Peter Dutton (Dickson, Liberal Party, Shadow Minister for Health and Ageing) Share this | Link to this | Hansard source

Off the back of the last piece of business before the House, I congratulate both the shadow minister for ageing and the Minister for Ageing for the way in which they were able to facilitate what is certainly a very important visit in an area in which we all, as a nation, have a definite responsibility to improve the outcomes. We need to make sure that people in Indigenous communities, particularly the aged, are able to enjoy a standard of care which would be expected by other Australians. As the shadow minister for health and ageing, I will also endeavour to provide bipartisan support wherever possible to make sure that we can satisfy ourselves that standards are improving, that increased funding is flowing and that ultimately the living standards of those residents concerned is improved.

I want to continue my comments from this morning in relation to the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008 and restate my disbelief that this government would proceed with a bill that will put further pressure on the public health system in this country. It really defies belief that this government would force up to one million people out of private health insurance, adding hundreds of thousands of procedures to the waiting lists of the public hospitals right around the country—this at a time when the public hospital system is at breaking point.

Any Australian family, any older Australian and any person in this country  who has been in need of emergency medical attention would be able to tell the story of their experience, or of that of somebody known to them, when they visited a public hospital basically anywhere around the country. They would tell you the story of the tremendous support they received from the staff at the hospital, but they would tell you of their great frustration at the period of time they had to wait. You hear countless stories right around the country—in particular from older Australians who, in some cases, have been on waiting lists for many years—and it is very hard to explain to those people why this government would be putting extra pressure on those waiting lists which potentially would see people on current waiting lists waiting even longer.

It is hard to imagine that this government have any credibility in the area of health policy when they are pursuing the same ideological outcomes as the state and territory Labor governments have been pursuing over the last 10 years. When you dig a little deeper you understand that this is a government driven by ideology and with the same sort of health priorities, the same style of health management, as we have seen at a state level over the last 10 years, and that is, as I said earlier today, most concerning.

The coalition government achieved a great deal over 11½ years in this country, not just for the economic situation—and that is most pertinent at the moment because this is a government that have inherited a fundamentally strong Australian economy. They inherited an economy with a surplus, not the deficit that we inherited when we came into government in 1996. They inherited no net government debt. When we came into government in 1996 we inherited $96 billion of government debt, paying about $8 billion a year in interest. We provided to the incoming government at the November election a prudential regulation system in this country which is now obviously the envy of the world. It was all that work by the Commonwealth over the last 11½ years that has provided us with the ability to support health services in this country, health services for which the federal government has a responsibility, health services which we have to make sure we get right today so that with the ageing of our population we are able to cater for tomorrow.

I mentioned to the House earlier today some of the achievements of the coalition government in relation to private health insurance. The latest data from the Private Health Insurance Administration Council show that 10.9 million Australians, 44.7 per cent of the population, were covered by private health hospital cover. Significantly, in the 12 months to June 2008, the biggest growth of any age group was in the 25- to 29-year-old category, with an increase of 53,313 people. These are the people the Rudd government expects to drop their coverage, reducing the pool of people and resulting in increased premiums.

So my message today is to pensioners, to older Australians, to many self-funded retirees who are finding it difficult to make their budget balance in these very difficult economic times and to families. They need to ask this government why they are introducing a policy in the form of this bill which will effectively drive premium prices in this country through the roof and which will displace all of those people out of private health insurance and onto the waiting lists of an already stretched public system. The government need to explain that to the Australian people. The Australian people need to demand answers to these questions. Why would you pursue such an ideologically driven policy which will provide poorer health outcomes for every Australian?

Australians understand the way insurance works in this country. They understand that the risk is spread amongst people who insure. They understand that some of those 10.9 million Australians, like younger people before they have families, do not claim very much at all by way of their private health insurance. By and large, they are not, fortunately for them, in a stage of life which presents them with complicated medical issues or procedures that require a lot of money to address. They are the people who average out the price for older Australians. This is a very important principle for people in this debate to understand.

If you remove one million of those people, particularly younger people who do make health insurance affordable in many cases for a lot of older Australians or people who are struggling on smaller incomes to pay their private health insurance, then it stands to reason—and all of the independent evidence backs this up—that the health insurance premiums in this country will rise unnecessarily and they will preclude in many cases people who have paid health insurance for a long time and are approaching a stage of their life where they need that satisfaction of mind. They maintain their private health insurance so that if they are ageing in a facility somewhere or in a community they will have the support of a private health system. Some of those people will, tragically, out of this circumstance be driven out of that system. That is an unacceptable position to adopt, but it is one that this government has ideologically adopted.

As I understand from media reports, there have been some developments in relation to the position of Senator Fielding and his stance on this matter. Members will recall that the senator voted against the bill in its original form in the Senate, which blocked its passage, and the amended bill is the one that we debate now in this chamber. I understand from those media reports that Senator Fielding says now that he will pass government budget measures, including this particular measure. That decision is, of course, one entirely for Senator Fielding, but some of the important points that Senator Fielding made in his contribution to the original debate need to be borne in mind today. People need to recognise that the opposition posed by Senator Fielding, the coalition and many other people right around the country who are independent of the parliamentary process but who are nonetheless experts in health, and the concerns that we all share, still need to be borne in mind. Senator Fielding’s contribution to the debate should not be dismissed because of his current position. People still need to bear in mind the very important consideration that Senator Fielding gave to the first bill. The reasons for which he decided to vote against the first bill still stand. The fundamental corruptness of this as good public policy still stands. This will still result in bad outcomes for Australians, some of which I have detailed before and some of which Senator Fielding has detailed both in the chamber and outside. Those outcomes still stand. Those difficulties which make this bad policy have not gone away.

This is a measure which will deliver bad financial outcomes as well. There has to have been, by my estimation and on the advice that I have received, some deal stitched up or an intention to stitch some deal up with the state and territory governments. The state and territory governments around the country will not tolerate hundreds of thousands of procedures going onto their waiting lists without corresponding compensation from the Commonwealth. To his credit, the former Western Australian Labor health minister told the Senate inquiry of the $50 million a year extra which it would cost the Western Australian health system to facilitate, on the estimates available at the time, the extra procedures in the public hospital system in WA. I spoke of that earlier. He was the only one at the time, when you went around the country, that had the guts to say that this was going to be a financial burden on the state and territory governments.

It stands to reason that if Western Australia was demanding compensation for that $50 million then the other states and territories will follow suit. So, importantly, this minister needs to explain to this House and to the Australian people what deals have already been done. How many millions of dollars of Commonwealth taxpayers’ money have you promised to state and territory governments? How will that compensation flow? What is the justification for that money flowing if it exceeds any savings to the Commonwealth? If the money which has to flow from the Commonwealth to the states exceeds any savings to the Commonwealth, why would you pursue this policy? The health system in this country cannot stand with either private or public as the only options. The same arguments prevail in education as they do in health. If you take away the private sector and the capacity of people to be able to contribute to their own medical health insurance, the pressure on the public health system in this country will be unbearable. That is why we stand opposed to this policy. It is why we will not support this bill either in this chamber or in the other place. It is why we hold fast to our very strong belief that, in a population of 20 million people where over 10 million people have private health insurance, safeguards need to be put in place to make sure that that is a viable system into the future.

If you took all of the Commonwealth revenues that we put into private health in this country and transferred them into the public health system tomorrow—if you effectively closed down the private health sector—the public health system would still collapse under the weight. There is nothing but ideologically driven desire in this debate. There is no other rational explanation as to why this government have taken the stance they have. They need to be honest about where it is they think private health insurance will be heading in this country over the next 10 years. There is a lot of rhetoric from this government; there are a lot of thought bubbles; there are a lot of one-day policy media release announcements which ultimately amount to nothing. This government have to explain why they are striking at the heart of the private health insurance system in this country at the same time as they are striking a near fatal blow to the public health system. None of their state counterparts could have supported this in public or private discussion. The federal department of the minister, the Department of Health and Ageing, opposes this measure. This is a Treasury driven measure which will be bad for families. It will be bad for older Australians. This government needs to decide whose side they are on. Are they on the side of the bureaucrats and boffins associated with this decision or are they on the side of the 10 million Australians who have private health insurance? (Time expired)

Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to support the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. It is with great interest that I speak on this bill today. The Medicare levy is, of course, currently a one per cent levy placed on taxpayers who do not have in place private patient hospital cover and who earn over certain thresholds. It is these unjust and outdated thresholds that I will be focusing on and that are, of course, the centrepiece of this government’s bill, which I am happy to speak on today. The Medicare levy surcharge was first introduced in 1997 by the then coalition government. When first introduced, this policy was aimed at encouraging high-income earners in Australia to take out private health insurance—a noble act by any means—but, unfortunately, this legislation has now become outdated and shamefully misdirected, and it is my government’s commitment to the Australian people to correct this injustice and to unburden working Australian people and families of an unfair tax. The public do not expect anything less, and why should they?

To look back to 1997 when this policy was first introduced, the then government classified a high-income earner as a single person earning over $50,000 per annum or a family earning over $100,000 per annum. In doing so, it set the threshold of this levy at these levels. The problem is that these threshold levels have not changed since their introduction 11 long years ago. It is a shame, and shameful, that the former government never had the foresight, courage or leadership to keep these thresholds up to date and to keep pace with current Australian trends.

When the policy was first introduced, again back in 1997, 167,000 people paid the Medicare levy surcharge—that is to say, 167,000 high-income earners without private hospital insurance paid this tax. But, as wages and the cost of living increased over the 11 years since the levy’s first introduction and with the same static thresholds applied to this policy by the former government, by 2006 this figure had jumped to over 465,000 people in Australia paying this tax—465,000 Australian taxpayers hit with an additional one per cent surcharge for not having private hospital cover. It is now the ordinary working Australian and their families who pay this tax, alongside the high-income earners and the wealthy whom it was originally targeted at. A wage of $50,000 per year is now below the average wage in Australia. The average wage is now $58,600 per year. To hit a group of Australians earning less than the average wage with an additional tax that was initially targeted at high-income earners is, in my opinion, grossly unfair, if not clearly wrong. It is certainly harsh, unconscionable and very unreasonable. In August 1996 the then Treasurer told this House regarding the Medicare levy surcharge:

… higher income earners who can afford to take out private health insurance will also be encouraged to do so.

…            …            …

This is the levy which the Government hopes no-one will pay.

After its initial introduction in 1997, approximately eight per cent of Australian taxpayers incurred the Medicare levy surcharge. This eight per cent is probably a fair reflection of the levy’s initial purpose of targeting high-income earners who choose not to have private health insurance. However, this figure has unfortunately risen to approximately 36 per cent of Australian single taxpayers in 2008 paying this levy, a tax that the previous government hoped no-one would pay. It gets worse, with estimates that up to 45 per cent of single taxpayers will be paying this levy by 2011 if the thresholds are not changed.

In my opinion, the opposition, by not supporting this bill and this government’s attempt to ease the pressure on working families, have obviously shown just how out of touch and out of their depth they are with the Australian people. I would certainly invite members of the opposition who do not support this government’s change to come to my electorate of Flynn and to tell the teachers, nurses, police officers, paramedics and others in my electorate earning over $50,000 per year and paying this levy that they are high-income earners and deserve to pay this tax. In my opinion, it is clearly a joke that it is these sorts of Australians who are being hit with this levy. It is blatantly clear that an income of just over $50,000 per year for a single taxpayer is not an excessively high income, so why should we sit back, as the opposition want to do, and let this group of hardworking Australians pay an extra one per cent in tax? This is a tax that working families do not deserve and, quite frankly, cannot afford.

I note with great interest the comments of Professor John Deeble, the driving force behind the engineering of the Australian Medicare system in the 1980s, on the outdated Medicare levy surcharge income thresholds. Professor Deeble comments on the existing income threshold arrangements by saying:

The result is a very high marginal tax rate for people with incomes at or close to the thresholds.

We cannot simply sit by and let those hardworking Australians on or near $50,000 pay a high marginal tax rate—and we will not. I do not have to remind this House that there are financial pressures on household budgets today. It saddens me, particularly at this time of year when many of my constituents in Flynn and many in the Australian community generally are waiting for a possible tax refund in the mailbox, that the teachers, nurses and others whom I have previously mentioned may be hit with an additional $500 or so of tax when this money is much needed for other necessary items on the household shopping list. This is why we need to look at the old, outdated and unjust thresholds and ensure that the Medicare levy surcharge remains relevant to the Australian people, remains focused on what was originally intended and is simply not just a misguided tax slug.

In order to help those working families—those teachers, those nurses and others to whom I have referred—this government, through the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008, aims and intends to increase the outdated, out of touch, 11-year-old income thresholds held onto by the former government to $75,000 per annum for singles and $150,000 per annum for families. By increasing the income thresholds for the Medicare levy this government will restore the original purpose of this bill. In doing so, this government will restore equity, balance, fairness and justice back to the system for working families and ease the tax burden on working Australians and their families. The increased income thresholds introduced into the House by this bill will restore fairness to the system, and that is what the Australian taxpayer deserves—a fairer system, a fairer choice and a fair go for all.

This bill will give back to the Australian people a genuine choice as to whether to take out private health insurance or not. This is an important decision that needs to be made by each Australian and their family, taking into account all the other household bills and expenses and, of course, having a look at the many benefits that private health insurance can offer them. It is not the place of this government to tax ordinary Australians for financial decisions they have made after carefully considering their options and their individual circumstances. Nor is it the place of this government to force middle-income Australians into buying low-cost, cheap private health insurance policies in an attempt to escape the outdated Medicare levy surcharge, only to find that these policies have little or no use when they are actually needed. This issue was a key finding in the Senate Standing Committee on Economics report on the inquiry into this bill and a key reason for that committee recommending that this bill be passed by the House.

I strongly support any moves by this government to give back to the people of Flynn and Australians generally a genuine option, particularly where health is concerned. As I have often said and will continue to say, ‘If you don’t have your health then you don’t have anything.’ It is estimated that by amending the Medicare levy surcharge threshold for singles from $50,000 to $75,000 under this bill 330,000 Australians will not be liable for the one per cent levy in the 2008-09 year. That is, an additional 330,000 hardworking Australians will be unlocked from this misguided tax, giving immediate tax relief to 330,000 Australians. That is a much needed break for 330,000 Australians and it is a fairer choice for 330,000 more Australians. In my opinion, to block this bill is grossly unfair and the opposition should be ashamed. This bill, when originally announced by the government in this year’s budget, set the single income levy threshold at $100,000. It is now reintroduced into this House at the level of $75,000 per annum for singles while maintaining the $150,000 per annum threshold for families.

This adjustment has come after extensive consultation with relevant stakeholders and the private health insurance industry. This, I feel, is an important compromise and shows the government’s leadership on this issue and its willingness to listen, to discuss and to get the balance right. Due to the change in the single level threshold since the budget announced back in May, this government will ensure that individuals are in no way disadvantaged from the previous announcement. Under new arrangements introduced into the bill a single taxpayer earning over the $75,000 threshold will have until 1 January 2009 to purchase private health insurance and not be liable for the Medicare levy surcharge for the period 1 July 2008 to 31 December 2008. This consideration will benefit individuals who may either have ceased their private health insurance cover after the May announcement or have taken a new job or gained a salary increase and who have not yet taken out private health insurance.

An important part of this new legislation is the introduction of annual indexation of the single threshold. This indexation will see the single rate increase in $1,000 increments as Australian wages increase. Of course, so too will the family threshold, as it will always be set at twice the amount of the single threshold. This indexation will ensure that the system remains fair, just and equitable and that it will remain relevant to the Australian people today and well into the future.

This indexation of the thresholds will ensure that in a further 11 years time we are not in the same position as we are in today and we are not unfairly burdening the taxpayers of Australia as the opposition would and as is happening today. Had the original Medicare levy surcharge been indexed 11 long years ago, we would today see an income threshold of $67,000 for singles if indexed to CPI and $76,000 for singles if indexed to average weekly earnings.

As a result of these planned amendments we will hear no doubt from the opposition that the bill will put pressure on health insurance premiums. The health minister, who is showing leadership on this issue, has made it quite clear that this bill will not be acceptable as an excuse by health insurers to hike premiums. This government will closely scrutinise and monitor any request by the health insurance industry to raise premiums, and, unlike the previous government, we will not have a simple ‘tick and flick’ response to such requests.

No doubt we will also hear from the opposition that this bill will cause people to discontinue their private health cover. This issue is best answered in the Standing Committee on Economics report, with evidence presented to the committee that the primary motivating factors for people in Australia to take out private health insurance are security, peace of mind and the ability for patients to choose their doctor and to choose in which hospital they will receive their treatment. What this bill does though, as I have said earlier, is give back the right for middle-income earners in Australia to make that choice and unburden them of a tax, labelled as a high marginal tax, which they can simply not afford.

This bill restores fairness to the system and provides the opportunity to unburden 330,000 working Australians of a misdirected tax. It is with confidence in the government’s commitment to the public health system that I commend the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008 to the House. (Time expired)

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

As the member for Ryan, I am very pleased to speak on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008 and to follow a colleague from Queensland. But I must say on hearing the presentation by the member for Flynn that I am not sure whether he is very passionate about what he was trying to advocate. If you believe in something, you have to be a bit passionate about it. You have to come in here and say, ‘This is fantastic; this is good for the country; this is good for our constituents.’ I have to say that I am not sure that the member for Flynn gave that very strong impression. I certainly intend to give a very passionate presentation representing the coalition side and, indeed, the side of the people of Ryan.

