Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

In continuing on from my remarks prior to question time, I note that this group of bills is another example of the government breaking its word given to the Australian people. I was talking before about some of the concerns we have locally about the pressures that are already on our existing health system and how these measures are going to make that situation worse. In the Courier-Mail last week there was an article about parents of children with ear, nose and throat problems and the concern that they are being told to consider paying for private treatment. This is despite living in one of the more disadvantaged areas of South-East Queensland. The article notes:

Doctors in Logan, south of Brisbane are at a loss to know where to refer children which have ear, nose and throat conditions for public treatment.

The article states that Logan Hospital, which is located in my electorate, has approximately 1,000 children waiting to be seen. What kind of a place are we creating for our children, particularly those from disadvantaged families who cannot afford private health insurance? And this legislation is not going to make that problem better. It is going to make it worse because it is going to push more people into the public sector. Private hospitals currently treat 40 per cent of all patients in Australia. Medibank Private has predicted that some 37,000 members alone will drop their cover and 92,500 will downgrade. Over the next five years it is expected that approximately 1.6 million will drop cover and 4.3 million will downgrade. How is the public system, which is already severely strained, going to cope with the increased costs and pressure? At the end of the day, this becomes a blatant, cost-shifting exercise to transfer responsibility from the Commonwealth to the state public health systems.

The Queensland government has long been struggling to provide sufficient support for their health services, and shifting the responsibility onto the existing resources and staff will result in complete disarray and possibly even tragedy. We do not want to see in hospitals an increase in the incidence of people not getting proper treatment or being left in hallways as they wait for beds. These are all things which could possibly be made worse in light of the current proposed legislation. In addition, upward pressure on insurance premiums will force people to reduce their levels of cover.

For example, in an article in the Albert & Logan News, dated 6 October 2010, a mother was quoted because she had spent some nine hours in the emergency room at Logan Hospital after suffering a miscarriage. She was angry and frustrated that nobody had sought to provide her with any assistance during that time. More recently, there was the headline in the Sunday Mail 'Left lying in own blood, patient claims' about failure to get treatment at Logan Hospital. All in all these are current examples of a system under enormous pressure. That pressure is only going to be made worse by pushing people from the private sector into the public sector.

In this debate it is important to note that our doctors, our nurses and associated health workers are going to bear the brunt of people's frustration, angst and anger. Yet these are the very people who already seek to do such a wonderful job in our community. It is well known that they work long hours under constant pressure. We should be doing everything we can to ease those pressures, not make them worse.

The federal Labor government promised that we would not face this legislation but, as we have discussed numerous times, they have broken this promise again and again. This is the third time that this has been debated in this House. Labor always purport to seek to help the most disadvantaged and underprivileged, yet over time we see the reverse. Their very policies actually hurt those that are most disadvantaged and underprivileged, not help them. Given the cost of private health insurance if premiums go up, the many low-income earners who do have their own private health insurance will bear the burden of the increased premiums because of fewer people being insured privately. I would like to highlight this point by quoting from an email that was recently send to me by one of my constituents. The email reads:

We are very concerned about the proposed means testing of the private health rebate. As it is, the funds have all been regularly increasing their costs and causing us to wonder how much longer we can keep up the payments. Although we will not be immediately affected as our income is below the levels reported, we most certainly are aware that there will be a mass exodus from the funds which will force them to increase their costs further in order to compensate, this will have a further flow on effect and will force us out of private health insurance, to which we have contributed for 35 years.

We note that Labor promised not to touch the subsidy before the 2007 election and regard this as another broken promise.

The email went on to say that they found the government's plot to sell the changes to private health insurance, as stopping the poor from subsidising the rich, as both insulting and dishonest. The authors of this email went to the effort of making some comparisons to support their view, and I would like to note some of their observations, an area that I touched on earlier. If you are earning an income of about $30,000 per annum you are paying about $5,000 per annum in tax and Medicare levy. If you are earning about $60,000 a year, you are paying about $12½ thousand and if you are earning about $90,000 a year, you are paying about $22½ thousand. So you can see that as your income increases you are contributing significantly more to general taxation and also through the Medicare levy. When you have a look in detail at the argument that the poor are subsidising the rich, you see that does not hold any water. It is time this government's ideological bent, of saying that the rich need to pay more for this and more for that and that the poor and needy are suffering, was put away. The politics of envy does no good as to the future of this nation whatsoever. We in the opposition oppose these measures for very good reasons, as I have outlined. Whilst the government seeks to promote this as a win-win solution, I see it as nothing more than a lose-lose one for the individuals and families living in my electorate and those around the country. We oppose this legislation.

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

I speak in support of the Fairer Private Health Insurance Incentives Bill 2011, Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011 and Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2011. Together, these bills will proportionally lower the private health insurance rebate for those in higher income tiers and increase the Medicare levy surcharge for those on higher incomes who elect not to purchase private health insurance. Through these measures, the government is seeking to rebalance a range of policies supporting the private health insurance industry, as promised and taken to the 2010 election—a fact that many people in this chamber just recently have chosen to neglect. These new means-testing arrangements will make the private health insurance rebate fairer.

At the moment, more than 45 per cent of the Australian population is covered by some form of private hospital cover. This figure is at a 10-year high. In total, over 10.4 million Australians have private health insurance. Currently, consumers who purchase private health insurance receive a 30 per cent government rebate on the cost of the premium. This is not means tested. Those aged over 65 receive a 35 per cent rebate on their private health insurance costs and those over 70 receive a 40 per cent rebate. These rebates were introduced under the Howard Liberal government and the expenditure on the rebate has grown substantially over the last decade. In 2001-02, government expenditure on the private insurance rebate totalled $2.1 billion. In the 2010-11 financial year, the total expenditure on this rebate had increased to $4.7 billion. That is more than double the amount from 2001-02.

The 2010 Intergenerational report published on the Department of the Treasury website on 1 February that year states that the private health insurance rebate is the fastest-growing component of the Australian government's health expenditure and is forecast to increase by over 50 per cent in real terms per person over the period 2012-13 to 2022-23. The private health insurance rebate is the fastest-growing element of health expenditure and, if not capped, will cost the taxpayer $100 billion over the next 40 years. The fact that the fastest-growing element of health expenditure is not infrastructure, primary health care or pharmaceuticals but is the subsidising of private health insurance shows why these bills are so important.

In the 2009-10 budget, the government announced it would introduce measures to limit the growing cost of the private health insurance rebate. We tried twice to implement changes to the rebate during the last parliament, but the legislation was rejected both times by the Senate.

These bills create three tiers of support for private health insurance based progressively on the annual income of an individual or a family. For singles, there is no change unless a person earns over $83,000 per annum. Once they go over that, then the rebate reduces from 30 to 20 per cent. Going further up the income scale, once a single person earns over $96,000 per year, there is still a rebate, but it is reduced to 10 per cent. Once they get to $129,000 per year, the rebate cuts out.

For families and couples, the bills propose that the cut-off amounts be doubled. Therefore, following that figure, the rebate for a family or couple is 20 per cent once their combined income exceeds $166,000 per year. Once that couple or family receives an income of more than $192,000 per year taxable income, the rebate is 10 per cent. There is no rebate beyond $258,000 annual taxable income. If there are children involved, then there is an extra $1500 in the threshold for each tier per child. For example, a family with two dependent children would have to earn a combined taxable income of over $169,000 before they lost the rebate. There is no change to the private health insurance rebate for those individuals earning below $83,000 as singles or $169,000 for two-child families. They retain the full rebate.

Nearly eight million policyholders will retain the full rebate on private health insurance. The important figure to remember, I think, in this debate is that nine out of 10 Australians will not be affected at all. With the average yearly wage for 2011-12 trending to around $68,790, the average wage earner will not be affected by these changes. Those opposite are suggesting that an administration assistant, an apprentice, a retail worker and maybe a teacher not only in my electorate of Deakin but right across the country should be subsidising those who have substantially more income than themselves.

I believe the current expenditure on the private health insurance rebate can and should be better allocated to other ways of supporting our health system. The big problem with private health insurance rebates is that this money, rather than being spent in our hospitals for everyone, goes into the pockets of consumers or purchasers of health insurance to subsidise that product. I think it is an inefficient way of supporting our health system.

The other problem with the rebate is that the more that is spent on private health insurance the bigger the subsidy received. So this rebate gives the biggest benefit to those on the highest incomes rather than the money being delivered directly to the health system. The rebate gives more money to those who are well off and less to those who take out basic policies.

Recent data shows that 45 per cent of the population have private health insurance, but this figure is higher for higher income households—for example, 91.3 per cent of couples earning between $240,000 and $300,000 a year have private health insurance. Those on low incomes have lower rates of health insurance—for example, only 25.6 per cent of singles earning less than $50,000 take out private health insurance. Proportionately more of this rebate, which is now costing $4.7 billion a year, is being paid to higher income households. The question that I have to ask—and I have asked it in this chamber before—is: 'Is welfare for the wealthy a good use of health funding dollars?' My answer is I do not think so. The other impact of this legislation is to increase the Medicare levy surcharge, increasing the penalty for those on higher incomes not taking out private health insurance. When the government lifted income thresholds for the Medicare levy surcharge in 2008 in order to apply indexation, the Liberal Party and the private health insurance industry ran around like headless chooks, warning that thousands of people would abandon their private cover. They said it would increase the number of people not purchasing private health insurance. They said it would increase demand for public hospital services as well as push up premiums for private health insurance. But these arguments have been proven wrong.

