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The Australian Constitution, Medicine and the Law

ADF Conference 1996
Dr Shirley Prager - Chair Morning Session
Dr Keith Wollard - Chair Afternoon Session

Speakers Notes:


Mr Milgate: I would like to call on our Chairman for this morning's session, Dr. Shirley Prager, and I will read to you a little bit about Dr. Shirley Prager as I introduce her.

Dr Shirley Prager is a family and child psychiatrist in private practice in Beaumaris, Victoria, and Dr. Prager is currently the Chair of the Victorian Branch of the Royal Australian and New Zealand College of Psychiatrists. She is a counsellor on the Victorian AMA. She is also an honorary lecturer at Monash University in Psychological Medicine and prior to taking up full time psychiatry, Dr. Prager and her husband, who is also a doctor but a scientific doctor, were both in Armidale where Shirley was involved in rural general practice, one of the toughest jobs that any doctor can do, so Dr. Shirley Prager knows a lot about medicine and a lot about psychiatry and we are very privileged to have her as our Chairperson this morning. Thank you Dr. Prager.

Dr Shirley Prager

Dr Prager: Ladies and gentlemen, on behalf of the Australian Doctors' Fund and the Australian Medical Association I'd like to welcome you today on this really historic occasion of the 50th anniversary of the 1946 referendum which led to an amendment to the Australian Constitution that is intended to guarantee the professional independence of the medical and dental profession in Australia. I think it is very significant that the Australian public voted for this amendment against civil conscription in 1946.

To formally welcome you I would like to introduce the Chair of the Australian Doctors' Fund, Dr. Bruce Shepherd, who may be well known to most of you.

Dr. Bruce Shepherd was educated in Tamworth, New South Wales, which is not so far from Armidale where Stephen was telling you I was working for five years, and later at Sydney University where he qualified in dentistry at the age of 20. He later qualified in medicine at Sydney University and has had a distinguished university sporting career in rowing, surfing and rugby. I think that shows now. He obtained a university blue for rowing.

Dr. Shepherd has been an orthopaedic surgeon for many years in Sydney and has had an active medico-political career, commencing with the Australia Society of Orthopaedic Surgeons, the New South Wales branch of the AMA and then as Federal President of the AMA from 1990 to 1993. During this time he has led the profession through a series of confrontations with government. He has often been outspoken on issues affecting medical practice and the independence of the profession. Dr. Shepherd's other appointments include Chief of the Department of Surgery, Baulkham Hills Hospital, Visiting Medical Officer at St. Luke's and Mater Hospital Sydney, and consultant orthopaedic surgeon to the Spastic Centre of New South Wales.

In 1970 he and his late wife, Annette, founded the Shepherd Centre for Deaf Children, which educates over 75 deaf children at any one time in modern communication techniques.

Welcome, Dr. Shepherd.

Dr Bruce Shepherd

Dr Shepherd: Good morning and welcome. May I congratulate on your perspicacity in coming to this conference. I know it is fairly hard to get terribly excited about a conference with this title - and some of my colleagues expressed that - but I think as the day goes on you will realise that perhaps it is at the very seat of those things that we believe.

The Australian Doctors' Fund was started by some of us who felt, as Sir Robert Menzies said many years before, that the relationship between a doctor and a patient was private and sacred. He certainly did his part in ensuring that that occurred and it is up to us to ensure that that continues, because the independence of a profession such as ours reflects the independence and the freedom of our society.

The Doctors' Fund has called a number of seminars, often in association with the AMA, and each one of those I might say has been a milestone in the problem that it was addressing. For example, there was a time when the AIDS debate was captured by some of our misguided colleagues who were somewhat under the control of a small group in the gay community and we were doing the wrong thing. It was only when we stood up and said we as doctors have a great responsibility in this, and science has a responsibility in this, that we started to change things. We got involved in road safety, and I well remember having the big car manufacturers saying safety doesn't sell cars. We said we're going to change that. I am sure if you look around now you'll find almost every car that's advertised indicates how important safety is. We've done the same sort of things with bureaucracy and the cost of bureaucracy; with the plight of wives of rural medicos; Steve will have to remind me, there's one other one. In all these instances we've had a say and we've felt strongly about it.

It was Shirley who pointed out that this is the 50th anniversary of the time when civil conscription was made part of the Constitution, that it could not apply to doctors and dentists. So it was time for us to have another look at the Constitution. You will see many of the topics in the excellent foreword that we have to the programme - I recommend that you take the time to have a good look at that - and it should be spread far and wide.

It would appear reasonable that the purpose of the Constitution is to enable a nation of people to live together in harmony and to prosper. It would further seem reasonable that the legal process that develops from that is directed towards the same ends. I believe in this day in this country - and perhaps even worse in the United States - that the Constitution acting through the legal process is not doing the job.

I do not wish to attack my colleagues in law but I must say that many of the laws that have grown up have perhaps catered towards some of the more unethical to take advantage of, and take advantage of society. As a result of this we have a society which is somewhat stultified and controlled. We only have to look at the ACCC's remarks which were in the foreword about taking the least risk options. What a dreadful thing that is, that people who are trying to do things in our society have to take least risk options in order to avoid the ire of the ACCC. How are we going to have people conceive new ideas and take risks when we have such powerful people and powerful organisations which our legislative process has built up stopping them from doing so. Perhaps that's the reason why the United States has the same sort of problem as we have, a tremendous balance of payments problem and a lack of prosperity - a lack of prosperity which is caused by over-regulation.

I was talking to two of my eminent colleagues - two eminent members of my profession - in the last week. One who is a very good surgeon and a professor said he is giving up clinical practice at a time when he is still doing it very well. Why? Because he said "I can't stand the pressures". So he's going to go and do medico-legal practice. This, I put to you, is what's wrong with society now - that those who do and create and achieve are so trammelled, whilst those who control are so untrammelled. He will find it so much easier to look at a few patients for a couple of days a week and give opinions about them and nobody will ever question whether those opinions are of high quality or of low quality, whether they are honest or dishonest, they will be accepted, and he won't be sued for enormous sums of money if he doesn't get it right. Now as a surgeon he may do the very best possible and he may be sued out of his mind. Now that's what's wrong with society - it doesn't happen just to medicine, it happens to almost everything - that we are so now controlling the good people in society and allowing the ones who may or may not be good who control us - to control and to overcontrol.

I am looking forward to the debate today and to hearing some specific instances of how we can deal with this very serious problem, where the people who are trying to make society prosper and trying to create harmony in society are being over controlled, and where their thoughts and their plans and the risks that they may be prepared to take, are being taken from them.

Just think - I want you to think again - of a very good doctor who is giving it away because he can't handle the pressures, who is starting to look at his patients not as his beloved patients who he wants to do something for, but perhaps as the enemy, a potential person who may sue him. It's not good enough - we mustn't be too self preoccupied in this - its not just in medicine, but its in every other aspect of society that we're stopping things from happening. Until we do that, until we fix it, we're not going to see those balance of payments change.

I welcome you again. I must just say a word about Stephen Milgate because I guess if I want to be remembered for anything its that I --- perhaps the Doctors' Fund may not have started without me, but I think I'd like to be also remembered for the person who perhaps made the Doctors' Fund work, and that was finding Stephen Milgate and persuading him to come along with us. I thank you Stephen for all that you have done. We as a profession tend to be shrinking violets and if we see that the needs of our patients perhaps may coincide with our own selfish interests we perhaps back away from something. Stephen can see the needs of patients perhaps better than we can, at least as well, and he makes us do things that we perhaps may not do otherwise.

I thank you for coming and I hope at the end of the day you feel it has been a well worth-while occasion.


Dr Prager: Thank you Bruce. Its now my pleasure to welcome the Hon. Daryl Williams, the Federal Attorney General and Minister for Justice. Daryl Williams AM QC holds a law degree from the University of Western Australia and was selected as Western Australian Rhodes Scholar in 1965. He subsequently obtained a Bachelor of Civil Law degree at Oxford University in 1967. Mr. Williams was a Commissioner of the Law Reform Commission of Western Australia from 1982 to 1986 and chaired the Commission for a year. He was also President of the Law Society of Western Australia in 1984 and President of the Law Council of Australia in 1986 and 1987. He was appointed a member of the Order of Australia for services to the legal profession in 1989. He has been a member of the Joint Select Committee on Certain Family Law Issues and a member of the House of Representatives Standing Committee on Legal and Constitutional Affairs from 1993 to 1996. His appointment as Commonwealth Attorney General and Minister for Justice was announced by Prime Minister John Howard on 8th of this year. The Hon. Mr. Williams has also been appointed to the National Security, Parliamentary Business and Legal Affairs committees of Cabinet. His most recent activity has been to assist the Prime Minister push through uniform State gun law legislation following the Port Arthur tragedy. The Hon. Daryl Williams.

Hon. Daryl Williams

Hon. Daryl Williams: Thank you Dr. Prager and thank you very much to the AMA and the Australian Doctors' Fund for the invitation to speak to you. Its actually a very pleasant experience to speak on a subject that doesn't have a raging debate about it going on at the time. While there is a debate its much more civilised than some others that I've participated in in recent times.

I want to talk this morning about the Federal Government's approach to Constitutional change and in that connection with professional independence. After offering some comments on the first subject I want to focus then on the role that a representative body - such as one representing medical professionals - can play. My message is that the Government recognises the valuable contribution professional bodies can make to the public debate about the Constitution.

It is generally accepted that the Constitution has served us well. It has established a stable federal frame work of Government and has continued to provide a workable foundation for our parliamentary and democratic institutions. Certainly the Constitutional Commission established in 1986 to review the Australian Constitution recognised, even in the context of its far reaching review, the need to retain in form and spirit the basic frame work of institutions established by the Constitution. It is precisely because the Constitution has served us well and proven so durable that Constitutional change must not be undertaken lightly. That said, the Constitution is not immutable nor does it preclude social or political evolution. Sir Robert Menzies said, and many have agreed, and I quote, "a written Constitution is an expressed scheme of government designed to give a basic structure in a changing world, not designed to inhibit growth in a growing world, nor to make the contemporary world subject to the political, social or economic ideas of a bygone age. A Constitution is not a straight jacket, it is a frame of government".

More fundamentally, the Constitution provides for its own alteration. Section 128 of the Constitution provides for the passage of a bill by both Houses of Parliament, or under certain circumstances by one House, followed by a vote by the people - that is a referendum - on whether to approve the bill. People have voted on proposals for change over the years. In some cases these proposals have been accepted. No doubt proposals will be put to the people again. Indeed the government has undertaken to establish a People's Convention to examine proposals for an Australian Republic, as well as other proposals for Constitutional change. We recognise that citizens, as well as Governments, have given and should give consideration to when and how to start the process of Constitutional change. Clearly it is open to the government of the day to initiate proposals for change when it considers it appropriate.

In some cases the Commonwealth has unilaterally developed proposals which have then been passed by Parliament and put to a referendum under Section 128. However, different approaches to initiating proposals to Constitutional change are possible. Among these the Constitutional Convention certainly can play an important part both in initiating and evaluating proposals for change. The best known Constitutional Conventions are probably those associated with adopting the Australian Constitution. The 1891 Sydney Convention framed the Federal Constitution, while the Convention held in Adelaide, Sydney and Melbourne in 1897 and 1898 led to it being adopted.

The Government's motivation in proposing a People's Convention is to give the community, through both its delegates and appointed Parliamentary representatives, an opportunity to identify areas perceived to be in need of change. The Convention would also provide an opportunity thoroughly to ventilate and debate the issues. The very choice of a Convention raises some interesting issues. For example, we can draw a significant distinction between the two founding Conventions I have just mentioned. The 1891 National Constitutional Convention held in Sydney was attended by delegations appointed by the legislatures of the six Australian colonies and New Zealand. In that sense it was a Parliamentarians' Convention. The Constitutional Convention of 1897/98, however, comprised ten representatives elected at large from each of the colonies. Exceptions were Western Australian, whose Parliament chose the delegates, and Queensland - perverse even then - who sent nobody.

Other examples of Parliamentarians' Conventions are the 1942 Convention involving members of the Commonwealth and State Parliaments and considered referring certain powers to the Commonwealth; and the Australian Constitutional Convention which met from 1973 to 1986 drawing delegates from Commonwealth, State, Territory and Local Governments. Less official popular conventions or conferences - that is meetings of people not appointed by Governments - were held in Corowa in 1893 and Bathurst in 1896. The City of Bathurst and organisations within it and the Constitutional Centenary Foundation are planning a centenary of that event in the course of this year. I note that in the case of Corowa and Bathurst the Federation Leagues convening the conferences invited representatives of various commercial and political groups and organisations.

Wide debate has centred on the relevant merits of Parliamentarians' Conventions as against Popular Conventions. Critics of the Parliamentarians' Convention as a platform for Constitutional change suggest that delegates are invariably inhibited by party loyalties and may well be uninterested in change. Others suggested the Parliamentarians' Convention does not capture the popular imagination enough to ensure due consideration of the proposals. It is true that the 1891 Convention apart, Parliamentarians' Conventions have not achieved a great deal in terms of Constitutional change. Even in the case of the 1891 Convention it would seem that the work begun there was greatly assisted by the revitalisation of the Federal issue at the Corowa and Bathurst Conventions. On the other hand, while delegates to the 1897/98 Convention were drawn from large fields of candidates in each State - fields which included many non-parliamentarians - only one non-parliamentarian was elected. It is therefore not clear to what extent we can attribute the Convention's success to the fact that it was a popularly elected body.

Experience has shown that the Constitution is difficult to amend irrespective of how proposals for change are generated. It is noted in this Conference's Issues Paper by Miss Christine Rau, electors have voted on 42 proposals to alter the Constitution on 18 occasions since Federation. Only eight amendments have resulted, and next year will be the 20th anniversary of the last time there was a successful amendment. Nevertheless a Popular Convention has perceived advantages. This is made clear in the oft quoted remarks of Dr. Quick concerning the progress during the 1890's of the movement for Federation. Dr. Quick and Mr. Garren wrote the annotated Australian Constitution very soon after its enactment. Dr. Quick stated very clearly that the best guarantee of popular interest and confidence was to be found in asking the people to choose for themselves the people to whom the task of framing the Constitution should be entrusted. The point is that while the chosen representatives of the people were for the most part those who would have been the chosen representatives of the Parliament, the fact of their election by the people allowed them to enjoy a confidence that appointment by the Parliament could never have given them.

As a convention comprised of both Parliamentarians and popularly elected delegates, it is likely that the People's Convention would have a claim to a representative base extending beyond the major political parties. It is also possible that this base would extend beyond existing well organised community groups, although some commentators have suggested that an election process is most likely simply to reproduce the prevailing political status quo. Given that the directly representative nature of the People's Convention may be an advantage in arousing public interest and in establishing a better claim to a broad representative base, the election and appointment processes clearly warrant close attention.

We must also acknowledge that the success of proposals produced by the Convention, or even simply considered during its deliberations, may depend on other factors. One factor which appears to be critically important in determining the outcome of Constitutional referenda is bi-partisan support for proposals in the Federal Parliament. While bi-partisan support does not guarantee success, all successful proposals have enjoyed such support. Some suggest that the number of proposals at a referendum may be a relevant consideration. The history of referendum results does suggest that the greater the number of proposals presented to the electorate at any one time, the greater the risk of a No vote. While the High Court has indicated there is no Constitutional impediment to presenting multiple proposals - it decided that in 1988 - factors increasing the risk of a No vote must be taken into account in deciding whether the Convention should be free to formulate any number of proposals. The very conduct of referendum campaigns may affect the outcome. Campaigns are regulated by the Referendum Machinery Provisions Act of 1984. In particular, this allows for distributing the official Yes/No cases to electors.

If the People's Convention formulated or supported a particular proposal, a question would arise on the Convention's and the Government's respective roles in putting the case for the proposal. The Constitution does not require the Government to support the proposals or recommendations of the People's Convention. Nonetheless it is axiomatic that any People's Convention should have every opportunity to generate proposals with a real prospect of acceptance by the people and success at a referendum. We can draw some conclusions about the pre-conditions for change from Australia's history of Constitutional referenda. That history tends to suggest that referenda have a real chance of success only where the process for developing referendum proposals enables both politicians and the public to reach a consensus about the areas needing change, and what kind of change is necessary. Broadly speaking, only a very small proportion of proposals seeking enlargement of the Commonwealth Parliament's legislative powers have been successful. In fact, most of the early proposals were for an enlargement of Commonwealth legislative power at the expense of the States. Very few got through.

Proposals about the election and referendum provisions of the Constitution have been slightly more successful, although where they would have affected existing patterns of State influence, vis-a-vis the Connell(?), they have always failed. Remaining proposals enjoying broad political support have a much higher success rate. That is, those not seeking to expand Commonwealth power or dealing with the election or referendum provisions of the Constitution.

An important contributing factor to the very low success rate in the first two categories appears to be a consistent failure to adopt methods capable of reaching consensus in controversial areas. While clear principles do not emerge there is evidence to suggest that - as some commentators have put it - the success of referenda presupposes a recognition of the issues involved and a lowering of the barriers of suspicion about the processes of change. One commentator has suggested that as any proposal for real Constitutional change is likely to limit the power of one part of the institutional network as against others, that most tenacious of all political reactions, the desire to preserve what one already has, will quickly come into play.

What does emerge is a sense that the composition of the People's Convention and its role in defining issues for consideration will be crucial factors in establishing the pre-conditions for Constitutional change. As I've mentioned, delegates to the 1897 Convention were elected at large from each of the colonies, the only exceptions being Western Australia and Queensland. I've also noted that the popular election of delegates may be an important factor in generating public support and in encouraging the perception of the Convention as a broadly representative body. However, the election process itself could take a number of forms. For example, a variation on the 1897 model may be adopted with a specified number of delegates being elected from each State and Territory in State-wide or Territory-wide ballots. If elected delegates comprise only half of the Convention's total membership the number of delegates from each State and Territory would be calculated accordingly. In principle, however, there is nothing to prevent elected delegates making up a smaller or larger proportion of the Convention.

Some commentators suggest that retaining State and Territory elections as opposed to National elections would involve lower election costs. This might provide scope for State and Territory Governments to run elections along lines agreed with the Commonwealth. The cost of elections would be reduced if they were run with other State or Commonwealth elections. However, this raises the potential for the process of Constitutional change to be obscured by other more immediate political concerns.

As to appointment, there is no legal impediment to the Government appointing Parliamentarians, whether Commonwealth, State, Territory or Local, to the Convention. On the question of numbers, the Government may appoint delegates using any system or formula that it chooses. The 1891 Convention, although not appointed by a Federal Government, comprised seven delegates from each of New South Wales, Victoria, Queensland, South Australia, and Western Australia and three from New Zealand, a total of 38. The 1897 Convention, on the other hand, comprised 50 delegates, even though Queensland sent no delegates and New Zealand were no longer involved.

There is no legal impediment to appointing non-parliamentarians to the Convention. While such an approach may be precluded by other considerations, the Commonwealth certainly has the power to establish a Constitutional Convention comprising appointed delegates only. Of course, non-parliamentary appointees could be selected in a way that retained an element of community participation and representation. For example, they could be selected from candidates nominated according to guidelines ensuring the recognition of particular groups, interests or regions. There would be no necessary legal impediment to delegating the selection role to a specialised body established for that purpose or to the specification of guidelines for the operations of that body.

Questions also arise as to the appropriate procedural arrangements for the People's Convention. These are closely connected to other important organisational questions, such as whether the Convention should have a role in setting the agenda for Constitutional change; and whether the Convention should have a role in formulating particular proposals - either those that it has generated or those presented to it for deliberation. If the Convention is to be responsible for the precise formulation of particular proposals it might need expert support capable of translating the Convention's deliberations into proposals suitable for consideration by Government or Parliament. Such support enhanced the work of the 1986 Constitutional Convention. The final report of that Commission is a formidable document with a value that goes beyond any particular proposal. Generally there would be no legal impediment to providing support in the form of advice from expert groups, either to formulate Convention proposals or in relation to submitted proposals. An expert group set up by the Government might put particular proposals to the Convention in the areas identified in the Government's policy statements. Depending on the approach taken, it may also be possible to accord this group an important preliminary role as the body responsible for accepting agenda proposals and putting them to the Convention for its consideration. We need to acknowledge that such a body could potentially exert a powerful influence over the Convention's deliberations and outcomes. For that reason its composition should effectively rule out any suggestion of direction by a particular political or ideological commitment or affiliation.

Implicit in what has been said is that decisions about the nature and extent of the Convention's role in setting the agenda for Constitutional change, and about more mundane questions of procedure, are likely to have important consequences for the Convention's capacity to achieve consensus and establish the pre-conditions for Constitutional change. As with the authors John McMillan, Gareth Evans and Hadden Storey, I tend to think that the machinery for initiating referendum proposals should serve two objectives; it should provide a forum to debate the issues thoroughly and the options for reform, so that they are publicly aired, recognised in advance, and not sprung unexpectedly upon the electorate. It should also provide a forum in which the major political parties and possibly the other groups and interests can forge some consensus.

To summarise, any People's Convention should be established in such a way as to allow it, if the will exists, to generate proposals with a real prospect of acceptance by the people at a referendum. Evidence suggests that consensus amongst politicians and the public is a pre-condition for the success of Constitutional referenda. Such consensus is unlikely if there are no arrangements for public involvement in identifying and considering proposals for Constitutional change. Obviously the public includes professional people and their representative bodies.