As we know, this bill is to amend the Medicare Levy Act 1986 and the New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 in order to increase the Medicare levy surcharge thresholds on annual taxable income from 2008-09 and in subsequent years. The bill proposes that the thresholds be increased for individuals from $50,000 to $75,000 and for families from $100,000 to $150,000, with the family threshold going forward to be double the single threshold.

This is the second attempt by the Rudd Labor government to penalise families and Australians at large for taking up private health insurance. What the member for Flynn did not say and what I am happy to say to all those Australians who might be listening and to the people of Ryan—for anyone who might be listening who does not know, Ryan is the seat that represents the suburbs of the western part of Brisbane—is that this is basically an ideological assault on private health insurance by the Rudd Labor government. The Labor government has a problem with private health insurance—I am not so sure why—and it is coming through in this piece of legislation.

The bill proposes transitional arrangements so that individuals who obtain private health insurance before 1 January 2009 will avoid liability for the Medicare levy surcharge threshold for the period 1 July 2008 to 31 December 2008. As I said, this is the second attempt by the government to give legislative effect to the 2008-09 budget measure first proposed in a tax laws amendment bill. The earlier bill, as I know that the constituents of Ryan will be all too aware, proposed to increase the Medicare levy surcharge thresholds for individuals from $50,000 to $100,000 and for families from $100,000 to $150,000. These proposed changes to the thresholds attracted considerable public debate and the bill was referred to the Senate Standing Committee on Economics for inquiry. As we know, with the combined position of the coalition and Senator Fielding, the bill was rejected by the Senate on 24 September 2008.

I want to refer to Senator Fielding’s remarks. He is, of course, the Family First senator and he put families first in explaining why he did not support the Rudd Labor government’s ideological assault on the people that he represents. Senator Fielding said:

Most people giving evidence to the Senate committee that examined the increased Medicare levy surcharge thresholds agreed that the increases would lead to people dropping out of health insurance cover, which would lead to increases in the cost of health insurance premiums and would put pressure on public hospitals that are already buckling at the knees with huge waiting lists.

He went on to say:

Evidence to the committee estimated that there would be an increase in health insurance premiums of up to five per cent as a result of changes to the thresholds, let alone other cost increases to the health sector.

He continued:

Families buy health insurance for all sorts of reasons, and price is just one of those factors they take into account, but, in an environment where many families are doing it extremely tough under high mortgage interest rates, high petrol prices and high grocery prices, families are making a significant sacrifice to keep their health insurance. These families, struggling to pay for health insurance, are making a decision in the interests of their loved ones and their own health, but they are also taking some of the burden off the public hospital system.

I say, ‘Hear, hear!’ to Senator Fielding. That was true when he gave his speech in the Senate in September and it is true today. I hear from the government that he is considering a reversal of his position. I am not so sure that he is, but I would say to Senator Fielding that his remarks in the Senate in September are as accurate today as they were then.

I get the impression that Senator Fielding has concerns about the state of the Victorian health system, but, if he were from Queensland, he would be horrified. I notice we have in the chair a member from Victoria, Mr Deputy Speaker Andrews. The previous occupant of the chair, Mr Deputy Speaker Scott, is from Queensland and certainly, as the member for Maranoa, he would agree with me that in Queensland the health system is in a diabolical position. In a moment I will give a couple of examples of the state of complete horror that the Queensland health system is in, because they really are very critical reasons as to why the federal opposition opposes this bill.

The Rudd government predicts some half a million people—583,000 people—will drop their private health insurance, a figure which is down from 644,000. Even with the revised prediction, Access Economics estimates that by 2012 well over one million Australians will have dropped their private health insurance or not taken it out. Access Economics also predicts that, with the thresholds set at $75,000 and $150,000 by 2012, over 770,000 episodes will have been shifted to the public system, a massive extra burden on the already struggling public health system. Coming from Queensland, I want to draw the House’s attention to that. I know that all my Queensland colleagues will agree, certainly the people of Ryan will agree and, indeed, every Queenslander will endorse my statements, my concerns and my anxieties about the state of the Queensland health system.

If you are going to push people off private health insurance, it is only logical that they will go into the public health system. But, if the public health system is in such a mess, all that is going to do is to put a burden on the people that should have first priority in the public health system. I am sure Queenslanders listening will be aghast at the extent to which the Queensland Minister for Health, Mr Robertson, is having to defend the state of Queensland Health. In the interview that he gave on 4BC last Wednesday he hung up on Mike Smith, the 4BC broadcaster, when he could not defend his policies and the state of his oversight of the Queensland health system. When he was interrogated and put under the hammer, the health minister hung up on the 4BC interviewer. It is just astonishing that the health minister, unable to defend his government’s position under scrutiny and under genuine interrogation, hung up on a radio broadcaster.

This is the state of Queensland Health. It is just unbelievable. More than 750 emergency department patients waited at least eight hours for admission to Queensland’s largest public hospital in August. This is not information that the Queensland government has released of its own volition; this had to be prised from it. A Royal Brisbane and Women’s Hospital document leaked to the Queensland opposition reveals that at least half of the almost 1,600 emergency patients needing a bed in August had to wait eight hours or more. I am talking about not just feeling unwell but emergency need, and those people had to wait eight hours for a bed. This is almost double the target that Queensland Health has set.

I think the comment of the opposition health spokesman in Queensland is very apt. Mr Mark McArdle said:

This is just a cold and heartless way to treat very sick people who desperately need hospitalisation.

If you do not believe what the opposition spokesman for health said then take it from someone who is independent. The Chairwoman of the Australasian College for Emergency Medicine in Queensland, Dr Sylvia Andrew-Starkey, said that she had earlier raised serious concerns about the overcrowded emergency department. The Queensland government got a heads-up and yet they ignored it.

I suspect that when the polls come around in Queensland, the people of Queensland will be waiting with their baseball bats, certainly for Mr Robertson and, I suspect, for many of his colleagues. It is about time too. The Labor government has been in power now for nearly 20 uninterrupted years and this is the state in which we find the Queensland health system. Why is this relevant to this debate? It is relevant because when people go off private health insurance they are more likely to go onto the public waiting lists. For those who can take out private health insurance it is the position of the coalition to encourage them and to support them to take out private health insurance.

It stands to reason that people in Queensland are concerned about the state of Queensland Health when we get this situation here. The Sunday Mail in Brisbane very recently, a couple of months ago, revealed that the Queensland health department—would you believe this?—counts chairs as beds. It counts chairs as beds—but not just chairs. If there is anyone in Queensland listening to this and saying, ‘This can’t be right. The member for Ryan must be off his tree here,’ let me continue. It is not just chairs but trolleys. Mr Deputy Speaker Andrews, I know you come from Victoria and perhaps you are concerned about the state of the health system in Victoria, but can I assure you that in Queensland it is much worse. For anybody in the press gallery who has not heard this, talk to your Queensland colleagues in the gallery, because they will certainly make it very clear what the situation is.

Chairs, trolleys, cots, stretchers and—get this one, anybody listening—lounge suites are counted as beds in the Queensland health system. This is absolutely absurd. The Queensland health data dictionary defines an ‘available bed’ as ‘a bed which is immediately available to be used by an admitted patient if required’, and an ‘available bed alternative’ includes ‘an item of furniture’. This is just unbelievable. So a bed equals an item of furniture, and ‘item of furniture’ expands to include, for example, trolleys and cots. And there are ‘non-recognised beds’—in other words, chairs, trolleys, cots, stretchers and lounge suites.

Any Australian that is listening to this will be shaking their head in absolute disgust. Goodness! If you are a Queenslander listening to this, ring up your state member, ring up the Premier’s office, ring up the health minister’s office and just give it to them, because your health depends on efficient service. Your family’s health depends on the capacity of the hospitals and the emergency services to take care of you. When you go to hospital and you need a bed, you do not want to be sitting on a lounge suite. When you go to hospital in Queensland, you do not want to be forced to sit on a chair. When you go to hospital in Queensland, you do not want to be told, ‘Yes, there’s a bed available,’ and find when you look around for a bed that you are then directed to a cot. For goodness sake!

I say to the people of Queensland: get on the telephone and call the Premier’s office. Call the office of the Minister for Health in Queensland, Mr Robertson. Call your local state MP. Of course, if you live in Indooroopilly, call Mr Ronan Lee, your Greens member, who abandoned the Labor Party. Call Mr Ronan Lee. He says that he left the Labor Party in Queensland because he was disgusted at Premier Bligh’s views on the environment. I suspect he could add his disgust at the way that the Queensland Premier and her predecessor governed Queensland when it comes to health matters. Goodness gracious me. I have to say this again, because it is just unbelievable: beds in Queensland hospitals include chairs, trolleys, cots, stretchers and lounge suites.

Let me go on here. This is the interesting bit. The Queensland health minister defended this. The Queensland health minister disagreed that it was misleading the public to identify those things as beds. Where is he? Is he for them being counted as beds or is he against them being counted as beds? The bottom line is that this is from the Queensland health data dictionary, produced by the Queensland health department under the administration of a Labor Premier. And I repeat: Labor have been in power in Queensland for nearly 20 uninterrupted years, from Goss to Beattie and now to Bligh. Interestingly, I had the opportunity of flying down to Canberra today with the former Queensland Premier Wayne Goss, and I suspect that he as well would be absolutely aghast at this. So, Mr Goss, I know you are in the building somewhere. If you are in front of a TV screen and you are listening to this, I am sure you are shaking your head as well.

But why is this relevant? Why is it relevant to the people of Queensland and why is it relevant to the people of Ryan, in the western suburbs, who I represent? Well, it is very relevant to this bill, because you are going to be struggling to get a bed—a real bed, one that you can actually lie down on, one that you can be treated in comfort on. We do not want a six-foot tall patient to be forced to lie in a cot or an elderly lady who needs a bed to be told, ‘Go and sit on that lounge suite over there.’ This is just absurd. Why is this relevant to this bill? Again, it is relevant because, if you take up private health insurance, you are doing a great service to many Australians who need priority in accessing the public health system.

But, if the support of the government is not there, what is going to happen? More likely than not, you are going to leave private health insurance. That is why all members of the coalition can be proud of what the Howard government did in supporting private health insurance, with some 10 million Australians having private health insurance. I encourage them as much as possible to stay in private health insurance, because in a sense this is also a form of service to the country. I note that the Minister for Veterans’ Affairs is in the House. I am sure that in doing the job he does he acknowledges Australians who serve our country, but let me say, Minister, that you must acknowledge all those who take out private health insurance. They are doing a great service for contemporary Australia.

Let us get to a constituent of Ryan and her concern. This is a real person with real concerns. I wish I had more time, but, alas, with only a few minutes to go I am going to have to wrap it up soon—and I am just starting to get into it! I am certainly getting into it in a passionate way, unlike my Queensland colleague there, the member for Flynn, from the Labor Party. I know that the member for Flynn is new to the parliament and I wish him well in the two years that he has left as the member for Flynn, because we are certainly coming after him. We are coming after you, Member for Flynn! I am sure that you are going to enjoy your time in the parliament in those two years. You are a very passionate guy on the football field, but try and bring that passion into the parliament. Come on! Defend your policies. Get up with vigour and defend them.

A lady called Elizabeth from the western suburbs of Brisbane, from the Ryan electorate, emailed me in May and said:

Dear Mr Johnson,

I am a disability pensioner in your electorate of Ryan. I am seriously concerned that the raising of the Medicare Threshold will increase my private health insurance considerably.

I am already struggling to pay my rent and MBF by cutting down on food, and I would like to know what you are going to do about this situation. I feel that I have a right to choose the doctor/hospital of my choice!

To Elizabeth from the Ryan electorate: thank you very much for your email to me in May after the budget. Of course, as your federal member, I am going in to bat for you.

When I got the opportunity to make contact with Elizabeth, she informed me that she had also contacted the government because she knew that I was in opposition. She was very upset about that too, I might add. The Prime Minister’s office just told her that the Medicare surcharge increase would not affect private health insurance costs. Of course, we all believe in fairies at the bottom of the garden as well! This is just absurd. The Queensland health system is in chaos and the Prime Minister is saying to Elizabeth from the Ryan electorate that the Medicare surcharge increase will not be affected by the private health insurance policy of the government. Really, we were not born yesterday.

I want to say to the people of the western suburbs, the people of Ryan, thank you for all your contact with me. Thank you for your support of the opposition’s position. Certainly the Turnbull opposition is going to take the fight to Labor on their rampant vandalism of private health insurance in this country. Half the population in this country are being hit by Labor and the other half are going to be suffering when pressure is imposed on them when premiums go up because private health funds will need to accommodate that extra loss that will be a consequence of the government’s policy. To the people of Ryan, where there is some 62 per cent uptake of private health insurance: I will continue to bat for you. (Time expired)

Mike Symon (Deakin, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to speak in support of the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. Unlike the member from Ryan, I am not going to repeat myself on several occasions because I think this can be said once in a cogent way. Back in May this year, when I spoke on the original Medicare levy surcharge thresholds bill, I commented on the effect of the Medicare levy on working single people. I also spoke about the effect of the Medicare levy on working families and spoke of several examples. Both the Liberal and National parties subsequently denied this tax relief to working singles and working families by voting the original Medicare levy surcharge thresholds bill down in the Senate, so today I am going to highlight just how many people are affected by the actions of the coalition in opposing this well-deserved tax cut.

In 1997-98, the first year of operation of the Medicare levy surcharge, there were 167,330 taxpayers who were hit by this surcharge. By 2005-06, because of no indexation, the number of taxpayers slugged by the Liberals Medicare levy surcharge had climbed to a massive 465,325. Let me put this on the record here: these are 465,325 people who choose not to have private health cover. They may not want it; they may not feel that they need it. That is their choice and that is their right.

A lot of working people speak with their accountants at tax time and make the decision to take up bare bones private health cover, policies that often have many exclusions and large excesses. Why do they do that? As many accountants will tell them, if the policy costs less than the surcharge that would be payable then the worker is in front. That is a simple equation, but it should not be the determinant of whether you choose to take out private health insurance or not.

Once they have taken up private health insurance, of course, people can claim the 30 per cent private health insurance rebate. That is not affected in any way by the introduction of this bill. In fact, this bill leaves all private health insurance rebates in place at the varying levels of 30 per cent, 35 per cent and 40 per cent, as Labor committed to in the 2007 election campaign. The Rudd Labor government wants to give people incentives to take out private health insurance, not hit them up with a tax grab they cannot afford. This bill, when enacted, will bring tax relief to around 330,000 taxpayers.

Let us look at the case if you are a single person and earning the average income of $58,600. Currently you will get slugged with the Liberals’ Medicare levy surcharge tax of one per cent of your taxable income for the year. This does not necessarily come about from working massive amounts of overtime or holding a really well paying job. The threshold is crossed for many who are on award wages and even more who are on enterprise agreements. In this case, that means an extra $586 that has to be paid to the Australian Taxation Office at the end of the year. That is $11.26 out of your pocket each and every week of the year for the privilege of earning an average income.

Working families are also placed in a similar bind. Once their income rises over $100,000, they too are hit with the Liberals’ Medicare levy surcharge. However, as the one per cent surcharge applies to every dollar of taxable income, the extra tax payable is higher. So a family with an income of $105,000 is currently hit with an extra $1,050 of tax each year. That is real dollars out of the pocket and the family budget and off to the tax office. That is $20.19 a week that could be spent on other household needs.

The result of the surcharge applying the way it does is that those who earn just over the threshold limits are severely punished with very high marginal tax rates. When this tax was introduced by the Liberals in 1997, it was meant for high-income earners, but now it hits people earning less than the average wage. If the Medicare levy surcharge had been indexed to CPI since its introduction 11 years ago, the singles threshold would now be $67,000 per annum, not the current limit of $50,000 as imposed by the former coalition government. And, if the Medicare levy surcharge was indexed to the growth in average weekly earnings since the start date of 1 July 1997, the threshold would now be $76,000 per annum, 52 per cent more than the current threshold of $50,000 as currently locked in by the Liberal Party.

At the inquiry of the Senate Standing Committee on Economics into the original Medicare levy surcharge thresholds bill on 31 July this year, the Treasury representative told the committee:

In the absence of any changes to the threshold, we estimate that in 2008-09 about 36 per cent of single taxpayers would exceed the threshold and that would go up to 45 per cent of single taxpayers by 2011-12.

This bill introduces annual indexation for the surcharge thresholds based on average weekly ordinary time earnings for both singles and families. Many people forced into the supposed choice of private health cover or paying the Medicare levy surcharge are young adults who are less likely to claim on private health insurance whilst still young.

The Rudd government has allocated an extra $1 billion in funding for public hospitals over this financial year. This is complemented by a $600 million program to reduce elective surgery waiting lists, a program that is delivering results already with 14,000 additional patients having received their surgery this year and another 11,000 patients to go—that is, for this year. The Rudd government has also put substantial investments into primary care designed to keep the pressure off public hospitals.