I remember speaking on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill of 2008 in the last parliament and making the point that people should take out private health insurance if the product and service is good and relevant to the individual's or family's circumstances. As I have said, time has passed and the evidence is now in. A report by KPMG conducted after the introduction of the higher Medicare levy surcharge found that private hospital activity following the changes to the Medicare levy surcharge actually grew at a faster rate than public hospital activity, which also grew.

The facts are there. The current percentage of those taking out private health insurance is at a 10-year high. Treasury modelling estimates 99.7 per cent of people will keep their private health cover, with only about 27,000 people dropping out because of these proposed changes. This would lead to an increase of approximately 8,500 additional public hospital admissions over two years, which is an increase of around 0.1 per cent. This is a very small number indeed and is nothing like the fearmongering predictions that we hear so often from those opposite. These bills will reduce government subsidies for high-income earners and increase the penalty if they opt not to take out insurance. This ensures that most, but not all, high-income earners will still opt to stay in. Indexation will ensure that, over time, the tiers are raised as national incomes rise.

It is important to note that nearly eight million policy holders will not feel any difference at all. There will be no effect on the cost of hospital or general treatment policies because well over 99 per cent of people who have cover will retain their cover. Treasury analysis advises that the combination of reducing the subsidy while increasing the Medicare levy for those on higher incomes will ensure that policyholders retain their private health insurance. The Australian Healthcare and Hospitals Association said that it:

… supports changes to the Medicare levy surcharge and private health insurance (PHI) rebates based on income. The Association has, for many years, known that the PHI rebate is not an effective mechanism to attract and retain members in the health funds. Not only is the mechanism itself ineffective, it is also an extremely inefficient use of taxpayer dollars …

These bills will help Australia get the best value for its health dollar as there is an urgent need to manage this rebate, which is the fastest growing health cost in the nation. I commend these bills to the House.

Joanna Gash (Gilmore, Liberal Party) Share this | Link to this | Hansard source

You have got to hand it to the Labor Party. There seems to be no end to their creativity in spinning a good yarn. This bill seeks to cut $2.8 billion in private health subsidies, inevitably forcing more people onto the already strained public hospital waiting lists. And they title their bill the 'Fairer Private Health Insurance Incentives Bill', surely an oxymoron. Cutting health insurance rebates can only result in forcing more people onto the Medicare levy, resulting in longer hospital queues in Nowra and Milton hospitals. It is the only logical conclusion to draw. Private industry warned against this when Labor first tried to raise the subject under their former leader a couple of years ago. For example, the Royal Australasian College of Surgeons on 12 May 2009 said the budget measure which cut rebates would 'inevitably drive some Australians out of the private health system, placing even greater strain on Australia's public hospitals'. The Australian Medical Association, on the same day, said:

… if you don't keep your private health insurance, you'll be slugged with an increased Medicare Levy surcharge. They get you both ways.

I could not agree more, and this bill confirms exactly what the two major medical associations were warning us about.

This government has never been a fan of private health insurance, despite the success in easing the pressure off the perpetually struggling public hospital system. This bill is just the latest step in Labor's campaign of dogma. Certainly no lessons were learned through its previous experience in 2009 or through industry advice saying, 'Don't do it,' or, most importantly of all, the chaotic health and hospital systems, which we are still experiencing.

When I was reading the explanatory memorandum to the bill, I could not help thinking that the $1.7 billion in cost overruns and waste remediation for the pink batts fiasco could have paid for the subsidy cuts the government is now proposing. When you add the other amounts that have been wasted, there should have been no need to go down this path at all. No wonder Australians, especially in Gilmore, are angry. They cannot see the justification for this to happen. The government has shown no remorse for generating so much waste through its own incompetence, yet it has no hesitation in slugging the taxpayer when it wants. Gilmore has one of the lowest socioeconomic demographics in Australia and I am astounded the government continues to deny the impact this policy will have on the public hospital system in regions like Gilmore. Many families make significant sacrifices so they can take out private health cover, yet here we are again, under this government, penalising those who would benefit most. There is no gain to be had, only pain.

Then, as if to compound this stupidity, the government want to impose another tax by increasing the Medicare levy on some of the soon-to-be-disenfranchised health insurance subscribers. This latest variation will see a three-tier system of subsidies, starting at $80,000-odd per annum for a single subscriber. The first tier get a 10 per cent cut to their subsidy and their Medicare levy will not go up—at least, not yet. The next tier get a 20 per cent cut but their levy goes up. The third tier get no subsidy and their levy goes up even more. Any incentive is deleted.

I note that Treasury estimates that around 25,000 individuals are predicted to opt out, and in some circles that appears to be a conservative guess. In the Senate hearing earlier this year, Medibank Private admitted no research was done as to the likely impact, but they did some internal modelling. That is another way of saying 'an educated guess'. The upshot is that the government does not really know what the impact will be but is keeping its fingers crossed. I have no doubt that this will be just the tip of the iceberg as other cost pressures encouraged by the government start to sink in. With unemployment predicted to rise by another 100,000 in the next 12 months and daily living expenses just going through the roof, it does not take a genius to predict that many households will be cutting a lot of their spending. In fact, they already have, with cost-of-living pressures and, still to come, the carbon tax. This latest venture will only add to that pressure. So, in a way, Labor will get its wish to destroy private health insurance, not through careful planning but through a combination of incompetence, ineptitude and dogma.

But this latest move by the government is hardly a surprise. They were opposed to the scheme when the coalition introduced it and, with the Greens calling the shots, they are determined to remove it completely. I am amused by the inclusion of the word 'fairer' in the title of the bill. This is not a recent innovation, because they tried this on with their Fair Work Act, which is anything but fair. I think that has been demonstrated well and truly. Perhaps they will now turn to their latest slogan: 'a painful adjustment.'

Next, instead of eradicating the subsidy in one fell swoop, as they said they would, this is going to be the death of a thousand cuts. Nobody should be under the illusion that this bill tells us where it will stop; it is just the next step in a series of steps, because the government have not recanted their determination to get rid of this scheme. It might just take a little longer.

I recall a press release issued by the former Minister for Health and Ageing, Ms Roxon, on 26 September 2007, when she was occupying the shadow portfolio. I seek leave to table the press release.

Leave not granted.

I am not surprised leave has not been granted, because this press release actually states the truth. The shadow minister was unequivocal in her assurances. In fact, it was a promise. In part, this is what she said:

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

… Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge and other components of the existing private health insurance incentive scheme.

It is now abundantly clear that the words were carefully crafted. The shadow minister did not say that they would not change the qualifying criteria, which they are now attempting to do—another broken promise. It seems to me that Labor, to quote Nicola Roxon's own words from the very same press release, will do anything and say anything to get elected. They were not going to cut the private health insurance rebates—at least, that is what they tried to imply. That was before they were elected. Now Labor have been elected, $2.8 billion worth of cuts are going to be made—another lie, another broken promise.

If that is not enough, in a letter to Dr Michael Armitage, the Chief Executive of the Australian Health Insurance Association, the then federal Labor leader, Kevin Rudd, in a letter dated 20 November 2007, wrote:

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.

Federal Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge.

Labor will maintain the existing framework for regulating private health insurance, including the process for approval of premium increases.

I remind you, Mr Deputy Speaker, and the House that this statement came from the former Labor leader, Mr Rudd.

By their words, they stand condemned. What utter deceit. The government cannot be trusted to tell the truth and they cannot be trusted to do the right thing. And they certainly cannot be relied upon to get things right. The more the Prime Minister talks about going forward, the more we are slipping backwards.

According to a report in the Australian Financial Review, dated Wednesday, 17 August last year, the Private Health Insurance Administration Council showed that Australia had reached its highest rate of private hospital insurance participation in more than 10 years: in the three months to June 2011, 87,381 people signed up for private health cover. That is what the rebate sought to do when it was introduced. It was an incentive to reduce reliance on the public hospital system by encouraging people to take out private health insurance. It has been an outstanding success, yet this government wants to sabotage that success and trap us in a public hospital system that is groaning under demands that are not being met.

Labor's promise to take over the hospital system has fallen by the wayside and has been diluted to an agreement to share funding—and then only for future growth. How will that work? Another broken promise, but I think it is more a case of Labor confusing their ambitions with their capabilities. This has been the recent pattern of the Prime Minister, making sugary promises on the run and not following through. How many so-called policy announcements have languished after the initial press statement? Making a shallow statement, disguised as a policy announcement is easy. Labor have done it hundreds of times. The challenge for Labor is following through, and that is where they have been found wanting.

Deloitte released a report titled Economic impact assessment of the proposed reforms to private health insurance. I wonder whether the word 'reforms' accurately describes what this government is trying to do, because this proposal is a retrograde step. Deloitte describes the reaction to these proposed changes as significant, not in a good way but with a negative consequence. This is what Deloitte concluded:

In time, it is expected that the cost of servicing increased demand for public hospital services will outweigh the savings to government from the means testing of the rebate.

On this basis, how can anyone in their right mind support this legislation? And that statement comes from an independent and credible body, external to the political process.

I am not surprised that the Independents have indicated their reluctance to support the changes, as has been reported in the Fin Review. At the back of all this, I have to wonder about this strategy to force people back into public hospitals being pursued at the same time as the government is building superclinics to ease the existing strain on public hospitals. Is it in fact a sly ploy to get people into the yet-to-be-constructed superclinics? And what of the government's plan to ease the demand on public hospital waiting lists by utilising private hospitals? How is this going to work?

