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

I rise to support the Fairer Private Health Insurance Incentives Bill 2009 [No. 2], the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 [No. 2]. It is with blinding hypocrisy that we hear the opposition spokesperson on health trying to give this parliament and the government a lecture in relationship to health and the merits of the two parties as to where they stand on their records with the health system. What the Australian people know, what this parliament knows and what is plain to everyone is that when the former Howard government was in charge of the Treasury benches what they did, when the now Leader of the Opposition was the health minister for four years, was rip $1 billion out of the health system.

The contribution of the former health minister, now opposition leader, was to make it harder for public hospitals to operate and harder for them to deliver the services that Australians expect. He also presided over putting a cap on the number of GPs which also led to shortages of GPs in electorates like my own, something that this government has rectified. It is an amazing contribution that the opposition spokesperson on health made today to claim that Labor cannot be trusted when it comes to health care versus the position that the former government took on health. I will come back in a little bit more detail to some of those issues.

What is clear from the opposition spokesperson on health is that last year not only did he give up on his electorate but also he gave up on tough health reform. It is a pretty sorry state that he is still remaining as the shadow health spokesperson when he clearly does not have his heart in that job either.

The government is again seeking to rebalance its range of policies supporting private health insurance. Under these bills for low- and middle-income earners the private health insurance rebate will remain unchanged. Higher income earners will receive a reduced rebate. As income increases 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 in line with the principle underpinning the Australian tax transfer system that the largest benefits are provided to those on the lower incomes.

Currently approximately 14 per cent of single taxpayers who have incomes above $75,000 receive around 28 per cent of total private health insurance rebate paid to singles. Under the new reforms these single taxpayers will receive about 12 per cent of the total PHI 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 total PHI rebates paid to couples. Under the new reforms these couples will receive around nine per cent of the total PHI rebate paid to couples.

Treasury modelling estimates that under these reforms 99.7 per cent of people are expected to remain in private health insurance. While the opposition spokesman on health will tell us that the world is going to collapse and that everyone is going to leave private health insurance, that simply does not stack up when economic modelling is done. I repeat: 99.7 per cent of people are expected to 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. This is supported by a recent Ipsos survey which demonstrated that, when people are fully aware of the changes made, only 15,000 people will drop out of insurance. This is actually 10,000 fewer than what the government estimated when we first introduced these bills into parliament.

Private health insurance has shown to be a resilient product. In the latest September quarter figures the coverage of health insurance has grown to 46.7 per cent, up 0.2 per cent on the June quarter. This demonstrates that the government policy changes are not having an impact as predicted by the opposition. The saving from this measure has increased by approximately $90 million to $2 billion over five years from the estimated savings published in the 2009-10 budget, which was $1.9 billion. This is due to an upward revision in the estimated government expenditure on the private health insurance rebate published in the 2009-10 Mid-year Economic and Fiscal Outlook.

While most private health insurance rebates are now expected to be paid, increasing the cost of the private health insurance rebate to the government, the average size of each additional rebate will be smaller if this measure is passed, thus increasing the save from these measures. The estimated increase in government expenditure on the private health insurance rebate published in the 2009-10 Mid-year Economic and Fiscal Outlook—$276 million in 2009-10 and $1.1 billion over four years—underscores the need to implement the government’s reforms to reduce the long-term cost to the budget of a quickly growing expenditure and ensure that support for private health insurance remains fair and sustainable into the future.

It never fails to amaze me how those on the other side constantly come here and express concerns about our public hospitals, the dental system and our health system generally. When we think back to what the former government did by ripping billions of dollars out of the public health system and closing down the Commonwealth dental scheme, the opposition has no credibility with anyone when it comes to health. 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.

In my electorate of Dobell in the north of the Central Coast in 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 to subsidise the private health insurance rebates of high-income earners, especially if those 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 one-third of them commute to and from Sydney, a two-hour trip each way every day. 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 families 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 of course are 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. In my electorate we are very familiar with the pressures on public hospitals.

It should also be mentioned whenever we talk about health—and I think it is sometimes overlooked by both sides of politics—that in Australia we have a world-class health system. We look after and make sure that people who need to be seen in emergency departments and hospitals are seen. If I or my family were to fall ill, I would rather it be in Australia than in any other country in the world. I think that point always needs to be made in terms of a debate about health. Having looked after health workers for close to 20 years, the dedication and the work that doctors, nurses, allied health professionals, health workers and hospital workers do is something to behold in terms of their commitment to doing their job. Because of that commitment we have a first-class, world-class health system throughout Australia. That is not to say that there are not things that can be improved. It is also important to point out that, when this government came to power, there was a need for some immediate action to strengthen our health system.

Whilst the opposition spokesman said that the government has been all rhetoric in relation to what it has done on health, that simply does not stack up to analysis. I would like to go through some of the issues and some of the improvements that this government has made in terms of our health system since coming to government. In terms of hospitals, the government will invest $64 billion in the hospital and health system across the country over the next five years. That is a 50 per cent increase on the previous agreement by the Liberals. That is a real change: a 50 per cent increase in the money that is going to be spent in health. That is not simply rhetoric; that is real action, putting dollars into our health system and our hospitals to make sure that they can run as smoothly as possible.

We have invested $600 million in our elective surgery program. Stage 1 committed to a target of 25,000 extra elective surgeries in 2008 and delivered 41,000 procedures. They were real procedures. These are real people who are out there, on waiting lists for elective surgery. This is not some sort of spin that has been made up by this side of parliament. Forty-one thousand additional procedures have taken place because of the investment that this government has put directly into health. Under stage 2, more than 150 hospitals across Australia will receive funding to make sure that these extra elective surgeries can take place so that people who have been on waiting lists can be seen in a shorter period of time than would have been the case if the Howard government had been re-elected.

We have invested $750 million in taking pressure off emergency departments, and more than 30 hospitals will benefit from this investment. In terms of infrastructure, we are now undertaking historic investment in nation-building health infrastructure. We are investing $3.2 billion in 36 major projects across our hospitals and medical research institutes, including $1.2 billion in world-class cancer centres. The statement from the opposition spokesperson that the government has done nothing simply does not stack up when you look at the achievements that this government has made and the inroads that this government is making in improving the health outcomes for all Australians.

We have invested $275 million to construct 34 GP superclinics across the country. I am lucky enough that one of those super GP clinics is in my electorate of Dobell, and it has been operating since September of last year in a temporary capacity. They have just exchanged contracts for the permanent site of this new super GP clinic, and the successful tenderer—who is operating now with two doctors, a dietitian, a physiotherapist, a hearing clinic and a podiatrist—will be investing a further $16 million on top of the government’s investment into this super GP clinic on the Central Coast. In addition to that, because the model of the super GP clinic has been such a good model, this same provider is looking at putting in a similar investment of $14 million a little further south in my electorate. So, from a modest investment from the Australian government in two super GP clinics operating in my electorate, we will end up with some $30 million of private investment going into these super GP clinics.

Just in terms of doctor numbers, this will provide an additional 40 doctors in my electorate. We at one stage, when the Howard government was in office, had close to one doctor for every 2,000 residents. Of course, at that time the then Minister for Health and Ageing, now opposition leader, Mr Abbott, had put a cap on GP training places, so it was very difficult to get more doctors into regional areas such as my own and into areas that had a great need for additional GPs. So, whereas some Sydney suburbs had one doctor for every 800 residents, we had one doctor for every 2,000. I am happy to report that, whilst we are looking forward to these additional doctors that will be coming through the government’s investment and the private sector’s investment in super GP clinics, we are already up to one doctor for every 1,500 residents in my electorate. This is because we have lifted the cap on GPs, a very important initiative of this government that is having a real and direct effect on the primary care that people in my electorate are receiving.

In terms of workforce, the government will invest $1.1 billion in training more doctors, more nurses and more health professionals. This is the single biggest investment in the health workforce ever made by an Australian government. We will see 812 additional ongoing GP training places from 2011, a 35 per cent increase on the cap of 600 places imposed since 2004 by the now opposition leader, then health minister, Mr Abbott. The government will deliver $134.4 million to better target existing incentives and provide additional non-financial support to rural doctors. The reform introduces incentives based on this principle: the more remote you go, the greater the reward. Under this initiative, 2,400 more doctors in 500 communities around Australia will become newly eligible for rural incentive payments.

There will be $122.7 million of measures to improve choice of and access to maternity services for pregnant women and new mothers through providing MBS and PBS benefits for services provided by midwives. We will provide access to the MBS and PBS for nurse practitioners at a cost of $59.7 million. The government will also provide 20 nurse practitioner scholarships, 1,134 new annual Commonwealth supported higher education places in national priority areas of nursing and a new incentive of $6,000 for eligible nurses who return to a hospital or aged care setting.

You can see the scale of the investment that this government has already made in terms of health. You can see that without these measures we would be in a much worse situation in terms of our health system and that this government has made a real difference in making sure that money is flowing to the health system. We have also made sure that the often neglected area of prevention has been recognised, and we have invested a record $872 million—the single largest investment ever in preventative health—to make sure that we can look at ways of making sure that people do not fall ill in the first place.

I noticed that the opposition spokesman made some comments about dental care. It was unbelievable that he would have the gall to do so, given the former government’s record of closing down the Commonwealth dental scheme. This government committed a total of $650 million for two dental programs. The teen dental program commenced last year and provides $150 annual payments to eligible families. To the end of December, 258,203 teenagers had received a dental check-up under the program, with 7,598 dentists—70 per cent, that is—providing services. Unfortunately, due to the opposition standing in the way in the Senate, the Commonwealth dental health scheme, which would provide up to one million consultations, has not been able to commence. They closed it down when they came to government in ‘96. We are trying to put services back into dental care, and we are being frustrated in the other place by the opposition.

This government is committed to providing $44 billion over the next four years to aged and community care. No government has invested more than this one in aged care. We are rolling out an additional 2,000 transitional care beds, a $293.2 million program which helps reduce pressures on hospitals. What this means is that older people generally, who are in hospital beds and who could be moved out of those hospital beds, which could be provided to new patients, are able to move to these transitional beds, freeing them up and meaning that our health system has a greater flowthrough. These are very important reforms that this government has made to the health system.

