects of any other registered organization. As we have already noted, that section affirms the liability of the Commission to pay all rates, taxes and charges under any law of a State.
But then it is said that the levy in question here is not a cost incurred wholly and exclusively in carrying on business as a registered organization, for the reason that the payment of the levy is unrelated to any purpose of the business. With respect, we are unable to accept the submission. We cannot imagine a more direct cost of the business. It is levied on an organization conducting a hospital benefits fund and is computed by reference broadly to the number of contributors to the fund. The criterion of liability is the conduct of the business which has attracted registration under the Act. It is true that the levy is attracted irrespective of whether or not the organization is registered under the Act but the levy is nonetheless a cost of the business, because it is the conduct of the business which attracts the liability to pay it. The Solicitor-General of the Commonwealth argued that the imposition of the tax is a clear case of inconsistency because its necessary effect is to intrude into the financial situation which the Act regulates a charge in favour of the Crown in right of a State. With respect, if that is so, then why does not every impost incurred under the authority of a State law merit the same condemnation? The Commonwealth Act provides no basis for distinguishing between State taxes by reference to the size of the impost.
It is not to the point that the purpose of the Victorian levy is to enable out-patient hospital services in Victoria to be provided free to contributors to the hospital benefits funds conducted by those organizations which are required to pay the levy. A similar objective in relation to New South Wales is reflected in the New South Wales Act although there the free service to contributors is to be extended to ambulance services for which there is no provision in the national health scheme. There may in fact be some inequity in the operation of the State legislation, as Mr. Ryan appearing for the intervener Hospitals Benefits Association pointed out. There is no necessary relationship between the amount of the levy which a particular organization may be required to pay and the value of the services which in the relevant period the contributors to the fund conducted by that organization may receive without charge. But to focus on a possible consequence of the operation of the Act in that way is to be diverted from the real issue, which is the competence of the State legislature to impose the levy. The Court cannot be concerned with the fairness or otherwise of the policy which is sought to be implemented. The question of validity can only be resolved by reference to the character of the levy itself and the question whether or not its imposition is consistent in the constitutional sense with the Commonwealth Act.
On any view the levy in each case is a tax. It is levied on organizations which carry on within the State concerned the business of providing hospital benefits to contributors. The amount of the tax is calculated by a formula in which the number of contributors is a major factor. When received the proceeds of the tax are paid into the consolidated Fund and form part of the ordinary revenues of the State. What happens thereafter so far as the financial resources derived from the tax are concerned is immaterial to the character of the tax. It is irrelevant whether or not an organization is registered under the Commonwealth Act. It is not impossible for an organization to carry on the business of providing hospital benefits to contributors without being registered with the Commonwealth although as we have mentioned there are significant financial advantages attaching to registration. In our opinion, the central fact, which is of critical importance, is that the levy is simply a charge on the business and therefore a cost which is directly and wholly referable to carrying on that business. As such it is a cost for which the Commonwealth Act makes express provision in s. 68(2)(c)(ii).
From what we have said it follows that the State Acts do not deal with a subject matter which the Commonwealth Act intends to regulate completely and exclusively. If the State Acts did deal with the question of the benefits registered organizations should or might provide to their contributors, they would enter upon a field from which the Commonwealth Act displaces State law. But they do not either require or authorize an organization to pay any benefit, or affect the basis on which benefits are payable. If a contributor is required to pay charges for out-patient hospital treatment, he will still be entitled to benefits in exactly the same amount as if the State Acts had not been passed. It is true that the State Acts may have the effect that a contributor will not be charged for out-patient treatment, and thus he will not be entitled to any benefit in respect of that treatment. However, the Commonwealth Act does not deal with the question whether charges for such treatment should be made by the hospital which provided it, but only with the question what benefits should be paid to a contributor who is required to pay charges incurred in respect of the treatment. Similarly, the New South Wales Act does not require that an organization should pay out of its fund a benefit for ambulance services. The effect of that Act may be that a contributor becomes entitled to such services free of charge, but that is not a question with which the Commonwealth Act is concerned. Moreover, the State Acts do not deal with the question what amounts are to be debited to a fund. The State Acts impose a tax, and since, for the reasons given, the amount of the tax is a cost within s. 68(2)(c)(ii), it may be debited to the fund. The authority for the debit is however the Commonwealth Act. For these reasons we reject the contentions that the State Acts are legislation on a subject which is dealt with exhaustively and exclusively by the Commonwealth Act, and that there is a direct inconsistency between the provisions of the State Acts on the one hand and the Commonwealth Act on the other. From a practical point of view the State Acts may affect the finances of registered organizations, but so would any other cost incurred in carrying on their business.