This legislation has to be viewed in the context of the health reform announcement, made on 2 August last year. Key changes will not be implemented until at least 2014-15, seven years after Labor first promised to fix public hospitals. They also promised that, if needed, they would hold a referendum to take them over. The core promise of Labor's health reforms was that the Commonwealth would become the dominant funder of 60 per cent of hospital costs. That promise has since been scrapped. Its substitute, the supposed increase to 50 per cent growth funding of hospital services will not occur until 2017. That is at least two elections away and with no explanation as to how it is to be funded. A definition of an efficient price of hospital services has yet to be determined, and further negotiations may even be required on the scope of services eligible for Commonwealth funding.

Kevin Rudd said that, on health, the buck would stop with him. Julia Gillard says that the states will be in charge. Julia Gillard has broken Labor's promise on elective surgery guarantees. Patients in category 1 who had waited the clinically recommended time were promised that they would have their surgery in five days. Patients in category 2 would have surgery in 15 days and patients in category 3 would have surgery in 45 days. What are the chances?

The new national elective surgery targets will not be fully implemented until 2016, with reward funding now paid in advance to state governments and no guarantees for patients. The national emergency access target for patients to be admitted or discharged within four hours has been watered down from 95 per cent of emergency department patients to 90 per cent, and will not be fully implemented until 2015. Labor will spend hundreds of millions of dollars this year establishing the National Health Performance Authority, the Independent Hospital Pricing Authority, Medicare Locals and the National Funding Authority. None of this is good news for Gilmore. The superclinic in Shoalhaven, promised by Labor to be up and running by Christmas last year, is not due to commence for perhaps another two years, and even that has a revised forecast that is optimistic. Shoalhaven Hospital is struggling and Milton-Ulladulla Hospital is virtually a second-level operation where some of the services have been cut.

This legislation is a square peg in a round hole. It is a retrograde step. It breaks more promises and it will only compound an already difficult situation. It is not something we need and it is certainly not something we deserve. I cannot for the life of me see any sense in this, and I can see even less in a government that is determined to have its own way despite the cost to the community. I do not support this legislation and I do not trust a government with a proven track record of cunning, deceit and rank stupidity. The Australian people deserve better.

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

In my remarks today on the Fairer Private Health Insurance Incentives Bill 2011 it is my intention to talk a little bit about the historical context in which we find ourselves, particularly with regard to matters of promises, which many other speakers have talked about, and health reform, even though I would say that this bill has nothing at all to do with health reform; this is the budgetary bill.

When we think back to the 2007 election campaign—and I think almost all members in the chamber fought that election campaign—we remember clearly what took place. Some of the things that the former Prime Minister Kevin Rudd—whether that title will apply to him again in the next few weeks I do not know—talked about was the end of the blame game, how there was going to be resolution of the conflict between the states and the Commonwealth, how everybody would start to get along better, how there would be great strides forward on health care and how, as was promised, if there was no resolution then there would be a Commonwealth takeover of public hospitals. That was very much part of the 2007 campaign, and it obviously gave the current government and the former prime minister a great deal of momentum. When you go to the front door of anyone's house and say, generically, 'What are your issues?' the default issues are without doubt health and education. Everyone says, 'Let's fix the health system.' So when that imagery was created by the Labor Party before the 2007 election—ending the blame game and fixing up the health system—everybody wanted to believe it, and I think it worked very well for Labor.

Within that context, an aspect of that campaign was the then Leader of the Opposition, Kevin Rudd—now former Prime Minister and current foreign minister—using a 'younger John Howard' image. As part of that, Mr Rudd and his then shadow health minister, Julia Gillard, were very careful in their addressing of concerns within the health industry and the private health industry. That leads us, as others have alluded, to the letter written by the former federal Labor leader and member for Griffith, Kevin Rudd, dated 20 November 2007, just shortly before the election. In this letter he was very clear on the matter of retaining the existing private health insurance rebate.

We talked in that election campaign about the fact that Labor was out to get the private health insurance rebate. They were going to make changes to it and we knew the consequences of that. At the time the Howard government was elected in 1996, we were in the situation where the proportion of Australians that were a part of the private health system was down to something like 33 or 34 per cent. Through the measures the Howard government put together that was elevated to something like 45 per cent, which took pressure off the public hospital system. In Cowan, some 75 per cent of residents in my electorate are covered under the private health insurance arrangements.

However, as I said, it was very clear that the image, the claim or, you might say, the promise that was put out there by Labor before that 2007 election campaign was that there would be no change. As a result the private health industry was fairly quiet on the matter and it did not choose to highlight any further concerns to the people of Australia, and that was another aspect that helped the Labor Party win government in 2007. This matter was addressed quite significantly in question time today, and the point was made by the current Prime Minister that the promises that were made about the private health insurance rebate were pre-2007 election, the point being that promise was made two elections ago. I note as well that the member for Dickson very clearly made the point when we approached the 2010 campaign that comments were on the record which indicated to Australians that there would be no changes to the arrangements for the private health insurance rebate. So the reality is—and I will move further into this bill soon—that the view and the perspective that was given to the Australian people was that their health insurance rebate was not going to be touched. How truly wrong that was.

It is important for me to say that the former minister for health is on the record as saying:

On many occasions for many months, Federal Labor—

this was before the 2007 election—

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

As I have said, the letter from the Hon. Kevin Rudd to the Chief Executive Officer of the Health Insurance Association, Dr Michael Armitage, again very clearly states that federal Labor was committed to the private health insurance rebates. Unfortunately, as is so often the case in the last four-plus years, what is promised before an election bears little relationship to what takes place after the election. Yet we cannot blame the Greens for any of this of course! The socialist to communist fringe of Australian politics have always been complete and utter socialists. Their view of the world is that anyone who has done well in their life must only have done so due to the sweat of somebody else. So they are fully behind the redistribution of wealth and there are plenty in the government who probably subscribe to a similar view.

When we look at private health insurance circumstances we know that there are 10.2 million Australians who currently have private health insurance for hospital treatment. As I said before, 75 per cent of my electorate of Cowan—some 95,000 voters, citizens over 18, and their families—all believe that they want to make sacrifices in their lives in order to be able to afford private health insurance so that they will have choice in the future. A lot of people might say, and obviously it is also the government's view, that anyone on more than $80,000 a year and any family on more than $180,000 a year must be wealthy. But that is not the whole story, and I will go through that a little bit further. It is certainly the case that 75 per cent of my constituents are within the private health insurance arrangements. In fact, back in August last year we received letters from almost 2,000 of our local residents asking for the retention of the current private health insurance rebate. Residents such as Ken Roberts, Sarah Harris, Lee Davis and Barbara Brown, to name four of those almost 2,000, simply cannot understand why the Labor government is out to cut the private health insurance rebate. They see it as an attack on the hard-working and aspirational people of this country.

In just the last day or so I received an email from my constituent Mark Paulton. I will read into the record what he says:

We are a modest family of 3 with an income just over a gross income of around 180k pa. This is modest really when in context of Perth and the mining boom as you can appreciate.

Since labour have been in power I have seen appreciation for the working family dwindle and really encouragement now goes to those who aren't striving to better their income levels and raise themselves without support of the state. For example here are things that labour has introduced that has directly affected me and my family due this government thinking that a family earning over $150,000 is classed as a millionaire in their view:

1. Means testing of a family Tax Benefit A and B, Child Care Benefit and Baby Bonus … Loss of around $3500 pa

2. Flood Levy introduced … $1000

3. Means Test of Rudds stimulus package so not applicable to our income level … $1000

4. Carbon Tax Introduced $2500pa

5. No change to recent income tax threshold in line with inflation … $1000pa

6. Changes to Medicare and Obstricians fees for using their services … $2500

And now

… The loss and means test of the PHI rebate …$1000pa.

Consideration of not just the PHI rebate means test, it should be considered with all the other changes this government has done and this extra change not only is a burden in its own right, it's compounded by the fact that one has been levied on just purely because we are perceived to be millionaires. The total of the above is around $12,500 in changes that makes us worse off since labour came to office.

Is it any wonder that retailers are feeling it tough as well.

When you have 75 per cent of the people in Cowan concerned about this sort of issue, is it any wonder then that so many people in my electorate are concerned? When Deloittes did the analysis on the impact of the legislation it showed that they expected 175,000 people to withdraw from private hospital cover and a further 583,000 to downgrade their cover. The AMA shares that sort of viewpoint as well. The health insurance sector predicts that another 730,000 are likely to downgrade their hospital cover and 775,000 are likely to drop from ancillary altogether. Even the government's own Medibank Private has estimated that 37,000 of their members alone will drop their cover and 92,500 will downgrade their cover. That is thousands more than the government estimates will abandon private health insurance due to this bill—due to these measures that the government is trying to introduce today. One private insurance company is saying that they alone will lose more people to private health insurance than the government estimates will happen across the whole country. I ask everyone in this place: who do they think is accurate on these matters?

One of the specific points that has been made about private health insurance and these plans to take the rebate away from so many people relates to the pool base for private health insurance. The reality is that with each person that drops out of private health insurance the pool base gets smaller and smaller. Even if Medibank Private is the only insurer that loses people—which is not necessarily going to be the case—37,000 people will no longer be part of that pool base. All those people that the government claims it is trying to protect will also see their insurance premiums rise as the health insurance companies will have to try to make ends meet whilst continuing to provide services from a reduced number of insurance policyholders.

