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

Today Australians know for certain that they have a government that they cannot trust, a government that will say one thing and do the other. They have a government that is clearly a fraud. The Fairer Private Health Insurance Incentives Bill 2009 and related bills before the House impose a series of changes on the private health insurance rebates paid to Australians who have or who are about to take out private health cover. They are changes this government, the Prime Minister and the Minister for Health and Ageing promised would not happen. Perhaps they are changes that reflect Labor’s ideological hatred of and opposition to private health care or the result of this government’s reckless spending that will plunge our nation into the depths of record debt that will take decades to repay. Most likely, to be fair, they are both—a desperate government after its irresponsible cash splashes has returned to form and attacked private health as it seeks any means at its disposal to claw back cash as it racks up bigger and bigger budget deficits. All Australians will pay a price for these changes to the health insurance rebate introduced by the coalition government to reverse a rapid decline in the number of Australians with insurance during the Hawke-Keating years and to take the pressure off our public hospital system that that decline precipitated.

Those with insurance will pay more through higher premiums. Those who rely on public health treatment can expect longer waiting lists with more people seeking treatment. These changes are a direct repudiation of Labor’s supposed and publicly stated position in relation to private health insurance rebates before the last election. Any Australian who believed then that Labor would not attack private health was misled. Time and time again those promises were made, before the last election and many times since. Here is what the health minister said to the Australian people in a media release on 26 September 2007:

On many occasions for many months, Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private Health Insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

The minister went on:

The Liberals continue to try to scare people into thinking Labor will take away the rebates. This is absolutely untrue.

Let us not forget a letter written by the Prime Minister, the then opposition leader, in November 2007, just days before the last election. The Prime Minister wrote to the Health Insurance Association and in his correspondence he said:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and 35 and 40 per cent rebates for older Australians.

Federal Labor will also maintain lifetime health cover and the Medicare Levy Surcharge.

One has to wonder what the 1.7 million Australians who now face lower rebates or no rebates at all think about Labor’s promises. They were reassured that this would never happen by none other than the Prime Minister in February last year when he told the Australian:

Private health insurance rebate policy remains unchanged and will remain unchanged.

That was followed in May last year by the health minister, who said on Macquarie radio:

We continue to support the 30 per cent, 35 per cent and 40 per cent rebate for those Australians who choose to take out private health insurance.

In October last year, this Minister for Health and Ageing addressed the annual Australian Health Insurance Association conference. What did she tell the delegates there? She said this:

Private health insurance consumers will still be able to claim 30 and 40 per cent rebate and Lifetime Health Cover incentives will remain in place.

As late as 24 February this year, Minister Roxon told the Age newspaper:

The government is firmly committed to retaining the existing private health insurance rebates.

Was the Labor government firmly committed to the rebates? Was it really? Or was that statement just more of the spin and subterfuge that this government descends to on a daily basis to mislead the Australian people? If that statement were true how does the minister explain evidence given by officials of the Department of the Prime Minister and Cabinet to Senate estimates last week that they first provided formal advice ‘within the budget process on the proposed means testing of the private health insurance rebates on 23 February this year’—on the very day that the health minister made her latest commitment to keeping the rebates in place unchanged. The two opposing positions were being expounded on the same day. The minister was saying that the government was committed to the insurance rebates; the bureaucracy under the direction of the government was preparing to gut them. Did the minister know? Did she deliberately mislead the public and media or is she outside the loop of decision making within this government, outside the loop of what is really happening?

The question is: is this minister for health a mere marionette for the powers that be in the Prime Minister’s office, the Treasury and the department of finance? The media should ask this question: did this minister mislead them or is she merely a puppet of Prime Minister and Cabinet? Whatever the answer—and, I repeat, this is a question that begs an answer—the budget delivered the lie to this government’s promises and we have before us these bills which are erroneously entitled the fairer private health insurance incentive bills. Of course, they are nothing of the sort.

These bills introduce three new tiers to the health insurance rebates. These are tiers that mean 1.7 million Australians who pay for private health insurance will face lower rebates and therefore higher premiums—1.7 million Australians who earn above $75,000 as singles or $150,000 as couples. Some will have the rebate cut to 20 per cent and others to 10 per cent, and some will get no rebate at all. Those on the new tier 1—earning $75,000 as singles or $150,000 as a family or couple—face, on health industry estimates, a 14.3 per cent rise in premium payments. On tier 2 the premium increase is effectively a 28.6 per cent slug. For those on tier 3, who will now get no rebate whatsoever, the premium hike is a huge 42.9 per cent. For those who opt to have no insurance, they can expect to pay more through the Medicare levy, with increases of up to 50 per cent.

The government describes this as a rebalancing of the rebate system, one that, I repeat, was never flagged in any way, shape or form before the last election and one that the government was denying would happen as late as three months ago. The government says these changes will see 25,000 people opt to drop out of private health insurance, with estimates that another 40,000 will downgrade their insurance. The government has chosen the lowest number it could find to again spin that there will be little impact from these changes.

The private health sector does not believe the Treasury estimates one iota, and why would they? The health minister put out these figures and the Minister for Human Services tried to spin them to the Senate—only to find out that he had to correct the record, finally admitting that 1.7 million Australians with health insurance would be impacted on as a result of these changes. So he had to move his figure from 25,000 being impacted to 1.7 million people, excluding children, being impacted. That exposes the incredible spin not just of this measure but, of course, of the modus operandi of this government in so many other areas.

The industry thinks even that is a conservative estimate of the impact of these changes. Its calculations increased by a minimum tenfold the number of people who might drop their insurance coverage. They fear that not 25,000 but 240,000 people could drop their hospital insurance coverage, that more than three-quarters of a million people might drop ancillary coverage and that almost that number—around 730,000 people—might downgrade their insurance levels. All up, they estimate that some 2.4 million Australians covered by health insurance will be impacted in some way by these changes.

What does that mean for our health system? It will transfer patients, treatment and costs to the public side of the ledger. The Prime Minister said that he was going to fix public hospitals. This is the sort of underhanded ‘fix’ they talk about around a race track. This ‘fix’, the private health sector estimates, could transfer almost 75,000 extra treatment episodes from the private to the public health sector over a year, meaning that public hospitals would have to accommodate an extra 190,000 bed days at a cost of some $200 million. Four million allied health services would no longer be covered by private health insurance, at a cost of over $200 million. Almost two million dental care treatments, for which private health insurance would have paid almost $100 million, would also no longer be covered.

It is little wonder then that the Australian Health Insurance Association says that every single one of the more than 11 million Australians with some form of private health insurance will have to pay more for their insurance. One million of those, one million people, live in households where the annual income is less than $26,000 per annum and they are going to face higher premiums to keep that cover. That is what the Rudd government calls rebalancing of the rebates. The Australian Medical Association agrees that many Australians will now have to pay more for their insurance. The Royal Australasian College of Surgeons expects the measures to ‘place a greater strain’—in their words—on Australia’s public hospitals, ‘driving poorer and more vulnerable Australians back into the public system’. The Australian Private Hospitals Association is also critical of the measures in this bill. In their words the result will be to:

… put more pressure on our already overstretched public hospitals. Destabilising the current balance between public and private is not just bad policy; it is ultimately unsustainable and therefore irresponsible.

I would like to take up the point of sustainability. This minister, in her second reading speech, talked considerably about sustainability. These new arrangements, she said, were all about keeping the balance between private and public health services sustainable. What has happened between the Rudd government’s first budget when this Labor administration was fully committed to the rebate and now? Around 360,000 more Australians have taken out private health insurance and qualified for the rebate. Does that make it unsustainable? Hardly. That is an increase of around four per cent in the number of people with insurance. It is a false argument from this health minister, more spin and more rhetoric to cover up this attack on private health, which Labor has long hated. It is ideologically driven and, clearly, poorly thought through.

This government is desperate to find savings in its budget and it does not need to attack private health insurance to do so. The savings it needs in order to try to cover some of its reckless spending can be made elsewhere. The coalition, of course, has suggested an increase in the excise on tobacco. A 12½ per cent increase in excise on cigarettes or about three cents on each cigarette would deliver the same amount of savings or more than projected from this attack on private health insurance rebates.

