Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Hansard source

On 15 May the Private Health Insurance Legislation Amendment Bill 2008, which amends the Private Health Insurance Act 2007, was introduced to this House. It contains five key amendments to the act. This bill will remove the dual regulation of health related business conducted through health benefit funds by both the Private Health Insurance Administration Council, or PHIAC, and APRA, the Australian Prudential Regulation Authority, so that from July 2008 insurance products, when administered through an insurer’s health benefits fund as health related business, will be solely regulated by PHIAC. It will also require private health insurers to incorporate under the Corporations Act in order to apply for registration to the council. This will directly impact on four of the current 38 health insurers which are now registered bodies rather than corporations. They will have until 1 January 2010 to become companies. PHIAC will cancel the registration of any private health insurer that is not a company by that date. This bill also ensures that eligibility for membership of restricted access insurers can be specified in the insurer’s constitution or rules. This amendment will ensure that the application of the community rating rules to discounted corporate products will be clarified. Lastly, the application of the community rating rules to pilot projects for broader health cover initiatives will be clarified.

The coalition have a proud history of supporting measures to improve the regulation of the health industry. In 2006 the health insurance bill was adopted. It was designed to increase competition in the industry and improve services to consumers by allowing insurers to provide policies that reflect contemporary clinical practice. We wanted to make sure that the bill simplifying the legislation surrounding private health insurance would not lead to those insurers being bogged down in compliance requirements. The bill also allowed private health insurance to cover outpatient and out-of-hospital services, including chronic care management of conditions such as diabetes and asthma and disease prevention programs. The 2006 bill also required health insurers to standardise the information they gave to policyholders so that the policyholders could better understand their entitlements under the insurers’ policies.

The expanded scope of health insurance allowed people to access a broader range of services. Coming into effect in April last year, this meant that insurers were finally able to pay benefits for medical services traditionally accessed outside the public hospital system and the hospital system generally. This bill allowed for the best care to be provided in the most suitable location. For example, people requiring cataract surgery could now access this surgery without having to be admitted to hospital. Similarly, cancer sufferers could now have chemotherapy administered at home or in a low-care environment. This step provided another opportunity to provide top-quality health care in a lower-cost environment.

Despite assuring the Australian people that the government would support private health insurance, the Prime Minister has instituted policies that, indeed, seek to undermine it. By raising the Medicare surcharge levy thresholds from $50,000 to $100,000 for singles and from $100,000 to $150,000 for couples and families, the government has signalled its policy of undermining access to health insurance and to choice in health care. In March this year, figures from the Private Health Insurance Administration Council revealed that, yet again, new records were set in private health insurance uptake. The week before the budget was handed down, 9.477 million Australians, or 44.6 per cent of the population, were covered by private health hospital cover. No doubt that will be the peak. Almost 10 million Australians have willingly given themselves a choice of hospital and doctor when they need treatment and care. Significantly, in the 12 months from March 2007, the biggest growth of any age group was among the 25- to 29-year-olds, with an increase of 57,500 members. Now this is all about to change. Private health insurance is about to be dealt a savage blow that will see Australians drop out of private health cover. That number remains a matter of strong conjecture.

The Treasurer told the National Press Club that the government projects that up to 485,000 people will drop their private health insurance as a result of the government’s changes. But a report from Access Economics projects that up to one million people could drop their private health cover. Another report, from PricewaterhouseCoopers, suggests that more than 900,000 extra patients will allow their insurance premiums to lapse. They will therefore rely on the public health system as a direct result of this government’s decision. The government has apparently based its policy on modelling done by Treasury. The government has refused to release this modelling so that it can be held up to proper scrutiny. Generally, advice from Treasury is just as likely to be disregarded by this government if it does not accord with the government’s own political line.

If the Prime Minister and the Minister for Health and Ageing have nothing to hide then why will they not release the detailed modelling of their changes to private health insurance? If the government believe that this policy will merely deliver a mild sting to the healthcare system, they should be prepared to show their modelling. If there are wild exaggerations in the numbers being bandied around by Access Economics, by PricewaterhouseCoopers or indeed even by the Treasurer himself then the government should be prepared to show their modelling to all Australians. The reality is that young and fit Australians will be the first to give up their private health insurance. This will see a redistribution of risk amongst those who keep their cover.

We already know that premiums for everyone will rise to unprecedented levels. Independent analysts suggest the impact could be much higher. On 29 May this year George Savvides, the managing director of Medibank Private, which is wholly owned by the Rudd government, told a Senate estimates hearing that he expects to lose between seven and 10 per cent of Medibank Private’s client base as a direct result of the government’s changes to private health insurance. So the PricewaterhouseCoopers numbers and Access Economics numbers appear to be closer to the mark. If you apply seven to 10 per cent across the 9.5 million people, that is somewhere between 600,000 and 950,000 people dropping out of private health insurance, according to the formula of George Savvides, the managing director of Medibank Private. I am not familiar with the demographic make-up of Medibank Private’s membership base, but it is the largest private health insurer in Australia and you would think that it would have a real cross-section of the community there.