It is argued that the levy in truth is directed to registered organizations and that it therefore assumes a discriminatory character which is of itself sufficient to render it invalid. We think that what we have already said answers the contention. But let it be assumed that the levy is discriminatory in that it selects registered organizations only to bear the burden. It does not follow that such a law would necessarily be inconsistent within the meaning of s. 109. In support of the argument reliance is placed on a passage in the judgment of Dixon J. in West v. Commissioner of Taxation (N.S.W.) [1] where his Honour said:
It will be seen that the grounds I have given for deciding the present case concede that if a State tax discriminated against pensions, salaries, or other payments made by the Commonwealth, it could not be supported. If the right to the payment were conferred by a law of the Commonwealth, prima facie the scope and intention of that law would be enough to make inoperative any attempt by the States to impose upon the payee a special burden because of his occupying that character. The State tax would be inconsistent with the law of the Commonwealth in making enjoyment of the right or benefit conferred by the latter the special occasion of a burden. The invalidity of the State law would then be a result of s. 109 of the Constitution. It will be noted that Dixon J. was speaking in the context of a discriminatory State tax on pensions, salaries or other payments made by the Commonwealth. He said that "prima facie the scope and intention" of the Commonwealth law would be enough to invalidate the imposition of a special burden on that payment by the State. No one could disagree with such a statement. It does not follow, however, that a consideration of the scope and intention of the Commonwealth law in question here leads to a similar conclusion. As we have already observed, the Commonwealth Act does not create the organizations. They are not statutory emanations of the Commonwealth such as were discussed by this Court in Australian Coastal Shipping Commission v. O'Reilly [2] . In the case of incorporated organizations, they owe their existence and their general powers to State law. The Commonwealth clearly marks out the extent of its intrusion in that regard: see, for example, s. 74A, which prevents a registered organization, so long as it continues to be a registered organization, from being wound up. It is clear, of course, that upon registration an organization must operate the fund consistently with the prescriptions carrying the authority of the Commonwealth law and no State law could countermand that authority either directly or indirectly. But we are unable to discern any intention in the Commonwealth Act in its present form to protect registered organizations from the imposition of State charges on the conduct of their business, even if the occasion for the charge is the conduct of a hospital benefits business. We emphasize that it is not a question at this stage of the legislative power of the Commonwealth. It may be that if the State Acts represent a modification of the operation of the national health scheme as embodied in the Commonwealth Act which is unacceptable to the Commonwealth Government then the matter will require the attention of the Parliament. Construing the Commonwealth Act as it now stands, we are bound to reject the argument that the State Acts are invalid by reason of inconsistency within the meaning of s. 109. 1. (1937) 56 C.L.R. 657, at p. 681. 2. (1962) 107 C.L.R. 46.
We turn now to the question whether s. 73B(1) of the Commonwealth Act authorized the Minister to impose an obligation not to pay the levy on each of the registered organizations in Victoria and New South Wales as a condition to which its registration would be subject. The question must be considered on the basis that the State laws imposing the levy are valid laws not inconsistent with the Commonwealth Act, notwithstanding that the Minister may have resorted to what was seen as no more than an administrative expedient in the face of what he believed to be an invalid State demand.
Section 73B(1)(b) empowers the Minister at any time to impose a condition or a further condition as a condition to which the registration of an organization is subject. It is a wide power, not controlled by any express criteria in the Act. InSwan Hill Corporation v. Bradbury [3] , Dixon J., when speaking of an administrative discretion to relax a prohibition imposed by a statute, propounded the test of discretionary error in these circumstances, which is now well established. He said:
When a provision of this kind is made, it is incumbent upon the public authority in whom the discretion is vested not only to enter upon the consideration of applications for its exercise but to decide them bona fide and not with a view of achieving ends or objects outside the purpose for which the discretion is conferred. But courts of law have no source whence they may ascertain what is the purpose of the discretion except the terms and subject matter of the statutory instrument. They must, therefore, concede to the authority a discretion unlimited by anything but the scope and object of the instrument conferring it. Cf., also, Water Conservation and Irrigation Commission (N.S.W.) v. Browning [4] . The answer to the question must be found in a consideration of the statutory purpose for which the discretion was conferred. It is clear from what we have already said that the Act is concerned to regulate the relationship between the contributor and the registered organization with a view no doubt to protecting both the contributor and the fund. It does not define that relationship exhaustively but ensures that certain essential requirements are met. In our opinion, this provides the central object of the Act, by reference to which the scope of the discretion conferred by s. 73B(1)(b) is to be determined. We would not attempt to define the scope of the discretion exhaustively. As Dixon J. remarked following the passage which we have cited from Swan Hill Corporation v. Bradbury [5] : It may be possible to say that this or that consideration is extraneous to the power, but it must always be impracticable in such cases to make more than the most general positive statement of the permissible limits within which the discretion is exercisable and is beyond legal control. In the present case one must ask whether the imposition of a condition regulating the relationship of the organization to the State is within the statutory purpose for which the discretion was conferred. In our opinion, the answer is clearly No. Apart from s. 74A, which expressly affects the application in some circumstances of the winding-up laws of the States, there is no indication of such a purpose. On the contrary, there is positive recognition in s. 68(2)(c)(ii) that the registered organizations will continue to conduct at least a hospital benefits business within a State and suffer some State governmental regulation in that regard. Save for s. 74A, no protection from such regulation is provided by the Act. There is nothing in the Act to support the view that the general words of s. 73B(1)(b) authorize the Minister to impose a condition which would require an organization to contravene State law. In relation to the Health Insurance Commission, there is the express recognition, without limitation, in s. 39 of the Health Insurance Commission Act that the governmental regulation to which we have referred will include taxes. That section requires us to answer question 5 in the affirmative. 1. (1937) 56 C.L.R. 746, at pp. 757-758. 2. (1947) 74 C.L.R. 492, at pp. 504-505. 3. (1937) 56 C.L.R., at p. 758.
The matter may be approached from another direction. As we have said, the fact which in our opinion is central to a resolution of the issues is that in each case the levy is a cost imposed on the conduct of a hospital benefits business within the State. The Commonwealth Act in its present form expressly authorizes such a cost, when incurred by a registered organization, to be debited to the fund. Yet the Minister has purported to exercise a discretion whereby the organizations are threatened with the cancellation of their registration if they pay the levy. In effect the Minister has purported to override s. 68(2)(c)(ii) of the Act so to exclude a particular cost of the business from the operation of that provision. It is quite impossible to read such a power into the provisions of s. 73B(1) of the Act.