When it comes to health reform, this side of parliament welcomes a debate. We will stack up our record, any day of the week, against the record of those opposite, particularly against the record of the former health minister, the now Leader of the Opposition, who presided over ripping a billion dollars out of the health system, capping GP numbers and doing nothing about the shortages of nurses and health professionals. On this side of parliament we have made real changes. For the future, the government has embarked on a path to build the health and hospital system that Australia needs for the 21st century. The government is committed to an overhaul of the health system to ensure it can cope with future challenges, including an ageing population and rising health costs. I commend the bill to the House. (Time expired)

Andrew Southcott (Boothby, Liberal Party, Shadow Parliamentary Secretary for Regional Health Services, Health and Wellbeing) Share this | Link to this | Hansard source

We have been here before. The Labor Party, when they were last in government, could not wait to get their hands on private health insurance, and they made a number of decisions in the first few years of the Hawke government which amounted to a 40 per cent withdrawal of the support for private health insurance. We saw private health levels fall from around 50 per cent in 1983 to the point where they reached a low of 30 per cent a little more than 10 years ago. Private health insurance plays a very important role in keeping pressure off public hospitals. It provides for people to have choice of doctor and choice of hospital, but it really plays a critical role in reducing waiting lists and keeping pressure off the public hospital system. So, as the previous government, we introduced a number of reforms: the private health insurance rebate, lifetime health cover and an increased rebate for people over 65 and over 75.

It is no secret that the Labor Party has always been opposed to private health insurance. Anyone with any passing familiarity with debates on health policy would be well aware of that. The Latham Diaries is a very good guide to what the view of the Deputy Prime Minister on private health insurance was when she was the Labor Party’s spokesperson on health. That is why there was great interest by the public in knowing what the Labor Party would do with private health insurance. Let us have a look at what they said before the election. Before the election, when Kevin Rudd was interviewed by Leon Byner on radio FIVEaa on 24 August 2007, Leon Byner asked:

… 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 for private health funds which currently the Government supports, that’s the 30 per cent we’re talking about?

Kevin Rudd replied:

Absolutely not.

The Prime Minister, when Leader of the Opposition, in a letter to the Australian Health Insurance Association, 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.

The Prime Minister, in a press conference in the Prime Minister’s courtyard on 25 February 2008, said:

The Private Health Insurance Rebate policy remains unchanged and will remain unchanged.

The current Minister for Health and Ageing, in a media release when she was shadow minister for health on 26 September 2007, 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.

On 24 February 2009 Nicola Roxon told the Ageand this was at a time that we now know she was seeking advice on the means testing of private health insurance rebates:

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

What this means is that with the Labor Party it is very important to always look at the fine print, because in each of just two budgets they have already withdrawn government support for private health insurance.

We would like to know what their plans are if they are re-elected this year. The 46 per cent of Australians who hold private health insurance have a right to know what the Labor Party plan to do if they are re-elected. With Labor it is not just what they say; it is what they do. Everyone knew that the Labor Party were to do this, so why did they lie before the last election? Why have they broken this promise? This is a clear breach of a promise they made—of commitments they made—prior to the last election. They promised not to alter the private health insurance rebates.

What this now means is we return to the bad old days where you saw people dropping out of private health insurance. As the people who stayed in private health insurance were older and were more likely to claim, we saw rising premiums and a vicious circle occurring. This is what happened when Labor were last in government. We saw a dramatic decline from 50 per cent to 30 per cent of the population being insured. It dropped to a point where the structure we had was almost unsustainable. According to details given by the Department of Health and Ageing to the Senate inquiry, 25,000 Australians are predicted to drop their hospital and general treatment cover. A further 10,000 people who currently have hospital and general treatment cover are expected to keep their hospital cover and drop their general treatment cover. Another 5,000 people with general treatment cover will drop that cover. That is very modest compared to other predictions which are around, such as research undertaken by Access Economics which showed that four times more people than predicted by Treasury may go without private health insurance as a result of changes to the private health rebate and the Medicare levy surcharge.

What we know is that there is enormous concern in the community about quality of treatment in public hospitals, about access to treatment and about waiting lists. Another thing that the Labor Party promised to do in government was fix the public hospital system. They set a deadline of the end of June 2009. We are already seven months on from that deadline and nothing has happened. This is another very clear case. Labor promised before the election that they would fix public hospitals. The Prime Minister famously said, ‘The buck stops with me.’ Now we see, more than two years on in government and more than seven months after their own deadline, that nothing has happened on public hospitals. What we see, importantly, on private health insurance is that Labor have taken measures which will add further pressure on the public hospital system. We saw only this week the embarrassment to the Labor Party in which the Prime Minister claimed that this measure would save $100 billion over the next 40 years. He claimed that was in the Intergenerational report. The Intergeneration report made no mention of this at all; in fact, the measure that we are considering is a savings of $1.9 billion over the next five years.

Turning to my electorate of Boothby, I know that private health insurance is an important issue. There are 93,685 people who are covered with private health insurance. Seventy-one per cent of voters hold private health insurance, 63 per cent of voters hold hospital treatment insurance and 69 per cent hold general treatment insurance for ancillaries and so on. These are about 20,000 singles and 20,000 families who are insured. As I said, more than 90,000 people are covered with private health insurance. One of the things that I have always had impressed upon me by constituents is the importance of having tax deductibility as an incentive for people to take out private health insurance. The measures such as tax deductibility through the private health insurance rebate, the lifetime health cover and the Medicare levy surcharge have led to the point where we have more than 45 per cent of people covered by private health insurance. That is a big jump from what it was when the Howard government was first elected, where it was languishing in the low 30s.

In my electorate there are a number of hospitals—Flinders Private Hospital, Blackwood and District Community Hospital and Griffith Rehabilitation Hospital—and outside of my electorate but used by many people in my electorate is the Ashford Hospital as well, so this is a very important issue for my electorate. We have more than two-thirds of people holding private health insurance. This is a very simple issue. The Labor Party before the election said one thing, and they have done another thing in government. The Labor Party in two budgets have on two occasions withdrawn support from private health insurance. What my constituents and the public would like to know is what their plans are if they are re-elected. This is the second time we have considered this bill, and the opposition remains opposed to this. This is a clear breach of the promise.

If this bill is passed, all Australians will be paying more for their health. In fact, using the government’s own figures, Australians will be paying something like $100 billion more for their health over the next 40 years. People who are on incomes above $75,000 will see increases in their premiums or the Medicare levy surcharge. People who are on incomes below $75,000 who hold private health insurance will see increased premiums as a result of dropouts and these cutbacks to the private health insurance. People who do not hold insurance will have to wait longer, because there will be more people in the public hospital system. There will be more people in the public system, adding further pressure to that. This was not just a promise they made in the election. This was, as I said at the start, repeated many times by the Prime Minister. It was repeated many times by the minister for health. It is another broken promise by the Labor Party, and the opposition remains opposed to it. We believe that private health insurance plays a very important role in our health system. It is very important in taking pressure off the public hospital system. We will be fighting for this to be retained.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Fairer Private Health Insurance Incentives Bill 2009 [No. 2] and cognate bills. Before I continue, I would like to go on the record and declare a conflict of interest: I do have private health insurance—like millions of other Australians—and my family is covered by it. Also, I cannot hide from the fact that I do earn more than $120,000. I just wanted to put that on the record.

This week the Treasurer released the new Intergenerational report, called Australia to 2050: future challenges. This report confirmed what most of us already know: Australia’s ageing population is a big pressure point for our health system. Unless we can magically discover Ponce de Leon’s fountain of youth—maybe somewhere out in the Balonne or on a property out in Western Queensland—the pressures on our economy are only going to get worse. As the population ages, more people will rely on health services. At the same time, health costs—the opportunities to spend money in the health system—are growing rapidly. It is just a reality that most of our health costs balloon as we age. They tend not to occur when we are 20, 30, 40 or even when we are 5, 10 or 15; it is much later in life that health costs skyrocket.

The report that the Treasurer delivered on Monday found that health spending would almost double in the next 40 years. That is incredible. It would rise to 7.1 per cent of our GDP in 2050. This means that we cannot continue the way we are going because our economy will be totally overwhelmed. Life and lifestyles as we now know them will come to a screeching halt. If we want our fellow Australians to be able to access the kind of health system that they expect and deserve, we cannot just take a business-as-usual approach. We cannot just stick our heads in the sand and say, ‘No, things are fine; we can continue.’ We need to respond to the research, to the hard data, to the empirical trends that, sadly, sit before us. The private health insurance rebate is an important tool for helping more Australians access private health insurance. It is a great example of the helping hand of government working with individual responsibilities. It is something that those opposite used to believe in; now they are retreating from that.

Since 2001, more than 1.2 million more Australians have taken up private health insurance, with 9.8 million people now covered. In fact, in the latest September quarter, the coverage of private health insurance has grown to 46.7 per cent, up by 0.2 per cent on the June quarter—something not mentioned by speakers on the other side, especially the first speaker for today, the member for Dickson, who is like Henny Penny Hanrahan when it comes to private health insurance—‘the sky is falling’. He says ‘we’ll all be rooned’ when it comes to private health insurance numbers. But, no, Henny Penny Hanrahan, the member for Dickson, has it totally wrong; we have actually had an increase, despite the calibrations that the Rudd government has sensibly brought in in the context of a constrained budget and an ageing population.

Not only does this mean that nearly 10 million Australians enjoy the benefits of access to private health care; it also takes pressure off our public hospitals. However, the current rebate is just not sustainable for the long term. That is why we need to recalibrate the rebate to ensure low- and middle-income Australian taxpayers are not subsidising the health insurance of wealthier Australians. As I said at the start, if I earn over $120,000—and all MPs would be in that bracket, certainly individually—why should the trolley boy at Woolworths at Moorooka subsidise my health needs? Why should the panelbeater at Coopers Plains subsidise my health needs? Why should the baker at Corinda subsidise my health needs? Why should the aged-care nurse at Sunnybank Hills subsidise my health needs? I know that the Liberals want to look after the big end of town, but by blocking this particular measure they are costing Australian taxpayers almost $2 billion over the forward estimates and $100 million out to 2050.

When will the Liberal and National parties have the courage to take the tough decisions to manage long-term fiscal pressures and ensure that all Australians have a sustainable health system? I remember a time when they claimed economic credibility, but that title has slipped away entirely. The opposition like to pretend that this bill will force thousands of Australians to give up on private health insurance and rely on the public health system. As I said, the previous speaker and Henny Penny Hanrahan, that voice of doom, said, no, people are going to turn away from private health insurance; but this view does not add up and it is not supported by the data and the research. It is just more of the smear and fear that we have come to expect from those opposite. The member for Dickson said that the Labor Party’s changes are about an ideological obsession. However, any sensible person, anyone with a shred of common sense, would see that it is about a commitment to delivering balance and common sense.

