Angus Taylor (Hume, Liberal Party) Share this | Hansard source

I am delighted to hear that those opposite will be supporting the bill that is before us, the Private Health Insurance Amendment Bill (No. 1) 2014. At the same time, it was very clear from the speech that we just heard that they still do not understand what sustainability of a healthcare system looks like, so I will come back to that during the course of my speech.

Of course, the objective of this bill is to ensure that our Medicare system, our health system, is sustainable. We want to preserve universal access to health care and we do not want to undermine it, but that means making ends meet. It means ensuring that we have ways of managing the burgeoning costs of our healthcare system, which we know are rising at an extraordinarily rapid rate. It also means having a strong commitment to health and medical research, and that of course is central to the bill before the House.

The Private Health Insurance Amendment Bill (No. 1) 2014 implements a measure which was announced in the 2014-15 budget. It will pause the indexation tiers for both the Australian government rebate on private health insurance and the Medicare levy surcharge. The link between the rebate and the Medicare levy surcharge will be preserved, and this is critically important, because they operate together to ensure that people whose rebates are reduced because of Labor's means-testing have a strong incentive to retain their private health insurance rebate. That link is absolutely central and it is a link that this bill is intended to ensure is in place. It will be done by inserting a clause in the act to pause the indexation arrangements for three years. The indexation arrangements will remain at the 2014-15 rates in the following three years of 2015-16, 2016-17 and 2017-18.

It is important to note that only four per cent of the 6.2 million private health insurance policies held at December 2013 will be actually affected by this measure. As we will see in a moment, they are those of the highest income earners. These changes will not affect individuals with an income that remains below $90,000 or couples and families with an income that remains below $180,000. It is deliberately intended that those who can afford to pay this do.

As we heard from the previous speaker, all savings from this measure will be invested in the Medical Research Future Fund. There seems to be a schizophrenia about this from those on the other side of the House. On the one hand they claim to be extremely supportive of health and medical research, but we hear again and again their criticism of our putting in place one of the biggest funds in health and medical research—potentially the biggest—in the world. The 2014-15 budget committed to establishing this $20 billion fund, and once fully established it is expected to deliver an additional $1 billion into medical research each year, effectively doubling our current yearly investment. So this is a massive commitment to health and medical research, something which Australia is good at and something which we know is critically important to sustaining our budget.

The fund will be the largest of its kind, at least, in the world and will build on Australia's world-class research capabilities. We see those in our universities and research institutes time and time again. The extraordinary role that so many of our researchers have played in addressing serious Australian and global health problems is a real tribute to the quality of those people and the work that they do. All of this is in stark contrast to Labor, who claim to be supportive of health and medical research but who tried to rip $400 million from the pockets of medical researchers in 2011—something that I think Labor would prefer to forget.

I said that we needed to understand a measure like this within the context of the budget. It is very important to remember that the fastest-growing and the largest items in the budget are health costs. To put this in perspective, the MBS costs in the budget are growing at about nine per cent nominal a year—almost 10 per cent a year. For the private health insurance rebate, it is a similar number. These numbers come from the Parliamentary Budget Office. We know that the costs of public hospitals are growing at about seven per cent a year and the PBS a little under six per cent per year. At the same time, we know that growth of the actual revenues coming into the government is much slower, at perhaps five per cent or, in a very good year, even six per cent. The fact of the matter is that, with fast-growing costs and with revenues to the government below that, there is a problem. Those opposite do not like to call it a crisis. We can call it what we like; we have a very serious problem here that we need to address or else our health system will not be sustainable. There are two ways you can attack this. One is you can reduce spending and the other is you can increase taxation. Given that we hear time and time again that those opposite do not want to reduce spending, we can only assume that their solution, if they were to get into government—and I am hoping that we will hear this before the next election—can only be raising taxes. I look forward to hearing from them about how they are actually going to do that.

Paid parental leave does not go anywhere near what is required to deliver on the huge number of promises that they are making to the Australian people around money they are intending to spend. Much of that spending, cleverly, is always beyond the forward estimates. We will need to hold them to account as they start fessing up to the Australian people about what their spending really is going to be if they ever get into government—God help us.

But we know that right at the centre of these costs we face in the health system is chronic disease. We know that it is absolutely critical that we address chronic disease and that it is exactly what the health and medical research funding that we are supporting in this legislation is intended to do. I want to give you an example of a chronic disease problem that is very serious, perhaps the most serious, and that is diabetes. We know that the mortality and morbidity rates associated with diabetes mean that the cost of the disease, both for the individual and for the health system, is considerable, and that is a cost that research must be focused on attacking. We know that right at the centre of this is comorbidity.