As I said in the debate on the original Medicare levy surcharge legislation, I believe that this is an issue about choice. Despite the increase in thresholds, it is estimated that most of the individuals and families with incomes between the new and old thresholds will retain their private health cover. And I say this: if the product and service provided by a private health fund is good and relevant to the individual’s or family’s needs then I am sure that the cover will continue.

Many people highly value their private health insurance cover because it gives them peace of mind that their medical and hospital costs will be covered should they need it. Being forced to buy a product you do not want to use or to pay extra tax is not choice. But the Leader of the Opposition and his predecessors in the Howard government left in place the $50,000 threshold that forced working families to take out private health insurance year after year, whether they valued the product or not, just to avoid a tax bill at the end of the year.

Of course, this is the opposite of choice—the opposite of what those on the other side of the House claim to believe in. They talk about being the party of tax cuts, but they oppose this proposed tax relief for at least 330,000 Australian working singles and working families. If the Liberal Party think that $50,000 per year is still a high income, I would really like to see what they think a low or middle income is. They claim that an income of $150,000 per year is not very high and that people in this salary range and above should receive welfare from the government. Remember the baby bonus debate. The opposition cannot have it both ways. If $50,000 per year is a high income, how can $150,000 per year not be? Paying an extra one per cent of your gross income is a significant slug to working singles and families who do not want private health cover. This bill is targeted at bringing relief to working singles and working families. Some individuals could be up to $750 a year better off, whilst some couples could be up to $1,500 better off. The question really has to be asked: why does the opposition want to stand in the way of a tax cut to 330,000 working people?

I support this measure to help working singles and working families choose whether they should spend their money on private health insurance and I commend the bill to the House.

Andrew Southcott (Boothby, Liberal Party, Shadow Minister for Employment Participation, Training and Sport) Share this | Link to this | Hansard source

To begin on Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008, I remind the House that there are now 10.9 million Australians who hold private health insurance. We have 44.7 per cent of the population with private health insurance. It was not always this way. When Labor were last in power, we saw a dramatic decline in the levels of coverage of private health insurance, declining by about two per cent a year. It was approaching the point whereby private health insurance would have been unsustainable. It was a very unstable structure. As each premium rose, there were younger, fitter, healthy people dropping out, which meant that the risk profile of the funds changed. As a consequence there was a vicious cycle whereby people left in the fund were more likely to claim and so it went on.

It was only through taking action that the Howard government was able to stop the decline in private health insurance coverage and to reverse it. This happened principally through three measures: the 30 per cent rebate for private health insurance, which we later increased to 35 per cent for people over 65 and to 40 per cent for people over 70; the Medicare levy surcharge, whereby if people on certain incomes did not have private health insurance they would pay an extra one per cent Medicare levy; and Lifetime Health Cover, which provided that people who did not take out private health insurance over the age of 30 would pay a lifetime additional premium for each year they were out of private health insurance. Those three measures were very important in us now having a very stable and sustainable structure of private health insurance. We have seen the growth of some important groups in private health insurance. In the 12 months to June 2008, 53,513 25- to 29-year-olds took out private health insurance. As most members will know, it is very important that you have a broad representation of the community to have a sustainable structure with private health insurance.

I want to deal with a couple of the arguments the government have presented in favour of this bill. The first one seems to be that this is a tax cut. It is a very unusual tax cut because it saves the government money—$354 million over four years. Most people with any understanding of finance or economics would recognise this for what it is—a tax cut which involves the government giving less to the community over the next four years and adding to the surplus. This is a tax cut which involves the government giving with one hand while taking back with the other. It is the sort of tax cut that the Artful Dodger would be proud of.

Having said that, this is extremely targeted—it only goes to people in a very narrow income band who do not hold private health insurance. When the opposition was in government, we recognised that there were much better ways to target low- and middle-income families and singles. We did it through tax cuts. Look at the tax cuts that were announced almost 12 months ago by the then Treasurer, Peter Costello, and Prime Minister John Howard—tax cuts which were adopted by the then Labor opposition and which came in on 1 July. They were very important for people on average earnings, who got a tax cut of $35 a week, and for average income families, who got a tax cut of about $50 a week. These were very important for what is a very common family structure now: one partner working full-time and one partner working part-time.

This is a tax cut which involves the government building its coffers, so it is not really a tax cut. One of the problems is what the consequences of this poverty decision will be. There are several. The first is that the initial proposal had, on Treasury’s own figures, 644,000 people dropping out of private health insurance. The estimates were that it would principally be young, fit, healthy people dropping out. The argument was that this would not have an impact on public hospitals. But you need to look at the second-round impacts. When younger, fitter and healthier people drop out you will see a change in the risk profile of the private health funds and, as a consequence of that and that alone, premiums will rise because the remaining core are more likely to make a claim on their private health insurance. There will also be second-round effects just from the premium rises alone. Treasury’s own figures expect 57,000 Australians over 65 to drop private health insurance. These are people who are already getting a very significant private health insurance rebate—35 per cent. On the amended bill—the government’s new bill—there will still be 583,000 Australians who will drop their private health insurance. So the first impact is that we will have large numbers of people dropping private health insurance. It will change the risk profile of the private health funds and lead to upward pressure on private health premiums for those who remain.

The second impact is what it does to these people who exit private health insurance. Access Economics has estimated that by 2012—in four years time—there will be an extra 770,000 episodes which will have shifted to the public hospital system. So there are very serious consequences of this legislation. Today we heard the Minister for Health and Ageing introduce a new argument. Apparently, when the IMF are calling for tax cuts and payments to be made to individuals to help with the global financial crisis, the minister for health seized on the Medicare levy surcharge bill as an example of a tax cut. Wrong! There is no cash injection into the economy involved with this bill. In fact, it is taking $354 million out of the economy over the next four years. These are the consequences. In the middle of the global financial crisis, Labor’s idea of a tax cut is to take $354 million away from the community—that is the total. We have 583,000 people who will drop their private health insurance, and, if this bill is passed, by 2012 we will see an extra 770,000 episodes in public hospitals. To the extent that younger, healthier people drop out of private health insurance, we will see the private hospital premiums rise. To the extent that older people drop out of private health insurance as a consequence of those premium rises, we will see additional pressure on public hospitals.

This is not the last word on private health insurance. If this bill is passed, we will be revisiting the consequences for many years to come. This is a very short-sighted piece of legislation. It was put in to meet the government’s imperatives during the budget cycle. It will be very damaging to people with private health insurance and it will put additional pressure on the public hospital system. In my own electorate of Boothby, 71 per cent of voters hold private health insurance and 63 per cent have hospital cover. They would expect me, as their representative, to do everything possible to keep downward pressure on private health insurance premiums. They would expect me, as their representative, to do everything possible to keep additional pressure off the public hospital system. That is why, on this side of the House, we have always been very clear about the role that private health insurance plays in keeping pressure off the public hospital system. We have a vision for a dual system, private and public, where the private system keeps the pressure off the public hospital system. Labor, for their own ideological reasons, have decided to introduce this bill, which will provide no relief to the community. It actually takes $354 million away from the community over the next four years. It will lead to premiums rising, and it will lead to more people using the public hospital system. I will be voting against this bill for obvious reasons.

Ms Catherine King (Ballarat, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to speak in support of the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. I note with some irony the member for Boothby’s absolute defence of his government’s record of somehow keeping private health insurance premiums down. Correct me if I am wrong here, but I do not remember private health insurance premiums going down in the 11 years of the previous government. We had the member for Boothby saying in this place that it is incumbent upon him as an elected representative to ensure that his constituents are represented and to apply as much pressure as he can to ensure that private health insurance premiums go down. We have been in government nine months. Obviously, the world did not start nine months ago. There were 11 years of the Howard government and private health insurance premiums did not go down. Not only did they not go down; they went up by substantial amounts and increasingly a gap emerged between the sorts of things that people thought they were paying for and what they actually got. The member for Boothby came in here and said it is incredibly important for him to ensure that private health insurance premiums do not go up. Well, where was he over the last 11 years?

This bill brings about a change to the Medicare levy surcharge thresholds. It is a change that is long overdue. Families in my own district have been sending the same message to me since I was elected. They tell me that their household budgets are tight. It is no secret that childcare costs are draining family budgets, grocery prices are pressing firmly on hip pockets and petrol prices and rising mortgage stress are at the forefront of most families’ minds. That is why this government has introduced this bill into the House. We are conscious that there are a broad range of cost pressures on Australian families. This bill will deliver tax relief to some 330,000 Australians. This bill is another example of this government’s commitment to assist hardworking families across Australia who are struggling with their household budgets.

When the Medicare levy surcharge was originally introduced by the former Liberal government the aim was—and it was a good policy aim—to provide incentive to high-income earners to take out private hospital cover. That was the principle behind the policy. We subsequently found out that the $50,000 threshold was not determined by any scientific analysis of what constituted a high-income earner at the time—some 11 years ago now. In fact, that threshold was calculated over a bottle of whisky by the then Minister for Health and Family Services, Michael Wooldridge. It is pretty outrageous. This $50,000 was carved in stone, not to be changed or indexed over the subsequent 11 years. That $50,000 that was determined over a bottle of whisky some 11 years ago was set in stone.

How long did members opposite expect the current levels to hit only high-income earners? In its current form the surcharge eats away at the hip pockets of families who are earning less than the average wage. The former government introduced the thresholds that have been laid down in concrete for some 11 years. Not once have they been changed. At present the threshold for singles is $50,000 and for couples and families it is $100,000. Residents in my own electorate of Ballarat will assure members of the opposition that $50,000 is not a high income. The Medicare levy surcharge is hitting the hardworking residents of my district who are earning less than average wages.

The Liberal government failed to adjust the thresholds and members opposite should explain to residents of my community why they allowed this tax trap to continue. This is reflected by the number of people who are now subject to pay this surcharge. In 1997 there were 167,000 people paying the surcharge. By 2005-06 it had risen to 465,000 people. Let us look at those figures again: in 1997 there were 167,000 people and less than 10 years later there were a staggering 465,000 people caught in this tax trap. Should we believe that in those 10 years 298,000 taxpayers became highly paid and started living a life of luxury? Not in my electorate.

The threshold has not kept pace with the rising cost of living. The previous government took their finger off the pulse of ordinary Australians. The Medicare levy surcharge was not meant to hit families on average wages. It was never designed to do that. The surcharge needs to change. I, along with all members of the government, am determined to deliver tax relief to families in my electorate and to all families right across Australia who are struggling on average wages. We are determined to pass this bill. We are prepared to give the Australian people certainty when looking at our country’s budget.

Since we announced our intention to amend this tax we have received varying opinions and opposition to our proposed changes, particularly from those opposite. Members opposite opposed the tax relief for those hardworking Australian families that was in the original bill put before the Senate. The Rudd Labor government is determined to pass its budget measures in full. We are determined to pass our budget and we are determined to protect the budget surplus. We have had detailed consultation with stakeholders with the intention to introduce this new bill, which we hoped would be supported by both parties but clearly is not.

We are proposing new thresholds for the Medicare levy surcharge. In this new proposal we plan to increase the threshold for singles from $50,000 to $75,000. Our previous proposal announced in the budget aimed to lift the threshold for singles to $100,000. Because of the opposition of the Liberal and National parties we have been unable to successfully do that. The intention of the former proposal was to move the tax that crept down over time from high-income earners to ordinary Australians on average wages. We received opposition from the Liberal Party, who saw to it that we could not provide tax relief to as many families as we had hoped.

Our government has continued consultation with stakeholders, and today we are debating our negotiated proposal. This change is a measured proposal that will provide relief to hardworking Australians on average wages. It will help compensate for the continual increased costs of living I mentioned earlier—increases in childcare costs, groceries, petrol and mortgages: essential services the average Australian family relies upon and basic living necessities. Aside from increasing the threshold for singles to $75,000, this bill retains our original commitment to lift the Medicare levy surcharge for families from $100,000 to $150,000.

Combined, these two measures will provide immediate tax relief to some 330,000 Australians—330,000 Australians that are not classed as high-income earners. These amended thresholds are sensible and closely resemble the levels proposed by other groups within Australia. The Australian Private Hospitals Association and Access Economics have both suggested rates that closely resemble those proposed by the government in this bill.

In addition to the threshold changes for the Medicare levy surcharge, the government’s proposal will also see the singles threshold indexed each year, which means that the situation we are currently in, where the $50,000 threshold seems to have been set in concrete for the last 11 years, will not occur again. We have done this because members on this side of the House recognise that wages do change and that this should be reflected in the Medicare levy surcharge thresholds.

I support this bill because it provides tax relief for some 330,000 Australians—and it does provide that relief. Any members opposite who try to say that the 330,000 Australians who will receive that tax relief are not going to benefit somehow or that, as we heard from the member for Boothby, it is somehow not real money, or not real tax relief, have got to be kidding themselves. I support this bill because it is a measured and responsible approach that assists households struggling to meet the many demands that are placed on their household budgets.

The bill will not only amend the thresholds for the Medicare levy surcharge but will also amend the legislation so that the thresholds are indexed. This will make sure that next year, the year after that and continually into the future this bill will be relevant and up to date with the wages of Australian working families. Since the introduction of the Medicare levy surcharge, we have seen hardworking Australians being sucked into a tax trap that the previous government laid for them. In this bill, the government adjusts the current thresholds to appropriate levels and has put measures in place to remove the trap that taxpayers would have faced otherwise into the future. I urge members opposite to support the bill.

The Rudd government is supportive of tax relief for hundreds of thousands of Australians. If the Liberal Party do not support this bill—and they have indicated that they will not support it—then the opposition clearly do not support tax relief for those families. We had the Leader of the Opposition and the shadow Treasurer today in question time calling for tax relief in the context of the global crisis. Today they have the opportunity. They have an opportunity right before them, some few hours after question time when they raised this as an issue, to actually support tax relief for Australian families. It is incumbent upon them to support this bill if they believe what they said in question time, that tax relief for Australian families is absolutely necessary in the current context of a global crisis. I commend the bill to the House.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

I rise to add my voice to absolutely and categorically not support the revised Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008 before the House. I do so because this has nothing to do with improved health outcomes. This is simply a budget measure. We hear the member for Ballarat talk about a tax trap eating at the hip pocket and that she is determined to deliver tax relief, when this moribund government in its budget increased taxes by $19.8 billion. This government brought in almost $20 billion in new taxes in its first, and I am sure only, term, yet the member for Ballarat rolls out the statement that she is determined to deliver tax relief and that, if we do not support it, clearly we do not believe in tax relief. It is farcical and ludicrous in the extreme.

Mr Rudd wanted to fund his promises through cuts and through $20 billion in new taxes. Not that he told anyone prior to the election but he wanted to do it so he could claim the mantle of an economic conservative. It is interesting that he felt he needed to massively increase taxes and fund election promises through those cuts if he were to claim that mantle of economic conservatism. Clearly he was looking back to the dreadful days and the appalling legacy of Keating to this nation: $96 billion in debt, $8 billion in interest payments per annum and a $60 billion hole in unfunded superannuation liabilities. Keating almost destroyed the nation.

What is worse is that the Labor Party were planning to change the threshold levels even before they won the election but failed to inform the voting public. In fact, the health minister’s office stated that they would not release details during the election campaign. Thus, considering the harm that this legislation will enact, its passing would be a travesty. The original legislation sought to change the thresholds where the Medicare levy surcharge kicked in—for singles, from $50,000 to $100,000 and, for couples, from $100,000 to $150,000. The government’s initial estimates showed, when the thresholds were set at $100,000 and $150,000 accordingly, that 485,000 people would drop their private health insurance. This modelling only included adults, not children or dependants. Once they were included, the government predicted 644,000 people would leave.

A range of organisations, including Access Economics and PricewaterhouseCoopers, have estimated that anywhere up to a million people will leave private health insurance because of these measures. The Rudd government has maintained that it will be young, healthy people who will drop their insurance first, but, as premium prices increase, we know the biggest losers will be those on fixed incomes, especially pensioners. Older Australians are the biggest claimants on private health insurance. Many of these are pensioners who—despite an increase in the cost of living and the government’s complete recalcitrance in providing any relief through supporting the opposition’s $30-a-week increase for single pensioners and veterans—continue to maintain their health insurance despite their budgetary constraints.

Treasury has revealed it expects 57,000 Australians who are 65 years or older to drop their private health insurance, based on the initial legislation. The Rudd government, though, faced with its proposal’s inability to gain passage through the Senate, introduced the revised legislation to the House with a new level of $75,000 for singles and an unchanged level of $150,000 for couples. The government predicts 583,000 people will drop their private health insurance—down from 644,000. Even with the revised levels, Access Economics estimates that by 2012 well over one million Australians will have dropped their insurance or will not take it out.

Access Economics also predicts that, with the thresholds set at $75,000 and $150,000 respectively, by 2012 over 770,000 episodes of care will have shifted to the public system—a massive extra burden on the already struggling, and indeed failing, public health system. The initial legislation would save the government $300 million over four years; the new legislation, $354 million.

By way of history, I can say that in 1997 the coalition government introduced the then Medicare levy surcharge to tackle the low level of private health insurance coverage. Under these measures there has been a 10.8 per cent increase in private health insurance participation levels, from 33.9 per cent to 44.7 per cent. This is the result of three initiatives designed to work together: firstly, the 30 per cent rebate; secondly, Lifetime Health Cover; and, thirdly, the Medicare levy surcharge.

