Andrew Laming (Bowman, Liberal Party) Share this | Hansard source

This is an opportunity to commend Australia's tax and transfer system and in particular shine a light on schedule 1 of this bill, which makes changes to the Medicare low income threshold. With your indulgence, Deputy Speaker, I will focus specifically on the schedule that has not been addressed in the debate so far, changes to the low-income threshold which make a significant change for people living with incomes in the range of $20,000-35,000. I mention it because it is almost an untold story in the budget and many of us look with a certain bemusement at left wing journalists who attempted to make broad assumptions about how people would be worse off in the 2014-15 budget when in reality they were unable to incorporate some of these very positive changes around safety nets that gave low-income Australians a real chance of being able to both afford the health system we are in at the moment but also weather periods when there are significant out-of-pocket costs.

Every health system in the world grapples with this simple fact that there are some people with chronic, complex and expensive health needs but there are also people who experience individual years of very high out-of-pocket health costs. Australia has quite an elegant way of dealing with it through safety nets introduced under the Howard government. I guess one of my concerns is that the level of understanding of these safety nets is quite poor. When you speak to people who are potentially eligible for the safety nets, many have not registered with the Department of Human Services to be eligible. Many are not tracing their use of general practice, optometric and other Medicare eligible out-of-hospital services to know that they are hitting the safety net at all. This is a very important piece of information not just because they exist but because in this budget we work to strengthen those thresholds for low-income earners and it appears in this legislation under schedule 1. I want to emphasise that now.

Stepping back in context, Australia has the most finely balanced, exquisitely balanced, health system on the planet with about half our population having access to private health insurance and half using a very high-quality public system. We achieved that balance not by accident. We achieved it by a coalition committed to getting there. We got there through health minister Dr Michael Wooldridge and his three-pillared approach to building confidence in private health care: the 30 per cent rebate that has been the subject of considerable detrimental tweaking by the previous Labor government; the Medicare levy surcharge, where if you do not take out private health insurance you pay an additional Medicare levy of between one and 1.5 per cent; and finally community rating, which works to ensure that, regardless of your health and age, you can enter and contemplate private health insurance even if you live in Rockhampton without having to be concerned about paying more. While there are obviously elements of adverse selection avoided, some people do criticise that system because of the moral hazard around potentially engaging in unhealthy behaviour but still paying the same price for your private health insurance. That is one for another day.

Back to the Medicare levy, the surcharge for high income earners who do not take up private health insurance is probably the most powerful of those three. It is a piece of policy unique to Australia, which was the first to adopt it in the late 1990s. Once again it is one of those elements of coalition social policy that has been looked at, examined and adopted in other parts of the world. The Medicare levy surcharge was in place mostly as a way to get more people to take out private health insurance, but let us make one thing clear: the Medicare levy does not pay for the Medicare system. The entire Medicare levy component, as discussed in schedule 1 of this bill, is only about 15 per cent of the total Medicare bill, so it is a contribution but in no way covers it.

At these levy calculations which change as a result of this budget and this bill, we know that at lower incomes people who are not paying tax into the system are not actually triggered to pay the Medicare levy. That makes perfect sense, doesn't it. What happened in this budget was that these thresholds were increased even more than CPI. That has important implications for some people who are living in those income ranges. If you are below the threshold, and that is $20,542, there is no Medicare levy payable. Between about $20,000 and $24,000, you are paying for 10 per cent of any of your excess above the $20,000 figure. But once you hit that $24,168 then the entire taxable amount is subject to a Medicare levy surcharge. These are reasonable as are the pensioner tax offset concessions, which ensure that if you are receiving a full pension the same thresholds are not triggered and you do not start paying a Medicare levy. For every reason this is good policy because there is no point having a tax churn down in the group or pulling into a tax system simply to pay a levy. That makes good sense.

What is important are the changes that we have made to the Medicare safety net. We have seen reductions, significantly, to $400 for singles and families, $700 for those who receive family tax benefit part A and $1,000 for others. People do not even know that these safety nets exist in many cases, and they need to. They need to know that the coalition has worked to ensure that families who are living in various parts of Australia can now still come under the one family safety net. That is an important piece of policy that makes our health system even more affordable.

The last important piece of policy intervention was to cap the amount relative to the scheduled fee that can be charged from an out of pocket, and that would be to prevent gouging in instances of very high medical bills that depart significantly from the Medicare scheduled fee. That makes sense and it avoids that gaming situation where a medical practitioner may say, 'You've already hit the safety net for the year so all of this will be paid for by the government, so please don't feel bad about this particularly large bill.' That gets addressed as well. People need to know when they hit the $400, $700 and $1,000, these simplified, much lower and much stronger safety nets are now in place thanks to the Abbott government. The Howard government was responsible for these safety nets. The Abbott government has strengthened them and schedule 1 of this bill works in a complementary way to ensure that people who are not paying tax are not hit by the Medicare levy.

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