It is for these reasons that we have come to the conclusion that the condition which the Minister purported to impose on each of the registered organizations in Victoria and New South Wales was not within the authority conferred on him by s. 73B(1) of the Commonwealth Act. It follows from this conclusion that the condition was also beyond power in so far as it was directed to the Health Insurance Commission.
We would answer the questions set out in the stated case as follows: Question No. 1. No. 2. No. 3. Unnecessary to answer. 4. Unnecessary to answer. 5. Yes.
I have had the advantage of reading the judgment prepared by Gibbs C.J. and Murphy and Wilson JJ. It sets out the facts, the questions asked in the case stated and the relevant statutory provisions.
The first step in resolving the issue of inconsistency is to ascertain the effect of the provisions contained in Pts VI and VIA of the National Health Act 1953 Cth ("the Act") relating to hospital benefit organizations. It is necessary to look not only to the operation of the relevant sections but also to the general scope and objects of the statutory regime in order to decide whether the two State Acts are inconsistent with them.
Parts VI and VIA regulate in a comprehensive fashion, hospital benefits organizations and the funds which they conduct. This regulation takes the form of rules which are expressed to apply to hospital benefits organizations and of powers vested in the Minister - power to grant or refuse applications for registration, whether subject to terms and conditions or not, power to impose or vary conditions of registration and power to give directions to registered organizations. The statutory scheme serves several purposes. It is designed to protect contributors by ensuring as far as possible that registered organizations and the funds which they operate are financially sound. In this respect many of the provisions in Pts VI and VIA have the same object as provisions in the Life Insurance Act 1945 Cth regulating insurance companies and their funds. However, the statutory scheme goes far beyond the mere protection of contributors. The scheme seeks to ensure that by the regulation which it imposes hospital benefits organizations will provide to members of the public who elect to become contributors an opportunity to insure against liability for basic hospital accommodation and treatment.
In large measure it is to the provisions which relate to this aspect of the statutory scheme that we must look in resolving the issue of inconsistency. Although hospital benefits organizations need not register under the Act, the advantages which flow from registration are such that the conduct of the business is confined to organizations which are registered. They are not prohibited from carrying on any other business. But the Minister can make it a condition of an organization's registration that it carries on no other business and he can give a direction prohibiting an organization from carrying on any other business (s. 73BEA).
A registered hospital benefits organization (which I shall call a "registered organization") is one whose rules require it to conduct a hospital benefits fund (s. 4(1)). Two of the fundamental conditions of eligibility for registration of an organization are (1) that it permits any contributor to its fund to contribute for benefits in respect of himself and his dependants (if any) in accordance with a basic table (s. 73BA and condition (b) in the Schedule to the Act); and (2) that it will not permit a person to contribute for benefits under a supplementary table unless that person is a contributor in respect of a basic table (condition (g) in the Schedule). A basic table is one which incorporates a range of benefits of the kind described in the statutory definition of basic table in s. 4(1) and no others. Generally speaking, these benefits correspond to the amount of standard hospital fees for in-patients, excluding nursing home type patients. Section 4(1) sets out other benefits, including benefits in respect of out-patient services, but only out-patient services provided to persons by a hospital in a State or Territory in which recognized hospitals make charges for the provision of outpatient services. The basic table does not specifically include benefits in respect of ambulance services.
The Act contains various provisions which are designed to ensure that membership of the fund is open for contribution to basic table benefits by the public and that there will be no discrimination against persons by reason of their poor health. Thus the rules of the organization must not entitle it to refuse to enrol contributors by reason of their health (s. 73(2A)) and the rules must not be designed to achieve a membership having a higher level of health than that of the community generally (s. 73(2B)). The Minister has power to direct a registered organization to admit a person as a contributor in respect of a basic table where he is satisfied that there are reasonable grounds for believing that the refusal was due to the past or present health of the person or one or more of his dependants (s. 73BF). He has a similar power where he is satisfied that a registered organization has refused to accept payment of the contribution of a person who is a patient in an institution (s. 73BFA) and where he is satisfied that the cancellation of a person's membership as a contributor constitutes an improper discrimination against that person (s. 73BFB).
Central to the regulation of a registered organization's fund is s. 68(2) which provides that an organization is not eligible for registration unless its rules comply with the requirements of the subsection. The provision which the rules are required to make may be described in this way. There is to be credited to the fund the whole of the income derived from carrying on its business as a hospital benefits organization (s. 68(2)(b)). No amount is to be debited to the fund other than the amounts set out in s. 68(2)(c). Broadly speaking, these amounts are the payment of benefits to contributors, costs incurred in carrying on the business of a registered hospital benefits organization, costs incurred in providing certain services for contributors and amounts paid to the Hospital Benefits Reinsurance Trust Fund. Whether the cost of providing ambulance services is a permitted debit to the fund hinges on the question whether such services are "out-patient services or other allied health services for contributors" within the meaning of s. 68(2)(c)(iii).
The Minister's power to give directions under s. 73BE to a registered organization extends to a variety of matters - (a) the rates of contributions to be paid; (b) the scope and level of benefits that are to be available to contributors; (c) the provision of a service to be provided to contributors or their dependants; (d) the transfer of moneys between funds; (e) any other matter that is prescribed. It will be noticed that there is no expressed limitation in point of purpose on the Minister's power to give a direction.