This legislation does represent a huge knock for those hardworking Australians who want to share the cost of the provision of their own health services—those people who believe that society does not owe them and that they should pay their own way where they can. They are just asking for that little bit of help so that they can take pressure off the public hospital system. I do not think it is too much to ask, particularly for those that pay the majority of the income tax in this country, that they should get that little bit of support. These are people that have been making sure that they are doing the right thing for this country as well as looking after themselves first and foremost and it is not wrong for them to get just that little bit of support. We reject this bill, we reject the premise behind it and we call on the government to get its act together and balance the budget in the right way by cutting its spending. (Time expired)

Louise Markus (Macquarie, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2011 and the two cognate bills that are before the House. This is not the first time that these bills have been seen in this place. The same set of bills has been defeated by the Senate on two separate occasions, but this Labor government is now at it again for a third time. This of course is no surprise: if we have learnt one thing about the Labor government it is that it will never let a little thing like a mandate, or the will of the people, get in the way of it fulfilling its own agenda.

These bills aim to reduce the incentives for Australians to take up private health insurance by slashing the 30 per cent rebate and increasing the Medicare levy surcharge for those without insurance, according to income thresholds. Those earning over $80,001 will have to either receive a reduced rate of 20 per cent or pay a one per cent Medicare levy surcharge. People earning over $93,001 will either receive a rebate of just 10 per cent or pay a 1.25 per cent surcharge, whilst those who earn over $124,001 will no longer receive any private health insurance rebate and will face a Medicare levy surcharge of 1.5 per cent.

This government has selective amnesia when it comes to this issue. In 2007, then Leader of the Opposition Rudd gave assurances to the Chief Executive Officer of the Australian Health Insurance Association, the Hon. Michael Armitage, that federal Labor would not make any changes to the private health insurance rebate.

A young professional in the seat of Macquarie earning $95,000 per year with a $1,500 per annum health insurance policy will see his rebate slashed from 30 per cent to 10 per cent or in real dollar terms from about $450 to $150. That equates to this person being $300 a year worse off. If they do not have private health insurance, their Medicare levy surcharge will rise from $950 to $1,187.50 and they will be $237.50 a year worse off. Put simply, they are damned if they do and damned if they don't. This is another example of Labor trying to hurt everyday Australians—young families, senior citizens and small business owners who are already struggling to make ends meet as the cost of electricity and other vital items continues to rise. If passed, these bills will add to the ever-increasing cost-of-living burden being felt by people across the electorate of Macquarie.

When in government the coalition implemented incentives which saw a 10 per cent increase in the number of Australians who use private health insurance. Thanks to these incentives we now see around 45 per cent of Australians using one form or another of private health cover. Increased patronage of private health insurance is a vital part of ensuring greater access to health services for everyone.

Public hospitals all over the nation struggle to keep up with the demand. This is not a reflection on the hardworking doctors and nurses who work in public hospitals and are valued members of our community but a reflection on the demand that is currently placed on our health system. Private health insurance assists public hospitals by giving those who can afford it the opportunity to receive private care, which assists by easing pressure on hospital waiting lists. Reducing the rebate will increase the cost burden of private health insurance on mums, dads and self-funded retirees who are already struggling with price hikes. This will leave many with no choice but to drop their private health insurance altogether, whilst forcing others to downgrade to cheaper policies. This was highlighted by a telephone survey conducted by ANOP Research. They found that, if this bill was passed, 11 per cent of those surveyed would drop their hospital cover and a further 24 per cent would downgrade it. This would not only provide them with less cover but in turn place a great deal of pressure on our public hospitals and other health services.

The government's own figures show that around 27,000 people would be forced to drop their private health cover. This would result in an extra 8,500 public hospital admissions, as those previously covered by private health insurance returned to the public hospital system. These figures tell us that the Labor government fails to understand the impact that this bill will have on these 27,000 individuals across the nation—families, students and self-funded retirees who through no fault of their own will be worse off. During Senate estimates hearings, the leading insurer Medibank Private said that according to its own internal modelling about 37,000 of its members would be expected to drop their cover with an additional 92,000 expected to downgrade their policies if this bill were to pass. Medibank's figures suggest that under this bill 10,000 more Australians will be forced to drop private health insurance than the government has suggested. However, Medibank is talking about only their customer base, whilst the government is talking about the entire nation.

To see how the government's national figures stack up, look at the Deloitte report entitled Economic impact assessment of the proposed reforms to private health insurance, commissioned by the Australian Health Insurance Association. This report estimates that, over the first year, 175,000 people will drop their private health insurance and 538,000 people will have to downgrade their policies. We have the government saying 27,000 and a report by Deloitte claiming 175,000. So who can we trust? Who is more believable? The government that brought us the pink batts disaster, the 'building the entertainment revolution' through the set-top box scheme, the ludicrous cash-for-clunkers idea and, for an encore, wants to bring in a carbon tax? Or a company like Deloitte which, since its foundation in 1845 has been regarded as one of the world's largest companies when it comes to professional services?

The Deloitte report also found that this bill, which has been rejected twice by the Senate over five years, will cause the number of those dropping their cover to increase to 1.6 million consumers, while a further 4.3 million will downgrade their policies. Additionally, 2.8 million Australians would drop their general cover, which includes ancillary services such as dental. It found that because of this severe impact on the health insurance market, private health insurance premiums would rise significantly. The rise would be a staggering 10 per cent more than would otherwise be expected, making private health insurance even more unaffordable for those struggling against surging cost-of-living pressures. The report went on to show that this would have a significant impact on the public health system, with public hospitals having to treat a significantly higher number of patients as people withdrew from private health cover.

We need to be very clear about this. What the Labor government is proposing here is bad health policy. This government has a long record of failing to understand what the public wants, and this policy shows that nothing has changed. The impact that this proposal will have on the residents of Macquarie is significant. An average family in which the father works as an accountant and the mother as a schoolteacher, earning wages above the threshold, with a basic private health package costing $2,500 a year, will see their rebate reduced from 30 per cent to 20 per cent, costing them an extra $250 a year. This is at a time when cost-of-living pressures are high and many among us are calling out for greater access to health services.

By bringing the Fairer Private Health Insurance Incentives Bill and the two related bills back before the parliament, this Labor government is once again showing that it is not listening to what Australians are saying. In both May and November of 2009 the parliament clearly told Labor that we did not want it destroying our health system. We must now again say that in 2012 nothing has changed. This bill needs to be opposed. The last thing we need is more hurt from this Labor government.

Kelly O'Dwyer (Higgins, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Fairer Private Health Insurance Incentives Bill 2011 and related bills—the government's latest broken promise and latest attack on aspirational Australians. This is an issue that goes to the very heart of my electorate of Higgins. My electorate is full to the brim with aspiration.

When I stood here for the first time in this place just over two years ago, I referred to the thread that binds the people of Higgins together, that thread being aspiration—whether it be young couples renting for the moment but desperate to own their own homes; whether it be families wanting the best for their children, scrimping and saving to provide them with the best opportunities in life; whether it be small business people, rolling up their sleeves, taking a chance and creating jobs; or whether it be older residents who have worked hard throughout their lives, whose accomplishments prove what can happen when you dare to pursue your ambitions.

Yet this government does not believe in aspiration. It does not believe, as we do, that the best path to our collective prosperity involves giving individuals, families and businesses the freedom, opportunity and encouragement to build and secure their own futures. It does not believe in self-reliance. It is ideologically opposed to encouraging people to work hard, to save and to contribute to their own health care.

This bill is all about penalising individuals and families. It goes to the heart of cost-of-living pressures that families and individuals are already increasingly facing. This bill will increase the cost of private health insurance while at the same time do nothing to decrease the pressure on the public health system. Far from it: the changes that the government seeks to make today will increase the pressure on the public health system.

Seventy-seven per cent of my electorate have private health insurance. That is around 83,258 people, based on the current ABS statistics. Each of those people will be affected, either because their rebate will be taken away in full, because it will be decreased or because their premiums will ultimately rise because of the significant number of people who will drop out of the private health system. Even the remaining 27 per cent of my electorate who do not currently have private health insurance will be affected, because the public health system will come under increasing pressure.

It is instructive to look at the number of people who will be directly impacted when tier 1 of the government's legislation kicks in. In my electorate of Higgins, about 21 per cent of singles and seven per cent of couples will be directly impacted. I think it is telling that the lights have gone out in this chamber, because this legislation is a demonstration of how the lights have gone out on this government and how this government have ultimately been incredibly deceptive in the comments they have made about the 30 per cent private health insurance rebate across the years. It is useful to look back at what this government have said about the 30 per cent rebate—a rebate that was brought into effect by the coalition government, by the then Minister for Health and Aged Care, Dr Michael Wooldridge, to ensure that we could have affordable and sustainable health care for all. It was to provide Australians with choice, to encourage people to be self-reliant.

Let us go back and look at what the current Prime Minister, who was then shadow minister, said about the private health insurance rebate. She said that she would give an ironclad guarantee that there would be no change to the 30 per cent private health insurance rebate. She said that she was so sick of saying it that she would ensure that there would be 'an ironclad guarantee' that there would be no change. All of us in this place know exactly what the Prime Minister's promises are worth. Only days before the last election, the Prime Minister made another promise—that there would be no carbon tax under the government she led. She broke that promise to the Australian people and she broke her promise as shadow minister for health not to rip away the private health insurance rebate.

But it was not just the Prime Minister who made this assurance to the people of Australia. At the election in 2007, the shadow minister for health, the member for Gellibrand, explicitly stated that federal Labor had:

… made it crystal clear that we are committed to retaining all of the existing private health insurance rebates.

In the media statement released during the campaign, she stated:

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

That is what she said: 'This is absolutely untrue.' She went on to say:

The Howard government will do anything and say anything to get elected.

Doesn't that take the cake? It turned out that it was the shadow minister for health who would say anything or do anything. This is a very interesting statement from the member for Gellibrand. It has to be one of the most duplicitous statements ever made by a shadow minister with respect to a government policy, ranking just after the Prime Minister's famous remark—her famous broken promise—about a carbon tax.

