Petro Georgiou (Kooyong, Liberal Party) Share this | Hansard source

I rise to speak on Appropriation Bill (No. 1) 2008-2009 and associated appropriation bills. The Treasurer said that this is a Labor budget—it was echoed by the previous speaker—and it certainly is a Labor budget. It is a budget characterised by high taxes, high spending, high unemployment and no relief on inflation. The Labor government inherited an enviable economy from the coalition. The coalition eradicated debt, established and maintained healthy services and instituted economic and taxation reform. These fostered and encouraged employment growth and a prosperity enjoyed by this country over the past decade. The legacy of the coalition government is an economy that is flexible, strong and prosperous. This is a total contrast to what the coalition inherited when it came to government in 1996. Government debt was $96 billion; the deficit was $10 billion. Australia suffered through a recession that we had to have and endured astronomic interest rates, high inflation and high unemployment. The coalition’s responsible management of the economy fostered an economy in which all Australians could be confident about the future.

It has to be said that this economic prosperity seems to have been taken for granted by Labor, and this budget is certainly one of missed opportunities. There is no agenda for the future; there is no vision for the type of nation we can grow to become. There are no details of action to strengthen our position and build on the gains that have already been made. Instead of capitalising on the strength and stability of the economy, the Labor government has instituted a range of measures that increase inflationary pressures. The budget fails to assist with the cost of living. There are income tax cuts but they were delivered by the coalition in its last election commitments. They were provided for in forward estimates and maintained by Labor, which I find is nice. What I find a bit concerning is that the Treasurer has indicated that there will be an end to returning excess budget surpluses to taxpayers as tax cuts.

This budget forecasts higher spending, higher taxes, higher unemployment and lower economic growth. New taxes and revenue measures will raise $19.7 billion over five years. Taxes have been increased on everyday items such as cars, alcohol, energy, computer software and passports. Even with the coalition’s income tax cuts in this budget, the total income tax take will increase by $42.8 billion, or 21.1 per cent, over the next four years. The CPI increase from the new tax increases means that despite the government’s rhetoric there is no relief from petrol prices, grocery prices or home loan interest rates.

Preliminary modelling estimates that the new tax alone will add up to 0.4 percentage points to the CPI. The strain on the community is increasing as the cost of living continues to grow. The budget increases inflationary pressure by increased spending. Again, despite a lot of chest beating by the Labor government that the razor gang would be slashing spending to contain inflation, the opposite is actually true. This budget removes $15.2 billion of coalition spending detailed in forward estimates but replaces it with $30.1 billion in new spending. And budget papers forecast a rise in the unemployment rate in the next 12 months.

This budget fails across a wide range of fronts. It fails pensioners; it fails retirees; it fails our schools and students; it fails our rural communities and it fails carers. Today I want to focus on the budget decision to increase the tax threshold for the Medicare levy surcharge. This was something that the member for Chisholm took up. The fact is that the coalition has long understood and appreciated that this nation’s health system is best served when we have viable, efficient and successful private and public health services working together to deliver health care.

The people of Kooyong understand and appreciate the importance of a strong private health system contributing to the overall quality of health care, and in my electorate the percentage of people with private health insurance is 77 per cent—30 per cent higher than the national average. A balanced health system with strong private hospitals is in the interest of all Australians. In government the coalition supported private health insurance to ensure that the right balance existed in the way health care was managed. Labor, on the other hand, has long held a different set of principles. The last time Labor was in government it continuously undermined the private health insurance system. Under Labor, private health insurance coverage fell significantly, and the reality is that Labor has always thought that it can afford to diminish the private health system because it believes that it is wealthy people who are in the system and that they will always stay there so the system does not need support.

Real life is quite different from this. One of the most interesting findings from the period when Labor was systematically eroding the base of private health insurance was that, amongst the lowest 20 per cent of income earners, private health insurance membership levels remained virtually unchanged across the decade from 1983 to 1992, while membership in all other income brackets declined. Under Labor it was the lower income earners who felt the brunt of Labor’s attack on private health. I believe that it is these people who will again feel the most pain as a result of Labor’s decimation of the private health system. Labor’s long-term cynicism about private health is becoming clear, and it is this cynicism that lies at the heart of the decision to increase the threshold for the Medicare levy surcharge. This increased threshold will serve to turn people away from private health insurance and further burden an already struggling public system. Not only will this increase the burden on the public health system but it will place unacceptable costs on the Australian community at large.

Research has shown that, for every dollar spent by the government on the private health insurance rebate, a saving of up to $2 on healthcare costs is made. It is undeniable that the public health system, now run by state Labor governments across Australia, is under strain. Even the states recognise that, and Western Australia and Tasmania have said that compensation from the federal government will be sought if there is an increased demand created by the policy change to the Medicare levy surcharge.