Section 74A provides that a registered organization, so long as it continues to be a registered organization, shall not be wound up under a law of the Commonwealth or a State or Territory. Of course the fund of an organization, so long as the organization continues to be registered, may become the subject of an order for judicial management or winding up under Pt VIA. The Minister is bound to cancel the registration of a registered organization if its fund has been wound up in accordance with Pt VIA. Then the prohibition in s. 74A no longer applies and the organization may be wound up under Commonwealth, State or Territory law. Apart from s. 74A there is no section in Pt VI which in terms is designed to displace the application of State law.
Section 74B provides that a registered organization shall conduct its fund in accordance with the provisions of the Act and the regulations, the terms and conditions of registration, any direction given by the Minister under the Act relating to the fund, and such of the provisions of the constitution, articles of association and the rules of the organization as are not inconsistent with the Act or the regulations, the terms and conditions of registration or the Minister's directions - "and not otherwise". However, I do not regard the expression "and not otherwise" as evincing an intention of excluding the operation of all Commonwealth and State and Territory laws in relation to registered organizations. Subject to s. 74A the general provisions of the Companies Acts would apply to registered organizations which are companies. The expression is no more than an emphatic declaration that the fund shall not be conducted otherwise than in accordance with the requirements of s. 74B. Contravention of that section entitles the Minister to appoint an inspector to investigate a fund.
This summary of the Act in its application to registered organizations is sufficient to demonstrate a legislative intention to deal comprehensively, and to the exclusion of any other law, with the relationship between a registered organization and contributors to its fund, certainly so far as that relationship embraces the rates payable by contributors and the scope and level of benefits payable or offered to contributors by the organization. As they are matters which may be made the subject of ministerial direction under s. 73BE, it is not to be supposed that they were intended to be subject to regulation by State law, even in the absence of ministerial direction.
A State law could not impose an obligation on a registered organization to admit contributors to its fund who do not contribute in respect of the basic table. Nor could a State law alter the basic table so that benefits in respect of out-patient services not already included in the basic table and ambulance services were included in the basic table benefits. Quite apart from their entry into a field which the Act has exclusively marked out for itself the suggested State laws would be directly inconsistent with specific provisions in the Act - see s. 73BA and condition (g) in the Schedule; and the definition of basic table in s. 4.
If follows that, if the State Acts on their true construction require registered organizations to reimburse, or to provide benefits for, contributors to their hospital benefits funds in respect of all outpatient and ambulance services, the State Acts would be inconsistent with the Act. The effect of such a requirement would be to alter the basic table by adding the new benefits to it. The new benefits would not be benefits in a "supplementary hospital table" as defined by s. 4(1) because it is of the essence of the benefits in a "supplementary hospital table" under the Act that the contributor to the fund has a choice whether he will subscribe for them by contributing in respect of them. If the State Acts operate in this way they would "alter, impair or detract from the operation" of the Act (Victoria v. The Commonwealth [6] , per Dixon J.; Ex parte McLean [7] ).
The State Acts do not, however, operate in this way. The N.S.W. Act, the Health Insurance Levies Act 1982, exempts contributors to hospital benefits funds from payment of out-patient and ambulance services (s. 17). The exemption in the Victorian Act, the Hospital Benefits (Levy) Act 1982, extends to out-patient services only (s. 10). Otherwise the two State Acts are substantially similar. Consequently it will be sufficient if I refer to the N.S.W. Act. It imposes a tax in the form of a monthly levy on organizations carrying on the business of providing hospital benefits to contributors (s. 10). The amount of the levy is calculated by reference to the total amount of contributions received from contributors to the organization in the relevant month for the purpose of securing entitlement to basic hospital benefits - see the definition of monthly levy in s. 4(1). An organization is one which conducts a hospital benefits fund (s. 4(1)). "Hospital benefits fund" is defined by s. 4(1) as:
a fund out of which an organization makes payments to contributors for periods of accommodation and maintenance in hospitals, and for surgical, therapeutic or other medical or health treatment, service or procedure in hospitals The levy is not expressed to be payable out of an organization's hospital benefits fund. It could be paid out of an organization's resources which stand outside its fund, as, for example, when the organization carries on some other business. However, in most, if not all, cases the practical effect of the State legislation is that the amount of the levy will be paid out of an organization's hospital benefits fund. That seems to have been the assumption underlying the State Acts.
The amount of the levy, when collected, is paid into Consolidated Revenue. There it remains to be drawn upon for the general expenses of government. In no way is the amount collected earmarked for use in defraying the cost of providing free out-patient and ambulance services to persons who are contributors to a hospital benefits fund who have the benefit of the exemption given by s. 17 of the N.S.W. Act from payment of fees for out-patient and ambulance services.
As I see it, the State Acts do not impose an obligation on registered organizations to provide benefits to contributors in respect of out-patient services or ambulance services. On the other hand, the practical result of the State legislation is that the funds will be depleted by the amount of the levy which the registered organizations are liable to pay, except in so far as a particular registered organization is able and chooses to pay the levy out of other assets which it has.