It went on. Kevin Rudd, who was then the Leader of the Opposition, also made some incredibly explicit promises in relation to the private health insurance rebate. He said, in a letter, which I have here today:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year—

This is in 2007—

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.

Federal Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge. Labor will maintain the existing framework for regulating private health insurance, including the process for full approval of premium increases.

The Labor government have again broken their promise. In fact, before they went to the 2010 election, they brought forward changes in the 2009 budget which saw a broken promise on private health insurance—a private health insurance broken promise which will affect every single Australian and, most particularly, all of those Australians who currently hold private health insurance. It will affect not just those whom the government claim will be directly affected—those on higher incomes—but every single person who holds private health insurance, because their premiums will rise as people drop out of private health insurance.

The government have said that we should not be worried about the people who drop out of private health insurance. They say that it is a minuscule number. They say that, for their savings of upwards of $1.9 billion—which they now say is over $2 billion—very few people will drop out of private health insurance. This does not stand up to scrutiny. Private health insurers have conducted their own research and asked Deloitte to provide a report on the number of people who would be anticipated to drop out of private health insurance as a result of the proposed changes. The report said that, over five years, up to 1.6 million Australians will drop their cover, which is pretty radically different from Treasury's estimate of around 25,000 people. Not only that but, according to this report, up to 4.3 million Australians will downgrade their cover over five years. This will see an increase in premiums—the cost of health insurance—of upwards of 10 per cent. This means that the cost of health care in Australia will increase.

Australians who are battling cost-of-living pressures right now ask themselves: 'Why? Why is this government so committed to ripping away choice for Australians? Why are they committed to raising the cost of private health insurance?' The government claim this is because they need to find savings. But let us look at the government's record. They have the worst economic record of any government in recent history. They have delivered in their four budgets deficits that add up to $167 billion, which of course means that Australians for generations to come will be paying off the subsequent debt that the government are racking up. Already we know that the cost of the government's borrowings will impact Australians—every man, woman and child—by $6,000. This is a government with a terrible record; a government that has needed to increase the gross debt ceiling from $75 billion to $250 billion.

Warnings abound in our national papers every day that this government is on the path to economic destruction through its waste and mismanagement. It must stop. While this government says it needs to rip out around $2.4 billion from the private health insurance rebate, it has wasted more than $1 billion on pink batts and more than $1.5 billion on trying to correct the mistakes made under that program. This government has managed billion-dollar blowouts in mismanaged programs such as border protection. There has been a blowout of over $1 billion in that policy alone. This government has also wasted billions of dollars on the Julia Gillard memorial school hall projects. A number of school halls and infrastructure projects have not been managed well and there has been an incredible waste of taxpayer dollars. While the government has presided over such waste and mismanagement, it claims that it needs to rip money out of private health insurance.

The only reason this government is pursuing this action is that, ideologically, it is opposed to private health insurance. It is opposed to people saving and providing for their own futures and it is against choice in health care. It is now on its the third attempt to dismantle the private health insurance industry in this country. I stand against this, as do the people of Higgins. The people in my electorate of Higgins are vitally opposed to these measures and I will continue to fight for private health insurance that will allow Australians to directly participate. This government should hang its head in shame for taking one policy to the 2007 election and then the 2010 election, but then breaking that promise. This government cannot be trusted to maintain its promises; it cannot be trusted to maintain the health care of all Australians. This legislation should not stand.

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I am pleased to speak on the Fairer Private Health Insurance Incentives Bill and related bills. The House is debating a simple, clear-cut issue—should the Australian tax system encourage all Australians, or as many who are able, to provide for their own medical expenses through taking out health insurance, or should it instead, as this government proposes, put private health insurance and choice of medical provider even further out of the reach of many Australians? Regrettably, that will be the effect of the fundamentally misconceived provisions in the bills the House is debating this afternoon.

When it comes to private health insurance, Labor has form. Labor is relentlessly hostile to private health insurance. Labor is hostile to private hospitals. Labor is hostile to the notion of Australians seeking to rely on their own resources, seeking to make provision for themselves and their families rather than relying solely and exclusively on the public system. This bill is redolent of ideological hostility towards private health insurance and towards self-provision, which is at the absolute core of Labor's approach. That is why this bill is designed to make it harder for Australians to help themselves and their families. This bill is designed to make it more expensive to take out private health insurance; it is designed to penalise many of those who seek to provide for themselves rather than be a burden on the public purse.

Let us remind ourselves of the principal provisions in the Fairer Private Health Insurance Incentives Bill. Firstly, the current private health insurance rebate, which for most people is set at 30 per cent of expenditures and for older people somewhat higher, will be reduced for those who are above certain income levels. If you are a single and your income level is more than $124,000, the rebate will be reduced to zero; if you fall into certain income levels below that, the rebate will be reduced by lesser amounts. The second major provision in this bill increases the current Medicare levy surcharge on your tax bill which applies if you do not have private health insurance. Today that stands at one percentage point; in the new world, should this bill pass the House, that rate will increase to 1.25 per cent for a single person with an income above $93,000 and 1.5 per cent for a single person with an income above $124,000. We have had some highly illogical and internally inconsistent arguments in support of this measure. Just today in the House the Prime Minister drew a comparison between a highly paid businessmen earning $500,000 a year and an apprentice earning much less, and argued that, in the absence of the measures contained in this bill, there is an unsavoury degree of cross-subsidy on the part of the apprentice to the businessman, who has the benefit of the private health insurance rebate. A brief look at the numbers indicates what a ludicrous claim that is. In the case of the businessman cited by the Prime Minister, the tax on $500,000 is $206,050, prior to the application of the rebate. If we assume a typical level of private health insurance premium then that tax bill will be reduced by a mere $720. By contrast, somebody earning $50,000 will have a tax bill of $10,200. So the suggestion that, in some way, the person paying $206,050 a year in tax is freeloading on the person paying $10,200 in tax, which was essentially the argument put by the Prime Minister in the House, is self-evidently not worth considering when you take even the briefest look at the actual numbers.

I want to make three points in the time I have available. Firstly, the measures inherent in this bill fundamentally attack the provisions of the private health insurance rebate and are an appalling abandonment of what was apparently previously an ironclad commitment. Secondly, for many years we have seen from the Labor side of politics a consistent mismanagement of policy in the area of private health insurance, founded on their implacable ideological hostility to the private health insurance industry. Thirdly, the ill-designed and ill-thought-through measures in this bill will seriously damage choice and equity in health care in Australia.

On the first point, I remind the House, as a number of other speakers have done, of commitments that were made in the lead-up to the 2007 election by a number of eminent members of the Labor Party. The member for Gellibrand had this to say: 'On many occasions for many months federal Labor have made it crystal clear that we are committed to retaining all of the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.' Then it was a commitment; now, apparently, that commitment is out the window and completely meaningless.

What did then opposition leader Kevin Rudd have to say just before the 2007 election? In a written commitment, a letter to the industry body, he had this to say: '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 rebate and 35 and 40 per cent rebates for older Australians.' This is a shameful abandonment of a commitment previously given by the Labor Party.

My second point is that the policy area of private health insurance is one which has been subject to consistent mismanagement over many years by Labor during its times in government, and by contrast the coalition has shown a sure hand in seeking to maximise the number of people who take out private health insurance and thereby contribute themselves towards the cost burden of the health system, which would otherwise fall entirely on the public purse. When Medicare was introduced in 1984, a decline began in the percentage of the population covered by private health insurance. By 1998, only 30.4 per cent of the population was covered by private health insurance. I need hardly add the obvious point that this left the vast majority of Australians drawing on the publicly funded system, putting it under substantial pressure.

The Howard government, I am pleased to say, unlike the approach of the present government, tackled this pressing policy problem with measures that were well designed and which achieved their desired outcome. The desired outcome of course was to increase the proportion of Australians with private health insurance cover—that is, to increase the proportion of people who were taking upon themselves the burden of funding their own health needs rather than simply leaving it to the public purse.

The measures introduced by the Howard government involved a mixture of carrot and stick. The carrot of course was the introduction of the tax rebate, which is now under savage attack in the legislation before the House today. The stick of course was that if you did not take out private health insurance above certain income thresholds, you were required to pay the one per cent Medicare levy surcharge. Those measures were extremely successful. By 2007, private health insurance coverage had climbed to 44.6 per cent of the population. In my own electorate of Bradfield, 85 per cent of households have private health insurance. In other words, a very substantial proportion of the people in my electorate of Bradfield have taken the decision to incur, out of their household budget, expenditure against their future health needs because they want to make sure that they are doing what they can to provide for their own health needs and the costs of those health needs rather than simply leaving it to the public purse to support their health needs. I commend them for doing that.

Let me turn therefore to my third point and perhaps the one which is most important, as the House considers this package of measures. What will be the impact of this legislation on the policy objective of choice and equity in the Australian healthcare system? I am sorry to say the effect of these measures will be very damaging. Some 2.4 million Australians are directly affected and they face an immediate increase in premiums, depending upon which tier they fall within, of between 14 per cent and 43 per cent. In turn, it is likely that there will be a material reduction in the percentage of Australians who hold private health insurance. Conversely, there may also be people reducing the tier of insurance they hold. Private health insurance premiums are likely to rise and the inevitable consequence will be more pressure on the public health system and more pressure on the public purse which funds that public health system.

