HIGH COURT OF AUSTRALIA

MASON CJ, BRENNAN, DEANE, DAWSON, TOOHEY, GAUDRON AND McHUGH JJ

 

 

 

HEALTH INSURANCE COMMISSION v PEVERILL

(1994) 179 CLR 226

9 March 1994

 

 

Constitutional Law (Cth)

Constitutional Law (Cth)—Powers of Commonwealth Parliament—Medical benefits—Acquisition on just terms—Entitlement of medical practitioner to fee for assigned benefit—Reduction of fee by retrospective legislation—Whether acquisition of property otherwise than on just terms—Laws imposing taxation to deal only with taxation—Whether imposition of tax on practitioner—The Constitution (63 and 64 Vict. c. 12), s. 51(xxiiiA), (xxxi), 55—Health Insurance Act 1973 (Cth), ss. 20, 20A—Health Insurance (Pathology Services) Amendment Act 1991 (Cth).

Orders


Appeals allowed.


Set aside the orders of the Federal Court. In lieu thereof, declare that the Health Insurance (Pathology Services) Amendment Act 1991 (Cth) is a valid Act of the Commonwealth and is not a law imposing taxation contrary to s.55 of the Constitution, and order that the respondent pay the costs of the Health Insurance Commission in the proceedings in the Federal Court.


Judgment in the proceedings for the Commission.


The respondent to pay the appellant's costs.

Decisions


MASON CJ, DEANE AND GAUDRON JJ The facts and the relevant
statutory provisions are set out in the reasons for judgment prepared
by Dawson J As his Honour points out, the effect of the Health
Insurance (Pathology Services) Amendment Act 1991 (Cth) ("the Amending
Act") was to reduce, with retrospective effect, the benefit of $34.50
which was previously payable under item 1345 of the schedule for what
was known as the ELISA test. The Amending Act was expressed to
operate retrospectively from 1 January 1980 being a date prior to the
provision of those medical services by Dr Peverill which are relevant
to these proceedings. The Amending Act excluded the ELISA test from
item 1345. Instead, the Amending Act inserted items 2294 and 2295
covering ELISA tests for rubella and prescribed a fee for that test
of $15.40 which was amended upwards over time culminating for
relevant purposes in a fee of $17.20. Hence, the amounts payable to
Dr Peverill for ELISA tests which he performed for patients were
reduced retrospectively from $34.50 to the fees prescribed in item
2294.



2. The reason for the enactment of the Amending Act with
retrospective effect, as stated by the Minister in his second reading
speech, was ((1) Commonwealth, House of Representatives,
Parliamentary Debates (Hansard), 11 April 1991, at 2464.):
"to validate certain recommendations made by the Medicare
Benefits Advisory Committee relating to the payment of
Medicare benefits that were not given legal effect through
failure to make necessary ministerial determinations".
The Health Insurance Act 1973 (Cth) ("the Principal Act") provided
for the establishment of that Committee to advise the Minister about
the contents of the table in the schedule of benefits to that Act.
A determination by the Minister on the basis of the Committee's
recommendation to vary the schedule requires certain steps to be taken
to give effect to the recommendation. For a period of time these
steps were not taken. Nonetheless, the Commission, the public and
many pathologists acted on the basis that the Committee's advices were
effective to vary the table of benefits in the schedule. The advent
of the ELISA test resulted in considerable time and cost savings so
that, acting on the recommendations of the Committee, the Department
issued in 1984 a Medicare Benefits Assessment Advice which specified
items 2294 and 2295 for the ELISA test. Subsequent advices were
issued for these items, generally to increase the amount of the
benefit payable. In 1987 the Minister made determinations under s.4A
of the Principal Act to give effect to the recommendations but the
recommendations were set aside for procedural deficiencies. In 1990,
the Federal Court (Burchett J) held that the ELISA tests fell
within item 1345 not items 2294 and 2295 which offered a benefit of
$4.60 ((2) Peverill v. Meir (1990) 95 ALR 401.).



3. According to the explanatory memorandum, the purpose of the
Amending Act was to:
"validate the Advices so that claims and payments made in
accordance with them will become valid and proper, to bring
the legislation into line with the general practice in fact
adopted at that time".
The memorandum continued:
"There will be transitional provisions to ensure that no-one
will be required to make any refund of any payment already
made as a result of this Bill, to preserve a right to
additional payment in respect of anyone who, on the basis
that the amendments contained in the Advices are valid,
has been underpaid, and to exclude any liability for any
additional windfall payments to pathologists for the
procedures covered by the Advices in excess of the amounts
(sic) specified in the Advices. The amount specified in the
Advices for payment were fixed on the recommendation of the
(Committee) as proper remuneration for such procedures."
According to the financial impact statement contained within the
memorandum, the Amending Act would prevent additional expenditure of
up to $100 million that could result from additional payments for
ELISA tests if the fee recommendations of the Committee were not
applied.



4. The principal question, as we see it, is whether the
retrospective reduction in the amount of the benefits payable to
Dr Peverill (and others similarly placed) by virtue of the patients'
assignments of their benefits to him, whereby he accepted the
assignments in full payment of the services rendered, invested the
relevant provisions of the Amending Act with the character of a law
with respect to the "acquisition of property" within the meaning of
s.51(xxxi) of the Constitution. In our view, it did not.



5. The assignments, pursuant to s.20A of the Principal Act, by
patients to Dr Peverill of their entitlements to medical benefits
vested a statutory right in Dr Peverill to receive payment by the
appellant Commission from consolidated revenue. But the acquisition
of that statutory right by Dr Peverill was not an acquisition of
property which fell within s.51(xxxi). That provision is directed,
in our view, to requisition, not to voluntary acquisition ((3) John
Cook and Co. Pty. Ltd. v. The Commonwealth (1924) 34 CLR 269 at 282;
British Medical Association v. The Commonwealth (1949) 79 CLR 201 at
269-271 per Dixon J; Poulton v. The Commonwealth (1953) 89 CLR 540 at
573 per Fullagar J; Trade Practices Commission v. Tooth and Co. Ltd.
(1979) 142 CLR 397 at 416-417 per Stephen J; but cf. R. v. Registrar
of Titles (Vict.); Ex parte The Commonwealth (1915) 20 CLR 379 at 392
per Isaacs J). The assignments were voluntary; there was no element
of legislative compulsion about them.



6. Dr Peverill's argument is that the retrospective substitution
of a statutory right to receive payment of a lesser amount in
substitution for his earlier entitlement is an "acquisition of
property" for the purposes of s.51(xxxi). It may be accepted that
the entitlement to payment for each service is a valuable "right" or
"interest" of a kind which constitutes "property" for the purposes of
that paragraph ((4) Minister of State for the Army v. Dalziel (1944)
68 CLR 261 at 285, 290, 295; Mutual Pools and Staff Pty. Ltd. v. The
Commonwealth, unreported, High Court of Australia, 9 March 1994
at 10 per Mason CJ, 23 per Deane and Gaudron JJ). But it does not
follow that the legislative substitution of another and less valuable
statutory right to receive a payment from consolidated revenue for that
previously existing brings about an "acquisition" of the earlier right
for the purposes of s.51(xxxi).



7. Dr Peverill's argument is that, in the case of a fixed liquidated
obligation of the Commonwealth to which an individual is presently
entitled, the cancellation of the obligation is an "acquisition of
property" because the effect of the Amending Act is that the
Commonwealth acquires the original entitlement and replaces it with
another. A mere extinguishment of a right, it is conceded, will
involve no acquisition ((5) Reg. v. Ludeke; Ex parte Australian
Building Construction Employees' and Builders Labourers' Federation
(1985) 159 CLR 636 at 653.) but it is said that it is otherwise when
the Commonwealth derives a financial advantage from the termination
and that financial advantage is the precise equivalent in amount of
the deprivation suffered by the owner of the original right.



8. There is no doubt that the derivation by the Commonwealth of
a financial advantage in association with the extinguishment of a
right to receive a payment from the Commonwealth may constitute an
acquisition of property for the purposes of s.51(xxxi) of the
Constitution ((6) See Mutual Pools and Staff, unreported, High Court
of Australia, 9 March 1994 at 10 per Mason CJ, 23-24 per Deane and
Gaudron JJ). That could even be so in some cases in which
extinguishment of the right takes place in the context of some genuine
adjustment made in the common interests of competing claims, rights
and obligations between another party and the Commonwealth. However,
here, the extinguishment of the earlier right to receive payment of a
larger amount has been effected not only by way of genuine adjustment
of competing claims, rights and obligations in the common interests
between parties who stand in a particular relationship ((7) See
ibid. at 9 per Mason CJ, 28 per Deane and Gaudron JJ) but also as
an element in a regulatory scheme for the provision of welfare benefits
from public funds.



9. The Amending Act seeks to correct a defect in the administration
of the Principal Act in that, according to the decision of the Federal
Court, the payments for the relevant tests carried out by Dr Peverill
which it provided for were thought to be excessive. Before the
Federal Court gave its decision there was a dispute as to whether item
1345 was the relevant item. Dr Peverill contended that it was. The
Commission and many pathologists, acting on the basis of Medicare
Assessment Advices, thought otherwise and considered that item 2294
was appropriate. What the Amending Act does in this situation is to
bring about the position that was thought by the Commission to have
existed before the Federal Court decision. By achieving that result,
the Amending Act brought about a genuine legislative adjustment of the
competing claims made by patients, pathologists including Dr Peverill,
the Commission and taxpayers. Clearly enough, the underlying
perception was that it was in the common interest that these competing
interests be adjusted so as to preserve the integrity of the health
care system and ensure that the funds allocated to it are deployed to
maximum advantage and not wasted in "windfall" payments ((8) See
Hanks, "Adjusting Medicare Benefits: Acquisition of Property?", (1992)
14 Sydney Law Review 495 at 500-501.).



