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The AIHW was established as a statutory authority in 1987 by the Australian Institute of Health Act 1987 to report to the nation on the state of its health. In 1992, the role and functions of the then Australian Institute of Health were expanded to include welfare related information and statistics, making it the Australian Institute of Health and Welfare. The Act is now titled the Australian Institute of Health and Welfare Act 1987 (Appendix 2).

The Act establishes the Board as the governing body, with the role and composition of the Board specified in s. 8(1) of the Act. The AIHW Board is accountable to the Parliament of Australia through the Minister for Health.