Analysis by Deloittes, which has been cited by a number of speakers in the House this afternoon, predicts that some 1.6 million consumers are likely to withdraw from private health insurance cover, a number which is very, very different from the panglossian assumption in the work done by the Treasury that a mere 25,000 people will give up coverage. The further issue which presents itself is that the dollars which are purportedly saved out of this exercise must be offset against the extra cost which the government and in turn taxpayers will be required to bear towards the cost of the public health system. According to research conducted by Econtech and other parties in 2004, for every dollar of public funding going into the private health insurance rebate $2 was saved—that is to say, $2 towards the cost of the health system that was met by private health insurers, rather than being required to be paid out of the public purse.

Many of the arguments that have been made by the government in favour of this measure do not bear up to close scrutiny. It is claimed to be a savings measure, but in real terms it is in fact a tax increase, because Australians above a certain income tax threshold who do not take out private health insurance will now face a further increase in their income tax rate, which could be as high as one per cent or 1.5 per cent. This in turn creates what might be described as a price shield for private health insurance premiums, as the eminent economist Henry Ergas has argued in the Australian newspaper today, and the consequence of that is that there will be an upward force on private health insurance premiums which would not have existed in the absence of the measures contained in this bill. The consequence in turn is that private health insurance will become increasingly unaffordable for a proportion of Australians.

When you step back and look at the overall impact of these measures, it is very difficult to avoid the conclusion that what the Labor Party is doing here is pushing us towards a two-tier health system in Australia, where the poor or the less well off are in the public system and the more affluent are being pushed into a private health insurance funded private system. That seems a very curious approach for the Labor Party to be taking. It is a profound attack on the principles of both economies of scale and equity that the public health system is supposed to deliver and it is one of the many curiosities of this deeply ill-conceived piece of legislation, which attacks fundamentally Australians who seek to provide for themselves.

Josh Frydenberg (Kooyong, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2011, Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011 and Fairer Private Health Insurance Incentives (Medicare Levy Surcharge-Fringe Benefits) Bill 2011 before the House. The government's proposed changes, which will means test the private health insurance rebate, is a retrograde step that is vehemently opposed by the coalition. Means testing the rebate will drive up premiums, force millions of Australians to downgrade their private health care with many abandoning it all together and increase the pressure on an already stretched public health system. What is more, it is a fundamental breach of another Labor promise. From Kevin Rudd to Julia Gillard to Labor's last Minister for Health and Ageing, Nicola Roxon, the government repeatedly stated its commitment to maintaining the private health insurance rebate in its current form. In September 2007, Nicola Roxon 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 … The Liberals continue to try to scare people into thinking Labor will take away the rebates. This is absolutely untrue.

Then again in February 2009, Nicola Roxon said:

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

We now know the truth. Whatever modicum of trust was left after Labor's successive backflips on the carbon tax, offshore processing and mandatory precommitment for pokies, it must surely have evaporated after this latest government reversal. How can Labor honestly be trusted on anything? In contrast, the coalition has been consistent in our commitment to not means testing the private health insurance rebate. It goes right to the heart of an individual's freedom to choose and for what many consider to be an act of personal responsibility. We as Liberals want a robust private system in health just as in education, and we want this private system sitting side by side with a viable and effective public system. This was well put by Margaret Thatcher when she, as Prime Minister, said of private health insurance in the United Kingdom:

I, along with something like 5 million other people, insure to enable me to go to hospital on the day I want, at the time I want, and with a doctor I want. For me, that is absolutely vital … Like most people, I pay my dues to the National Health Service; I do not add to the queue, and if I said "Look, because I cannot come when you want me, I must come when I want to" you would accuse me of jumping the queue. I exercise my right as a free citizen to spend my own money in my own way, so that I can go in on the day, at the time, with the doctor I choose and get out fast."

So that was Margaret Thatcher and this thinking could equally apply to the Liberals' approach to private health insurance in this country. There you have it: the doyenne of British conservatism, whose record in limiting the excesses of the state are revered the world over, explaining why she and five million of her fellow Britons had private health insurance. So wouldn't Margaret Thatcher be surprised to learn that we in Australia, where our public system is even more effective than that of the UK or the United States, have around 12 million Australians with private health insurance—a remarkable 52.9 per cent of the population. In an electorate like mine, Kooyong, the number is even higher, with 74½ per cent of its people having private health insurance. This includes nearly 25,000 people who are single. In my electorate of Kooyong this means that more than 100,000 residents are covered by private health insurance. These changes will take money out of the pockets of people in Balwyn, Hawthorn, Kew, Camberwell, Deepdene and Canterbury. It means less money for them to meet the rising costs of living because this money will have to now go, if they choose, into keeping their private health insurance.

Significantly, as my colleague and friend the member for Dickson and shadow minister for health said in a very valuable contribution in this House last week, a remarkable 5.6 million people with private health insurance have an annual household income of less than $50,000 and 3.4 million Australians with private health insurance have an annual household income of less than $35,000. Never let it be said that this is a rebate for the rich. These are aspirational Australians, some of whom do it very tough but take out private health insurance because they have made a considered choice. This is how they want to spend their money. This is the epitome of personal freedom. So too when it comes to the private health insurers in Australia themselves: a number of them are not-for-profit organisations whose bottom line is not to expand their margins but to achieve more affordable health care that delivers a better service for the consumer.

We in this House should also not forget that private hospitals do much of the heavy lifting in our healthcare system. They look after 40 per cent of all patients in Australia. In 2009-10 this equated to 3½ million patients, and for elective surgery the numbers are even higher with nearly two in every three cases taking place in private hospitals. These are remarkable numbers and reflect the fact that the Australian people have been voting with their feet for private health insurance.

Indeed, it was the Howard government's policies which facilitated this very high take-up that we now enjoy. In 1997 John Howard introduced a one per cent Medicare levy surcharge on taxable income, penalising those income earners who did not take up private health insurance; 1999 saw the introduction of the 30 per cent rebate; the year 2000 saw Lifetime Health cover and from 2005 the more elderly people in our community received greater rebates for taking up private health insurance. At every step of this reform process undertaken by the Howard government you could see the take-up rates dramatically improve. For example, in the 12 months after the introduction of the 30 per cent rebate in January 1999, the percentage of Australians with private hospital health cover jumped from 30.6 per cent to 43 per cent and in the years afterwards it jumped to the level we now enjoy at around 52.9 per cent.

What is so concerning to members on this side of the House is the large number of people that will be negatively and directly impacted by this government's legislation. Around 2.4 million people will see immediate rises in their premiums of 14 per cent, 29 per cent or 43 per cent depending on their income levels. According to the Australian Health Insurance Association, over 800,000 more Australians will be admitted to public hospitals. In their analysis, the top-tier consultancy Deloittes has said that 175,000 Australians will withdraw their private health cover in the first year and 583,000 Australians will downgrade their cover. Over a five-year period those numbers will dramatically rise to 1.6 million people who will withdraw their private cover and 4.3 million people who will downgrade their cover. Even the state-owned Medibank Private has come out publicly and stated that 37,000 of its members will remove their private cover and 92½ thousand of their members will downgrade their cover.

I have no doubt that the government's decision to means-test public health insurance will be deeply unpopular with the Australian people. The public understands that this is not about the future costs of the program. The rebate as a proportion of the total healthcare spend, public and private, has stayed constant at 3½ per cent for the last decade. The public understand that this is not about improving the state of our public healthcare system, for they have heard all that before—the hospital fix that Kevin Rudd promised but which never arrived and the superclinics that were promised but never built. But they do know that this government is under enormous budgetary stress as a result of its own fiscal mismanagement.

This is just a mad dash for cash. They need to scramble for a surplus and in doing so will hit Australian families once again. The problem is that in doing so the consequences of these changes will be profound. Healthy and young people will make up thousands of the thousands of people who give up their private cover, reducing the cross-subsidy that is a hallmark of insurance schemes. Premiums will rise, membership will fall and the overall pressure on our public health system will become even more pronounced.

Be under no illusions. This is bad policy from a bad government and it will come at a bad time for Australian families. This legislation before the House to put a means test on private health insurance in this country must be opposed by all clear-thinking members who are interested not just in the good health of our country's balance sheet but also in the physical health and wellbeing of all Australians.

Alan Tudge (Aston, Liberal Party) Share this | Link to this | Hansard source

I also rise to speak against the passage of the Fairer Private Health Insurance Incentives Bill 2011, which I believe will be a dagger through the heart of the private health insurance industry. I commend the member for Kooyong, who was just speaking, for his remarks, and I associate myself with his comments. There are three reasons I am against this bill before us. First, it is based on a broken promise. Second, it is bad policy that will cause premiums to go up for all Australians. And, third, it is bad economics; it will just lead to greater cost-shifting to the states and longer public hospital waiting lists.

Let me go to the first point—the broken promise. This bill is just another breach of faith from this Labor government. It is another broken promise. We had a firm commitment—in words, in writing—from this government that it would not be amending the private health insurance rebate scheme. The Labor Party made this very, very clear, and it did so time and time again. Perhaps nothing is more clear on this than the letter Mr Kevin Rudd, who at the time was the federal Labor leader, wrote to the chief executive of the Australian Health Insurance Association in late 2007. He wrote:

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.

There are many other occasions on which this very firm commitment not to amend the private health insurance rebate was made. But what do we have before us? We have a further breach of faith from this government against an explicit commitment it had made.