10. It is significant that the rights that have been terminated or
diminished are statutory entitlements to receive payments from
consolidated revenue which were not based on antecedent proprietary
rights recognized by the general law. Rights of that kind are rights
which, as a general rule, are inherently susceptible of variation.
That is particularly so in the case of both the nature and quantum
of welfare benefits, such as the provision of medicare benefits in
respect of medical services. Whether a particular medicare benefit
should be provided and, if so, in what amount, calls for a carefully
considered assessment of what services should be covered and what is
reasonable remuneration for the service provided, the nature and the
amount of the medicare benefit having regard to the community's need
for assistance, the capacity of government to pay and the future of
health services in Australia. All these factors are susceptible of
change so that it is to be expected that the level of benefits will
change from time to time. Where such change is effected by a law
which operates retrospectively to adjust competing claims or to
overcome distortion, anomaly or unintended consequences in the working
of the particular scheme, variations in outstanding entitlements to
receive payments under the scheme may result. In such a case, what is
involved is a variation of a right which is inherently susceptible of
variation and the mere fact that a particular variation involves a
reduction in entitlement and is retrospective does not convert it
into an acquisition of property. More importantly, any incidental
diminution in an individual's entitlement to payment in such a case
does not suffice to invest the law adjusting entitlements under the
relevant statutory scheme with the distinct character of a law with
respect to the acquisition of property for the purposes of s.51(xxxi)
of the Constitution ((9) See Mutual Pools and Staff, unreported,
High Court of Australia, 9 March 1994 at 9 per Mason CJ, 28 per Deane
and Gaudron JJ).



11. Dr Peverill's alternative submission is that the Amending Act
is a law imposing taxation and that it contravenes s.55 of the
Constitution. The short answer to this submission is that the Act
does not impose an obligation on Dr Peverill or anyone else to make a
payment to the Commonwealth or the Commission. The essence of a tax
is that there is an exaction, levy, contribution, duty or charge. A
tax commonly takes the form of the imposition of an obligation to pay
money. But there can be no basis for holding that a reduction in the
value of a chose in action or the substitution of a chose in action
for a lesser amount for another chose in action can amount to the
imposition of a tax.



12. In the result we are of the view that the Amending Act is valid
and we would allow the appeal.

BRENNAN J This is an appeal from the decision of Burchett J in the
Federal Court declaring that the Health Insurance (Pathology Services)
Amendment Act 1991 (Cth) ("the Amending Act") is ultra vires and
beyond the powers of the Parliament of the Commonwealth. His Honour
ordered that certain paragraphs of a pleading by the appellant
Commission which relied on the Amending Act be struck out. The appeal
to the Full Court of the Federal Court was removed into this Court
pursuant to s.40 of the Judiciary Act 1903 (Cth). The Commission's
pleading is a defence to a statement of claim filed by the respondent,
Dr Peverill. Dr Peverill applied for an order of review of a decision
by the Commission not to pay him medicare benefits in respect of
professional pathology services rendered by him to patients prior
to the Amending Act at rates which were then current. That Act
purported to reduce these rates retrospectively. Dr Peverill
contended that he was entitled to payment at the higher, pre-amendment
rates. Indeed, he had established the applicability of the higher
rates in earlier litigation: Peverill v. Meir ((10) (1990) 95 ALR
401.). The Amending Act was enacted for the purpose of applying,
retrospectively, rates of payment which had been applied in practice by
the appellant Commission and which the judgment in Peverill v. Meir had
held to be not in accordance with the schedules of rates contained in
the Health Insurance Act 1973 (Cth) as amended to 1 January 1988 ("the
Principal Act").



Dr Peverill's right to claim medicare benefits

2. By s.20(1) of the Principal Act, a medicare benefit is payable by
the Commission to a patient (being an "eligible person" ((11)
s.10(1).) ) who incurs medical expenses in respect of a professional
service. However, instead of claiming for and being paid a medicare
benefit, a patient may either obtain a cheque payable to the medical
practitioner who renders the professional service (pursuant to s.20(2))
of the Principal Act) or make an agreement with the medical
practitioner under which the patient assigns the patient's "right to
the payment of the medicare benefit to the practitioner" and "the
practitioner accepts the assignment in full payment of the medical
expenses incurred" (pursuant to s.20A(1) of the Principal Act). Dr
Peverill seeks to enforce the several rights to payment of medicare
benefits assigned to him by patients pursuant to s.20A.
Section 20A(3) reads as follows:
"Where an assignment under this section takes effect,
or an agreement under this section is entered into, with
respect to a medicare benefit, the medicare benefit is,
subject to section 20B, payable in accordance with the
assignment or the agreement, as the case may be."
Section 20B(2) provides:
"A claim for a medicare benefit assigned under section
20A shall -
(a) be made in accordance with the approved form; and
(b) be lodged with the Commission within the period of
6 months, or such longer period as is allowed in
accordance with sub-section (3A), after the rendering
of the professional service to which the benefit
relates."
Sub-sections (3A) and (3B) of s.20B provide for a discretionary
extension of time for the lodging of claims. Sub-section (3) of s.20B
provides:
" A claim referred to in sub-section (2) shall not be paid
unless the claimant satisfies the Commission that -
(c) in the case of an agreement under sub-section 20A(1)
that was signed by each party in the presence of the
other - the assignor retained in his possession after
the agreement was so signed a copy of the agreement;
or
(d) in the case of an agreement under sub-section 20A(1)
that was signed by the assignor in circumstances other
than those referred to in paragraph (c) - the assignor
retained in his possession after so signing a copy of
the document so signed."
A medicare benefit is not payable until the claim for it is duly
lodged and accepted ((12) It is acceptance for payment (not payment)
of a claim for medicare benefits that determines whether the patient
contribution is reduced in respect of later claims for medicare
benefits: s.10(3).). On acceptance of a claim, the amount
payable is paid out of the Consolidated Revenue Fund of the
Commonwealth which is appropriated for that purpose ((13) s.125.).
Section 20(1A) provides:
"Subject to subsection (2), medicare benefit payable
under subsection (1) shall be paid in such manner as the
General Manager of the Commission determines."



3. A medicare benefit in respect of a pathology service is not
payable without a request from a referring practitioner: s.16A.
Dr Peverill's statement of claim alleged that he had received the
necessary requests, that he had rendered pathology services during
the period between 3 December 1984 and 31 July 1989 and that patients
had assigned to him for the purposes of s.20A the rights to the
payment of medicare benefits otherwise payable to the patients. On
that pleading, the right acquired by Dr Peverill was a right to lodge
a claim for medicare benefits, to have the claim accepted, and to be
paid "the amounts payable by the Commonwealth under Part II" of the
Principal Act ((14) ibid.). The right which he acquired was not
assignable by him: s.20A(5).



4. The medicare benefits payable to Dr Peverill under the Principal
Act were amounts equal to 85% of the fee specified in the General
Medical Services Table and the Pathology Services Table in respect of
the particular service rendered by him ((15) See s.10(1) and
(2)(b)(i), the definition of "table" in s.3 and the Tables contained in
Scheds 1 and 1A to the Act.). In Peverill v. Meir it was held that
the services rendered by Dr Peverill fell within items in the Tables
which prescribed rates higher than the rates prescribed for the items
under which Dr Peverill had in fact been paid.



5. Dr Peverill's statement of claim alleged that the Commission had
failed to pay him "such payments as are payable to him pursuant to
and by reason of the Act". He sought declarations of entitlement to
payment and consequential orders for payment of amounts calculated
by reference to the level of medicare benefits payable under the
Principal Act at the respective times when he had received the
requests for the provision of pathology services. The Tables
prescribing the rates of medicare benefits were amended
retrospectively by ss.4 and 5 of the Amending Act so as to bring the
services provided by Dr Peverill within items which prescribed rates
corresponding with the amounts which Dr Peverill had in fact been
paid. The Commission set up the Amending Act by way of defence,
pleading that Dr Peverill had been paid medicare benefits at a rate
which, if lower than that to which he was in truth then entitled, had
nevertheless become the rate applicable to the services rendered by
force of the retrospective effect of the Amending Act. Section 6(1)
of the Amending Act reads:
"Where:
(a) before the commencement of this section, a person
made a claim for payment of a benefit in respect of a
service by reference to an item that, because of the
retrospective operation of a provision of section 4 or
5, did not relate to the service; and
(b) the person has been paid in respect of the service a
benefit calculated by reference to the fees specified
in that item;
the person is taken to have been entitled to receive in
respect of the service the amount of benefit that was
paid."
Other sub-sections of s.6 were enacted to ensure that ss.4 and 5 were
effective to prescribe retrospectively the amounts to be paid out of
Consolidated Revenue as medicare benefits in respect of the items
mentioned in the Amending Act.



6. Paragraph 23 of the defence - one of the paragraphs struck out by
the order of Burchett J - read as follows:
"Pursuant to Section 6 of the Health Insurance (Pathology
Services) Amendment Act 1991, the amount which the
Applicant is to be taken to have been entitled to receive
in respect of the pathology services referred to in
paragraph 15 of the Amended Statement of Claim is the
amount of the benefit in fact paid to him."
Burchett J held that the reduction in medicare benefits purportedly
effected by the Amending Act in respect of the services rendered by
Dr Peverill is invalid for failure to comply with the requirement of
just terms in s.51(xxxi) of the Constitution. Dr Peverill seeks to
uphold that decision and, by notice of contention, seeks to attack the
Amending Act on the additional ground that it inserts into the
Principal Act a provision imposing taxation contrary to the provisions
of s.55 of the Constitution.



Section 51(xxxi) of the Constitution

7. The constitutional guarantee of just terms contained in s.51(xxxi)
is engaged by a law which effects or provides for an acquisition of
property. The nature of property for the purposes of s.51(xxxi) has
been examined in a number of recent cases to which I referred in
Australian Capital Television Pty. Ltd. v. The Commonwealth ((16)
(1992) 177 CLR 106 at 165-166.). It is unnecessary again to recite
those references; it is sufficient to recall that the characteristics
of a proprietary right include its capacity to be assumed by third
parties and its having "some degree of permanence or stability" ((17)
National Provincial Bank Ltd. v. Ainsworth (1965) AC 1175 at 1247-1248
per Lord Wilberforce.) although "(a)ssignability is not in all
circumstances an essential characteristic of a right of property"
((18) Reg. v. Toohey; Ex parte Meneling Station Pty. Ltd. (1982) 158 CLR
327 at 342-343 per Mason J). A practitioner's right to the payment
of a medicare benefit assigned by a patient is conferred by statute
exclusively upon the assignee practitioner when the conditions
prescribed by the Principal Act are satisfied. It is not capable of
assumption by third parties. It is a right ultimately to be paid by
the Commission a sum of money out of Consolidated Revenue. The
Commission is under a corresponding statutory duty. That duty is
enforceable by a public law remedy: by mandamus or mandatory order
under the Administrative Decisions (Judicial Review) Act 1977 (Cth). I
respectfully agree with Burchett J when he said in Peverill v. Meir
((19) (1990) 95 ALR at 421.):
"Where legislation endows a statutory body with the duty
of administering a scheme to provide for the making to
claimants of payments on behalf of the Commonwealth, in
accordance with statutory criteria, the determination
whether a particular claim falls within those criteria will
generally be a decision of an administrative character,
made under an enactment, within the meaning of the Judicial
Review Act. There is nothing in the nature of such a
determination to exclude it from the scope of judicial
review. A decision applying, or purporting to apply, the
statutory criteria is a decision 'required to be made' by
the legislation in question."
If too little is paid, the duty is not properly discharged and a
public law remedy is available. That is the nature of the remedy
sought by Dr Peverill in his statement of claim.



