Damian Hale (Solomon, Australian Labor Party) Share this | Hansard source

I rise today to make my contribution to this debate on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. The Medicare levy surcharge is a one per cent increase on top of the Medicare levy for individuals and families who do not have private hospital cover. The thresholds are currently set at $50,000 for individuals and $100,000 for couples and families. This bill will increase the thresholds to $75,000 for individuals and $150,000 for couples and families. Importantly, it will also index these thresholds against wages growth in the future. It is a vital bill because, among other things, it will deliver tax relief for working families struggling with household budgets.

As has been stated before, the surcharge was initially introduced to encourage high-income earners to take out insurance. The former Treasurer, the member for Higgins, said at the time of its introduction:

… higher income earners who can afford to take out private health insurance will also be encouraged to do so.

…            …            …

This is the levy which the Government hopes no-one will pay. It is entirely optional. Those who take out health insurance (with the benefits attached) will be exempt.

But, of course, the passing of time has made it very clear that the member for Higgins’s wish was rather more like wishful thinking. We know many hundreds of thousands of people now pay the surcharge. Those opposite never bothered to change the thresholds. That means more and more low- to middle-income earners are being forced to make the choice between a tax that was meant for high-income earners or private health insurance that in many cases they cannot afford.

We on this side of the House want this to change. The hardworking people in my electorate of Solomon deserve this. I listen to the people of Solomon and, believe me, they are doing it tough and any relief is going to be welcome. In fact, the other day I was talking to a family about this particular issue. Let me recount their story. They are a hardworking husband and wife with a couple of teenage kids living in the northern suburbs of Darwin. They do not live in a mansion and they certainly do not drive flash cars. I suppose you could say that they are doing okay. They are buying their home and paying their mortgage on time. They work hard for everything they get. Maybe once a month they get to go to the cinema with the kids. Occasionally they get to go to a restaurant as a family. The kids play a few different sports—and, having five children myself, I know there are lot of costs involved: paying for registration fees, uniforms, equipment and the like. They catch up with their friends and mates for a barbecue and they have a few drinks. These guys are living from pay to pay. They do not have heaps of money to splash around—and let me tell you they are definitely not worried about stocks and shares at the moment, because they do not have any. These guys pay their mortgage, feed and clothe their kids, go to work, put fuel in the car and pay their bills: their rates, electricity, phone, car rego and the like. As I said, they occasionally get to do a few things like going to the movies or a restaurant. Things get pretty tight, so every so often they take out ‘time to pay’ arrangements until they get through the fortnight to the next payday. I asked them how much they were earning. Dad is on $65,000 a year and mum is on $43,000 a year. My maths tell me that is $108,000. That means that under the current threshold they will be paying the Medicare levy surcharge.

Let me start with the current change the government is pursuing, which is proving controversial in the Senate. I am sure you have all been following the Medicare levy surcharge debate attentively, so I would like to set out some clear points about the government’s position in case you have not gleaned these from the at times rowdy debate. We in the government are committed to providing both real choice in health care and support for people who choose to take out private health insurance. We are also strongly committed to providing tax relief to working families, something which we will continue to pursue now and in the future.

We all know that the surcharge was initially introduced to encourage high-income earners to take out insurance, and I have a few quotes on a couple of issues in support of helping people with cuts to tax. The Leader of the Opposition, in his first press conference as leader, said:

I know what it is like to be very short of money … I know Australians are doing it tough and some Australians, even in the years of greatest prosperity, will always do it tough.

Well, now he has his first test of whether he wants to help and whether he really understands what some people in our community are going through at the moment and that they are doing it tough. He has an opportunity to show leadership and make sure that the people who are affected by this threshold have some tax relief. That is certainly in his hands as the Leader of the Opposition. He has an opportunity to stand up on this.

There have been other people who have come forward in support of changes to the threshold. Tasmanian Liberal Senator Richard Colbeck said:

If they are talking about indexation, and that is the intent of the government, then indexation of this measure would have put the threshold at about $75,000 to $76,000.

West Australian Liberal Senator Mathias Cormann, the current shadow parliamentary secretary for health administration, said:

… would it be more appropriate, instead of doubling it and probably overshooting the mark, to look at what the figure would be if it had been indexed? I am talking about approximately $75,000 per annum.

The Australian Private Hospitals Association has recommended thresholds of $76,000 and $152,000. Access Economics, in a report to the AMA, said that thresholds of $70,000 and $140,000 ‘would have restored the system to previous real levels, if this was the goal’. Terry Barnes, the former senior adviser to the former health minister, the member for Warringah, suggested that thresholds of around $80,000 and $160,000 would be appropriate.

So, they are the thoughts out there. We have listened to concerns from both sides of politics and from the cross benches in the Senate and amended this bill by appropriately bringing it back to $75,000. Those opposite have a perfect opportunity now to get out of the way and to give real tax relief to working families. This is not about destroying private health insurance companies. I am a member of one—a proud member of a private health insurance company. This is not about that; this is about bringing fairness back into the system and it is about looking after working families and giving them some tax relief at the time that they do their tax. If the previous government had bothered to change the thresholds, more and more low- and middle-income earners would not now be forced to make a choice between paying a tax that was meant for high-income earners or taking out private health insurance. As I said, we want to change this.

