Steve Irons (Swan, Liberal Party) Share this | Hansard source

I rise to speak on the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012. I have spent a great deal of my time as a member of this place talking about issues surrounding health. As the Deputy Chair of the Standing Committee on Health and Ageing for over four years, it has been an area that I have taken a special interest in and also since being in parliament. I know from all of the people in my electorate that I speak with about this issue, as well as the many individuals and stakeholders I have met and spoken with through my committee work, that it is a policy area of critical importance to millions of Australians. When it comes to health, Australians simply want better outcomes—not excuses and not broken promises but better outcomes. That is why I find it so disappointing when I hear members from the government side so often contributing to this debate based on the politics of envy. Instead of viewing these issues with a focus on better health outcomes, government members revert to type and turn even health care into divisive class warfare pitting different members of the Australian community against each other for political aims.

This approach of the government on this topic reflects the chaos that they have often found themselves in over the past five years. We have seen health ministers and Prime Ministers come and go over this period in what history will look upon as one of the worst if not the worst governments in Australia's history.

As reflected in the bills before the House today, most of the government's policy has been driven not by wanting to improve our health system but by fiscal desperation after years of wasteful government spending and, as the member for Mitchell said, by ideological policy.

In the weeks leading up to the recent budget, we witnessed the government trying to convince the Australian public that they were innocent victims of circumstances; that revenues for the Commonwealth had inexplicably collapsed. The government's explanation for their poor performance is quickly refuted by looking at the real numbers over the past five years. Revenue has increased by $80 billion while spending has increased by $120 billion, thus bringing us from a roughly $20 billion surplus in the last year of the Howard government to the $19.4 billion deficit announced by the Treasurer in this year's budget.

This is a government with a spending problem not a revenue problem; that is plain for all to see. The immense waste of this government has put pressure on all areas of government, as good public policy is put aside while the Treasurer desperately tries to get the budget under control; not by the next parliament but the one after that.

The bills before the House today are yet another example of that waste. Commonwealth government health expenditure already stands at about $62 billion, or 16 per cent of government outgoings. As is well documented, we face a range of demographic and medical challenges that will lead this expenditure to grow in real terms as it has consistently done over the past decade in Australia.

The state of the budget under this government represents the biggest threat to our health system over the next decade with the Treasurer delivering the five biggest deficits in Australia's history and gross debt pushing the $300 billion debt ceiling. The need for increased spending on health, combined with an environment where our budget position is extremely weak, is of great concern.

What is infuriating about these proposed changes and the state of the budget is that, while the government are content to rip money out of private health insurance, they have still managed to find room in the budget to fund a $10 million advertising campaign for Medicare Locals in the period leading up to the September election. When money should be invested in front-line services, this government manages to revert to politics and an obsession with political survival above all other considerations.

The government's focus should be to get every possible dollar away from the excessive administration of bureaucratic function and redirect it to patient services. What they have done over the past five years is increase the number of statutory agencies in the portfolio and the number of government funded entities, and increased the number who are employed in the portfolio by nearly 30 per cent, whilst government cuts have adversely affected patients, clinicians and the hip pockets of everyday Australians. These 12 new agencies have cost around $12 billion to establish, and appear immune to cuts, whilst funding has been slashed for private health insurance, public hospitals and dental health through the closure of the chronic diseases dental scheme.

This fiscal irresponsibility and the misguided priorities of this government bring us to the latest changes to private health insurance. Lifetime Health Cover was introduced by the Howard government in 2000 as part of reforms that significantly increased private health insurance coverage across Australia. Lifetime Health Cover is a loading on private health insurance premiums that is applied at a rate of two per cent for every year that an individual is over the age of 30 when they take out hospital cover, with a cap of over 70 per cent applied. This policy setting is intended to ensure people take out private health insurance at an early age and maintain their cover. The second component of this bill ceases direct claiming of the private health insurance rebate through the Department of Human Services known as the incentives payment scheme.

The coalition has long understood the important role the private health system can play in reducing pressure on the public system. Reduced pressure helps keep spending pressure under control so that policymakers can target more resources to those most in need, and therefore deliver better outcomes for patients. The previous coalition government's private health insurance reforms in the form of rebates—the Medicare levy surcharge and Lifetime Health Cover—saw the number of people with private health insurance increase 75 per cent, from 6.1 million to over 10.7 million. This is a trend the current government has recklessly sought to undo, and the bills before the House today are just the latest attack on the private health system.