The Treasury estimates show that in fact 99.7 per cent of people are expected to remain in private health insurance. If we look at the last quarter’s data, maybe it will even increase. They predict about 6,500 singles and 5,500 families may have to drop their private health insurance—and let us hope that those numbers decrease. In fact, a survey conducted by the research firm IPSOS found that even fewer people would drop their private health insurance as a result of these changes. It is a much more valued product than those opposite claim. The reality is that around three-quarters of all policyholders in Australia will not incur any increase in their net premiums as a result of this bill before the House.

These changes to the private health insurance rebate are not being made in isolation. They are accompanied by a massive health reform agenda and increased spending on public health in areas like elective surgery and chronic disease prevention and other initiatives like GP Superclinics rolling out across the country—one coming soon to Moreton—and a significant boost to training more doctors, nurses and allied health professionals. Contrast that with the work of those opposite, where they ripped a billion dollars out of the health system. So for those opposite to complain about this recalibration is hypocritical, to say the least.

The Fairer Private Health Insurance Incentives Bill 2009 introduces a tiered system to better balance the incentives for people taking out private health insurance. For low- and middle-income earners the private health insurance rebate will remain unchanged. That is for singles earning less than $75,000 or families earning less than $150,000. Tier 1 will apply to singles with incomes of more than $75,000 and families with incomes of more than $150,000. For these people the rebate will be 20 per cent, increasing to 25 per cent at 65 years of age and 30 percent at 70 years. Tier 2 kicks in at $90,000 for singles and $180,000 for families. These are not necessarily people on struggle street, I would suggest. The rebate will start at 10 per cent, increasing to 15 and 20 per cent at the age brackets I mentioned above. The rebate cuts out at tier 3 and applies to singles on $120,000 and families earning more than $240,000. This legislation also changes the Medicare levy surcharge to encourage higher income earners to maintain their private health insurance. It does so by raising the levy to 1.25 percent for those in tier 2 and 1.5 percent for those in tier 3. The Medicare levy will remain unchanged at one per cent for those in tier 1 and below.

As healthcare costs continue to rise, we are going to see an increase in private health insurance premiums. That is just the reality of an ageing society and advancing health technologies. If we agree that we want private health insurance to be sustainable for the long term, we need to respond to these increasing costs. That is the Labor Party view of policy. We look for the long-term benefits to the nation and the long-term best interests of the nation, not short-term political expediency. Unfortunately, maybe sometimes that is the curse of opposition—and it certainly seems to be a baton that the new Leader of the Opposition has grasped with both hands. Rather than handing out government rebates to all and sundry, responsible government, far-sighted government, government with vision, demands that we fairly allocate government resources to those that need it most. This legislation strikes the right balance. It continues to support low- and middle-income earners while empowering those that have the ability to pay. As I mentioned previously, this measure will deliver $2 billion in savings over the next five years and ensures that private health insurance remains fair and sustainable into the future. I commend the 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 today to address the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009. This legislation would alter the Medicare Levy Act of 1986 by increasing the surcharge for those workers who exceed higher-income thresholds but do not opt into private health insurance. This is part of a package of bills and has been presented in conjunction with two bills which seek to create three income tiers. These tiers would be used to determine the amount of private health insurance rebate people receive when they purchase a complying health insurance policy, and thus affects the price of premiums. The former provision is undoubtedly a means to punish those people on higher wages who choose to remain in the public health system. In simple terms, the act imposes a substantial cost on those high- and middle-income workers who rely on the public system, which in turn encourages them to pay for membership of a private fund.

The success of this system has been demonstrated by the increase in private health insurance membership which occurred when the surcharge was first established by the former coalition government. In little more than a decade, private health insurance membership has increased by more than 14 per cent. With the success of this program in mind, it seems ludicrous that the Rudd Labor government would seek to make damaging changes to the provisions already in place.

Increased private health insurance membership is vital to ensure the public system can cope with the demand of those who need it most. Currently, hospitals across the Hunter and across the country are overstretched. This has been highlighted by a number of recent reports, including the New South Wales Health Quarterly Hospital Performance Report. In the September quarter of last year, this report found that the Hunter’s three hospitals—the Calvary Mater, Maitland Hospital and John Hunter Hospital—admitted just 69 per cent of emergency patients in the recommended time frame, on average. Further, and most recently, the Productivity Commission revealed that in 2007-08, there were 59 cases of ‘sentinel’ events in New South Wales public hospitals—the highest of any state in Australia. These ‘sentinel’ events, as they are called, occur when there is a hospital system failure. This includes incidents involving the wrong patient or body part, medical instruments being left in patients after surgery, and medication errors. These events can result in serious injury or even death and can lead to a serious decline in confidence in the nation’s public health system.

Let us be clear on this issue: these failures are not to be blamed on the hardworking doctors, nurses and other allied health practitioners who perform outstanding work despite far from ideal conditions and who are stretched to the limit to perform, often encouraged to work extremely long hours and tiring shifts. These people are to be praised for their dedication, and in particular, for serving areas of real need. In Paterson we have a drastically ageing population and a shortage of health facilities. To put this into numbers, GP Access has found that in some parts of the Paterson electorate there are more than 2,000 residents for every full-time GP, while there are fewer than 800 per GP within many areas of Sydney.

To add further insult to injury, the Rudd Labor government has failed to initiate programs to attract more doctors to rural and remote Australia and the numbers continue to dwindle. In the Hunter region alone, including the Paterson electorate, more than half of all doctors are more than 50 years of age and 20 per cent are more than 60 years of age. These doctors are facing retirement and will cause numbers to decline even further. Despite this stress and demand, we still have a number of talented professionals who choose to serve patients across the electorate. Their dedication is truly appreciated.

10:44:30 Of course, these people are not to blame. Where we really must point the finger is at the Rudd Labor government, which has failed to put a real plan into place and make an investment to provide our public hospital staff with what they require to get the job done. In 2007 our Prime Minister looked into the eyes of Australians and promised to fix our health system. Now, after 2½ years of failed benchmarks, underfunding and broken promises, Kevin Rudd has finally decided to do something. Now, ironically in an election year, Mr Rudd has decided to take some action. Clearly, this is policy on the run and sadly, after all this time, he still has not managed to get it right.

Allow me to note how the private-public health system works. I will quote from the government’s own Department of Foreign Affairs and Trade website:

Private hospitals provide about one-third of all hospital beds in Australia. Private medical practitioners provide most out-of-hospital medical services and, along with salaried doctors, perform a large proportion of hospital services. Private practitioners provide most dental services and allied health services such as physiotherapy.

About half of all Australians have private health insurance. Forty-three per cent of the population (or nine million people) are covered by hospital insurance for treatment as private patients in both public and private hospitals. Forty-three per cent of the population (or nine million people) have ancillary cover for non-medical services provided out of hospital, such as physiotherapy, dental treatment and the purchase of spectacles.

The Australian Government is seeking to achieve a better balance between public and private sector involvement in health care by encouraging people to take out private health insurance, while it also preserves Medicare as the universal safety net. The Australian Government helps to make private health insurance more affordable by offering a 30 per cent rebate (and higher rebates for older Australians) for the cost of private health insurance premiums.

As you can see from the Rudd Labor government’s own webpage, 30 per cent of rebates are used to make health care affordable. It is amazing then that this same government wants to reduce rebates, by its own admission making private health insurance less affordable for workers. It would also punish those people who have already signed up to private health insurance by making their rebate smaller. This is extremely worrying because if private health cover becomes too expensive and premiums soar, many of my constituents will be forced to stop paying for private cover, especially those who are already struggling with rising interest rates, petrol prices, grocery bills, power bills and water rates—not to mention the threat of what will occur with the Rudd Labor government’s ETS.

This hurts not only those on middle and high incomes, who the Rudd Labor government is clearly trying to attack through this legislation, but also those people barely struggling to pay for private insurance in order to supply braces for their children and contact lenses for their teenagers and to afford to get those painful wisdom teeth removed. The Rudd Labor government may try to trick you into thinking that those on lower incomes will still pay the same amount for private insurance because their government rebates will not change; however, if higher income earners are forced out of the private health system, premiums will soar for everyone. And the more they soar the more people will drop out of cover, and the vicious cycle will continue.

This poses problems on many levels. Firstly, it is sure to force more people back into the public hospital system, which, as I have demonstrated in this parliament, is already struggling. It will make waiting lists longer, increase the time it takes to have elective surgery and place more demand on already stretched resources and hardworking hospital staff. Moreover, it could stop people seeking vital treatment for health conditions. Since many patients rely on private health cover to afford services such as dental surgery and optometry, these same people could be forced to go without.

This has turned out to be just the latest in a string of ill-conceived rebate cuts designed to fill the Rudd government’s coffers, which have been left empty and in serious debt because of Kevin Rudd’s cash splash. We have been forced to watch as Mr Rudd and his ministers spend billions of taxpayers’ dollars but get little or no results. Take, for example, the failed Copenhagen climate change conference. On 8 January Nine News reported that the Rudd Labor government’s delegation spent almost $1½ million on travel and accommodation. Did we get a binding target out of it? No. Did we get an agreement from our globe’s biggest polluters? No. What did come out of all that cash? A nice trip overseas for Mr Rudd and many of his supporters.

This is just the tip of the iceberg. The Rudd Labor government wasted $200 million of taxpayers’ cash before it finally lowered its inflated rebates for home insulation from $1,600 to $1,200. It made this mistake despite advice from the coalition that the $1,600 rebate was excessive. The Rudd Labor government has also now hit the $1 billion jackpot on consultants. What has come out of this spending? More talk, more reviews, more broken promises, very little action and no practical measures to actually help the families in my electorate of Paterson.

At the same time as this reckless spending has been occurring, Mr Rudd has also fought to cut vital life-changing rebates for cataract surgery and cortisone injections for arthritis suffers, which cost little in comparison. Thanks to the immense pressure from the coalition, the Rudd government has now backed down from its plan to cut the Medicate rebate for cataract surgery by a staggering 51 per cent and instead will—still cruelly—reduce the rebate by 12 per cent, most of which is expected to be absorbed by practitioners. But there is still no action on the cortisone injections.

This comes as a huge relief to many residents in my electorate of Paterson, who wrote to me that they were very fearful that they could be forced to go without sight-saving surgery. I am pleased that the coalition has, in this case, been able to force Kevin Rudd to see the error of his ways. Nevertheless, these attacks on health rebates by the Rudd Labor government raise questions over where the priorities of our Prime Minister actually lie. Even more so, it demonstrates his overwhelming inability to fix our health system and his total disregard for the elderly, frail and sick. This failure by Kevin Rudd was demonstrated in a report in the Australian newspaper just this week, on Monday, 1 February:

Medical students are emerging from the nation’s universities feeling inadequately prepared to deal with crucial tasks such as calculating safe drug doses and writing prescriptions.