This brings me now to the relationship between the process of Constitutional change and the question of professional independence. As the Issues Paper for this conference makes clear, Section 51 (23A) of the Constitution, in prohibiting the authorisation of any form of civil conscription, currently entrenches a degree of professional independence so far as the enactment of Commonwealth laws regulating the provision of medical and dental services is concerned. However, I do not intend discussing how Section 51(23A) operates or the extent to which it may be said to support professional independence per se. Rather, I wish to focus more generally on the process of Constitutional change and the role that a representative body - in this case a body representing medical professionals - can play in that process.

I think it is interesting in this context to consider briefly the history of Commonwealth involvement and Constitutional change in health related areas. The Issues Paper makes the point that the Commonwealth has been constrained in developing formal structures for providing health care by its limited Constitutional power in these areas. It notes that the Constitution originally contained no express granted power to make laws on any health related matter. In fact, its only express powers remotely connected with health concerned invalid and old age pension. Nevertheless, it is common knowledge that by 1945 the Commonwealth had exacted legislation providing for maternity allowances, child endowment, widows' pensions, and unemployment and sickness benefits, not to mention pharmaceutical benefits. The precariousness of the Commonwealth's constitutional position in these areas has been noted. It was confirmed in the first pharmaceutical benefits case in the High Court in 1946. The proposal to amend the Constitution in 1946 was effectively a response to the precarious nature of the Commonwealth's position. The then proposed Section 51(23A) included the prohibition against civil conscription, thereby accommodating the then Opposition's demands. As an aside, I think it is interesting to note, particularly in the context of this conference and my earlier remarks, a later rather forceful observation made by Sir Robert Menzies about his part in the adoption of Section 51(23A). He said if a Government wants to amend the Constitution is practically essential to have the support of the Opposition.

Of more immediate interest, however, is the role played by the Australian Division of the British Medical Association. It had already made its views on the subject of professional independence very clear, and is generally seen to have contributed to the ultimate course of Constitutional change in this instance. Further, the BMA went on to play a central role in arguing the case against the Labor Government's subsequent Pharmaceutical Benefits Scheme embodied in the Pharmaceutical Benefits Act 1947. Although accused by Prime Minister Chifley of conservatism and downright pig-headedness, there is no doubt that the BMA's actions were instrumental in bringing about the amendment to the scheme, leading to the decision of the High Court in the second Pharmaceutical Benefits case in 1949. These proved disastrous for the Labor Government's larger plans for a national health scheme.

Following the demise of the Chifley Government in 1949 the Menzies Government proceeded to negotiate a voluntary medical benefits scheme with the Medical Association. Introduced in 1953, it reinforced the role of private insurance funds and a private medical profession. The development of the Commonwealth's legislative involvement in the provision of health care has continued in a piecemeal fashion through to the present day. For example, the notion of the scheduled fee was not introduced into the National Health Act 1953 until 1970. The Gorton Government introduced common fee schedules, once again taking account of the professional associations' recommendations. The professional associations continued to pay an active role in relation to the development of the Medibank and Medicare legislative scheme under the Whitlam, Fraser, Hawke and Keating Governments. As noted in the Issues Paper, a separate stream of Commonwealth involvement in health care can be traced in the area of financial grants to the States under Section 96 of the Constitution. The Section 96 mechanism has provided a way to provide Commonwealth money to the States if used for a specific purpose. While this mechanism often effectively requires the Commonwealth to act in concert with State bodies, it has enabled the Commonwealth to implement health related policies. This form of Commonwealth funding started in the 1920's although it was not until the 1950's that grants for health and hospitals began. Greater use was made of this form of funding during the 60's, 70's and 80's, particularly in the area of community health centres and public hospitals.

I think the relevant point for present purposes is that professional associations and other representative bodies, as constituent parts of the broader Australian public, have played and should continue to play an important part in shaping the course of Constitutional change concerning health care. I recognise that such bodies are often in a position to generate and present detailed arguments in the areas of complex law and policy. Professional associations representing medical practitioners have in the past articulated the concerns of their constituents, and made sure that those concerns are well understood by Parliamentarians and the public. As I indicated a little earlier, the importance of professional independence to medical practitioners was certainly made clear in 1946. I commend the active involvement of all professional associations who can contribute independent specialised advice and enhance consultative processes.

To summarise then, in establishing Australia's democratic institutions, the Australian Constitution has generally served us well. The possibility of Constitutional change then must not be taken lightly. Nevertheless, where the broader community perceives that there is a need for change we need comprehensive and open debate. The People's Convention could provide a useful forum for citizens and representative bodies to make sure that their ideas and concerns are taken into account in any process of change. Obviously this would require the active participation of citizens and the various representative bodies to identify and articulate their ideas and concerns.

In the particular case of medical associations, history has shown us that they can be a powerful force in shaping Commonwealth policy in the course of Constitutional change. I am confident that professional associations can go on to play a significant role in future debates concerning Constitutional change, particularly where this touches on the question of the importance of professional independence. Indeed I believe that the participation of such bodies in any People's Convention would be a very positive development. I therefore congratulate the organisers of this conference for providing an opportunity for participants to focus on the important role that professional associations may play in debate about Constitutional change.

Dr Prager: Thank you very much Daryl Williams for that very erudite and insightful analysis of the Federal Government's approach to Constitutional change, and particularly the process of it and the historical basis of it. It is very reassuring to hear the commitment of the Federal Government's thinking to the professional independence of the medical and dental professions and the role that that will play and has played in democracy in Australia, and particularly in any future Constitutional change.

We now have a few minutes for questions prior to morning tea. Could we have questions please? Would people please come to the microphone. We have a question over here. Could you please announce your name.

Michael Ridley: Michael Ridley, I am a general practitioner from Coffs Harbour and a member of the Australian Doctors' Fund. It has been reported that one of the things that the Government is considering is the withdrawal of medical benefits from non vocationally registered general practitioners practising in certain locations and only granting Medicare benefits to their patients if they move to designated country areas as there is a shortage of doctors as you are aware in rural areas nation wide. Would this in fact be civil conscription by default and would you be consultative as to whether this proposal should go ahead?

Hon. Daryl Williams: I think I'm going to be very wary in venturing into answering that question. I have been a Minister for three months and I'm doing the job that two Ministers and a Parliamentary Secretary in the previous Government did, and I'm finding that coping with my own Portfolio is quite a job, rather than trying to venture into Dr. Wooldridge's Portfolio. I think I'll take that question on notice, if you'd care to set it out I'd be very happy to give you a written response but I'd just be guessing if I commented further now.

Dr Prager: Do we have any other questions?

Bill McCubbery: Bill McCabry, a GP, also a member of the Australian Doctors' Fund. In terms of effective change as distinct from formal Constitutional change, what safeguards are there in place to stop COAG and other meetings of State and Federal Governments becoming conventions of Sir Humphries, mushrooming the elected representatives.

Hon. Daryl Williams: Your question is directed at a very precise issue, the safeguards to prevent the bureaucratic takeover of COAG. My experience of the COAG processes is limited because it's a meeting of heads of Government, Premiers and Chief Ministers, and the Prime Minister. But the impression I've had in my time in Parliament and as a Minister is that COAG is anything but a function of the bureaucrats. It's very much a function of the heads of Government themselves. Admittedly there's a substantial committee structure underneath but the formal decisions are, in my experience, without doubt taken by the heads of Government. I would accept that there is a risk, as there is with any Ministerial meeting involving Ministers from the different jurisdictions, and there has been experience in the past where the agendas of Ministerial committees and councils have become very much burdened by detailed subjects that really ought to be dealt with by the officials rather than the Ministers. I think you can rest assured that the current Government has no intention of allowing that to occur in its role in relation to Ministerial councils of one sort of another.

Dr Prager: Thank you. We have another question over here from Dr. Danuta Mendelson and then one in the front row.

Dr Mendelson: The original Conventions were all male, even though women actually did contribute to the discussion, the fact is that all Conventions were all male. Will there be any discussion of having the conventions representative of the whole of the population, including the women, and perhaps actual representation allowing for the representation of women on an equal basis.

Hon. Daryl Williams: The coalition policy made plain that it didn't want to have an unrepresentative set of appointed delegates, and also made plain that it didn't want them all to be elderly. There is in fact express provision made for people under the age of 25 to participate. So I think you can rest assured that that is an issue on which there will be a great deal of focus. It may not be in the hands of the Government, as distinct from the electors, as to who gets elected, but we will certainly promote the idea that there should be a substantial representation of women in the convention.

John McMillan: John McMillan from the Australian National University. In your coverage of the pre-conditions for Constitutional change, one of the pre-conditions that is often left out, I think, is that Constitutional change by and large. has to be proposed by a non-Labor Government. The statistics nationally and in State Constitutions show that proposals put forward by a Labor Government stand an almost certain chance of failure. Those put forward by a non-Labor Government, particularly by a Liberal Government, stand a much higher prospect of success. We're in the paradox at the moment that the Liberal Government has proposed the machinery for Constitutional change but has not yet defined what substantive proposals it is likely to support or would like to go forward.

Firstly, does the Government have in mind any areas for substantive change that it is likely to support, or if it's relying merely on the People's Convention to put forward those proposals, is it the Government's intention to put forward to a referendum every proposal which comes forward with majority support from that Convention or will the Government still retain a discretion to decide which proposals are going to be put forward to a referendum.

Hon. Daryl Williams: In the election policy - to deal with the last point first - the commitment was to put to referendum any proposal that received consensus support at the Convention. That doesn't mean to say that the Government would itself necessarily support it, but it would ensure it was put to the people.

On your broader comment, the question of proposals from non-Labor Governments succeeding at a better rate than Labor Government proposals, I'm not sure that that is likely now to be true. It's very difficult since we've only had proposals put in recent times in 1977 and 1988, and the 1988 ones all failed - there was mixed success in 1977. We really don't have much evidence as to the why people think about the proposals in these times. We know from past experience that without bipartisan support there's no chance, but if you look at it statistically, of the 42 proposals put to the people since Federation, many of them were highly politically contentious proposals to expand Commonwealth legislative power, put by Labor Governments to obtain control over prices and rents. They were put in a number of different ways over time, and I think Labor Governments have learnt that there's just no prospect of that sort of a proposal getting up, and I think statistically we're likely to see a change if there are changes in Government in the future.

Dr Prager: We've got time for one last question and then we'll break for morning tea.

Prof O'Brien: Paddy O'Brien. Mr. Williams and I know each other from Western Australia. As you would expect, I am delighted that the Federal Government is to honour its commitment to hold a People's Convention. I would disagree with you and Mr. McMillan that it is merely a useful forum. Mr. McMillan said merely - relying merely on a People's Convention. I put it in inverse terms by saying that we would be disappointed if we were relying merely on the Government or the Parliament because I think that the Constitutional Convention in terms of determining the means by which a people are governed is the heart of the matter, not just an adjunct, not just a useful means of trying to get a consensus.

Secondly, just as a comment, quickly, I think all this talk about the history of success and failure is totally irrelevant for a variety of reasons, and people should be offered the choices, regardless of whether experts assess the success or failure of those choices. If the name of the game is to try and come up with something -- proposals that are only going to succeed, this is a limitation of choice and, in effect, is a sort of manipulative process by experts against the people. Having made those comments -- because I would make them in my speech and you may not be here and I make those criticisms while you are here.

The question I want to ask you again does follow on from what Mr. McMillan said. You have not indicated what the Government's preferences are - and I agree that I don't care what the Government's preferences are in terms of substantive matters because I think that should belong to we, the people, through the Convention - but more importantly therefore, because I consider the Convention to be the heart of the matter, what is yours and the Government's preference for the constitution of the Convention itself? You outlined a number of possible models but which one is the Government going to introduce? It must know now because the Convention is due very soon.

Hon. Daryl Williams: Thank you Prof. O'Brien. I may have misunderstood your initial comment but it seemed to me you were going back on things that I've heard you say in the past which is very much a pro-democracy pro-people approach. I wouldn't personally object if the Convention were to say, well let's not worry about whether we can get an issue through a referendum, let's ask ourselves what sort of government we really want and then tackle the issue head on. But I think realistically you have to take account of the desire to achieve something out of the convention.

Prof O'Brien: ... (inaudible) ... how can the convention foreshadow what the people might vote? If the convention is to be representative, as you say, then that is the representative body, and Parliament is not ... So of course you have to allow the Convention to have its say. There was no guarantee that the proposals that came out of the 1890's convention would be accepted but finally after a campaign and public debate they were.

Hon. Daryl Williams: I don't think anything that we're proposing in relation to the Constitutional Convention would not be consistent with that approach. As to the particular proposal, that will be announced in good time.

Dr Prager: Thank you very much again for coming today. We've really been very fortunate in your attendance and your erudite exposition to us and answering the questions. We're now going to break for only ten minutes for morning tea. We'll see you back in ten minutes. Thanks very much to the Attorney General.


Dr Prager: I now have the pleasure of introducing Dr. Danuta Mendelson from Victoria. Dr. Mendelson is currently Senior Lecturer in Torts, Public Law and Civil Rights at the School of Law, Deakin University. Dr. Mendelson was born in Warsaw, Poland and arrived in Australia as a teenager in 1964. After completing a Bachelor of Arts degree with First Class Honours she then went on to complete her Masters, Doctorate of Philosophy in Linguistics, Bachelor of Law with Honours and Master of Law, at Monash University. Her Masters degree examined the interface between medicine and law. Her Masters thesis was relied upon by Mr. McMay QC in a House of Lords case, Page v Smith (1995), and Dr. Mendelson's research has included investigation into the difficult areas of consent and refusal of medical treatment and psychiatric illness liability questions. Her papers include works on the legal concept of malingering, compensation for stress and medico legal aspects of pain and suffering.

We are very honoured to have Dr. Mendelson here today to talk to us on the legal context and consequences of the 1946 referendum. Dr. Mendelson -

Dr. Danuta Mendelson

Dr Mendelson: Ladies and gentlemen, I first have to qualify one point and that is what I am going to present is really work in progress and you have to allow for that.

As was said before, since 1906, 42 Constitutional alteration bills have been submitted to a referendum. However only eight were supported by the Australian people. Paragraph 23A of Section 51 which is represented there, was inserted into the Commonwealth Constitution following the successful referendum of 1946. This year therefore marks the 50th anniversary of the amendment. I shall discuss the Constitutional and legal background to the holding of the referendum, the two major cases in which the High Court of Australia determined the meaning of this provision, and also its significance today.

Let's start with Constitutional background. It was on 17th September 1900 that Queen Victoria proclaimed that on 1st January 1901 the Commonwealth of Australia would come into existence. On that day all Australian colonies would become the original states of the Federation, united under the Commonwealth of Australia Constitution Act 1900. The Commonwealth of Australia Constitution Act ratified an agreement amongst self governing political entities - the old colonies - to give up some of the powers to the central new body - the Commonwealth - while preserving sovereignty over the powers they had retained. The Commonwealth could only exercise those powers conferred upon it under the Constitution. All powers not specified in that document, and known as residual powers, remained with the States.

Amongst the powers specifically enumerated in the Constitution, mainly under the paragraphs of Section 51, the so-called concurrent powers were included, and these powers enabled the Commonwealth to legislate with respect to certain subject matters over which the States also had legislative authority under that residual general power. Thus under paragraph 23 of Section 51 of the Commonwealth Constitution, the Federal Parliament was given powers to legislate for old age and invalid pensions. However, the responsibility for health care - general health care including the control of the general practice of medicine, was retained by the States under their residual general powers.

Likewise the Commonwealth under paragraph 14 of Section 51 was given power to legislate in the area of insurance, other than State insurance. However, wide incidental powers were granted to the Commonwealth under paragraph 39 of Section 51 and we shall see that that was quite important for the relationship between medicine and the Commonwealth later on. There did not seem to be any Constitutional difficulty with the division of power between the States and the Commonwealth with respect to health until World War II. For in 1943 the Chifley Government began to introduce a number of social services measures such as child endowment, widows' pensions, maternity benefits and pharmaceutical benefits. The Constitutional foundation of these measures came into question when the validity of the Pharmaceutical Benefits Act of 1944 was successfully challenged in the case known, naturally, as the Pharmaceutical Benefits case. This case placed in doubt the validity of other Commonwealth social services Acts, in particular those providing for maternity allowances, child endowment, widows' pensions, unemployment and sickness benefits as well as hospital benefits.

The only way of ensuring the continuance of these benefits was to amend the Constitution through a referendum as provided for under Section 128 to authorise the Federal Government to provide such benefits and similar social services.

I shall now discuss the origins of the clause, but not so as to authorise any form of civil conscription, which you can see in the bracketed phrase there.

In the 1946 referendum the Chifley Labor Government placed before the people three separate Constitutional bills. The object of the first one was to insert into the Constitution paragraph 23A, extending the Commonwealth power in relation to the provision of social services. The second bill involved granting the Commonwealth powers to legislate for organised marketing of primary products, and the third bill proposed to give the Commonwealth a new power to make laws on, and I quote, "terms and conditions of employment in industry but not so as to authorise any form of industrial conscription".

In its proposal for the Constitution Alterations Social Service Bill of 1946 the Labor Government insisted that apart from the power to confer social benefits, the Federal Parliament should also be given power to provide national medical and dental services. The Leader of the Opposition, Mr. Menzies, supported the extension of the Commonwealth Government's powers to legislate for the provision of maternity allowances, widows' pensions, etc., but was opposed to the extension of the power to medical and dental services. The Opposition argued, with some justification, that the proposed amendment would give the Commonwealth Constitutional power to nationalise the medical and dental professions by making all the medical practitioners and dentists members of one Government service.

In fact, at the time the referendum proposals were being debated before the Australian Parliament, medical services had been nationalised in New Zealand. In the United Kingdom the Labor Government introduced into the House of Commons the National Health and Medical Services Bill which led to the creation of the National Health plan. In the House of Representatives even if Dr. Evatt, the then Attorney-General, was somewhat coy about the issue of nationalisation of medical and dental services, it was made clear during the Parliamentary debate that some members of the Chifley Government were very much in favour of introducing a similar scheme for medicine and dentistry in Australia. To prevent this possibility Mr. Menzies proposed an amendment that extended the power of the Commonwealth to the provision of medical and dental services but not so as to authorise any form of civil conscription. Mr. Menzies explained that the notion behind the amendment was that, and I quote, "if the industrial workers were entitled to be protected against conscription, the members of the medical and dental professions should be entitled to a similar protection". The amendment was accepted by Dr. Evatt on behalf of the Government and the bill was extended to read as it reads today.

The proposal was then put to the people in September of 1946 and was carried nationally and in all six States. While supporting the social services amendment, the Opposition campaigned against the other two bills, with the result that they failed to command the majority of States.

So we come to the British Medical Association against the Commonwealth case. Following the 1946 referendum the Pharmaceutical Benefits Act of 1944 was redrafted and re-enacted. Certain sections and regulations of the new Act provided that medical practitioners should write each prescription for a medication listed in the Federal Formulary of drugs on a Government prescription form. Drugs listed in the Federal Formulary could be obtained free under the Commonwealth scheme. However, the obligation to use the Government prescription form was imposed upon the medical practitioner whether or not the medicines were to be obtained free. In particular Section 7A imposed a penalty of fifty pounds on any medical practitioner who failed to use a prescription form supplied by the Commonwealth for a medicine, the formula of which was contained in the Formulary, or in the addendum to the Formulary. The Constitutional validity of these provisions was successfully challenged in the High Court of Australia in the British Medical Association against the Commonwealth case, known as the BMA case.

The majority declared the Act was valid, however Section 7A was found to be beyond the power of the Commonwealth Parliament, and had to be struck down because the requirement to use the Government prescription form, irrespective of whether the drugs were being prescribed from the formulary or not, amounted to a form of civil conscription. Chief Justice Latham delivered the leading judgment. His Honour determined that as a consequence of the introduction of the words "the provision of" at the beginning of paragraph 23A, the new power given to the Commonwealth relates only to provision of medical services by the Commonwealth and not by doctors in private practice. His Honour defined private medical practice as involving employment by a patient of a doctor who provides the service for which the patient is bound to pay a fee. While the Commonwealth Parliament can validly make laws with respect to the provision of the benefits and for medical and dental services, it is not authorised to make laws providing for the complete control of medical services rendered by any person to any other person, nor does the Commonwealth legislature have Constitutional power to control the practice of the medical profession completely or to such less extent as the Parliament might think proper.

Chief Justice Latham defined the term civil conscription in the following way. He said, "The term civil conscription is wider than industrial conscription. It is applicable in the case of any civilian service that is non military work or service. It could probably be applied to any compulsion of law requiring that men should engage in a particular occupation, perform particular work, or perform work in a particular way."

Justice Dixon, as he then was, in dissent, created a distinction between, on the one hand, a regulation of the manner in which an incident of medical practice is carried out, and on the other hand, the compulsion to serve medically or to render medical services. Justice Dixon determined that unlike the compulsion to serve medically or to render medical services, the regulation of the manner in which financial and administrative incidents of medical practice are carried out - such as using Government forms for writing prescriptions - does not fall within the prohibition. And this he explained was because an incidental interference by the Commonwealth in the complete freedom of medical practice comes within the power of paragraph 39 of Section 51. Justice Dixon never explained the meaning of the term "incident" which when applied to private medical practice "events, circumstances, episodes, occurrences and experiences whereby medical administrative and financial elements are inextricably linked".