The $386.3 million saving from this bill is in addition to savings of $2.8 billion resulting from means-testing changes to the private health insurance rebate that were implemented on 1 July 2012. As outlined at the start of my speech, these changes have been announced in an environment of fiscal emergency. The Prime Minister and Labor members over many years repeatedly ruled out any changes to the private health insurance rebates. Through MYEFO and means-testing changes, Labor's broken promise on private health insurance amounts to nearly $4 billion. That is $386 million through changes in this bill, $700 million from limiting the government contribution to the rebate by a maximum of CPI, and $2.8 billion from means-testing. Of course, all this is framed around a dated class war campaign by Labor. Labor is wrong to imply that private health insurance is for the rich. Five point six million people with private health insurance have an annual income of less than $50,000, and 3.4 million have an annual household income of less than $35,000.

From Langford to Belmont to South Perth and Salter Point in my electorate, these changes unnecessarily increase cost-of-living pressures and are hurting many hardworking families and individuals in my electorate of Swan. During a campaign to save our local GP clinic in Belmont last year, my office received hundreds of calls from patients desperate to have their health services protected. I know that, when the government makes policy at the expense of front-line services, it is people like Dr Sri and Dr Pang and their thousands of patients who feel the brunt of these costs.

In a letter to the editor of the Hobart Mercury on 2 September 2004, the Prime Minister—then the shadow minister for health—wrote:

I grow tired of saying this—Labor is committed to the 30 per cent private health insurance rebate.

Well, Prime Minister, Australians are growing tired of broken promises and the lack of integrity with which this government goes about its business.

Many Australians from lower and middle-income brackets use private health insurance. In my electorate of Swan, 79 per cent currently have private cover. That is over 89,000 individuals. They are all paying the price for Labor's irresponsible budgets and broken promises on private health insurance. The remainder of my electorate, who rely solely on the government system, are also hurt as increasing costs in the private system force more and more people back to the public system, further crowding our hospitals and increasing pressure on front-line services. Cost-of-living increases in WA are biting already due to the mining tax and the carbon tax. Labor's broken promises on private health insurance are making it even worse. Whilst the government is paralysed by its obsession with political survival, I hear every day of the hardship these changes place on real people in my electorate—people like Eric Van Der Kooij from Wilson, James Donnelly from Cloverdale and Sue Ball from Como. These individuals, as well as tens of thousands in my electorate who rely on our health system, are being hit with extra costs.

The government's changes to private health insurance are already having an effect. The government's own Private Health Insurance Administration Council, PHIAC, have announced:

… in the five years to 2012 that exclusions and restrictions have become much more prevalent.

They have also noted:

… the increased use of exclusions … may work against the policy objective of private health insurance in easing the burden on public hospitals.

In addition, the full effects of Labor's means-testing changes are yet to be felt. PHIAC have reported $1.2 billion in prepayments in the June quarter as people try to defer the resulting premium increases. Many policyholders prepaid for 12 months or more, delaying the pain of Labor's cuts.

Public hospitals are already struggling under a $1.6 billion cut to the hospital funding in Labor's MYEFO. This includes retrospective cuts to public hospital funding that has already been spent and allocated in 2011-12 and 2012-13. It has caused the closure of public hospital beds and operating theatres and delays to elective surgery. The government has since announced the reversal of its position, but only for Victoria, further adding to the chaotic policy environment.

It is reported that changes to lifetime health cover in this bill will increase premiums by up to 27.5 per cent on 1 July 2013, a direct hit on lower income Australians. The change will add extra complexity to the private health insurance system. The means-testing change has already created around 21 different pricing structures for premiums. These increases in the administrative burden are being implemented with only a short time frame for private health insurers to change systems by 1 July 2013, further increasing their costs for compliance.

Presently the Lifetime Health Cover loading is removed after 10 consecutive years of hospital cover. Once again, the government is changing the rules. There will be people who make household spending decisions based on the current policy and who will be close to having their loading removed having paid the loading in good faith and abiding by the appropriate rules. Now they could be hit with a 27 per cent premium increase and forced to drop their cover.

Unfortunately for Australians, this government takes a highly ideological approach to this policy area. Regardless of outcomes and regardless of the clear benefit of reducing pressure on the public hospital system, this government is yet again reducing incentives for Australians to invest in private health insurance. The changes can only be bad for Australians, as lower-income patients are priced out of the private system and our public system suffers from the increased burden.

The coalition supports private health insurance. This bill adds more complexity to private health insurance and will raise premiums for Australians on lower incomes. It will force more people to drop down their level of cover. It will add to the cumulative effect of Labor's attack on private health. The coalition will oppose the changes to the Lifetime Health Cover. The coalition has been listening and we stand ready to make a difference. If we have the privilege of forming the government after September our priority will be to invest where we can best benefit patients. We cannot undo Labor's damage from day one. There is no money in the bank to immediately reverse the cuts or right their attacks. It will be through restoring Australia to good economic management that the careful investment in our health system can be made into the future and the right outcomes achieved for my electorate of Swan and all Australians.

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