The latest data from the Private Health Insurance Administration Council show that 10.9 million Australians, or 44.7 per cent of the population, were covered by private health insurance. Significantly, in the 12 months to June this year, the biggest growth of any age group was in 25- to 29-year-olds, with an increase of over 53,000 people. These are the people the Rudd government expects to drop their coverage—reducing the pool of people, which will result in increased premiums and a greater load on an already strained public health system.

Yet it is the impact of this legislation that is of such profound concern. Those who leave private health insurance will need to rely on the public system. There is no plainer statement of fact. Short of dying a lonely, miserable death in their own homes, patients will go to the public health system. Yet the government has not provided any extra funding for the public system to cope with the predicted and absolutely sure influx of patients.

During the Senate inquiry, the Western Australian government stated that people dropping insurance would lead to higher hospital costs in the magnitude of over $50 million per year. That is just one year for one state. The government has offered no compensation for the public hospitals and in fact did not even conduct any modelling on these so-called second-round effects. It did not speak to the National Health and Medical Research Council. It did not speak to any of the states. I do not think the government even spoke to its own health minister. This was simply a move by Treasury because Mr Rudd, the Prime Minister, wanted to make a range of savings and tax increases so he could claim some mantle of being an economic conservative.

The government is trying to save money—with a $22 billion surplus left for them and a $20 billion surplus from the preceding year. These changes would see a reduction in revenue of $660 million but a government saving of $960-odd million. I can only conclude, by looking at the evidence, that the Labor government, considering the $22 billion surplus and looking to save $300 million, just does not like private health insurance.

Here are the facts to support it. Private hospitals treat four out of every 10 admitted patients in Australia, representing nearly one-third of all days in hospitals. Private hospitals perform the majority of surgery—56 per cent. In my electorate of Fadden on the Gold Coast, the fastest growing electorate in the nation, there are 49,724 people with private health insurance. With predictions that almost 10 per cent of insured people will drop out of the system, that is almost 5,000 people dropping out who will then be required to go into the public system. We only have one public hospital on the Gold Coast. That is it. There is only one place to go.

Let us look at the wider public health system—the one that is being prevailed upon, the one that has been governed by the Labor states over nearly the last decade. Let us look at Queensland Health, which has had 18 years of Labor government authority out of the last 20. Let us look at Queensland Health, that incredible organisation of efficiency and effectiveness. Let us particularly focus on their quarterly public hospital performance report for the March quarter of this year. The Gold Coast Hospital is the only public hospital that services the sixth-largest city in the nation. With at least 5,000 people in my electorate and a similar number in the electorates of McPherson and Moncrieff, 15,000 more people will draw on the requirements and services of the lone Gold Coast Hospital because of this bit of moribund legislation.

The Gold Coast Hospital has the third-highest number of people admitted to hospital in Queensland: 17,344. It services the most people in Queensland in an emergency department: 24,613, which is 30 per cent more than the next highest hospital, Royal Brisbane. The Gold Coast Hospital performed 2,650 elective surgeries, coming third after Royal Brisbane and Princess Alexandra hospitals.

Whilst the move on the Medicare surcharge will throw at least 15,000 people in the three electorates on the Gold Coast—and as many as half a million people across the nation—into the public system, let us look at the elective surgery numbers now and the impact of this move. According to Queensland Health’s March quarterly service report, right now in Queensland there are just over 36,000 people on waiting lists and a further 159,000 people waiting to get on the waiting list. And this government thinks it economically prudent, socially right and medically the best thing to do to raise a surcharge and push more people onto public hospitals! How much bigger does this government want the waiting list, and the list of people waiting to get on the waiting list, to grow? There are 36,000 waiting and 159,000 people in Queensland waiting just to get on the waiting list—and this government brings forward legislation such as this. It would be ludicrous—it would just be absolutely funny—if what they were trying to do were not so tragic.

Leaked Queensland Health data on Queensland’s biggest emergency departments show the number of sick people waiting more than eight hours in the Queensland government’s emergency queues to get a hospital bed has doubled in the last five years, all under a Labor government’s watch. I can only assume Labor is proud. ‘Access block’ is the term that describes the delay that patients who need to be admitted to hospital experience in the emergency departments when their in-patient bed is not available. Queensland Health access block data count the number of seriously ill people who wait eight hours or more in the emergency department or outside on an ambulance trolley for a hospital bed.

The Australasian College for Emergency Medicine likens the growing emergency department crisis to the national road toll, with recent studies showing a 20 to 30 per cent excess mortality rate caused by access block and emergency department overcrowding—about 1½ thousand deaths per year, at 2003 levels of access block. The Gold Coast emergency department is one of those at crisis point, with 27 per cent of emergency department patients caught in access block in 2003-04, growing to 44 per cent in the 2007-08 financial year. The Rudd government wants to send more Australians to the Gold Coast emergency department, where 44 per cent of the people who walk, crawl or are carried through those emergency department doors are either laying on trolleys or stretchers in the emergency department or in ambulances outside. The Australasian College for Emergency Medicine says that if you are access blocked, if you are lying on stretchers and trolleys, you have a 20 to 30 per cent higher chance of dying.

Despite those facts, which are appalling in their own right, this government wants to send over half a million people, 770,000 more episodes of care, into that already strained and overcrowded public hospital system. Is this a joke? Are you absolutely kidding the Australian people? How can you possibly look at those statistics and say, ‘You know what; it makes sense to put more people into those emergency departments, even though 44 per cent are waiting over eight hours or more and those 44 per cent of people have a 20 to 30 per cent chance of dying because of it’? You think it is wise to increase the number of people in that situation?

The major cause of access block and emergency department overcrowding is a lack of available hospital beds. This is because there has been a decrease in the number of real hospital beds in Queensland in the last decade, despite a major increase in population and clearly lots and lots of advertising. When the Beattie government took control of the state’s public hospital system in 1997-98, there were 10,809 hospital beds in Queensland. Ten years later, in 2008-09, the Queensland budget shows there are 10,234 hospital beds—575 less. The embattled Minister for Health, Stephen Robertson, has since revealed that, of those 10,234 hospital beds, 1,370, or about 14 per cent, are not actually beds. They are chairs, trolleys, cots, stretchers and lounge suites. In 10 years the Labor state government have done an extraordinary thing: they have reduced the number of hospital beds by 700; they have made 14 per cent of them chairs, trolleys, cots, stretchers and lounge suites; and they have made 44 per cent of people going to the emergency department at the Gold Coast Hospital wait for eight hours or more on a trolley or cot or in an ambulance.

According to the Australasian College of Emergency Medicine, those 44 per cent of people have a 20 to 30 per cent greater chance of mortality, of dying, because of the situation they are put in, which is because of what Labor have done in the hospitals. This is the report card. This is the legacy. This is what the Queensland state Labor government have achieved in a decade. And their colleagues in power, the federal Labor government, want to push up to half a million Australians across the nation, and just under 100,000 Queenslanders, into that system with this bit of legislation. That is a legacy this government will not live down in a hurry.

Queensland Health nonsense does not stop there. A constituent recently let me know that she is trying to salary-sacrifice as a casual employee of Queensland Health. She is over 65 and wants to salary-sacrifice into super to take advantage of the tax benefits. Under the current Queensland Health ruling, you have to have been a casual on regular hours for 12 months before you can do this. The lady in question is a health professional, a mammographer, who sought to come out of retirement as an independent retiree—with no source of income from the government—because she is deeply concerned about the health of Gold Coast women and wants to assist them with her skills as a mammographer. Yet Queensland Health has told her: ‘We’re sorry—you can come, but as a casual you can’t salary-sacrifice into super. We know it’s not worth your while, but that’s just the way it is.’ There is a chronic shortage of professionals in Queensland Health and this is what constituents are told.

Queensland Health is a joke turning into an aberration turning into 10 years of dreadful policy failure. Notwithstanding that and the issues in the public system, the government are seeking to move legislation that will force many more Queenslanders into that ailing public system simply because they as a Labor government dislike private health insurance and because the Prime Minister wants to claim a mantle of economic conservatism and so has driven a whole range of tax increases and cuts to effect that. I do not think the people of Queensland or indeed the people of this nation should have to suffer in an overcrowded public health system because of the arrogance of the Prime Minister and his desperate desire to rid himself of the horror of the past Keating government and its economic excesses to try and claim what is a hollow mantle. The legislation is not supported. It should not gain passage through the houses. It should be deplored by all.

Steve Gibbons (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

We are debating this Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008 at a time of unprecedented turmoil in the world’s financial markets. I think it is worth spending a little time looking at the current situation—the situation we find ourselves in. It just underscores why it is so important that this legislation be passed not only by this House but also by the Senate, and why it is so bewildering that those opposite in the Senate are going to oppose it.

After a lifetime of slavish devotion to the invisible hand of the free market by the parties opposite, it is fascinating to watch them as the enormity of current events starts to sink in. Deregulation and unfettered free markets are delivering just what they always have in the past: chaos, concern and uncertainty for ordinary working people. Time and time again in our history, free markets have been found wanting. Time and time again the private sector has demonstrated that it cannot be trusted to exercise moral and social responsibility, it cannot be trusted to regulate itself and control its own excesses and it cannot be trusted to operate in anyone’s best interest other than its own. And time and time again the private sector has had to be bailed out by government—by taxpayers—which of course means that they have to be bailed out by the ordinary working people of the world.

Extraordinary measures have been taken to bring stability to the financial markets. Banks have been nationalised around the world. Shotgun marriages have been arranged to rescue teetering institutions from oblivion. Things are so bad that the banks will not even lend to each other, and governments everywhere have to guarantee bank deposits and borrowings. And, even though Australia’s banking institutions remain sound, well capitalised and profitable, our government has been forced to guarantee our banks so that they can remain competitive in the global financial markets.

The world’s largest economy has been brought to its knees by unscrupulous and incompetent bankers whose freedom to lend money to people who could not afford to repay it and to take risks they could not manage was encouraged increasingly by deregulation. And the Liberal Party, under the extreme economic policies of John Howard and the member for Higgins, tried to take this country down the same path as their neoconservative heroes in the United States. Deregulation and privatisation were the answer for everything: for telecommunications and teaching, for railways and roads, for highways and health care. If it was possible to divert investment away from public assets and services and into the hands of the private sector, the Liberals and their agrarian socialist sidekicks would find a way. Even when the private sector could not remain in business, by delivering required services at an acceptable price, the coalition would not invest so that the public sector could fill the gap. No, the Howard-Costello answer was always to subsidise the private sector and claim that this would take the pressure off the public sector—the public sector that they continued to starve of funding.

Fortunately, this madness has come to a halt with the election of the Labor government. The Australian people are not stupid, and when John Howard forced through his unfair Work Choices legislation without an election mandate, voters said, ‘Enough is enough.’ They recognised that the coalition’s deregulation of the workplace was a step back to Victorian times. They did not believe the Howard government when it said, ‘All this regulation to protect workers’ basic conditions and rights is not necessary.’ They did not believe the Howard government when it said employers could be trusted to behave ethically and honestly. They did not believe the Howard government when it said the private sector would control the excesses of its more extreme members. And they were right.

We have already seen how that approach led to the current global financial meltdown and we are indeed lucky that the Australian people saw through the coalition when they did. Of course there are some members opposite who still do not accept the voters’ verdict. The shadow Treasurer, for example, still pines for the individual workplace agreements and the exclusion of trade unions from negotiating on behalf of ordinary working Australians. She was also one of the ministers who drove the Liberals’ free market philosophy into the education sector—a philosophy of subsidising the private sector and underfunding the public sector education system.

We saw the results of this in last week’s economic survey of Australia by the OECD. Its report said we spend less than those countries that invest the most in their education systems. The reading ability of Australian children dropped significantly between 2003 and 2006, and our underinvestment in preschool education was particularly highlighted. Only 42 per cent of children aged three to four are in formal education programs here, compared to 90 per cent of children in Belgium, France, Germany and New Zealand. Not only is this morally wrong but it makes no economic sense. As an advanced post-industrial economy Australia’s path to continued prosperity in the 21st century is critically dependent on the skills and education of its workforce. A decade of the Howard government’s education policies has put us behind and it will take Labor’s education revolution to get us back on track.

Labor is also fixing Australia’s public healthcare system after more than 10 years of underfunding by the Howard government. This includes the $10 billion fund to equip Australia’s health and hospital system for the future. This is the single biggest investment in health infrastructure ever made by an Australian government. It will fund investments in health and hospital facilities, medical technology and equipment, and major medical research facilities. Labor’s other healthcare commitments include up to $600 million to clear elective surgery waiting lists, $780 million for dental health and $275 million for GP superclinics—investments that are badly needed to rectify the Howard government’s neglect of the public healthcare system.

Nowhere is the Liberals’ slavish devotion to the private sector more obvious than with its Medicare levy surcharge. This was introduced as the demands of an increasingly ageing population were showing up the inadequacy of the Howard government’s funding of the public healthcare system. Instead of investing more in the public hospitals that they had been underfunding for years, the coalition’s answer was crass, ideologically driven legislation—legislation that was nothing more than a blatant attempt to force more people into private health care. In the eyes of the coalition, access to affordable health care is not a right to be enjoyed by all Australians; it is a privilege that has to be paid for. And, if you are earning less than the average wage and you cannot afford to buy your health care from the private sector, the coalition would hit you with an additional tax charge.

Of course, the spin was a bit different when the Medicare levy surcharge was introduced. The surcharge was meant to apply to high-income earners to encourage them to take out private health insurance. The rationale was that those who could afford to take out private health insurance should be encouraged to do so. The member for Higgins even said at the time that he hoped it was a tax no-one would ever have to pay. The only problem was that he and John Howard thought that someone earning just $50,000 a year, or a working couple earning $100,000 a year between them, were rich. Well, they were not rich then, and they certainly are not rich on those incomes today. The Liberals’ failure to index these thresholds when they were in government, and their refusal to support doing so now, brings into question whether they ever intended the surcharge to be a tax on only high-income earners in the first place.

Look at the massive increase in the numbers of people paying the surcharge since its introduction in July 1997. In its first year, 167,000 people paid the surcharge. By 2001, this had risen to 198,000. By 2003, 282,000 people were being slugged by the Howard government. By 2006, an incredible 465,000 people were swelling the government coffers. Almost three times the number of people that were originally targeted are now paying this Howard government tax on the lower paid. It is incomprehensible that the Liberal Party continues to support slugging working families with a tax that it claims was only ever meant to apply to high-income earners.

The government announced in this year’s budget that it would raise the Medicare levy surcharge thresholds from $50,000 for individuals and $100,000 for couples and families to $100,000 and $150,000 respectively. The government estimates that this would have taken some 455,000 working Australians out of this Liberal tax trap, but the ideological intransigence of those opposite and their traditional willingness to use the Senate to block legitimate budget measures by the elected government means we are back here debating this issue for a second time. This new bill proposes an increase in the thresholds to $75,000 for individuals and $150,000 for couples and families. These thresholds will be indexed to wages growth in the future. This will provide tax relief to some 330,000 taxpayers, not as many as Labor would have liked, and those who will miss out on a tax cut can blame the opposition. It now ought to be inconceivable that the opposition will not support this bill. The surcharge is their own policy, after all. The threshold proposed in the current bill would effectively raise the surcharge to what it would have been had it been indexed from the start. There is considerable stakeholder support for the proposal. The Australian Private Hospitals Association recommends thresholds of $76,000 and $152,000 with indexing thereafter. Access Economics has told the Australian Medical Association that thresholds of $70,000 and $140,000 respectively would restore the system to its original levels in real terms.

Then there is the issue of individual choice, a philosophy that the Liberal Party claim as their own. They certainly did not give lower income taxpayers any choice when they introduced the surcharge. Low-income taxpayers had no choice about whether to take out private health insurance or not. ‘If you won’t pay up to our mates in the private health sector, we’ll hit you with another tax,’ the Liberals said. It sounds to me more like one of those offers from Don Corleone that you cannot really refuse. High taxes and no choice is what the coalition parties really stand for. Labor is the party of choice and low taxes. It is Labor that will give working families a real choice about whether they wish to take out private health insurance and Labor will not tax them if they cannot afford to.

Working families were doing it tough under the coalition. The cost of mortgages and rents spiralled as John Howard’s reckless spending policies drove up inflation and alarmed even his own Treasurer. The prices of groceries, petrol, education and health care all rocketed under the Liberals, and now the Liberals continue to block tax cuts for working Australians by not passing budget measures in the Senate. It is incomprehensible that the Liberal Party remains opposed to putting $600 in the pocket of someone earning $60,000 a year who is currently forced to pay the Medicare levy surcharge.

The global financial turmoil that I spoke about earlier will inevitably have an impact on this country. While we are better placed than some other countries to ride out the coming storm, there is bound to be economic uncertainty for some considerable time to come. This is even more reason to give low-income working Australians a financial buffer in the form of this tax cut. It is always possible that the Liberal Party will continue to oppose any tax cuts for the lower paid, because this is the party that for 11 years was the highest taxing government in Australia’s history. This is the party that is now desperately trying to reform itself and its policy platform to have at least some relevance to the needs and aspirations of Australians in the 21st century. This is a major undertaking; it will no doubt take some time before the warring factions on the Right can reach some common ground.