This has meant in 1980 the exception to the Constitutional prohibition created by Justice Dixon under the guise of the power of the Commonwealth to regulate the incidents of medical practice for financial and administrative purposes, was upheld by the High Court of Australia in the case of the General Practitioners Society of Australia against the Commonwealth, known as General Practitioners case.

In that case the High Court decided that legislation which had the practical effect of compelling pathologists to be registered under the Commonwealth scheme if the patients were to be eligible for Medicare benefits, and to abide by the obligations thereby imposed, did not amount to civil conscription because there was no legal or practical compulsion on pathology practitioners to perform a medical service. The provisions merely regulated the incident of the medical service through administrative procedures.

Justice Gibbs, as he then was, who delivered the leading judgment, determined that the term civil conscription encompasses any compulsion of law requiring that doctors should engage in a particular occupation or perform particular work, but does not apply to the requirement by the Commonwealth that they perform work in a particular way, if that requirement merely regulates the manner in which administrative and financial incidents of their medical practice are carried out, and does not oblige the doctors to perform a medical service.

The court thus retreated from the strict reading of the prohibition supported by the 1940's High Court in favour of a reading which enables the Commonwealth to exercise quite comprehensive controls over the medical profession in the context of implementing its Medicare programme, without apparently infringing paragraph 23A of Section 51.

So let's now examine some recent Commonwealth initiates which affect the medical profession and pose the question, are these new initiatives, 1995 initiatives, authorised by the power in paragraph 23A of Section 51 of the Commonwealth Constitution.

Well, as I mentioned before, the power to regulate and control individual medical practice rests with the States and the Territories under their residual general powers. It is the States and the Territories that, through their respective Medical Practice Acts and their Health Acts, are able to control the qualifications of practitioners as well as the nature and conduct of their private practice. The 1995 amendments to the National Health Act and the Health Insurance Act contained in the Health Legislation Private Insurance Reform Amendment Act - in those amendments the Commonwealth has attempted to regulate medical practice in ways which may be beyond the Constitutional powers of the Federal Parliament as defined in paragraph 14 of Section 51 with regard to the Commonwealth insurance powers, or paragraph 23A of Section 51 with regard to the provision of medical services.

In the time allowed I shall only discuss the particular provisions in Section 73BBA and Section 73BDAA of the National Act which I believe may infringe paragraph 23A of Section 51 because they aim to control medical services rendered by doctors to their patients and may also amount in certain circumstances to a practical compulsion to perform medical services.

So let's start with Section 73BBA which provides that registered private health funds have the right to negotiate agreement with individual medical practitioners regarding price payable by the funds for professional services rendered by contracted doctors to the funds' members. The agreements include the acceptance by individual medical practitioners of:

  1. the payment by the organisation in satisfaction of any amount that would, apart from the agreement, be owed to the medical practitioner in relation to a professional service by an eligible contributor, and
     
  2. the agreement by the fund to accept assignment under sub-section 20A of the Health Insurance Act of medical benefits payable in respect of the professional service.

Under the assignment agreement, fees for services rendered by contracted physicians to the patient, are not paid by the patient, instead 75% of the Medicare benefits are transferred directly to the Health Fund.

Section 73BDAA of the National Health Act provides for hospitals to act as purchasers of professional services from doctors, whereby each individual medical practitioner agrees to accept payment by the hospital in satisfaction of any amount that would, apart from the agreement, be owed to the medical practitioner in relation to professional services to which the agreement applies. In consequence of such agreement the hospital can agree with the health fund to accept payment from the fund of an amount in satisfaction of the doctors agreed fee. Now Section 73BDAA specifies that under the agreement between the fund and the practitioner, the physician will be required to inform the eligible contributor at any time before the professional service is rendered, or as soon as circumstances permit after the professional service is rendered, of any amount that she or he will be liable to pay. It is unclear upon which head of power the Government relied, when enacting the amendment, however in the case of New South Wales against the Commonwealth, known as the Hospital Benefits case, the majority of the High Court held that the power with respect to insurance under paragraph 14 of Section 51 was limited to control and regulation by the Commonwealth of the relationship between the registered health benefits organisation and their contributors. So it is a very narrow way --- it is really quite a narrow power that the Commonwealth has. It only relates to, as I said, the regulation and control of the relationship between the private health fund and the contributors.

This may have given the Commonwealth the power to comprehensive nullify the patient contributors' rights to medical confidentially vis-a-vis the private organisations under Section 73G of the National Health Act, which I suggest you read very carefully. However, even under the incidental powers vested in the Commonwealth by virtue of paragraph 39 of Section 51, it would be surprising if the power with respect to insurance were to be interpreted as extending to regulation of the therapeutic relationship between medical practitioners and health fund contributors. The question then arises, whether the Commonwealth enjoys this kind of power - that is the power of interfering with therapeutic relationships under paragraph 23A of Section 51.

In the BMA case Chief Justice Latham defines private medical practice in Australia as a relationship whereby, and I quote, "the patient employs the doctor and is bound to pay him for his services. The doctor provides the service in return for the payment or promise of payment of a fee". This model was not challenged in the General Practitioners' case, even though the creation of Medibank, the predecessor of the modern Medicare in 1975 and the consequent establishment of the Health Insurance Commission, provided for medical or Medicare benefits being payable by the Commission to patients who incur medical expenses in respect of professional services. This means that 85% of medical scheduled fees are being financed out of consolidated revenue. However, since under the present system of financing medical benefits the patient retains the choice of a doctor and the doctor the right to select the method of payment from the patients for services rendered, the nature of private practice as described by Chief Justice Latham has not changed.

In the General Practitioners case Justice Gibbs reiterated that the Federal Parliament has no general power to regulate private medical practice in the sense of physician/patient relationship, the Commonwealth's powers being limited to regulated of those financial and administrative incidents of practice that pertain to the provision of the Commonwealth medical and pharmaceutical benefits. For instance, having to write prescriptions on appropriate forms, having to sign undertakings promising compliance with the provisions of the Health Insurance Act and of the regulations made thereunder.

Although in her second reading speech the then Minister for Health, Dr. Lawrence, claimed that doctors will still be able to receive fee for service the legislation has effectively introduced an interloper, in the form of the health fund, into the physician/patient relationship. The requirement in Section 73BDAA that physicians inform the patient about the cost of services to be rendered before undertaking treatment turns the medical clinical practice on its head. Within the patient/doctor relationship the role and duty of the physician is to work together with the patient to achieve therapeutic goals they have arrived at in consultation. Traditionally, society has delegated the responsibility for making clinical treatment decisions to physicians in the belief that making clinical treatment decisions -- physicians are the best qualified to do so because of their clinical training, the degree of emotional detachment, and the ethical ideas expressed through the Hippocratic Oath. It would be these elements that would make doctors, in consultation with the patient, the best qualified persons to take full account of the patient's medical condition, and his or her best interests in the circumstances.

By prohibiting contracted medical practitioners from carrying on practice in what was formerly the normal way, that is by billing the patient after the service has been rendered, the new law compels them to carry on practice in a different way. It imposes upon the relevant medical practitioners a shaman-like obligation to diagnose and predict the course of the patient's condition, disease or illness before undertaking treatment. From a legal point of view the requirement pre-supposes that the decision whether, and what kind of treatment should be undertaken or continued, will not be made by the two parties to the doctor/patient relationship in accordance with the criteria that I mentioned before, but rather that the treatment advice should be determined in accordance with what the patient/contributor can afford under the particular insurance policy.

This requirement goes far beyond the regulation of merely administrative and financial aspects of medical practice and strikes at the core of the therapeutic relationship. As such, the requirement is beyond the power of the Federal Parliament Constitutional mandate.

Let me now move onto the issue of civil conscription and prohibition. The validity of the provisions contained in the Health Legislation Private Insurance Reform Amendment Act -- there are certain aspects of those amendments which may also be open to question on the grounds that they infringe the prohibition against civil conscription. In her second reading speech the Minister stated that the contracts between physicians and health funds are not compulsory, however once entered into will preclude the doctors from raising bills outside of the contract. In the General Practitioners case Justice Gibbs agreed with the majority in the BMA case that paragraph 23A of Section 51 prohibits the Commonwealth from imposing a compulsory service of a medical kind. His Honour also reaffirmed that the expression civil conscription in the paragraph is not limited to compulsory service which is performed full time or regularly, because the relevant words of the prohibition are intended to prevent any form of compulsion to perform particular service.

Now the legislation that I am discussing pre-supposes that medical practitioners contracted to insurance funds who under-estimate the cost of treatment will be compelled either to pay for the extra treatment out of their own pocket, or to provide the services to an insured patient free of charge. This may occur in cases where unforeseen complications develop, for example if the patient developed an unexpected allergic reaction to a prescribed medication, or investigations indicate that the condition initially diagnosed is much more serious and requires more expensive treatment. Being compelled to perform medical service free of charge, even if such service were to be rendered only intermittently, would come under the definition of civil conscription. The fact that the medical practitioner may enter into such an agreement voluntarily does not provide a cloak of validity for the otherwise unconstitutional provision.

Moreover the argument that the obverse parties to the contracts that stipulate such compulsory service are medical practitioners and the insurance funds, rather than the Commonwealth, is compromised by the provisions of the assignment agreements whereby, as I mentioned before, 75% of the Commonwealth Medicare benefits, payable as fees for services rendered by contracted physicians, is directly transferred to the health funds. Therefore even though the amendments impose compulsion to render medical service in an indirect or practical way, they still breach the prohibition against the imposition of civil conscription.

Thank you.

Dr Prager: We have time for one question.

??????: Dr. Mendelson, listening to you I'm not quite certain whether if one takes out private hospital insurance, one maintains ones right to privacy or whether that is prejudiced too as a result of this legislation.

Dr Mendelson: Well, I do believe --- it is quite clear that the private health funds have total immunity from criminal and civil prosecution irrespective of any contract or any law to the contrary in the State or Territory. So even though you could say as a medical practitioner I have a duty of medical confidentiality towards my patient, if in fact the fund wants and in fact gets your clinical notes from the hospital, neither you nor of course your patient will have any recourse to law; in other words there is impunity. So there isn't a right but there is impunity. It is very unfortunate I believe that there is nothing in the amendments, nothing in the Act, to in fact compel both the hospitals and the private funds to tell, to inform the prospective customers, the contributors, who are going to be patients, about the fact that their right to confidentiality has been basically stripped.

Dr Prager: Thank you very much, Danuta Mendelson, for a very lucid and frightening exposition of what has happened recently in 1995. I am absolutely horrified and appalled as a member of the Australian public and as a doctor that patients rights to confidentiality have been removed by the Lawrence legislation and the consequences of that legislation for medical and dental practice.

We are very fortunate to have Dr. Danuta Mendelson today to explain to us the consequences of the 1946 amendment, and how important our Constitution is in Australia, and particularly the referendum in 1946 against civil conscription of the medical and dental professions. Thank you Dr. Mendelson.


Dr Prager: Now it's my pleasure to introduce to you Harry Evans, Clerk of the Senate, Canberra, since 1988. Harry Evans was born in Lithgow and educated at Lithgow High School, and graduated from Sydney University BA (Hons) in 1967. He has served the Senate in a number of senior positions. He was Deputy Clerk of the Senate from 1987 to 1988, Clerk Assistant from 1983 to 1988, Secretary to various Senate committees pre-1983, including the Regulations and Ordinances Committee, Select Committees on the Conduct of a Judge and Allegations Concerning a Judge and Select Committee on Legislation Procedures. He has been author of various pieces on parliamentary and constitutional matters and editor of the 7th edition Odgers' Australian Senate Practice. We are very fortunate to have Harry Evans speak to us today on the historical context of the Australian Constitution.

Harry Evans BA

Harry Evans: Thank you very much and I thank you for your very kind invitation to address this august body. I have done a written paper of which I have lodged some copies on the table over there. Those who find the oral presentation incoherent might find the written version I hope a little more coherent.

In this centenary decade we are looking back at the 1890's, the period when the Australian Constitution was drawn up, and I think we have something of a distorted view of it. I think it is difficult now to get an accurate picture of what went on at that time. Partly this is because great events have occurred later which have interposed layers of frosted glass, as it were, between us and that epoch and it makes it difficult for us to get a clear view. Partly it's because of the tendency of all historical views to engage in anachronism, that is attributing to a past era things which in fact belong to a later era. I think it can be very important to endeavour to get a true picture of the 1890's and the Federation movement because I think it can be very informative particularly in this period when we are thinking about Constitutional change.

I think that the whole approach to discussing the Federation movement in the 1890's is wrong. I think it is guilty of anachronism, because countries drawing up Constitutions has become very commonplace nowadays, it happens every day of the week practically, and we tend to think that this is not an unusual occurrence. In fact the tendency is to think of it as a rather boring occurrence. But this obscures the very unusual character of what went on in the 1890's in Australia. In fact, the process of founding a nation by a process of deliberation and of deliberate choice of the people, of putting together a nation out of disparate parts, has historically been a most unusual phenomenon and has occurred only in a handful of places. The great example, of course, was the drawing up of the United States Constitution, but even in the 200 years since then it has been a very very rare occurrence. Mostly countries have come about by war and conquest and imperial imposition and their borders have been drawn by those sorts of events and they have had independence and constitutions handed down from on high, and they have had constitutions which haven't lasted very long. The founding of a nation, as occurred in Australia in the 1890's, has been very very unusual.

The other thing about what occurred in Australia in the 1890's was the ultra democratic character of the whole process, which makes it even more unusual. The Constitution was drawn up by wholly elected conventions, in contrast to some other bodies which have been proposed in recent times - completely elected convections - and it was then submitted to referendum, a series of referendums in fact, for approval by the whole people of each of the States. That - up to that time and since in fact - has been a very unusual occurrence. There is a tendency, of course, to depict the federation movement in terms of mundane politics - it was all a process of bargaining between a collection of politicians - but even if we so regard it we have to be struck by the unusual nature of it. Most countries in the 1890's didn't have politics as such. The most common form of government was autocratic monarchy or semi-autocratic monarchy. The number of countries which engaged in that sort of free process of discussion and bargaining between different political groups could be counted on the fingers of one hand. In fact, in the 1890's the Australian colonies were regarded as leading the world in democratic politics and foreigners used to come here to examine this peculiar phenomenon.

So the first thing that we have to do in recapturing what happened in the 1890's is to appreciate the unusual character of it and its unusual characteristics. The other error which is made I think in looking back to the 1980's is that we now think, well they wanted to unite the country, obviously they'd have a Federation - pretty obvious thing to do. In fact, the embracing of Federation by the Australian founders was a most remarkable thing to have occurred. What we have to remember is the form of government we now call federation was only invented 100 years before. You have had states coming together in what were called federations or confederations, but what was involved was the different state governments appointing delegates to some sort of central body and then the central body would make decisions which would then be carried out by the constituent state governments.

The system of having the people of the constituent states elect their state governments and also directly elect their federal - their central government with a division of powers between the two, and each separately and individually responsible to the people, was a new invention, and in the 1890's it was still bright shiny new. It had been invented, of course, by the founders of the United States. It had only been adopted by only one other country with any degree of success - that was Switzerland - and it was still untried to a large extent at that time.

It was very remarkable that the Australian founders were so ready to take a leap in the dark of adopting this new system of government which had only existed for that short period of time. It was, of course, a foreign model, it was something adopted from a foreign country. It was totally alien to the British traditions, with which the Australian colonies have been brought up. In fact, if we look at the drawing up of the Australian Constitution it is remarkable the extent to which they departed from the British model with which they were so familiar, and the British political traditions with which they were so familiar, and embraced this foreign model of federalism. It is difficult to appreciate this now because, as I said, federalism has become -- the federal system has become so common, we're so used to it, it's been adopted so widely around the world.

We tend to forget its essential characteristics. For one thing the federal model involves a serious repudiation of monarchical government. It is essentially a republican system of government. Each of the state governments and the central government are delegates of the whole people - sovereignty is vested in the whole people - and each of those governments acts separately --- having separately delegated powers from the people. We tend to forget this but there were people in the 1890's who were very well aware of this. In fact, one of the delegates to one of the conventions pointed out to them in a speech that what they were establishing was a republic in everything but name, and old Sir Henry Parkes said, "hush, we don't want to get into that". But they were well aware of it.

The other thing too is that adopting a federal model involved adopting a separation of powers. In other words separately constituting the executive government, the legislature and the judiciary. The Australian founders did this with great enthusiasm. They had separate chapters in their Constitution on the executive, the legislature and the judiciary, each established with its own Constitutional charter. Under the old British monarchical system, of course, sovereignty is vested in the monarch, and the executive, legislative and judicial branches of government are regarded conceptually as the delegates of the monarch - the Queen's courts and so on. But the Australian founders were not to be put off by that, and as I say, they enthusiastically wrote into the Constitution a structure of separation of powers.

As I said, this readiness with which they adopted this foreign unBritish republican model of federalism based on separation of powers was quite remarkable. I think one of the things that inhibits our understanding of this is that we tend to regard the old founding fathers as great Empire men, loyal to the British Empire, British to their boot heels and so on. In fact, it is here that we are guilty of anachronism, of attributing to that age the attitudes which in fact developed later.

The men of the 1890's were quite fond of good old Queen Victoria, they quite liked the British, thought of themselves as being of British heritage and so on, but they didn't have that intense Empire loyalty and Empire nationalism which in fact developed later on. It was actually deliberately promoted as a political movement by the Tory government in England, and particularly by Joseph Chamberlain, who was Secretary of State for the Colonies. It was fuelled by rising world tensions, the threat from the German Empire, the arms race which ensued between the great powers of Europe. The British Empire started to feel threatened by these developments. There was the South African War which gave a great boost to Empire nationalism and Empire patriotism, and of course there were the events leading up to and including the First World War, all of which consolidated in what I call this Empire nationalism, this feeling of loyalty to the Empire.

It is an anachronism to read that back into the 1890's and to think the founders of the 1890's were like that. I'll just give you a few examples. We seem to think of them as being great sentimental orators who delivered long bursts of sentimental oratory about things. When they first gathered in their Constitutional Convention to consider federation for Australia, the most sentimental piece of oratory that I can find is a couple of speeches by Alfred Deakin and Henry Parkes in which they referred to what they called "the great Republic" and its magnificent federal system of government which they were about to imitate. Henry Parkes reminded the convention that they were following in the footsteps of this great Western republic, the great commonwealth of the west, which now had a population of 70 million free people under this magnificent federal system that they were about to go into. Sir Henry Parkes, as you might have known, wasn't particularly enthusiastic about federalism.

Similarly, during the convention debates Sir Richard Baker, who later became the first President of the Senate, engaged in several heated attacks on the British system of government. He didn't want to have the British Cabinet system of government, what we call responsible government, and he engaged in some heated attacks upon it. He called the Cabinet system a system of ten men trying to govern and ten other men trying to stop them. He referred to the system of having the Governors, or the Governor-General at the federal level, supposedly representing the Queen and supposedly appointing the Government, which was really a Cabinet of Ministers appointed by the majority party in the lower house -- he referred to all that as a British sham. Nobody jumped up and said, you cad, sir, how dare you defame the Empire in those terms, simply because in those days people were less hung up about their Britishness and the Empire and so on, than people later became. He was able to say that with impunity, with some appreciation, because they were much less hung up about those things in those days.

Another little example I'll mention. Somebody showed me a collection of photographs of the federation celebrations in Adelaide. The thing that first struck me - there were buntings and flags all around and there were pictures of Queen Victoria - the thing that struck me was the enormous number of American flags that were being flown around the place. Ten years later nobody would have thought of putting up a foreign flag in the streets of an Australian city. But they were being flown by people because they were conscious that this federal system they had adopted was based on the American model, and in fact they thought they were embarking down the same path as what Alfred Deakin called the great Western republic.

Once we understand that the people of the 1890's were different, they were not as sometimes they came to be later depicted - we can make sense of the debates. People tend to regard the debates which took place at the conventions as extremely boring affairs, but when you read the debates, with an appreciation of what was really going on in the 1890's, you see that the conventions were not divided between centralists and decentralists, as you might imagine.

You see two groups emerging fairly strongly at the conventions. One group might be called the true federalists. I have already mentioned Richard Baker who was the acknowledged leader of that group. They wanted a completely federal system, and to have what they called a completely federal system they wanted to abandon the British cabinet system of government altogether. They pushed very hard for that and they took the convention to a number of divisions on that very question.

On the other hand you have the Anglophiles - the British is best faction - who wanted to stick to the cabinet system of government that they were familiar with in the separate colonies. They were willing to water down federation to make it compatible with the cabinet system.

Everybody accepted that one of the elements of a federal system would be that you would have two Houses of Parliament, with virtually equal powers, one representing the States by population and one representing the States equally, and both having an equal mandate from the electors, from the people. The supporters of the British system could see that there was a problem with that. The British system had evolved with the cabinet responsible to Parliament because there was only elected House, and everybody accepted that it had all the power because it was the only one elected House. When you have two elected Houses there was bound to be a question mark over to which was the government responsible. Both the federalists and the group I have somewhat unkindly called the Anglophiles were well aware of this and wanted to overcome the problem. The first group wanted to overcome the problem by abandoning the British system, and the second group wanted to overcome the problem by considerably watering down the federal system.