The second reason I am against this bill is that it is poor policy that will push premiums up for everyday Australians. Madam Deputy Speaker, as you may be aware, an estimated 12 million Australians now have private health insurance. That constitutes over half the Australian population, or 52.9 per cent. Of those, about 10.3 million have hospital treatment cover. The people who take out private health insurance are not, overall, just the wealthiest in Australian society—not by any stretch of the imagination. To give you a few figures to prove this point: 5.6 million people who have private health insurance have a household income of less than $50,000 per annum and 3.4 million have a household income of less than $35,000 per annum. This is not an individual's income; this is a collective household income. It is a broad cross-section of Australian society that is taking out private health insurance. This is a good thing. It is a good thing that a broad cross-section of society takes out private health insurance. It is a good thing that so many people take out private health insurance, because the more people who take out private health insurance the less pressure there is on the public system. As we know there are extensive waiting lists on the public system, there are stresses and there are pressures on it. The more we can take off the public health system the better it is for everybody.

It has not always been the case that we have had such a high proportion of people who take out private health insurance. Far from it. If you go back to the Hawke and Keating governments people were dropping out and the private health insurance system was at quite a critical point. From memory, I believe at that time the percentage of those with private health insurance was down to about 33 per cent of the population. When Howard and Costello came to government in 1996 they saw this problem and tried to rectify it. Indeed, they put in a number of steps over the course of their government to lift the proportion of people who took out private health insurance, and they had a remarkable effect. An estimated 75 per cent more people took out private health insurance as a result of the measures that the Howard-Costello government put in place. That high proportion has been maintained all the way through to this present time. But now we are again at a critical stage. We are at a moment where the tides may turn once again, and turn in a negative direction.

What will be the impact of the proposed changes contained within the bill before us? As we know, some 2.4 million people will be directly affected. They will face immediate increases in their premiums of 14 per cent, 29 per cent or 43 per cent, depending on their income tier. That is a huge percentage increase in their premiums. This is at a time when many people, even people who are relatively well off, with incomes of $100,000 or $150,000, still have mortgages to pay and when electricity bills, groceries, water bills, child care et cetera are all going up. But the increases will not be limited to those 2.4 million people who are on higher incomes. Rather, the impacts will be felt by everybody who has private health insurance—every single one of those 12 million people.

Deloitte, who have done some analysis of the bill before us, believe that, as a result of the changes proposed, premiums across the board will go up by 10 per cent above what they would ordinarily go up by. Ordinarily we see premiums go up five, six or seven per cent per annum. Here we are talking about potentially a 17 per cent increase in premiums. The government's own private health insurer, Medibank Private, predicts that 37,000 of their members will drop cover because of the increase in premiums. They predict that 95,000 of their members will downgrade their cover because of the increase in premiums that will come about as a result of this bill. That is just one insurance company. That does not include Bupa, Australian Unity or all the other private health insurance companies. That is just one private health insurance company, the government's own, which estimates that 37,000 people with drop out and 95,000 people will downgrade.

Deloitte believe that in the short term 175,000 people could withdraw from private hospital cover and over 500,000 people will downgrade. In the medium term, the five-year horizon, they estimate that 1.6 million people will drop out and 4.3 million people will downgrade. If these figures are anywhere close to being accurate, and I believe they will be, we will be seriously winding back the clock. People will be dropping out again in droves and premiums will skyrocket. This will just put more pressure on the public hospital system, which it does not need at present. More pressure on the public hospital system also means more pressure on taxpayers, who have to pay for the public hospital system.

On that particular point, we have some modelling suggesting that every dollar of funding provided to the private health insurance rebate saves $2 for the government. So, overall, the analysis based on the bill in front of us is that $3.8 billion extra will be required to fund the public hospital system as a result of these particular changes.

In my own electorate over 84,000 people have private health insurance. These are not wealthy people; they are everyday, middle-income Australians. They take out private health insurance not because they are particularly well-off but because they like the convenience, the choice and some of the peace of mind associated with it. Another significant reason for it in my electorate is that they want to have access to Knox Private Hospital, which is for most residents in my electorate the closest and most convenient hospital for them to attend. It is easy for them, and their family members, to get there. Under the changes proposed, many people may have to look further afield in order to access the hospital of their choice, because they may not be able to afford the premiums, should they go up as we expect they will.

Why are the Labor Party doing this, given that it is based on a broken promise and it is poor policy, which we know will put up costs for everyday Australians and cause thousands of people to drop out? We know it will cost the taxpayer potentially billions of extra dollars overall. Why are they Party doing it? There are two reasons. The first is ideological. The Labor Party have never liked private health insurance. They have always argued against the additional benefits that the Howard-Costello government put in place. Despite what they said publicly before election, we have always known that secretly they have wanted to reduce the number of people covered by it.

The second reason that they are doing it, though, is because the Labor Party—the Rudd-Gillard government—have blown the budget so systemically and so categorically that they are now looking for every single dollar that they can possibly find to create the elusive budget surplus come budget time this year. As I pointed out, overall the impact of these bills on the taxpayers will be a negative one, with them potentially paying billions of dollars extra as people shift back to the private health system.

But the accounting trick—and this is the only thing that the government are interested in—means that in the short term there could be savings, because it will shift costs from the Commonwealth across to the states. The states still have to find the money somewhere. They are raising taxes from the same constituents, whether they be in my electorate or any other electorate. But the federal government will be able to make a short-term cost saving, according to the Treasury figures. These bills are in front of us because they do not like private health insurance and never have and because they are desperate to find extra savings because the budget is in such poor shape. This provides them with a neat little accounting trick in the short term to get them through the grave difficulties that they have at the moment.

Let me summarise the position in relation to these bills. They are based on a broken promise—that is the first point. They implement poor policy that will see premiums increase across the board for everyday Australians on very modest incomes. It will see people fall out of private health insurance and put greater pressure on the public health system. That is the second point. Finally, my third point is that these bills are poor economics. They increase the pressure on the taxpayer overall and create additional financial pressure on state governments that the Commonwealth avoids in the short term. I am firmly against these bills. I believe that all sensible members of this parliament should also vote against these bills.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

I rise tonight to address the Fairer Private Health Insurances Bill 2011, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2011. I am pained to even call the package by its name. This package of bills is not designed to make things fairer for Australians and nor is it designed to make things better in our national healthcare system. This legislation is designed to cut the healthcare rebate that families and singles are eligible for. That means nothing less than private health insurance becoming more expensive for working families in this nation. That will compound on increases in the cost of living across the board.

We are battling a healthcare crisis in this country. Public waiting lists have been spiralling out of control and now this government wants to cut private healthcare insurance to save a few dollars. The hallmark of this government is economic mismanagement. This is a Labor government that is happy to spend $50 billion on a National Broadband Network that has only 4,000 customers after five years. It is happy to spend $2 billion on its border protection blowout, including cigarettes for detainees. And yet, when it comes to the lives and wellbeing of the people of Australia, this is where the ALP thinks they should be saving money.

Just a couple of months ago, in November, I read a story in the Newcastle Herald by Jacqui Jones entitled 'Hunter surgery schedule blowout'. It is important that I quote this article to the parliament. It read:

Surgery waiting lists have blown out at some Hunter hospitals to almost four times longer than the national average, with waits increasing 20 times over in the past year for some procedures, the latest data shows.

The most recent information on hospitals’ performance will be made publicly available today through the federal government’s MyHospitals website.

It is based on information provided by public health departments to the Australian Institute of Health and Welfare.

A Newcastle Herald analysis of data for Hunter hospitals showed blowouts in waiting times for surgery in 2010-11, compared with 2009-10, and waits that were longer than national averages.

At Calvary Mater Newcastle, the median wait for plastic surgery was 93 days in 2010-11, compared with the national average of 24 days.

This was up from a wait of four days in 2009-10, and 22 days nationally.

Waiting times for gall bladder removal and hernia repair increased over the year and were longer than national averages.

At John Hunter Hospital, eye surgery patients waited twice as long as their national counterparts.

Delays were long for cataract extraction, with the 282-day median wait (90 days nationally) in 2010-11 up from 176 days (86 days nationally) in 2009-10.

Orthopaedic patients took longer to get to surgery, including for hip and knee replacements, at John Hunter Hospital than patients booked at hospitals elsewhere in Australia.

At Maitland Hospital, orthopaedic lists blew out to a 234-day median wait (national 64 days) in 2010-11, compared with 169 days (national 62 days) in 2009-10.

Increases were also experienced within the year and beyond Australia-wide trends for gynaecological surgery and haemorrhoid removal at Maitland.

The waiting times at Kurri Kurri Hospital for ear, nose and throat surgery and at Belmont Hospital for a hysterectomy increased over the year and were longer than national averages.

Here we have in the Hunter people waiting longer than ever before and yet this Labor government wants to force more people onto the public health system, thereby making the situation much worse. We have people in the Hunter waiting up to four times longer for surgery than their interstate counterparts. And yet all of the members from the Hunter—the member for Newcastle, Sharon Grierson; the member for Hunter, Joel Fitzgibbon; the member for Charlton, Greg Combet; and the member for Shortland, Jill Hall—are going to push this legislation through. And it looks like they will be joined by Rob Oakeshott, the member for Lyne. They are all just champing at the bit to support the economic mismanagement of this Labor government, which will be to the detriment of people in our region. This really should be a no-brainer. Even the Labor Party should be able to see how destructive this legislation will be. However, I will spell it out, just in case they have not worked it out yet: this legislation will make private health insurance more expensive for 2.4 million Australians. For some of those people it will mean an increase in premiums of 43 per cent. That is a cost of almost 1½ times what they are already paying. Deloitte have done the figures and, under this legislation, 1.6 million Australians are likely to drop their private health cover over the next five years. And, of those who do not drop it altogether, a further 4.3 million will downgrade the level of their coverage. The minister has not even tried to deny this—in fact, she has admitted that people will drop their cover. When coupled with increases in the costs of living, including groceries, rent, power and gas because of this Labor government's reckless carbon tax, yet to come, this is just another attack on families and on their budgets and it is a thing they just cannot afford. According to this Labor government, if you work hard to provide private health care for yourself and your family, you should be punished—you are doing too well for yourself and you are not paying enough.