8. Once it is appreciated that the right conferred by the Principal
Act upon an assignee practitioner is to be discharged by a statutory
authority when certain statutory criteria are fulfilled, it is clear
that that Act does not create a debt enforceable by action. The
Principal Act is a code prescribing the benefits to be paid and the
manner of paying them. The only way in which a medicare benefit can
be paid to a claimant is by acceptance of a claim made within time
followed by a payment by the Commission in an amount prescribed by the
statutory Tables out of Consolidated Revenue in such manner as the
General Manager of the Commission determines. The money thus to be
paid is the only money appropriated for the purpose of paying medical
benefits. The principle is stated by Isaacs J in Josephson v.
Walker ((20) (1914) 18 CLR 691 at 701.):
"Prima facie, where the same Statute creates a new right
and specifies the remedy, that remedy is exclusive. The
natural presumption to begin with is that Parliament in
creating the novel right attaches to it the particular mode
of enforcement as part of its statutory scheme. To that
extent the enactment is a code."
In the leading case of Pasmore v. Oswaldtwistle Urban Council ((21)
(1898) AC 387 at 394-395 cited by Griffith CJ in Josephson v. Walker
(1914) 18 CLR at 695-696; cf. Mallinson v. Scottish Australian
Investment Co. Ltd. (1920) 28 CLR 66 where an industrial award did not
alter the character of the payment to be made under a contract of
employment but only its amount: see at 72.),
the Earl of Halsbury LC said:
"The principle that where a specific remedy is given by a
statute, it thereby deprives the person who insists upon
a remedy of any other form of remedy than that given by
the statute, is one which is very familiar and which
runs through the law. ... the statute which creates the
obligation is the statute to which one must look to see if
there is a specified remedy contained in it. There is a
specified remedy contained in it, which is an application
to the proper Government department."
In Federal Commissioner of Taxation v. Official Receiver ((22) (1956)
95 CLR 300.), the nature of a taxpayer's right to a refund of overpaid
PA.Y.E. instalments fell for consideration. A majority (Dixon CJ,
Williams and Fullagar JJ) denied that that right was an ordinary
debt. Fullagar J said ((23) ibid. at 324; see per Williams J at
310-312. Dixon CJ agreed with both Williams J and Fullagar J at
305.):
"we have here nothing really analogous to an ordinary
'debt', but simply a statutory direction to an officer
of the Commonwealth to cause a payment to be made out
of consolidated revenue to a specified person and an
appropriation of consolidated revenue for the purpose of
that payment and of no other payment."



9. Similarly, the Principal Act creates no debt recoverable as such
in any court of competent jurisdiction. The scheme of that Act is to
appropriate Consolidated Revenue to the extent necessary to allow the
Commission, after acceptance of claims made to it within the times
prescribed, to pay out to claimants the amounts prescribed by the
Principal Act. The Principal Act confers on assignee practitioners a
right to be paid medicare benefits subject to the conditions
prescribed but it does not create a debt.



10. The right so conferred on assignee practitioners is not property:
not only because the right is not assignable (though that is
indicative of the incapacity of a third party to assume the right)
but, more fundamentally, because a right to receive a benefit to be
paid by a statutory authority in discharge of a statutory duty is not
susceptible of any form of repetitive or continuing enjoyment and
cannot be exchanged for or converted into any kind of property. On
analysis, such a right is susceptible of enjoyment only at the moment
when the duty to pay is discharged. It does not have any degree of
permanence or stability. That is not a right of a proprietary nature,
though the money received when the medicare benefit is paid answers
that description ((24) See Federal Commissioner of Taxation v.
Official Receiver, ibid. per Fullagar J).



11. Such a right can be contrasted with the right to payment
considered in O'Driscoll v. Manchester Insurance Committee ((25)
(1915) 3 KB 499.). There, doctors were entitled under their agreements
with the Insurance Committee to be credited with specified amounts for
their treatment of insured patients and to be paid a share proportioned
to their credits out of a fund to which insurance premiums and payments
under a statute were contributed. It was held that the amounts to be
paid to the doctors under their respective agreements were debts,
albeit the precise amounts had not been calculated. In O'Driscoll v.
Manchester Insurance Committee the debt to which a doctor was entitled
was attached under a garnishee order. A debt can be assigned or is
otherwise within the disposition of the creditor. But, under the
Principal Act, neither the Commission nor the Commonwealth becomes a
debtor to an assignee practitioner although the right conferred on the
assignee practitioner is discharged by the payment of money by the
Commission on behalf of the Commonwealth.



12. The Principal Act provides for the payment of what is, as between
the Commonwealth and the claimant for the medicare benefit, a
gratuitous payment. If a statute provided for money in a particular
amount to be paid to a person from whom property had been acquired, a
diminution of the amount to be paid enacted after the acquisition
might well attract the protection of the just terms requirement in
s.51(xxxi). Again, if a statute provided for money in a particular
amount to be paid to a person who had given good consideration for the
payment, the right to payment in that amount might well be regarded as
property which could not be diminished by a law enacted after the
consideration was given that did not provide just terms. But the
Principal Act does not fall into either of those categories. True it
is that an assignee practitioner acquires a right to claim a medicare
benefit under s.20A only by agreement to give up a right to payment of
a fee for services rendered but that agreement is between the assignee
practitioner and the patient. Consideration passes from the assignee
practitioner to the patient and from the patient to the assignee
practitioner. What the assignee practitioner acquires is a statutory
right which, as between the practitioner and the Commonwealth (or the
Commission), is a gratuity.



13. Perhaps it should be mentioned that s.51(xxxi) is not attracted
by the acquisition by an assignee practitioner of a right to claim
a medicare benefit: that acquisition is effected simply by the
agreement between the patient and the assignee practitioner. In any
event, there can be no doubt as to the justice of the terms on which
the assignee practitioner acquires that right from the patient: the
assignee practitioner foregoes the debt which the patient owes for the
services rendered.



14. When the right conferred by the Principal Act is thus analysed, it
is clear that the amount which the Commission is commanded to pay to
an assignee practitioner whose claim is accepted is the amount
prescribed by that Act at the time when the duty to pay is performed.
The Parliament, having power to authorize the Commission by
legislation to pay medicare benefits, has power by legislation to vary
the Commission's authority. Though it was held in Peverill v. Meir
that the duty to pay was not fully performed, an order now to pay the
amount prescribed by the Principal Act as amended would be futile, for
the Principal Act as amended now prescribes the amount to be paid as
the amount which Dr Peverill has in fact received. The question in
this case is not whether the Amending Act should be interpreted as
having a retrospective operation. Section 6 of the Amending Act makes
clear its operation. The question is whether the Amending Act
provided for the acquisition of property. The answer to that question
is: no.



15. Perhaps an assignee practitioner might think that the distinction
between a debt and a statutory right to claim a medicare benefit
and to have the claim accepted and paid is artificial. But the
distinction reflects an important difference. When, by statute or
otherwise, a debt is created, the creditor is by law entitled to
payment in the amount of the debt and that entitlement is immune
from legislative acquisition under s.51(xxxi) unless just terms are
provided. But where a pecuniary benefit payable out of Consolidated
Revenue is gratuitously provided by the Parliament to the beneficiary,
the amount of the benefit remains until payment within the unfettered
control of the Parliament. The distinction between a debt and the
right conferred on assignee practitioners by the Principal Act is the
difference between something owned and something expected, the
fulfilment of the expectation being dependent on the continued will of
the Parliament.



Section 55 of the Constitution

16. As the Amending Act imposed no tax but merely altered the amount
of benefits payable under the Principal Act, the challenge to the
validity of the Amending Act based on s.55 fails.



17. Dr Peverill's claim is susceptible to defeat by the Amending Act.
That legislation is valid and the appeal must be allowed.

DAWSON J Speaking generally, a patient who incurs expenses for
medical or pathology services is entitled to receive medicare benefits
from the Commonwealth government under the Health Insurance Act 1973
(Cth) ("the Principal Act") ((26) See s.10.). Instead of the patient
paying the medical practitioner for a service and then claiming the
medical benefit from the government, the patient may enter into an
agreement with the practitioner whereby the patient assigns the right
to payment of the benefit to the practitioner and the practitioner
accepts the assignment in full payment for the service ((27) Health
Insurance Act, s.20A(1).). The medicare benefit is payable in
accordance with the assignment or agreement ((28) ibid., s.20A(3).).
It is this arrangement which allows a medical practitioner to engage in
the practice known as bulk-billing.



2. Between 3 December 1984 and 31 July 1989 the respondent,
Dr Peverill, performed pathology tests of a kind known as the ELISA
test, which is short for enzyme-linked immunosorbent assay. The
procedure is one by which specific biological substances can be
detected and measured and is used, amongst other things, to test for
antibodies to the rubella virus. Dr Peverill's patients assigned to
him their rights to medicare benefits for the ELISA tests. The
medicare benefits were calculated by reference to fees for pathology
services set out in a schedule to the Principal Act ((29) ibid., s.9.).
Dr Peverill submitted claims for the ELISA tests under item 1345 of
the schedule which specified a fee of $34.50. The claims were made to
the appellant, the Health Insurance Commission, which was the
appropriate body under the Principal Act ((30) ibid., s.20(1).). It
decided that the claims should be met under item 2294 in the schedule
which specified a fee of $4.60. In proceedings under the Administrative
Decisions (Judicial Review) Act 1977 (Cth) in the Federal Court,
Burchett J held that the Health Insurance Commission was in error and
that the benefits payable for ELISA tests were covered by item 1345
((31) See Peverill v. Meir (1990) 95 ALR 401.).



