Sharon Bird (Cunningham, Australian Labor Party) Share this | Hansard source

I indicate to the House that I only intend to speak for about 10 minutes on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008 because I need to go to the Main Committee to speak on another bill. Given that, I will not canvass the much broader issues that many members in addressing this legislation have, particularly issues to do with hospitals.

The bill that is before us increases the Medicare levy surcharge threshold for individuals from $50,000 to $75,000 and the threshold for families from $100,000 to $150,000. The member for Riverina in her comments to the House indicates that she is not certain where those figures came from. Quite clearly, what that reflects is the fact that, throughout the consultation process in the Senate inquiry into the previous bill, many coalition members and industry players indicated that, if what we were seeking to address was the failure of the initial legislation to contain indexation, the current thresholds should be $75,000 and $150,000. Having taken on board the contributions of those players in the debate on the original bill, the government has come to these new threshold proposals.

The bill introduces transitional arrangements so individuals who obtain appropriate health cover before 1 January 2009 avoid the Medicare levy surcharge for the period 1 July 2008 to 31 December 2008. It also ensures that the thresholds will be indexed against wages growth into the future.

The Medicare levy surcharge, when it was introduced by the Howard government, was clearly and indeed explicitly outlined by the then government as being meant to apply to high-income earners with the purpose of encouraging them to take out private health insurance. We have a mixed health system in Australia. It has a universal, accessible to all public system and a thriving and, one would hope, competitive private system that offers a choice. I would argue that interaction between the two has driven much of the quality of our health insurance.

In their contributions to this debate, people have been indicating particular problems, mainly around issues with their local public hospitals. It is true that we continue to need to address the public hospital system. Also, the challenge is there for the private sector to address some of the less than adequate services through a provision of services by the private health system. Much of that is driven by an international shortage of specialists and medical staff. That creates some challenges for both the public and private hospital systems in particular and the health system more broadly.

We have a mixed system. In Australia it has always been that those who have the income capacity to do so will often choose to take out a form of private engagement with the health system through private health insurance. That has worked well for us. In fact the mixed base of our economy across a range of areas has worked well for us. The original legislation was intended, we were told, as a carrot to encourage those with the income capacity to take out private health insurance to do so to give meaning to that mixed health system.

The failure to provide indexation in that original legislation has had absolutely the contrary effect to that which the government of the day said it was intended to achieve. What we are doing is correcting the original legislation’s failure to provide indexation. If we accept that the government at that time was honest in its claims, its legislation was only about a carrot to encourage those who could afford it to take out private health insurance. The effect has been a tax trap for families increasingly less and less able to afford private health insurance. One could be extraordinarily cynical and think that the original legislation, despite the claims about its purpose, was actually about forcing more and more people who are less and less financially able to sustain it into the private system, thereby providing some of the general motive to push people out of the public system into the private system whether they wanted to go into it or not.

Much of what the former government did in this sort of area was introduced using the term ‘choice’. That was a favoured concept of the previous government. Yet when you looked at the impact of what it was that they did, what it did was take away choice. The net effect of that legislation over time has been that people have been given no choice, with them being punished whether they stuck with the public system and said that private health insurance was not a choice for them or whether they took out private health insurance as a result of these pincer movements, if you like, by legislation.

That tax trap is an inequity. It is unfair to working families. It is unfair to individuals who have been increasingly caught in that tax trap. It should be fixed. This legislation attempts to addresses that—and, indeed, the previous legislation tried to address that. I am quite bemused as to why the now opposition would have a problem with a measure that is about government getting out of the way of choice. It is saying that the government should get out of the way of people having choice; the government should allow people to make their own calls on whether or not they want private health insurance; the private health insurance market should be driven by competitive behaviour—quality service and good products—and attract its own clientele on the basis of that. One would have thought that that would be the classic Liberal Party position to take on an issue like this.

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