In a challenge to Kevin Rudd’s twin promise to improve university education and doctor shortages, a government study has also revealed that medical supervisors feel the abilities of hospital interns fall short of their expectations.

The study reveals just 36 per cent of junior doctors think they have been adequately or well-prepared to do wound management.

And only 29 per cent of final-year medical students feel they have been adequately prepared to calculate accurate drug doses.

The landmark review of the nation’s medical education system was finalised 19 months ago but released only on Friday.

Medical leaders warn that the extra influx of students since the Education Department commissioned the research has made the failings it describes even worse.

News of the concerns about medical education comes before today’s release of a new Intergenerational Report warning that the nation’s ageing population will impose extreme pressure on the health system, including the medical workforce.

It also comes as The Australian has learned a Rudd government program aimed at addressing the drastic shortage of nurses in the nation’s aged-care facilities has failed, attracting just 138 nurses in two years, against a target of 400.

The article went on to reveal even more distressing figures from our medical graduates. It stated:

The report found medical students feared for their skills in a number of key areas, including knowledge of basic sciences, while hospitals increasingly struggled to make time for effective teaching in the face of packed waiting rooms.

Only 48 per cent of final-year students and 64 per cent of junior doctors thought they were adequately or well prepared to write prescriptions.

Interpreting X-rays was a concern for 69 per cent and 77 per cent respectively.

And just 44 per cent of medical students and 48 per cent of junior doctors felt they had been properly trained to insert a tube through the nose and down the throat of a patient.

This is yet another problem that has come with an overburdened public health system. With too many patients and not enough resources, doctors have been unable to devote the time required to train new doctors and have left many fledgling GPs feeling inadequately trained to serve the health needs of Australians.

As this example shows, the problems of an overstretched public health system are far-reaching. If the Rudd government has its way on these reforms and forces people out of private health insurance, the problems will only get worse. It is with dismay that I imagine even longer waiting lists, fewer people seeking help for dire medical conditions and doctors left to fend for themselves, feeling inadequately trained. Most people are aware of the problems associated with means-testing private health cover. That is why before the 2007 election Kevin Rudd and his ministers promised not to means-test private health. Here we are three years later with nothing but another broken promise and another ill-conceived bill before parliament.

It begs the question: why has Mr Rudd suddenly changed his mind? Of course, backflips are something we have seen a lot of during the time of the Rudd Labor government. But, in this case, to change his mind about something so fundamental to the way we live, breathe and survive can only be because Mr Rudd is panicked about the massive debt he has burdened this country with—the massive debt which will force interest rates to skyrocket over the coming years, the debt which we and generations to come will pay dearly for. The latest figures from the Mid-Year Economic and Fiscal Outlook place the Rudd Labor government’s projected net debt at $153 billion by 2013-14. This is money which will have to be paid back by taxpayers.

In an attempt to convince the Australian people we need these reckless changes to private health, the Rudd Labor government has said that not passing this bill will cost $100 billion over the next four decades. We were led to believe the details for this enormous figure would be revealed in this week’s Intergenerational report. Unfortunately, Treasury analysis does not appear in the report and we have been left wondering where on earth this figure has come from. To date, it appears to be nothing but a fear tactic orchestrated by a desperate government that is attempting to deal with its own money mismanagement.

The key message here is that we cannot afford to force people out of private health care. If this happens, our struggling hospitals will only struggle further because of increased demand on supplies and longer waiting lists. Those families who choose to remain in private health care will have to dig further into their pockets to be able to afford basic cover for themselves and their children. At a time when our population is ageing and demand for health services is already increasing, this is a mistake we simply cannot afford to make.

The current rebate on private health care and the Medicare levy surcharge are practical measures to encourage people to take up private health care and ease the pressure on our public system. These are practical measures we absolutely cannot afford to lose or tamper with. We cannot be fooled anymore by a Rudd Labor government that cares so little for the health of our nation.

Kerry Rea (Bonner, Australian Labor Party) Share this | Link to this | Hansard source

I support the Fairer Private Health Insurance Incentives Bill 2009 [No. 2] and associated bills, which attempt to introduce a fairer private health insurance system. I listened with great interest to the member for Paterson as he gave a very gloomy and dim picture of a public health system that was in trouble. I listened to his litany of examples about people being forced to receive inadequate health care and medical professionals being concerned about the level of health care that they were able to provide.

What I find interesting is that the member for Paterson—and, indeed, many members of the opposition in speaking on this debate have used very similar examples—is somehow trying to say that this legislation, which is not yet law, is the reason the public health system and his constituents are facing such serious healthcare problems. I think we need to remind the opposition of the reality. Perhaps it is due to the 12 years of neglect by the previous government and the fact that the Leader of the Opposition when he was health minister for four years ripped $1 billion out of the health system and froze the number of GP places. Perhaps the report that the member for Paterson was referring to is in fact a reflection of the attitude the previous Howard government had towards health care. I doubt very much it is a result of this proposed legislation which is attempting to introduce a fairer private health insurance system by reducing the private health insurance rebate for higher income earners—hardly a measure that would have created the litany of examples produced by those opposite that reflect on our public health system.

The point I want to reiterate to the opposition is that we are not abolishing rebates for private health insurance and the proposals contained in this legislation are not the cause of the problems we are addressing in our public health system. A range of factors have contributed to that, and I certainly agree that it is due in no small part to the lack of federal government support in terms of funding, resources and policies when it comes to providing a better healthcare system.

This legislation is unapologetically about this government ensuring that we introduce a fairer private health insurance system. It is about ensuring that low-income earners do not subsidise higher income earners when it comes to health insurance rebates. I agree with the Treasurer: I do not think that the low-income earners in my electorate of Bonner should be subsidising my or my family’s private health insurance.

I took out private health insurance for a number of reasons. I have three children. I have very bad eyes and all three kids now wear glasses. All of us, including my husband and me, need dental care. There are a whole range of reasons, very practical, cost-effective reasons, that my family would take out private health insurance. It is not because I received a subsidy from the government. It is not because I received a rebate. It is because it was a health choice that I thought was best for me and my family and I therefore do not expect people on much lower incomes than mine, or than my combined income with that of my husband, to be subsidising the fact that I am in a position to make that choice.

What is important in the context of the opposition’s comments and in the context of this debate is that this legislation is just one small part of the very significant initiatives that have already been introduced by the Rudd Labor government to ensure health reform in this country which will provide a better overall healthcare system. The reality is that the health dollar is finite, that the population is growing and that the demand for health services within the population is also growing. We know that it is our responsibility as a government which provides funding for health care that we do two important things. It is a dual responsibility. We have to find a way of providing the best health services for the vast majority of Australians in this community. It is not about subsidising the health choice of high-income earners. The overall responsibility is to provide a balanced healthcare system that supports both private health choices and a good public health system while at the same time being very mindful of the fact that we are spending taxpayers’ dollars. We must be responsible in the way that we spend that money. We have to find a way of supporting a healthcare system that is cost-effective and efficient but also provides the best possible healthcare choices for all Australians, regardless of their position and their income.

We also know that, due to modern science and to great advancements in technology, particularly in the area of medical procedures and health care, the demand on the health dollar is changing. We are getting better at doing some things, but we are also discovering new procedures and new medicines that we as a government would like to support and make more affordable for all Australians. So it is also important that we acknowledge that health funding is an ever-changing, ever-moving feast. It constantly needs to be reassessed and re-prioritised as some procedures become redundant, some procedures become less expensive and we become aware of new procedures that require and deserve support to be made more affordable.

So we have to be very clever about the way we use the health dollar and we have to be mindful always of both changes in technology—medical advances—and changes in demand, because we are looking at a population which is living longer and which is increasing. We must be very careful and mindful of how we spend that dollar. Once again, I do not believe that subsidising the private health insurance costs of higher income earners is the most cost-effective and efficient way that we can spend a health dollar to provide a better health system in our modern world.

We need to look at what the government has already done to support the health system overall—a $64 billion COAG agreement on health. This involved unprecedented amounts of money and unprecedented cooperation between the states and the Commonwealth who, combined, are the people ultimately responsible for providing the healthcare system in Australia.

The expectation is that 99.7 per cent of people will retain private health insurance even when this legislation is passed. We are not talking about a drastic reduction in the number of people seeking private health insurance. We are not talking about a sudden rush on our public hospital system because of this legislation. All we are talking about is a fairer way of supporting affordable private health insurance in this country. Currently, 14 per cent of single income earners in this country who earn over $75,000 get 20 per cent of the total private health insurance rebate. That is just not fair. There is no other way to explain that statistic than simply to say, ‘It is not fair and we need to rearrange it.’ In the same way, 12 per cent of couples who earn over $150,000 currently get 21 per cent of the private health insurance rebate.

This is not simply a statistic that reflects that, as a percentage of the population, they are getting a greater share of the rebate; we are talking about a particular sector of the population which is earning what are considered, in this day and age, to be very good incomes. I find it amazing that the party which considers itself to be the party of small government, the party of free enterprise and the party that supports the free market, is contradicting every single one of those principles by opposing this legislation. High-income earners do not have private health insurance because they get a government rebate. As I have already said, from my own experience, that of many of my colleagues and that of people I talk to, high-income earners take out private health insurance because they want that choice, because they want the medical services that they can access and because they know that having private health insurance is a better way of providing good health care for themselves and their families. That is why they take out private health insurance.

The health insurance companies themselves are private companies. They are in a competitive market. They have good marketing analysts, they have great PR strategies and they have great advertising campaigns. They are in the business because they have a product to sell and they believe that they can match or better their competition. They are not saying, ‘We will become a private health insurance company because the government will support people to take out our product.’ They want people to choose their product because they believe that they can provide the best healthcare options in the private health insurance system. So to say that reducing the rebate for people on incomes of over $75,000 and families on incomes of over $150,000 is about attacking and putting too much pressure on our public health system does not recognise those people’s ability to make a choice and to pay for it, and it does not recognise the fact that private health insurance companies are out there selling a product. The companies do not necessarily need those people to have government rebates to choose their product.

In terms of the issue about subsidy, it really surprises me that the opposition do not understand that there are still eight million low- and middle-income earners whose rebates will not change under this legislation. We are not attacking the rebate system. We are not removing private health insurance rebates. This legislation is not about completely removing a benefit; it is about providing balance. It is about understanding that a government’s responsibility first and foremost is to provide a healthcare system which supports, maintains and upgrades our public health system. We also acknowledge that the private health sector provides people with options that can relieve pressure on the public health system. Therefore, it is appropriate that the government also step in to support low- and middle-income earners by giving them an affordable option to taking out private health insurance. It is not about supporting private health insurers; it is about giving all Australians an affordable option on health choice. We have to remember our responsibility as government health funders and our responsibility to support Australians to seek out the best health options they can. It is not about simply providing a rebate for the sake of it.