The government has claimed that rebate changes will generate savings of around $1.9 billion over four years, though I point out its figures are certainly more than rubbery. What the budget says and what the minister has presented to this House in the bill’s explanatory memorandum are different: the memorandum predicts the $1.9 billion figure, while the budget papers provided a lower estimate of $1.75 billion. So much for the government’s attempts to attack savings from our suggested cigarette tax increase: the Treasury figures used in Labor’s attempt to discredit this suggestion show that it would in fact deliver more to the budget bottom line, some $2.2 billion over the forward estimates. And that is not to mention the wider health benefits of fewer people smoking and less call on the nation’s health services, the health dividend of a rise in cigarette excise and subsequent decrease in smoking. Smoking is the single biggest preventable cause of death and disease in our country. Its cost to the nation is some $31.5 billion annually. It is responsible for more than 15,500 deaths. Yet this government prefers to drive people away from insuring for their own health, as opposed to considering measures that have such obvious health benefits to the nation and the economy. So the options are there for this Prime Minister, for this health minister and for this government to take some real decisions rather than following a disastrous, ideological bent that will damage our health system.

Under the Hawke and Keating governments, the last Labor governments that left this nation mired in debt, the number of people with private health insurance had fallen to just 30 per cent of the population. The previous Howard government, through the rebates and a series of other measures, reversed that fall to a situation where some 44.6 per cent of Australians are covered by private health insurance. That is around 9.9 million Australians with hospital cover. Public hospitals are already stretched to breaking point by the mismanagement of successive state Labor governments. Imagine just how worse off things would have been with a Labor federal government continuing to drive people out of private health insurance over the past decade. That is exactly where this government is headed now. This is not its first attack on private health, and it certainly will not be its last.

The coalition is opposed to these changes to the private health insurance rebates. We will oppose these bills. We will oppose them for the reasons that I have outlined. In summary, I want to underscore a couple of points. This Prime Minister went to the last election promising the Australian public that he would end the blame game and that he would fix public hospitals. Over the course of the past 18 months since this government was elected there has only been increased pressure on our public hospitals. The daily examples that we see in our newspapers, the horror stories that people out in the community—particularly rural parts of our country—are experiencing on a daily basis remain completely unacceptable. We have to recognise that things have not improved in our public hospitals over the course of the past 12 months. In fact, in many cases they clearly have deteriorated to a point well beyond unreasonable. I suspect that this continuing attack by this government on private health will result in people moving from their private cover into the public system. That will have an impact not only in relation to hospitals, but also in relation to dental—a very important debate in this country. This will put extra pressure on the provision of public dental services around the country. That will be felt nowhere more than with older Australians. This government will have the responsibility for having made it more difficult for those Australians, particularly those low-income Australians, particularly those older Australians on low incomes who have private health insurance, to receive those dental services. And if they have to join public queues, then that will be a great travesty for them indeed.

We need to recognise that many Australians at the moment are maintaining their private health insurance in difficult circumstances. Many Australians are facing great stress economically because of this mismanagement of the Australian economy by the Rudd government. Many people have had their overtime cut. Many people are in households now where there is only one person working and the other person is not working. We have a very strongly held belief that many of these people potentially will lose their private health insurance at a time when they can least afford to, and that will put extra pressure on this public hospital system. This will put extra pressure on the funds that are trying to provide economies of scale so that they can keep at a minimum the price rises for people who do have private health insurance and will maintain it even in difficult circumstances.

The most important thing to remember out of this debate is that many people have maintained their private health insurance or have been attracted to private health insurance not only because of the incentives that were put in place when the coalition was in government but also because they are dead scared about going into public hospitals and utilising services, despite all of the good work of those doctors and nurses and professionals who, on a daily basis, provide those services to Australians in need. Many Australians are concerned that states, in running down the health system, have made it necessary for these Australians to maintain their private health insurance. This government is going to put a further nail in the coffin of private health.

In these difficult economic circumstances created by this government, we have offered up an alternative. We have said to the government, ‘This is a measure which, on your figures, rubbery as they are, projects savings of $1.9 billion over the estimates.’ As the Leader of the Opposition said in his budget reply speech recently, in opposing this measure we will do the economically responsible thing—that is, provide an offset for blocking the savings measure. We have put up an increase in tobacco excise across the board of 12½ per cent. We are not reckless like the government in some of their tax proposals, where we would suggest just increasing the tax on one particular tobacco product, which would only see people move into other brands of cigarettes, and we have put forward a well-considered, well-costed policy that gives the government a very stark choice. It can retreat from its ideological attack on private health insurance, and, at the same time, it cannot lose revenues by supporting this coalition’s very responsible measure in relation to the increase of the tobacco excise. For that reason, I move:

That all words after “That” be omitted with a view to substituting the following words:“the House declines to give the Bill a second reading, and calls on the Government to offset the revenue that would have resulted from the enactment of this Bill and the associated bills, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 and Fairer Private Health Insurance Incentives (Medicare Levy Surcharge – Fringe Benefits) Bill 2009, by increasing the excise on tobacco”.

This will act as a true test of the government’s position on the move by the opposition to offset the arrangements associated with the costings around this bill. We have a responsible measure on the table. We are calling on the government now to support the increase in the tobacco excise as opposed to stripping away support to millions of Australians who have private health insurance. We do not want to see people drop their private health insurance. We do not want to see extra pressure on the public health system. We want to make sure that we say to the Australian people that the coalition remains committed to supporting not just our private health insurance system but also our public health system. We want to make sure that we make it sustainable into the future and we want to be economically responsible at the same time.

We have put forward a challenge to the government and it is detailed in this amendment. We say to the government: support the coalition’s position to increase the tobacco excise and you will have an opportunity to prove to the Australian people that you are not just on some ideological bent but that you support what the coalition has put forward and that is good health policy. It relieves some of the stress for people who will present with conditions as a result of having smoked, in some cases for a short time and in other cases over a lifetime. We say to those people that this is the decision that the government needs to make: does it support the coalition’s position to preserve the arrangements around private health insurance so that we do not put extra pressure on the public health system and at the same time prevent the economic situation in this country from getting even worse under this disastrous government by increasing tobacco excise?  That is why I move this amendment and why the coalition will be opposing these bills.

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

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

I second the amendment and reserve my right to speak.

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

The sheer hypocrisy of the member for Dickson talking about the pressure on public hospitals and the dental system, is mind-boggling. When we think back to what the former government did, ripping billions of dollars out of the public health system and closing down the Commonwealth dental scheme, the audacity of the member for Dickson to come in here and cry out that he is concerned about the public hospital system meets no test of credibility with anyone. The government is rebalancing its range of policies supporting private health insurance so that those with a greater capacity to pay for their own private health insurance do so. We are doing that rebalancing through the bills that I am speaking in support of today: the Fairer Private Health Insurance Incentives Bill 2009, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009.

Under these changes, the private health insurance rebate will remain unchanged for low- and middle-income earners. Higher income earners will receive a reduced rebate and, as incomes increase, the rebate will progressively fall. The changes to the Medicare levy surcharge will encourage higher income earners to maintain their private health insurance. These reforms will provide a fairer distribution of benefits, bringing government support for private health insurance into line with the principle underpinning the Australian tax transfer system that the largest benefits be provided to those on the lowest incomes.

Currently, approximately 14 per cent of single taxpayers who have incomes above $75,000 receive around 28 per cent of the total private health insurance rebate paid to singles. Under the new reform, these single taxpayers will receive about 12 per cent of the total private health insurance rebate paid to singles. Similarly, approximately 12 per cent of couple taxpayers who have incomes above $150,000 currently receive approximately 21 per cent of the total private health insurance rebate paid to couples. Under the new reforms, these couple taxpayers will receive about nine per cent of the total private health insurance rebate paid to members of couples. Treasury modelling estimates that under these reforms the number of people expected to remain in private health insurance will be virtually unchanged. Treasury is estimating that that will drop to 99.7 per cent of those who are there now. This is because those high-income earners who receive a lower rebate will face a higher tax penalty for avoiding private health insurance.

It is proposed that, from 1 July 2010, three new private health insurance incentive tiers be introduced to better balance the mix of incentives for people taking out private health insurance. Existing arrangements will remain unchanged for singles with incomes of less than $75,000 per annum and families with incomes of less than $150,000 per annum. Based on current projections, tier 1 will apply to singles with an income of more than $75,000 and families with incomes of more than $150,000. The private health insurance rebate will be 20 per cent, increasing to 25 per cent at 65 years of age and 30 per cent at 70 years of age. The Medicare levy surcharge for not taking out complying private health insurance will remain at one per cent. Tier 2 will apply to singles with incomes of more than $90,000 and to families with an income of more than $180,000. The private health insurance rebate will be 10 per cent, increasing to 15 per cent at 65 years of age and 20 per cent at 70 years of age. The Medicare levy surcharge for not taking out complying private health insurance will be increased to 1.25 per cent. Tier 3 will apply to singles with incomes of more than $120,000 or families with incomes of more than $240,000. No private health insurance rebate will be provided. The Medicare levy surcharge for not taking out complying private health insurance will be increased to 1.5 per cent. All income thresholds will continue to be indexed to wages according to movements in the average weekly ordinary time earnings. The income thresholds will also be adjusted for families with more than one child in the same manner as existing arrangements for the surcharge—that is, $1,500 for the second and each subsequent child.