We all remember the revolving door to the Leader of the Opposition’s office during the 1980s, and it is spinning just as quickly two decades later. In less than a year on the opposition benches, the coalition has already seen two leaders, and there is always the menacing shadow of the member for Higgins stalking the back bench. But, while the Liberals try to get their act together, there is absolutely no justification for them preventing this Labor government, duly elected with an overwhelming mandate, implementing its program of help and support for working families, particularly in light of the worsening economic outlook.

Tony Abbott (Warringah, Liberal Party, Shadow Minister for Families, Housing, Community Services and Indigenous Affairs) Share this | Link to this | Hansard source

Mr Deputy Speaker, I take a point of order on relevance: this has nothing to do with the legislation that is currently before the House and I think the member should be asked to bring his remarks back to the legislation.

Arch Bevis (Brisbane, Australian Labor Party) Share this | Link to this | Hansard source

Whilst I have some sympathy for the point made by the member for Warringah, I recall listening to the last eight or 10 minutes of the contribution from the member for Fadden, where there were about 90 seconds that could be said to be relevant to the bill. Most of it was about the Queensland health system. There has been a fairly broad-ranging debate. That said, I encourage the member for Bendigo to bring himself closer to the parameters of the debate.

Steve Gibbons (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

I certainly will. It is completely unconscionable for the opposition to keep working Australians from receiving this modest but welcome tax cut. This new Medicare levy surcharge bill is sensible, reasonable and responsible. I strongly support the bill and I call on those opposite to do so without amendment both in this House and in the Senate.

Margaret May (McPherson, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

The Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008 is the second bill the government has introduced to seek to increase the Medicare levy surcharge thresholds for individuals and for families. The coalition opposed the initial proposed changes to the Medicare levy surcharge threshold and we will be opposing this second attempt at the bill to increase the Medicare levy surcharge thresholds on taxable annual income. Let us be clear about this: the Senate voted down the government’s first bill of proposed Medicare levy surcharge changes on 24 September because it would have hurt the most vulnerable in the community, forcing up private health insurance premiums and blowing out public hospital waiting lists.

The legislation is fundamentally flawed. This second bill, amended slightly with higher income thresholds, will still adversely affect older Australians—those people on fixed incomes, those who are in most need of a robust health system. This bill proposes that singles earning up to $75,000 per annum and couples earning up to $150,000 per annum will be able to opt out of private health cover without incurring the Medicare levy surcharge. These changes will see people drop out of private health insurance in vast numbers, leading to higher premiums and increased usage of our public health system—a public health system that is already straining and already not delivering. The bill we are debating affects an already stretched public health system, as I have said. It fails the Australian public now. It is going to continue to fail all Australians if this bill is passed through this House because the public health system will not be able to cope with the increased numbers of Australians on those public waiting lists.

We already have ineffective state Labor governments demanding a federal bailout of their failing health systems. Yet the Prime Minister, the man who promised to end the blame game, is pursuing legislation that will hit the public health system hard, increasing waiting lists. People will have to wait for surgery. In time I have no doubt that, stretched to the limit, we are going to see a compromise in the type of health care and the levels of health care that are delivered to all Australians. The budget papers reveal an expected saving in 2008-09 in reduced expenditure on the private health insurance rebate. Make no mistake about it, this bill is not about a tax cut for battling Australians; it is about saving dollars for the Rudd government.

Private health insurance participation levels under the Howard government rose to 44.7 per cent as a result of three initiatives designed to work together: the 30 per cent rebate, Lifetime Health Cover and the Medicare levy surcharge. In August this year the Private Health Insurance Administration Council released figures showing a record 10.9 million Australians held private health insurance. These figures demonstrate that people want choice when it comes to health care. In contrast, this bill translates to a reduction in private health insurance participation of close to 600,000 people, on government estimates. Access Economics estimates that by 2012, even with revised thresholds, up to one million people will leave private health insurance or not take it out. Further, Treasury has revealed that it expects around 57,000 Australians aged 65 or over will drop their private health insurance. What these figures translate to in real terms is more hardship for our older Australians. Those people on fixed incomes, our pensioners and self-funded retirees, will be the hardest hit, and these are the people who need to keep their private health insurance. Is this the legislation legacy the Rudd government is aiming for—to leave pensioners in the lurch when they need it the most?

Cost of living pressures are biting hard for pensioners, and with so many expected to drop private health insurance it is only a matter of time before premiums rise for the older Australians who do retain their cover. Older Australians are the biggest claimants on private health insurance and often they keep private health cover while forgoing other spending to ensure they will not be on public hospital waiting lists for long periods of time. If premiums increase—and they are predicted to rise by up to 10 per cent—due to a decrease in private health insurance membership then those on fixed incomes may be forced to give up their private health cover, causing a real crisis in public health in Australia. The comfort and security that elderly and chronically ill Australians had through affordable health insurance is at serious risk with the introduction of this bill.

The Rudd government has made it abundantly clear that it does not care for the welfare of older Australians. It has sidelined and ignored them since winning office last year, and this latest abandonment cannot be allowed to go unchallenged. This bill in no way assists older Australians, self-funded retirees, carers and families on low incomes. In reality it is a hazardous measure, as it undermines the health and security of people on fixed incomes, particularly older Australians—those Australians who need health care the most. These people will have to make a choice between the increased cost of private health insurance or sitting on a long public hospital waiting list. Unfortunately, the stretched budgets of Australian families will win out in many homes, as Australians on fixed incomes need to maintain a measure of modest living standards and the cost of increased premiums will in many cases price them out of the market.

I strongly oppose this bill. It is backwards policy and an added burden on a public health system that is already on its knees. The Prime Minister promised to end the blame game, so I cannot understand his logic in putting further pressure on the struggling public health system, on our public hospitals. I would be very surprised if there were one state health minister in this country who supported the initiatives in this bill. Australia is facing considerable challenges with its ageing population. Rather than implementing policy that will help meet those challenges, this measure jeopardises the health and wellbeing of older Australians, Australians on low incomes, those on fixed incomes, self-funded retirees and pensioners. The changes will see a reduction in revenue of around $660 million but a government expenditure saving of $960 million, as it will not have to pay the 30 per cent rebate. Overall this will result in a saving of $300 million.

Does the Rudd government really want to penny pinch on legislation that affects those with the least amount of disposable income? In the current financial climate older Australians need the government’s support more than ever. No matter how the Rudd government tries to spin this one, it is older Australians who will ultimately suffer. If they stay in private health insurance then they will face increased premiums and if they drop out then they will face long public hospital waiting lists. Older Australians deserve better. I challenge this government to think hard about what they will do to support those on fixed incomes, who are struggling to meet rising costs of living and the rising cost of groceries and who now will also be worried about their health and wellbeing. There was no mandate for this legislation at the last election. In fact, the Prime Minister did not share his legislation with the Australian public before going to the election last year. He does not have a mandate to introduce this legislation, and those of us on this side of the House will be opposing the legislation for the same reasons we did the first time.

Damian Hale (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to make my contribution to this debate on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. The Medicare levy surcharge is a one per cent increase on top of the Medicare levy for individuals and families who do not have private hospital cover. The thresholds are currently set at $50,000 for individuals and $100,000 for couples and families. This bill will increase the thresholds to $75,000 for individuals and $150,000 for couples and families. Importantly, it will also index these thresholds against wages growth in the future. It is a vital bill because, among other things, it will deliver tax relief for working families struggling with household budgets.

As has been stated before, the surcharge was initially introduced to encourage high-income earners to take out insurance. The former Treasurer, the member for Higgins, said at the time of its introduction:

… higher income earners who can afford to take out private health insurance will also be encouraged to do so.

…            …            …

This is the levy which the Government hopes no-one will pay. It is entirely optional. Those who take out health insurance (with the benefits attached) will be exempt.

But, of course, the passing of time has made it very clear that the member for Higgins’s wish was rather more like wishful thinking. We know many hundreds of thousands of people now pay the surcharge. Those opposite never bothered to change the thresholds. That means more and more low- to middle-income earners are being forced to make the choice between a tax that was meant for high-income earners or private health insurance that in many cases they cannot afford.

We on this side of the House want this to change. The hardworking people in my electorate of Solomon deserve this. I listen to the people of Solomon and, believe me, they are doing it tough and any relief is going to be welcome. In fact, the other day I was talking to a family about this particular issue. Let me recount their story. They are a hardworking husband and wife with a couple of teenage kids living in the northern suburbs of Darwin. They do not live in a mansion and they certainly do not drive flash cars. I suppose you could say that they are doing okay. They are buying their home and paying their mortgage on time. They work hard for everything they get. Maybe once a month they get to go to the cinema with the kids. Occasionally they get to go to a restaurant as a family. The kids play a few different sports—and, having five children myself, I know there are lot of costs involved: paying for registration fees, uniforms, equipment and the like. They catch up with their friends and mates for a barbecue and they have a few drinks. These guys are living from pay to pay. They do not have heaps of money to splash around—and let me tell you they are definitely not worried about stocks and shares at the moment, because they do not have any. These guys pay their mortgage, feed and clothe their kids, go to work, put fuel in the car and pay their bills: their rates, electricity, phone, car rego and the like. As I said, they occasionally get to do a few things like going to the movies or a restaurant. Things get pretty tight, so every so often they take out ‘time to pay’ arrangements until they get through the fortnight to the next payday. I asked them how much they were earning. Dad is on $65,000 a year and mum is on $43,000 a year. My maths tell me that is $108,000. That means that under the current threshold they will be paying the Medicare levy surcharge.

Let me start with the current change the government is pursuing, which is proving controversial in the Senate. I am sure you have all been following the Medicare levy surcharge debate attentively, so I would like to set out some clear points about the government’s position in case you have not gleaned these from the at times rowdy debate. We in the government are committed to providing both real choice in health care and support for people who choose to take out private health insurance. We are also strongly committed to providing tax relief to working families, something which we will continue to pursue now and in the future.

We all know that the surcharge was initially introduced to encourage high-income earners to take out insurance, and I have a few quotes on a couple of issues in support of helping people with cuts to tax. The Leader of the Opposition, in his first press conference as leader, said:

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.

Well, now he has his first test of whether he wants to help and whether he really understands what some people in our community are going through at the moment and that they are doing it tough. He has an opportunity to show leadership and make sure that the people who are affected by this threshold have some tax relief. That is certainly in his hands as the Leader of the Opposition. He has an opportunity to stand up on this.

There have been other people who have come forward in support of changes to the threshold. Tasmanian Liberal Senator Richard Colbeck said:

If they are talking about indexation, and that is the intent of the government, then indexation of this measure would have put the threshold at about $75,000 to $76,000.

West Australian Liberal Senator Mathias Cormann, the current shadow parliamentary secretary for health administration, said:

… would it be more appropriate, instead of doubling it and probably overshooting the mark, to look at what the figure would be if it had been indexed? I am talking about approximately $75,000 per annum.

The Australian Private Hospitals Association has recommended thresholds of $76,000 and $152,000. Access Economics, in a report to the AMA, said that thresholds of $70,000 and $140,000 ‘would have restored the system to previous real levels, if this was the goal’. Terry Barnes, the former senior adviser to the former health minister, the member for Warringah, suggested that thresholds of around $80,000 and $160,000 would be appropriate.

So, they are the thoughts out there. We have listened to concerns from both sides of politics and from the cross benches in the Senate and amended this bill by appropriately bringing it back to $75,000. Those opposite have a perfect opportunity now to get out of the way and to give real tax relief to working families. This is not about destroying private health insurance companies. I am a member of one—a proud member of a private health insurance company. This is not about that; this is about bringing fairness back into the system and it is about looking after working families and giving them some tax relief at the time that they do their tax. If the previous government had bothered to change the thresholds, more and more low- and middle-income earners would not now be forced to make a choice between paying a tax that was meant for high-income earners or taking out private health insurance. As I said, we want to change this.

We announced in the budget that we would seek the threshold to be $100,000 for singles and $150,000 for couples and families. This would provide immediate relief to thousands of people paying the tax. We have listened closely, as I have said, to the concerns that have been raised about the threshold and accordingly put forward a revised proposal. This is about being a good government. This is about listening to the people and the experts and listening to those opposite and coming up with what is best for the Australian public. It really becomes tiresome that we continue to have health kicked around as a political football when we have an opportunity right now for bipartisan leadership on health to fix the health problems that we have in this country. So we have changed. We have been able to find a compromise and to come back and push this again.

The Leader of the Opposition, in his first statement as the Leader of the Opposition, talked about families doing it tough, about his own start in life and how he did it tough and did not always have money, about how he has worked hard to get where he is and that he knows the community is doing it tough. He has an opportunity now to show some real leadership and to come in and help working families by giving this bill passage through the Senate. Consider this: in 1997-98 around eight per cent of all single taxpayers had incomes exceeding $50,000. It is projected that in 2008-09 around 36 per cent of all single taxpayers will have an income exceeding $50,000. Under the new proposed changes, around 14 per cent of all single taxpayers will have an income exceeding $75,000. About 330,000 Australians will get immediate tax relief due to our policy change. A couple earning $60,000 each could save $1,200 a year.

I do not subscribe to the view that these adjustments to the thresholds to keep them relevant will put an end to private health insurance as we know it. Private health insurance consumers will still be able to claim a 30 to 40 per cent rebate, and the lifelong health cover incentives will remain in place. The data show that it was these measures, and in particular Lifetime Health Cover, that encouraged the current high rates of membership. Private health insurance membership levels did not improve following the introduction of the MLS and in fact continued to decline from 31.9 per cent to 30.2 per cent. It was only following the introduction of the rebate in 1999 and the Lifetime Health Cover in 2000 that coverage increased to 32 per cent in 1999 and 43 per cent in 2000. Coverage has stabilised at the level it currently stands—44.7 per cent. Surprisingly, these statistics have not been lost on the debate.

But the real point is that the industry will best succeed if their members want to keep their policies because of the belief that health insurance is good value, that they are getting something worth while from the premiums they pay, not because of these government interventions. I am sure you would agree that the industry should have more than a tax penalty as the main driver for taking out insurance. This is especially the case for an industry that has built so much of its marketing on choice—choice of doctors, choice of hospital room, choice of product. The key surely is to provide a good product that people want and that is affordable.

At the COAG meeting in March this year the Prime Minister along with all the state and territory leaders announced that the Rudd Labor government would relieve pressure on our public hospitals. Unlike those opposite, we are taking real action. That is why we have provided $1 billion in additional funding for our public hospitals. Do you know why we had to do that? There is a lot of debate about this. It was absolutely necessary because those opposite did cut $1 billion from hospitals when they were in government. Our government is absolutely committed to delivering on election promises. Our budget initiatives demonstrate this and this bill definitely demonstrates it. It is about delivering healthcare improvements for the people of Australia. After a decade of funding cuts and neglect we are committed to working with the states and territories to fix our hospitals and deliver health care for the working families of this country.

The people of Australia, particularly the people in my electorate of Solomon, suffered as a result of the previous government’s neglect and underfunding of Australians’ health care. That is why this piece of legislation is not only good for Australians; it is absolutely essential. Those opposite had 11 years of being in the perfect position to work with the states and territories to improve the lives of Australians but the best game plan they could come up with was perfecting the blame game.

There is much work to be done in health. We have a health system that has been neglected, but the Rudd Labor government has made a strong start, and we intend to continue for the long haul. All Australians, and especially the good people of Solomon, expect the blame game to end and expect the government to take control of health and improve it. This will form part of the package to do so by addressing the Medicare levy surcharge.

I will touch very quickly on the legacy left behind. It includes the $1 billion worth of cuts, 650,000 Australians on public dental care waiting lists, a nationwide shortage of almost 6,000 nurses and a nationwide doctor shortage which affects 60 per cent of the population. There were 2,300 older Australians languishing in hospital beds every night when they should have had access to aged-care homes. The gap in Indigenous life expectancy has blown out to 17 years. A tiny fraction of Commonwealth health spending, 2.2 per cent, was actually invested in health promotion and prevention.

The facts and figures do not lie, and they add up to the fact that, as a country, we need to address a raft of issues to do with health, from elective surgery to the Medicare threshold. I think people have really had enough of listening to parties argue and use health as a political football across this chamber. I will just go back once again and remind the Leader of the Opposition, who has come out and said that he wants to support working families—he has done it tough in his life previously—that he has the perfect opportunity now to tell his senators to let this bill pass through, and to give tax relief to working families in this country. I commend the bill to the House.

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

I rise to discuss the issues contained within the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. There are many questions as to how we have actually come to this position and about the changes from the initial policy proposal. In doing so, I say to the member for Solomon that, when research has been conducted, one might have a look at what the former coalition government inherited from the former Labor government and see that there was a marked improvement in aged-care beds, there was a marked improvement in the number of doctors and there was a marked improvement in the numbers of nurses’ places made available. To just give a set of figures that does not truly reflect growth and truly reflect action taken is quite mischievous and quite misleading in the House.

I rise to talk on this issue this evening because we have gone from an initial policy proposal where the singles threshold level would have been raised from $50,000 to $100,000 and the couples threshold level would be raised from $100,000 to $150,000. When we went to the election last year, there was no actual demonstrated policy from the Labor party that they were planning to change these threshold levels. They failed to inform people that this is what they were planning. In fact, they had decided to make these changes. It appears, when we listen to the speakers, that changes are being made in the interest of working families and in the interest of the Australian taxpayers. In fact, the government knows that it is actually going to have a windfall gain out of this policy. The government themselves have predicted the numbers of people who will leave their private health insurance. Therefore, they will not require the 30 per cent rebate and, therefore, the government will not be paying out the 30 per cent rebate and there will be a massive saving to the government.