The majority of the delegates, being good British compromisers, thought that it should be possible to put the two things together, and in fact that's what happened. But you can see through the debates this constant struggle between the federalists and what could more fairly be called the cabinet government men, over what sort of system they were to have. Being, as I said, great British compromisers, they compromised all along the way until they came to this question of the financial powers of the two Houses.

The Cabinet government people wanted to make it clear that the Lower House had control over finance because they said if it didn't you would have the problem of to which House is the government responsible. The federalists wanted to give the Upper House, the Senate, total control over finance with no limitations. This was the field on which they conducted their great battle over the financial powers of the two Houses. People reading the debates now think why on earth did they spend so much time haggling over this seemingly machinery question, but that's the explanation of it, that this was the field in which the federalists and the cabinet government people fought out their final battle. They were able to dream up a compromise on that as well, which is reflected in Section 53 of the Constitution.

Of course, this tension between the federalists and the cabinet government people is going on to this day. We have heard a lot in recent days about mandates and government saying, we have a mandate. I keep pointing out that it's awkward when you ask how you can get a mandate with less than 50% of the vote. That's not a question which is considered by the mandate theorists terribly much. But the Governments say we have a mandate to govern, we can't be mucked around by this wretched Senate. That thesis is best refuted simply by going back and reading the debates of the 1890's. The mandate theory can be killed off by reading a few juicy passages there. In particular, there was a speech by my old friend Sir Richard Baker who said, now look, let's get it clear. We are not having a British system of government with this Constitution. We are departing very very radically from the British system. We are going to have two elected Houses. We are going to have a division of powers. Get the idea out of your heads that we've got a British system of government. His words were not disputed - not in that regard anyway - by the members of the conventions.

The other thing that I should draw attention to in the work of the founders is the curious way in which they conducted their debates as if they were establishing an independent State, when in fact they knew they weren't. They provided a structure which was really appropriate to a completely independent country, in fact a completely independent federal republic. But then on the other hand, they accepted that they were going to remain in the British Empire, that they would have the Crown and they would have the overarching authority of what was called the Imperial Parliament. In fact, they had to remind themselves at various times that Australia was not to be an independent state because the Imperial Parliament, as it was called, could still theoretically legislate for Australia. There was the Crown which gave a link to the executive government of the United Kingdom, and Governors-General, for example, were, in the early part of the Commonwealth, regarded as the representatives of the British Government, and even the judiciary was going to be linked back with the Privy Council in England.

The curious thing is that you have this Constitution which is, as I say, appropriate to an independent state, inside this sort of Imperial shell. It's a bit like a duck egg. You have the shell, and when the shell breaks out comes a perfectly formed duckling. Once the Imperial shell was removed you had a Constitution which was appropriate for an independent country, and that's why Australia has been basically able to become an independent country by a process of evolution without formal Constitutional change.

The subsequent events, as I said, obscured all this about the 1890's. I have already mentioned the growth of Empire loyalty under the pressure of war and the threat of war. Soon after the Commonwealth was established the Labor Party arrived on the political scene. The Labor Party had not participated in the federation movement, they didn't particularly like federalism as a system. They wanted a system whereby they could capture the treasury benches and nationalise everything, implement a socialist objective. They didn't like the division of power of the federal system. Conservative parties were forced to unite against the Labor Party and the old federalists in this process virtually disappeared. They vanished from sight in about 1910.

This led to a confusion about the nature of the Australian Constitution. People began to think of themselves as having a Westminster system of government. In fact, endlessly over the past eighty years or so we have told ourselves we have a Westminster system of government. What is a Westminster system of government? How can we practise it? In fact, we've ignored the fact that the founders did not give us a Westminster system.

We are now perhaps embarking on a period of Constitutional change. One of the things that has brought that about is the collapse of social democrat ideology that centralised government is the cure for all ills. There is the feeling that Australia needs to adjust its place in the world and so on, and all this leads to a feeling that we're in an era of change. If we are, we can learn a great many valuable lessons from the 1890's.

We can look to their criticism of cabinet government. They were very well aware of the weaknesses of cabinet government, and of which we have become unaware, that it tends to lead to an executive government dictatorship in which parliament is just a rubber stamp for the executive.

They were aware that Australia is a big country and needs a dispersal of power, a regional devolution of power, in order to be governed effectively. They were hostile to a concentration of power in one place. They wanted a dispersal and division of power.

They were perfectly ready to look to foreign models for lessons as to how they should arrange their institutions. They weren't afraid of going outside of their own tradition.

Above all, the one lesson we can learn from them is that they thought they could trust the people. They were not afraid to have completely elected conventions and to submit their work to referendums in which the whole people would vote. They were above all democrats who knew that a Constitutional settlement could only come out of approval of the whole people and by a very open democratic process of debate. The process of debate which went on in the 1890's would put some so-called debates that we have nowadays to shame by the openness of it and the democratic character of it.

In a word, the founders of the 1890's were more modern than some of their successors. If we look back to them without those intervening panes of frosted glass, as I call them, we can see that they were more in tune with our concerns than later generations were, and there is a great deal to be learnt from a proper appreciation of their work.

I have a fear that I've gone overtime, is that right? I apologise.


Dr Prager: Now I have great pleasure in introducing to you Professor Patrick O'Brien. Patrick O'Brien was born in Wodonga, Victoria. He was educated at St. Kevin's College and Melbourne University and is currently Associate Professor of Politics at the University of Western Australia. Professor O'Brien has had a distinguished academic career. He has been a Distinguished Scholar at the Heritage Foundation, Washington DC, Senior Visiting International Fellow at the Institute of Government Studies, University of Berkeley, California and Senior Australian Fulbright Scholar.

Professor O'Brien is an internationally respected political analyst and commentator and he has published widely in Australian politics. His books include: The Saviours: An Intellectual History of the Left in Australia; Constitutional Conflict in Australia; Factions Feuds and Fancies: The Liberals: The Burke Ambush: Corporatism and Society in Western Australia; Burkes Shambles: Parliamentary Contempt in the Wild West; The Executive State: WA Inc. and the Constitution; and finally The People's Case.

I have much pleasure in welcoming Patrick O'Brien to talk to us on the Constitution, democracy and medicine.

Associate Professor Patrick O'Brien

Prof. O'Brien: Ladies and gentlemen, Dr. Prager, Dr. Shepherd and Dr. Milgate, thank you very much for the opportunity of coming here. I think you've done a great job and whoever organised the programme of speakers has done it in almost a perfect order of progression as far as I am concerned.

I'm not going to talk much about medicine but I'm certainly going to talk about the Constitution and democracy. I think the Issues paper done by Christine Rau was excellent and the paper presented by Dr. Mendelson and the remarks by Dr. Shepherd and some of the papers to come will more than adequately cover that field, and one of the virtues of coming to a conference like this is that I shall learn from those papers.

Just let me make one very quick remark about the whole problem of what basically is nationalised medicine no matter under what nomenclature it is presented. It's like the old joke, "mummy, why is the dog licking himself there? Because he can." We get these nationalised systems, whether it be the Dalkins unified national system of higher education which really is - it's still in existence - is a form of civil conscription at the universities, or the Medibank/Medicare complexity. We get them because it is politically possible and reasonably easy to get around the sorts of prohibitions that Dr. Mendelson described. So we do need to attend, I think, to our Constitution to prevent it being hijacked.

I think what Harry Evans so well illustrated was that the democratic temperament and principles that underwrote our Constitution have in fact been hijacked principally by undemocratic forces, mainly motivated by positivistic utilitarian philosophies which are the basis for social engineering. So the whole debate about the Constitution is driven by positivistic utilitarian social engineering procedures, not principles, and I was delighted to hear Harry's presentation which concentrated on those principles. What I am going to do is try and adenbrate on some of those principles and present to you the basic arguments in my recent book, The People's Case: Democratic and Antidemocratic Ideas in Australia's Constitutional Debate, which is on sale here for $20, a bargain, and which I'll sign. Being an author and slightly entrepreneurial I am not ashamed of selling my wares as you are indeed not in selling yours and want to have a free market in which to do so.

I think that what we need to do somehow or other in the Constitutional context is to word some sort of clause by way of a Statute of Limitations against government that enshrines democracy and a free market economy in this country, and that also in a general sense, is so worded that prohibits the nationalisation in any shape or form of the professions, of the arts, of education and of commerce and enterprise. I think that that's one area where people who do support democracy and the free market system must put their minds to, because it is the principal area in which social engineers are most active, and in which they try and manipulate the flaws in the system. So that I think if we are committed to democracy we have to attend to the flaws in our existing Constitution.

However, before I proceed with my criticisms let me say that now the ogre of the Turnbull Keating republic has passed us by, I think that before we actually do have any referendums for Constitutional change we should first celebrate the great achievements as described by Harry Evans in the year 2001. But I hope that the Howard government would now put all available funds to that purpose and cut off all funds to all those groups which were advocating variations of the Keating Turnbull republic immediately, including the Australian Constitutional Centenary Foundation, and that those monies be put into celebrating our great achievements.

Now what better way in which to, so called, educate the people of Australia - all of us - about our Constitution , its history, its values, its strengths and its weaknesses, than by celebrating it in such a manner. Then after those celebrations we then can, if we still want to, continue with the National debate. So I would see whatever proposal the government is vaguely thinking about for a Constitutional Convention next year as merely the first step, the first stage, in a discussion that may take a period of four, five, six to ten years.

Having said that I think that Constitutions are terribly important. I am disappointed by the sort of attitude of the new Commonwealth Attorney General, Mr. Daryl Williams, as we heard this morning, who takes a rather procedural casual approach as if, well, they're just another part of the process of government. I think that Harry Evans really implicitly laid that one to rest by pointing out that in fact civil Constitutions, that is democratic ones, are something historically and humanly unique. I think the greatest statement to that effect was made by Jacque Maritane, a French philosopher and theologian, in his book Man and the State, which was written in 1951. Maritane was one of the authors of the new German Constitution, the West German Constitution, and an author of some of the United Nations Charter of Human Rights, though he was critical of some of the clauses. He argued that democracy was in secular temporal terms mankind's highest achievement, and that this great achievement was ever under threat, and yet it guaranteed human kind the possibility of biological survival. Remember he was writing at the time of the end of the Second World War, at the beginning of the Cold War, with the possibility of nuclear annihilation. His basic argument is that no other human invention had created the possibility of people pursuing human decency in a co-operative manner as democracy had.

The problem with the utilitarian positivist tradition which dominates debates in our society is that it undercuts that, it pooh-poohs the idea of looking at great ideals.

Constitutions, be they civil or authoritarian, are the co-fashioners of political cultures and the ways and means by which societies are governed. In the words of the late and great Aron Wadasky(?), as you organise, so shall you behave.

They have dramatic impacts upon the quality of life, liberty and happiness within any given society. They are the principal fashioners of the nature of social relations by determining whether a society is predominantly hierarchical, individualistic, egalitarian or fatalistic in its ethos and ways of doing things. They can restrict or encourage civility. They can encourage or hinder movement towards fulfilment of the great human goals of liberty, fraternity and equality, or favour one at the expense of the others.

They can sweeten relations among the people by encouraging civility and trust or engender suspicion and mistrust by making individuals overdependent upon rule by grace and favour, and thereby also fatalistic. The best example of that of course are the totalitarian regimes where you have two cultures, the hierarchical official culture and the popular culture which is fatalistic, that is the belief that you can do nothing to change anything.

From the democratic perspective they are not, nor can they be permitted to become, sacrosanct and mystical documents manipulated by the few for the few over the many. Nor however well they have served us must they become permanently set in the mores, conditions and times in which they were constructed.

If the ways and means by which we are governed are found wanting from the democratic perspective how can there possibly be any principal objections to asking all the people, and not just a Parliamentary or executive chosen rump, to be equal partners in the co-operative communal venture and a venture of refashioning those means to the satisfaction of the vast majority of people, and at the same time leaving the way open for future generations to make changes if the new ways prove inadequate in particular respects.

Constitutions are best tested through usage. Indeed that has been the whole history of Constitutional development in England, the source of our adopted and adapted system of Government. However, it is by no means a one way street. As we have all discovered, regress has frequently outweighed progress, not just in the United Kingdom and Australia but elsewhere in the world as the tragic and brutal aspect of 20th century politics testify.

So why be curmudgeonly and repressive. Why deny the golden opportunity to practice the magnificent civic virtues of trust, reciprocity and partnership in a manner most fitting and appropriate for a peace and liberty loving people, that is through a civilly forged concord in which each and every citizen is without exception an equal partner.

Hence my distress further at Mr. Williams' address where he keeps on talking about the stumbling blocks, not about the great positive aspects of Constitutions. It's all a bit of a worry, it's always a bit of a trouble. We are always told that, yes, history tells us that's it's difficult to change, etc. etc. etc. I am sick and tired of this repressive attitude in Australia, that is a part and parcel of the repression of enterprise, the repression of creativity and of suppression. We have become ultra-cautious despite all the talk about the great flowering of Australian science, culture, etc. We have become repressive, and we need to free ourselves from this dulling repression.

In the history of the modern state, from the 17th century until today, one of the chief questions for political theorists and constitution makers and for peoples generally, has concerned the nature and locus of both executive and sovereign power and the relations between them.

In Australia, though executive power is constitutionally vested in, and exercisable by the Queen through Governors and Governors-General, history and practice tell us otherwise. Real executive power under Australia's Westminster type of government is vested in and exercisable by Prime Ministers and Premiers and their cabinets, that is by the political executives which are formed from the majority parties in the Lower Houses of our parliaments which, in turn, they dominate.

The term parliament is a correct term normally when applied to the Australian institutions because, by and large, they are not legislators. They are what the French origin of the word indicates, talking institutions, talking shops. It is only when the government of the day does not have a majority in an Upper House of a parliament that they might approximate being true legislators.

The constitutionally undefined, and thereby also essentially absolute powers of appointment, patronage, and social, cultural, political, financial and economic decision making of our political executives, prime ministers and cabinets, have been the least considered areas in Australia's contemporary constitutional debates at both Commonwealth and State levels. These debates have focused on the republican monarchy question in terms of the status of heads of state, at the expense of the nature and extent of real executive power, and where sovereignty does lie and should lie. That is the debate has been conducted at the expense of democratic constitutionalism. Consequently detailed theoretical and empirical analyses and discussions of executive and sovereign power within the framework of the history and further development of democratic constitutionalism is not merely timely, it is essential to Australia's future state and federal constitutional arrangements.

The history of democratic constitutionalism which, as Harry Evans pointed out, is a very short history, has largely been the history of individuals and whole societies attempting to limit and check and balance executive power through the constitutional entrenchment and practical application of the political sovereignty of each and every individual.

This applies equally to England's glorious revolution of 1688/89, as it does to the US Declaration of Independence and Constitution, and as it did to our Constitutional debates of the 1890's, and it does today in the former Soviet empire. Thereby the sine qua non of any review of the exercise of executive power must begin with reflections on its nature and usage. We must understand what executive power really is.

Therefore a first priority for democratic constitutional review must be the analysis of executive power from every possible perspective. Until this has been sufficiently done, the function, scope, effects and limitations of executive power and its relations with the other branches of government, particularly parliament, the courts and the bureaucracy and its impact on the nature of civil society, community relations and the lives of individuals, can be neither properly understood nor determined, nor indeed can the very idea, let alone the reality, of democratic citizenship be comprehended.

If we do not know where we stand in relationship to executive power we cannot define the nature of our citizenship. If we do not know where sovereignty lies, who has it, again we cannot define the nature of our citizenship. I will discuss sovereign power later, but if the time runs out just let me explain what it essentially means. All power derives from and belongs to the sovereign authority. Therefore it is the sovereign authority which legislates, which executes, which taxes and which appoints. Moreover, if the sovereign authority does not have the means at its disposal to enforce its will it is not sovereign. Until we know who has that power - and that power cannot be delegated - we do not know what it means to be a citizen. So in that sense we have not got citizenship in Australia. We are subjects of sovereign executive power. Sovereignty lies with the executive as I will indicate a bit later and indicate why.

Executive sovereignty, the sovereignty of the executive, is incompatible with parliaments that act as legislators. Executive sovereignty, which we in effect have, requires secrecy to such a degree that it has become one of the principal characteristics of the conduct of government throughout Australia, and increasingly in the last two decades. Indeed there is a strongly held view at both Commonwealth and State levels within all major political parties that the efficient conduct and maintenance of our present system of government is in fact dependent upon cabinet secrecy, even concerning party political operations.

For example, the arguments advanced before the WA Supreme Court and the High Court of Australia by the former Minister for Health and former Premier of Western Australia, Dr. Carmel Lawrence, and a West Australian MLC, Mr. John Howden, and fully endorsed and financed to the tune of upwards of a million dollars of taxpayers' money by the Keating government, that the survival of our democracy - and that was the argument put before the court - would be threatened by former cabinet ministers giving evidence to the March Royal Commission about what may or may not have been said at a State cabinet meeting concerning party political strategies to be employed to destroy political opponents, and that our system of government is structured on secrecy, are ominous harbingers of what we can expect if what I call in another publication, hourglass republicaners determine our constitutional future. They are offering us a triple whammy in the form of the mad, the bad and the ugly.

In defending cabinet secrecy the way they did during the Easton Royal Commission, Labor spokespersons to the former Prime Minister Mr. Paul Keating to every member of his cabinet, were advancing what can be best described as the Polit Bureau model of government. In the former USSR the Polit Bureau was the peak body of both the ruling party and the government. All its deliberations were secret and it was above the law. This was justified in the name of democracy, the salvation of the system and the best interest of all who lived in the USSR. In reality however what it all amount to was government by inquisition.

In a splendid book a chap called Harvey C. Mansfield Jr. - and the book is entitled Taming of the Prince: The Ambivalence of Modern Executive Power - the author astutely notes that with the post Machiavellian emphasis on, and love affair with unchecked and thereby also irresponsible and unaccountable executive power, and its origins in absolute monarchy, there has emerged in many modern polities, including modern democracies, a weak and a strong executive, with sovereign lying, or being exercised by the latter, that is the strong executive, in the name of the former, the weak executive, which is frequently the institutional legacy of monarchical sovereignty.

Without belabouring the point it must be said that recent experiences in Australia, vis-a-vis the power relationship between governors, governors-general, prime ministers and premiers and cabinets, suggests that such a judgment is most apposite to Australia and its states in particular.

So for the sorts of reasons that I have given and for the advancment of truly responsible and accountable government what we must do is first distinguish conceptually between sovereignty and the executive, so that secondly, and most importantly, we can define, limit, separate and check and balance them in a new constitution for all Australians because - and taking up Harry's point and the fear about cabinet government expressed in 1890 by Mr. Baker - those fears have come home to roost. Here we have the office that totally dominates politics in Australia, and increasingly does so, the office of prime minister and cabinet - not even given constitutional recognition. Now, as we all know, even from the most simplistic studies of power, an undefined power is an unlimited power. So we do need --- now most of the problems that have been discussed by this conference so far in relationship to medicine etc. derive from the unlimited powers of the Prime Minister. An American president is almost powerless vis-a-vis the American polity in comparison with an Australia prime minister.

It is absurd that there is power to declare war, there's power to make unchecked appointments to the courts, to ambassadors, to give licences and monopolies out to particular people at the expense of others, to impose systems, to change systems overnight, is all exercised by an undefined office. So we must write that most powerful executive office into the Constitution, put limits on its power, and checks and balances on those limits.

I know time is up, I'd like to go on but I can't. This leads to the second most important point, that we must write specifically into the Constitution that sovereign power lies with the people of Australia individually and collectively. Not with the people, because that means with the State. Of course the critics of this argument say, "oh, you're just preaching motherhood". But of course they say that because those who argue against that are defenders of unlimited undefined executive power.

Of course if you write into the Constitution the specific statement that sovereign authority, sovereign power, lies with the people individually and collectively then you must establish the institutions through which that sovereignty is practicably expressed. If we do that we then can automatically see that we then must turn the parliaments into true legislators, so that they become the people's legislators. We then must also see that we exercise the power of appointment so that the people, through the parliament, can have some say in who our judges are, in who our ambassadors are, who will be the head of the ABC. All of these are just executive appointments. We've got to attend to that because if we do not then we are going to get into bigger trouble as systems of control develop in a more refined way in the next century.

The present Liberal Party in every state says, "oh well, look, we're nice chaps. We're not going to use this power in a nasty way". Well, tell me another. But even if they are gods and angels, given that that power is there, whatever so called good they do can be completely undone within two or three months by a government that has the mind to impose an entirely different system without basic reference to the people.

In conclusion, I think that we owe it to the founders of our Constitution, we owe it to ourselves, and more importantly we owe it to posterity to try and clean up our Constitution, to make it more perfectly democratic so that we again can become a leader in world terms of what a truly democratic society is.

As Dr. Shepherd said, the problems confronting the medical profession vis-a-vis executive power and impositions are the same problems that are confronting every other profession, though the medical profession was the first profession to be targeted as the model of what you can do to control and co-opt the professions basically as conscripted agencies of government.