In my electorate of Dobell, on the north of the Central Coast region of New South Wales, we have one of the lowest median wages in the state. Clearly, lower income earners who are my constituents would not think much of the idea that their taxes are helping subsidise the private health insurance rebates of high-income earners, especially if these people on lower wages simply cannot afford private health cover. This system will make the rebates fairer. In Dobell working people face many struggles and challenges. They endure long hours each day away from their families, because over a third of them commute to and from Sydney, a two-hour trip each way. In many cases rising food and rent costs place additional pressures on their livelihoods and a fairer private health insurance system means we can better maintain the balance between public and private health systems.

There will always be many families who cannot afford private health cover, but those people will be more secure in the knowledge that this government is committed to improving the public health system. Let us start with the hospitals, which are of course the most visible face of the health system. It is no secret that many of our public hospitals are under severe pressure as our population ages and the burden of chronic disease takes hold. The emergency department of Wyong Hospital, in my electorate, is the fifth-busiest in the state. And as we come into winter, it will be busier than at other times of the year.

The Rudd government recognised this increased pressure on hospitals and took action at COAG last November. The 2009-10 budget implements that historic agreement. It includes the biggest ever funding deal for our public hospital system—$64 billion over five years. This is nearly $20 billion more than the previous healthcare agreement, a massive increase of nearly 50 per cent in funding for our public hospitals. These reforms are about improving health systems, not just money, important though that is after years of neglect by the previous government. We have already seen results from our $600 million blitz on elective surgery waiting lists, with an extra 41,000 procedures last year, 16,000 procedures above the target.

The government’s investment also includes a $750 million injection to reduce pressure on our stressed emergency departments. The budget delivers a substantial increase in our nation’s hospital infrastructure. This year the government’s Health and Hospitals Fund will open with $3.2 billion on the way to fund 32 important new projects across the country. We are also putting in place structures to improve the long-term performance in services provided by our hospitals. All governments have agreed to report against a comprehensive set of performance indicators across the health system. And we are taking steps towards the introduction of activity based funding for public hospital services.

These initiatives will improve the performance and the accountability of the health system. A quick look at what the budget is delivering will indicate the strength of the Rudd government’s commitment to Australia’s health system: $64 billion over five years for our public hospital systems, an increase of $20 billion; $3.2 billion from the Health and Hospitals Fund for three key reform areas; $1.5 billion over seven years for hospital infrastructure of national significance; $1.3 billion over six years to deliver nationally consistent cancer detection, treatment and care, supported by two comprehensive cancer centres and up to 10 regional cancer centres, and an upgrade of BreastScreen Australia’s equipment to digital technology; $430.3 million over six years in translational research infrastructure across mental health and neurological disorders, child health, Indigenous health and chronic diseases; $134 million to reform and enhance incentives to encourage doctors to work and stay in our rural and remote communities, with changes to the geographic classification that will result in more than 2,400 doctors becoming eligible for support for the first time; $120.5 million over four years to provide greater choice in maternity services by expanding access to services provided by qualified midwives, additional scholarships and a new 24-hour helpline to support women and their families before and after birth; and, $59.7 million over four years to provide highly skilled nurse practitioners with appropriate access to MBS and PBS from November 2010, which will allow doctors to focus on tasks that require their level of skill and expertise and which is coupled with an investment to increase the GP workforce by 35 per cent.

In my electorate of Dobell I was recently very pleased, along with the health minister, to announce the successful tender for the government supported GP super clinic, which will be located in the fast-growth area of Warnervale. An experienced team of professionals which currently runs the Toukley Medical Practice and another practice at Tuggerah will operate the new super clinic, to be known as the North Central Coast GP Super Clinic. The government’s agreement with Warnervale Medical Services will see a temporary GP clinic operating in Woongarrah within four months while preparations are made to house a permanent state-of-the-art clinic in the new Warnervale City development by 2011. The North Central Coast GP Super Clinic will bring together additional GPs; specialists; allied health professionals; and pharmacy, radiology, pathology, rehabilitation, dental, physiotherapy and psychology services, all in one convenient location, with many of those services bulk-billed. As well as providing families and people with chronic diseases access to affordable care by general practitioners and health professionals, the new GP super clinic should also relieve pressure on the Wyong accident and emergency department—which, as I have already stated, is the fifth-busiest in the state.

Through the bills I am speaking about today we are also determined to maintain an appropriate balance between the public and the private health systems. This rebalancing of the private health insurance rebate is not expected to have a significant impact on private health insurance membership. The consequence of that is that we do not expect these changes to have an adverse impact on public hospital attendances. We know for a fact that last year’s changes to the Medicare levy surcharge had no negative effect on health fund membership. In fact, membership has increased in the last two quarters. Mr Deputy Speaker, you will remember the loud protestations we had to the contrary from those opposite.

To sum up, these changes mean that high-income earners will receive fewer government payments for their private health insurance but will face an increase in costs should they opt out of their health cover. Singles and families with incomes below the Medicare levy surcharge thresholds—around three-quarters of all policy holders—will not incur any increase in their net premiums as a direct result of this measure. Policy holders under 65 years of age will continue to receive a 30 per cent rebate on the cost of their health insurance premiums. Those aged 65 to 69 will receive a 35 per cent rebate and those over 70 will receive a 40 per cent rebate. Spending on the current private health insurance rebate is growing quickly and it is expected to double as a proportion of health expenditure by 2046-47. These changes, through these bills, will result in a saving to the government of expenditure of about $1.9 billion over four years.

The government had tough choices to make in this budget; tough choices to maintain jobs and put in place vital infrastructure while providing long-term savings. Means testing the private health rebate was a tough decision that the government made. The private health industry should have confidence in their products. The private health system is an important part of our overall health system. There are many people in my electorate who do use private health and are very happy with the services they provide. It does not seem too controversial to assume that most high-income earners will continue to have private health insurance because they want it, regardless of the rebate.

We have heard before in this place that the sky will fall in if we bring fairness into government policy regarding private health insurance, and I am sure we will hear it again in the contributions from those opposite. We have heard the opposition cry wolf on these matters before and they will again. We must remember that last year we were told by the opposition that we were the great wreckers of private health in Australia if we dared to increase the income threshold for the Medicare levy surcharge. Of course, they were proved wrong and they will be proved wrong again in relation to this debate. We had the extraordinary musings from the Leader of the Opposition on this subject. He said:

… in an ideal world, every Australian would have private health insurance.

We would have to go back to Fightback to see the coalition release such a candid attack on our universal health system as we saw by the Leader of the Opposition. A strong universal health system is the cornerstone of our health system. It is what the vast majority of people in my electorate of Dobell believe. The Leader of the Opposition is out of step with community sentiment. He will never ever lead this country if that is how he feels about health care. These reforms will ensure that the government’s support for private health insurance remains fair and sustainable in the future. I commend these bills to the House.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Defence Science and Personnel) Share this | Link to this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2009 and cognate bills. This legislation outlines how the current Prime Minister of Australia has sacrificed the nation’s healthcare system through his reckless spending. As a consequence of Labor’s senseless budget, forward projections indicate that there will be one million unemployed by 2010-11, a record $58 billion deficit and a record net debt of at least $188 billion by 2012-13. These figures are all key markers of the failure of the Rudd Labor government’s economic management.

What do these figures mean in real terms—in terms that we all as Australians can relate to? What if I told you that due to Labor’s reckless spending the Prime Minister of Australia had to take out billions of dollars from the health system to help repay the biggest debt of any government in the nation’s history? This is exactly the situation at hand. Let me say this to you again so that there is absolutely no mistaking the issue: the Prime Minister is taking billions of dollars out of the health system to pay for his reckless spending and Australians are now paying for that reckless spending. They are being given $900 cheques in the hand by the Prime Minister whilst the Treasurer sneaks hundreds, if not thousands, of dollars out of our back pockets to pay back Labor’s debt record.