Previously, singles earning $50,000 or more who did not have private health insurance were required to pay a Medicare surcharge of one per cent of their taxable income. The threshold for families was $100,000. This policy provided an impetus for people to consider taking out private health insurance. Since the introduction of the Medicare levy surcharge, the number of people participating in the private health system has increased from below 30 per cent in the late 1990s to the current participation rate of 44.6 per cent, or 9½ million people. The number of patients treated by private hospitals has increased by 17 per cent in four years to 2.8 million patients, and 56 per cent of all surgeries are conducted in private hospitals.

The importance of private health cannot be underestimated, and the Labor Party is making a fundamental mistake by taking it for granted. Let me just run over some more statistics. Private hospitals currently conduct 84 per cent of all obesity related surgery, 77 per cent of all knee procedures, 70 per cent of all eye procedures, 64 per cent of all spinal procedures, 55 per cent of all hip procedures, 55 per cent of all chemotherapy and 41 per cent of all coronary bypass surgery. Private hospitals treat four out of every 10 patients admitted to a public hospital for treatment. In 2005-06 they treated 423,000 accident and emergency patients and over one million patients aged 65 years or over.  It is these older Australians who will be most adversely affected by this change. They cannot easily leave the system and they will be forced to pay higher premiums. The AMA has reported that it is older Australians who will be most adversely affected. The security and comfort that elderly and chronically ill Australians have had through affordable health insurance is at serious risk.

The change in the threshold has led the Department of the Treasury to anticipate that 485,000 people will leave the private system. This has been calculated as 186,000 singles and 150,000 families. Contrary to what the previous speaker, the member for Chisholm, said, these families actually need health cover. They will now need to rely on an overstretched public health system. But, to take this matter further, the working paper written by PricewaterhouseCoopers for the Australian Health Insurance Association has estimated that government savings, as detailed in the budget papers, would actually require more rebate payers to leave the system than is stated. Using the average premium cost, PricewaterhouseCoopers calculate that 613,000 people would have to leave private health insurance in the next financial year. With over 610,000 policyholders, and taking into account children in families, the number of people leaving private health insurance to fit the government’s forecast is potentially in the order of 900,000.

The Australian Medical Association commissioned Access Economics to report on the overall impact on health of the 2008-09 budget. Access concluded that the government has adopted a policy that harms the insurers and the private hospitals, while adding further burdens to an overstressed public hospital system and affecting the long-term fiscal position, which will in fact be felt immediately. I do not think that the Labor Party’s ideological obsession with undermining private health insurance will serve the government or the community well in the longer term. Good policy must exhibit short-term gain and long-term vision, especially in an area such as health. Sadly, the policy decision on private health insurance, like the vast majority of measures in this budget, lacks both.

Another feature of the budget that is worth while remarking on is the abolition of the Investing in Our Schools Program. I have had some experience with Labor economics, but I have got to say that I was surprised about the abolition of this program. I think that it had been universally welcomed by all members of parliament, and certainly, in my electorate, it made a fundamental contribution to improving, at the margins, the quality of education in our schools. I think that every member of parliament who walked into a school to see the new facilities, especially in the state school system, was taken by the quality of the changes and the dedication of the people who made bids for the Investing in Our Schools Program. I think that this is a very sad loss and I reiterate that it did surprise me, because I thought that that program would have had overwhelming support from all sides of the parliament.

On a positive note, I note the budget commitment to the abolition of temporary protection visas and the granting of permanent visa status to all refugees found to be owed protection. I think this is a measure that addresses a situation which has been unacceptable for far too long, and I am pleased to note that the arrangements to abolish the temporary visas will be in place by 1 October. I also welcome the commitment to the Adult Migrant English Program of an additional $49.2 million over four years.

In fairness, I should also welcome the provision in the budget to end discrimination against same-sex couples. This is a measure which has been long discussed in the coalition and I am just glad it is taking place in this budget.

Overall, it cannot be denied that the budget represents missed opportunities. Instead of continuing on the path of sound economic management with a range of prudent measures to encourage prosperity and growth, this budget reverts to the Labor style of economic management. Spending has been increased, despite pledges that the razor gang would be ruthless in its funding cuts. Cuts have been made to agencies such as CSIRO, HREOC, the Australian Bureau of Statistics and the Ombudsman. In that context I note that I am concerned about those cuts in terms of the Ombudsman’s ability to deliver on his statutory responsibilities.

The bottom line is that new spending in this budget is almost double the amount saved by cuts. There is no strategy for reform in this budget to enable continuing economic growth, and I think it needs to be registered that the maintenance of economic prosperity will not continue as a matter of course and that there has been a failure on the part of this government to address this issue. Australia’s prosperity is an outcome of disciplined management of the nation’s economy. This is something that Australians can never take for granted and it is something that we can no longer believe is in place. The budget increases taxes, increases spending and increases pressure on inflation. It is a budget in which Labor has failed the Australian economy.

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