I'm sorry I have to finish, but you can buy my book. Thank you.

Dr Prager: Thank you Professor O'Brien. I think Professor O'Brien is bringing some vital messages to us today for the future of Australia, for the future of freedom and democracy in this land, and the future of independence of the professions, and the future of the Australian people having a say in what goes on in our country. So we're really very fortunate to have Professor O'Brien today. I know we could listen to him a lot longer. He'll have another opportunity and you'll have an opportunity to ask him questions at 4 pm today. Now we're going to break for lunch and we wish to return promptly here at 2 pm. Thank you for being such a wonderful audience.


Mr Milgate: I would like to introduce to you our Chairman for the second half of the day, Dr. Keith Woollard. Dr. Keith Woollard has a very important meeting with the health insurance industry at 4.15 so he will be relieved during the question session by Dr. Shirley Prager. We don't want him to be late for that meeting.

Dr. Woollard graduated from the University of Melbourne in 1970 and after completing his internship in Perth, he went to the United Kingdom. Only two years later in January 1973 he had passed the examinations for Membership of the Royal College of Physicians. He was a member of the British Medical Association from 1972 to 1982 and returned to Australia to take up an appointment in the cardiology department of Royal Perth Hospital in February 1981 when he joined the Western Australian Branch of the Australian Medical Association and he has been a member since that date. He is in a private cardiology practice in Fremantle. We'd like to also add that Dr. Keith Woollard on 25th May 1996 became the Federal President of the Australian Medical Association and is now the public face of medicine in Australia. To that State's credit Keith Woollard is the first Western Australian to achieve the status of Federal President of the AMA. Am I correct Dr. Woollard?

Not only is Professor Patrick O'Brien representing Western Australia strongly but also our Federal President, Keith Woollard, who will chair this afternoon's session. Thank you.

Dr Woollard: Thank you very much, Stephen. It's a delight to be here and I must compliment this morning's speakers and Stephen and all the people involved in organising this meeting. I personally have found it remarkably informative and I am always delighted when my mind is expanded with intellectual discussion rather than recreational drugs, of course.

I might add to those lists of eminent Western Australians, of course, the Attorney General Daryl Williams, who is my local Member of Parliament, which has some substantial advantages, given the current political climate.

It's my great privilege to welcome Maurice Neil now to discuss further issues today. Maurice is a Sydney Queen's Counsel, also admitted in the other States and Territories and Ireland as well. He works in common law, professional negligence, defamation and media law, commercial, administrative, constitutional and appellate jurisdictions. He has a long and impressive curriculum vitae involving himself in many enquiries and commissions, including those into the police matters, the early release of prisoners, the Street, Wood and WA Government Royal Commissions.

He is a Vietnam veteran, and for five years was a Member of Federal Parliament. He also acts as a common law arbitrator in the New South Wales Supreme Court.

For the past five years he has been providing very valuable advice to the Australian Doctors' Fund on a variety of matters including the defamation, trade practices and discrimination laws affecting the profession, freedom of information and administrative appeals tribunal matters that might affect the fund itself, the ABS Census on the medical profession and proposed changes to the Health Insurance Act.

He is a very eminent person and I know he never rests. I was outside having morning tea there and went to speak to Daryl Williams, my friend, and found him receiving most of Maurice Neil's forthcoming speech during morning tea, so it hasn't been lost on just us alone, Maurice.

Maurice Neil QC

Maurice Neil: Thank you, Dr. Woollard. Ladies and gentlemen, I would ordinarily speak off the cuff after lunch in particular, but I have been asked to deliver a paper which I will read and then make one or two supplementary additional comments.

The title of the paper is Managed Care, Doctors' Contracts and the Australian Constitution.

Background - at the request of the ADF this paper explores a number of questions without providing specific solutions. The ADF wishes to stimulate forward thinking and planning on possible areas of legal redress if the government does not reverse the former government's policies on managed care and doctors' contracts. Facts referred to or assumed in this paper are based on information provided to me by the ADF.

Managed Care and Contracts - I have been provided with a sample of a contract called a "Purchaser Provider Agreement" proposed to be entered into between a health fund and "medical providers". It relates to services to be provided by medical practitioners to members of the fund, patients, who have been admitted to hospital. The fund states that it will not interfere in the relationship between doctor and patient. The fund agrees to pay direct to the practitioner fees for particular items calculated in accordance with a formula in respect of valid claims made by the practitioner, who agrees not charge any additional fee to the patient. Co-payments are allowed in limited circumstances. Invalid claims may be billed direct to the patient. Dispute resolution procedures ultimately involve arbitration.

A pamphlet produced by a health fund states that it is proposed to publish a register of doctors and their selected co-payments maxima for the information of members and their GP's. A register of specialists will enable members to determine if they may incur any out of pocket expenses. The register will also provide GP's with a list of specialists who have agreements with the funds. A sample schedule refers to five specialists in paediatrics, three of whom charge no out of pocket expenses for members, one of whom charges a maximum out of pocket expense of $400, and one of whom charges a maximum out of expense of $800.

The ADF claims that in practice it will be inevitable that doctors who are shown as charging any out of pocket figure will receive less work and perhaps eventually no work. The ADF also claims that the exigencies of medical practice and ethics are such that the doctor patient relationships must inevitably be affected by such agreements, and that the bargaining power of doctors is inadequate as against the power of the health funds, and the capacity for bargaining is restricted by threats of action under the Trade Practices Act.

I am advised that Managed Care operates in many parts of the United States of America. President Clinton is on record as saying in late 1995 that the health system in the United States was in a very severe crisis. The differences between America and Australia on the question of the need for managed care seem to include the following.

Health costs as a percentage of GDP in the USA were 9% but have gone up to 14% and are still rising. In Australia the figure is 8.5% and decreasing. The use of technology in the United States is widespread and expensive, in part promoted by a fear of law suits unless every possible avenue is explored. The technological addiction is not as serious in Australia. The Americans have traditionally not had a referral system from general practitioner to specialist. They have self referral which means that a citizen simply chooses to go direct to a specialist. Under the new system of Managed Care, specialist positions particularly in California have been devastated, as Health Maintenance Organisations, known shortly as HMO's, use ordinary physicians in lieu, and/or as "gate keepers" for referrals to specialists. In Australia the gate keepers role has traditionally been performed by the general practitioner.

The Medicage system in the United States only covers a small percentage of the population in the virtual poverty zone. It is not universal as with Medicare in Australia. In the US there is therefore pressure on employers to insure employees for health care. The employers shop around for the cheapest insurance available. This results in a large number of generally healthy patients coming onto the HMO books with a consequent large profit in respect of them. The HMO's then make every effort to reduce the costs involved in servicing the unhealthy group. There does not seem to be a great incentive to subsidise the costs of the unhealthy by the premium income representing the healthy group.

This contrasts with Australia where the Medibank levy and general revenue are used as a transfer/subsidy mechanism from general tax payers, most of whom are healthy, to those more in need of treatment such as aged persons and the chronically ill.

The law without contracts - Initially I was asked to consider what legal avenues might available to ameliorate the effects of a contract system. Various possible options came to mind and will be addressed below. However, to date there have been virtually no contracts entered into between doctors and health funds in Australia. Precisely what would happen if contracts were entered into on a wide scale cannot be predicted. The ADF strongly fears that the severe blights of the United States would be repeated here, or at least there would be serious prejudice to patients, doctors and the community generally.

It seemed to me on analysis that the position was somewhat akin to that of a lawyer giving advice to a person who is asked to be interviewed by the police. Absenting special legislative provisions or other special circumstances the conventional advice is do not speak to the police, do not sign anything. Such advice is given in order to maintain and protect the rights of the citizen whose position might be adversely affected by the making of admissions or the signing of documents. Even in civil cases, a lawyer who is asked by a client to advise urgently and on limited information on whether the client should sign a document would often advise do not sign, in order to preserve and protect the client's legal rights and position.

I have been provided with no information to indicate that the legal rights, including bargaining rights, of doctors would be improved by the signing of contracts. The ADF is convinced that the overall position of doctors would be prejudiced by entering into such contracts. It is entirely a matter for each individual doctor to decide whether to enter into a contract.

If a contract system comes into vogue and detrimentally affects the rights or position of doctors there is unlikely to be any legal remedy that will fully cure the problem. At best the law may provide some relief from some of the symptoms.

The law with contracts - If doctors do enter into contracts two broad situations may emerge. Firstly there may be general voluntary entry into contracts by doctors, in which case the law will be largely irrelevant. Secondly, if the profession splits and a substantial number of doctors enter into a contract system, there may be a need for some legal relief if the rights of other doctors or patients are prejudiced.

General common law - There is general law which grants relief against a party inducing another party to breach a contract. This might be applicable but only in rare and exceptional circumstances such as where a doctor had an ongoing contractual relationship with a patient.

Conflict of Interest - The system of Managed Care seems to be based on the concept of a fund acting as a health wholesaler, buying doctors' services in advance and on-selling them to patients. To access the doctor the patient pays a premium to the fund which directs which doctor treats the patient, and then pays the doctor. At present, the doctor treats the patient, who pays the doctor, if necessary with the assistance of insurance. In each system the doctor is liable for treatment.

It is a matter for the profession to determine the extent to which the Managed Care system involves ethical problems. The pressure for reduced services such as less time in hospital and less procedures while in hospital, clearly has the potential for placing the doctor in a conflict of interest situation. However, in the absence of legislation there would be no specific legal redress.

Breach of contract - If a member of a fund contracts for appropriate cover with choice of doctor and does not receive the applicable level of treatment or choice of doctor, it is possible to envisage actions for breach of contract by the member patient against the fund. Again, pragmatic considerations, particularly financial, may mitigate against the bringing of action unless sufficient patients have been similarly affected as to warrant a class action. Such actions could be available in respect of treatment by hospital staff and/or technicians.

It may be assumed, however, that the funds will require the members to agree to Managed Care arrangements as a condition of health insurance. The legislation seems to envisage that the Trade Practices Act would not cover the position. However, it may be possible for patients to mount individual or class action challenges to such arrangements pursuant to the Trade Practices Act.

Negligence - If a fund requires the patient to attend a particular doctor who treats the patient negligently, the fund may be liable in an action for negligence brought by the patient. Much would depend on the circumstances, for example, was the fund on notice of any prior problems or did the fund require the patient to be treated by a practitioner on matters not within his particular specialty.

Trade Practices Act - If the health funds became so powerful that their actions became anti-competitive, especially if the number of health funds became few, it might be possible to bring proceedings similar to those known as anti-trust proceedings against HMO's in the United States. This would involve substantial evidentiary and financial burdens. Relief in class actions is becoming more available in Australia. If particular groups of doctors felt that they were the subject of anti-competitive or unfair practices on the part of funds and doctors who had contracts with funds, it is possible to envisage class actions.

In the United States the ranks of nurses have been decimated. Some have brought class actions to protect their positions and also have alleged that the system involves consumer fraud.

The Constitution - There is no specific provision in the Constitution which prevents doctors from entering into contacts for Managed Care. The 1946 amendment which instituted Section 51 23A allows the Commonwealth to make laws with respect to various allowances and benefits but not so as to authorise any form of civil conscription. As long as the contracts are really voluntary no question of civil conscription will arise. If sufficient numbers of doctors enter into contracts to bring about a situation in which the remainder are forced into contracts it may be possible to mount a challenge.

The High Court rejected a civil conscription challenge to the 1973 Health Insurance Act, but had previously held that civil conscription could apply to legal compulsion to engage in particular conduct, and also compulsion to perform work in a particular way. If the ultimate effect of Managed Care was to require doctors to perform work in a particular way there could be an argument that civil conscription had arisen. It would be necessary to show that there was Commonwealth legal compulsion to engage in the conduct or to perform the work in a particular way and that such compulsion was either the direct or necessary consequence of the legislation permitting the contracts.

Legal concerns in a no contract environment - The ADF has concerns that the Trade Practices Act may be used against doctors opposed to the implementation of contracts. It is feared that the ACCC will claim that agreement among doctors not to enter into contracts in some way amounts to anti-competitive practice and may be a secondary boycott under Section 45 of the Act.

Jurisdiction is said to derive from many doctors operating through family, service or practice companies and proposed provisions covering the profession. Much will depend on particular facts. The ADF advises doctors to make their own independent decisions. If in the future the ACCC took objection to a particular groups of doctors coming together and agreeing not to enter into contracts, the ACCC would have the burden of proving that such arrangement was for the purpose of, or likely to have the effect of, substantially lessening competition. No doubt the doctors would argue that the purpose was to preserve and extend competition.

The High Court has held that the Constitution contains an implied freedom of political expression. The court struck down proposed legislation to prevent political advertising on the basis that the Constitution provides for a democratic system of representative government, and without the opportunity for freedom of discussion and expression on political issues, a citizen cannot meaningful participate in the system of representative government.

No doubt doctors would seriously consider a constitutional challenge to the Trade Practices Act preventing them from exercising their rights of freedom of discussion and expression on matters of social and political importance, particularly in the context of preserving their bargaining power in negotiations with the government or health funds. The ADF may wish to consider making representations to government to amend the Trade Practices Act to remove the threat of possible action.

So ends the paper. What I did foreshadow to the Attorney was the possibility of some follow-up correspondence to him and to the Treasurer, who has general ministerial direction over competition matters now, and the government generally, on the basis that it seems to me to be obnoxious and odious that ordinary citizens going about their ordinary business discussing important issues of the day, and indeed trying to discuss those issues in a way that protect worthy persons seeking to benefit humanity through the medical profession, should be even subject to such types of threats.

However, I should express one conflict of interest myself, and that is if doctors did enter contracts it might well be to the benefit of the lawyers.

There are other aspects that might be developed in due course. One would not necessarily want to give away one's hand on some matters that might be looked at, particularly in the area of what may happen if there is a developing problem. In looking at some of the research you are probably aware of some of the horror stories from America about, for example, a lady awakening after a hysterectomy operation and being abused by a technician because she was not monitoring the IV equipment sufficiently, and the agreement had some kind of clause in it whereby she was a part self carer or self healer. Another lady who under arrangements was not permitted in the last few weeks of her pregnancy to travel more than 30 miles from her own home. Even the Americans are thinking that that might be unconstitutional. She ended up having the child 40 miles from her home in a hospital run by the HMO that she was contracted to but they would not assist because it was not in the hospital near her home. And many examples of doctors who have written to funds suggesting some improvements in the way they operate, and getting a letter immediately back saying "as you are not as enthusiastic a person as we need to have in our system your contract is cancelled" under whatever the provisions may be, and they in many cases have virtually become penniless.

We have a saying in the law if you have a difficult case and you win it, then sometimes you don't necessarily go back to ask for all the costs. You don't, if you get out of the lion's den, necessarily go back for your hat. If certain doctors want to go into the lion's den we will try and give them legal hats to fight with but one would think they might be better off not requiring too much legal assistance by entering upon that course.

Dr Woollard: Thank you very much. I'm sure he'd be happy to take some questions.

Stuart Bollan: Stuart Bollan from Sydney. Could you please just run by me a simple scenario that I find it difficult to understand, and that is if a group of patients join a health fund which, as a consequence of that union, forms a powerful position to negotiate with both private hospitals and individual doctors, how then is it in any circumstance to be seen to be anti-competitive that if a doctor can no longer, or a hospital can no longer negotiate with a patient one by one, then the organisation that they might choose or the grouping that they might form, would seen to be possibly anti-competitive if you like when the patients have joined a circumstance to give them a greater power of bulk purchasing, or whatever you'd like to call it.

Maurice Neil: I'm not quite sure that I would understand all the implications of the scenario that you're putting forward but one would have to see what might develop. Generally speaking, the way things are moving at present is the power of -- I'm considering doctors in particular not necessarily patients grouping together because I don't know of any particular patient groupings that have necessarily developed in the way you have suggested.

Stuart Bollan: Just you're grouped together if you're a fund member in MBF or Medibank Private.

Maurice Neil: If you're talking about patients grouping together by joining a fund I don't think that comes within the ordinary concept of actually grouping together. Persons have ordinarily entered into a fund, they go along, they make their application, they join up. I don't think one would apply questions of bargaining arrangements to what those persons have done. If you then say what happens at the other end, what the fund is doing, it all depends on what the fund seeks to do with its power. And as I understand the position the funds are seeking, bit by bit, to be able to introduce this Managed Care system which would seem to give them additional power. But they do get certain privileges under the legislation. The question arises whether or not, if they become anti-competitive, there is some provision under the Trade Practices Act or some ancillary law that would enable something to be done about it.

Dr Woollard: Thank you very much again.

Maurice Neil: Thank you, doctor.


Dr Woollard: Our next speaker is Dr. Donald Sheldon. Don is well known to all those in the medical profession. He is Head of the Department of Upper GI Surgery at Royal Prince Alfred Hospital and Head of the Division of Surgery at the Masonic Hospital in New South Wales. He comes from Canterbury Boys' High. I think you had some illustrious classmates at Canterbury Boys' High including the odd Prime Minister. He graduated from Sydney University a couple of years ago and from the Australian College of Surgeons in 1964. He also was in Vietnam as the team leader of a surgical aid team and in 1968 he was awarded a British Commonwealth Scholarship to study in London.

He has been heavily involved in medico politics and holds several current positions including Chairman of the Council of Procedural Specialists which has representation from all the groups including dental surgeons, and has been a Federal Councillor for the Australian Medical Association and a Councillor of the Royal Australasian College of Surgeons. He is currently a member of the Case Mix Implementation Board and the Inter Collegiate Committee on Mammography Screening. He is a Past President of the Australian Association of Surgeons. He is also indefatigable. He has the rather daunting task of talking about medicine, past, present and future and has to condense this into 30 minutes so I wait with anticipation as to how he will do so.

Dr. Donald Sheldon

Dr Sheldon: Thank you very much, Keith. My topic this afternoon that Stephen Milgate kindly allocated is the Australian medical practice, past, present and future. And seeing that won't take me very long I thought I might actually mention a couple of other things before reading my paper apropos of what's been said already today.

We've been hearing a lot about the Australian Constitution and in particular ways and means by which it has been abused to make the practice of medicine that much more difficult and mechanisms introduced to try and coerce doctors into some form of nationalised situation.

In 1986 the Australian Association of Surgeons obtained the opinion from a Mr. Tom Hughes QC as to whether the Medicare legislation itself constituted an indirect means of coercing doctors into salaried positions under government control, in other words did the Medicare legislation itself constitute a breach of the civil conscription prohibition in Section 51 23A. His opinion was that there was a case to argue but that with the - I'm using his words - that with the current constitution of the High Court such an appeal would be unlikely to succeed. In other words the impression we were given was that the government had put this Act, the Medicare legislation in place, and the High Court would almost certainly favour that position.

Subsequently on the advice of my friend, student and colleague, Dr. Ray Burne, who is not only a medical practitioner but a practising barrister, we have been looking at an alternative way in which the structure of the Medicare legislation might be challenged. That is not such much a constitutional challenge - in other words not looking at it as to whether it breaches the constitution - but whether there's a legal challenge based on the interference with basic human rights. The Medicare legislation, as you know, prohibits the individual from insuring himself for the reasonable expected costs of health care, and we believe there's a very real breach of basic human rights there and that could well be a course down which we will travel, particularly when we have further talks with Mr. Maurice Neil.

The profession of medicine has some unique features which distinguish it from other fields of human endeavour. The principles upon which it is based were espoused by Hippocrates as long ago as 440 BC. Despite modifications the basic code of conduct which determines the social contract between doctors and the communities they serve remains essentially unchanged. At least until now.

The professional code demands that doctors place the welfare of their patients above all other considerations - even the practitioner's own safety. The profession has acknowledged that not all citizens can afford their services but have insisted that none shall go without treatment through lack of financial resource. With such noble principles enshrined in its code one wonders why there exists a determined effort to de-professionalise the practice of medicine.

Australia inherited the basis of its health care arrangements from Britain. Hospitals were run by religious and charitable organisations. Doctors of high esteem were appointed as Honorary Medical Officers and devoted part of their working week to provide services to the poor and indigent in a charitable or publicly funded institutions without any charge at all.

The original Australian Constitution, the original draft, saw health care and hospitals as purely the responsibility of the States. This has been mentioned several times already today. The only role of the Federal Government in health care that the founding fathers saw was that of quarantine services. Could these founders of our Constitution have imagined that we would have 6,000 public servants in the Commonwealth Department of Health in Canberra by 1996.

When I commenced practice as a surgeon at Royal Prince Alford in 1970 we worked in an honorary capacity. A means test determined which patients were eligible for free service. In many ways this system was closer to perfect than any system before or since.

The main flaw was the means test which resulted in some anomalies and unfair determinations as to who should pay and who should not. These problems could have been easily corrected by a number of simple mechanisms.

In 1974 Medibank replaced honorary service with a system of discounted payments for doctors treating non-chargeable patients in the public hospital system. The prevailing argument was that public patients should not be subjected to the stigma of accepting charity. The stigma seemed to be more an issue with the health planners than it was with the patients. The same concerns did not apply apparently if the charity were dispensed by government rather than the medical officers.

At the entrance to the Royal Prince Alfred Hospital there is an inscription which states "Here abideth faith, hope and charity, but the greatest of these is charity".

This virtuous sentiment became redefined with the introduction of Medibank by Mr. Hayden. Charity dispensed by one individual to another was resented. Such was the mind-set of that era.