The Prime Minister should clearly state to the House, to the taxpayers and to the public—the public who voted him in because they thought they could trust him—where his priorities lie. The Prime Minister should outline where his moral campus resides. Is it that the Prime Minister’s morals fall short when he recognises that there is more popularity en masse, superficial as it may be, in handing out cheques to the public rather than fixing our healthcare system? Some have likened the Prime Minister to Robin Hood, but I disagree with this. Robin Hood stole from the rich to help out the poor. The Prime Minister is simply taking money from whomever he can and from whichever fund he can, not to help out others but to mask his reckless spending. But he is not doing a very good job of it. May’s budget revealed that two-thirds of the debt owed by taxpayers in 2012-13 will be due to spending decisions taken by the Rudd Labor government over the past 18 months.

Paterson families are far worse off under Rudd as indeed are all Australian families. 1.7 million Australian adults will immediately be affected by changes to rebates for private health insurance, facing either higher premium payments or higher tax payments through the Medicare levy. This includes nearly 50 per cent of all enrolled voters in the Paterson electorate—58,289 people who were deceived by the Prime Minister when they took him for his word that their private health insurance costs would not increase. I would like to quote the Prime Minister on a radio interview with Leon Byner on radio 5AA on 24 August 2007, ahead of the election. Byner said:

All right, now let me ask you a couple of questions that listeners have called in on. Lorraine wants to know if you are going to take off the rebate from private health funds which currently the Government supports—that’s the 30 per cent we’re talking about.

And Rudd’s reply:

Absolutely not.

It gets even better. In a letter to the Australian Health Insurance Association on 20 November 2007, just days before the election, the now Prime Minister, then Leader of the Opposition, said:

Both my Shadow Minister for Health, Nicola Roxon, and I, have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

What we see here is an absolute mockery. People can have no faith in what the Prime Minister says. They need to judge him by what he actually does. This Prime Minister guaranteed people that health insurance costs would not increase. In fact, for health generally, he said that the buck would stop with him. The fact is that all Australians will have to pay more for health care because of the Rudd government’s change to private health insurance. In short, Australians who earn over $75,000 will pay more because of the cuts to the private health insurance rebate, and if they drop out altogether they will still pay more because of the increased Medicare levy surcharge. Australians who earn under $75,000 per annum will pay more because of increased premiums due to younger and healthier people dropping out. Not only that, those who are uninsured will now have to wait even longer because of the increased pressure on the public health system as people begin to drop out of the private health scheme.

Public hospitals in my electorate, in places such Gloucester, Dungog, Bulahdelah and Tomaree, are already struggling under the pressure of limited resources and funding provided to them by the New South Wales state Labor government and the federal Labor government. Now Labor is introducing plans which will, consequently, increase this pressure. This can only be described as absolutely absurd. Yet the Prime Minister said that, when it came to health, the buck would stop with him. The Prime Minister’s decision to make these changes to private health insurance makes a complete mockery of his election promises which I outlined earlier—that is, he would fix the hospitals by June 2009. It makes a mockery of the fact that he guaranteed to people in interviews and in letters to the Health Insurance Industry Association that it would not change. Another quote that I kind of enjoy reading is from Nicola Roxon, when she was shadow minister for health. In a press release on 26 September 2007, before she became the minister, she said:

On many occasions for many months, Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private health Insurance rebates, including the 30 per cent general rebate and the 35 and 50 per cent rebates for older Australians.

The Liberals continue to try to scare people into thinking Labor will take away the rebates. This is absolutely untrue.

We are standing here today debating a bill which will remove those rebates for some Australians. The only time the government changed its tune is more recently, since the election. I quote the Prime Minister at a press conference in his courtyard on 25 February 2008, when he said:

The private health insurance rebate remains unchanged and will remain unchanged.

The reason I keep quoting the Prime Minister and the health minister is to show a track record. They convinced people prior to the election that they were economic conservatives, which has proven to be a farce. The only thing they have done is show people that Gough Whitlam was perhaps an economic conservative, by way of example. They were also prepared to say to people that they were not going to touch the private health insurance scheme. Here today we are debating a bill which will do exactly that.

Who is supporting the coalition stance on this? The Australian Private Hospitals Association are in support the coalition’s view that the Prime Minister turned on the Australian public when they clearly broke their election promise. The association’s CEO, Michael Roff, stated on 12 May 2009:

The changes to the private health insurance rebate announced in tonight’s budget are a clear breach of election promises made by the Rudd Government. The changes will lead to a system that is confusing, complex and costly for those millions of Australians who take responsibility for their own health care costs.

Perhaps what is most infuriating is that these increases in private health insurance premiums and the Medicare safety net levy could have been avoided. They could have been avoided if the Rudd Labor government had not, to use their own terminology, ‘spent money like a drunken sailor’.

However, the Rudd Labor government still have the power to stop penalising all Australians by their reckless spending—that is, if they listen to the coalition and take our advice on how to amend the situation. The coalition are in a prime position to advocate such advice, with their far superior track record of economic and health system management. Simply put, the Rudd Labor government could avoid having to increase private health insurance premiums for those earning over $75,000 per year by enforcing increased taxes on tobacco. An approximate 12.5 per cent increase in the excise on tobacco would pay for the hole in the budget created by the Rudd government’s reckless spending and provide positive health outcomes. The coalition’s proposal has been widely supported by third-party groups, including the Heart Foundation, the Australian Medical Association, Quit, Professor Simon Chapman, of the University of Sydney, Professor Harry Clarke, of La Trobe University, and many others. The executive director of Quit, Ms Fiona Sharkie, said on 15 May, 2009 that increasing the cost of tobacco products is the single most powerful way of driving down smoking rates. She also said:

There is absolutely no doubt that increasing cigarette prices will save thousands of lives that otherwise would be lost to the devastating harms of tobacco. Research consistently shows increases in the real price of cigarettes are crucial to reducing smoking rates.

The Prime Minister’s claim that such a proposal would leave a hole in the budget is just clever and manipulative politics. He is relying on Treasury modelling over 10 years, well beyond the current forward estimates of this budget. In fact, Treasury figures confirm that, over the life of the budget forward estimates of four years, an increase in cigarette excise would more than cover the cost of retaining the private health insurance rebate in its current form—that is, $2.2 billion to cover $1.9 billion. As smoking prevalence reduces because of the increased excise, there would be additional savings through reduced demand for health services.

The Prime Minister is quite blatantly throwing around lies in an attempt to distract the Australian public from his spiralling and out-of-control debt and broken promises. Furthermore, the changes to the private health insurance rebate are just the latest phase in Labor’s unrelenting war against private health insurance. Labor hate private health insurance. They hate the fact that individuals should and can choose what type of insurance coverage they want and what sort of health system they want.

The coalition believes in the right of all Australians to take charge of their own healthcare needs and plan for their own future. We have always worked hard to deliver incentives to promote the uptake of private health insurance and take the pressure off Medicare. People will drop out because they cannot afford the much higher premiums, and that will restart the catastrophic premium membership death spiral of the 1980s and 1990s, when Labor almost wiped out private health insurance. The Prime Minister claims that the coalition does not support Medicare, but the facts speak otherwise. The previous coalition increased funding of Medicare from $6 billion to $12.5 billion—a 48 per cent increase in real terms—and this at the same time took the pressure off the public hospital system by increasing private health insurance coverage from 34 to 44 per cent. The coalition is the best friend Medicare ever had.

Eleven million Australians choose to pay their own hard-earned money for private health insurance in order to have a choice in their health care. It does not have to be one at the expense of the other, Prime Minister. As our nation’s chosen leader, you should be promoting our democratic right to freedom and choice—the freedom to choose the level of cover which suits us, not simply a base minimum that we can afford due to increased costs. Australians deserve a strong and well-balanced health system that supports Medicare as a cornerstone but also encourages self-reliance. After the massive cash splash, Australians are now being asked to pay for Labor’s reckless spending with higher health costs. The Prime Minister is taking billions of dollars out of the private health system to pay for his reckless spending. Australians are concerned not only about the impact of the colossal amounts of debt on future generations but also about the fact that they are already paying the price now. The Australian Health Insurance Association could not have agreed more when it stated on 12 May:

The Rudd Government’s decision to dismantle the private health insurance rebate will place increased pressure on the public hospital system and will force up premiums for those Australians who take responsibility for their own health care by taking out private health cover.

Every single one of the more than 11 million Australians with Private Health Insurance (one million of whom live in households with an income of less than $26,000 pa) will have to pay more for their private health insurance as a direct result of this policy.