The doom and gloom that is painted by the opposition—if they support this legislation, which they have clearly said they will not—raises a number of assumptions that I think are quite interesting. For example, as I have already said, there is an assumption that 0.3 per cent of people may choose to drop out of private health insurance because of these changes—we must remember that we are actually still supporting the 99.7 per cent who are still in there—and that that will suddenly put such great pressure on our public hospital system that it will fall over. As we can all see, that is nothing more than a scare campaign about this legislation. We know that people will not be rushing to the casualty departments tomorrow because they do not have private health insurance. We know that people will still look at their budgets and their healthcare needs and make the best decisions for themselves and their families.

I also want to say to the opposition that trying to drum up a fear and scare campaign around the pressure on our public health system as a result of this legislation is totally wrong. All they are doing is reminding every single Australian that our public health system is in need of major reform, support and upgrading because of their 12 years of neglect—not because of a proposed piece of legislation. It is also important to remind the opposition that if they want to support the private health insurance industry they could support the government’s measures on preventative health. They could do that rather than opposing this fairer approach to the way that government rebates are administered, rather than opposing this legislation which is about providing affordable healthcare options to those who need them and acknowledging that those on higher incomes are in a financial position to make their own health choices and will do that. If the opposition were to support the government’s measures on preventative health, they would be supporting the public health system and the private health system, and I think that would be welcomed by private health insurance companies.

Preventative health can not only significantly reduce the pressure on our public health system; it can also support an ever-growing market for the private health system. We all know that our private health insurance companies are now offering a vast range of products that are about preventative health and allied health services rather than just hospital or dental care. We all know that you can claim gym membership, you can get physiotherapy costs covered, and you can get a whole range of allied preventative health measures claimed through your private health insurance company, because those companies understand that that is the best way of reducing health costs. They also understand that in this day and age it is becoming increasingly popular, throughout the whole of the Australian community, to look at ways of getting healthier and fitter and to find ways to avoid becoming victims of chronic and acute diseases and avoid having to rely on a public health system when it comes to injury or major illness.

I say once again and reinforce in closing: please would the opposition get over their ideological opposition to this and appreciate that this is a fairer way of distributing the public health dollar. To really support people who take out private health insurance and to ensure that private health insurance and the private health system continue to flourish and grow, you need to actually acknowledge the importance of preventative health. We need to start looking at policies, programs and government support for that area. Indeed, supporting the Preventative Health Agency would be a very good start.

Alex Hawke (Mitchell, Liberal Party) Share this | Link to this | Hansard source

I rise to speak for a second time on the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] and related bills because, of course, this legislation has already been rejected by the Senate. We now see a government desperate to impose this ideological agenda on the Australian people. It is an agenda that they did not apprise the Australian people of prior to the last election. Indeed, all of the statements from the shadow minister for health, now the Minister for Health and Ageing, and the Prime Minister indicated that they would not touch the rebate system. Quotes to that effect are numerous right up until 2009. Even as late as 24 February 2009 we heard:

“The Government is firmly committed to retaining the existing private health insurance rebates,” Ms Roxon told The Age.

That is the minister for health in 2009, telling the Australian people that that government is firmly committed to retaining these rebates.

People are entitled to ask: what is really going on? When the Senate has turned this legislation down, saying it is a breach of election commitments and not an appropriate way to manage the health system, why would the government seek to reintroduce this legislation in the face of such opposition? The answer is their mismanagement of the budget. Of course, now we do not have any money to fund a proper healthcare system. This is not an issue of private health versus public health. This debate is not about that, although some of those opposite are trying to turn it into an ideological debate. This is about how we fund the healthcare system. Funding is certainly one of the issues we have heard a lot about in this debate, and it is something I would like to talk about. How we fund all of the needs of the healthcare system is critical.

In Australia the biggest component of federal government expenditure is welfare. It is more than double the expenditure on health in Australia. That is important to note, because we have a strong and thorough welfare system that spends in the order of $110 billion a year, more than double the healthcare budget, and that is not counting state budgets and all of the money spent by state governments. Yet every government in this country, whether state or federal, knows that we are facing a funding crisis in relation to health. How do we meet future challenges? How do we fund those challenges? The answer is not going to be found in government expenditure alone. No government can afford to increase expenditure to fund healthcare challenges completely. We need a private healthcare system. It is not a luxury or something that we can take for granted. We need to ensure that it is a strong and vital system. The legislation that is before us today is going to undermine that system.

There is a public healthcare system available to those who cannot afford private health care and a private system for people to fund by putting their own capital into private health cover so that they can make a contribution to their own health care, thereby lifting the burden off the taxpayer and enabling money to be spent where it is needed. That is why I say there is an ideological component in the legislation before us. Certainly the ‘fairer’ in the title of the legislation is a misnomer. There is nothing fairer about changing these rebates, putting more pressure on the public system and ensuring that there is a worse healthcare outcome for all. It is commonly the rhetoric of socialist governments to say things are fairer when they are bringing everybody down. Simply put, this is something that will drag everybody down.

Coming from an electorate that has the highest proportion of families in this country, I reject the contention that people on $75,000 a year are wealthy. I reject the contention that couples on $150,000 are wealthy. I come from an electorate with a high average income, the second highest average income in Australia. However, most of that income is spent on mortgages. My electorate also has the highest proportion of mortgages of any electorate in the Commonwealth. It is one of the fastest-growing areas in Sydney. I know that all of that disposable income is spent on simply affording the family home in Sydney. I know that people on $75,000 pay a higher marginal tax rate and that people on $150,000 pay one of the highest tax rates. You cannot simply say that people on $75,000 or $150,000 with two, three or four kids are wealthy, so they can afford not to have these rebates. That is not a proposition that I accept. It is about the signals that you send to people out there in the community as a government. What is the signal from this legislation? The signal is: we do not want you to take up private health care. The indirect signal you will send is: the government does not prioritise private health as something that is valued. It is only a 30 to 35 per cent rebate. It is something that says to people: if you are prepared to put your capital into your own health care, the government will make a contribution as well.

The member for Bonner spoke about a fear campaign, and there is a fear campaign being run by the Prime Minister of this country in relation to this matter. With Laurie Oakes on Sunday we saw that fear campaign dramatically exposed to the Australian people. The Prime Minister claimed on national television that, if this measure was not passed by the parliament, there would be a cost to the Australian taxpayer of $100 billion. He claimed that that was in the Intergenerational report and that the Intergenerational report backed up his claim that, if we did not do this, private health in Australia would cost the taxpayer $100 billion. Clearly that was a complete and utter misrepresentation. The Prime Minister said:

What the Intergenerational report tomorrow will reveal for the first time is that the cumulative impact of knocking that major reform back is in the order of one hundred billion dollars over the next several decades.

Of course, when industry went to research this claim it found it is not in the Intergenerational report. Indeed, industry rejects completely that this is the case. Why would a Prime Minister make a claim of $100 billion? There is a real contention about this quote, because $100 billion is what we already spend on welfare. We spend less than half of that on the health budget—$50 billion goes into health. Is health worth $100 billion over several decades? Most people in this chamber and most people in the Australian public would say, ‘Absolutely it is.’ If we are providing a rebate which means the government pays one small component and other people put a larger component of their capital into their own health care then that is a great system because the government has the smallest share of the payout in that case.

If you remove that incentive, we have heard many arguments from those opposite that there will only be a few people who leave the system. I can say anecdotally, even from speaking to people in my own age category—and I am one of the youngest people here—that people do not just say that they will leave the system. Speaking to people who have private health cover I hear that they will reduce their level of cover. That is an issue that has not been addressed by those opposite. Reducing the level of cover and putting a burden back to the public system is not going to be a good outcome either. Even if it is a small amount—10,000, 15,000 or 20,000, whatever we want to argue about the figures, it could be more and it could be less—that will place an extra burden on the public system.

Then there are the people who will reduce their level of cover or will not be attracted to take up private health insurance. How will that be a better outcome for the health system in Australia? That is what this government has failed to demonstrate. I want to record here that private health insurance is not just for the rich. There are over one million people with private health and hospital cover who live in households with a total annual income of less than $26,000—over one million of these households have some form of private hospital cover. They are saying there is a value in putting their hard earned capital of $26,000 or less into the private health system. Why would they make that assessment? It is because there is great value in putting aside your capital to look after your own health and it is a value judgment they have made. It is because the government has a system which rewards them for doing so and it is a good system. Why then should a person on $75,000 not be entitled to a reward? They work just as hard; they do earn more money and they get taxed more as well. They have as many taxes, charges and imposts as anybody else. It is as vital to those people as it is to people on $26,000 that there is an incentive to take up private health because we still operate under that mentality that we have a universal healthcare system—that is still one of the prime directives in public health in Australia—and so anybody is entitled to put the whole burden of health care onto the public system. I say that we should retain the incentives because those incentives are working and doing a good job for us in keeping our system sustainable—and we do have a major funding challenge.

I think where this debate turns to an ideological issue has cost us enormously. Taking my own electorate again, a brand new private hospital, the Hills Private Hospital, has opened. It has an emergency ward; it is a fantastic thing. It cost in the order of $200 million. Speaking to the managing director, who has worked in public and private health in Australia, in New Zealand and in the UK, it could not have been done in the public system for less than double that amount. He is very clear about that. We want private capital in health, we want private capital in research, we want private capital in health insurance and we want them to build hospitals. It is a good thing; it is not something that we should be threatening or rejecting. It is a complementary and positive thing to the public healthcare system and it is something that we must be very focused on continuing to encourage.

When I spoke to the people running the Hills Private Hospital about getting someone to open it, they told me that they have opened three private hospitals in western Sydney, under the New South Wales Labor government, in areas where, for the New South Wales Labor government—let us be very clear—it will be a long time coming before they can build a hospital. Even though in the north-west of Sydney we have had a massive growth in population, a huge expansion in the number of families and in the demand for services, and a scaling back in hospitals like Blacktown, Blue Mountains, Hawkesbury of all kinds of units and services, there is no plan to build a major hospital in the north-west of Sydney. If the private sector did not deliver this hospital, there would be no new hospital in north-west Sydney even though it is one of the major growth corridors in our largest city in the country.

