Opinion Number. 1421

Subject

National Insurance Fund POWER OF COMMONWEALTH TO legislate for National Insurance Fund: EXTENT OF INSURANCE POWER: ‘INSURANCE’: NATIONAL HEALTH SCHEME: UNEMPLOYMENT COUNCIL: UNEMPLOYMENT INSURANCE: WORKERS’ COMPENSATION: WHETHER COUNCIL COULD BE GIVEN POWERS OF COMPULSION: IMPLICATIONS FOR INVALID, OLD-AGE AND WAR PENSIONS: REGULATION OF FRIENDLY SOCIETIES

Key Legislation

Invalid and Old-age Pensions Act 1908: Constitution s 51(xiv): War Pensions Act 1914

Date
Client
The Secretary, National Insurance Advisory Committee

The Secretary of the National Insurance Advisory Committee has forwarded me the following questions for advice:

  1. Has the Commonwealth power to legislate for a National Insurance Fund providing the benefits recommended by the Royal Commission on National Insurance?
  2. Does ‘the provision of medical treatment and medicine’ come within the definition of ‘insurance’?
  3. Has the Commonwealth power to legislate for (2)?
  4. What amendments of the Commonwealth Invalid and Old-age Pensions Act will be required if (1) is instituted?
  5. What amendments of the War Pensions Act will be required if (1) is instituted?
  6. Should such amendments be embodied in the proposed National Insurance Bill?
  7. Has the Commonwealth power to legislate with respect to Friendly Societies by means of–
    1. Friendly Societies Act.
    2. National Insurance Act.?

The recommendations made by the Royal Commission on National Insurance are, briefly, the following:

First Progress Report

Institution of a National Insurance Fund providing for payment of sickness, invalidity, maternity and superannuation benefits to insured members, membership being compulsory.

Institution of a National Health Scheme providing adequate medical treatment for the people, and the requisite machinery for the prevention of sickness and accident.

Second Progress Report

Constitution of an Unemployment Council comprising representatives appointed by the Government, the employees; organisations and the Trade Unions, the objects of the Constitution of the Council being–

  1. The establishment and supervision of a national system of employment bureau throughout Australia;
  2. the regulation and supervision of existing private labor exchanges;
  3. the collection etc., of statistical data concerning employment;
  4. the conduct of special enquiries as to the incidence and causation of unemployment in the different industries;
  5. co-operation with various authorities in providing avenues of employment, and technical training; and
  6. the furnishing of detailed information as to the trend of employment.

The institution of a system of insurance against unemployment to meet unavoidable risks and provide assistance in necessitous cases.

Third Progress Report

The provision of a comprehensive national insurance scheme rather than amendment of the Invalid and Old Age Pensions Act to provide for payment of destitute allowances; and in the meantime the granting of certain discretionary powers to the Commissioner of Pensions where a claimant whose pension claim is rejected is destitute.

Fourth and Final Report

The recommendations in this report deal mainly with questions of administration.

Dealing now with the various questions asked by the National Insurance Advisory Committee, I am of opinion as follows:

  1. The constitutional power of the Commonwealth to legislate on the subject of insurance is primarily that contained in placitum (xiv) of section 51 of the Constitution which gives the Parliament power to make laws for the peace, order and good government of the Commonwealth with respect to–
  2. xiv. Insurance, other than State insurance; also State insurance extending beyond the limits of the State concerned:

I do not think the word ‘Insurance’ in this placitum should be construed as limited to insurance of the classes which were in existence when the Commonwealth was established. Wharton’s Law Lexicon defines insurance as–

The act of providing against a possible loss by entering into a contract with one who is willing to give assurance–that is, to bind himself to make good such loss should it occur.

In so far as the benefits recommended by the Commission are benefits in the nature of insurance as defined in the above definition, they are in my opinion within the constitutional powers of the Commonwealth.

The recommendations of the Commission, however, go beyond these limits.

e.g.–

  1. in the proposal to include Workers’ Compensation legislation under the National Insurance Fund administration;
  2. in the institution of a National Health scheme which will provide adequate medical treatment for the people and the requisite machinery for the prevention of sickness and accident; and
  3. in the provision of an Unemployment Council having power inter alia to regulate and supervise the existing private exchanges.

So far as these particular proposals are concerned, it does not follow that they are wholly beyond the powers of the Commonwealth.

As regards (1)–the Commonwealth has workers’ compensation legislation for its own employees, but has no power to legislate generally in respect of workers’ compensation.

As regards (2)–while the Commonwealth, under its power to expend its money for purposes which it thinks desirable, has power to institute a National Health scheme which may be availed of by persons who desire to do so, it has not power to compel persons to submit to treatment, or to compel compliance with any provisions enacted for the prevention of sickness and accident.

As to (3)–I do not think any Unemployment Council which might be created could, under the present constitutional powers of the Commonwealth be given any compulsory powers.

Subject to the foregoing I am of opinion that the Commonwealth has power to legislate for a National Insurance Fund providing generally the benefits recommended by the Commission.

With reference to the second and third questions asked by the Committee, I am of opinion that the provision of medical treatment and medicine may be brought within the definition of insurance, and that the Commonwealth has power to legislate therefor.

As regards the fourth question–I think that the present Invalid and Old Age Pensions Act would, if the Commission’s proposals are given full effect to, be no longer necessary except to provide for those whose age, at the inception of the new scheme, was such as to preclude their coming under that scheme.

As regards the fifth question–the War Pensions Act provides benefits in respect of disabilities arising out of war service. I doubt whether that Act should be amended. Provisions might be made in the proposed scheme to avoid dual benefits.

As regards to the sixth question–Friendly Societies are voluntary associations governed by State Acts. I do not think that it is competent for the Commonwealth to pass legislation regulating such bodies generally, but in so far as the activities of friendly societies fall under the head of insurance I think they can be controlled by Commonwealth legislation.

[Vol. 23, p. 242]