3. Dr Peverill then sued the Health Insurance Commission to recover
benefits in respect of ELISA tests which he alleged were due under
item 1345. In a separate action, Dr Peverill made claims under item
1345 in respect of various other pathology services which he alleged
involved the quantitative estimation of substances.



4. Whilst both actions were on foot, the Health Insurance (Pathology
Services) Amendment Act 1991 (Cth) ("the Amending Act") was passed.
Some of the amendments made by that Act are expressed to operate
retrospectively from 1 January 1980. The Amending Act excluded from
item 1345 "quantitative estimation of ... a microbiological or tissue
antigen or antibody" ((32) Health Insurance (Pathology Services)
Amendment Act 1991, s.4(1)(a).), thus excluding the ELISA test.
Instead, the Amending Act inserted two new items, 2294 and 2295, which
prescribed benefits for "Enzyme-linked immunosorbent assay (ELISA)".
For the tests performed by Dr Peverill between 1 March and 14 June
1984, they provided for a fee of $15.40; for tests performed between
15 June 1984 and 30 June 1985 they provided for a fee of $16.60;
and for tests performed between 1 July 1985 and 13 March 1986 they
provided for a fee of $17.20 ((33) ibid., s.4(1)(c)-(e).). From 14
March 1986 the schedule was further amended to prescribe fees for
"Enzyme-linked immunosorbent assay (ELISA) for a microbiological or
tissue antigen or antibody where that antigen or antibody is not
specified elsewhere in the Schedule". The fee prescribed remained at
$17.20 ((34) ibid., s.4(1)(f).). From 1 August 1986, pathology tests
were placed in a separate schedule but the item numbers remained the
same as did the scheduled fees ((35) ibid., s.5(1).). From 1 August
1989 the scheme for pathology medicare benefits was significantly
altered by the Community Services and Health Legislation Amendment Act
1989 (Cth) and the benefits payable under that legislation are not in
issue in this litigation.



5. The effect of the Amending Act was to reduce, with retrospective
effect, the benefits which were previously payable for the ELISA
tests. The Health Insurance Commission amended its defence in each
action to rely upon the retrospective amendments to the Principal
Act. Dr Peverill in turn amended his reply in each case to allege
that the Amending Act was beyond the power of the Commonwealth
Parliament, being a law providing for the acquisition of property
other than on just terms contrary to s.51(xxxi) of the Constitution.
Dr Peverill also alleged, presumably in the alternative, that the
Amending Act purported to insert into the Principal Act provisions
imposing taxation contrary to s.55 of the Constitution.



6. The matters came before Burchett J to determine the issues
raised by the amendments to the pleadings. He held that the Amending
Act was beyond power because it was a law with respect to the
acquisition of property which did not provide just terms. He did not
find it necessary to deal with the issue raised under s.55 of the
Constitution ((36) Peverill v. Health Insurance Commission (1991) 104
ALR 449.). He ordered the amendments to the defence in each case to
be struck out. An appeal to the Full Court of the Federal Court was
launched by the Health Insurance Commission against those orders and Dr
Peverill delivered a notice of contention that the Amending Act was a
law imposing taxation within the meaning of s.55 of the Constitution.
The appeal was removed into this Court under s.40(1) of the Judiciary
Act 1903 (Cth).



7. The Commonwealth Attorney-General intervened before us to support
the validity of the Amending Act and, in doing so, relied upon
decisions in the United States dealing with the prohibition contained
in the Fifth Amendment against the taking of private property for
public use without just compensation. That prohibition is extended
to the States by the Fourteenth Amendment. There is a significant
difference between that provision, which prohibits the taking of
property without just compensation, and s.51(xxxi), which confers the
power to acquire property compulsorily upon just terms. Moreover,
the prohibition in the United States is necessarily to be seen in the
context of due process which has no counterpart in the Australian
Constitution. Caution must, therefore, be exercised in the use of
American authorities in relation to s.51(xxxi). The Attorney-General
submitted that the United States decisions establish first, that
gratuitous benefits such as welfare benefits do not constitute
property for the purposes of the prohibition against taking without
just compensation, and secondly, that laws designed to cure previous
defects in administration do not offend against the prohibition. He
sought to apply those propositions in the context of s.51(xxxi).



8. However, I find no need to resort to American authority upon
the subject. It is clearly established in this country that before
s.51(xxxi) has any application there must be an acquisition of
property. There is, as I have said, an obvious and important
distinction between a taking and an acquisition. As Mason J observed
in The Commonwealth v. Tasmania (The Tasmanian Dam Case) ((37) (1983)
158 CLR 1 at 145; see also at 181-182 per Murphy J, 247 per Brennan
J, 283 per Deane J; Trade Practices Commission v. Tooth and Co. Ltd.
(1979) 142 CLR 397 at 408; Reg. v. Ludeke; Ex parte Australian Building
Construction Employees' and Builders Labourers' Federation (1985) 159
CLR 636 at 653; Australian Capital Television Pty. Ltd. v. The
Commonwealth (1992) 177 CLR 106 at 166, 198-199.):
"The emphasis in s.51(xxxi) is not on a 'taking' of
private property but on the acquisition of property for
purposes of the Commonwealth. To bring the constitutional
provision into play it is not enough that legislation
adversely affects or terminates a pre-existing right that an
owner enjoys in relation to his property; there must be an
acquisition whereby the Commonwealth or another acquires an
interest in property, however slight or insubstantial it may
be."
In my view Dr Peverill has failed to establish that the Amending Act
is a law with respect to the acquisition of property for any purpose
in respect of which the Parliament has power to make laws.



9. As I understand it, Dr Peverill first put his case upon the basis
that when a patient assigned to him the patient's right to a medicare
benefit, he acquired a chose in action. So much is, I think, clear.
Indeed, s.20A(3) of the Principal Act provides to that effect when
it says that the medicare benefit is payable in accordance with the
assignment. And there can be no doubt that a chose in action may
constitute property for the purposes of s.51(xxxi) ((38) Minister of
State for the Army v. Dalziel (1944) 68 CLR 261 at 290; Bank of N.S.W.
v. The Commonwealth ("the Bank Nationalization Case") (1948) 76 CLR 1
at 212-214, 267, 299, 349.). Moreover,
it is now settled that s.51(xxxi) extends to the acquisition of
property by persons other than the Commonwealth ((39) Jenkins v. The
Commonwealth (1947) 74 CLR 400 at 406; McClintock v. The Commonwealth
(1947) 75 CLR 1 at 23, 36; P J Magennis Pty. Ltd. v. The Commonwealth
(1949) 80 CLR 382 at 401-402, 411, 423; Trade Practices Commission v.
Tooth and Co. Ltd. (1979) 142 CLR at 427, 451-452; Australian Tape
Manufacturers Association Ltd. v. The Commonwealth (1993) 176 CLR 480
at 510-511, 526.). Further, it may be assumed for the purposes of the
argument (although it is clearly not beyond argument) that a law
reducing the rate of a medicare benefit, the right to which constitutes
the relevant property, is a law with respect to the acquisition of that
property even though the acquisition was completed before the law took
effect.



10. However, a medical practitioner who accepts the assignment of a
medicare benefit in full payment for his or her professional services
does so entirely voluntarily. It is difficult, therefore, to see
how any question of just terms arises. Indeed, the better view
now appears to be that s.51(xxxi) is confined to the compulsory
acquisition of property. That view was taken by Stephen J in Trade
Practices Commission v. Tooth and Co. Ltd. where he said ((40) (1979)
142 CLR at 416-417; but cf. R. v. Registrar of Titles (Vict.) (1915) 20
CLR 379 at 392; The Commonwealth v. New South Wales (1923) 33 CLR 1 at
55; British Medical Association v. The Commonwealth (1949) 79 CLR 201
at 270.):
"The reference to 'just terms' throws light upon the
particular meaning of 'acquisition' in the placitum.
Despite early dicta to the contrary it is now well
established that pl.(xxxi) contemplates acquisition by
'the method of requisition', not by 'the method of
agreement' ((41) John Cooke and Co. Pty. Ltd. v. The Commonwealth
(1924) 34 CLR 269 at 282 and see Poulton v. The Commonwealth (1953) 89
CLR 540 at 573 per Fullagar J). Thus in British Medical Association
v. The Commonwealth ((42) (1949) 79 CLR 201 at 271.) Dixon J
contrasted acquisition under pl.(xxxi) with the case of a
voluntary sale, speaking of the former as involving the taking of
property from him 'against his will without just compensation'."



11. Be that as it may, the chose in action in the form of a medicare
benefit was not, in my view, acquired for any purpose in respect of
which the Commonwealth has power to make laws. Dr Peverill acquired
medicare benefits by assignment from his patients for his own purpose
and the acquisition therefore falls outside s.51(xxxi). As Brennan J
said in Re Tooth and Co. Ltd. (No.2) ((43) (1978) 34 FLR 112 at
146-147.):
"An acquisition purportedly authorized by a law with
respect to a subject matter of federal power is not
necessarily an acquisition for the purpose of that subject
matter. If the property the subject of the acquisition is
not to be used or applied 'in or towards carrying out or
furthering a purpose comprised in some other legislative
power' (i.e., a power other than pl.(xxxi)), the acquisition
is not for a purpose to which pl.(xxxi) refers. The purpose
of an acquisition is determined by the statute's intention
as to the use or application of the property in the hands of
the person acquiring the property. Where a law purports to
authorize an acquisition of property by a private person,
and there is no question of applying the property when
acquired either for the use and service of the Crown, or for
any other purpose in respect of which the Parliament has
power to make laws, the law finds no constitutional support
in pl.(xxxi). It does not fall outside pl.(xxxi) for want
of just terms, but for want of purpose."