So we can talk about records all we like. We can talk about the Labor record at state government level or we can talk about the Howard government record at federal level, but the reality is all governments are increasing funding to health, they are increasing it substantially and it is not enough to meet the expectations and the demands. That is the reality of this debate. So why would we take a measure in this chamber today to reduce the incentives for people to put their own capital into their own health cover? It is an absolute and utter wrong signal to the market. I always enjoy getting lectured by Labor members such as the member for Bonner about the market because they have a lot to say about the market these days—everybody is a free market person today, as was once famously said. The reality is that signal to the market at this time that we are reducing incentives to take up private health insurance from whatever categories of income and age group is the wrong signal at the wrong time. It will mean that fewer people will put less capital into their own health which is exactly what we do not want at a time when we are facing funding crises, shortfalls and challenges across the entire health system and nobody has the answer to that.

Kevin Rudd came forward and said: ‘I do have an answer to that. If by the first six months of my government we have not solved the problems in health, the federal government will intervene and take over the healthcare system and, of course, take over hospitals.’ We have seen a complete and utter backtrack on that position and we still have no answer or no plans from Kevin Rudd—yet another broken election promise and commitment. We all wait with breathless anticipation to see how he is going to solve the issues of public health that he committed to solve prior to the last election.

In summarising, I have spoken on this prior to this and I think that some of those comments that I made including that three-quarters of my own electorate is covered by private health insurance are really important arguments. I do not see that it is a difficulty to me; I do not see that as a problem. I think that it is a good and important fact that we encourage as many people to take out their own health insurance and we encourage as many people as possible to look after their own health because that allows us to do more in our public system. We should not mistake the signals in these bills. The fact that this government has not worked with the industry and peak body associations to even amend or look at another option in relation to this means that it is ideological and hard headed about undermining the private health insurance system.

There are plenty of third-party bodies—the Australian Health Insurance Association, the Australian Medical Association, the Australian Private Hospitals Association, the Royal Australasian College of Surgeons, the National Association of Specialist Obstetricians and Gynaecologists—who all say that this will put greater pressure on every person who is privately insured and will also put greater pressure on the public system. That is something that we should take from these bodies with great concern. Why add extra pressure to every person in private health? Why add extra pressure to people in the public system? If there is a budgetary crisis in the Rudd government, health ought to be sectioned off from that crisis. If we have gone from a state where we had zero net government debt and a $10 billion surplus to having a $50 billion deficit or more and a problem with the budget, it ought not to be health that is used to solve that crisis. I make that position very clear.

The Prime Minister in trying to allege that there would be a $100 billion cost, which is completely fictitious and not backed up by the Intergenerational report, indicates that he is thinking about how to solve his budgetary crisis—the debt that we have gone into. Health is not the area that we should be looking at. There is no way any federal government, whether it be this government or a future government, can decide to fund every health need and challenge that we are going to face. We are going to need to have a strong private health system as well as a well-funded public system.

Therefore this kind of measure is a retrograde measure. It will mean that fewer people are taking up private health. It means that Australians will pay more for their health care. Even if you argue that it is only 10,000 or 15,000 people, when they leave the private health insurance system—those who understand all about insurance systems know, and all of our free-market economists on the Labor back bench will particularly note this—that you then have less money in the pool to pay all the claims. Therefore the insurance premiums have to rise. There is no doubt about that. There is no argument about that. I know that with all the lectures we are getting from the Labor backbench on the market that that will resonate very strongly with them.

The key points about this legislation are that the government is refusing to budge because it has an ideological obsession with private health, but this should not be turned into a debate about the public system versus the private system. That debate ought to be trash-canned straightaway. The reality of modern Australia is that we have a strong public health system and that we have a strong private health system. Governments provide incentives for people to put their own capital into private health and we need them to do so. We need people to put as much of their own capital into private health as we can encourage them to. We know that even people on household incomes of $26,000 or less—one million of them in this country—made the judgment that they are going to put something aside because of the incentives we as governments have put in place. Why then is that not good enough for people on incomes of $75,000 and over or on $150,000 and over? We want them to put as much of their capital aside as we can encourage them to. You must have incentives for that to happen. You must have incentives under a universal healthcare system.

This is a good system. It is a working system. It is the same as saying, ‘The Rudd government inherited zero net government debt and a $10 billion surplus so we can go on a spending spree.’ Now we know that we are all going to pay the price for profligate spending, for $900 cash bonuses, $22 billion in cash handed out to people. There will be an enormous price to pay. If that is why we are seeing these bills reintroduced again after being refused by the Senate then, certainly, that is a failing of this government.

I also want to say that the government have broken their election commitment. I want to remind everybody about that one more time, because we are going to hear a bit about this. They promised they would not touch the rebate system. They had to promise that prior to the election because all Australians know that the private health insurance rebate system works. It works because the government provided it as an incentive and people take up that incentive. There are 11.1 million Australians who have a form of private health insurance. We have a working system and we need more capital generated into the private system to relieve the public system so that it can be funded adequately for governments to meet the challenges.

Together, as a complementary model, we can achieve a level of quality funding for health in Australia, but it must be together. This ideological division of public versus private will not be useful. It will mean a lot of pain for people in private health. It will add pressure to the public health system. Coming from an electorate with a large proportion of families and people on private health, I can speak with authority and say that people will leave the private system and return to public health, and people will seek to reduce their level of cover. Both of those things are unnecessary. We do not need to take this step. If we do not take this step we can continue to work on how we fund these challenges and how we make sure more people are putting as much of their daily budgets as possible into their health care. That is the way that we will have a chance of funding this system. The reality is that no government in this country can meet the challenges purely through government funding alone.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I also rise to speak on the Fairer Private Health Insurance Incentives Bill 2009 [No. 2] and associated bills, with the changes to the Income Tax Assessment Act, the Medicare Levy Act and bringing in the three private health incentive tiers to commence from 1 July 2010. Hopefully, as legislators and policy makers, we can get an outcome this time on this legislation package. I would hope that no-one in this place or in the other likes standing and talking and achieving nothing. We have seen various pieces of legislation come before this chamber and get bounced by the other chamber. I would hope we have more success this time around.

I was interested to listen to the previous speak and thought I heard a criticism of the market. In many of the conversations going on at the moment in this place I am left scratching my head when I hear a Liberal criticising the market that is being endorsed by a Labor government. I sometimes wonder where the consistency is in public policy. If the question is about the market and about the fairness of the market, and if this is the legislation in question, then I think we can have a debate, but if the implication is that the market based response from the coalition on the ETS, which was presented yesterday, is somehow a non-market response, then I think people are being a bit two-faced.

There is also the question that is raised in the heading of this legislation—and I raised this the first time around—of ‘fairness’. It is a growing pet hate of mine to see this pushing of a particular view in the titles of bills before this place. I think it is for the debate of the chamber and the view of the parliamentarians to decide what is fair and what is not. It is not for the proponents of particular legislation to almost push a view of fairness onto policy makers. Once again I raise that issue: it is through this process of discussion and debate that we will decide what is fair or not. When we see words included in legislative headings that push particular emotions it is, as I say, starting not only to get my back up but, I know, to get the backs of a few backbenchers and members of this chamber up as well. So I would hope a bit of a resistance movement to that can be formed over time.

Also, there is the question of universality in health. This is also a point raised previously. It still, within communities, sometimes comes up as a point of division and debate about whether in Australia today there is universal free health coverage for all. I would hope that argument is dead in this place. I would hope there is an acceptance of the symbiotic relationship between public health and private health. Each relies intimately on the other and each will fail without the other. It is a concern at times to still hear comments that government should provide free health care to all regardless of the circumstances. I still remember Graham Richardson, when he was health minister, making that point very clear: there is no such thing as free universal health care. The private system has been built very much to support and allow for public health care in Australia. But this idea of free universal coverage is one that seemed to enter the mythology of Australia incorrectly. So I would hope everyone in this chamber, regardless of what side of politics they are on, does accept and promote the importance of that symbiotic relationship between the public sector and the private sector in the delivery of health care in Australia.

Representing the mid-North Coast of New South Wales, I can assure this place that we are intimately aware of the importance of this symbiotic relationship. The Port Macquarie Base Hospital—I am sure it has been mentioned in this place many times over the last 15 to 20 years—was the test case in Australia for a privately run public hospital, with a contracted agreement between the New South Wales public sector and a private company going way back. It started out as Health Care of Australia, worked its way through to Mayne Nickless and in 2005 was returned to the public health network. We in our community are intimately aware, therefore, of the potential divisions that can be caused due to this concept of privatisation within the health sector and the divisions when the private and the public are played off against each other. On the flip side, we are intimately aware of the importance of both sides in this ongoing debate about health care between the public and the private sector. There are enormous benefits when the two of them work together well.

So I would hope that, when this public-private issue is referred to in the provision of insurance, there is this test of fairness. I can accept a means testing on the figures that are put before us, and I think it would meet a community standard of fairness if a rebate no longer applied to a family that is on an income of just under $250,000 a year. Representing a lower socioeconomic region, I am pretty confident we can pass the pub test on the mid-North Coast by saying that there should not be any government money going to a family that is earning nearly a quarter of a million dollars a year in income and that there should be some dip into their own pockets if they are earning over that. So I do think that passes the fairness test, even though I am critical of the word ‘fairness’ being used in the title of the bill. Likewise, from the income scales that have been presented—the three tiers—I am pretty confident that they can also pass that pub test and that community standard of what is fair in regard to whether government incentives should be given to people to take out private health coverage based on the certain income levels attached to the three tiers.

So it is a watching brief that I will be taking, making sure that government keeps those commitments. I hope the figure of 99.7 per cent still stands in regard to the impact of these changes and that only 0.3 per cent of people with private health coverage will leave because of this means testing. I think that is one that we will all be watching very closely, and quite rightly so. If the impacts are greater and therefore the impacts on public health delivery become greater then hopefully there will be a fair rattling of the tin by many of us to have this policy reconsidered and reviewed. Representing a high-growth region with a high elderly population, I think it is fair to say that the ‘house full’ sign is up on, certainly, four of the hospitals within my area, and any greater pressures that could come from legislative change such as this are certainly not welcome under current funding arrangements for regional hospitals such as mine. So I will be watching that issue closely to see whether there is transfer of anyone who may take great offence or see it as a huge burden that sees them drop out of private health insurance, and then I will be watching the direct impacts of that on public health delivery in a regional area such as mine.