Many precious concepts that had moulded our philosophies and stimulated doctors to embrace medical practice as a lifetime commitment were discarded. Traditional humanitarian attitudes were subjugated to the "universal health care is a basic human right" mentality of the 1970's. The belief that the more fortunate members of society should provide their services free of charge to the less fortunate was deemed obsolete. Charitable enterprise and the user-pay system was replaced by universal benevolence administered by central government and funded by the bewildered taxpayer.

The chapter on health in E.G. Whitlam's book The Whitlam Years sheds light on the political ideology that drove health policy and produced Medibank in 1974. Mr. Whitlam lamented Mr. Menzies' amendment to Section 51 23A of the Constitution which, as we've heard today, says "but not so as to authorise any form of civil conscription". Mr. Whitlam failed to see the importance of preserving the intimate and crucial relationship between patient and doctor, the very basis of ethical medicine. He resented this Constitutional prohibition on the nationalisation of the medical profession which he perceived as fundamental to an ideal, government controlled health care system. He went on to say, and I quote "Although the Constitutional position precludes the nationalisation of doctors it does not prevent the nationalisation of hospitals", and later on he said, "It is more important to nationalise the hospitals than the doctors".

Such was the obsession to nationalise the medical profession that health policy thereafter was directed primarily to circumventing Section 23A of the Constitution.

With the introduction of Medicare in 1983, Dr. Blewett and Mr. Hawke mounted the final assault to nationalise the profession. Private medical practice and private hospitals found they had to compete with a government funded public sector which offered totally free, un-means-tested, unlimited hospital services to all citizens as a basic right. This was the ultimately irresponsible exercise of health policy and could be explained only with the realisation that it was intended primarily to undermine private hospitals and private medical practice. Why else would a government insist on giving away hospital care to those who had the capacity to pay?

The programme certainly damaged private health care. The number of people with private health insurance has halved in the 13 years since the introduction of Medicare and continues to fall. Private hospitals have lost a lot of business and many doctors now rely heavily on public hospital income.

However, Medicare has been a Pyrrhic victory. The public system has collapsed under the burden of patients exercising their right to free treatment. As Keith Wilson, another Western Australian of eminence, observed when he resigned as that State's Labor Health Minister under the Carmen Lawrence ministry, Medicare had been a bonus for the affluent but had made access to public hospital care that much more difficult for the poor and the under-privileged. Yet these were the people whom the system purported to look after.

Bed shortages, waiting lists, cancelled operations, premature discharges are now commonplace in public hospital systems. These problems are the legacy of Medicare. The end result of providing services for no charge is to impose compulsory rationing.

Belated but futile attempts were made by the Keating Government to resuscitate the private health industry and ease the rationing crisis in the public sector. However community rating, rising premiums, larger gaps and the availability of a free alternative to private care persist. People continue to drop their private insurance and both the Richardson scheme and subsequently the Lawrence reforms have failed. Doctors have refused to sign contracts with private health funds. The fundamental ethic of the doctor's maintaining his autonomy to treat his patient free of government or commercial interference has been lost in the United States with the introduction of managed care there. These programmes have been strenuously rejected by doctors in Australia and I can assure you shall continue to be so.

Recent changes to the Trade Practices Act have created uncertainties about the futures of our medical colleges. There have been claims that these institutions could be acting in an anti-competitive manner, restricting training and creating an artificial shortage of practitioners. However, these bodies are run on strictly ethical lines. The Councillors and Fellows act in a totally unpaid capacity in accordance with Hippocratic principle. The role of the college is to maintain standards of clinical practice and to encourage research for the sole purpose of ensuring maximum safety for those who contract disease or who sustain injury. Surely if any institution is acting in the public interest it is the college. If any organisation is eligible for exemption under the Trade Practices Act it should be the Royal Australasian College of Surgeons and the other sister colleges.

Medicare, on the other hand, is a legislated monopoly. Much of the malaise now affecting our public and private health sectors is a result of the restriction of trade inherent in the Medicate legislation and should now be subjected to the scrutiny of the ACCC. Medical insurance should not be a government monopoly. The new push for unfettered competition should be applied to the medical insurance industry.

If one reads the guidelines of the Trade Practices Act to the health sector you will see that exemptions are available so that institutions or individuals can behave in an anti-competitive way provided that it is in the public interest. But being in the public interest is at the discretion of one of the commissioners in the ACCC and to my knowledge there is no guidelines or statements as to what "in the public interest" means. It is interesting that Medicare, presumably, although a monopoly will be deemed to be in the public interest and preserved.

We are also told in that document that the AMA fee schedule is inherently anti-competitive but seeing that it is not adhered to then it will be satisfactory and will be allowed under the ACCC. I really think that whole legislation is a monumental nonsense.

When patients get sick they want to see a doctor - not a fund co-ordinator, not an administrator, not an economist and not a health department bureaucrat. This basic relationship has endured for millennia and should not be ignored in future health care schemes. Attempts to destroy or pervert the fundamentals of professionalism in medicine are mischievous and unwise. Any system of health care not based on professionalism will not endure.

The era of centralised health funding and management by ideologues and economic rationalists has run its course. We have completed a period wherein health care dollars have been collected in Canberra and redistributed to the States. Attempts to redistribute these funds equitably have involved progressively complex formulae. Case-mix based funding has created a growth industry for health ecomonists. Despite years of efforts and millions of dollars the economists are still struggling to find the elusive solution for health dollar allocation.

The only way to guarantee rational and fair health care spending is to reintroduce patient surveillance into spending decisions. Governments should provide safety nets for catastrophic events and make provision to guarantee services for the underprivileged. The way forward is to re-establish patient autonomy and responsibility in health spending decisions. I think this is what Professor O'Brien was telling us this morning in the whole range of human endeavour. Traditional health insurance arrangements have obviously failed - as witnessed by the fact that we're down to about 31% of the community covered - and urgent measures should be taken to deregulate the industry - as Dr. Buntine would say - and permit health savings bonds, expanded trauma insurance and other forms of insurance into the market place.

Medical insurance which attempts to provide no gaps or first dollar cover will fail, as they have done in every other type of insurance that adopted that philosophy. Unlimited utilisation of no gaps plans creates cost explosions that result in either unacceptable premium escalation or rationing of services. Systems designed to be free to all eventually become unavailable even to the underprivileged. We can never restore equitable health care delivery until these principles are accepted and put into practice.

Turning to hospitals, they need to move into the future by accepting that the new model will be that of a motel type of accommodation on the same campus as the operating suites and high dependency areas. Day surgery and early discharge are now established and in general accepted by the public. However, care needs to be taken to prevent over-zealous administration from promoting the "quicker but sicker" ethos that pervades US care.

The time honoured, respected, noble and virtuous medical profession is committed to the patients who seek the practitioner's care. That should not, and in fact cannot change, despite those who would wish to destroy our profession.

In summary, the principles that should govern our future health care system are -

Firstly, the acceptance of the concept that the profession is the best and fairest model to govern the delivery of health care by doctors and their patients.

Secondly, the recognition that government and the profession must co-operate to ensure proper health care services to people with limited financial resources.

Thirdly, the insistence that individuals be responsible for their own health care arrangements, and that other options for private health insurance be permitted and encouraged.

And fourthly, the acknowledgment that systems that make patient surveillance of, and responsibility for payment of medical and hospital bills, is fundamental to cost containment and essential to prevent abuses in the system.

The Utopian era where benevolent government offered all things medical to all people for 1.25% of their taxable income is finished. More self reliance must now be restored to the individual if the dream of equitable health care for all is to be realised in the future. If we continue down the current pathway a 9% levy will be required to meet the real costs of health care, as obtains in Germany.

Thank you.

Dr Woollard: Thank you very much Don. Do you have some questions for Don? We do have a few minutes before afternoon tea. Richard, in the front row here.

Dr Richard Tjiong: Don, as usual that was enlightening, I enjoyed your talk. I would like to single out one aspect of what you said and ask a question, not only to yourself but perhaps to other members in the audience who may be closer to the government, and that's the question of co-payment.

Central in the problem facing Medicare and the government administering Medicare is, as you said, cost containment. To me as a practising doctor, and a specialist at that, I can't help perceive that the lack of co-payment by the patient has encouraged over-utilisation both by the patient, as well as encouraged by in some cases practitioners. You spoke of gate keepers. The best gate keepers of the lot are the patients themselves, not the government who pays out what essentially is a Medicare bulk billing open cheque, as it were, or for that matter under managed care, managed care insurance companies. They will at the end of the day be third party fundings as it were.

In other words, coming back to my question, would you agree with me or what would your view be with regards to the reintroduction of co-payment as an essential element, among others, for containing costs? And the second question is where is the government going with co-payment?

Dr Sheldon: Thank you very much, Richard, I'll try and address your question. What I've just said in this paper here stresses that first dollar insurance, or the other word for a system without any co-payment, will end up being over-utilised and the premiums then go up to a situation so that nobody can afford it. My late father-in-law was the claims manager of the NRMA some years ago when they first introduced a five pounds, it think it was, excess, and in the first year that was introduced their payouts dropped 50%. I think the same principle applies to medical costs. If there is no price signal for the patient, if the patient hasn't got to check the account and put their hand in their pocket - if the fund or whatever agency is financing their care pays the first dollar - and even worse with the managed care principle where they don't even see the account, it's sent directly to the fund - then the potential for over-servicing by doctors and over-utilisation by patients becomes inevitable.

I am not sure what is in Dr. Woolridge's mind with co-payments. He seems to say one thing one week then reverse it the next. But I think there is a realisation that some form of co-payment must exist otherwise the system must break down.

Peter Fursby: Don, Peter Forsby, Sydney. Our society has been modelled and modified by these 13 years. It expects more from its government than it should have ever expected and politicians - seeing that the future is not more than three or six years long - have pandered to their wishes. Do you believe the state of the general population is such that they expect and will demand of the politicians no co-payments and a continuation or an improvement, from their point of view, of a no paying system, or is there a possibility of turning around the minds of our society.

Dr Sheldon: I think that's a very pertinent question, Peter. For 13 years people have come to realise that they can get totally free treatment in the public hospital system. I am referring now - I guess you are too - to hospital care rather than to out-patient consultations and visits. The community have got to like the idea that the system costs them nothing and this is the imperative on the funds. The funds are being told that people are dropping out of the funds because they pay their premiums and they still get gap payments on top of that.

To even up the system you have to be able to provide your clients, the health fund clients, with a system of no gaps policies. But as we have already said, how can any industry compete successfully against a government funded system which offers everything for absolutely no payment at all without any means test. This is the real reason that the funds are in disarray, this is the real reason that the funds are going down the tubes, because they are trying to sell a product to people who have a totally free alternative up the road under Medicare.

Until some form of responsibility comes into the equation and says that people who can afford to pay have to pay something then we'll never get it right. I agree with your suggestion that the politics of it are difficult. It's interesting in Indonesia, there's no such thing as a free public hospital bed. Even when the average wage is about $5 a day patients still pay something to go into the public hospital system. It's cheaper in Australia to be a public hospital patient than it is to be living at home. You even get free meals in the public hospital sector. The means test that we had originally had some unpleasant anomalies in it, but the Social Services Department already categorises people into pensioners or health care card carriers. In other words, to a large extend the means testing is done automatically, it doesn't need to be done by the hospital. You could make a strong argument for a plan that still gave those individuals totally free treatment in the public hospital sector. But until we go back to a system where people who have the capacity to pay have to pay something we will have the current crazy system where everything has to be rationed, hospitals are being closed down, beds are being restricted, and not even the poor and the indigent can now get into our public hospital system because everybody wants to avail themselves of the freeby.

So even though it's going to be politically difficult and there will be some squeals I don't think there is any other alternative other than to end up closing our hospitals virtually altogether.

Dr Woollard: Any other questions?

Graham Denistine: Graham Denistine is my name. I'm an obstetrician and gynaecologist from Melbourne. I should add I don't know for how much longer I'm likely to be an obstetrician either, even though this still happens to be the part of my practice that I enjoy the most. But that's not what I'm up here to whinge about.

I try to look a little bit about the broader issues here. Something which I haven't heard mentioned which worries me is patients' expectations of their medical care. I believe it's something that can run down in a country and in fact I believe I'm seeing it my professional lifetime. Certainly in obstetrics, women will now accept obstetric care of a lower standard than they have in the past and this is why they are leaving the private obstetricians in droves. I think this was very much brought home to me recently on a visit to Italy where I visited the University department of obstetrics and gynaecology in Turin, a very large city, which has only four gynaecological oncology beds. This is a sophisticated society but they have become adapted to such things as I saw, as a woman having a radical vulvaectomy which broke down. She was still discharged from hospital after a few days and returned every day with a relative under each arm to have this horrendous surgical wound attended to. This is just a comment that I think we are seeing and I think that the Australian population will accept waiting lists, they will accept more junior specialists attending to them, and they will accept the things that we know are not in their interests.

Dr Sheldon: If I could just respond to that. I think what you say is very largely true. One of the great difficulties our profession has - again something which distinguishes it from other professions - that they're not going to sit back and let sick people suffer or die and our altruism in that regard is our Achilles heel. One of the reasons the public hospital system continues to thrive is that doctors still have that sense of obligation and responsibility and professionalism to look after people in that arena. I would hate to think that we would take a step back from that, but again that is one of the problems that is both a virtue but at the same time a burden that our profession has to carry.

Ray Burne: I'm Ray Burne, you know that. I wondered if you'd comment on this. How much of this problem about co-payments is our own fault. How often do we see a patient, find that they're not in a fund and automatically assume this person must be a public patient. How often do we adequately explain the alternative. After all, this person has been saving one to two thousand dollars a year for x years by not being in a fund. How often that they can see the specialist next Tuesday and it might cost them $15, that being the difference between the two fees often. How often do we say he's a public patient, we must send him along to out patients. Are we to this extend the authors of our own problem?

Dr Sheldon: Yes, I think that's a very good point, Ray. Statistics show that the average Australian citizen has one operation in their lifetime and to belong to a health fund for a year costs somewhere between $1500 and $2000. One of the big changes that have occurred in the last few years has been the reduced length of stay that people spend in hospitals, and more and more people are finding that they can have a relatively major operation and be out of hospital in three days and still pay less than they would have paid for a year's premium. This is being reflected in the fact that the last statistic I saw showed that 22% of patients having operations in private hospitals were uninsured. The self insured or the uninsured is growing and I think there is a greater awareness amongst practitioners and the patients themselves that health insurance is a bad product, it is a bad deal and a lot of them are abandoning it.

I think this is why Peter Woodcock's Silver Cross type of insurance will become the alternative that certainly the young and the healthy will take up. Because we have a system of community rating it means the young and the healthy are subsidising massively the old and the frail, and the young and the healthy are starting to wake up to this, and although they might feel noble about it, when it comes to the crunch they just can't or won't afford to continue to stay in the current type of health fund.

The expanded trauma cover can be provided at a much -- at about half the premium of the comprehensive insurance. It gives the individual a lump sum on diagnosis and then it empowers the patient to select the type of health care he wants to pay for and it puts patient surveillance very much back into the equation and would hopefully overcome a lot of the anomalies we see in spending decisions on tests and how long you stay in hospital and which doctor you go to and so forth. But I think your point is well taken that the suggestion that because somebody is uninsured automatically means they have to be a public hospital patient is not correct.

??? : (inaudible) I was wondering, sir, if you would comment on your views as to the relationship of professional independence and DRG's and casemix funding.

Dr Sheldon: Casemix funding - firstly casemix - because when you use the term casemix funding the casemix enthusiasts resent that. They say that casemix is a classification system and funding is just one of the uses that could be made of it. From the medico's perspective casemix funding is purely a way of rewarding performance on a pre-determined cost weighted basis for the service offered. I think the biggest problem I have with casemix funding, that it's too hard. They've been working on classification systems for five years and it's still too crude. They can't get precisely the levels of difficulty and all these multitudes of co-factors that affect the problem of looking after the individual patient I think make the whole system unnecessary. First of all I don't think its workable and secondly I think it's too complicated. We already have a casemix system that you can read in your Medical benefits schedule. The operation schedule is already there and I think we're much more wise to use that.

As regards professionalism I'm not sure that it has a direct relationship that I can see off the top of my head, but I'll talk to you at afternoon tea about that.

Dr Wollard: Thank you very much, Don.


Dr Woollard: The final speaker in this session is Dr. Richard Tjiong. Richard is the Chairman of United Medical Defence, the oldest and largest of the Australian Medical Defence organisations, and a Graduate of the University of Sydney again - we have two graduates of the University of Sydney again, I think they're trying to compete with the West Australians here this afternoon - and is a practising Ear Nose and Throat Surgeon.

He joined the Council of United Medical Defence in 1986 and was elected President - now he's called the Chairman - in 1993, having served as Treasurer beforehand. He is the Foundation Chairman of Australasian Medical Insurance Limited.

Keith was admitted to the Bar of the Supreme Court of New South Wales in 1991 and teaches ear, nose and throat surgery and well as health law at the Medical Faculty of the University of Newcastle.

I have to add to that, of course, he joins a group of us this afternoon who could only be described as vertically disadvantaged. Looking round at some speakers including myself and my co-chairman this afternoon, I think we all fall into that category. I think this is another step forward - as well as Western Australia standing up - I think those of us who are not particularly tall are also standing up to be counted. Thank you, Richard.

Dr. Richard Tjiong

Dr Tjiong: I am particularly disadvantaged because English was not and is not my mother. So as the previous speakers had to resort to their papers, I have to resort to both my papers and my computer.

Dr. Woollard, Dr. Shepherd, distinguished guests and ladies and gentlemen, it gives me great pleasure to be able to speak today to you on the question of the Constitution and medical malpractice crises. Data from major medical indemnity organisations confirms that the incidence of malpractice civil suits issued against doctors has doubled in the past five years, while significant components of awards for damages in most Australian States have doubled in a matter of two years.

Christine Rau in her preamble, in the yellow papers that you have, on page 27, did mention the figures from Justice Badgery-Parker of the Supreme Court, to the effect that the New South Wales Supreme Court has recorded an unprecedented increase in the number of suits against professionals, and it was his deduction that in the main those professionals were or are doctors.

This trend is set to continue. The Harvard studies suggest that in the relevant population only one out of eight negligent outcomes led to a civil suit, and that there were four times more non-negligent adverse outcomes than there were negligent incidents. The Harvard figures may suggest that the potential pool for alleged malpractice claims could be 32 fold the number in the system. While there are no real comparative figures in Australia, there could be no question to the proposition that only a small percentage of negligent outcomes are litigated.

The steep increases in subscriptions to medical indemnity organisations of recent times could not compare with the worst that is yet to come. The estimated sum of current annual subscription revenue collected by the indemnity industry in Australia is in the order of one hundred and twenty five million Australian dollars. That figure does not take into account the insurance premiums paid by institutional providers. Theoretically a 32 fold increase in malpractice claims may result in a national indemnity subscription revenue of four billion dollars per annum. This amount is more than half of the total payout by Medicare to all privately practising doctors in 1995.

Traditionally compensation for personal injuries has been processed under an unfettered common law system. The need for legislative intervention became obvious when common law was seen to be inadequate to address the demands for compensation faced within certain industry groups. Personal injuries compensation achieved prominence in the workplace arena in the wake of the industrial revolution of the 19th century. The legislatures in each Australian State subsequently reacted by introducing a comprehensive scheme of compensation applicable to the workplace. Similarly as a result of advances in the motoring industry, the legislatures have introduced schemes of compensation to cope with the resulting incidents in personal injuries arising from motor traffic accidents. In an analogous way many of the personal injuries associated with health care could in the main be ascribed to the post war advances in medical technology and knowledge.

When assessing compensation common law judges look at the circumstances of the individual cases before them to which they apply the common law that has been developed over the years by other judges. They do not tend to take into account the impact of their decisions on the society as a whole.

Justice Henley in the case of Butcher and Peterson - Justice Henley is a judge of the Court of Appeal, as many of you may know - he invited parliamentary intervention in the event society would have thought the award in that case was excessive. In Butcher, the future care costs of an injured motorist was assessed at four million dollars, which allowed for a private hydro-therapy pool, a special disability car, live-in caring couples and their locums. It is only natural for members of the medical profession to react by urging the capping of damages and by demanding increases in Medicare rebates in order to fund increases in defence costs.

However, there is an urgent need to look at the bigger picture. A responsible profession such as the medical profession ought to own up to its obligation in compensating patients for the true negligence of its members. It should look again at the funding arrangement of its current indemnity scheme, the standard of practice of its members as it relates to incidents of negligence, as well as at reforming the tort system of compensation.

This paper takes a brief look at a proposed scheme, being proposed as a model, which encompasses these three areas, which in fact are referred to in the Professional Standards Act, the New South Wales enactment of late 1994. However, by excluding personal injuries claims this legislation is not applicable to the health care profession.

First, the scheme is not about establishing a government funded no fault compensation scheme. It is not about an industry funded no fault compensation scheme confined to health care injuries. The proposed scheme retains fault based compensation. All health care providers, both individual and institutional, should carry proper insurance arrangements which are commensurate with the fault related compensable risk that their activities generate. There should be risk management programmes applicable to the whole profession to uphold a standard of practice of medicine and to reduce the incidence of negligence.