Is that massive saving being put into relieving the hardship of the working families that many of the opposite side talk about or relieving the plight of older Australians, who, might I say, are the biggest claimants on private health insurance? Many older Australians have kept their private health insurance because they see, particularly in New South Wales, the disgraceful demise of public health. They are not game to drop their medical benefits. They are not game to drop their private health insurance. In fact, I had a lady in my office last week who gave me a sincere and disturbing account of her experiences as a pensioner within a public hospital system that cared little about the problems that she was experiencing with her health, which is why she feels she must keep her health insurance above and beyond any other thing that she pays out for.

We have had this disgraceful demise in New South Wales at the hands of a Labor government. I do not think anybody could deny that what is happening in health in New South Wales is just unacceptable. My concern is that we have older Australians, who are the biggest claimants, and working families doing it tough. In fact, they will do it even tougher. The more people who drop out of health insurance, of course, the fewer people there are to bear the cost of private health. I suggest that, if anything meaningful is to come out of this, there should be added incentives, over and above the 30 per cent rebate, for those people, particularly older Australians, who have kept their private health insurance.

What we have is a mishmash and a hotchpotch of ideas. We have an Independent senator, Steve Fielding, who has argued in the upper house for extra assistance to deal with premium price increases and for an increase from the 30 per cent rebate to a 35 per cent rebate. We have another Independent senator, Nick Xenophon, who has argued for lowered thresholds—around $67,000 for singles and $134,000 for couples—and for the thresholds to be indexed. So we have a toss-up between two proposals. I do not understand on what basis these changes were made and what formula was used to determine the changes and to say, ‘Okay, we’ll move from our initial policy proposal of moving from $50,000 to $100,000 for singles and from $100,000 to $150,000 for couples and we’ll have a revised threshold of $75,000 for singles and $150,000 for couples, which would be indexed.’ That seems to be trying to make deals on the side. If we are going to have an all-in discussion as to exactly what might be of benefit, I would like to put my two cents worth in as well and ask why the government would not offer some relief to those older Australians having no gap—‘Stay in your health insurance and we’ll guarantee you no gap with the money that we are saving from all of those people who are going to drop out of their private health insurance.’

We know, because the government themselves predict, that there will be about 583,000 people who will drop their private health insurance. They have revised that down from 644,000, of course, because they have reduced that threshold to $75,000 for singles. Even with the revised levels, though, Access Economics estimates that by 2012 over one million Australians will have dropped their insurance or not taken health insurance out. Access Economics also predicts that, with thresholds set at $75,000 and $150,000 for singles and couples respectively, by 2012 over 770,000 episodes will have shifted from the private system to the public system—a massive extra burden.

I am speaking about this bill because of my concern as to how my electorate in the Riverina will cope with this additional pressure on the Wagga Wagga Base Hospital. I appeal to the government and the minister to ensure support for places like Wagga Wagga in particular and Griffith, which need additional facilities. In 1970 there was a sod turned for a new hospital in Wagga Wagga and here we are in 2008 and there has still been no move to construct that new Wagga Wagga Base Hospital. Let me explain what the problem is and why I am so concerned about this exodus of people back into the public system. We had Griffith Base Hospital and we had Wagga Wagga Base Hospital—we had a hospital in most towns. Then it was determined that Griffith would be downgraded basically to a local hospital and that Wagga Wagga would be made the base hospital—the regional referral centre. Was one dollar put into the Wagga Wagga Base Hospital for it to become a regional referral centre? No. What happened was that two-bed wards were made into four-bed wards and four-bed wards were made into eight-bed wards. Women and men share the same shower and toilet facilities—absolutely unacceptable! The children’s ward is eaten out with white ants, to the point that there is almost more danger for your child in the children’s ward than from their illness as a result of the white ant infestation and the fact that it could collapse because it sits out in a wing and is a filled-in veranda area.

We have a calamity, a catastrophe, that saw thousands of people rally in the streets of Wagga Wagga. They came from all over the region to implore the former Minister for Health in the New South Wales state government, Reba Meagher, to commit to building a new Wagga Wagga base hospital. We were tired of the false promises and the let-downs. I might add that coalition governments before did the same thing to Wagga Wagga Base Hospital, but over the last 13 years it has been unbelievable to see what has taken place. The referrals that have taken place in Wagga Wagga Base Hospital have been extraordinary. The staff do a magnificent job under the most trying of circumstances. You could not ask for better staff, but under what conditions do they work? Even on the day when the former health minister, Reba Meagher, was coming into Wagga Wagga to have a look at Wagga Wagga Base Hospital, the Greater Southern Area Health Service had to clean up an operating theatre that had been deluged by a small fall of rain—one of the very few that we have received in the last seven years—which absolutely filled up the operating theatres. Our operating theatre times have been cut back. Everything has been reduced. We have one private hospital that has been trying to manage the whole of the private health insurance industry in the electorate. That is Calvary, and they are doing a significantly good job.

We had a promise and a commitment by the former health minister, Reba Meagher, that the new Wagga Wagga base hospital would be built. Then blackmail took place in the most disgraceful way. We were told by the health minister that the coalition, having not supported the privatisation of electricity under former Premier Iemma with his and Costa’s bold plan to privatise electricity in New South Wales, which was not supported by their own party or their unions and which would have seen members of their own party, for once, crossing the floor to vote against it—and funding for the Wagga Wagga Base Hospital was linked to the privatisation of electricity. That was a lie. The former minister, Reba Meagher, should stand condemned for lying to the people, because at no time was that new hospital linked to any electricity privatisation. It was a disgraceful lie.

I am very concerned about the legislation currently before us in the House. With the initial legislation we would have had a reduction in government expenditure by it not paying the 30 per cent rebate of $959 million. There would have been a reduction in revenue of $660 million, but the government saving would have been $299 million. There has been no breakdown of the expenditure and the revenue provided to us for this legislation, but there seems to us to be a government saving of around $354 million. We have heard a lot from the government side of the House about all the money that the Commonwealth is putting into the hospital system to support the mass exodus into it. It is a load of codswallop. During the Senate Standing Committee on Economics inquiry into the bill, the Western Australian government stated that people dropping insurance would lead to higher hospital operating costs in the magnitude of over $50 million per year in Western Australia alone—one state. Imagine what it is going to equate to in states like New South Wales. It is quite extraordinary.

It is a fact that the government really offered no compensation to the public hospitals and did not conduct any exercise to determine just what the spin-off and the effect of this legislation would be. They are clearly going to let this just play itself out and then blame the states because hospitals are the states’ problem. They are not a federal problem. Everybody is told that hospitals are the states’ problem, so it is easy. We hear about stopping the blame game. Gosh, it is all you hear about in this House on a continual basis, yet all you hear is blame, blame, blame. What will in fact happen is that I will be told in the House, by the Minister for Health and Ageing or by the Prime Minister, about the impact of this legislation on my electorate, particularly on the public hospital system and how it cannot cope with the added people who have presented to them as a result of dropping their health insurance, and that it is a state issue. Hospitals are a state issue. We will see where the blame game really starts and finishes when this takes place.

As I have said, I think that something meaningful should come out of any change to health insurance. People who are paying health insurance should get incentives. They get their 30 per cent rebate. That was put in place by the former government and has had an enormous outcome. We have seen an increase of 10 per cent of people participating in health insurance. There were a suite of incentives offered by the former government to encourage people to take out health insurance: Lifetime Health Cover, a 30 per cent rebate et cetera. If we are going to make changes, let us make a change so that those people who pay for private health insurance, particularly those older Australians who make the most claims on their private health insurance, will have no gap payments. Give them back the money that the government will save from the people who will exodus from private health insurance. Provide that no gap.

It seems to me to be such an anomaly. I listen to people who come and ask: ‘Why is it that we pay such significant private health insurance and we get a 30 per cent rebate but, when we use it, it costs us so much money? It can cost us thousands and thousands in gaps. But if we had the same procedure in the public hospital system and loaded the public hospital system up, even if it were an emergency procedure, it would cost us nothing.’ It is a valid question and a valid concern for people. So let us start to ease the burden. Let us start to look after a particular part of our community to begin with—older Australians. If the government is not going to provide the $30 a week rise in the pension then the minister should seriously consider having a no-gap policy and providing the savings to older Australians who are paying health insurance and using the private health insurance system. They should not have a gap. If anything is to come out of this legislation, let that be one of the good results.

If everyone is forced back into the public health system in my electorate, it simply will not cope. I urge and plead with the minister to get involved in the rebuilding of the Wagga Wagga Base Hospital to ensure that the people of the Riverina are able to get access to health care of the quality that they should enjoy—the same as any city person would.

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to 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.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

What about compulsory unionism?

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

That has long gone by the board. We are the party and the champions of real choice now, I say to the shadow minister at the table. The reality is that people, especially in the current economic times, are in a position where it is very difficult for them to sustain their private health insurance. At any point in time when private health insurance premiums go up I can guarantee that my phone will run hot. People are really annoyed that they are forced to take out private health insurance. They do not feel that they are getting a quality product; they do not feel that they are getting value for money. They cannot vote with their feet by pulling out of it, because the government has set it up so that they are stuck with the requirement to have private health insurance.

The private health insurance industry in this country is a pretty good one. It is pretty competitive. There is room for improvement. One of the best ways to keep them on their toes and provide a good service is not to have a captured market but to require them to go out and seek a market and ensure that people see that it is valuable, and they keep their private health insurance because it is valuable to them, not because the government is waving a stick over their head to force them to do so.

By 2005-06 nearly 500,000 people were trapped in the tax trap set up in the original legislation. We want to abolish that trap. We want to give some tax relief to those families earning around $50,000—hardly a high income in today’s economy. We have listened to the concerns, the views and indeed the proposals not only of the industry more broadly and various lobby groups around this area but also of opposition members in the Senate and their contributions and suggestions.

We should acknowledge that Senator Fielding has today indicated that he will support the legislation. It is important to provide immediate relief to approximately 330,000 Australians, a significant number, at a time when they most need it. We heard, from the member for Solomon earlier, that the new Leader of the Opposition has said that he is there to go into battle for working families. Here is one very simple and straightforward way to do that. We need to give people genuine choice and that is what we are attempting to do with this legislation.

I want to very briefly in my closing comments make the point that many members of the opposition have said that people will pull out of private health insurance, so the opposition, I assume, presume that the product is so appalling and so uncompetitive that people will not choose to stay simply because they are getting good service and value for their money. Instead you have to force them to stay in regardless of how bad the product or service might be. Their argument has by and large been that this will put massive pressure on the hospital system. Thank heavens there is now a federal government that for a start is not cutting money from the public hospital system, as has happened over the last 12 years, but is actually putting money back into providing training positions in universities for the staff needed for those systems.

At the end of the day, people should not be forced by the government into taking out private health insurance when they are on incomes that cannot sustain it. This legislation quite simply and purely corrects an anomaly. It is something that I would have certainly expected the Liberal Party to have argued for and I am surprised we are even having to debate the principles behind this legislation.

I commend the bill to the House. I commend Senator Fielding for acknowledging that the current economic situation means that the budget’s integrity has to take precedence and that he is therefore going to pass the government’s budget measures in the Senate. I think that is a responsible position to take. While I do not agree with many of his concerns about this bill, I do acknowledge his position and I commend the bill to the House.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

I want to speak against the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. I and many others spoke against the government’s initial Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2008, which attempted to increase the Medicare levy surcharge thresholds for individuals from $50,000 to $100,000 and for families from $100,000 to $150,000. This No. 2 tax law amendment bill proposes to lower the income threshold level to $75,000 for singles.

How can these amendments reduce financial pressures on working families? The government must realise that its proposed legislation is not wholly directed at working families. People who are currently in private health insurance also comprise single people both young and old. Low-income families and singles on incomes below the threshold levels would be adversely affected because they would not benefit from the tax cut but would face higher health insurance premiums as a result of fewer people taking out health insurance. Lower income families would simply fall out of the private health insurance market and have no alternative but to rely on the public health system.

A number of senior constituents in my electorate of Forrest have called me to discuss what the government’s proposed legislation would mean to their private health insurance premiums. They are most concerned when they understand the detail of the proposed legislation. It stands to reason that those who benefit least from health insurance will be the first to leave the system. They would be those with good health, the young and fit. Senior people can see the logic of why younger healthier people and also low-income families would withdraw from private health insurance, which would leave a smaller pool of older Australians reliant on their private health insurance. They can also see that ultimately premiums will drastically increase and they may no longer be able to afford the private health insurance that they have maintained to give them some level of surety so that, should they need medical treatment or hospitalisation in the ensuing years, they will be able to receive it and not have to wait in the never-ending queues for elective surgery as a public patient.

Pensioners cannot cope now with the higher cost of groceries, fuel and day-to-day living expenses. Most fear that they will not be able to afford to pay higher premiums for their private health insurance. If the government believes that this will help working families, how will it explain to working families in the future, once the family has pulled out of private medical insurance, why it is they cannot get the necessary medical treatment and why there are queues of public patients before them? This will ultimately put an unsustainable burden on our public hospital system—a system which is struggling to cope now.

What we do need to concentrate on is assisting in the improvement of medical services to all Australians, particularly in regional areas and areas where our communities are telling us that there is a problem. Mostly this relates to problems of shortages as in my electorate of Forrest, where we are certainly suffering from a shortage of doctors. We need to attract more doctors to regional areas and ensure that they remain in regional areas. To this end, a lot more work needs to be done to reform the formula used by both the federal and state governments in calculating the doctor-patient ratio and in determining state areas of unmet need and districts of workforce shortages.

As I am focused on representing the residents in my electorate of Forrest, I will not support the proposed bill because it is not in the interests of my constituents. The proposed amendments will not only affect those people who currently have health cover and wish to retain it but also affect those people who calculate that they do not need private health cover because they will not have to pay the Medicare levy surcharge. Ultimately, it will affect communities because of the shift to reliance on public hospital facilities. The Labor government suggests it will deliver tax relief to working families struggling with household budgets, meaning they will have more money left because they no longer need to pay for their private health insurance premiums. In reality, they will need more funds to pay for their health when in the future they need medical treatment either elective or emergency. The exodus of people from private health will create an enormous strain on our health system.

Western Australia, and in particular the south-west, is already facing shortages—not enough beds, delays, cancelled surgery and emergency departments of major hospitals not coping with demand. According to the Private Health Insurance Administration Council, the private health insurance hospital coverage rate in 2007 for Western Australia was 47.9 per cent. This was the highest in Australia in 2007, with the closest being New South Wales at 45 per cent. There has been a steady increase in the number of south-west residents taking up private health insurance, not only because of the incentive of the 30 per cent rebate but also due to the fact that people know the public health and hospital system is not working for them.

In January 2008 the Australian Health Insurance Association’s national survey of private health insurance funds in Australia reported that people in my electorate with private health insurance represented 56 per cent of voters. This again is higher than the national average of 44.7 per cent. There are many senior residents in my electorate who have raised their concerns with me that, if premiums increase by as much as 10 per cent, they will no longer be able to retain their private health insurance policies—and these are policies they have budgeted for and gone without luxuries for because they want to maintain private health insurance in their later years.

Some 44.7 per cent of the Australian population is now covered by private health insurance. In the 12 months to June 2008 the biggest growth of any age group to take out private health insurance was in the 25- to 29-year-olds—an increase of 53,000 people. If this policy is passed, up to one million people will drop their private health insurance and end up in our state health systems. Even with the expected younger age group exiting the private health system, the government has ignored advice from Treasury which predicts that about 57,000 Australians aged 65 and over will drop their private health insurance. The AMA has estimated that something like 700,000 to 800,000 Australians who are insured will drop out. The government itself admitted it did not take into account that many of these would be families and that children in those families would not be covered and would fall into the public paediatric hospitals.

What the government intends to save by not paying private health insurance rebates for all the people they predicted would drop out based on their change in the Medicare levy surcharge is minimal compared to what it will cost across Australia to support the states and territories in bailing out the public health system with the increases in demand the hospitals will face. State public hospitals cannot cope with the level of demand now. One of my constituents, Mr Murray Upson of Dalyellup, recently underwent a knee operation in Bunbury. It was not a good experience for him in hospital. He observed a chronic understaffing of nurses on the ward, leading to a very stressful time for staff and patients. During the night he had to wait three hours for painkillers, and when the overworked and stressed nurse finally came to him he felt even worse for taking her away from her other duties and actually apologised for being in pain.

This bill will cost government, it will cost households and it will cost our health system. When close to one million people both young and old drop out of private health insurance, they will fall into the public hospital system. The demand will increase, but it will also mean that the pool for private health insurance will become small and private health insurance premiums will go up. The AMA has predicted that premiums will need to increase by 10 per cent per annum, which will make it unaffordable for many Australians, and so the demand will increase. I do not support this bill.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

People in my electorate welcomed the tax relief delivered in the budget just recently, and I have to say the member for Cunningham made some very good points in her speech previously. I would like to say that the people in my electorate deserve tax relief, and that is why this government has delivered tax relief in this financial year and, through the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008, plans to deliver even more.