The question whether this affects in a material respect the relationship between the registered organizations and contributors to their funds hinges very largely on the provisions of s. 68(2)(c)(ii) of the Act. The introductory words of s. 68(2)(c) provide that "no amount is to be debited" to the fund "other than" the specified amounts. The consequence is that if the State legislation subjects the funds to a liability or outgoing other than those contemplated by the Act then there is a case of inconsistency of a direct kind. Are the monthly levies "costs incurred by the organization wholly and exclusively in the carrying on of business as a registered hospital benefits organization"? The language is similar to that of s. 51(1) of the Income Tax Assessment Act 1936 Cth. It would include State taxes of general application - an income tax and a payroll tax - and local government rates because they are costs incurred wholly and exclusively in the carrying on of business as a hospital benefits organization to the extent that they are incurred in the conduct of that business. But does it include a tax imposed on registered hospital benefit organizations when the amount of the tax is calculated by reference to the amount of contributions received by the organization from contributors to the fund?
The question is by no means easy to answer. It is tempting to say that had the Parliament applied its mind to the question it would have rejected the notion that a tax imposed by a State, directed solely at registered organizations and calculated in the manner indicated, is a cost incurred in the carrying on of such an organization's business. There is much to be said for the view that a particular tax of that kind which is associated with the provision of free out-patient and ambulance services to contributors was not intended to fall within the embrace of s. 68(2)(c)(ii). However, in the ultimate analysis we are driven back to the words of the statute. They are appropriate to cover all taxes the liability to which is incurred as a cost of carrying on the relevant business, whether the taxes be general or particular in character. There is no doubt that liability to the levies imposed by N.S.W. and Victoria is a cost incurred in carrying on the business of registered organizations. In the absence of a definite indication that a tax of this kind is to be excluded I conclude that it is a permitted debit to the fund under s. 68(2)(c)(ii).
Dixon J.'s remarks in West v. Commissioner of Taxation (N.S.W.) [8] were also invoked to sustain the argument in favour of inconsistency. There his Honour observed that if a State tax discriminated against pensions, salaries or other payments made by the Commonwealth it could not be supported. His Honour was speaking in a context remote from the present as his next remarks make plain. He went on to say:
If the right to the payment were conferred by a law of the Commonwealth, prima facie the scope and intention of that law would be enough to make inoperative any attempt by the States to impose upon the payee a special burden because of his occupying that character. The State tax would be inconsistent with the law of the Commonwealth in making enjoyment of the right or benefit conferred by the latter the special occasion of a burden. It is impossible to apply these remarks to the present case because there is no right to payment conferred by the Commonwealth which has been made the occasion of a special burden by the State. Here the issue of inconsistency has to be decided by reference to the more general test: Does the State law alter, impair or detract from the operation of the Commonwealth law? 1. (1937) 56 C.L.R. 657, at p. 681.
That test may be applied so as to produce inconsistency in two ways. It may appear that the legal operation of the two laws is such that the State law alters, impairs or detracts from rights and obligations created by the Commonwealth law. Or it may appear that the State law alters, impairs or detracts from the object or purpose sought to be achieved by the Commonwealth law. In each situation there is a case for saying that the intention underlying the Commonwealth law was that it should operate to the exclusion of any State law having that effect. As we have seen, the effect of the State Acts is not to alter, impair or detract from rights and obligations arising under the Act. Nor do the State Acts have that effect in relation to the object and purpose of the Act. The State Acts do not affect the capacity of the registered organizations to offer to the public insurance against the liability of the contributor for basic hospital treatment and accommodation provided for him and his dependants.
The final question is whether the additional condition, imposed by the Minister as a condition of registration, that the registered organizations not pay the State levies was authorized by s. 73B(1)(b). The power to impose a condition under that provision needs to be read together with other provisions in the statute including s. 68(2)(c)(ii), which, it seems to me, is central to the statutory scheme. Section 73B(1)(b) cannot be read as authorizing a condition which would prohibit a registered organization from satisfying a liability that is a cost which, according to the statute, may be debited to its fund. Indeed, on the view which I have taken, s. 68(2)(c)(ii) is indicative of an intention that the registered organizations are liable to the imposition of State taxes. I do not think that the general language of s. 73B(1)(b) authorizes a condition which would either (a) exempt or make immune a registered organization from that liability or (b) bind the organization not to satisfy that liability out of its fund, though leaving the organization subject to that liability.
For these reasons I agree with the orders proposed by Gibbs C.J. and Murphy and Wilson JJ.
The primary question in this stated case is whether either or both of the Hospital Benefits (Levy) Act 1982 Vict. ("the Victorian Act") and the Health Insurance Levies Act, 1982 N.S.W. ("the New South Wales Act") (collectively, "the State Acts") or so much thereof as impose a levy on organizations conducting a hospital benefits business or fund in the particular State, is or are inconsistent with the provisions of the National Health Act 1953 Cth ("the Commonwealth Act" or "the Act") and, to the extent of any such inconsistency, invalid (Constitution, s. 109). If that primary question be answered in the negative in the case of either State Act, a question will arise as to the validity and, if it be valid, the effect of a direction given by the Commonwealth Minister for Health ("the Minister") to each registered hospital benefits organization in that State purportedly imposing, as a condition of its registration, a requirement that it not pay the levy.