Tort laws should be reformed so that process and access are streamlined and statutory guidance should be given to common law judges as to what are the reasonable maximum awards to be given for any particular injury.

To be effective such a scheme must be integrated as well as comprehensive. It is acknowledged that at first glance the scheme falls comfortably under the traditional jurisdictions of the states. The nature of health care delivery, the standard of delivery, the judicial system of compensation arising from a departure from that standard, suggests a strong need for a national approach. The scheme addresses a problem that is not just simply a state problem, it's nationwide. Another important reason relates to the fact that health care funding is derived mainly from the Commonwealth, both through Medicare and through State grants, let alone the funding of health care in its own territories and jurisdictions. Then there is the cost of defensive medicines. As we all know indemnity subscription payments by doctors are derived largely from that Federal government funding.

The previous speakers have noted that to date the High Court has given judgments on three cases related to the Commonwealth powers over health. Mr. John McMillan in his book Commonwealth Constitution Power Over Health suggests that available powers have been under-used. In a seminar such as this, may I therefore be so bold as to venture some thoughts and raise some questions as to the existence of powers in the Commonwealth, either to establish the proposed scheme nationally or to influence its establishment by the States. Then there is the question on the political process, which I shall touch upon in my conclusion.

Firstly, with regard to the insurance element. Most individual health care providers especially doctors and dentists obtain malpractice cover from medical defence organisations which, with one exception, offer only discretionary indemnity cover. It is in this sense that medical defence organisations do not offer insurance contracts and are therefore thought to be outside the Commonwealth Insurance Act 1973. Medical defence organisations offering purely discretionary cover are not required to conform to insurance accounting standards and until recently they have not recognised the importance of insurance principles in the management of their financial affairs.

One such principle is as basic as the requirement to be fully funded in any one year for all the incurred liabilities. In the book called Medical Negligence Established in 1990, a British authority attached to a medical defence organisation rejected the notion of full funding and described such a requirement for full funding as vexatious. I quote, "Had its status as an insurance company been established the union would have subjected to many vexatious requirements including in particular that of maintaining a fund amply adequate to cover present and past contingent liabilities". As Fiona Tito(?) has acknowledged and I agree, that a good deal of the reason steep increases in defence subscriptions, particularly with regards to some if not all defence organisations, relates to a reversal in their position to that stated in this quotation, that is, they have been trying to catch up.

Unlike insurance underwriters in the eyes of a discretionary defence organisation, investment incomes have not been an important part of their revenue nor have the investment incomes been tax effective. Most discretionary medical defence organisations do not carry re-insurance partners in the manner considered prudent in the insurance industry and enforced under the Insurance Act.

Discretionary organisations, I submit with respect, are not the vehicles of indemnity that would appropriately address the current and future demands made on the medical profession for malpractice compensation. Furthermore, the discretionary nature of their contracts with members do not provide the security of an insurance contract for both the practising members and third party beneficiaries, their patients. Public interests mandate that health care providers carry insurance and at adequate levels to fund the negligent risk generated by their activities. Demands on their funds are now of such magnitude that management of the indemnifiers must be conducted at the insurance industry level.

Only until very recently discretionary organisations have shown considerable reluctance to move into proper insurance arrangements for their members. I am particularly pleased today to be able to relate to you that in the last two weeks only, all defence organisations operating in Australia have come to recognise and acknowledge that the best cover for doctors (at least in Australia) is provided by insurance. They've gone even further by acknowledging that such an insurance should be claims made but with compulsory run off cover on retirement. That, ladies and gentlemen, has the same effect as covering the doctors on an incidents base.

This recognition by medical defence organisations does not preclude the necessity to continue our present journey into the Constitution. Health care issues extend beyond insurance and reach out beyond doctors. What about private and public hospitals. Do they currently carry sufficient insurance for personal injuries? A private hospital in South Australia found itself insolvent last year when a single malpractice verdict exceeded the insurance cover of that hospital by some three million dollars. That hospital has been liquidated this year.

In that same year a New South Wales public hospital had to dig into its general revenue and sought further injection of funds from the state, when a malpractice settlement exceeded its insurance cover.

In the proposed scheme all individual and institutional health care providers are to carry adequate insurance. The question is, does the Commonwealth have the legislative powers to mandate such an insurance requirement.

The final report of the professional and indemnity review suggests that the Commonwealth may attach insurance requirements to Medicare rebates pursuant to the incidental powers related to the medical and dental benefits that you are all familiar with now, that is Section 51 placidum 23A of the Constitution. However, such a route may catch only those practitioners whose services are rebatable by Medicare. Providers such as privately practising midwives and institutions would be exempt.

What about the corporations powers. Corporations power under placidum 20, section 51 of course, of the Constitution has been used extensively since the Concrete Pipes case determined by the High Court in 1971, which widens considerably the High Court's interpretation of the corporations power of the Commonwealth, as the legal members in this audience would have easily acknowledged. That section says parliaments shall have power to make laws with respect to foreign corporations and trading or financial corporations falling within the limits of the Commonwealth.

This power has been the foundation for legislation on matters as diverse as trade practices, foreign takeovers, food labelling, tobacco advertising, equal opportunity, sex discrimination, privacy protection, environmental protection and consumer protection. That is since the 1971 case.

Corporations play a major role in health care. Besides the fact that they manufacture and import drugs and medical appliances, advertise their products, conduct medical research and education, they operate hospitals, and more and more individual medical practitioners are employed by incorporated practices.

The corporation powers refers to trading, financial and foreign corporations. Trading has been given a wide interpretation in the Adamson case. It extends to business activities carried on with a view to earning revenue. Trading does not need to be the sole activity of the corporation, it is enough that it is a sufficiently significant proportion of the overall activities of the corporation or a substantial corporate activity.

Furthermore, the activities of the trading corporation that are the subject of the Commonwealth power extends to acts done by the corporation for the purposes of trade - Tasmanian Dam case - and Professor Lindell has suggested even a wider view that would include any activity of a corporation including internal management. It is certain that the corporations power extends to consumer protection generally. Consumer includes doctors who are consumers of insurance products, as well as the patients who are consumers of the health care services. It therefore seems that the corporations power could be used to legislate a requirement that all health care corporations carry certain malpractice insurance for the protection of the employed individual providers and for the protection of the recipients of their services, the patients.

It may arguably be used further to sanction the recovery of damages by the corporations against the individual employee who is the wrong doer, i.e. the Commonwealth may exact legislation akin to the New South Wales Employees Liability (Indemnification of Employer) Act 1982. This legislation prevents the employer recovering against the employee. That is to say that employees are fully covered by their employer for any negligence claims against the employee arising from the employee's work. Like many legislations, exceptions do apply.

What about the insurance power? So 51 23A health benefits power and the corporations power now catch the individual providers and corporations in health care. There are others who are still left out. What about the more pervasive insurance power.

Section 51 placidum 14 of the Constitution provides that parliament shall have power to make laws with respect to insurance, other than State insurance, also State insurance extending beyond the limits of the State concerned. So what is insurance? Professor Lane suggests that while the essence of insurance centres around the existence of an insurance contract, he cites authorities to the effect that the court is now doubting whether such a contractual element is a characteristic of insurance in the constitutional sense. It is therefore highly arguable that the review by an Australian court of the findings of Sir Robert McGarry, Vice Chancellor, in a 1979 case of NBU versus the Department of Trade in England, may lead to a finding that the indemnity business carried out by discretionary medical defence organisations comes under the Commonwealth insurance power and that the Insurance Act would apply to these organisations.

Could the insurance power be used to compel rather than to regulate insurance? The power may allow the Commonwealth itself to establish an insurance scheme underwritten by its own insurer. In addition, there is a respectable constitutional opinion, at least in the Australian National University - to say that although the issue has not been tested, the power could be used to compel health care providers to take out such insurance from non government insurers.

Many would accept that a Commonwealth law compelling all motor vehicle drivers to take insurance for traffic related personal injuries would be a reasonable and legitimate use of the Commonwealth insurance power; similarly if the insurance power is used to legislate, compelling all health care providers to take out malpractice insurance.

A more contentious power is the financial power, the financial grants power - contentious at least in the political sense. Section 96 of the Constitution provides that parliament may grant financial assistance to any State on such terms and conditions - I'll start again, forgive me.

Section 96 of the Constitution provides that parliament may grant financial assistance to any State on such terms and conditions as parliament thinks fit. We all know that Federal grants made to States under this section are an important part of both the Federal and State economies. It seems that the High Court has given a wide application to the words terms and conditions that may be attached to a State grant. Besides specifying precisely the activity to which the grant is to be spent, or on which the grant is to be spent, the Commonwealth may require a matching grant from the State residual funds, it may even discriminate for or against a State in the allocation of the Commonwealth funds. There are respectable authorities who believe that the Commonwealth may attach terms and conditions widely as it sees fit.

Could the power on State grants be used to require the States to introduce a uniform system of malpractice insurance for all health care providers? I venture to say yes.

To sum up, the Commonwealth may well have powers under several sections of the Constitution to effect the insurance requirement of the proposed scheme. It has plasidum 23A to catch the individual practitioners who receive Medicare benefits. It has the corporations power to reach health care institutions. It may require the States to effect the insurance as a condition of State grants. Its insurance power may well be used to catch all, except of course State executive institutions. This power, the insurance power, certainly is available to regulate the insurance aspect of the scheme.

The second element of the proposed scheme is on risk and quality management in health care. Health authorities and learned colleges have for some time recognised the needs for ensuring the delivery of health care - of quality care. Several initiatives are already in operation. The Health Minister in New South Wales has issued a directive to collect and manage first incidents in public hospitals. Learned colleges have started compulsory programmes of post graduate education. The Australian Council of Health Care Standards makes incident monitoring and quality assurance programmes mandatory for accreditation. The list goes on. However, there is no system of integrated incident monitoring and quality health care management throughout the health care industry, let alone throughout the nation.

Mutual medical insurers, as an industry, have vested interests beyond just simply cost minimisation. To mutual medical insurers and to the medical professions risk management is synonymous with quality management. Risk and quality management is an integral part of an insurance operation.

Once it is established that the Commonwealth has the power to achieve insurance objective, the power to legislate on risk and quality management may be derived from both the implied and expressed incidental power of the Commonwealth. Alternatively but more specifically, the Commonwealth ability to legislate a national and integrated system of risk quality management in health may be founded on Section 51 plasidum 23A power to provide medical and dental benefits.

Tort reform forms the third element and probably the element that commands the highest attention of the medical section of this audience and the medical profession generally. The objective of tort reform is not to curtail the payouts by insurers, but rather to introduce a more accessible and equitable system of compensation which is fair to the patients and affordable by the community - a system with greater certainty of outcomes and therefore greater predicability of financial costing and managment by the indemnifiers.

Tort law needs review both with regards to the substantive and to the procedural matters. The following is a mere outline.

Negligence by reference to reasonable conduct needs to be affirmed. A recent State court judgment suggests an attempt to dilute this definition. In some cases the courts may arguably have created, in effect, a form of strict liability for adverse outcomes - for simple adverse outcomes. This trend must be resisted.

Next there is the causation issue. The High Court in Rogers and Whittaker has moved in line with consumers' expectation and with the law in the North Americas. It has, however, left a very important issue of causation unresolved. The subjective patient or the particular patient test applicable to the causation issue has previously been laid down by the New South Wales Court of Appeal in Alice and Wallsend. After Rogers and Whittaker the causation issue should be determined by the objective patient test, otherwise known as the reasonable patient test. In Robell and Hughes, a judgement of the Supreme Court of Canada, there was a lengthy explanation in the judgment to the effect that to apply the subjective or the particular patient test would have left the defendant doctor open to a hindsight reconstruction by the aggrieved patient.

Next, with regards to the area of diagnosis and treatment recognised by the courts as being technical areas of medicine. The courts have recognised that reasonable standards in this area need to be made by the court by reference to experts' evidence.

What is expert evidence? What are experts? They should not be "hired guns" who act as advocates for one of the litigants, as was the case with one of the plaintiff's expert witnesses in the celebrated case of Woods and Loundes. Recourse should be made by the courts to panels of accredited experts who have a threshold understanding of jurisprudence and who have been appointed jointly by the courts and learned colleges.

Having defined negligence and determined liabilities, the next thing the courts have to determine, of course, are damages. Damages should reflect the reasonable expectation of the public and be consonant with fair compensation to the patients. The imputation of Justice Hanley in Butcher referred to earlier in this paper should be acted upon. Future care costs must be reasonable if compensation is to be made more accessible to the negligently injured patients. The better elements in workplace and motor traffic compensation legislation should be adopted. Examples are the tables of disabilities and the thresholds and capping for non-economic loss in the respective New South Wales legislation. By the introduction of thresholds trivial claims could be eliminated. Large awards such as the cost for future care and economic loss should be subjected to mandatory structured settlement, whereby lump sum awards could be paid out or are paid out as annuity or some other form of periodic payments.

Essential in the process of determining liability and damages are the proposed procedures in the adversarial system. Procedures should be streamlined and greater use should be made of accredited expert panels in assessing probable liability and appropriate awards without necessarily removing altogether the litigant's common law rights to a determination of both liability and awards by the courts. Statutes of limitations need to be more strictly enforced.

Does the Commonwealth have powers to legislate in order to modify the common law? This is probably the most unchartered of the waters into which we are sailing this afternoon. May I venture to suggest that while the power to provide medical and dental benefits along with the corporation power may well be capable of creating liability respectively in individuals and corporations providing health services, it is unlikely that they may be used to restrict the existing common law rights of the litigants. The corporation power has been used to create a statutory liability such as relating to consumer rights under the Trade Practices Act, and directors and officers liability under the corporations law including the provisions of penalties and a time limitation associated with the statutory rights. It is submitted that these statutory provisions have not removed the common law rights of the consumers on the same subject matters.

Does the Commonwealth have powers to create its own statutory malpractice scheme confined to health complete with a limitation on time procedures and awards? The answer is probably in the affirmative under the medical benefit powers, corporations power, insurance power and the related incidents power. But again probably not so as to displace the common law rights over which the States have concurrent and residual powers.

It is curious though with regard to the insurance power of the Commonwealth as to whether or not it can intrude into this State jurisdiction over common law. It is debatable I concede - there is a debate in fact - about whether the Commonwealth can take away common law rights. For example, in a debate about whether to have a no fault compensation scheme proposed by the Whitlam government in 1973 to 1975, some lawyers advised that the Commonwealth could not take away existing common law rights, all it could do is to confer additional rights. But there is a countervailing view to the effect that the Commonwealth now uses corporation powers to protect a corporation. For example, the secondary boycott provisions of the Trade Practices Act protect corporations against strikes imposed by unions. It is generally thought that the corporations power could be used to protect newspaper corporations against common law defamations actions, at least to limit it.

All these issues are still unresolved. However, one should acknowledge that the courts are very anxious to preserve common law rights.

In conclusion, the incidence of litigations and the related awards are substantially more significant today and will continue to increase in the future. It is therefore imperative that the system of compensation for personal injuries caused through health care has at least the same scope and degree of comprehensiveness as the compensation schemes associated with personal injuries sustained on the road and in the workplaces. This paper has attempted a brief look at the powers available to the Commonwealth to effect a national scheme of fault based personal injuries compensation confined to health care.

Time has not allowed me to touch on issues limiting the Commonwealth powers, such as the conscription issue which fortunately has been touched on by previous speakers, and there are additional Commonwealth powers that may be more peripherally relevant, such as the foreign affairs powers.

While it is desirable to take a national approach to an appropriate model of solution, the Australian Constitution makes the direct and comprehensive involvement of the Commonwealth government fraught with legislative difficulties. It appears that by a combination of powers the Commonwealth may be in the position to institute a national fault based compensation scheme confined to health care related personal injuries, however such an exercise requires a political willingness of Herculean proportion, and the existence of such a scheme may not necessarily displace the common law rights of the patient.

Alternatively, by financial coercion, the Commonwealth has the legislative framework to require the States to institute the scheme. Such a route will still require the States to be committed to the agreement, which one would have thought would be more forthcoming by co-operative awards, rather than by financial constraints.

The third option which has greater practical attraction, is to introduce a scheme by co-operative efforts of both Commonwealth and States. The development of a single corporations law from the existence of several and separate State companies law in recent years is worth emulating. The first step in this development was the achievement of unity of purpose among the governments, and as most of you know, the next step was taken by the State and the Commonwealth creating separate but identical companies laws or legislations on companies, and the finale was achieved by each and every state enacting simply the adoption of the Commonwealth corporations law as being applicable to the State.

The existence of the political will at both State and Commonwealth levels requires more than just a debate that may emanate from a seminar such as this. The driving force is a perception that there is a significant problem today which affects the health care profession and patients alike and this problem would be worse and more unmanageable tomorrow. There needs to be a vision that the problem could be prevented and be turned around into an opportunity to create a scheme that will benefit all Australians.

Such a driving force could not come from one organisation only. The medical and legal professions, together with consumer groups, should examine this challenge. Leaders in the medical profession in at least one state, in the State of New South Wales, have already been informed of the proposed scheme as a model of comprehensive reform and have expressed an agreement in principle. All medical defence organisations in Australia have reached a consensus on at least the issue of insurance. I am hopeful that consensus on the whole scheme may be reached within the medical profession nationally before year end.

The medical profession will soon be ready to take this course to the wider forum and to the legislators both at State and Commonwealth levels for their consideration. Let us hope that our parliamentarians have the visions, wisdom and political will to put it into appropriate legislative action.

Dr Prager: Thank you, Richard. That was a very insightful and comprehensive insight into the serious problems of malpractice crisis, a lot for us to think about in terms of possible options and solutions. I know I personally will benefit from reading Richard's paper because it was very dense, and to a medico who is not also a lawyer - and possibly the other way around - it would be an excellent paper to read as well as to hear.


Questions

Dr Prager: We're now ready to start with question time and we have a number of people over here to ask questions. Could you introduce yourself by name and would you also name the person or people you wish to address your questions to.

Phillip Bates: Philip Bates, Sydney. My question is addressed to Mr. Evans and perhaps Professor O'Brien. Mr. Evans, when you were speaking you mentioned, when you went through the 1980 debate there seemed to be the two groups - the people I think you called the federalist group, and there were the others who were what I might call more the British cabinet system group, and that the final Constitution, as I understood it, you were saying really, was a compromise between those two factions. Why is it in fact that when one actually reads the Constitution itself, those people who represent or reflect what I might call the British cabinet system group seem to have lost out so completely in the sense that there is simply no reference at all in there to things like the Prime Minister or what I might call the Westminster conventions of government which are in fact such a central part of our system. So I was just curious really why it was that the actual written word of the Constitution from a historical point of view didn't seem to reflect the cabinet system in the same way as we actually run our system.

Mr Evans: I don't know that the cabinet system group lost out. They became the dominant school of thought in relation to how the Constitution should actually work. In the 1890's it was thought that, just as the British Constitution worked largely on practice and not on written rules, that that was satisfactory to operate a cabinet system in Australia as well. In fact, the separate state governments, or colonial governments as they then were, had operated in that way themselves. So they thought practice was enough and they wouldn't have to write it in. Of course, as Paddy O'Brien pointed out one problem of not writing things in is that there is a danger that there won't be reasonable limitations on powers. That is in fact what has happened, the powers of Prime Ministers and cabinets have grown and grown and grown and because there's no Constitutional limitation on them as such, we've developed a system of Prime Ministerial and cabinet dictatorship, whereby people largely tend to accept that the country is run by the Prime Minister and the ministry of the day.

The federalist group were actually very critical of the British cabinet system, precisely for that reason, that it all worked on practice and on legal fictions in fact, on the legal fiction of executive power being invested in the monarch or the monarch's representative, so in a sense they've been vindicated by subsequent developments.

Prof. O'Brien: I really have nothing to add to what Harry has said, except to say in addition -- I think he is right but there was the other factor, which has been a factor until recently which is, if you did define the Prime Minister and cabinet or some executive power at that existing time it was accepted that the executive power was exercised by the Crown, even nominally, and in Australia by the Governor and Governor-General. Now remember that it's only at the time of federation -- it's only fairly recently that many of the states or colonies have got self government. In Western Australia, as my colleague and friend Martin Webb has pointed out, there was no cabinet system following responsible government in the 1890's. Lord Forrest, who was quite a significant Australian, who again would fit the sort of profiles that Harry was talking about but who's not really known very much outside Western Australia, despite the fact that besides being Chief Minister, Premier if you like, of Western Australia and a great explorer, was also a federal Minister for Defence for many years. They were called ministerials in his day, and those who were members of the ministry and those who weren't. In Western Australia it was as a consequence of the Labor Party that the cabinet system got going. Really in the 19th century in England the cabinet system developed more or less into its modern form through the growth of the modern political party because it was a nice way of corralling members and getting discipline of members, etc. So I think for those reasons -- Further it has created an industry by which casuistical lawyers now make a living out of not wanting to regularise it because in the sort of dark mysterium one can make all sorts of judgments about it.