Starting on 1 July, those earning $40,000 per annum welcomed their extra $20.19 each week. Why wouldn’t they? When the childcare tax rebate increased from 30 per cent to 50 per cent, mothers were calling my electorate office saying, ‘What a wonderful move,’ and, ‘That was so much help.’ The baby bonus increased to $5,000 and a full tax credit was granted to petrol and diesel expenses, particularly for activities in commercial fishing and fish farming. This was good news and was very well received. I went up to Bowen in my electorate, to the Bowen Fishing Classic, where over 10,000 people attend for a long weekend to go fishing, and I can tell you they were very happy with some of the tax relief they have been getting.

People in my electorate of Dawson do not want budget measures blocked in the Senate. They do not want tax measures blocked that are going to save them money, put money in their pockets and help them put food on the table and petrol in the car. These are good policies that put money in the pockets of everyday working people and working families. They want the Liberals and the Nationals in the Senate to get out of the road, unblock the supply and pass these measures. My constituents do not expect or want the Senate to play politics and block key budget measures such as this. The Senate is the states house and senators should act in the best interests of the states they represent. Blocking budget measures is not the action of a responsible opposition. It proves that they are in no position to lead.

The member for Wentworth had a sterling opportunity to show real leadership and work for the national interest, not the Liberal Party’s interest, but he has absolutely and completely failed to do that on this issue. The member for Wentworth has failed in his first test as leader of his party to make things right in the Senate. If the member for Wentworth wants to show true leadership, he should give the command to the Senate: unblock the supply, pass these measures and give working families money in their pockets to put food on the table and petrol in the tank. That is what the people of this nation want. Is it his lack of leadership, his lack of judgement, or is it simply irresponsible? I tell you what: I will let the Australian people be the judge of that—and judge him they will.

The Liberals control the ultimate passage of this bill through the Senate, so the question of economic responsibility goes fairly and squarely back to them. I do, as the member for Cunningham has done, congratulate Senator Steve Fielding on his decision. He has shown pragmatism in the circumstances of the global economy and how that will affect everyday working people in this nation. The Prime Minister has called on the Liberals not to play short-term politics in the Senate, because the Senate is not the place for short-term politics.

In blocking tax relief for battlers, in unnecessarily taxing those on medium incomes, their flag is well and truly planted. What those on the opposite side truly believe is well and truly on show for all to see. The fact of the matter is that they have not changed. They paid no attention to what happened to them in the election in November last year. They were out of touch then and—guess what?—they are still out of touch now. They are not in touch with the everyday people of this nation, who are saying, ‘We want a government—the Labor Rudd government—to help us with our everyday expenses.’

Here is a measure that is going to do that directly and the Liberals and the Nationals in the Senate are deliberately blocking it. It is absolutely irresponsible. Those opposite should come clean and admit that the Liberal and National parties have denied working families a tax cut and are proud of it, plain and simple. That is a terrible place to be with the Australian people. They will not forget this. I again acknowledge Senator Steve Fielding, the Greens and Senator Nick Xenophon for the decisions that they are making.

We are reintroducing this bill because we want to deliver tax relief. We want to give a fair go to families on medium incomes. This bill will provide tax relief by adjusting the Medicare levy surcharge thresholds for individuals and families. The Medicare levy surcharge currently is a one per cent increase on top of the Medicare levy for individuals and families who do not have private hospital cover. The thresholds are currently set at $50,000 for individuals and $100,000 for couples and families. This bill will increase the thresholds to $75,000 for individuals and $150,000 for couples and families, and index these thresholds against wages growth into the future. That is a responsible thing for the government to do. That is a responsible thing for leaders to do. This is a responsible thing which any future leaders on the other side of this House need to take note of, and they need to get out of the way and stop blocking the supply.

This bill will deliver tax relief to working families struggling with household budgets. The truth is that since 1997, due to a failure to adjust the thresholds, the Medicare levy surcharge has become a tax trap that has caught more and more working families. This measure will deliver immediate tax relief to 330,000 Australians. For two average-income earners, each earning about $60,000, this will deliver a saving of $1,200 in its first year. Why is the opposition blocking this? Why is the opposition denying everyday working people the ability to have an extra $1,200 in their pay packet? Fifty thousand dollars is not a high income. It is certainly not a level to justify imposing a Medicare levy surcharge. Why would the Liberal and National parties be opposed to putting $500 in the pocket of someone earning a working salary of $50,000 who is forced to pay the Medicare levy surcharge right now? The Liberal and National parties continue to support slugging people in working families with a tax that was meant to apply only to high-income earners. The Liberals’ failure to adjust the thresholds when they were in government, and their stubborn refusal to support our proposal to do so now, brings into question whether they ever really intended it to be a tax that applied just to high-income earners in the first place.

We on this side of the House have delivered and want to continue to deliver tax relief to working families. Until now, those opposite have not. I hope the opposition will support the government’s Medicare levy surcharge bill and join with us in providing tax relief for hundreds of thousands of Australians. Remember: $1,200 a year may not be much to you but to the working families who are struggling it is a lot. I commend this bill to the House.

Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts) Share this | Link to this | Hansard source

I rise this evening to speak on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. I have to say how extraordinary it is to listen to the contributions of the members of the Rudd Labor government as they talk about savings, responsibility and a long-term vision. These are all very sound, very forthright principles that probably on first blush would be worthy of support. But there is an extraordinary reality when you actually dig into the detail about what Labor is proposing with the bill that is before the House. This is the second time that it has come before the House and that Labor has tried to institute these changes to the Medicare levy surcharge threshold.

I listened with great interest to the member for Dawson as he spoke about how this bill is fundamental to helping working families and to ensuring that those Australians have the opportunity for a tax saving. If in isolation all you listened to were those comments, you might think the member for Dawson had something constructive to say about providing income tax relief to Australian working families. If you did not know that this Labor government was imposing $20 billion of new taxes on the Australian people, you might think that there was some sincerity in the comments of the member for Dawson. But the reality is that those members opposite come to this debate with no sincerity and they are, for all intents and purposes, naked when it comes to this debate. The reason they are naked is the sheer hypocrisy we hear from members opposite when they talk about the need to ensure that working families have a tax break, the sheer hypocrisy of Prime Minister Kevin Rudd, and the sheer hypocrisy of the member for Dawson and those before him.

No doubt those from the Australian Labor Party who stand up after him will also say, ‘Working Australians deserve a tax break; it is very reprehensible that the opposition is not supporting this bill.’ I say back to Labor government members that, if working Australians deserve a tax break, how can you be part of a government that is imposing $20 billion of new taxes on Australian working families? How can you come into this chamber and make the claim that you are motivated and genuinely concerned about working Australian families when you are so happy to impose $20 billion of new taxes on the Australian people?

I say to the people of Mackay: look at the member for Dawson and understand his sheer hypocrisy when he says, ‘This is about savings.’ I tell you what: this is certainly about savings—make no mistake about it—but it is not the savings of working Australians that the government are motivated by; it is not the savings of those Australians who are doing it tough in this current climate; it is not the savings of pensioners and self-funded retirees that the government mean when they talk about making savings. No. Do not swallow that hook, line and sinker because the only savings the government care about are the savings to their outlays. They are the real motivation for the Rudd Labor government making these changes and the real reason the government want to increase thresholds. It is not because they have a long-term genuine belief about the need to ensure we have adequate thresholds when it comes to private medical insurance. It is about making sure that the Rudd Labor government do what they can to continue their ideological attack on private health insurance in this country. So, when the member for Dawson and members opposite talk about their great desire to ensure that there is a long-term vision and a responsible policy platform for private health insurance in this country, just think about those key points. It is those points which underscore the coalition not supporting this legislation before the House.

The Rudd Labor government’s moves, through this legislation, will force hundreds of thousands of Australians from private medical insurance into the public system. This is a very real and genuine concern for members of the opposition and is the reason we will not support the short-sighted, politically reckless decision of the Rudd Labor government to change these thresholds.

I live on the Gold Coast. I have the great fortune, together with other members, of representing a city of some 500,000 people. I must say that, had we a great public hospital system, I would be less concerned about the ramifications of this exceptionally short-sighted decision by the Rudd Labor government. But the reality is that, on the Gold Coast, I have seen over the past year or two the very real consequences of a state public health system which, frankly, is absolutely disgraceful. I have read on the front page of my local newspaper, the Gold Coast Bulletin, about women giving birth in hospital storerooms because there are not enough beds for them. I have read how the Gold Coast Hospital is regularly placed on bypass because there is not enough room within the facility and how Gold Coast patients requiring oncology services have to travel up the road to Brisbane. Then we discover that the plan for which the Rudd government likes to claim responsibility will force around 500,000 people from the private system onto the public system. You start to scratch your head and wonder what this government is really up to.

What would motivate the Rudd government to increase the number of people moving from the private system, where they are covered, onto long public hospital queues? What would be the reason the Rudd government would seek to do that? We know that it is about savings but, as I said, it is not about tax savings. If it were about tax savings, the government would not stand up with barefaced hypocrisy and claim on the one hand that they are all about providing tax relief to working Australians through this measure while on the other hand introducing $20 billion of new taxes. When the Labor Party can look the Australian public in the eye and explain why they are prepared to impose $20 billion of taxes on working Australians, claiming to be sincere about this measure, that will be the day the Australian people will start to take them seriously, but that day is a long way away—a very long way away. Those from the Labor Party who have come before the chamber will not be able to address that issue because they are more concerned about the spin and the Rudd Labor government’s need to sell this issue as in some way ensuring that there is a benefit to people when, in reality, the only benefit will be enjoyed by the Rudd government.

When this legislation was initially introduced into this House—let’s call it the surcharge threshold mark 1—we know that the savings to the Rudd government as a result of no longer having to pay the 30 per cent rebate would have amounted to about $959 million. The reduction in revenue was about $660 million, a government saving of some $299.7 million dollars. Under the new legislation—and there has not been a breakdown provided by the government—we expect a government saving of some $354 million as a result of this change to the Medicare threshold. That is what this government is concerned with. That is what motivates the Rudd government to make sure that this legislation is passed. It is not about what is good for working Australians; it is about what is good for the Labor Party, and what is good for the Labor Party is a chance to save $354 million.

It is not only the coalition that has very genuine concerns about the ramifications of this legislation but also various state Labor governments. To cite but one example, during the Senate inquiry into this matter the Western Australian government stated that people dropping insurance would lead to higher hospital operating costs of the magnitude of over $50 million per year. That is just for Western Australia and just for one year—$50 million of additional operating costs. That was the Western Australian Labor government, and the same will apply in New South Wales, Queensland, Victoria, South Australia, Tasmania and the territories, as those hundreds of thousands of Australians walk away from their private medical insurance to go to the public system. The savings of some $300-odd million will flow to the Rudd government, and all the costs will be picked up by the state Labor governments. Let us not also forget that our brilliant state Labor governments across this country have managed to rack up about $90 billion worth of debt!

At a federal level, the Labor Party likes to claim that it comes to this debate with clean hands. It is happy to thrust the cost of this initiative onto the state Labor governments, which are already carrying a burden of some $90 billion. Today I read with interest that the state debt in New South Wales is growing at $18 million a day—$18 million a day is the legacy of the Labor Party there after being in office for a long, long time. Now we know that the Rudd Labor government is going to put even more people onto the public hospital queues in New South Wales. I say to the people of all the states in this country to dig a little deeper into this legislation and they will find the real motivation of the Labor Party when it comes to why it wants to make these changes to the thresholds. When a Labor member says to them, ‘We are doing this because we believe in tax breaks,’ ask the Labor member, ‘Why are you then imposing $20 billion of new taxes?’ When a Labor Party member says that this is about giving people choice in health, ask them what the 500,000 or so Australians are meant to do that move from the private system onto the queues in the public system. I say to constituents on the Gold Coast that they should come to this debate genuinely concerned about what this change means for the wonderful staff at the Gold Coast Hospital. The staff do a sterling job at that hospital, with very limited resources. They do a sterling job when they are ill equipped by a state government that is completely up to its eyeballs in debt. They do a sterling job when it comes to functioning as a hospital that is so very far below the needs of the region.

I also say to my many constituents who are aged 60 and over that they should be very concerned about the ramifications of this change to the Medicare levy surcharge threshold. The Minister for Health and Ageing has never wanted to address this issue. The question is: what will this change mean for private medical insurance premiums? We have not had a clear answer from the health minister, and I think other members opposite will never address it either. We know from the modelling that the most likely impact of this change is that health insurance premiums will skyrocket. We heard the Labor Party claim before the last federal election that they were concerned about cost-of-living increases. We heard the Minister for Health and Ageing make statements that she was concerned about hefty increases in the premiums for private medical insurance, yet we saw at the beginning of this year a tick and flick by the minister for health for premium increases of around six or seven per cent. We will see, as a direct result of this legislation, private health insurance premium increases of probably around 10 per cent.

We now see a vicious cycle starting. As a result of these changes, private health insurance premiums will increase by around 10 per cent next year. This will lead to a whole new tranche of people who will drop their private medical insurance because they are either unable to continue to afford to pay or without the desire to pay. The government has already conceded that those most likely to drop their private medical cover will be the fit and relatively young—perhaps I should say the young and relatively fit—Australians aged between 18 and 30 or thereabouts. The result is that older Australians, and in particular those in my electorate who rely on private medical insurance so that they are not a burden on the Australian population through the public system, will no longer enjoy the benefits of a very high level of private medical cover.

The coalition have a very proud track record in this area, because we believe in private health insurance. More importantly, we are prepared to stand up for private health insurance. We do not do it at the exclusion of the public system; we do it in addition to support for the public system. That is in stark contrast to the Labor Party, which fundamentally and at its core remains ideologically opposed to private medical insurance. We know there are many members of the government who, if they had the opportunity, would scrap private health insurance or, at least, would do their very best to ensure that private medical insurance was so expensive—with no government subsidy whatsoever—that very few Australians would have it. I recall when I was a teenager the Prime Minister at the time, Paul Keating, standing up and proudly boasting that he and his family did not have private medical cover. How extraordinary that you had a person who, in present day terms, was probably earning around half a million dollars a year proudly boasting that no-one in his family had private medical insurance as if, in some way, any health related costs that he or his family enjoy should rightly be paid for by taxpayers with no contribution coming from those individuals. This is the kind of daft ideology that the Labor Party supports. That is why the former government, this coalition, were committed to doing what they could to reverse the damage done, initially by the Whitlam government but then subsequently by other Labor governments, by ensuring the level of private health insurance coverage was turned around. The Howard government increased coverage by 10.8 per cent so that national coverage increased from 33.9 per cent to 44.7 per cent. In my electorate of Moncrieff, the coverage was even higher. In excess of 50 per cent of individuals in my electorate had private health insurance. They fundamentally believe that there is an important responsibility they have to make a contribution towards their health costs if they can afford to do so.

The coalition government introduced the 30 per cent rebate and rebates at 35 per cent for those aged 65 to 70 and at over 40 per cent for those aged over 70. Lifetime Health Cover and the Medicare levy surcharge were initiatives taken by the coalition to ensure that we did what we could to increase the number of individuals who have private medical insurance. It was built on the fundamental premise that, if you can afford to, it is worth while that you make a significant contribution to the cost of your medical cover. That principle is under direct attack by this government’s changes in this legislation. That is the reason why the coalition will simply not support Labor’s changes here.

As much as this change is dressed up to be about providing tax relief to working Australians, that is simply not believable. How can the government on the one hand claim to be concerned about providing tax relief to working Australians and yet also impose $20 billion of new taxes on those same Australians? It is completely unbelievable and it is completely hypocritical. The sole argument put forward by Labor members opposite—that this is about tax relief—cannot be believed, because the facts do not support their assertion. On the other hand, the coalition’s position is very straightforward.

This is designed to save the Rudd government some $350 million in revenue. This will, based on modelling provided not by the coalition but by the stakeholders themselves, drive 500,000 or so Australians from the private system to the public system. Those people living in my electorate on the Gold Coast and those Australians who have a genuine interest in public health matters would know that the very long public hospital waiting lists—the queues for surgery and the queues for elective surgery—and all of those problems are going to get much worse before they get any better under the Labor government.

Finally, if there is concern, let it not be the concern that I have expressed here today but the concern that has been outlined by those operators in the industry and, importantly, by the state Labor governments, the very real concern about the multimillion-dollar impost these changes will have on the public health system. I say to my pensioners on the Gold Coast, my self-funded retirees and those aged 65 and over: look at this issue with great concern and dig a little deeper than the spin that we hear from the Labor Party about how this is all designed to save them money. If you believe that paying an extra nine or 10 per cent on your health insurance premium is the way to a sustainable health system and if you believe that the way to ensure that we as Australians get better access to health care is to force hundreds of thousands of people from the private system to the public system then you would support this bill. But if you think that is a step in the wrong direction then you will not support this bill. I am certainly proud to be part of the coalition, who remain resolutely and steadfastly opposed to this very short-sighted and bad decision of the Rudd Labor government.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

I do not like using the word ‘hypocrite’ or hearing the word ‘hypocritical’, but I will not hear that term levelled at us from members of the former government that ripped the heart out of the public health system and in particular our hospital system. The member for Moncrieff, who just spoke, ranted and canted about the public health system, but he was part of the government which tried to decimate that. Before he leaves the chamber he might like to hear the remainder as well. We do have a universal healthcare system called Medicare. Mr Keating and others in Australia can be proud of that. That universal healthcare system is paid through income tax and the Medicare levy. The rant and cant was loudly served up by the other side in very large quantities. Added to that was a drop of scaremongering for the pensioners and independent retirees on the Gold Coast. What we got was no argument at all and a failure to deal with the detail of the legislation, which I would like to have a look at.