12. That means that the Amending Act must be supported by a head of
power other than s.51(xxxi). It is to be found in s.51(xxiiiA) which
gives to the Commonwealth Parliament the power to make laws with
respect to the "provision of ... pharmaceutical, sickness and hospital
benefits, medical and dental services". As Brennan J pointed out in
Re Tooth and Co. Ltd. (No.2) ((44) ibid. at 147-148.), whilst every
compulsory acquisition of property by the Commonwealth (other than
"forfeitures, penalties, taxes or the like") must find support in
s.51(xxxi) and not in any other head of power, the same is not
necessarily so in the case of a compulsory acquisition of property by a
third party under Commonwealth legislation. Brennan J gave the
examples of a law with respect to marriage and divorce providing for
the compulsory transfer of property between spouses and a law under the
defence power restricting a landlord's right to recover possession of
premises upon the expiration of a lease. This case is, in my view,
another example. The acquisition of the right to medicare benefits by
Dr Peverill was not an acquisition for any purpose of the Commonwealth
and, even if it were otherwise within the terms of s.51(xxxi), it would
fall outside it for that reason.



13. Alternatively, Dr Peverill submitted that the Amending Act had the
effect that the Commonwealth acquired the chose in action assigned by
a patient to Dr Peverill and substituted another of a lesser value.
In my view that argument cannot be sustained.



14. For the reasons Toohey J and I gave in Mutual Pools Pty. Ltd. v.
The Commonwealth ((45) Unreported, 9 March 1994.), the reduction or
extinction of a liability, even though it may confer a financial or
monetary advantage upon the person whose liability is reduced or
extinguished, does not result in the acquisition of property by that
person. That is not because no money passes hands. It is because
nothing which answers the description of property is acquired. True it
is that in that situation no coins or notes are involved, but the
character of money is not dependent upon its physical qualities. They
may not be present at all in a transaction involving the transfer of
money and are of no intrinsic worth. Money is merely a medium of
exchange; it is not an object of exchange. It represents value or
purchasing power, but does not constitute property within the meaning
of s.51(xxxi) of the Constitution. The enactment of the Amending Act
did not result in the acquisition by the Commonwealth of the chose in
action assigned to Dr Peverill by his patient. The value of the right
which he acquired in the form of the chose in action was reduced, but
the Commonwealth did not acquire any property.



15. Nor, in my view, can it be said that the Amending Act is a law
imposing taxation. That argument appears to assume that any tax is
imposed upon Dr Peverill rather than the patient. That assumption is
not, I think, crucial to the argument.



16. The familiar definition of a tax is that it is "a compulsory
exaction of money by a public authority for public purposes,
enforceable by law, and ... not a payment for services rendered" ((46)
See Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal
Dairy Ltd. (1933) AC 168 at 175-176; Matthews v. Chicory Marketing
Board (Vict.) (1938) 60 CLR 263 at 276; Browns Transport Pty. Ltd. v.
Kropp (1958) 100 CLR 117 at 129.). That definition is, of course, not
exhaustive even when there are added to it the more recent requirements
that a tax not be by way of penalty and not be arbitrary ((47) See Air
Caledonie International v. The Commonwealth (1988) 165 CLR 462 at 467.).
Whilst it may be possible in some circumstances for a tax to take a
form other than the exaction of money ((48) ibid.), in the context of
s.51 of the Constitution, which requires a line to be drawn between the
taxation power (par.(ii)) and the acquisition power (par.(xxxi)), those
circumstances, if they exist at all, must be limited. Nevertheless, a
tax must, I think, be by way of exaction and where the exaction is of
money, as it invariably is, it takes the form of the imposition of an
obligation upon the taxpayer which is met by the payment of money.
Money raised by taxation constitutes part of the revenue of the
Commonwealth and, under s.81 of the Constitution, forms part of the
Consolidated Revenue Fund to be appropriated for the purposes of the
Commonwealth in the manner imposed by the Constitution. Under s.83, no
money shall be drawn from the Treasury of the Commonwealth except under
appropriation made by law ((49) See generally Northern Suburbs General
Cemetery Reserve Trust v. The Commonwealth (1993) 176 CLR 555.).



17. In Australian Tape Manufacturers Association Ltd. v. The
Commonwealth Toohey J and I remarked ((50) (1993) 176 CLR at 522.):
"Those characteristics of a tax which require it to be
levied by a public authority for public purposes are
important in that they reflect the general conception of a
tax as a means of raising revenue for government (even if
the aim of the tax is also to encourage or discourage
behaviour of a particular kind). In consequence, the fact
that an exaction is to be paid into a consolidated revenue
fund is sufficient indication that the exaction is for a
public purpose, hence a tax ((51) See R. v. Barger (1908) 6 CLR
41 at 82 per Isaacs J; Moore v. The Commonwealth (1951) 82 CLR 547 at
561 per Latham CJ; Parton v. Milk Board (Vict.) (1949) 80 CLR 229 at
258 per Dixon J) . By inference, the
strongest indication that an exaction does not constitute a
tax is that the moneys raised do not form part of such a
fund."



18. In the present case there is no exaction: Dr Peverill is not
obliged to pay any amount for the purpose of raising revenue. The
Amending Act reduces the liability of the Commonwealth to pay medicare
benefits, but it does not, in my view, impose a tax. A tax may
variously be described as an exaction, levy, contribution, duty,
charge or even an extortion ((52) See Attorney-General (N.S.W.) v.
Homebush Flour Mills Ltd. (1937) 56 CLR 390 at 408.), but whatever the
description, taxation for the purposes of s.51(ii) involves an
obligation imposed by law to pay money which, when paid, will comprise
government revenue and form part of the Consolidated Revenue Fund
((53) Australian Tape Manufacturers Association Ltd. v. The Commonwealth
(1993) 176 CLR at 506.). Of course, what amounts to an exaction etc.
is a matter of substance rather than form. As Latham CJ observed in
Attorney-General (N.S.W.) v. Homebush Flour Mills Ltd. ((54) (1937) 56
CLR at 400.):
"'Voluntary loans' and 'gracious offerings' and 'forced
benevolences' are not unknown in our history. When such
transactions amount to the exaction of money in obedience to
what is really a compulsive demand, the money paid is paid
as a tax".
However, in my view, a person does not without more become a taxpayer
merely by reason of the reduction or extinction of a liability which
the government owes to him or her.



19. For these reasons, I would hold the Health Insurance (Pathology
Services) Amendment Act 1991 to be a valid exercise of legislative
power, and allow the appeal.

TOOHEY J The facts relevant to this appeal appear in other
judgments. I shall not repeat them unnecessarily.



2. Section 20A of the Health Insurance Act 1973 (Cth)
("the Principal Act") permits a patient to assign the right to payment
of a medicare benefit to the medical practitioner on the basis that
the practitioner accepts the assignment in full payment of the medical
expenses incurred. Sub-section (3) reads:
"Where an assignment under this section takes effect,
... the medicare benefit is ... payable in accordance with
the assignment".



3. It is apparent that upon an assignment in accordance with s.20A,
the respondent, Dr Peverill, acquired a chose in action in respect of
the medical benefit payable by the appellant, the Health Insurance
Commission ("the Commission").



4. The Health Insurance (Pathology Services) Amendment Act 1991
(Cth) ("the Amending Act") is attacked in so far as that legislation
reduced the medicare benefits payable in respect of ELISA testing
in cases where patients had already assigned the right to payment of
the benefit to Dr Peverill but where the Commission had not yet made
payment.



5. Dr Peverill's challenge to the validity of the Amending Act
to the extent that it deprives him retrospectively of payment for
ELISA tests in accordance with the medicare benefit applicable at
the time of assignment is based primarily on s.51(xxxi) of the
Constitution which empowers the Commonwealth to make laws with respect
to:
"The acquisition of property on just terms from any State or
person for any purpose in respect of which the Parliament
has power to make laws".



6. The meaning and scope of s.51(xxxi) are discussed, not only in
the judgments in this matter but also in the judgments in Mutual Pools
and Staff Pty. Ltd. v. The Commonwealth ((55) Unreported, High Court
of Australia, 9 March 1994.), Georgiadis v. Australian and Overseas
Telecommunications Corporation ((56) Unreported, High Court of
Australia, 9 March 1994.) and Re Director of Public Prosecutions; Ex
parte Lawler ((57) Unreported, High Court of Australia, 9 March 1994.).
I do not propose to go over the same ground again. At issue is
whether s.51(xxxi) has any application in the present case.



7. The Parliament's power to make the Principal Act derives from
s.51(xxiiiA) of the Constitution which includes the provision of
"sickness and hospital benefits, medical and dental services". The
power to enact the Amending Act derives from the same paragraph, read
if necessary with the incidental power in par.(xxxix). The fact that
the legislation has some retrospective operation does not detract from
that power ((58) Polyukhovich v. The Commonwealth (1991) 172 CLR 501.).




8. Section 51(xxxi), it has been said, serves a double purpose ((59)
Bank of N.S.W. v. The Commonwealth ("the Bank Nationalization Case")
(1948) 76 CLR 1 at 349 per Dixon J):
"It provides the Commonwealth Parliament with a legislative
power of acquiring property: at the same time as a
condition upon the exercise of the power it provides the
individual or the State, affected with a protection against
governmental interferences with his proprietary rights
without just recompense."
It follows that if a law of the Parliament constitutes an acquisition
of property, par.(xxxi) will invalidate the law unless it provides
just terms.



9. Inevitably the focus of inquiry has been whether there has been
an acquisition of property. The purpose of the paragraph was seen in
this way by Dixon J in Grace Brothers Pty. Ltd. v.
The Commonwealth ((60) (1946) 72 CLR 269 at 290-291.):
"The power conferred by s.51(xxxi) is express, and
it was introduced as a specific power, not, like the
Fifth Amendment, for the purpose of protecting the subject
or citizen, but primarily to make certain that the
Commonwealth possessed a power compulsorily to acquire
property, particularly from the States. The condition 'on
just terms' was included to prevent arbitrary exercises of
the power at the expense of a State or the subject."