The relevant provisions of the Commonwealth Act provide for the registration of hospital benefits organizations under the Act and closely regulate and control any hospital benefits fund conducted by a registered organization. It is a statutory condition of registration of such an organization (s. 73BA and Schedule, par. (b)) that the organization will permit any contributor to a hospital benefits fund conducted by it to contribute for benefits in respect of himself and his dependants (if any) in accordance with a "basic table". A further statutory condition of registration (Schedule, par. (g)) is that the organization will not permit a person to contribute for benefits under a supplementary table unless the person contributes to that fund for benefits under the basic table: the effect of this condition is that all contributors to the fund must contribute for benefits under the basic table. Section 4 of the Act provides that "basic table", in relation to a registered hospital benefits organization, means a table "that incorporates a range of benefits of the following kinds and no other benefits " (underlining added). There follows (pars. (a), (b), (ba), (bb), (c) and (d)) a list of the specific "benefits" which may, with "such other benefits (if any) as are prescribed for the purposes of this definition" (par. (f)), be incorporated in a "basic table". Shall, on occasion, refer to the specified benefits which may be incorporated in a basic table as "the permitted benefits". In the case of out-patient services, the permitted benefits are restricted as follows:
(d) in respect of out-patients services provided to persons by a hospital in a State or Territory in which recognized hospitals make charges for the provision of out-patient services -
(i) if that hospital is a recognized hospital - benefits equal to the charges made by that hospital for the provision of those services to persons who are not entitled to receive compensation or damages in respect of the cost of those services; or
(ii) if that hospital is not a recognized hospital - benefits equal to the charges made by that hospital for the provision of those services or the charges made by recognized hospitals in that State or Territory for the provision of services of that kind to persons who are not entitled to receive compensation or damages in respect of the cost of those services, whichever are the less.
The permitted benefits do not include any benefits at all in respect of ambulance services. It has not been suggested that there has been any prescription, pursuant to par. (f), of any presently relevant further benefits.
Section 73BE confers upon the Minister power to control, by direction, the scope and level of benefits that are to be available to contributors to a hospital benefits fund conducted by a registered organization. The section also authorizes the Minister to give a direction in relation to the rates of contributions to be paid by contributors to such a fund. Section 74B imposes a statutory obligation upon a registered organization to conduct a hospital benefits fund in accordance with any condition of registration imposed by or under the Act relating to the fund and any direction of the Minister given under the Act and served on the organization. Contravention of, or failure to comply with, such a condition or direction is deemed to be a failure or contravention on the part of the public officer punishable by a fine of up to $2,000 (s. 74(5)) and may lead to the appointment of an inspector to investigate the affairs of the organization (s. 82R) and, eventually, to an order that the fund be placed under judicial management or be wound up (s. 82Z).
The Act contains no definition of the term "benefits". Some of its provisions assume "benefits" will take the form of a sum of money paid to the contributor (see, e.g., the definition of guaranteed medical benefit in s. 4; s. 67(2)(c)(i); s. 68(2)(c)(i); Schedule, pars. (d) and (da)). In the case of the permitted benefits under a basic table, the designated obligation to the contributor is an obligation to pay money to him or her or at his or her direction in that the "benefits" are described as being "equal" to either an "amount" to be calculated or the "amount" of identified "fees" or "charges". Section 73D of the Act modifies that position by providing that, where a registered organization provides, or arranges for the provision of, services or treatment of any kind for all or any of its contributors or dependants of those contributors, the Minister may, at the request of the organization, direct that, to such extent as he directs, the provision of those services or of that treatment shall be treated, for the purposes of the Act, as the "payment" by the organization of benefits in respect of those services or that treatment. Other sections make clear that, while provisions such as the definition of "basic table" might require that particular benefits take the form of a payment of money to or at the direction of the contributor, the concept of "benefits" is wide enough to cover benefits in other forms, namely, the actual provision of services or treatment by or at the direct or indirect cost of the registered organization. Thus, s. 68(2)(c)(iii) authorizes a registered organization to debit against a hospital benefits fund costs incurred by the organization "wholly and exclusively in providing, or arranging to provide professional services, hospital treatment, out-patient services or other allied health services for contributors "
The overall result is that the Commonwealth Act imposes a statutory duty upon a registered hospital benefits organization to permit any contributor to contribute in accordance with a "basic table", being a table which incorporates a range of permitted benefits and any further benefits which may be prescribed and no other benefits. While the Act recognizes that "benefits" may take the form of the actual provision of treatment or services by or at the direct or indirect cost of a registered organization, the permitted benefits under a basic table are limited to payment of various amounts except to the extent that the Minister may direct under s. 73D that the actual provision of treatment or services should be treated as "payment". The permitted benefits under a basic table do not include any benefits in respect of out-patient hospital services other than payment within the confines laid down by par. (d) in the definition of "basic table" (see above) or any benefits at all in relation to ambulance services.
In the context of the ministerial power to give directions as to, among other things, the level of contributions, the policy underlying the strict statutory restriction upon what benefits may be incorporated in a basic table can be readily discerned. It is that hospital benefits insurance, restricted to cover what are seen as basic hospital accommodation and treatment, should be available to contributors to hospital funds conducted by registered organizations at a level of contribution geared to cover such basic accommodation and treatment only and, in the light of the condition contained in par. (g) of the Schedule (see above), that all contributors to hospital benefits funds conducted by a registered organization should be covered in respect of such accommodation and treatment. The ministerial power to give directions as to the scope and level of benefits that are to be available (s. 73BE) would not extend to overriding the express statutory provision that a basic table is a table which incorporates only the specified or prescribed benefits. The only means which the Commonwealth Act allows for adding to the specified benefits which may be provided to contributors under the mandatory basic table is the means by which additional benefits may be prescribed for the purposes of the definition of that table, namely, regulation made by the Governor-General (see s. 140).