Labor has lost control of the nation’s finances. Eighteen months ago we had no debt, and cash in the bank. Now, Labor is plunging Australia into more than $300 billion worth of debt and Australia’s health system is suffering because of it. At the same time as racking up unprecedented government debt, the Rudd Labor government is now going to trash the real achievements made in health over the last decade. The government needs to step up and make a decision: do they increase the cost of private health insurance and subsequently increase the pressure on the public health system or do they increase the cost of tobacco and consequently reduce the rate of people taking up smoking, which will relieve some of the burden that smoking places on the health system? For the sake of Australia’s public health, Labor needs to think now about how their reckless spending will have a devastating consequence for future generations. It needs to come up with real solutions, not just bandaids that put the cost back on the Australian public.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

The Fairer Private Health Insurance Incentives Bill 2009 and cognate bills will amend a number of acts to give effect to the 2008-09 budget measure that will see three new private health insurance incentive tiers. The Minister for Health and Ageing in her second reading speech said that the government supports a mixed model of balanced public and private health services. I agree, and say that the strength or backbone of our system is the health architecture which is Medicare. Medicare is the health infrastructure architecture that our health system builds on. It allows the mixed model of public-private that the minister referred to to do its job. The minister also said, correctly, in her second reading speech:

The government is also committed to a sustainable private health system, and to ensure it remains sustainable, the government will rebalance support for private health insurance to provide a fairer distribution of benefits.

These bills give expression to this fairer distribution in a number of ways. First, couples and families earning $150,000 or less will receive the same rebate as they currently enjoy and will not be adversely affected. Secondly, singles earning $75,000 or less will also receive the same rebate as they currently enjoy and will not be adversely affected.

The minister further drew our attention to the percentages of the private health insurance rebate paid to couples/families and singles, and it cuts up in the following way. Twelve per cent of couples/families taxpayers with incomes above $150,000 receive approximately 21 per cent of the total PHI rebate paid to couples/families, almost twice the particular population share. Fourteen per cent of singles taxpayers with incomes above $75,000 receive about 28 per cent of the total PHI rebate paid to singles, twice their particular population share. Under the government’s reforms, couples/families will receive approximately nine per cent of total PHI rebate paid to couples. Under the government’s reforms singles will receive approximately 12 per cent of the total PHI rebate paid to singles. Further, the minister in her contribution in the second reading speech told the House:

These reforms will bring government support for private health insurance in line with the principle underpinning the Australian tax-transfer system—that the largest benefits are provided to those on lower incomes.

Who could argue with that? Rebates for eight million low- and middle-income earners will remain the same, and the government will pay 30 per cent of the premium. The existing higher rebates for older Australians will remain in place for people earning below these thresholds: 35 per cent for people aged 65 to 69 years, and 40 per cent for people 70 years and over. These people will continue to have no surcharge liability if they decide not to take out the appropriate private health insurance.

The reforms are necessary for the following reasons. The first one that I outlined concerned the Australian tax transfer system, where the largest benefits are provided to the lowest income earners and so on. We know that health spending on the current private health insurance rebate is growing rapidly and is expected to double as a proportion of health expenditure within the next 40 years. This presents a predictable yet real challenge, made even more pressing in the fiscal environment that we are in and which the government has to respond to. It is an environment in which we are facing a global recession, the worst that we have seen in our lifetimes. This is very real. The budget indicates that, if this is distributed in fairer ways, it will save $1.9 billion over four years. The government says that this will help to ensure that private health insurance remains fair and sustainable. That is what it is about: having a fair and sustainable health system.

We are also talking about Medicare here. I was listening to the member for Paterson, who was saying that the coalition had a really good track record on health. For the record, their track record in government was to rip over a billion dollars out of the public health system. That was with the Australian healthcare agreements, which used to be 50 per cent from the federal government and 50 per cent from the states. According to the Australian Health and Welfare Institute figures, it was around 42 per cent to 43 per cent when they were in government. That is the period that the honourable member for Paterson is talking about. Yes, they do have a track record, but it is a very sorry one; one of ripping the guts out of the public health system.

I will turn back to how the three-tier system will work and describe it in a little bit more detail. Tier 1 will apply to singles with an income of more than $75,000 and couples and families with an income of more than $150,000. For these people, the private health insurance rebate will be 20 per cent for those up to 65 years in age, 25 per cent for those aged 65 to 69 and 30 per cent for those aged 70 and over. The Medicare levy surcharge for people in this tier who do not hold the appropriate private health insurance will remain at one per cent.

Tier 2 applies to singles earning more than $90,000 and couples and families earning more than $180,000. The rebate will be 10 per cent for those up to 65 years in age, 15 per cent for those aged 65 to 69 and 20 per cent for those aged 70 and over. The surcharge for people in this tier who do not have appropriate private health insurance will be increased to 1.25 per cent of income. Tier 3 affects singles earning more than $120,000 and couples and families earning more than $240,000. No private health insurance rebate will be provided for people who fall within the third tier and the surcharge for avoiding private health insurance will be increased to 1.5 per cent of income for these people.

The new tiered system that sets up the three tiers of rebate and surcharge levels based on income and age is designed to fairly calibrate what the minister refers to as the carrot and stick approach, the carrot by reducing some of it and the stick by increasing some of it to ensure that those who can afford to contribute for their health insurance do so. I agree with the government’s rationale, put so clearly by the minister, that it is not appropriate for low-income earners to subsidise the private health insurance of high-income earners.

We have heard in this place a lot of talk about what the impact will be. Annual indexation to average weekly earnings will ensure that these changes remain equitable and can be maintained into the future. The increased surcharge for people on higher incomes will help ensure that about 99.7 per cent of insured people remain in private health insurance. This is because those high-income earners who receive a lower rebate will face a higher tax penalty for avoiding private health insurance.

It is estimated also that approximately 25,000 people may no longer be covered by private health insurance. Remember that over the last two years that there has been in increase—people have been joining—and that it might therefore result in some 8,000 additional public hospital admissions over two years. I know that, with the pressures on the public health system, we do not want too many more. When that 8,000 is weighed against the fact that nationally public hospitals have about 4.7 million admissions per year, the impact of the measure will be insignificant. The measure will be particularly insignificant for public hospitals given the government’s investment under the new $64 billion COAG agreement, with hospitals receiving 50 per cent over and above what they received under the old Australian healthcare agreements—the ones that the coalition, when they were in government, ripped the money out of and therefore put huge pressure on the public health system. Further, there is the $872 million investment in preventative health that will assist in keeping people out of hospitals in the first place.

In summary, this measure is designed to make private health fairer, more balanced and more sustainable in the long term by creating a carefully designed system of carrots and sticks, and it will have a negligible effect on both premiums and the public health system. At the same time, the eight million low- and middle-income earners who I referred to earlier in my contribution who choose to have private health insurance will continue to enjoy the benefit of a significant government rebate. I commend the bills.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

One can now start wondering just how often we will find ourselves in this House discussing Labor’s broken promises. This government has been in office for just over 18 months, roughly. One can always remember the election campaign: ‘I’m a fiscal conservative.’ Well, the fiscal conservative has admitted in this House that Australians can anticipate being $315 billion, I think it is, in accumulated debt in about six years time. The Prime Minister has blamed that on everybody, as has the Treasurer. I am just waiting for them to blame the Mongolians—it will be only a matter of time before they are dragged into it.

Questions are asked about the impact of something like $9,000 debt for each Australian and the ongoing interest charge. In our early years of government, just finding the $8,000 million to pay interest on a $96 billion debt was difficult. I can only do the simple arithmetic and multiply that by three and a bit and I come up with around $20 billion in interest. Compare that, if you choose, with the cost of running the health system.

The member for Page accused the Howard government of ripping $1 billion out of the health system. The school teachers union always accused the Howard government of not giving as much to public schools as to private schools. But in each case, there is a total and deliberate failure to talk about general purpose revenue. Fifty per cent, give or take one or two per cent either side, of all the expenditures of state governments are funded through this parliament. The member for Page does not give a damn about it inasmuch as she thinks this parliament should organise taxes galore and not worry where they go. You can count numbers at any time. You have no right to stand up at this stage. You do not care, because you do not worry what people pay in taxes to this place.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I find the honourable member’s comments offensive, particularly the words, ‘I don’t give a damn.’ I ask that he withdraw.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

There is no point of order.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

There is the sensitivity being demonstrated. They can stand up here and talk about the Australian government not sending another billion dollars when it was the Howard government, in the interest of giving the states a growth tax for the very purpose of financing their health and education systems and their law and order responsibilities, which denied itself any political advantage. In fact it suffered great political loss to deliver that tax to the state governments. And we had the Labor Party opposing it.