10. The passage does serve to demonstrate the need to identify an
acquisition of property and to avoid erecting par.(xxxi) into a wider
guarantee than the Constitution warrants. The matter of
identification lies very much at the heart of Georgiadis v. Australian
and Overseas Telecommunications Corporation as it does in the present
case. But the search for identification of acquired property should
not obscure the fact that a subject of legislative competence may be
"altogether outside the scope of s.51(xxxi)" ((61) Attorney-General
(Cth) v. Schmidt (1961) 105 CLR 361 at 373 per Dixon CJ See also
Burton v. Honan (1952) 86 CLR 169 at 180-181 per Dixon CJ and Re
Director of Public Prosecutions; Ex parte Lawler.). In Attorney-General (Cth) v. Schmidt ((62) (1961) 105 CLR 361.) the Court upheld,
under the defence power, sections of the Trading with the Enemy Act
1939 (Cth) ((63) Sections 13C and 13D which were inserted by the
Trading with the Enemy Act 1952 (Cth).) even
though they provided for the proceeds of the windings-up of certain
businesses to be paid to the Controller of Enemy Property in
circumstances where property was not to be returned to German
ownership or control. The imposition of taxation and the operation of
forfeiture provisions in connection with criminal proceedings provide
parallels ((64) Trade Practices Commission v. Tooth and Co. Ltd.
(1979) 142 CLR 397 at 408 per Gibbs J).



11. In the present case, the Amending Act excluded the ELISA test
from the relevant item of medical benefit and made it the subject of
other items so as to provide an amount of medical benefit varying
according to when the test had been conducted. This had the effect of
providing a lower level of medical benefit than had been the case when
Dr Peverill took certain assignments from his patients.



12. Whether s.51(xxxi) is applicable may be tested by looking at the
position of the patient who assigned his or her medical benefit to
Dr Peverill. Had there been no assignment when the Amending Act
operated to reduce the benefit payable for an ELISA test, could it be
said that there had been an acquisition of property from the patient?



13. The answer to that question is, in my view, no. By the Principal
Act the Parliament conferred on patients a range of medical benefits.
It did so as part of a complex regime of health insurance. Section 20
is part of that regime. Sub-section (1) provides that a medicare
benefit "is payable by the Commission on behalf of the Commonwealth to
the person who incurs the medical expenses in respect of that
service". But the Parliament may alter, whether by way of increase or
decrease, prospectively or retrospectively, the benefits it pays as
part of that scheme. The language of Latham CJ in Allpike v. The
Commonwealth ((65) (1948) 77 CLR 62 at 69.) is apposite:
"In the case of the Commonwealth, therefore, such right
as there is is the creation of Commonwealth statute or
Commonwealth regulation. That right may be altered by the
authority which created it."



14. Relevantly, the position did not alter because there had been an
assignment of medical benefit to Dr Peverill. He took the benefit of
the assignment, as he was entitled to do. However, the Parliament
remained competent to alter the regime of health insurance and to
provide a recoupment to Dr Peverill in accordance with the regime as
formulated from time to time, even if the consequence was a reduction
in the Commission's liability to make payments. That is not to say
that Dr Peverill's entitlement to be paid the medicare benefit is not
property. It constitutes a chose in action and, for reasons that
appear in my judgment in Georgiadis, answers the description of
property. But the Amending Act effects no acquisition of property,
because it is impossible to identify any property or interest in
property acquired by the Commission. Indeed, the operation of the
Amending Act lies outside the scope of s.51(xxxi) but within the scope
of s.51(xxiiiA). It is in truth a law regulating benefits for
services of the kind identified in par.(xxiiiA). It is not a law
relating to the acquisition of property for a purpose in respect of
which the Parliament has power to make laws.



15. As to the appellant's argument that the Amending Act is a law
imposing taxation, I have read what Dawson J has said in that regard.
I agree with his Honour's conclusion that the Amending Act does not
impose a tax and with his reasons for reaching that conclusion. I
have nothing to add.
I would allow the appeal.

McHUGH J Pursuant to the provisions of the Judiciary Act 1903
(Cth), the Court has removed into this Court an appeal pending in
the Full Court of the Federal Court against a judgment of Burchett J
given in that Court. His Honour held that the Health Insurance
(Pathology Services) Amendment Act 1991 (Cth) ("the Amending Act") is
beyond the powers of the Parliament of the Commonwealth in so far as
it purported to reduce the amount of payments owing by the Health
Insurance Commission to Dr Richard Edwin Peverill. The principal
question that arises in the appeal is whether the Amending Act
provides for the acquisition of property of Dr Peverill on terms
that are not just, contrary to the provisions of s.51(xxxi) of the
Constitution. If that question is answered in the negative, a further
question arises as to whether the Amending Act is invalid because it
would result in a breach of s.55 of the Constitution.



The factual background

2. In 1990, Dr Peverill commenced an action against the Health
Insurance Commission in the Federal Court. He sued to recover moneys
owing by way of an assignment of medicare benefits in respect of
pathology services, rendered to patients between 3 December 1984 and
31 July 1989. By virtue of s.20 of the Health Insurance Act 1973
(Cth) ("the Principal Act"), a "medicare benefit in respect of a
(pathology) service is payable by the Commission on behalf of the
Commonwealth to the person who incurs the medical expenses in respect
of that service". However, s.20A provides that a practitioner may
accept an assignment of a medicare benefit "in full payment of the
medical expenses incurred in respect of the professional service by
the (patient)". If the practitioner does so, that person has a right
to payment from the Commission of an amount that is generally 85 per
cent of the appropriate fee specified in the schedule to the Principal
Act. Dr Peverill claims that each of the medicare benefits payable
to his patients has been assigned to him "within the meaning of and
for the purposes of Section 20A of the Act". He also claims that
the pathology services which he rendered fell within item 1345 of
Schedule 1A to the Principal Act or within schedule provisions that
Schedule 1A has replaced. In its amended statement of defence, the
Commission alleged that the Amending Act excluded the services
allegedly rendered by Dr Peverill from item 1345. In his reply,
Dr Peverill alleged that the Amending Act was invalid because it
contravened s.51(xxxi) or, alternatively, s.55 of the Constitution.



3. An order was made by consent that the constitutional issues raised
in the amended statement of defence and the amended reply should be
decided separately. On the trial of the separate issue, Burchett J
held that, upon the basis of the facts alleged in the statement of
claim, the Amending Act was invalid in so far as it purported to
abolish Dr Peverill's assigned right to the payment of medicare
benefits payable under item 1345. His Honour held that the Amending
Act purported to acquire property of Dr Peverill without according
compensation on just terms, contrary to s.51(xxxi) of the
Constitution. His Honour found it unnecessary to decide whether the
Amending Act was also in breach of s.55 of the Constitution.



4. The relevant history of the matter began on 9 May 1984. On
that day, the Department of Health, acting on a recommendation of a
statutory body ("the Medical Benefits Advisory Committee"), purported
to create a new item in the schedule of fees to cover pathology
services of the kind that Dr Peverill has rendered. Initially, the
fee was set at $15.40. By November 1987, it had been increased to
$18.40. In 1988, the Department received legal advice, which it
accepted, that the new item had been inserted without lawful
authority. Subsequently, the question as to what amount was payable
for pathology services of the kind rendered by Dr Peverill came before
the Federal Court for determination. Dr Peverill asserted that the
services fell within item 1345 for which the fee was $34.50. The
Federal Court upheld this contention ((66) Peverill v. Meir (1990) 95
ALR 401.). Dr Peverill then commenced the present action in the
Federal Court in 1990 claiming payment under item 1345 for a large
number of pathology tests performed between December 1984 and July
1989.



5. On 11 April 1991, the Bill, which became the Amending Act, was
introduced into the House of Representatives. The Minister for
Community Services and Health said that the purpose of the Bill was
to validate the advices of the Medical Benefits Advisory Committee
"so that claims and payments made in accordance with them will become
valid and proper and to bring the legislation into line with the
general practice in fact adopted at that time". According to the
second reading speech of the Minister, if Dr Peverill's action was
successful, the liability of the Commonwealth in respect of such
claims would be in the order of $100 million. The Bill received the
royal assent on 24 April 1991.



6. The Amending Act retrospectively amends Schedule 1A and its
predecessor, Schedule 1, to exclude from item 1345 pathology tests of
the kind allegedly carried out by Dr Peverill. Those tests are now
covered by new items 2294(3), 2294(4), 2295(3) and 2295(4) which
essentially give effect to the recommendations of the Medical Benefits
Advisory Committee. If the services allegedly rendered by Dr Peverill
fell within item 1345, as he claims, the effect of the Amending Act,
if valid, is to reduce the moneys owing by the Commonwealth to
Dr Peverill by more than 40 per cent.



Section 51(xxxi)

7. Section 51(xxxi) of the Constitution provides that, subject to
the Constitution, the Commonwealth shall have power to make laws with
respect to:
"The acquisition of property on just terms from any State or
person for any purpose in respect of which the Parliament
has power to make laws".



8. So far as possible the other legislative powers conferred by
s.51 of the Constitution are to be read subject to the provisions of
s.51(xxxi) ((67) Johnston Fear and Kingham and The Offset Printing Co.
Pty. Ltd. v. The Commonwealth (1943) 67 CLR 314 at 318; Bank of New
South Wales v. The Commonwealth (1948) 76 CLR 1 at 349-350; W.H.
Blakeley and Co. Pty. Ltd. v. The Commonwealth of Australia (1953)
87 CLR 501 at 520; Attorney-General (Cth) v. Schmidt (1961)
105 CLR 361 at 370-372.). Section 51(xxxi) is, therefore, both a
source of power and a guarantee that the property of the individual
will not be taken for public purposes except upon just terms.



9. However, not all acquisitions of property by the Commonwealth
fall within the terms of s.51(xxxi). In Mutual Pools and Staff Pty.
Ltd. v. The Commonwealth ((68) Unreported, 9 March 1994.), I pointed
to various cases of acquisition of property by the Commonwealth where
in the words of Dixon CJ the "whole subject is altogether outside the
scope of s.51(xxxi)" ((69) Schmidt (1961) 105 CLR at 373.). Such
cases include taxation, bankruptcy, forfeiture of property for breach
of customs or criminal laws and the seizure of the property of enemy
aliens. They are outside the scope of s.51(xxxi) because they are
cases where the taking of property by the Commonwealth is either an
inevitable consequence of a power conferred by s.51 or is a reasonably
proportional consequence of a breach of a law passed under such a
power.