Out of all of this, insurance firms will have no choice but to raise premiums for everyone. In the years ahead these premium rises will be known as the Rudd premium increases. Let it be very clear that the Prime Minister, as a direct result of his government’s initiatives, will be held accountable for every increase in private health insurance premiums from now on. The reality is that, unless hardworking families are rewarded for taking out private health insurance, they may be forced out of it. This government is actively pursuing its important role in watching closely as Australian families struggle under the weight of growing grocery and petrol prices. How are Australian families, already burdened by spiralling rents and the cost of living, supposed to shell out more for private health insurance without having any incentive to do so?

It is not just premium holders that will be hurt if, as Access Economics suggests, we do see a million Australians leave private health insurance. There will be something more than a mere sting in the public hospital system. And this system is cracking under the strain. Waiting lists for surgery continue to grow, and this is in spite of the doctoring of the waiting list numbers by Labor state governments and their bureaucrats. Access block and oversubscribed hospital beds mean that sick patients languish in emergency departments for far too long. There are hardworking, committed clinicians out there supporting a crumbling public hospital system. These clinicians are frustrated. They contact me each day with their concerns about the crumbling hospital system in which they are expected to deliver the highest possible medical care to their patients.

The fact that there is virtual chaos in a number of public hospitals around Australia is no better illustrated than at the Royal North Shore Hospital in my own electorate of North Sydney. The problems at that hospital have been the subject of a significant inquiry by the New South Wales government, extending right across the public hospital system in New South Wales. It is now known as the Garling inquiry. You need go no further than the fact that the Royal North Shore Hospital has had eight chief executives in 11 years. That is not a clinical issue. That is not a problem with the doctors. That is a problem with the administrators—public servants, in that case. Even then, each of those chief executives has clearly sent the message out—quietly, because they will ruin their career if they blow the whistle totally on the New South Wales hospital system—that the reason why they left is that the hospital system in New South Wales is dysfunctional. The fact that they are trying to run a very large hospital like the Royal North Shore Hospital with everyone second-guessing them means that they do not want to be party to the administration of that hospital. They do not want to stay as chief executive. Eight chief executives in 11 years under a Labor government—how could you run any system like that, let alone such a large hospital in such a large hospital system?

The burden on a hospital like the Royal North Shore Hospital is only going to increase as a direct result of the Rudd government initiatives. Rudd government initiatives such as the initiatives on private health insurance and on dentistry, where they are pushing people back into the public hospitals and abolishing dental cover in Medicare, add to the growing waiting lists in public hospitals and add to the already existing torturous levels of pressure.

The coalition believes in choice. That means having a vibrant and viable private health system sitting proudly alongside a high-calibre public health system. This is a choice in health care that Australians want and deserve. Private health insurance is the best way to enable Australians to contribute to their own health care and to be rewarded for doing so. It is no crime to have private health insurance. Contrary to what the member for Maribyrnong said in this chamber on 29 May, having private health insurance does not mean you are rich. He said that having private health insurance means you are rich. That was the Labor member for Maribyrnong. Taking out private health insurance means that you are able and are prepared to contribute to your own healthcare costs and in reward will access choice in healthcare delivery.

The Minister for Health and Ageing, in changing these levies, is seeking to punish those who remain holders of private health insurance. The Prime Minister’s policies will see premiums rise. The minister wishes to see those with health insurance and willing to contribute to the cost of their own health care marginalised. In the process, the minister for health believes this is a revenue-raising measure that will save the government 30 per cent on private health insurance rebates. The fact that every dollar spent on health insurance premiums brings in $2 in health spending is conveniently ignored by the Rudd government. The fact that a mass exodus of Australians from private health insurance will directly impact on the volume of patients seeking treatment in public hospitals is ignored. The fact that private health insurance will now be the only way Australians will have timely access to dental care since the axing of Medicare dental is ignored.

The Australian people have charged this government with handing down good policies that will advance the health of this nation. The government is failing Australians, but we will hold it to account. For example, the Prime Minister personally championed his alcopops tax as an important tool in the arsenal against binge drinking. The coalition disputed the validity of this so-called health measure. We urged the Prime Minister to be honest with the Australian people and admit that the alcopops tax measure is more about tax raising than it is about binge drinking by young Australians. Today in a Senate estimates committee hearing it was confirmed by Treasury that the Australian Taxation Office and the Australian Customs Service were the only agencies consulted prior to the introduction of this tax. The Department of Health and Ageing were not even invited to make a submission. Can you get that! The Prime Minister announces a health initiative on alcopops tax, he says that it is directed at addressing binge drinking and the department of health did not even know about it. As a revenue measure, the government needs to do some basic maths. Treasury have confirmed today that the estimated revenue figures contained in the budget papers rely on an expected growth in the consumption levels of alcopops. This projected growth is above and beyond what the alcohol industry itself was predicting, even before the alcopops tax was introduced.