The final point I want to make is that I expect there will be savings made from this, so there is the question of where that health dollar that is saved is going to go. It relates back to the point I was just making about current funding arrangements. They are a huge burden on high growth areas such as ours, where state governments such as New South Wales do not even follow their own funding formulas when it comes to the distribution of resources. On the North Coast of New South Wales, where we are now starting to drift up to a population in the North Coast Area Health Service of not much under a million people, we still remain below equity in the resource distribution formula—the government’s own formula—for how they split up the funding pie around the state. For the Commonwealth to blindly act without considering areas where there is high growth which remain underfunded, and therefore have extraordinary pressures on health delivery, would be folly. It would be folly for the Commonwealth not to consider that in their future allocations of funding, COAG agreements and future dealings with the states, because that is the critical issue for areas such as mine. Whilst we are under equity only by about two or three per cent, in dollar terms that equates to about $40 to $50 million a year. That money would make the delivery of health in our region substantially different. If any of the money potentially saved through this legislative package is going to go via this ugly path of going through the states to get on the ground then I would hope that a big stick is used to make sure the states deliver equity through their own funding formulas, which up until now they have been allowed to get away without. It is a blight on the delivery of fair, equitable and just health care within Australia. Populations move, and the funding formulas seem to lag a long way behind that movement of population. In an area such as mine, where there is high growth, we suffer because of that, and that will mean poor delivery of health care by government until it is addressed.

That would be the final question in allowing this legislation through this chamber from my point of view; I am not going to oppose it. I would want to know with any money that is attached to this that might be saved, or if we are going to start to see some reallocations of health dollars through this and other pieces of legislation, that finally we will get fair dinkum about funding in health in this country. That is going to take the big stick to the states that we have not seen before. In my short time here, I have seen a lot of kowtowing to the states: relying on the states to put up infrastructure priority lists which might be completely wacky. But that is what has been allowed to happen up until now, through programs such as the Health and Hospitals Fund. New South Wales quite publicly got slapped for putting up a wacky list. In the delivery of health in a region such as mine, that has implications, so I would hope that the Commonwealth will start to take more of a lead on this, will start to take ownership of the flow down of those public dollars and will start to take a real interest in the impacts on the ground, particularly in high growth areas. I was flattered and pleased that we had the Prime Minister visit four or five months ago and sit with doctors at the Port Macquarie hospital, the controversial one. He sat for over two hours with doctors and it was appreciated. I think we are now starting to get to the point of wanting to see the response from meetings such as those. With all the talk about health reform, the 2007 election commitments and where we are going with the health restructure, we are starting to come to the point where a few people have to come home with some commitments and plans, and we really need to start to engage communities who have acted in good faith in participating in this process.

My broader call to arms is for government to get the skates on in regard to health reform. This is one step, but there are people on the ground who are hurting. Port Macquarie Base Hospital, for example, is operating at twice its capacity. It is certainly the most efficient hospital in regional New South Wales, and I reckon it would give the metropolitans a good run as well. It is getting no benefit for being efficient. It is full, and at the moment none of that is recognised within the government’s own funding formulas. I am happy to let this legislation through, but it is the broader changes that we want to see. We want to see where the money is going to go and how serious the government is going to be about taking some ownership of that flow of money through to the delivery of health on the ground.

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

I rise to oppose the Fairer Private Health Insurance Incentives Bill 2009 [No. 2] and cognate bills that give effect to the measures announced in the 2009-10 budget. These measures provide for means testing of the private health insurance rebate and progressively increase the Medicare levy surcharge for people in my electorate without hospital cover. This legislation is yet another example of Kevin Rudd and the Labor government not being honest with the Australian people, by promising one thing in the lead-up to the election and then doing another. Before the 2007 election, Mr Rudd and the Minister for Health and Ageing—

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

Order! I remind the honourable member for Forrest that she ought to refer to the Prime Minister by his title.

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

Certainly, Mr Acting Deputy Speaker. Before the 2007 election, the Prime Minister, Mr Rudd, and the Minister for Health and Ageing repeatedly promised that they would not change the private health insurance rebate which had been introduced under the Howard government. Yet here we are and we have a completely contradictory piece of legislation introduced by the Labor government. The government clearly misled the Australian people prior to the 2007 election. These bills, which were rejected by the Senate in September 2009, are flawed and if passed will affect all Australians, both directly and indirectly. I am extremely concerned for people in my electorate. The coalition is strongly opposed to this legislation, which is likely to result in all of those with private health insurance facing even higher premium increases in the future. Furthermore, those without insurance will be affected, with more people reliant on the public health system. The government itself has admitted that this will be the case.

The Labor government initially claimed that 25,000 people were likely to drop private health insurance as a result of this legislation, with estimates that potentially 40,000 Australians would downgrade their cover. That, in turn, puts pressure on the system. However, Senator Ludwig later admitted that 1.7 million people with health insurance will be impacted by the changes proposed in this legislation. The health insurance sector has also stated that the government has seriously underestimated how many people will drop their health insurance and has anticipated the figure would be almost 250,000, a significant difference from the Labor government’s estimate of 25,000 people. The health insurance sector also projects that another 730,000 people are likely to downgrade their hospital cover and 775,000 people are likely to drop ancillary cover. All of these have implications for the public health system. The most important issue in the lives of the majority of people, as we know, is their health. My constituents frequently remind me of this. They frequently remind me of their concern about the Prime Minister’s failed election promise in relation to the health system.

What is also of concern is that this legislation comes when there has been an increase of more than 14 per cent in the Australian population over the past decade. Every Australian knows that the cost of health care is growing, as are the waiting lists for public hospitals. The coalition believes that it is the right of all Australians to have choices, to take charge of their own healthcare needs and to plan for their future needs. In my electorate of Forrest, 66 per cent of voters—that is 56,650 people—have private health insurance. This means that, if passed, this legislation will force 66 per cent of people in my electorate to pay more for the Labor government’s reckless spending and bad financial management. I wonder why the Labor government is attacking the health system. Why attack those with private health insurance cover in spite of inheriting the best economy of any government in the history of federal politics? The Labor government has wasted billions of dollars through its cash splashes and is forcing those with private health cover to help pay for their debt, their deficit and their bad decisions by saving $1.9 billion through this attack on people with private health cover.

We have seen reckless spending such as the $1.7 billion of waste in the BER program, which went from a $14 billion spend to a $16 billion spend of taxpayers’ funds, including $7.3 million for plaques and display signs. We have seen the Labor government spending over $1 billion on consultancy fees when this measure regarding private health will save $1.9 billion. This is at the same time that the government is attacking people with private health insurance, who are taking pressure off the budget and the public health system by having private health insurance. It is contradictory. We continually see examples of the Labor government failing the health portfolio. In December last year, the WA Liberal Minister for Health, Kim Hames, criticised the federal Labor government’s rollout of GP superclinics in WA. In a West Australian newspaper article, Minister Hames stated that he is concerned about delays and the lack of consultation with doctors. Minister Hames said: ‘We are not really satisfied with the progress, and there have been difficulties getting the agreements in place and the contracts out. There has been quite a lot of dissatisfaction with local general practitioner groups.’ They don’t seem to be such super clinics, at least in WA.

The government, through other defective health legislation, also tried to target thousands of Australians by proposing that they pay hundreds of dollars more for what is life-changing cataract surgery. A majority of these people are seniors, the very people who can often least afford to pay more and those who need the surgery most. They are attacking the most vulnerable. I had countless seniors in despair over what they saw as a heartless decision. When I met them in the shopping centres and in their homes, they were very vocal on this issue. They saw this as an appalling attack on elderly and often frail people in my electorate and around Australia. I presented a petition from the south-west of Western Australia. There were hundreds of signatures gathered in just a few days. It was not until sustained pressure from the coalition and people just like those in my electorate that the Labor government was forced to back down on this plan to dramatically cut the Medicare rebates for cataract surgery. It should not have come to this. The government should not even have considered using cataract rebates to help fund their program blowouts and to help pay off their debt and deficit.

There was also the IVF debacle, where Minister Roxon was forced to backflip on the Labor government’s proposed halving of the Medicare rebate for IVF treatment. The latest health legislation to raise concerns is also national e-health—more importantly, the absolute guarantee that will be required for the security of patients’ information. I note that the coalition’s shadow parliamentary secretary for health, who at the time was Matthias Cormann, captured the government’s inaction on health in an article in the Australian on 27 August last year, when he said:

On health Kevin Rudd promised the world and has delivered next to nothing. All we’ve had is a review into public hospitals, followed by a review into the review. After all their reckless spending there is now nothing left in the locker for health.

In conclusion, this legislation will put further pressure on public hospitals. We have heard members speak about this issue. It is the complete opposite of what the Labor government promised at the last election, increasing the cost of private health insurance for millions of Australians and resulting in fewer people with private health cover. I remain opposed to this legislation.

(Quorum formed)

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Deregulation, Competition Policy and Sustainable Cities) Share this | Link to this | Hansard source

I thank my colleagues opposite for the warmth of their welcome. It is quite noticeable that there are no Labor members actually speaking to this horrendous piece of legislation—

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Mr Price interjecting

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Deregulation, Competition Policy and Sustainable Cities) Share this | Link to this | Hansard source

The Chief Government Whip’s encouragement is appreciated. I have been ‘Rogered’. He could not rustle up any of his own people to speak in support of this horrendous piece of legislation. I must say I am not surprised. I just wonder how many Labor members, as they return to their electorates after being heroic in their compliance with the government line on whatever the speaking notes are, look forward to then facing the tens of thousands of people in their communities that have private health insurance. It is not surprising that the Labor Party is comprehensively AWOL in defending this measure. It seems to have learned nothing from the last time the Fairer Private Health Insurance Incentives Bill 2009 [No. 2] and cognate legislation were debated. It seems to have a very poor, in fact nonexistent, grasp of the dual pillars of Australia’s health system. The public system is valued and does a sterling job under difficult circumstances, ordinarily with underfunding and with poor administration and leadership from state governments. The private system complements the public system. We see in our community in the Mornington Peninsula many of the outstanding health professionals actively participating in both the public and the private system. This is good. The public health system is important but the private health system is equally important.

The measure we are talking about today is to remove an incentive for Australian families to provide for their own health needs and to get a little bit of encouragement from the government to do so. This is a little bit of encouragement that then results in many times that incentive being contributed to the health system through private health insurance premiums. This is a little bit of support for people who choose to provide for their own healthcare needs through their private insurance, who make choices about their discretionary income and decide to put a share of it towards their health costs, complementing the resources that are provided through governments. That would seem a good idea. It seems such a good idea that tens of thousands of Australians in each of the electorates right across the country think it is a good idea. It was such a good idea when the current Prime Minister, the then opposition leader, Kevin Rudd, was in me-too mode—remember that, colleagues, when I think the term was that there was not a cigarette paper between what the then Howard government did and what the then Rudd opposition claimed it would do if it were elected; not a cigarette paper’s difference.