10. The Commonwealth asserts that the powers conferred by s.51(xxiii)
and (xxiiiA) of the Constitution to make laws with respect to various
classes of welfare benefits include the power to increase, reduce,
abolish or otherwise amend the amount of such benefits at any time
without infringing the guarantee embodied in s.51(xxxi). Moreover,
the Commonwealth contended that it makes no difference that
legislation enacted under those paragraphs is expressed to confer a
right or entitlement to a benefit. In the present case, s.51(xxiiiA)
of the Constitution was the source of the power to enact the relevant
provisions of the Principal Act. That paragraph of the Constitution
empowers the Commonwealth to make laws with respect to "(t)he
provision of ... sickness and hospital benefits, medical and dental
services". The Commonwealth contends that a statutory benefit
conferred by that paragraph may be altered or revoked without
infringing the provisions of s.51(xxxi).



11. What Dr Peverill acquired in the present case was an assignment
of each patient's s.20 medicare benefit. Although his right or
entitlement was conferred by s.20A, that right or entitlement on one
view was no greater than the right or entitlement conferred on the
patient by s.20. The other view is that, because Dr Peverill accepted
the assignment in full payment for his services, his entitlement to
payment was a new and independent entitlement which superseded the
patient's entitlement. It is necessary, therefore, to examine the
s.20 and the s.20A entitlements separately.



The s.20 entitlement

12. In my opinion, no acquisition of property for the purposes
of s.51(xxxi) occurs when an enactment of the Parliament amends
or repeals a gratuitous statutory entitlement conferred by the
Parliament. Nor is the case different when the beneficiary of the
entitlement has fulfilled the conditions which govern the entitlement.
It follows that the Parliament may withdraw the statutory entitlement,
conferred by s.20 of the Principal Act, to the payment of a "medicare
benefit in respect of a professional service" even after that person
has incurred the expense of that service.



13. As the Solicitor-General for the Commonwealth pointed out,
decisions of this Court give little assistance on the question whether
laws reducing or abolishing gratuitous statutory benefits payable by
the Commonwealth infringe the guarantee embodied in s.51(xxxi). In
Allpike v. The Commonwealth ((70) (1948) 77 CLR 62.), however, the
Court held that no breach of s.51(xxxi) occurred where, pursuant to the
authority of a Commonwealth legislative provision, a Commonwealth
officer directed that the undrawn and deferred pay of a deceased
soldier and the interest thereon should be divided in a way which
conflicted with the deceased's will. Dixon J said ((71) ibid. at
76-77.):
"The provision applies prospectively from the passing of
the Act in 1942 to persons who die after the date of the
statute. So far as they are concerned, the provision deals
with the devolution on death of money which will become
payable under statute. Whether there will or will not be
a right vested in them to the pay or deferred pay or
allowances while they are serving as soldiers, the provision
attaches to their title to the money a condition affecting
its devolution on death. To do this is within the defence
power. I think there is no basis for the argument that
s.51(xxxi) of the Constitution must be invoked in order to
support a legislative direction of the course of devolution
on death of property when such a thing falls within the
purposes of the Commonwealth. Such a direction involves
no acquisition of property and raises no question of just
terms. The whole matter of the disposition on death of the
pay, deferred pay and allowances of a soldier appears to me
to be within Federal legislative power."



14. Allpike is authority for the proposition that, without infringing
s.51(xxxi), the Commonwealth can regulate a federal statutory
entitlement to a payment even after the beneficiary of the payment has
fulfilled the conditions entitling that person to the payment provided
that the entitlement was made subject to the condition that it could
be regulated. It need hardly be said that such a condition may be
imposed expressly or by implication or by inference from all the
circumstances of the enactment. Moreover, logically no distinction
can be drawn between an entitlement subject to a condition of
regulation and an entitlement subject to a condition of reduction or
revocation.



15. The decision in Allpike is in accordance with a long line of
authority in the United States which holds that statutory gratuities
are not property for the purpose of the Takings Clause in the US
Constitution ((72) The Fifth Amendment provides: "(N)or shall private
property be taken for public use, without just compensation".) and can
be altered or revoked before payment. The governing principle was
stated by Pitney J in New York Central RR Co. v. White ((73) (1917)
243 US 188 at 198.):
"No person has a vested interest in any rule of law
entitling him to insist that it shall remain unchanged for
his benefit."



16. In accordance with this principle, the United States Supreme Court
and federal courts have frequently and consistently held for more than
a century that welfare and pension rights are not vested property
rights and that Congress may cancel them at any time ((74) United
States v. Teller (1882) 107 US 64 at 68; Lynch v. United States (1934)
292 US 571 at 576-577; US Railroad Retirement Board v. Fritz (1980)
449 US 166 at 174; Bowen v. Gilliard (1987) 483 US 587 at 604, 607;
Hoffman v. City of Warwick (1990) 909 F 2d 608 at 616-617.).
Eighteen years before the enactment of the Commonwealth of Australia
Constitution Act 1900, the Supreme Court declared ((75) Teller (1882)
107 US at 68.):
"No pensioner has a vested legal right to his pension.
Pensions are the bounties of the government, which Congress
has the right to give, withhold, distribute, or recall, at
its discretion."



17. Just over fifty years later, Brandeis J in delivering the
judgment of the Supreme Court in Lynch v. United States ((76) (1934)
292 US at 577.) could say:
"Pensions, compensation allowances and privileges are
gratuities. They involve no agreement of parties; and
the grant of them creates no vested right. The benefits
conferred by gratuities may be redistributed or withdrawn at
any time in the discretion of Congress."



18. This principle is seen as the necessary consequence of Congress'
"plenary power to define the scope and the duration of the entitlement
to ... benefits, and to increase, to decrease, or to terminate those
benefits based on its appraisal of the relative importance of the
recipients' needs and the resources available to fund the
program" ((77) Atkins v. Parker (1985) 472 US 115 at 129.).
Consequently, non-contractual entitlements which the recipient has not
yet received are not property for the purpose of the Takings Clause
even though the recipient has a legitimate expectation that the
entitlements will be received ((78) Hoffman (1990) 909 F 2d at 616.) .




19. The entitlement under s.20 of the Principal Act must be taken to
be conferred subject to repeal or alteration - including retrospective
repeal or alteration - at the discretion of the Parliament. The
plenary power conferred by s.51(xxiiiA) extends to altering or
repealing the entitlement to a gratuitous benefit conferred under that
paragraph even where a person has met the conditions giving rise to
the entitlement. It could not be maintained, for example, that a
person who had turned 65 had a vested right, protected by s.51(xxxi),
to receive an age pension or that, consistently with the guarantee,
the Parliament could not change the conditions upon which the pension
was payable. Similarly, the right of payment under s.20 to a person
who has incurred a medical expense is subject to the condition that
Parliament may alter, reduce or revoke the right ((79) Allpike (1948)
77 CLR 62.). Nothing in s.20 specifically, or in the Principal Act
generally, indicates a legislative intention by the Parliament that it
will not alter, reduce or abolish s.20 entitlements, prospectively or
retrospectively. In the absence of any legislative expression to the
contrary, the entitlement conferred by s.20 - like any other statutory
entitlement - must be taken to be subject to the condition that it may
be altered, reduced or revoked at any time. Indeed, s.4 specifically
declares that the regulations may provide that the Principal Act is to
have effect as if the general medical services table were varied by
inserting or omitting an item or rule of interpretation in or from the
table or by substituting another amount for an amount set out in an
item in the table.



20. It is arguable, as the Solicitor-General for the Commonwealth
contended, that the abolition or alteration of a s.20 benefit involves
no retrospective exercise of power even when the change in the law
affects a right to payment in respect of a medical service already
incurred. The Solicitor-General contended that a law which abolishes
a benefit in respect of a period in the past operates prospectively to
remove the present and continuing right to receive the payment. But
whether or not this argument is correct, Parliament has plenary power
to make laws with respect to the provision of medical benefits and
this includes the power to alter, reduce or revoke them. Whatever the
Parliament can do prospectively, it can do retrospectively ((80)
Polyukhovich v. The Commonwealth (1991) 172 CLR 501.).



21. It follows that a law which alters, reduces or revokes a s.20
benefit, whether prospectively or retrospectively, is not a law with
respect to the acquisition of property for the purpose of s.51(xxxi)
of the Constitution. The s.20 entitlement is granted subject to the
condition that it may be altered, reduced or revoked at any time. A
law which gives effect to that condition does not acquire any property
of the beneficiary of the entitlement.



22. No doubt it is true that the right to payment conferred by s.20
of the Principal Act constitutes property within the meaning of
s.51(xxxi) of the Constitution. The right to payment conferred by
s.20 is a right to obtain payment of a specialty debt ((81) The Cork
and Bandon Railway Co. v. Goode (1853) 13 CB 826 (138 ER 1427); Royal
Trust Co. v. Attorney-General for Alberta (1930) AC 144.). It is a
chose in action which is assignable by the Principal Act. Property
for the purpose of s.51(xxxi) is not confined to physical things.
Under the general law, the term "'property' has ceased to describe any
res, or object of sense, at all, and has become merely a bundle of
legal relations - rights, powers, privileges, immunities" ((82)
Corbin, "Taxation of Seats on the Stock Exchange", (1922) 31 Yale Law
Journal 429 at 429.). A similarly wide interpretation has been given
to the term "property" in s.51(xxxi). In Australian Tape Manufacturers
Association Ltd. v. The Commonwealth ((83) (1993) 176 CLR 480 at 509.),
Mason CJ, Brennan, Deane and Gaudron JJ expressly stated that a
chose in action is property for the purpose of the paragraph ((84)
See also Minister of State for the Army v. Dalziel (1944) 68 CLR 261 at
276, 285, 290; Bank of New South Wales (1948) 76 CLR at 299, 349. It
may be that the authors of the Constitution in drafting s.51(xxxi) had
a physicalist conception of property in mind and intended that
paragraph to apply only to the acquisition of land, buildings and other
material objects: see Official Record of the Debates of the
Australasian Federal Convention, Melbourne, 25 January 1898, at
151-154. But the settled doctrine of this Court is that the term
"property" in that paragraph extends "to every species of valuable
right and interest including real and personal property, incorporeal
hereditaments ... and choses in action": Australian Tape
Manufacturers Association Ltd. (1993) 176 CLR at 509 citing
Dalziel (1944) 68 CLR at 290.). If the Commonwealth legislated so as
to enable one of its statutory agencies to acquire all the property of
a particular person, it could not be doubted that, for the purpose of
s.51(xxxi), the property of that person would include the right to
receive any payment owing by the Commission in respect of a medicare
benefit ((85) In the United States a series of cases have held that
statutory entitlements to benefits can constitute property for the
purpose of the Due Process Clause. See, for example, Goldberg v.
Kelly (1970) 397 US 254 at 262 (welfare payments); Wheeler v.
Montgomery (1970) 397 US 280 (old age benefits); Fusari v.
Steinberg (1975) 419 US 379 (unemployment benefits); Goss v.
Lopez (1975) 419 US 565 at 574 (public education); Mathews v.
Eldridge (1976) 424 US 319 at 332 (social security disability
benefits); Bishop v. Wood (1976) 426 US 341 at 344 (tenured
public employment). The juridical nature of this property right
has not been closely analysed. In Board of Regents v. Roth
(1972) 408 US 564 at 577, however, Stewart J said that:
"To have a property interest in a benefit, a person
clearly must have more than an abstract need or desire
for it. He must have more than a unilateral
expectation of it. He must, instead, have a legitimate
claim of entitlement to it. It is a purpose of the
ancient institution of property to protect those claims
upon which people rely in their daily lives, reliance
that must not be arbitrarily undermined.").