The Australian Institute of Health and Welfare submission to the inquiry of the Senate Standing Committee on Community Affairs into ready-to-drink alcohol beverages is telling. It found:

... the increased availability of RTDs does not appear to have directly contributed to an increase in risky alcohol consumption ...

The same submission also found that the increase in consumption of ready-to-drinks is apparent in older age groups but that patterns of RTD use among teenagers is unclear. Do those in the advisers box want me to repeat that? The Australian Institute of Health and Welfare submission to the Senate committee said:

... the increased availability of RTDs does not appear to have directly contributed to an increase in risky alcohol consumption ...

It went on to say that the increase in consumption of RTDs is apparent in older age groups—not young girls but older age groups—but that patterns of RTD use among teenagers is unclear. ‘So let’s have a $3 billion tax to address this specific point,’ says the government.

The latest statistics from the Nielsen ScanTrack survey of liquor retailers and independent bottle shops nationwide show that, as planned, alcopops sales have dropped since the new tax and sales of free-pour spirits have skyrocketed to fill the gap. Sales of 700-millilitre bottles of spirits rose by 21 per cent and hip flasks of spirits rose by 20 per cent in the same period. This fits in well with the studies selectively quoted by the Prime Minister in this House. These studies show that teenagers simply switch to alcopops from other alcoholic drinks but that, overall, teens are drinking less or the same amount as they were in the 1990s.

Allow me to refer to the Treasury minute dated 14 May, the day after the budget. The minister for health came into this place in question time and triumphantly tabled a minute, a Treasury document. How extraordinary it was. It would not have happened when the member for Higgins was Treasurer for all those years. I can promise you he would never (a) have tabled Treasury advice and (b) have another minister table his own department’s advice. How absurd! What a hotchpotch way to run a government. You have one minister tabling another minister’s briefing notes. Then, low and behold, the minister for health said that this is the Treasury modelling on the alcopops tax. I thought in good faith that was actually what she was tabling. The interesting thing is that it was dated 14 May, more than two weeks after the tax was introduced. It was not a modelling on the initiative; it was post ipso facto—after the event. Of course you can see the government’s strategy. ‘We’ve got a problem on this alcopops tax,’ says the minister for health, and the Treasurer says: ‘I will get Treasury to whip up a minute. We can parade it as modelling. That will be the solution. We will con the public. We will con the parliament. We will just table this in a triumphant way and claim that this is authoritative.’ It is not authoritative, but in all of those Treasury words there was one sentence that I thought was quite telling: ‘The second possibility is a redirection of alcohol consumption to other products as a result of the change in price of RTDs.’

We know from experience that you cannot take this government seriously when it says something. We also know that it does not take Treasury advice all the time. But, even though the Treasury advice was written weeks after the introduction of the alcopop tax, what do we discover? We discover that Treasury has a qualification in there that says: ‘There are two possibilities. The second possibility is that there is a 50 per cent chance that there will be a redirection of alcohol consumption to other products as a result of the change in price of RTDs.’ I ask whether that fits in neatly with the submission from the Australian Institute of Health and Welfare to the Senate Standing Committee on Community Affairs, which said:

... the increased availability of RTDs does not appear to have directly contributed to an increase in risky alcohol consumption ...

Doesn’t that sit neatly with the Nielsen ScanTrack survey of liquor retailers, which said that sales of 700-millilitre bottles of spirits rose by 21 per cent and sales of hip flasks of spirits rose by 20 per cent after the introduction of the alcopops tax? Instead of delivering a health measure, the government has simply shifted teenagers away from alcopops containing one standard drink per 370-millilitre can to pour-your-own spirits, where they could be doling themselves three or four standard drinks in the same volume of soft drink. The Prime Minister may well have delivered a shot in the arm to Treasury by applying a new tax to alcopops, but the health of Australian children will suffer directly as a result of this flawed initiative.

Why am I raising it in the debate on this bill? Because the government has not introduced the legislation to support their alcopops tax initiative. We are waiting. We have flagged that we will oppose it and we are waiting for the initiative. Even though the tax is being collected, it has not introduced it. I will place on record in Hansard a warning to the government that, if we succeed in blocking this flawed tax-raising initiative in the Senate, it will have a problem on its hands with the accrued proceeds in the same way that the previous government had a problem on its hands when the then opposition blocked some changes to beer excise.

The most significant initiative in health we have seen so far from the new government has seen Australians switch from alcopops to free-pour spirits. The coalition stand for healthy children, we stand for choices in health care, we stand for a vibrant public and private healthcare system delivering quality health care for all, we support private health insurance, and we support amendment bills that make regulation of the private health insurance system fairer, which this bill does. Therefore, we are supporting this bill.

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