Of course that money should be spent on hospitals. We now have the situation where they say the GST should flow totally without any deductions and as decided by the Commonwealth Grants Commission, which takes into account the other revenue capacity of individual state governments—not decided here in this House. The Grants Commission knows what is a fair distribution, and that is for the states to look after their hospitals. But they have managed to distribute that money somewhere else. Frequently agencies of the government spend all their time stopping the tax-paying sector—for instance, our development sector—from undertaking the sort of development necessary, while they justify their jobs. That is apparently more important than delivering a tax service.

But if the government seriously wants to save some money on health, why not allow Australians to insure for a visit to the doctor? That is expressly forbidden in the act—it was brought down by the Hawke government, in the process of trying to socialise medicine--—and for good reason: a lot of people would have taken that option. And remember that is forbidden under the Constitution. Australia cannot have, by decree of this parliament, British-style national health. The Australian government never had any responsibility for health; it was a state responsibility retained by them for themselves when they wrote the Australian Constitution; there was no parliament to write it. The reality is that money was put in and the states kept it for themselves and offered an entirely different system. Private health insurance was available, whether it was to pay the doctor or to pay for a hospital. When the act was brought in, for Medicare as we know it, you were forbidden to pay a doctor yourself through insurance. We saw a progressive campaign during the Hawke government to drive out the private hospital sector. Private health insurance is only the means by which we can have private hospitals and when private health insurance, as it was, became more expensive, more people left. And they were all the so-called ‘good risks’—those who made the least claim on the insurance sector.

There was great anticipation within the Labor Party and the Keating government by that time. He was a man who boasted that he never had any private health insurance but got his wife into a private hospital with a private room and a surgeon of choice. When you are the Treasurer or the Prime Minister of Australia you do not need private health insurance when you know how to work the system. And that is an absolute fact. But the reality is, had the Howard government not been elected when it was, had the Howard government not progressively introduced such issues as this rebate, private health insurance would have been unable to maintain a sufficient membership base to finance the private hospital system.

There is some suggestion in the minister’s second reading speech that ‘they will not notice the difference out there.’ The government think that 25,000 people who may no longer be covered by private health insurance hospital cover might result in 8,000 additional public hospital admissions over two years. We have waiting lists now but they shrug their shoulders at 8,000 additional admissions. We are of course told that it is insignificant—they were the minister’s words—because it has to be compared to 4.7 million overall admissions. It is like comparing the budget deficit with other nations that have been in the process of borrowing money when Australia under the Howard government was paying it back.

The interesting point is that we are told that the private sector, for example the Australian Health Insurance Association, the AHIA, have got very nervous about this. I am most interested in how important the private sector is to people. They tell us as follows: in respect of major procedures for malignant breast condition—I would think the next speaker would have some interest in that and I did not hear the member for Page on the subject—55 per cent of selected episodes are performed in the private hospital sector, but every effort is being made by the government to undermine the insurance scheme that keeps that afloat. Cancer therapy, chemotherapy, 55 per cent of selected episodes. Hip replacements—the difference between being in a wheelchair and being able to walk in comfort—55 per cent of selected episodes. Other major joint replacement and limb reattachment, 63 per cent. Mental health treatment same day—I presume that is psychiatry of some description—70 per cent. Lens procedures, which is the simple right of people to see, are being independently attacked by the government. I well remember during my time as shadow minister for health when a woman wrote complaining of the waiting lists and said, ‘I have been condemned to live in darkness for another two years because that is when my first chance of getting a public procedure will be available.’ Complex middle ear infection, 70 per cent. Other knee procedures, 77 per cent. Whilst it is difficult to display it here—I suppose if your name were ‘Prime Minister’ I would hold it up—they provide a graph showing change in hospital treatments by hospital type, and of course the private hospital contribution is going through the roof compared to public hospitals.

The minister trumpets the fact that they have thrown I think it was another $64 billion at public hospitals, but have the waiting lists disappeared? No, they have not. Here we have a proposal which became fundamental to maintaining balance between both the public and the private hospital sector. Of course that was the Medicare rebate of 30 per cent to all citizens. Why? It is not because they are rich or poor—and please remember the very poor do not pay the Medicare levy—it is because they have taken a voluntary option to make a significant financial contribution to their health care. Of course—and it will not happen, praise God—if everybody walked away from private health the savings to government would be the 30 per cent rebate, but the cost would be 100 per cent of the delivery of their health services. That is pretty odd accounting but not surprising when one heard this government defending its moves to borrow $315,000 million. The reality is that, as with private education, as with private health services, the people involved make a very real contribution.

When we get to this particular issue, why the problems are as we see them is of further of interest to me. I saw Medicare introduced and I have watched it. I served as shadow minister for health and as the minister identified the other day I came up with an alternative proposal. That alternative proposal was to subsidise pensioners by 100 per cent because, if they all got into private health along with other sections of the community, the cost to government and the Australian taxpayer would fall by 30 per cent by the simple act of aggregating all the contributions into one side of the insurance ledger. Now that is not the policy of the opposition. It never was simply because the then leader, John Howard, was too scared to tell Australians there was a better way. But that is just by the way.

What I am saying is that there is a great difference between the conduct of a public hospital and a private hospital. Public hospitals get budgets. A budget makes a patient a liability, and you have got to be careful that you do not get too many of them. When patients all turn up and want a hip joint replacement and you have not ordered in enough prostheses for that purpose, because your budget limited to how many you could buy, you put them on the waiting list. I attended a conference where the keynote speaker was a lady who had got a knighthood. She was a dame from New Zealand who had got her knighthood for her services to the public hospital system. She said a couple of things that are burnt on my brain. One was that waiting lists were part of the process of conducting the business of public hospitals. She then spent about five minutes of her speech on complaining bitterly—and I thought she did so with some character—about the administration of waiting lists. They are not honest, they are not fair dinkum and, as I have already said, if you are the Treasurer of Australia you can go straight to the top of the queue. That is communism and that is socialism where you have a new elite; they are called the public service. That is just one of the many problems.

But here I am talking about my electorate where if you are not privately insured you are severely disadvantaged. There are not the hospitals on your doorstep to which you can go for common or serious ailments, and you have to be privately insured because you cannot just drive down to the city and demand immediate admission for whatever your problems are. I am also talking about people who, when it comes to certain ailments, cannot be too long away from their farm or other business, so they pay up. Consequently, as I am advised by a private health insurance group, 46,000 persons in my electorate are currently covered by private health insurance, being 50 per cent of the voters listed in my electorate. Irrespective of their income, they are entitled to that small rebate of 30 per cent.

I also object, and continue to object, to this arbitrary list as to means testing. There is no argument in the world that says $150,000 in family income is necessarily making you rich. There are a variety of reasons why you could be on the breadline while you are on $150,000. They are not recognised. If only it were a net income or a taxable income or if some other circumstances were recognised. If only there were some sort of acknowledgment as you move further away from the very centralised hospital system that has developed over more recent years. All that is not there. If you are a pensioner out in a country area and you have a need, it is double that of a pensioner in the city for private health insurance. So why attack these people and why is that the process of saving money? When the thresholds for the super charge were changed and lifted, that was due to the generosity of the government. They wanted to give money back on private health. That is what they said. Now I think they see it as a means of attracting something like $1.9 billion. That is the rip-off.

More importantly, when it comes to public health, the opposition has made a very sensible proposal to the government: cancel this attack, keep your promises and let us increase the tax on one of the most debilitating practices of humanity, smoking. I have never smoked. My mother smoked from 13 to 73. My wife, in her younger days, smoked 40 a day. Nevertheless, we know it is a serious health issue and as such there is no reason why you cannot go and increase the cost of cigarettes in the hope of doing something about it. If the government wants revenue to save people’s lives, it should go down that road, but it should not discourage people from making a serious financial contribution to their own health services. As I have said, if you want some money do it the other way around: let people insure for their own doctors visits.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Order! The question is that the words proposed to be omitted stand part of the question. I call the honourable member for Shortland, who I thought was taking a point of order. I call the honourable member for Shortland to speak in this debate.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. I certainly would not worry about taking a point of order on the member for O’Connor as it was challenging enough trying to follow his thought process when I was listening to his speech on the Fairer Private Health Insurance Incentives Bill 2009 and related legislation. In starting my contribution to this debate, I would like to pick up on a couple of things that the member for O’Connor said. I will pick up on breast malignancies. For the benefit of the member for O’Connor, I am interested not only in breast malignancies. I am just as interested in seeing that men suffering from prostate malignancies get the kind of treatment that they should receive. My interest in a health matter is not determined by gender factors.