23. But the question in this case is not whether a right to payment of
a medicare benefit is property. It is whether a law which alters or
repeals the statute conferring that entitlement is, within the meaning
of s.51 of the Constitution, a law with respect to the "acquisition of
property ... for any purpose in respect of which the Parliament has
power to make laws". Because the right to payment which is conferred
by s.20 is conferred subject to any future alteration or repeal by the
Parliament, a law which alters or repeals that entitlement is not a
law with respect to the acquisition of property within the meaning of
s.51(xxxi). In the words of Dixon CJ in Burton v. Honan ((86)
(1952) 86 CLR 169 at 180.) "the whole matter lies outside the power
given by s.51(xxxi)".



The s.20A entitlement

24. However, it does not necessarily follow from Allpike and the
United States cases that no breach of s.51(xxxi) occurs if the
Parliament of the Commonwealth alters or repeals a practitioner's
right to payment arising out of the assignment of a medicare benefit.
The practitioner who takes an assignment "accepts the assignment in
full payment of the medical expenses incurred in respect of the
professional service". That means that the practitioner who takes an
assignment accepts the right to a payment of approximately 85 per cent
of the amount of the schedule item in return for surrendering his
or her contractual right to the fee payable by the patient. The
Solicitor-General for the Commonwealth contended that the practitioner
gives neither the Commonwealth nor the patient "a quid pro quo" for
the payment. But in giving up his or her rights against the patient,
the practitioner gives consideration for the payment authorised by
s.20A even if the Commission or the Commonwealth obtains nothing from
the assignment. If the terms of s.20A constituted a contractual offer
on behalf of the Commission, the practitioner's agreement not to
enforce payment of his or her fee against the patient would be
sufficient consideration to make a binding contract between the
parties ((87) Bolton v. Madden (1873) LR 9 QB 55; Jones v. Padavatton
(1969) 1 WLR 328; Tanner v. Tanner (1975) 1 WLR 1346.). It would be a
misuse of language, therefore, to describe the s.20A payment as a
gratuity to the practitioner. Moreover, the practitioner's right to
payment cannot be amended or repealed at the discretion of the Health
Commission or the executive government of the Commonwealth. Upon
accepting the assignment, the practitioner has a right enforceable at
law against the Commission. That right is a chose in action.
Unquestionably, it constitutes property for the purpose of s.51(xxxi)
((88) Australian Tape Manufacturers Association (1993) 176 CLR at 509.).
But is a law that abolishes or reduces the amount of a benefit that
is the subject of an assignment under s.20A a law with respect to the
acquisition of property for the purposes of s.51(xxxi)? Or is the
right of property created by force of s.20A, like the entitlement under
s.20, created subject to the condition that it can be altered or even
abolished by an exercise of power under s.51(xxiiiA) without infringing
s.51(xxxi)?



25. In my opinion, in the absence of a contract, a right or
entitlement to a payment created by federal law may be altered or
abolished at any time without infringing the provisions of s.51(xxxi)
even though the beneficiary of the entitlement may have acted in
reliance on the payment being made. Until the right or entitlement
has been transformed into some other form of property recognised and
enforceable under the general law, the head of federal power that
created the right or entitlement may be exercised so as to alter or
revoke that right or entitlement without infringing the guarantee
embodied in s.51(xxxi) ((89) cf. United States v. Rodgers (1983) 461
US 677 at 686 distinguishing between a "mere statutory entitlement" and
a "vested property right" in determining whether a taking had
occurred of a "homestead" right under Texas law.). Once the right or
entitlement to payment is transformed into a payment or a judgment
debt, for example, a new form of property is created which is not
dependent upon federal law for its substance, recognition or
protection. The Commonwealth can only acquire it by paying the price
demanded by s.51(xxxi). To hold that the right or entitlement may be
altered or revoked before but not after payment does not mean that form
has triumphed over substance. It simply means that, once the new
property has been created, it is outside the scope of the power which
created the original right or entitlement and can only be reached by an
exercise of power under s.51(xxxi).



26. In the present case, no contract was made between Dr Peverill and
the Commission. Section 20A does not contain an offer on behalf of
the Commission, the acceptance of which creates a contract between the
Commission and the medical practitioner. The terms of that section
amount to no more than a declaration of legislative policy which the
Commission must follow until it is altered or revoked by further
legislation. In Dodge v. Board of Education of Chicago ((90) (1937)
302 US 74.), the Supreme Court held that no vested right of property
was affected by legislation which reduced the annuities payable to
teachers who had retired or were eligible to retire pursuant to an
earlier enactment. The earlier enactment had reduced the period of the
teachers' tenure but had provided retirement annuities for them. They
maintained that the earlier enactment was an offer to pay an annuity
which they had accepted by remaining in service until their retirement.
The Supreme Court said ((91) ibid. at 78-79.):
"In determining whether a law tenders a contract to a
citizen it is of first importance to examine the language of
the statute. If it provides for the execution of a written
contract on behalf of the state the case for an obligation
binding upon the state is clear. Equally clear is the case
where a statute confirms a settlement of disputed rights and
defines its terms. On the other hand, an act merely fixing
salaries of officers creates no contract in their favour and
the compensation named may be altered at the will of the
legislature. This is true also of an act fixing the term or
tenure of a public officer or an employe (sic) of a state
agency. The presumption is that such a law is not intended
to create private contractual or vested rights but merely
declares a policy to be pursued until the legislature shall
ordain otherwise."



27. In the present case, s.20A did not provide for the execution of
any contract on behalf of the Commission or the Commonwealth. Nor did
that section confirm any settlement between the parties. It merely
declared the current policy of the Parliament in respect of the
payment of assignments of medicare benefits. It contained no offer of
a contract to a medical practitioner.



28. No doubt, Dr Peverill carried on his practice in reliance on the
belief that the services which he rendered fell within item 1345 of
the schedule and that he would be paid 85 per cent of the amount
specified in that item if he accepted the assignment of a patient's
medicare benefit. However, the element of reliance cannot transform a
federal statutory entitlement into property, immune from the reach of
the federal power which created it, as long as it remains accepted,
as I think it must, that a person has no right to the continuation
of a mere statutory benefit ((92) See Grais, "Statutory Entitlement
and the Concept of Property", (1977) 86 Yale Law Journal 695 at 699 ff.
In Board of Regents v. Roth (1972) 408 US 564, Stewart J appeared to
regard the element of reliance as the property-making factor.
However, because there is no entitlement to the continuation of a
benefit, I am unable to accept that this is so.). Participants in a
field regulated by legislation cannot object if the legislative scheme
is altered by subsequent amendments ((93) F.H.A. v. The Darlington
Inc. (1958) 358 US 84 at 91; Connolly v. Pension Benefit Guaranty Corp.
(1986) 475 US 211 at 227.).



29. The present case must, therefore, be considered on the basis that,
although s.20A gave Dr Peverill a right to take an assignment of the
patient's s.20 benefit and an entitlement to be paid 85 per cent of
the relevant item amount, that entitlement could be altered, reduced
or revoked before it was converted into money or some other form of
property. Whether the alteration, reduction or revocation affected
the entitlement under s.20A directly or, indirectly, by operating on
the underlying s.20 medicare benefit is a matter of no constitutional
significance. Consequently, the entitlement under s.20A did not
differ in substance from the patient's entitlement under s.20. It
follows that Dr Peverill's entitlement to payment under s.20A was
conferred subject to the risk that either it or the s.20 benefit
itself could be altered or revoked at any time by the Parliament.
Because that is so, the Amending Act did not infringe the provisions
of s.51(xxxi) of the Constitution.



Section 55

30. Counsel for Dr Peverill also sought to uphold the judgment of
Burchett J by contending that the Amending Act imposed a tax into
the Health Insurance Act contrary to the terms of s.55 of the
Constitution. He contended that the Amending Act effected a
compulsory exaction of a specific liquidated amount and was within
the traditional definition of a tax laid down in Matthews v. Chicory
Marketing Board (Vict.) ((94) (1938) 60 CLR 263 at 276.). Counsel
then contended that the Amending Act "purports to insert provisions
imposing taxation - namely ss.2(2) and the reference to past dates in
s.4 and s.5 at which the sections are said to have effect - into the
Health Insurance Act 1973". Consequently, the Amending Act was in
breach of s.55 of the Constitution and invalid ((95) See Air Caledonie
International v. The Commonwealth (1988) 165 CLR 462.). However, the
Amending Act merely alters the statutory entitlement to payment or, on
one view, abolishes that entitlement and substitutes another
entitlement of lesser value. Such a law is not a law with respect to
taxation but a law with respect to the "provision of .. sickness and
hospital benefits, medical and dental services" within the meaning of
s.51(xxiiiA) of the Constitution. The Amending Act no more imposes a
tax than legislation which reduces the value of an unemployment or
pension benefit.



31. The appeal must be allowed.