We see heart disease at about three per cent of the population but amongst those with diabetes, it is closer to 16 per cent. Across the population, stroke occurs in about two per cent but amongst those with diabetes there is a 10 per cent chance that you will suffer from stroke. Across the population, we see depression incidents at about three per cent but if you have diabetes it is seven per cent and so on. Vision loss across the population is one per cent but if you have diabetes it is six per cent. We know these comorbidities are hugely important and studies have shown that the average direct healthcare cost for a person with diabetes is approximately $6,100 a year and substantially higher for those with complications. That means that the direct healthcare cost is about $6 billion to the Australian taxpayer and to the health system.

Between 2000 and 2009, health costs associated with diabetes grew at about 10 per cent in nominal terms per year compared to substantially less for all other diseases over that period. Hospitalisations account for about 35 per cent of those direct healthcare costs for people with diabetes and 26 per cent of avoidable hospitalisation are due to diabetes. These costs are enormous and they are the costs we must address. We know from experience over decades that the costs associated with chronic disease are best addressed through fundamental research and applied research, which is exactly what we are intending to do with this health research fund.

In my electorate of Hume, health is one of the top issues. It is extremely important because Hume does have an older population and because Hume has a rural population. The chronic diseases of diabetes, heart disease, cancer and so on are serious problems in the rural parts and more broadly across my electorate. Indeed, it is worth saying at this point that my predecessor Alby Shultz is one of those constituents in my electorate who is suffering from cancer right now in Cootamundra hospital. I am sure all others in this chamber and all other members in this House would join me in wishing him well at what is very difficult time for him and his family.

We are blessed in my electorate with fantastic health professionals at every level. But we face a number of challenges. As we came into government, we knew that we had insufficient GPs in many of these areas. If you look across the major cities, we average one GP for 1,100 patients. But if you move to outer regional areas, it is one to 1,400 and if you move right up to the remote regions it is one GP to 2,000. If you look at the towns of Boorowa and Grenfell in my electorate, before we got into office the numbers were worse than one in 2,000. Fortunately, we have been working hard to address that issue. When we got into office, even in the outer suburban areas of Wollondilly, we saw numbers of 1 to 1,500 or of one to 2,000. We are working hard to address that as we speak. There are also great challenges with access to specialist services and great challenges with the quality of the infrastructure, particularly the Goulburn hospital and just outside my electorate in the Bowral hospital.

The full suite of the government's reforms are intended to address these issues, to attack a fast-growing cost base and to deliver better health outcomes. One of those is the Medicare co-payment. Research from my time as an economic student in the 1980s, ably supported by research from the member for Fraser, shows us that a co-payment is an effective way to reduce health costs. The New Zealanders know that, many European countries know that and we see that time and time again. In fact, a very famous paper—I read it in the 1980s—published in the American Economic Reviewprobably the leading journal for economists—demonstrated that the fastest way to reduce health costs whilst maintaining health outcomes was to establish a co-payment. We know that by putting a price on the service, both GPs and their patients will look to use the doctor's time as effectively as they possibly can.

I have also talked about the important reform in the medical research fund. As I said, the focus of that fund will be dealing with those very significant chronic disease problems that we see right across our population and I see particularly in my electorate. Around the country we see all levels of government experimenting with pilots in alternative approaches to service delivery, approaches that better integrate primary and secondary care and reduce avoidable hospital costs, approaches that change the current chronic disease care funding model to incorporate flexible funding models targeting resources with which they can realise the greatest benefit. It is very important that we as a government continue to support those pilots which are already yielding very exciting results. These pilots recognise that there are a number of opportunities to improve outcomes and the quality of care for people with diabetes and other chronic diseases in Australia, and we will continue to support them.

Of course, there are other critical reforms, particularly in regional Australia. We are supporting health infrastructure for training for doctors, and in my electorate we will continue to lobby hard for some of that infrastructure. We are also focusing on providing effective incentives for practitioners in regional areas.

The reform proposed in this bill is a crucial reform. It is a reform that should be viewed within the context of a broad range of healthcare, health system initiatives designed to ensure that our health system remains sustainable for many decades to come—decades which the Labor Party typically ignores in its thinking about the future and in its ignorance about how to actually reduce healthcare costs for decades to come. This is the sort of reform that will address that underlying issue of burgeoning health costs, whilst delivering improving health outcomes at the same time.

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