I would say to the member for O’Connor he really demonstrated to the House tonight just how out of touch he is and really how little aware he is of the health system. I would refer the member to a report that was brought down in the last parliament by the House of Representatives Standing Committee on Health and Ageing. Called The Blame Game: report on the inquiry into health funding, it highlighted a number of problems within the health system and I would say to the member for O’Connor that the problems that he was highlighting are not problems that were highlighted in that particular report. That report did recognise the importance of private health insurance, just as I recognise the importance of private health insurance and just as the government recognises the importance of private health insurance. The member for O’Connor made a comment that public hospitals get budgets. For the member’s information, private hospitals also work to budgets. Budgets are a very important instrument for any organisation.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

No, they get paid for every service.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Order! The honourable member for O’Connor will resume his seat or leave the chamber.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I think the objections of the member for O’Connor to means testing demonstrate just where he stands on the political spectrum. I suspect that he probably even objects to progressive taxation.

I would like to turn to the legislation that we have before us today. I support it strongly. As a member of the government I know just how important health is. As a person who is very active in her local community and who has worked within health, I know that it is important that we have a vibrant, strong private health system, just as it is important that we have a vibrant, strong public health system.

Unfortunately, I do not think that members on the other side of this House really understand just how important health is. When the Howard government was in power one of their first acts was to close the Commonwealth dental health scheme—a scheme that was responsible for providing dental care to people on low incomes. Another one of their great achievements in the area of health was to rip money out of the public hospital system! Members on the other side of the House are opposed to anything that is an investment in the public system, whereas we on this side of the House support both the public and the private systems. We support both of them very strongly.

The legislation that we have before us today, the Fairer Private Health Insurance Incentives Bill 2009, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009, is very important legislation. It is proposed that, from 1 July 2010, three new private health insurance incentive tiers will be introduced to better balance the mix of incentives for people to take out private health insurance. Existing arrangements will remain unchanged for singles with incomes less than $75,000 and families with incomes of less than $150,000.

In the electorate that I represent in this parliament, 49 per cent of the voters—this is going on information provided to me by the private health insurance industry so they highlight voters—have private health insurance. I decided that I would have a look at the information from the 2006 census. That showed me that 12.6 per cent of people in Shortland electorate earn $1,000 a week. The rest of the residents in Shortland electorate earn under $1,000 a week. Now, if I was to take that up to the amount that I needed to to come up with a figure of $75,000 a year I suspect it would be under 10 per cent of the single population that would be affected by these changes.

Similarly, 15 per cent of families received $2,000 a week in wages, which is $104,000 a year. If you take that up to $150,000 I would say that it would be, once again, 10 per cent or less that would be affected by the changes. I think that the private health insurance rebate should be delivered to people who need it—and that is what this legislation will enable. Those people that need assistance to pay their private health insurance should receive that assistance. The people who can manage to pay their private health insurance without assistance should not receive that assistance.

Shortland has a large number of pensioners living in it. I am quite confident that a large percentage of the 49 per cent of voters in Shortland electorate who have private health insurance are actually pensioners. And the changes that will come in under this legislation will not have an impact on those people.

I will go through the changes. The legislation will introduce a three-tier system. Tier 1 will apply to singles with an income of more than $75,000 and families with an income of more than $150,000, as I alluded to previously. The private insurance rebate will be 20 per cent, increasing to 25 per cent at the age of 65, and 30 per cent at the age of 70, for people who go over that threshold. The other part of this legislation is an incentive for people who currently have private health insurance and who have incomes that exceed the amount that I have mentioned. There will be a Medicare levy surcharge of one per cent for not taking out private health insurance.

Tier 2 will be for singles earning more than $90,000 income and families earning more than $180,000 income. I might add that there would be very few families in the electorate I represent in this parliament that would fit into that category. There would be some but there would be very few. Knowing the people of the electorate that I represent, I know that those who are committed to taking out private health insurance will continue to take out private health insurance. For the tier 2 people the rebate will be 10 per cent increasing to 15 per cent at the age of 65 and 20 per cent at the age of 70. Tier 3 will apply to singles with incomes over $120,000 and families with incomes over $240,000. Therefore those groups will not receive any rebate at all.

This is about rebalancing health insurance and the rebate that is paid. It is about ensuring that those people who actually need to access a rebate to be able to afford private health insurance will receive that rebate. It is for low- and middle-income earners, and the private health insurance rebate will remain unchanged for them. But I do not believe that people on low and middle incomes should have to subsidise the private health insurance of somebody like me. I think it is rather obscene that somebody earning $35,000 or $45,000 should have to subsidise the private health insurance of somebody earning $150,000 or $200,000 or families earning in that range. It is just not the Australian way.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Water) Share this | Link to this | Hansard source

So why did you promise to change it not one jot, not one tittle?

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I note the interjection from the other side of the House, and my advice to the member interjecting is that the Howard government’s record in the area of health was abysmal—absolutely abysmal. Instead of investing in health, they chose to invest in health insurance rebates. What we are trying to do is have a full health policy that invests in all aspects of health and, as part of that, provides assistance to those people who need it with their health insurance.

I think that the current Minister for Health and Ageing has made some truly progressive moves in the area of health. It is about making health accessible for all Australians, it is about providing choice within the health system, it is about enabling people to access the care they need and it is also about preventative health. This health minister has been very proactive in that area.

I note that the opposition’s solution to the issue of saving some money in the area of health is to introduce a tax on tobacco. I really find that most interesting. This is the same opposition that stood up, member after member after member, arguing that a tax on alcohol would not be a deterrent to young people drinking alcohol. They argued that taxes do not work, despite the fact that the AMA said that taxes do work. Now we have this turnaround where all of a sudden the opposition have discovered that taxes on products can influence people’s behaviour. It is worth pointing out to the House that, whilst the opposition came up with this proposal to introduce a tax on cigarettes, they were quite flawed in the way they managed to balance their numbers. They could not quite get the numbers right and there was a shortfall in the figures that they presented in relation to the savings that could be made.

But this is not about taxes on cigarettes. This is not about taxes on alcohol. This is about fairness and equity. This is about ensuring that those people who need assistance with their health insurance receive it. This is about targeting the rebate to those people in greatest need—people on lower and middle incomes—and it is about people on higher incomes taking responsibility and being prepared to take out their own health insurance. I believe that this will have minimal impact on the number of people who take out private health insurance and retain their private health insurance, as I think the choice to have private health insurance at the top end is fairly inelastic. I commend the legislation to the House. I fully support every aspect of this legislation.

Barry Haase (Kalgoorlie, Liberal Party, Shadow Parliamentary Secretary for Roads and Transport) Share this | Link to this | Hansard source

I was going to wade right into the issues that we are actually debating with this legislation—the Fairer Private Health Insurance Incentives Bill 2009 and cognate bills—but given that I have just had to sit through the presentation from the member for Shortland I feel I must address some of the comments she made in the first instance. She set about suggesting that one of the things the past government had done on coming to office was to destroy the dental health system. That is very interesting, because I have a particular interest in dental health and the system that was funded by the Commonwealth government and I fully understand why and when it was introduced. It was funded as a four-year program by the previous Labor government.

As I say, it was proposed for four years, because it was considered that dental health nationally was in a pretty deplorable condition. It had been allowed to deteriorate under collective ALP governments. The federal budget found funds to support that national dental health system for a period of four years, and when the forward estimates were examined when the Howard government came into office there was no funding to carry that program forward. So, rather than it being cancelled by the Howard government, it was simply allowed to lapse, as was planned by the previous government.

Listeners may be aware that when the Howard government moved into office in 1996 we found something like a $9 billion hole in finances, apart from the $96 billion deficit that we had to deal with, $90 billion of which had been accumulated as debt over the previous 13 years. We had to deal with a great deal of debt, as I strongly suspect we will have to deal with when we next take office, because this current government has no real, genuine, calculated intention of ever paying back the enormous amount of debt that has been accumulated in recent months. So let us get the record straight: there was no cancellation of the national dental health system by the Howard government. The national dental health system had been funded for a period of four years, after which it was expected by the previous Labor government that the state of dental health around the nation would be satisfactorily improved and the program would go back to the states to be funded by them, which was an absolutely proper strategy.

