Craig Thomson (Dobell, Australian Labor Party) Share this | Hansard source

I rise to support the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. The purpose of the bill is to adjust the Medicare levy surcharge threshold for individuals and families. The bill will increase the thresholds to $75,000 for individuals and $150,000 for couples and families. It will also index these thresholds against future wage growth. The changes proposed in this bill will deliver, most importantly, tax relief to working families who are struggling with day-to-day household budgets. It is clear that any such relief to Australian families is important, especially in these times of global financial uncertainty.

But those on the other side have no regard for these people; otherwise, they would be supporting this bill. I recall the opposition trying to lecture the government on the notion of being out of touch. Who is really out of touch? The opposition still cannot explain why it is not supporting tax relief proposed under this bill. They are measures that will deliver immediate tax relief to 330,000 Australians. That is a significant number of Australians who are out there today waiting to try and get this tax relief. For two average income earners, each earning about $60,000, this will deliver a saving of $1,200 in its first year. These changes will also give working families a real choice about whether they wish to take out private health insurance rather than being forced into it. The alternative is a tax that they cannot afford to pay. The issue with private health insurance and the choice that needs to be made by a family is: are they going to get value for money? Is it going to deliver the things that they need? Is it something that is worth doing for them? If it is not, they should not be penalised for choosing not to take out private health insurance, but those opposite seek to do so.

In the budget, the Rudd government announced it would raise the income thresholds at which people have to pay the Medicare levy surcharge if they do not have private health insurance. We need to go back and have a look in history. When this tax was first introduced in 1997 it was meant for high-income earners, but now working families have become disadvantaged by it. How can we say that someone earning a wage of $60,000 a year is wealthy? We need to be making sure that there is income tax relief by passing this legislation so that working families who do not see the value in taking out private health insurance are not slugged with a tax increase. This is why we must raise these income thresholds—so that the tax increase that they do not deserve is not foisted upon them. It is simply unfair that people who are earning those sorts of wages are being hit with a tax slug left to them by the Liberal Party.

The Rudd government wants to deliver tax cuts to 330,000 Australians, but the Liberals and the Nationals just want to block these changes. So much for the Leader of the Opposition’s heart-tugging statement when he first became leader:

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.

It seems that they will always do it tough, all right, if they have to put up with Liberal Party policies, because Liberal Party policies will ensure that they pay more tax. What this bill proposes to do is to give relief to working families who are being unfairly taxed.

We have a scenario under which the Leader of the Opposition has one of his first tests on which he can choose which side he wants to come down on: whether he wants to help working families or not—whether he really does understand the hardship that people are going through in the community—whether he wants to be on the side of families who are struggling to make sure that their household budgets meet daily costs or whether he wants to come down on the side of big health insurance companies. This is a chance for the Leader of the Opposition to show where he stands. But I think he is going to be found wanting. I think he is going to be found wanting like the Liberal Party has constantly been found wanting in relation to this debate.

The blocking of this bill will only prove that the Liberals do not understand the financial pressures facing working families; they do not understand the daily pressures that families are under; and they are completely out of touch with ordinary people. The other side are acting just like they did in government, simply ignoring the growing pressures on families. As far as the opposition are concerned, the need for any help when the family budget is tight just does not exist. The behaviour of the Liberals and the Nationals shows that they stand for tax slugs on working families who just cannot afford not to have those tax cuts. How have all the Liberal and National senators explained to working families under financial pressure why they blocked relief for 330,000 Australians? How can members come to this place or the other place and stand up say, ‘We are here representing people in our constituency but we are going to block them from getting a tax cut’? How can they do that? How can they go back to their electorates and say that they are representing families—families who are doing it tough? They simply cannot unless they pass this legislation.