It's a magisterium and it fits what Harvey Mansfield described in his book The Taming of the Prince the Machiavellian idea of executive power. Mansfield argues that modern executive power developed through the Machiavellian analysis, that the Prince must act on the basis of preserving the power of the Prince's party, and that this required - said Machiavelle in his advice to the Prince - a sort of facade of democracy but that real decisions and power were secretly done. Remember that Badget made the same analysis about the British cabinet in the 19th century when he made the distinction between the efficient and the -- what's the other part, of the efficient and the -- the dignified part - the dignified part was the Trooping of the Colour and all that, but it was chaps like him etc. who understood the efficient secret of government. So it is a fiction in a way but it's a very dangerous one because it means you do actually get secret government.

It wasn't only David Parke and people like this who argued for secret government. Remember that the Lawrence case is one that's very important because whilst the court did not rule that government was not based on secrecy, at least it said that the Royal Commission, being established by a State Parliament, therefore the Commonwealth had no jurisdiction over State Parliament. Despite the trend towards more centralist like decisions by the court, in this particular decision the court actually further entrenched the sovereignty of the State parliaments.

Trevor Mudge: Trevor Mudge, I'm an obstetrician from Adelaide and I'm here for NASOG. I enjoyed, Richard, your talk on professional indemnity very much and of course, as an obstetrician Graham and I and others have an enormous interest in it. I must say that I am terrified by your vision of the future and I am terrified by the fact that constitutionally the government may have power over professional indemnity insurance. Because if you think about it the capacity for professional indemnity insurance organisations to dictate modes of practice probably far exceeds the capacity of the health insurance industry to do so in the future. Also from your rather frightening figures of 32 times the current incidence the capacity for professional indemnity insurance to affect our margins also seems to exceed the capacity of the health funds to do so.

But the question, Richard, I'd like to ask you, please and I know you didn't have time to explain it, but could you explain to me why claims made with run-off for retirement is better than claims incurred. As an obstetrician faced with a potential suit 30 years hence from the delivery I do tonight, it seems to me that the opposite is true.

Dr Tjiong: Claims made with run-off cover at the end of the day cover the same subject matter, as incidents occurring cover providing of course that there is that compulsory run-off on retirement. But the superiority of claims made with compulsory run-off is that, one, it encourages doctors to report the incidents early. You would like the indemnifiers to cover you for all incidents occurring this year. How do the indemnifiers manage those incidents unless they know about the incidents if not that year, as soon as is practicable afterwards. You would argue, what if I don't know about it and I would retire. That's where the compulsory run-off comes in. At the moment with claims occurring cover, the way it is being managed by discretionary funds, without the slightest encouragement by most defence organisations for members to early report. That's just simply an open cheque and that's why we are paying for our yesterday's members' incidents. But if we want to be pay for our incidents that we incur this year, well we'd better let our insurers know about it so they can manage it better.

There should be no fear from you that the incident won't be covered, if that is what members are afraid about or afraid of arising from claims made insurance. That would be so on claims made insurance full-stop. But claims made insurance with run-off cover would give the same subject matter cover but a better quality of cover.

Dr Prager: Did that answer all of your question? Right. Because I was just wondering about the effect of government interference in medical practice if government became involved in the financial funding of insurance for malpractice.

Dr Tjiong: The government has to finance the funding of insurance directly. They're doing that now through Medicare. We pay the insurance. Where do we get our money from? From our fees and most of our fees are from Medicare rebates. Understandably, Don Sheldon and I agree that we must look at Medicare again, but whatever the source of our funding, the issue is not about the funding of insurance, it is to do with regulating the insurance operation of the insurers. Discretionary organisations at the moment are simply clubs and they don't manage their monies like insurance, proper business insurance people, do. They collect the money up till recently on a cash-as-you-go basis. That was fine in the 60's and the 70's when doctors weren't sued very much and the demand for funds wasn't all that big, but when we've got escalating claims, and worse still, when we see the amount of real negligent claims that's there for which the patients may well deserve compensation, we'd better have a system of compensating, or providing the compensation, so long as we define what we're compensating for: one, negligence; and two, the management of such a fund is a big business. It's not something that could be managed on a club like manner by, with respect, doctors who are skilled in medicine but totally unskilled in business. That's why we're paying so high a premium of recent times. Not all your steep increases as an obstetrician in the last few years have been due to the risk you've generated in that year, it's been a catch-up from previous years.

Dr Shepherd: Bruce Shepherd. I'm not directing this to any particular speaker but I'd perhaps like to hear from anyone who has an opinion. I have talked to many members of the legal profession. I'm sure that they see medical malpractice in an entirely different light from what we do. For most lawyers, it's just I guess like we have another day at the office, going to court, and doctors being, if you like tried, and at the end of the day we've even heard juries say that they didn't believe the doctor was negligent but they felt sorry for the patient and so they had to give him some money. For many of us in the profession it's an ordeal and I've heard many people say that a doctor, having been through the courts, never gets back to practising medicine the way they used to. Also, I think it's a very cruel and inefficient, expensive system of welfare, if you like, of distributing largesse. In other words one person will have exactly the same injuries as another. One gets nothing and is thrown on the state and the other persons gets two or three million dollars.

It seems to me that this is one of the things I was talking about this morning. We are in this very system inhibiting our care of patients. I wonder if any of you have any ideas of how we are going to influence - perhaps through a change in the Constitution - such a ridiculous system and a system which is not helping society in any possible way, and perhaps even persuade some eminent judges - who seem to think this is a pretty fair sort of a system - to change their minds.

Maurice Neil: I fully understand the problem of doctors who are taken through the courts. I've done cases for plaintiffs and for doctors, but I've also seen cases involving solicitors who have been sued, and they have the same traumas and worries, and it's certainly not a pleasant experience. I don't think there's going to be any short term solution. In some recent readings one perhaps glimmer of hope I came across somewhere in passing, was that some parts of America have experienced slight reductions in suits, partly because of capping and other legislative provisions, but also generally perhaps the high water mark has been reached and things are perhaps settling down a little bit.

I think, though, that there is room for considerable further detailed attention to this problem by combined medical and legal action and discussion, through groups like the Medico-Legal Society. The Australian Doctors' Fund would clearly have a role. And it's probably something that I would think you'd find most lawyers on reflection, if not immediately, would sympathise with the point of view you've been putting.

Dr Tjiong: I think Bruce hit the nub of the problem and that is - if I could extend it slightly - the trauma of doctors being sued is not confined to doctors who are sued for true negligence. The trauma is more relevant to those doctors who simply have been involved with an adverse outcome and he is not negligent and he is sued. This is where, with the greatest respect I would be so bold as to say that Bruce and I are in conflict with the view of His Honour Justice Kirby, who just simply considers - expressly so in a paper he delivered some three or four years ago - that we as doctors should not worry about being sued for negligence. It's just simply society's way of distributing the cost of adverse outcomes. Well, negligence is about a departure from a reasonable standard. When I'm sued for negligence and I'm sued successfully - or if my defence organisation says this is not defensible and we should settle - what it means is I've got to recognise that in that particular event I have fallen below the reasonable standard expected of me as an ear, nose and throat surgeon and of course I won't feel so good about it. Worse still, if I'm going to have to pay for adverse outcomes which are not negligence, but because of the system of compensation for negligence, or a simple non-negligent adverse outcome is labelled as negligence so that the patient could be compensated, all the more I would feel aggrieved, all the more I would want to retire from this wretched practice under that sort of circumstance. That feeling is not just singular. I'm in my early 50's and I enjoy my medical practice, and I must say I agree with what Bruce Shepherd said earlier on, and others. I am giving some serious thought as where I'm going with my medical practice, but I do enjoy my patient doctor relationship.

This is the point, though, if I may just take a few more seconds. We could try to change the system by piecemeal reforms - cap this, cap that, raise our subscription fees, change insurance. We're not going to get anywhere. That's been tried in the United States of America. Even the State of California has introduced structured settlements. Last year every neurosurgeon got sued in that state. Now who's going to practice --- let alone obstetricians as it were. The State of Colorado is the only state I know of where the medical profession and the medical indemnity organisation is seeking to do what we're proposing to do through this paper this afternoon, that is to introduce a comprehensive scheme of reform, not unlike in principle to personal injuries compensation in the workplace and in the motor car areas, where the excesses of common law judges should be curtailed. If you're concerned about that tell me what alternative, what better alternative can you propose. There is none better. In this route, by proposing a scheme we're saying that we as doctors will at least have some say in how things are going to be developed.

Maurice Neil: If I could just something a little heretical for a lawyer. In the area of personal injuries because governments used to - at least in New South Wales - have a scheme run by the government itself, the GIO, in which the payments were all made from the compulsory GIO scheme. When they turned to the private scheme in 1988 they didn't go the full hog, the government still retained some involvement by setting the premiums, so you've got a hybrid system. But bit by bit over the years, with the elimination of juries, the judges almost inexorably have ended up finding for the plaintiff more than used to be the case and the judgements have tended - although they don't necessarily say in as many words, but there are some judicial judgments, including Justice Kirby, who have recognised that the test of negligence has been de facto reduced.

Now in the area where, until recently, and still in New South Wales in limited areas, they have retained juries in industrial accident cases, the juries provide more verdicts for the defendant than the judges. And I've had quite a number of cases, where the juries have said, if I've been acting for the defendant, well the plaintiff if a bludger, or we don't like him, and they produce a fairly robust view. Paradoxically the jury system in America has at times got out of hand where there's huge verdicts. The Australian jury system seems to be a little different. On the other hand, when you look into the jury system in America a lot of the really huge verdicts have been set aside on appeal, the judges have set them aside on appeal and some of the --- I'm a member of one of the American Trial Lawyers Associations, the last set of figures I saw showed paradoxically, that for example, there were more verdicts for defendants in cases of black plaintiffs where the jury were black than where the jury were white. It's complicated but I agree there is a problem of judges, like in railway cases and others, the plaintiff doesn't very often lose. The answer has got to be -- or possible answers, I wouldn't say definitely today - looking at perhaps juries, although that day has probably gone, or you'll have to redefine the test and write into the legislation that negligence means real negligence and not some lesser test. You then get into all sorts of problems about whether you should say substantial negligence or gross or whatever. That's an area that could well be looked at in terms of better definition of the test.

?????? : Regarding Justice Kirby he gave a paper at the WA Law School on which I debated him and he said, on the public record, we judges make up the law as we go along. So I'm wondering now what High Court decisions we might get under Michael's influence.

In the matter which I have no expertise in, but I think it does raise the point that Dr. Sheldon raised which is the necessity not for you people, but for the community in general, to get back to fundamental values and principles because it seems to me that the history of the attack upon the medical profession was, if not motivated by greed, certainly greed was the exploitative factor that governments used in order to attack the medical profession. I always saw it a bit like Stalin's campaign against the Culacks, you pick out the doctors, the rich doctors, and then you appeal to envy - sorry not greed, envy, and so on. I think, leaving aside the whole technical problem of the law, it seems to me what you are saying is you have to get laws that are fair and have equity in them. So I think that this does require somehow or another, you people involved in this and other people, to sort of publicly talk about what is fairness, what is moral and proper, and what is virtuous in relationship to laws and what can be reasonably expected of a professional person in the conduct of their duties, so as to counteract this, because, as you know, even conservative governments for populist reasons go along with the envy argument, and are too frightened to make a contrary decision and change the laws of previous so-called reformist governments for fear that they'll get a backlash from the growing welfare industry.

So I think again it's always getting the principle right and then once you can agree on the principle then, okay, there's lots of ways of skinning the cat. But that's the observation that I would make on that.

?????? : Can I just make a further comment. I think the money is one thing. I guess you could say what goes round comes around and the money is spent out and it goes back into the community. But my great concern is two factors; the distraction of professional people from what they should be doing and doing well, if you like using good minds on things that they shouldn't be involved in. Judges should be doing other things than listening to these sort of cases. But worse than that and we can't measure this - we may measure it by the fact that we could disappear as a society - and that is that we're not being productive, we're not taking risks and we're not doing all the things that make a healthy strong wonderful society, living together in harmony and progressing. And that is worse than all this money we talk about, that worries me a lot, but I'm worried that people like you and me and other people say, I've had enough, and we've perhaps got another five or ten good years in us. I see that with my patients who are in industry. They say I'm alright, I've got enough, and they might be employing two or three hundred people and they I'm giving it away. Now that is much more costly to society than the money, and that's what we've got to think about and that's why we've got to change it.

I appreciate these great minds up here bringing up what we're doing. We must change the Constitution so that these things must stop. His Honour Justice Kirby, somebody should take him aside and get him where he --- I won't say any more.

??????: Well, if I may say so, that's a perfect example of the laws, including the usages of the Constitution or abuses of it, encouraging a culture of fatalism. It is clear that there's a sort of tendency towards fatalism in this room, of people saying, look, there is nothing we can do about it, we can't change what has been done to us because of the freebies or apparent free health that's being handed out, so we have to just grapple with the system as best we can and get out as soon as we can make sufficient arrangements to cover our retirement and our future. I think that does provide a perfect case study in law and the use of the Constitution in creating a fatalistic culture. As I indicated before, this just doesn't apply, of course, to medicine. It has also occurred in the higher education sector and in other sectors, it has occurred in the arts area where those who are excluded from the prevailing clack, don't get any assistance or don't get published, you see, so they're deprived of their living because of government fiat.

In publishing it's even worse in some ways because it wasn't just that -- it was also private publishing houses during that Labor period which appointed editors and readers of books in the knowledge that those editors and readers would approve of works that the government thought highly favourable. Why? Because the same conditions that applied to the market share allocated to newspapers applied to overseas publishers establishing houses in Australia.

So this was a general pattern, an ideological pattern, that was imposed upon the society. Now the imposers of that pattern - and we know them all personally - I mean, we know them - Billy Hayden, he's had a Road to Damascus conversion after being Governor General, a bit late though for you people; John Dalkins has retired on a million dollars and owns vineyards, etc.; Neil Blewitt's happily at the Court of St. James, etc. So these people have done their evil, done their damage, and are now living beautifully, and left behind a sort of mini mess like Gosplan left behind in the Soviet Union. I'm exaggerating a bit, I know for a fact.

But that's the problem. Don't get too -- you have to if you're occupied with your own problems, but realise what's needed is the creation more or less of a broad loose united front of people, and not just in the medical profession. Unfortunately, you see, each profession was getting picked off. No-one came to the defence of doctors because who wanted to defend greedy doctors, was the slogan that was put up. Or when Dalkins introduced the education thing, who wanted to defend academics, greedy academics, who were all the day swanning around conferences, etc. So the professions got isolated in this attack. So I think that there is a broader problem and it's an ideological problem, the imposition of these systems on groups.

Dr Tjiong: Can I just add, all the more that we can't as a medical profession go to the legislators or the public saying change this, change that. That seems totally or entirely to be for our vested interests. Asking the government to cap damages, they're not going to listen to you. We've tried that tack. They said to us, come back to us with a scheme that is politically palatable to the politicians. Hence we can't ignore consumer issues. We can't ignore the fact that there are negligently injured patients who are not compensated just the same as society cannot ignore that doctors are being sued for non-negligent adverse outcomes and the patients are getting away with that.

So how do we change these views. We could work our butts off trying to educate common law judges and you know what good that's going to do; or you could persuade the politicians to intervene and influence common law and that was what, I guess, my paper was about this afternoon. I don't want one thing to be misunderstood about my paper, and that is I wasn't about - the paper wasn't about the proposition that the Commonwealth government set up its own insurance scheme and its own compensation scheme for negligence. Not at all. We were talking about a private scheme of mutual medical defence organisations putting its house in order financially so it could fund its insurance obligations properly. And in turn we want the government to intervene with the excesses of the common law judges with regards to determining what is negligence.

We want a legislative definition of negligence, and I know the lawyers to my right will say that's going to be difficult. But set aside what's difficult. Look at in terms of what is challenging and what is potentially achievable. I think negligence is capable of being defined. Of course, having defined negligence we'll have to talk about what is a reasonable award of damages. Leave that to common law judges? Well, you got $41 million for John Blake, the injured motorist - it would be Mel Gibson as it were. But we need legislative intervention to say that the maximum reasonable award is not forty-two million, maybe it's five million, maybe it's four, but that's not for the legislators to determine. They should determine it in public interest after due consultations with the relevant professions, the medical legal professions and dare I say, necessarily, the consumer groups.

Dr Prager: Thanks for that clarification, Richard.

Peter Woodcock: Peter Woodcock from Silvercross. I've got a question actually for Dr. Mendelson because you seen to be neglected this afternoon. You've got to fight hard to get a female point of view on a panel like this. You were talking about Section 51 23A in your particular speech. In the preamble there's a reference in here to the fact that in 1987 the High Court held that that particular section enabled the Commonwealth regulation of private - in this case nursing homes that received a government subsidy.

What my question to you is would the opposite hold true. In other words take an insurance scheme that does not get an government subsidy - and Richard is into this area as well - but take an insurance scheme that does not get a subsidy, say as a tax rebate or something like that, does the Commonwealth have any power to actually regulate that scheme? If they've got the power to regulate when there is a subsidy would it also hold true that they have no power to regulate if there is no subsidy?

Dr Mendelson: I think that under paragraph 23A there probably wouldn't be. There might well be some kind of control under paragraph 20 which is the corporation power. So it would very much depend on the structure of that insurance scheme. They have certainly the power under the benefits, etc. The way that they controlled nursing homes was of course through the aged pensions etc. over which they have total power.

Maurice Wall: I'm Maurice Wall and I'm here representing the Australian College of Legal Medicine but I won't hijack the meeting. Can I ask a question in a private capacity and probably of Mr. Neil or Dr. Mendelson.

Mr. Williams this morning side stepped the very first question about the sending of non VR general practitioners to the bush or bankrupting them. There are probably somewhere around about 4,000 of these in Australia and I don't think many of them really want to go bankrupt, and probably they don't want to go to the bush. I can also foresee a situation if that happens of obstetricians under 35 will not practice in the city until they've spent five years in the bush. Psychiatrists, surgeons, anybody like that, everybody can get sent to the bush. Is the civil conscription provision in the Constitution strong enough to save any of these people?

Dr Mendelson: Basically because it prohibits actually telling the medical practitioners where to practice and how to practice, so they really cannot do it. That is very much within the prohibition. Even though the General Practitioners Society case did narrow down the prohibition it certainly left that part in tact and therefore, no, I don't think it would be Constitutionally possible.

Yvonne White: Yvonne White, psychiatrist. Just following on from that point, a lot of the colleges now as part of their training programmes are telling the trainees that they will have to go to the country, that it is part of their training. If they do not do their country turn they will not get accreditation and therefore not be able to sit for their exam. So how does that all fit in?

Dr Mendelson: As long as it is not directed from the Commonwealth the colleges can do it under their Articles of Association. They can in fact implement a rule like that. I suppose it could be challenged but I don't think it could be challenged on Constitutional grounds simply because they are not really government agencies.

??????: What the Commonwealth may do though, is (a) limit the number of provider numbers which I understand that you have to have to be able to receive a Medicare benefit for your patient. And maybe in so limiting those numbers, that they could make the numbers issued be related to a postcode. So in other words, it doesn't matter whether you go or not but the available item number will be issued to Moree.

Dr Mendelson: I'm not sure that would in fact --- that really would be conscription by stealth and therefore I don't think that the High Court would buy it.

??????: I think they'd have trouble getting that one through. This is again a problem of what might be desirable objects, if you want to have the medical practitioners more available in the country, with trying to do this by sort of legal or quasi-legal means, you end up with these sorts of problems. But I think also other law might come in there, such as the provisions of the Constitution. One would have to look at it and I haven't looked at it in detail, but there's provisions about discrimination against citizens within states or parts of states. I think it would be a very thorny one for them to embark upon and it would obviously have great political problems about it.

Dr Tjiong: Could I just add that I venture to ideate that the reason -- at the moment as we all know Medicare rebates are payable to doctors when they operate on or when they render services to private patients in private hospitals. It has always been a query in my mind as to why would the government want to do such a thing given that the Government's objective was to nationalise private hospitals. That is, I'm not in agreement with the government's doing so, let me not be misquoted, but I'm saying given that Gough Whitlam tried to nationalise private hospitals, why didn't he just simply say Medicare rebates are not payable for private patients in private hospitals. I suspect the reason is Section 51 23A. To do so and to pay Medicare rebates only in public hospitals could well be tantamount to conscription.

Dr Prager: Thank you for being a very attentive audience. It's time I think to conclude a most intellectually stimulating day where we've managed to combine a number of different professions. I think that has added to the quality of the day and the intellectual stimulation we have achieved.

I'd like to thank again our staff at the Old Parliament; our technical staff, the staff of the Australian Doctors' Fund who have worked extremely hard to make this day a success, in particular Stephen Milgate, Executive Director, Glenn and Val, who have put in an enormous amount of work, and the AMA who have supported us, and thank in particular our speakers.

????????: I want to thank you all for coming and for realising how an important a day it is. I can also assure you that it doesn't stop here. All of the other meetings we've had have gone on and on and are still having a significant influence on our society. This wasn't set up as simply a selfish doctor thing. Patrick O'Brien has taken it up and it applies to all of society. I think we have to lead off, we've been perhaps more privileged than many other sections of society and we have to show the way. So it's an historic day today.

I want to thank Shirley because not only has she chaired so well today, it was her idea and she's put a lot into it. I thank you as much as I thank the other speakers, because they've all seen what we see, and that is the tremendous need to change society. I agree with Patrick, you don't keep playing the game under the same rules, you change the rules. Thank you