The Commonwealth Act cannot properly be seen as dealing, or as intended to deal, exhaustively or preclusively with the general subject of either hospital benefits organizations or registered hospital benefits organizations. It assumes that there may or will be organizations which are not registered under its provisions and that, save for particular subjects as to which it does make exhaustive provision, registered organizations will remain subject to the ordinary law including applicable State laws. That being the case, the State Acts are not invalid merely for the reason that they may impinge upon the general subject of either hospital benefits organizations or registered hospital benefits organizations. It was submitted that the State Acts were inconsistent with the Commonwealth Act and invalid for the reason that they discriminated against organizations which were registered under the Commonwealth Act. Subject to that submission to which reference will subsequently be made, any inconsistency between the State Acts and the Commonwealth Act must lie either in direct incompatability between actual provisions or in the impingement by the relevant State Act on a more closely defined particular subject on which the Commonwealth Act has exhaustively or preclusively expressed what the law shall be (see Ex parte McLean [9] ).
Both the New South Wales and Victorian Acts provide for a monthly "levy" on "any organization" which carries on the business of providing hospital benefits to contributors within the relevant State: "organization" is defined by each State Act as having a meaning in effect identical to "hospital benefits organization" under the Commonwealth Act, namely, "a society, body or group of persons, whether corporate or unincorporate, which conducts a hospital benefits fund". The amount of the levy is determined by a formula and varies conformably with the factor A/B where A represents the total of contributions received during a particular period for insurance under the organization's basic table from contributors who do not permanently reside out of the relevant State (subject to special provisions, in the New South Wales Act, for Australian Capital Territory and Northern Territory contributors) and B represents the weekly contribution to be paid by a single person for cover under that basic table. Each State Act provides that the ordinary fee for out-patient hospital services under the provisions of the appropriate legislation (i.e. the Public Hospitals Act 1929 N.S.W. (s. 30) in the case of the New South Wales Act and the Hospitals and Charities Act 1958 Vict. (s. 70) in the case of the Victorian Act) shall not be payable in respect of out-patient services provided to a person who was, at the time the service was provided, a "contributor" (which includes persons on whose behalf contributions are made) to a fund conducted by an organization which is liable to pay the levy imposed by the Act and who makes a declaration "in the prescribed form". The New South Wales Act also contains provisions to free such a "contributor" from the ordinary obligation to pay for ambulance services under the Ambulance Services Act 1976 N.S.W.. The State Acts contain no definition of "basic table". It is, however, common ground that the reference to a "basic table" in the State Acts is, in the case of a registered organization, a reference to the basic table which the organization is obliged, under the Commonwealth Act, to offer to its contributors.
Examination of the Commonwealth Act discloses that it deals exhaustively and preclusively with a variety of particular subject matters. Examples relevant to registered hospital benefits fund organizations are registration itself, cancellation of registration and judicial management and winding up of a registered organization. The Act also deals, in a manner which is plainly intended to be exhaustive and preclusive, with a number of matters relating to hospital benefits funds conducted by a registered organization. In particular, the Act so deals, in the provisions to which reference has been made, with the subject of what hospital benefits may or may not be provided by a registered organization to its contributors under the basic table which it is under a statutory duty to offer to them and to which they all must subscribe: it exhaustively states what benefits may be included in a basic table and expressly provides that a basic table may incorporate "no other benefits" without losing its character as such. As has been seen, provisions such as s. 68(2)(c)(iii) and s. 73D make clear that the hospital benefits which the Act is concerned to regulate and control are not limited to the ordinary payment of money to a contributor but extend to the provision of relevant treatment and services. A table would not comply with the requirements of the definition of a basic table if it incorporated all the expressly secified benefits and any benefits which had been prescribed for the purposes of the definition and also incorporated the provision of superior hospital accommodation or the supply of additional professional services and treatment at the direct or indirect cost of the registered organization. The provision or supply of such superior accommodation or additional services or treatment at the direct or indirect cost of the registered organization would constitute "other benefits" with the consequence that the table was not a "basic table" of the type which the organization was under a statutory duty to offer to its contributors. A law of a State which provided that such additional accommodation, treatment or services to contributors must be provided by or at the direct or indirect cost of a hospital benefits organization to contributors under its basic table would, to the extent that it purported to apply to registered organizations, intrude into a field which the Commonwealth Act had exhaustively and preclusively covered and, within that field, be directly inconsistent with the provision of the Commonwealth Act that a registered organization must offer to contributors a basic table incorporating no benefits other than those specified in the Act or prescribed under it.
If the two State Acts had merely purported to give to each hospital benefits organization carrying on hospital benefits business within the relevant State a choice as to whether it would undertake to pay the levy and, by so undertaking, obtain for its contributors freedom from the ordinary obligation to pay for out-patient services (and, in the case of the New South Wales Act, ambulance services), the State Acts would, to the extent that they purported to authorize a registered organization to pay the levy to obtain that advantage (or those advantages) for contributors under its basic table, be inconsistent with the provisions of the Commonwealth Act to which reference has been made. The reason is that a registered organization would, by electing to pay the levy, be making provision for benefits which are not of the kind which may be incorporated in the basic table which it is under a statutory duty to offer to contributors. In so far as any benefits to contributors in relation to out-patient services are concerned, they would neither take the required form of a payment to contributors nor be necessarily confined within the express monetary limits contained in par. (d) of the definition of "basic table". In so far as any benefits to contributors in relation to ambulance services were concerned, they would be "other benefits" which are expressly excluded by the definition from benefits which may be offered under the basic table. The purported provision in the laws of the two States that a registered organization was entitled to pay the levy and thereby procure free outpatient services (and in the case of the New South Wales Act, free ambulance services) for contributors under its basic table would not only impinge upon a subject matter upon which the Commonwealth Act made exhaustive and preclusive provision but would be directly inconsistent with the requirement of the Commonwealth Act that a registered organization should offer to all contributors a table in which the specified and prescribed benefits "and no other benefits" were incorporated. The question arises whether such inconsistency is absent when the relevant hospital benefits organizations are given no choice as to whether or not they should pay the levy.
