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Does NSW’s hotel quarantine bill to Queensland hold up to scrutiny?

In short, probably not. It remains to be seen if NSW will push it further. However, it has raised some interesting questions about the extent to which purported decisions or “agreements” made by bodies such as Board of Treasurers are enforceable if put to proof.


NSW Hotel Quarantine invoice

Background


Returning travellers into NSW who do not require hospitalisation are required by the NSW Public Health Orders[1] to undertake mandatory hotel quarantine except in limited circumstances. There are naturally costs incurred in NSW providing this service which, from 18 July 2020,[2] were to be borne by the quarantined persons themselves by reference to a set scale of costs.[3]


NSW claims that between 29 March and 30 September 2020 it provided mandatory hotel quarantine services to 7,112 people who listed Queensland as their state of residence.


According to NSW, it was “agreed” some time earlier this year between all States and Territories that the costs of quarantining a returned traveller whose residence is in another State/Territory would be borne by the returned traveller’s home State/Territory, not the State/Territory where they happened to carry out their mandatory quarantine. Following the federal government’s international arrivals restrictions into Australia since mid-March 2020 and the subsequent outbreak of COVID19 in Victoria, a lot of commercial airlines had reduced their inbound routes into Australia to mainly Sydney. A lot of airlines dropped or significantly reduced their inbound routes into Brisbane, for example. The result is that returning Queensland residents would likely be required to carry out their quarantine in NSW instead of in Queensland.


NSW subsequently issued a tax invoice for $30M made out to the Queensland Treasury for not only the 7,112 people who underwent mandatory hotel quarantine in NSW but who specified a Queensland address between March-September 2020, but also a certain proportion of another 4,991 people for whom NSW did not have an Australian address recorded.


Queensland has said it is not going to pay the invoice, prompting strong rebuke from NSW. NSW Treasurer Dominic Perrottet has said that they may issue a “statement of claim” to Queensland.[4]

But does NSW have a leg to stand on? Relations between Queensland and NSW have soured during the pandemic so they may just try, but could NSW’s claim actually get up?


Analysis


The basis for the tax invoice is rooted in an alleged agreement reached by the Board of Treasurers that the costs would be shared as described above. The Board of Treasurers is an “independent body” established in October 2017 and comprised of the Treasurers of each of the States and Territories. This was done pursuant to an “agreement” signed by each of the States/Territories.[5] The agreement establishing the Board has terms of reference attached,[6] according to which the Board must operate. The terms of reference state that the Board will “uphold the sovereignty of state and territory governments within the Australian constitutional framework”. The terms of reference do not expressly deal with how members of the Board might bind their respective States/Territories to matters agreed by the Board, but does contemplate the Board making “decisions” which should be reached by unanimity and consensus and must be recorded in writing. However, all Board papers are confidential.


Without specificity as to what was “agreed” it is difficult to determine whether there is a true basis for the invoice. There are also questions about whether any such agreement or decision by the Board is effective to bind the State/Territory. Any such agreement may be just a ‘moral’ one at best.


In any event, it is not clear how the liability could arrive at Queensland in the first place. The Health Services Act 1997 (NSW) imposes liability squarely on the “person who receives any health service”.[7] There does not appear to be any mechanism for this liability to be transferred to the State/Territory in which such a person ordinarily resides.


Of course, Queensland could voluntarily agree to assume this liability by contract, but the onus would be on NSW to prove that had been done. Queensland Premier Annastacia Palaszczuk says there is no such agreement.[8] It is conceivable that, being made up of senior members of the executive like the treasurers, the members of the Board of Treasurers possess the individual authority to bind the State to an agreement but there may be evidentiary issues with this, as well as general issues of contract formation.


But even if there might be some way to overcome those difficulties, the tax invoice is made out to Queensland Treasury. That suggests there has been a taxable supply of services from NSW to Queensland Treasury, although it is not clear what this could possibly be. The service is clearly provided to the individual who is quarantining, not to the State/Territory where they ordinarily reside, let alone the treasury element of the polity. In those respects, the invoice is almost certainly fatally flawed. The invoice does not purport to be for liabilities assumed by Queensland pursuant to some agreement, which contradicts NSW’s stated basis for issuing it in the first place. Rather it is an invoice for services; services which have not been provided to Queensland and in respect of which it is arguably not liable.


Further, the invoice alleges that the costs of the additional 4,991 arrivals without addresses have been “allocated proportionally across the states” though there is no detail in the invoice to ascertain how this has been done and it is not clear why the territories have not been included in the proportioning process. Again, there does not seem to be any basis for NSW charging these costs, let alone in this way. What if the reason that no address was recorded was due to a failure of NSW to obtain and retain that information? Surely they should not then be entitled to benefit from that failure.


Even of the other 7,112 people who listed a Queensland address, there’s also no detail available about whether those addresses were verified or even validated for accuracy (what if someone wrote down 123 Queensland Street, Queensland? – not a real address, I checked).


If NSW does commence proceedings, which the NSW Treasurer has suggested they may do, they will be in the High Court.[9] The prospect of recovering $30M from Queensland, a not insignificant sum, may overcome any hesitance of undertaking such a costly and probably protracted exercise as proving a debt in the High Court.


It seems that at best Queensland has a moral imperative to reimburse NSW. Without more detail, it is difficult to see how the argument could be sustained in a legal sense. It is a good reminder that “handshake agreements” reached while responding nimbly to a health emergency may not stand up to scrutiny. The costs of hotel quarantine are clearly high. There is something to be said for acting in coordination and with camaraderie with other States/Territories during this time is important as it advances the national interest for the mutual benefit of the States/Territories. But without a proper legal basis for claiming cash, it is always going to be difficult to recover it.


Get everything in writing!



[1] https://www.health.nsw.gov.au/Infectious/covid-19/Pages/public-health-orders.aspx [2] Fees and payment | NSW Government [3] Pursuant to the Health Services Act 1997 (NSW) – see NSW Government Gazette No 153 of 17 July 2020. In contradistinction to Queensland, where it is under Part 7AA of the Public Health Act 2005 (Qld). [4] NSW Treasurer proposes payment plan for ‘disappointing’ Queensland government – 2GB [5] Board of Treasurers formal agreement (treasury.sa.gov.au) [6] Available from: Terms of Reference - Board of Treasurers (Final. Agreed 25.5.18) (nsw.gov.au) [7] Section 70(1). The hotel quarantine service is deemed to be a health service by the amendment to the Health Services Regulation 2018 (NSW) made by the Health Services Amendment (Quarantine Services) Regulation 2020 (NSW). [8] NSW Treasurer labels Queensland Premier 'selfish' over refusal to pay COVID-19 hotel quarantine bill - ABC News [9] S 59 Judiciary Act 1903 (Cth).

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