May I remind the House that when the Medicare levy surcharge tax was introduced it was meant to apply to high-income earners to encourage them to take out private health insurance. The rationale at the time was that those who could afford to take out private health insurance ought to be encouraged to do so. At the time the then health minister, Michael Wooldridge, said:

High income earners will be asked to pay a Medicare Levy surcharge if they do not have private health insurance … These are the people who can afford to purchase health insurance …

That was the basis upon which the Liberal Party brought in this particular measure. But they are not standing by that measure now. They are not saying that this is the principle that they have continued to believe in. No longer is that the case. Now they are in the camp of the private health insurers and are trying to protect their backs rather than looking out for working families and people whom this tax was never meant to apply to. They are saying that those people need to continue to pay this tax even though we know that families are doing it tough and need any tax relief that they can get.

The average income has increased but this policy simply has not kept up with the changes. It is now at the point where people earning below the average full-time wage have to either take out private health insurance they cannot afford or pay a tax that is supposedly only meant to apply to high-income earners. Under the Liberals the Medicare levy surcharge became a tax trap that has caught more and more working families, and the Liberal Party does not care. The Liberal Party simply say: ‘If they are caught, that is fine. We are in the camp of the private health insurance lobby. We want to make sure that they are looked after. We don’t care about working families. They can pay this tax.’

When you look at when this policy was introduced and how many people were affected by it, you see that only 167,000 people paid the surcharge. By 2005-06, this number had risen to 465,000 Australians paying the surcharge. Our changes will restore fairness to this policy and genuine choice for hundreds of thousands of Australians. It will mean that Australians can actually choose whether they want to take out health insurance on the basis that, one, they are going to get a 30 per cent rebate, which is still there; and, two, that health insurance is going to provide a product for them that they think is worthwhile taking out. That should be what the choice is about: whether it is worth them doing it. It should not be a situation where people who should not be paying this tax increase are being forced into paying it simply because we have an ideological position being put from those opposite.

On what we hear from the other side—and it is absolute hypocrisy that we have heard continually—in terms of the effects that this is going to have on the public system let us look at the respective records of the parties in relation to the public health debate and where they fall. On this side of the House, the Minister for Health and Ageing, who is now in the chamber, has already announced an additional billion dollars to go into public health this year. She and this government have put their money where their mouth is. We have made a real commitment to actually addressing and putting further money into the public health system. This of course is in stark contrast to the Liberal Party, which coincidentally ripped a billion dollars out of the public system in 2003. We consistently saw a decrease in the proportion that the former government, when they were in office, paid relative to the states in terms of the public health system. They were consistently in a situation where they disinvested and did not keep up with the proportion of payments that they made when they first came to office back in 1996. They have left the mess of funding in public hospitals to the Labor Party, to the Rudd government, to try to address.

The current government has also invested $600 million in elective surgery with fantastic results already. I can say that more than 14,000 additional patients have received their surgery from this initiative, with another 11,000 to be undertaken this year. We have also established the $10 billion National Health and Hospital Fund to invest long term in our health and hospital system. The Rudd government has looked at increasing the number of university places for training nurses and other allied health professionals. One of the great crimes of the previous government was not training enough health professionals in our universities. They did not train enough nurses so that there were shortages in these vital professions in the health industry. That caused undue hardship to people trying to access the health system. Let us look at what the coalition stood for in terms of public health. The Labor Party, the Rudd government, which has only been in government for 10 months, has done more for public health in those 10 months than those opposite did in 11½ years. We on this side have moved things forward in terms of public health. We have made a positive contribution rather than taking money away and making the public health system far worse, which is what happened under the coalition.

This matter is about making sure that working families are not slugged with a tax that they should not have to pay. There are 330,000 Australian citizens out there right at this moment who are not high-income earners and who should not be paying this tax. But unless this bill is passed they are going to be slugged with that tax. This is something that needs to stop. If the opposition believe that choice is a real issue, then they should be supporting this bill so that families can make a real choice. If they believe that it is worth taking out health insurance or if they believe that they do not need to do that, they should be able to make that choice. They should not be slugged with a tax that they cannot afford simply because the opposition wish to be in the corner of the big private health insurance companies. This is an important piece of legislation. It has been consulted on widely and has a wide range of support. It is legislation that should be passed, and I commend it to the House.

Debate (on motion by Ms Hall) adjourned.

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