The absence of any element of choice as to payment of the State levy weakens any link between the payment of the levy and the freeing of contributors from the obligation to make the relevant payments in that, if an organization had a choice as to whether to pay the levy, it would be apparent that a registered organization which elected to pay it did so to provide benefits, in the form of free out-patient (and ambulance) services, for its contributors. The connection between the levy and the provision of the free services is, however, clear enough under both the New South Wales and Victorian Acts. Thus, the provision in each State Act that no fee is to be payable in respect of the relevant services is expressly limited to services provided to a person who was, at the time the service was provided, a contributor to a fund conducted by an organization which is bound to pay the levy. The amount of the levy which an organization is required to pay is, under each State Act, determined by a formula which, subject to a discounting in the case of dependants, will reflect the number of persons who will be entitled to receive free services by reason of contribution to a fund conducted by that organization. The inferences are plain that the entitlement of contributors to a fund conducted by a hospital benefits organization to receive free out-patient (and ambulance) services is a benefit which is related to the obligation imposed upon the relevant organization to pay the levy and that, as a matter of substance, that entitlement must be seen as, at least to some extent, provided at the indirect cost of that organization. In the case of the Victorian Act, the making of those inferences is assisted by the express requirement (s. 9(2)) that an amount equivalent to the amount received by way of levy under the Act shall be paid into the Hospital and Charities Fund being the fund established under the Hospitals and Charities Act 1958 Vict.. In the case of both State Acts, the calculation of the levy which a particular organization must pay by reference to a formula which reflects the number of contributors under that organization's basic table accords with the underlying position that, in the case of a registered organization, all contributors to a hospital benefits fund must contribute under the organization's basic table and will derive, as contributors under that basic table and regardless of whether they also contribute for benefits under a supplementary table, all the benefits which the Act confers.
In the result, the New South Wales and Victorian Acts trespass in a field which the Commonwealth Act has exhaustively and preclusively covered, namely, the field dealing with the subject of what benefits may and may not be provided by, or at the direct or indirect cost of, a registered hospital benefits organization to contributors for benefits under the organization's basic hospital benefits table. Within that field, the State Acts provide in effect that contributors to a hospital benefits fund conducted by a registered organization for benefits under that organization's basic table shall receive, at least partly at the indirect cost of the organization, benefits which do not come within the benefits which the Commonwealth Act expressly provides can alone be incorporated in the basic table which the organization is obliged to offer to its contributors and for benefits under which all contributors to the organization's hospital benefits fund must contribute before being eligible to contribute for benefits under any supplementary table. To the extent that each State Act purports to apply to registered organizations, there is not only an intrusion into a field which the Commonwealth Act has covered; there is an antinomy between the provisions of the State Act and the provisions of the Commonwealth Act which amounts to direct inconsistency for the purposes of s. 109 of the Constitution. To that extent, the provisions of each of the New South Wales and Victorian Acts are invalid and inoperative.
The question whether, in the light of the above conclusions, the provisions of the State Acts are severable and valid to the extent to which they might apply to any hospital benefits organizations which are not registered organizations has not been argued before us. The factual context indicates that that question is probably of academic interest only. The appropriate course at this stage is to answer the first question in the stated case in accordance with the above conclusions and leave any question of severability to be subsequently argued if there be any practical need to have it determined.
As has been mentioned, a submission was made that the provisions of the State Acts are inconsistent with the Commonwealth Act and invalid in that they discriminate against hospital benefits organizations which are registered under the Commonwealth Act since, for practical purposes, all hospital benefits organizations in New South Wales and Victoria are so registered. I do not accept that submission. The State Acts refer to local hospital benefits organizations generally. The fact that taxation incentives have brought about a position where either all (in New South Wales) or almost all (in Victoria) of such hospital benefits organizations are registered does not alter the nature of the State Acts as applying indifferently to registered and unregistered organizations which accept contributions for benefits under what can be identified as a "basic table". On the other hand, there is some force in the argument that the State Acts, by imposing a levy which is only payable by a hospital benefits organization which accepts contributions for benefits under what can be identified as a "basic table", in effect penalize registered organizations for complying with their obligation under the Commonwealth Act to permit - indeed to require - all contributors to contribute for benefits under such a table which is so identified. My conclusion that the provisions of the State Acts are inconsistent with the provisions of the Commonwealth Act to the extent to which they would impose a levy upon registered organizations makes it unnecessary to consider whether the State Acts do so penalize registered organizations and, if they do, whether that would constitute a further basis for a finding of inconsistency under s. 109 (cf. West v. Commissioner of Taxation (N.S.W.) [10] ).
I would answer question 1(a)(i) and question 1(b)(i): "To the extent (at least) to which it purports to apply to organizations registered under the National Health Act 1953 Cth, Yes." The other questions in the stated case do not arise.
New South Wales
Commonwealth