Andrew Laming (Bowman, Liberal Party) Share this | Hansard source

There is a lot of history behind the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008. It goes to the health ministers who, through the eighties and early nineties, struggled with the notion of the private-public balance in health provision. Both sides of this chamber have devoted an enormous amount of time to debating the provision, quality and funding of public health services and the role that private health plays. It was a former health minister, Michael Wooldridge, who conceived the three-legged support for private health that effectively delivered the blended health model that we have seen work so well until tonight.

That blended model was delivered in stages. ANU academics have attempted to tease out the relative impacts of the 30 per cent discount on private health cover, the Medicare levy surcharge and the third part, community rating, whereby premiums can be adjusted for age according to the age of the person entering private health cover. It was a very delicate balance and there has been a sense that community rating was probably the most powerful of the three. But of course the 30 per cent rebate has become the most well known and that has been adjusted upward for seniors.

Tonight, the government is methodically dismantling that very, very delicate balance that saw 9.5 million Australians elect to pay their way in health care. There may well be within the government a deep ideological distaste for people who pay their way. I understand that before the election they would write letters to the health insurance industry and reassure them that they had their full support, but deep down the enthusiasm for the 30 per cent private healthcare rebate was lukewarm. The plan was to dismantle the Medicare levy surcharge as soon as they came to power. Of course, the last remaining leg in the stool is community rating, which supports the notion that if we enter private health cover early and we pay our way then we are provided for when we are seniors and most need that health cover.

There are neither quality signals nor price signals in a completely free system. While there will always be a role for a free public hospital system, it relies on a competing private health system to maintain the quality as a competitive option. Those who sell private health insurance know that they rely on a significant base to make it all cost effective—an economy of scale. This does sound like economics 101, doesn’t it? But the simple fact is that if you can have roughly half your population supporting the private health sector and investing some of their hard earned dollars in the health system then those 30 per cent discounts provided by government are exceptionally well-used resources.

That will change and unfortunately Treasury got the modelling all wrong. It was all a little bit of a rush for the new government coming up to the budget. Having had 12 years to think about these kinds of policies, they suddenly found themselves using the wrong hospital cover data and coming up with the wrong number of people who will fall out of private health cover. That is a great shame, but they are not going to amend it, are they. It is too late and the government will proceed blindly into this fatally flawed legislation. Whether there are 500,000, 600,000 or 750,000 people who opt out and go straight onto the public hospital waiting lists, that is no great concern for the government because, you know what, that will flow through to the state governments and they will simply handball them another rescue package before each state election.

Ending the blame game has come to this. It has come to the government destroying the private health system to make their point. We had this great hope that the half of Australians under private health cover might actually have tailored private health packages that might encourage public health options and encourage people to take preventative health measures. That has been lost with your legislation.

See this speech in context