I rise in support of the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008. I reinforce that the bill is about helping the budgets of working families around Australia and providing choice. The Medicare levy surcharge is a one per cent increase on top of the Medicare levy for individuals, couples and families who do not choose to take out private health insurance. The second proposal that we have put up is to lift the threshold from the current $50,000 for an individual and $100,000 for couples and families to a more realistic $75,000 and $150,000 respectively. This bill also indexes these thresholds against wages growth in the future.

The bill is another move by the Rudd government to pick up the slack from the former government. Although they were quite happy to introduce the surcharge as far back as 1997, they did nothing to stop it impacting over the years on more and more individuals, couples and families and their household budgets and savings. When the coalition introduced the surcharge it was meant to apply to high-income earners. I remind members that the then Minister for Health and Family Services, Michael Wooldridge, said at the time:

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.

I would hardly consider an individual earning $50,000 or a family or a couple earning $100,000 today, and trying to meet the costs of living in today’s climate, to be high-income families or individuals.

I would also like to take a moment to try to cut through some of the hysteria that we just heard from the member for Moncrieff and some of the hysteria being peddled by those opposite. I particularly heard that in the template answer by the opposition spokesperson for health and, not unexpectedly, from members of the health insurance industry. Their claims about a mass exodus from health insurance because of the change are alarmist at the least, and I believe they are an insult to the intelligence of everyday Australians, many of whom have made the decision to take out private health insurance because they can see real benefits from the security it offers. To suggest they will jettison this security because of a change like this is extreme. But don’t take my word for it; instead, I will turn to the opinion of Monash University senior lecturer Charles Livingstone, from the university’s Department of Health Science. In the Age last month he looked at what he calls ‘the great lie about private health cover’ and he questioned the concerns of Family First Senator Steve Fielding and his concern for the poor:

Clearly, he’s been strongly persuaded by the private health insurance lobby’s dire predictions of the consequences of increasing their threshold for the 1% surcharge, a fairly modest change to the panoply of Howard-era incentives and penalties intended to prop up their business.

Dr Livingstone contended that the introduction of the levy surcharge in 1997 did not stop the membership decline in private health insurance. Two years after the introduction of the surcharge, membership had in fact fallen from 32 per cent to 30.6 per cent of the population. The 30 per cent rebate, introduced on 1 January 1999, saw only a 0.8 per cent additional uptake in its first year. It was not until the introduction of the Lifetime Health Cover in July 2000 that numbers actually turned around. It led to an increase in health insurance coverage from 32.2 per cent of the population in March 2000 to 45.8 per cent by September 2000, and that was particularly because of its penalty and the non-taxpayer contribution. So Dr Livingstone asked:

If the surcharge didn’t encourage anyone to take up health insurance, why would its adjustment induce an exodus?

It is a fair question. Dr Livingstone goes on to argue about the merits of private insurance overall, contending it would be better to invest more in public hospitals. That is a debate that is not relevant here at the moment; we will leave that for another day. Suffice it to say that Labor is already putting a real increase in funding into public hospitals and public health after 12 years of neglect and promotion of the blame game. No other place is more demonstrative of that than the government intervention in the Mersey hospital in my electorate of Braddon. Why did it take 12 years for it to take an interest in public health and public hospitals? The member for Moncrieff never commented on that, and he could not counter that.

The point made by Dr Livingstone is that this change should not be viewed as a major disaster for health insurers but taken as a benefit for families. It is a tax break, a tax relief from a tax trap set in 1997. Contrary to the scaremongering by those opposite and by members of the health insurance industry, the AMA and others, there are people reporting that those most likely to drop cover are those in the younger age bracket, who are generally more healthy and are not major consumers of hospital services anyway. So they are unlikely to cause a major increase in public hospital activity. Again, in the rant and the cant of the member for Moncrieff, there was no comment on that.

This bill is a revision of our original policy and should come close to the mark suggested by many as a reasonable amount for the threshold, including by the Greens and Senator Xenophon from South Australia and in the review by the Senate. It is also about giving average working families a choice to take out private health care if they feel it is the right thing in their circumstances but not to be slugged with a tax that they may not be able to afford.

I would like to refer to the work of Helen Keleher, Professor of Health Science at Monash University, who has some interesting comments to make, particularly in relation to some of the arguments thrown up by the member for Moncrieff and the opposition health spokesperson. One of the prime arguments against the government’s plan is that hospital emergency departments will be inundated by people who no longer have private health insurance. Every single template answer that popped up on the other side put that argument forward. It is a nonsense. Only a tiny number of private hospitals have an emergency department, and they are very expensive to use anyway. We do not rely on them for emergency services; the public hospitals provide the vast majority of emergency departments across Australia. That is a fact. Nor would all the people who decide not to renew their membership of a private health insurance scheme get sick all at once. You would get the idea from the other mob that anyone who drops out of a scheme is going to rush off to the doctor and to hospital and go and see all the allied health people who provide services all at once. It is an absolute nonsense.

Our taxpayers’ dollars have been subsidising the health insurance industry to the tune of more than $3 billion a year since 1999 through the 30 per cent subsidy of private health insurance premiums. But, as I mentioned before, the research of Dr Livingstone shows this has had very little effect on the numbers of new customers taking out private health insurance. Those opposite who argue for public dollars to prop up private schemes should explain—indeed, I would ask the next speaker from the opposition to explain—why various insurance products are not competitive and why they require a massive subsidy from the public purse.

What about the argument that millions of Australians face an increase in their health insurance premiums? Over the past few years the federal government has allowed the private health insurance industry to raise premiums by more than the consumer price index. They rose by 7.4 per cent in 2003, 7.6 per cent in 2004, eight per cent in 2005, 5.7 per cent in 2006 and 4.5 per cent in 2007. Indeed, between 2002 and 2007 premiums increased by 37.9 per cent while the CPI increased by only 13.9 per cent. So, if such price rises are really necessary, people with private health insurance, like me, have a right to ask themselves if they are getting good value for money. Are the funds efficient? Have all the you-beaut extras they offer really increased the package quality to match the price increase? Surely private health insurance can do better than help people ‘jump the queue’, as Charles Livingstone puts it bluntly.

We are about encouraging people to do what is best for their health and for the health of their families. This bill is coupled with a major increase in the support for health services around the nation, as I mentioned earlier. And nowhere is that more evident than in my own electorate of Braddon. No doubt everyone in this place has heard of the Mersey Community Hospital at Latrobe, which some chose earlier to use as a political football. I would like to bring the House up to date with what has happened at the Mersey, a major Commonwealth hospital. You are probably aware that the Commonwealth reached an agreement with the Tasmanian government to manage the Mersey Community Hospital on our behalf from 1 September 2008. In recent months the Commonwealth has provided $1.1 million worth of necessary equipment and refurbishments that have assisted staff to continue to provide effective and safe management of patients at the hospital. Fortunately, we have been able to equip a high-dependency unit, which is now fully functional, meeting the healthcare needs of patients including those suffering from heart attack, stroke, severe asthma and other conditions requiring specialist care and monitoring.

As part of the Commonwealth’s ongoing commitment to the local community, up to $180 million will be provided over three years to Tasmania, exclusively for the management of the Mersey Community Hospital. This funding will ensure the current range of services is maintained. I would remind you that, apart from the intervention and the rhetoric that went with it, it is the Rudd government that has finally had to deal with the arrangements to give this effect, and that is $180 million over three years. That is a lot more than the $45 million that was thrown around by the former health minister and the former Prime Minister, the former member for Bennelong, when they were talking in this House and in Tasmania.

A dedicated general manager will be employed at the hospital to ensure continued local management. Services that will continue at the Mersey Community Hospital include the high-dependency unit I mentioned, a 24-hour emergency service, medical and surgical services for both day surgery and inpatients, low-risk obstetric services, low-risk inpatient paediatrics and low-complexity inpatient acute medical services. The Commonwealth funding will also allow for the expansion of a range of services, potentially including renal dialysis, more elective surgery, a regional rehabilitation unit for the north-west and transition care for older patients. To ensure the continuity of care all current staff have been offered continuing employment with the state government with no disadvantage. Finally, a north-west regional community advisory body will be established to oversee health outcomes for the region, and of course the Mersey will play a very important part in providing that health care in my region.

To conclude, the Rudd government has made considerable commitments to my electorate in terms of health outcomes. These range from $1.25 million for mental health in the region through the Sisters of Charity trauma counselling services, which provide services for the whole of Tasmania but are based in my region, to an offer of up to $7.5 million for two super clinics in the Devonport and the Burnie areas. I was very pleased to have attended two meetings in relation to the potential of the super clinics and what they can mean for a region. I hope that a number of innovative models will come forward to access that funding and provide even better healthcare services.

I would also like to acknowledge the work of Jane Holden who is currently the CEO of the North West Regional Hospital, which is based in Burnie but in actual fact she will have overview of the Mersey as well. Jane is a great breath of fresh air to my region, someone who believes in an integrated approach to providing health services, someone who believes that the hospital is really the last resort rather than the first resort, someone who believes in linking with ITC but working very closely with all health professionals and someone who sees the GP as the hub of health care, with the allied health service providers and the hospital playing their part in relation to that.

A reduction in the Medicare levy surcharge may not be something that people see as a direct benefit to the health of the people of my region or Australia but it will play its part in providing genuine choice for those who want it and considerable tax relief for those who need it. It will help restore the balance for many families and encourage them to look at their healthcare needs, and it is with this in mind that I commend the bill to the House.

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

I am addressing the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008, the bill to raise the Medicare levy surcharge thresholds. The state healthcare system is creaking by anybody’s standards. We all read the newspapers on a regular basis: waiting lists, beds in corridors et cetera. The states are, by all accounts, according to the papers last week, demanding billions of the federal government to fix what they see as the problems in public health. This will indeed severely test the Prime Minister’s pledge to end the blame game between the states and the Commonwealth on the health portfolio. It is with surprise then that we see this bill coming forward to actually increase the load on the public health system.

I refer to moves in South Australia of recent times by the South Australian government to introduce a new country health plan. I have spoken about it in this place on a couple of occasions before. The South Australian government proposed that 43 hospitals in regional and rural areas be downgraded to GP Plus Health Care Centres, which is, I think, a public service euphemism for bandaid centres. There was a large degree of public outrage. There have been public meetings all over the state. In my electorate, we had 400 at a meeting at Cummins and 800 at a meeting at Yorketown, all outraged by the fact that these local services, these local hospitals, which local communities have worked very hard to build, were going to be downgraded. In fact, at Yorketown, the public were told by a health official that, when they needed more care than their local first aid centre could accommodate, people could just quietly travel the 4½ hours to Whyalla, which was going to be their regional hospital, and pick up the health care they needed there. In fact, this town is only two hours drive from Adelaide, so you can understand how the public would be outraged with some of these suggestions.

As a result of that, the government has had to recant and install a committee to go back and draw up a new country health plan. I am not surprised it has had to do that. But, on the basis of this, one has to ask what it was trying to do—and what it was trying to do was save money. The reason it was trying to save money is that hospitals are under pressure. We all know hospitals are under pressure. This move to increase the threshold will only increase that pressure on public hospitals. Historically, health as a proportion of GDP keeps growing. In 1987, it was 7.4 per cent of GDP. In 1997, it was 8.3 per cent of GDP. By 2007, it had grown to nine per cent of GDP at a time when our gross domestic product had grown by a number of times. This bill just loads up the systems further.

I would like to tell you a little about my involvement with country hospitals in the past before I came to this place. I spent 10 years on my local hospital board, seven as chairman, and three years as chairman of my local area health association. Money has always been short in public health. This is not a new thing just happening at the moment. Money is always short, and this will continue. Health is going to take an increasing part of the Australian economy over the next 40 years as we deal with our ageing population. One of the things we used to do was sit around and work out how, in a hypothetical way, we could divide up the health budget in a fairer and more meaningful way. At what stage do you stop providing services to people? When should we just let them pass away? When is the public dollar wasted? Thankfully, we have not reached that stage yet, and I hope we never will. That was always the absolute commitment of the people that we worked with, but it just brings home how difficult these balancing acts are.

We must ask what role private health insurance and the private hospitals play in this system. At the moment, we have 44.7 per cent of Australians, or 10.9 million people, who have private health cover. This is up from the 33.9 per cent—falling at two per cent a year—at the time the previous Labor government fell to the Howard government. I think, if we had allowed that situation to continue, we would probably be down to a level of 25 per cent of public insurance at the moment or lower. The industry would have collapsed. The government says that we on this side of the House want to force people into private health care. Far from it. We want to encourage people into private health care. We want them to make a choice which is good for them and good for Australia. Over the past dozen years or so, we have done this through the system of taxation rebates where 30 per cent rebates are offered to people under 65; 35 per cent for those from 65 to 70; and 40 per cent for those over 70. Add the Lifetime Health Cover and the Medicare levy surcharge. All of these programs were opposed by the Labor Party. The Labor Party has had the private health industry, the private hospitals and the private insurance industry clearly in its sights for many, many years. This latest move is just the latest expression of that.

Without those measures, as I said, we would probably be down to 25 per cent or lower. Billions of dollars would not clear the backlog. The premise of these measures is that it is better for the taxpayer to pay 30 or 40 per cent of patients’ hospital bills than to pay 100 per cent. Why not allow those who can in our community, those who have capacity, those who want to have a choice, to pick up the extra? That is what they get—they get a choice. To maintain that people do not want a choice is, of course, a ludicrous proposition. What holds people back is that they cannot afford the choice.

The government initially planned to shift the thresholds even higher to $100,000 for singles, and it drew widespread condemnation from the industry and from people at large. It is just a sign that the government really does not understand what the ramifications of this move will be. Predictions by Access Economics and Pricewaterhouse are for a dropout figure of around one million people by 2012. On original estimates, even the government figure of 644,000 in the rising unemployment situation that we face at the moment, which the government and the Treasurer have acknowledged only in the last few days, these would have to be conservative figures. Because the government was forced to acknowledge the problems, not just here but in the community at large and certainly in the Senate, the new amendments have dropped the thresholds to $75,000 for singles and maintained the $150,000 for couples.

Now the government figures show that only—only!—583,000 people are going to drop out of private health. The member for Braddon has just made a spirited speech telling us that we are overselling the fact that people are going to be dropping out of private health. I point out to him that the government’s own figures are saying that 583,000 people are going to drop out of private health. That is a very substantial number. While I am on the member for Braddon, I point out that he asked the question, ‘Why did the previous government allow the private health industry to put up its fees faster than the growth in the CPI?’ That is exactly what the current Minister for Health and Ageing said a little over 12 months ago when she was the opposition spokesperson for health, and as soon as she became the health minister she approved an increase of almost five per cent in fees. It makes you wonder. It is very easy to throw these stones from opposition, but when she was in the seat she acknowledged that health inflation runs in front of the CPI.

Only 583,000 people, by the government figures, are now going to drop out of their private insurance. That means that the taxpayer is going to pick up 100 per cent of the bill for those 583,000 people instead of 30 per cent of the bill. This will have serious ramifications and will be an ongoing impediment to the health budget going forward. As a result, we are going to need a number of new facilities around Australia that we would not have needed without these changes. One can only surmise that this is just the thin end of the wedge and that the government clearly has the private health industry in its sights, as the Labor Party has for the last 30 years.

We are going to need new facilities, and we will have underutilisation of the private hospital system that exists at the moment. You cannot shrink the market by seven to eight per cent and expect to be running at full capacity. Access Economics predicts that 770,000 extra incidents will end up in the public health sector on an annual basis by about the year 2012. The government talks of tax relief, saying that families need tax relief. Shifting the demand from the private health sector to the public sector will ultimately lead to higher taxes, not lower. There is no other answer. As we have to build these new facilities and fund the extra admittances, there will be an increased demand on the Australian taxpayer. Unbelievably, this policy will reduce government outlays on health. By the budget figure, there will be a saving of $354 million through payments of fewer rebates to fewer policy holders at the same time as putting almost 800,000 extra patients in public hospitals. Of course there will be extra strains on the system.

The government expects that the young and healthy will drop their private health insurance first—they are the lowest users of health services. Private health companies will have no choice but to raise their premiums. There is no allowance for the second wave effect. The government has no modelling to show what will happen once the premiums rise. At the moment it is basing its figures on the current premiums, but we know the premiums are going to rise. Older Australians are the biggest users of the health dollar and they have a track record of maintaining their health cover through thick and thin, but they cannot be stretched forever. There is no pension increase in sight, something that has been raised in this House on a pretty regular basis of late, and they will be asked to foot a heavier bill for their private health insurance. There is no doubt that large numbers of these people will say, ‘I can no longer do this.’ So this move, which on the surface has some attraction for the punter out there on the street, Mr Joe Average, will in fact lead to higher taxation for them in the long term, it will lead to added strains on the public health service, it will lead to unused capacity in the private health sector, and it should be opposed.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to 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.