In my electorate people were very interested in urging me to secure clarity about the Labor Party position on private health incentives because the electorate knew that private health insurance ran against the DNA of the ALP. They wanted to know, and there was question after question on talkback radio, at press conferences, even in this chamber here, in an effort to draw out what the true position of the Labor Party would be if it were elected to government. Many people were falsely reassured and many people were, frankly, misled by the Rudd Labor team into believing their words that nothing would change about the private health insurance incentives and that people could confidently stride up to the ballot box on election day not having to worry about that incentive that encouraged them to provide for their health needs being messed with should the Labor Party be elected. That has proved to be a very misleading statement by Prime Minister Rudd and his health spokesperson, and Labor members and senators have parroted those assurances right across the country. They were parroted in my own electorate. People went to ask the ALP candidate what was going to happen with private health insurance and he said: ‘Don’t worry, rest assured nothing will change. Let’s go and talk about something else.’ That was the tactic of Rudd Labor, and now in government we can recall those immortal words attributed to Peter Garrett, the Minister for the Environment, Heritage and the Arts, ‘Once we get elected things will change,’ and that is exactly what has happened. Now we see a second assault on the private health insurance incentive.

This is so troubling because I have explained briefly the complementarity between the public and private systems. I have touched on the fact that medical professionals often practise in both systems. They are able through that practice in both systems to provide optimal care for their patients. They recognise that the waiting lists and scheduling challenges of the public system are one thing and they do a herculean job to try and address the difficulties that the administration of the public hospital system presents, knowing that in the private system they can pursue quality patient care and respond to individuals’ decisions to provide for their own health through private health insurance with a commensurate level of support and assistance. That is a good model.

You take away that incentive, and you take away encouragement for people to provide for their own health needs. You take away a modest incentive, a portion of private health premiums, and you risk losing the whole premium. So, whilst you might save some cents in the dollar, you lose the private, personal contribution through health insurance premiums. You quickly see a net reduction in the health resources available to support the care, the wellbeing and the treatment of the Australian population. You also see a shift of the demand, where those who once provided for their own retirement, able to pursue care in the private hospital system, join the waiting lists in the public hospital system. What you end up seeing is nothing more than a draining of resources, a discouragement for individuals to provide for their own healthcare needs and net disadvantage to the healthcare system as a whole. These were clearly articulated concerns last time this private health insurance legislation was discussed. These are the reasons why the opposition has been consistent in not supporting this damaging measure that the Rudd Labor government is proposing, and that is why the bills were comprehensively rejected in September 2009.

The government originally claimed that only 25,000 people were likely to drop out of private health insurance because of its proposal, with estimates of 40,000 degrading their cover. According to research from Roy Morgan, Ipsos and the Private Hospitals Association and other analysis from the health industry, nearly a quarter of a million people are likely to drop hospital cover, three-quarters of a million will downgrade their hospital cover and more than three-quarters of a million are likely to drop ancillary cover. This is what the practitioners, those in the field, are saying. And yet the government seems ideologically driven to keep that pressure on. The last time I spoke about this I highlighted the shift of demand from the private system to an already stretched and strained public hospital system, and how it would be to the detriment of not only those who currently have private health insurance but also those who do not.

I have highlighted how the cost increases to those who retain their private health insurance will flow from fewer people being in the insurance pool providing that care. But I also highlighted in the Mornington Peninsula example how the Frankston Hospital, the hospital that the state health minister recently recognised for its outstanding care—a recognition well earned and deserved in my view; a hospital that has, frankly, worked its tail off trying to respond to a growing population and an ageing population with increasing complexity and volume of health presentations to services—will lose as well. Frankston Hospital got a bit of a touch up a few years ago—they were told they were not bringing in enough private revenue. Private revenue is when a privately insured patient attends the public hospital for treatment and care. They are invited—they are not obliged, but they get plenty of encouragement—to reveal the fact that they have private health insurance. Why? Because then the cost of their treatment gets built into the health fund rather than absorbed by the operating budget of the hospital. The Frankston Hospital was apparently, according to the state government, underperforming in sucking in additional revenue from privately insured patients attending the hospital. They were told that they had to lift their game. The last time I spoke on this bill I outlined the revenue impact of that directive from the state government and how it had caused considerable disquiet in the local community. They are resources funded by the private health system supplementing the resources available to the public hospital.

So myopic is this government in its ideological hatred of private health insurance, it does not join up the dots. If you take away the incentive for people to take out private health insurance and to provide for their health care, you see a reduction in people making that personal choice; you see a reduction in the resources available to the health system as a whole; you see an increasing demand on a public hospital system already stretched with long waiting lists and, in the state of Victoria, waiting lists to get onto waiting lists—so clever is the management of that significant public hospital challenge—and you see a diminished opportunity for those public hospitals to draw in additional resources through revenue from privately insured patients.

It is almost like a perfect storm. It is almost like the government is setting about creating more of a health crisis than we have right now. Prime Minister Rudd said the buck stopped with him and promised so much about taking over the hospital system. What is he trying to do? Is he trying to nobble it first, so whatever it does it cannot look any worse than it is now? Is that the cunning plan of the Prime Minister? That seems to be what he is doing. This is a Prime Minister who forgets history. I was reminded by my friend and colleague Mr Tuckey, when he was reflecting on his time as shadow veterans’ affairs minister recently, and from my own time as veterans’ affairs minister, how there was a time when the Commonwealth ran hospitals—they were veterans hospitals; repatriation hospitals. A former Labor government thought it was such burden that they did all they could to unload them. They thought it was too expensive. There was a handful of them; that is all. There were not hospitals all across the country, just a handful of them. They were repatriation hospitals caring for our veterans community, who deserve our great respect and our great commitment to their health and wellbeing needs. But a former Labor government thought, ‘No, let’s not do that,’ and they unloaded the repatriation hospitals.

As the veterans’ affairs minister I was pleased to be able to introduce more private hospitals into the system that provides veteran health care, recognising that that was supporting the responsiveness of the system to the care needs of our veterans community and, together with the health system, we could increase the quality and the responsiveness and the convenience of the care provided to people. That is the history. But we have a Prime Minister thinking about going back to the future, when he could not handle a handful of repatriation hospitals—this was the Labor Party then—and they thought it was too expensive and they could save a lot of money by not being directly involved in operating hospitals. But, no, the Rudd Labor government is talking about going there again and I fear that these measures, such as removing incentives for private health insurance, are simply making a rotten system now, working under duress, worse, so all those concerns are exacerbated and then he will say, ‘Well, things aren’t flash but they are not as bad as they used to be,’ after he has made decisions of this kind to put added pressure on the public hospital system.

12:15:07

But it is not just this measure. I have spoken before in this place about the Frankston Medicentre. This is an after-hours GP clinic that has been around longer than the Prime Minister has been in this parliament. It has been proven to be a successful model, it had support from the former Howard government and yet we have learned that the Rudd Labor government is withdrawing that funding support. They have been told they will have to do less. We have the Rudd Labor government running around saying, ‘Let’s have these after-hours GP clinics’ et cetera, we have members talking about them being partially operational—which sounds like they are not quite what they are supposed to be—and we have a perfectly viable and enduring model, which has been with us for many years, being defunded by the Rudd Labor government. This is another decision that is simply putting more pressure on the Frankston Hospital.

At the moment people can attend the accident and emergency area and be advised of the existence of an option, if they choose to take it, of an after-hours GP service collocated in the same facility. Some funding to support that was provided by the Howard government, yet the Rudd government is defunding it. They have been told, ‘No, we are not going to provide the level of support you need—see how you go on less.’ The medicentre have informed me that that will make the system unviable. They have put to me good ideas about either a restoration of the funding being taken from them by the Rudd Labor government or alternatively some thoughts about Medicare benefits schedule billing arrangements. This is by definition an after-hours GP clinic, yet for at least an hour a day when they are open they are not able to access the after-hours GP Medicare Benefits Schedule item. As it is an after-hours clinic—that is, it is not open during normal hours—you would have thought they could access that benefit. That would at least provide some support, but we have seen no action on either of those two issues. Inactivity on those issues is putting greater pressure on the Frankston Hospital—a hospital that, as I said, I admire for the way it provides care under great pressure from a growing population, under-resourcing and many challenges that are being made more difficult by the Rudd Labor government.

I invite people to think carefully about this measure. It is not a $64,000 question for the electorate of Dunkley; it is a $64,000 Dunkley residents’ issue, as they will all be paying a heavier price for this Rudd government’s ongoing attack on private health insurance. It is not just an issue for those people that hold that care; it is also an issue for those that are looking for support from our health system. This ill-conceived measure will put up the price of private health insurance, discourage people from providing for their own health costs and add pressure and waiting lists in the public hospital and health system. In addition, as I have illustrated, privately insured patients bring additional revenue into the public hospital system. That opportunity, being encouraged in hospitals in Victoria by the state Labor government, will be diminished and disadvantaged as a result of this change.

It does not matter where you are in the health system or whether you are part of the public or the private system—in fact many people are active in both and contribute to both—the incentives to encourage the participation of those in the private system should not be changed, because the Rudd Labor government said they would not. Even on the most basic issue of honour, this should not be supported. At a policy level, with its impact on the health system, this is a silly move. In terms of preparing for our future and the population projections in the Intergenerational report that get selectively dragged out to support some ideological adventure that the Rudd Labor government is on, how can it be helpful to discourage people from providing for their own retirement at a time when we have an ageing and growing population? It is just another example from this government.

Prime Minister Rudd used to boast about a big Australia, as all diplomats do—they like being a representative of a bigger country—but he could not talk about a coherent strategy to support that projected population explosion of 60 per cent through to 2049. It is no good talking about a big Australia if you do not have the plans and the strategies to successfully settle and support a growing community in a sustainable way. Taking away encouragement from people to provide for their own health needs, with a growing and ageing population, is just downright dopey. It is wrong, it is dishonourable and it is a breach of faith and promise from the Rudd Labor team. They should hang their heads in shame and see that this is bad public policy. It is appallingly deceitful politics and it is going to undermine health care regardless of whether you are privately insured or not in electorates including Dunkley.

I am very pleased to be able to oppose this again because this is one of the silliest things we have debated. We proved that point last time. I do not know what is motivating this—the Rudd Labor government seem to learn nothing from their mistakes. It is just pure ideology and I invite the House, and particularly those members as they scurry back to their electorates after the parliament closes tomorrow, to have a chat to the tens of thousands of people in their electorates and explain why they are being done over by this bill today.