We announced in the budget that we would seek the threshold to be $100,000 for singles and $150,000 for couples and families. This would provide immediate relief to thousands of people paying the tax. We have listened closely, as I have said, to the concerns that have been raised about the threshold and accordingly put forward a revised proposal. This is about being a good government. This is about listening to the people and the experts and listening to those opposite and coming up with what is best for the Australian public. It really becomes tiresome that we continue to have health kicked around as a political football when we have an opportunity right now for bipartisan leadership on health to fix the health problems that we have in this country. So we have changed. We have been able to find a compromise and to come back and push this again.

The Leader of the Opposition, in his first statement as the Leader of the Opposition, talked about families doing it tough, about his own start in life and how he did it tough and did not always have money, about how he has worked hard to get where he is and that he knows the community is doing it tough. He has an opportunity now to show some real leadership and to come in and help working families by giving this bill passage through the Senate. Consider this: in 1997-98 around eight per cent of all single taxpayers had incomes exceeding $50,000. It is projected that in 2008-09 around 36 per cent of all single taxpayers will have an income exceeding $50,000. Under the new proposed changes, around 14 per cent of all single taxpayers will have an income exceeding $75,000. About 330,000 Australians will get immediate tax relief due to our policy change. A couple earning $60,000 each could save $1,200 a year.

I do not subscribe to the view that these adjustments to the thresholds to keep them relevant will put an end to private health insurance as we know it. Private health insurance consumers will still be able to claim a 30 to 40 per cent rebate, and the lifelong health cover incentives will remain in place. The data show that it was these measures, and in particular Lifetime Health Cover, that encouraged the current high rates of membership. Private health insurance membership levels did not improve following the introduction of the MLS and in fact continued to decline from 31.9 per cent to 30.2 per cent. It was only following the introduction of the rebate in 1999 and the Lifetime Health Cover in 2000 that coverage increased to 32 per cent in 1999 and 43 per cent in 2000. Coverage has stabilised at the level it currently stands—44.7 per cent. Surprisingly, these statistics have not been lost on the debate.

But the real point is that the industry will best succeed if their members want to keep their policies because of the belief that health insurance is good value, that they are getting something worth while from the premiums they pay, not because of these government interventions. I am sure you would agree that the industry should have more than a tax penalty as the main driver for taking out insurance. This is especially the case for an industry that has built so much of its marketing on choice—choice of doctors, choice of hospital room, choice of product. The key surely is to provide a good product that people want and that is affordable.

At the COAG meeting in March this year the Prime Minister along with all the state and territory leaders announced that the Rudd Labor government would relieve pressure on our public hospitals. Unlike those opposite, we are taking real action. That is why we have provided $1 billion in additional funding for our public hospitals. Do you know why we had to do that? There is a lot of debate about this. It was absolutely necessary because those opposite did cut $1 billion from hospitals when they were in government. Our government is absolutely committed to delivering on election promises. Our budget initiatives demonstrate this and this bill definitely demonstrates it. It is about delivering healthcare improvements for the people of Australia. After a decade of funding cuts and neglect we are committed to working with the states and territories to fix our hospitals and deliver health care for the working families of this country.

The people of Australia, particularly the people in my electorate of Solomon, suffered as a result of the previous government’s neglect and underfunding of Australians’ health care. That is why this piece of legislation is not only good for Australians; it is absolutely essential. Those opposite had 11 years of being in the perfect position to work with the states and territories to improve the lives of Australians but the best game plan they could come up with was perfecting the blame game.

There is much work to be done in health. We have a health system that has been neglected, but the Rudd Labor government has made a strong start, and we intend to continue for the long haul. All Australians, and especially the good people of Solomon, expect the blame game to end and expect the government to take control of health and improve it. This will form part of the package to do so by addressing the Medicare levy surcharge.

I will touch very quickly on the legacy left behind. It includes the $1 billion worth of cuts, 650,000 Australians on public dental care waiting lists, a nationwide shortage of almost 6,000 nurses and a nationwide doctor shortage which affects 60 per cent of the population. There were 2,300 older Australians languishing in hospital beds every night when they should have had access to aged-care homes. The gap in Indigenous life expectancy has blown out to 17 years. A tiny fraction of Commonwealth health spending, 2.2 per cent, was actually invested in health promotion and prevention.

The facts and figures do not lie, and they add up to the fact that, as a country, we need to address a raft of issues to do with health, from elective surgery to the Medicare threshold. I think people have really had enough of listening to parties argue and use health as a political football across this chamber. I will just go back once again and remind the Leader of the Opposition, who has come out and said that he wants to support working families—he has done it tough in his life previously—that he has the perfect opportunity now to tell his senators to let this bill pass through, and to give tax relief to working families in this country. I commend the bill to the House.

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