The member for Shortland in the conclusion to her contribution raised the issue of the alcopops tax and she contrasted that with our alternative proposal for fund raising: to increase tax tobacco. She glibly proposed firstly that the two situations were comparable and that the fact we would not support one and supported the other was a demonstration of hypocrisy. That was the only thing I could read into her delivery. The alcopops tax was introduced by the government as nothing more than a revenue-raising measure. They were going to pick up some $2 billion worth of additional revenue in the budget period as a result of hitting alcopops in particular, the ready-to-drink category of alcohol. The opposition coalition absolutely correctly resisted that heavy tax burden for those products because it had been presented by the Labor government as some sort of health measure that was miraculously going to reduce the amount of alcohol consumption by young people, particularly young women. What a farce that was. No such thing was true. There was no reduction in alcohol consumption. Overwhelmingly, the people who have come to me, especially the parents of young teenage girls, have said: ‘That introduction of an additional tax was an absolute failure. Now, my children spend less money on alcohol and consume more alcohol because suddenly they have realised they can go to a bottle shop and buy a 750 ml bottle of straight spirits and mix their own drinks. They get into a condition which can only be referred to as rolling drunk for much, much less because they mix their own drinks in unreasonable proportions and, in fact, they consume more alcohol in an evening than they would buying alcopops or ready-to-drink products, as they had in the past.’ So there was no reduction in the consumption of alcohol. If this unjustified additional tax is knocked off, hopefully, in the long term, the one thing that will be changed will be that the government will not be illegitimately raising another $2 billion.

The Hon. Malcolm Turnbull, the Leader of the Opposition, in his budget speech in reply on the Thursday following the budget proposed an additional tax on tobacco products. Proposing an additional tax on tobacco products is quite reasonable if you consider that we are talking about health issues. It is far more reasonable to raise revenue and put that revenue into the improvement of people’s health and the treatment of ill health than to simply slam those who are doing the right thing by affording their own health insurance to protect the public hospital system. So for the member for Shortland to suggest that our opposing the increased tax on alcopops is somehow at odds with proposing an additional tax on tobacco products is an absolute nonsense. If people were going to consume an alternative to cigarettes, for instance, they would still pay the tax.

Enough digressing; I will turn to the legislation at hand. What we are talking about tonight is the Fairer Private Health Insurance Incentives Bill 2009 and related Medicare levy surcharge bills. The very first point I have issue with is the title of this bill: ‘fairer’ private health insurance incentives. Frankly, I cannot see anything fairer about this proposition unless you have a particularly distorted view of the world. At the end of the day, this is an additional tax, an additional cost on those members of the public, those working Australians, who, when forced to analyse their particular position in the health system, back in 1997 when the Howard government proposed the Medicare surcharge, decided that if they could afford to take out private health insurance they ought to because they were going to suffer a financial penalty if they did not. As a result, many, many people joined the private health system and, because of that and the money that flowed into the private side of the health system, the pressure was taken off the public hospital system. That meant that those people who were on very low wages or in unfortunate circumstances and could not afford to buy private health insurance did not have the same waiting lists or queues for access to the public health system.

So to call this a ‘fairer’ private health insurance incentive when this philosophically socialist Labor government is now going to rip away that rebate from those who have acted independently and are prepared to support their own health through insurance is a nonsense. But it was no shock to me when this bill was introduced. I had said prior to the election in 2007 that this party could not be trusted with money, could not be trusted to govern for all Australians, could not be trusted to be fiscally responsible, regardless of the propaganda that we were fed. But I did not think they would go this far, because this legislation proposes to do something that, prior to the election, the Australian Labor Party said they would not do. But they have done it. We have had many, many other examples the last almost 18 months where they have gone back on their word, but I did not think they would actually do this.

They have almost tried to convince the Australian public, to cover up this proposition, that they are acting in some sort of Robin Hood role: they are going to rob from the rich to give to the poor. I think we as Australians have a pretty good sense of a fair go—and we have another adage along the lines of ‘a fair day’s work for a fair day’s pay’. But the leader of the current government, Prime Minister Rudd, is becoming well known now as the master of spin, and the Robin Hood robbing from the rich to give to the poor story is just another smokescreen. It is just another finely honed charade. This is not Robin Hood robbing from the rich to give to the poor; this is really the Sheriff of Nottingham redirecting funds from those who work hard and make a contribution to society and pay their way in the community—by helping those that cannot afford health insurance to a better, more accessible public health system. He is beating them around the head with it and doing it all behind a smokescreen. Those who cannot afford private health insurance which will allow them ready access to private health are now going to be penalised, because they will have less access to the public health system that exists. So the whole connotation of taking from the rich and giving to the poor is absolutely flawed.

It raises a further question: when the Prime Minister spoke glowingly and lovingly about his working families, saying he had to look after the Australians who were working families, he convinced many of us that he was genuine, and no-one really thought to question the definition of a ‘working family’. But, when you see legislation like this proposed, you start to wonder: just what is a ‘working family’? What does the government hold as a definition of their ‘working families’?

When this proposition was first revealed, numerous members of my staff said to me: ‘We’re not rich; we don’t have a wealthy family. My husband and I are working, we both work very hard and we pay health insurance. Sure, we earn in excess of $120,000 a year collectively, because we are in our working hard era, accumulating funds for a time when we have got a family. But we’re not rich.’ People all over my electorate are coming to me and saying: ‘You introduced, whilst in government, the rebate that was going to reward those persons who did the right thing and insured themselves against health situations in the future. How do you feel now that the government is proposing to take this rebate away?’ I say, ‘I’m angry; I’m very angry,’ because it flies in the face of what was promised before the election. Thousands of Australians took the promise at face value and said, ‘Well, we don’t have to worry about this being another high-taxing, big-spending government, because they said they won’t be.’ That is what makes me angry. When people go back on their word, it is great cause for anger.

I say to the people who come and complain to me, ‘The role of a good opposition is to highlight the failings of government, to highlight their broken promises, to highlight the fact that they say they will do one thing and then in fact do another.’ So we bring this issue up. Whether or not we will be able to stop this piece of legislation going through is yet to be seen, but there is no way that anyone who believes in a fair go could accept this legislation as being either honourable or necessary. There are other ways to raise these funds, and this government ought look to them.

We have had some statistics analysing all of the Australian federal electorates and the numbers of people in those electorates who have private health insurance. The member for Shortland raised the fact that she had a printout that had been provided to her by the Australian Health Insurance Association. I think she tried to make the point that the passage of this legislation would have a minor impact on her constituency because, as she read the stats, there were very few people in her electorate that had private health insurance. For the benefit of the member for Shortland, I can assure the House that in the electorate of Kalgoorlie there are some 63,000 people that are covered by private health insurance. Those people are primarily what the Rudd government would refer to as ‘rich people’. They are rich people; they are not working families by his definition. So they are going to have the 30 per cent rebate ripped away from them and they are going to be none too happy about that outcome.

The fact that many more than 50 per cent of my electorate bother to spend their hard-earned money on private health insurance is significant. But what is more significant is that there are no private health facilities across the Kalgoorlie electorate. That is, in 91 per cent of Western Australia—in 2.3 million square kilometres—there are no private health facilities. So why do my hard-working families take out private health insurance? Let me tell you.

They do so because they know that they are only going to keep earning so long as they keep working and, if they have an incident that requires immediate, good private medical attention, they have spent their money on that insurance and they will be able to access in a timely manner the health services they need in the city of Perth. They know full well that they will not get that private health service in the electorate but they will be able to go and get that health service as they need it because the private sector of health provides those facilities in the metropolitan area and charges for them and, if one is privately insured, the insurance company will pay. That is a system that was able to evolve when the Howard government salvaged the health system in this country after the near ruination of the 80s and 90s under Labor.

Labor would take us back to those days. They would take us back to the days of poor access, long queues, long lists and the ‘you’ll get repaired when we’ve got the time to repair you’ attitude. But it has been done under the smokescreen of Robin Hood robbing from the filthy rich, who do not deserve any consideration from government, and giving to the poor, who deserve every consideration from this government. If that does not reek of socialism, I’ll go ‘Hee!’.

The reality is that people are prepared to spend the money they work hard to earn to take out a private health insurance premium because they know (a) they can avoid the Medicare surcharge and (b) they will get a 30 per cent rebate. It is not an enormous rebate and the cost of private health insurance today is very substantial. Those people deserve to be respected by this government. They do not deserve to have this government go back on the beliefs they stated before the election that they would not increase taxes. This is nothing more than another financial hit on hard-working Australian families, the very same families that this government said it would protect.

Debate (on motion by Mr Anthony Smith) adjourned.