We only have to take a step back and look at why private health insurance rebates were provided in the first place to understand why the current system works so well. When the Medicare levy surcharge and lifetime health cover were introduced under the previous coalition government, private health insurance coverage increased from 34 per cent in 1996 to 44 per cent in 2007. Today private hospitals treat two in five of all patients in Australia, which accounts for some 3.5 million patients every single year. If those patients do not have private health cover, that is an extra 3.5 million patients for the public health system to cope with—or not cope with, which is more likely the case.

I want to put this into perspective in my own electorate of Paterson. In my electorate there are 46,184 people aged 18 or over with private health insurance, according to the figures published on 1 January 2011. That is around half the adults in my electorate. According to national statistics, 13 per cent of people will drop private health cover under this legislation within just five years. A further 36 per cent of people will downgrade their cover. In Paterson that equates to 6,004 people dropping their private health insurance altogether and 16,626 people downgrading their cover. If just half those people who drop their cover need surgery, that is an extra 3,000 people who are going to be forced into the Hunter health system waiting list—and that is just in Paterson alone; that is not taking into account the electorates of Hunter, Shortland, Charlton, Newcastle or Lyne, which also rely on the Hunter's hospitals. And that does not include those people who have reduced their cover and can no longer go into private hospitals for certain procedures. I know I have just gone through a lot of numbers, but it is important that we understand the real, on-the-ground impacts of this destructive legislation: an extra 3,000 people from Paterson waiting in line for surgery, pushing back other patients and being pushed back themselves, is the real impact.

So it is no surprise to me that, with reckless money-making moves like this one, the Australian public does not trust the Prime Minister or her Labor colleagues when it comes to the economy. In fact, a poll taken last Saturday and published in today's Australianshows that the opposition leader, Tony Abbott, is far more trusted with money matters than the Prime Minister, Julia Gillard. He has a nine-point lead on the question of handling the economy, with the Prime Minister having fallen by 14 percentage points since August 2010. Why would the public trust this government on the economy? After all, it is the same government who took a $20 billion surplus and turned it into a $96 billion deficit. This is the same government that takes a solution each and every time and turns it into a problem. There were years that passed without a single boat arrival under the former coalition government—

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

Order! The member is straying from the content of the bill. I call you back to the bill.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

I am showing a point on economic mismanagement, Madam Deputy Speaker.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

It needs to be relevant to the bill.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

With this economic mismanagement we now have 15,000 people illegally arriving by boat, putting further pressure on the health system. Now the ALP want to do the same thing to private health insurance. They want to create a problem where there isn't one.

Of course, we also know that you just cannot trust this government. What we keep getting is more and more examples of this government's dishonesty—a phoney, whatever-it-takes approach by government. After all, it was this Prime Minister, Julia Gillard, who said that there would be no carbon tax under a government she led—and yet we are set for the carbon tax to be introduced from 1 July. It was the same person, when the shadow minister for health, who said in the Weekend Australianin a letter to the editor, in her own writing:

The truth is I never had a secret plan to scrap the private health insurance rebate and, contrary to Mr Latham's diaries, do not support such a claim. For all Australians who want to have private health insurance the private health insurance rebate would have remained under a Labor government. I gave an iron-clad guarantee of that during the election. The difference between Tony 'rock-solid, iron-clad' Abbott and me is that, when I make an iron-clad commitment, I actually intend on keeping it.

In a further letter to the editor of the Courier Mailon 23 September 2004 she said:

Your correspondent Russell McGregor should have no concerns that Labor will erode or abolish the 30 per cent government rebate for private health insurance. Labor is committed to the maintenance of this rebate and I have given an iron-clad guarantee on that on a number of occasions.

That was from Julia Gillard, opposition health spokesperson. In fact, my favourite quote is: 'I grow tired of saying this: Labor is committed to the 30 per cent private health insurance rebate,' in a letter to the editor of the Hobart Mercury.

It is just not the Prime Minister, who was then the shadow health minister who gave such guarantees. We only need to look at the current Minister for Foreign Affairs, Kevin Rudd, who, as Leader of the Opposition in 2007, wrote to Dr Armitage of the Australian Health Insurance and said:

Thank you for your letter of 29 October 2007 seeking clarification on Federal Labor's policy regarding private health insurance. Both my Shadow Minister for Health, Nicola Roxon, and I have made it 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.

Federal Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge.

Labor will maintain the existing framework for regulating private health insurance, including the process for approval of premium increases. Zero per cent premium adjustment is not Labor policy.

I understand Nicola Roxon's office has also confirmed with you that Federal Labor has no plans to require private health insurance funds to make equivalent payments to public hospitals for patients who elect to be treated as private patients.

I trust this allays your concerns. Federal Labor values its relationship with the private health insurance sector and we look forward to continuing this regardless of the outcome on November 24.

Yours sincerely

Kevin Rudd

Federal Labor Leader

Member for Griffith

Nicola Roxon, then Minister for Health and Ageing, was quoted in the Age on 24 February 2009 as saying:

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

Yet less than three months later, on 12 May 2009, the insurance rebate changes were announced in the budget.

This is a government that says one thing and does another. This is a government that finds a solution and creates a problem—over and over again. We are into 2012 and it is clear that this government neither respects nor values its relationship with the people of Australia who are paying for private health insurance and contributing to support a reduction in pressure on the public health system. All this government seems to want to do, in fact its whole agenda, is to claw back money from working families to prop up its failed economic management position, a position that has created record debt.

This is a desperate move by a desperate government that has squandered the dollars of millions of Australians on wasted programs like the insulation tragedy and the school halls rip-off. I say to you, Madam Deputy Speaker Livermore, to each and every Labor member in this place and to the Independents: the health of our fellow Australians is far more important than all of the other programs that this government has wasted money on. This government will see, under its stewardship, a blow-out in the waiting lists in the public health system. This government will see, under its stewardship, private hospitals close because of a lack of patients. This government will see, under its stewardship, the health standards of the people of Australia deteriorate because it mismanaged the economy and saw as a sacrifice those hard-working Australians who take out private health insurance and who reduce the pressure on the public system. It should be the government's agenda, as it was under the previous coalition government and as it was stated to be by the previous Labor opposition, to support private health insurance to make it affordable for working families. That is why I call on the Independents to refuse to support this legislation that will hurt the people in their constituencies. I reject these bills as presented to the House.

Russell Matheson (Macarthur, Liberal Party) Share this | Link to this | Hansard source

Today marks the third time that this government has tried to launch its disgraceful attack on the forgotten families of Macarthur, families who are already doing it tough in these difficult times. This government is shamefully out of touch with the Australian people and with Australian values. The very existence of this bill represents yet another broken promise from Labor. Labor promised, hand on heart, that it would not touch the private health insurance rebate.

I must be having deja vu, because I can vividly recollect a promise to Andrew Wilkie about poker machine reforms, a promise to the Australian people to return the budget to surplus and a promise that 'there will be no carbon tax under a government I lead,' to borrow a phrase from the Prime Minster. Time after time we have seen repeated betrayals of the people of Australia. This Labor-Greens alliance will say anything to be in government, but, once in government, turn their backs on the people who elected them. They say one thing but do another. This government has a trust and credibility problem with the people of Australia. This bill represents yet another botched and broken election promise that will, without a doubt, result in greater cost of living pressures on families across this nation.

The Fairer Private Health Insurance Incentives Bill 2011, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2011 are a key part of the Prime Minister's ideological arsenal against the freedom of choice in health care. Private health insurance gives people the choice of treating doctor, the choice of when and where they can access health services, the choice of surgery options and the choice to be treated in a private hospital.

Private health insurance does not take away from the public health system, but instead adds significant value to Australia's total healthcare resources. The private health insurance rebate is a policy that has been staunchly defended by the coalition because it is, simply put, a good policy. The 30 per cent rebate has had a direct result in taking pressure off the public health system, all the while adding value to the health system as a whole. Australia's public health system is highly regarded and does a fantastic job with the resources at its disposal. I am confident that, under the leadership of the Liberal New South Wales government of Premier Barry O'Farrell, the New South Wales public health system will see many positive developments over the coming years. It is not feasible to say that the public health system in Australia could survive without the complementary benefits that the private health system provides.

This bill is a shameless measure shifting cost from the Commonwealth to the states' public systems. When the 30 per cent private health insurance rebate was introduced by the Howard government, the national coverage of private health insurance rose from 34 per cent to 44 per cent. The Howard government had the foresight to also introduce the Medicare levy surcharge for those who should be able to afford private health insurance but for whatever reasons had not taken it up. This measure ensured that those who chose not to contribute to their own health care through the private health care system would still contribute to the public health care system. The test used to determine whether a person would be liable to pay the Medicare levy surcharge would include taxable income, reportable fringe benefits, reportable superannuation contributions and total net investment losses. This government is trying to distort these provisions by seeking to apply the same income tests to determine whether families will also lose their rebate. It is a perversion of what the Medicare levy surcharge sought to achieve. This test will not just be used for people who opt out of eligible private health insurance, but apply to people who are currently paying their premiums and benefiting from the 30 per cent rebate. These people will lose out: some will be pushed into a lesser category of the rebate and some will lose their rebate all together. All Australians will face higher premiums because of this disgraceful government's actions.

The private health insurance rebate gives families in Macarthur the incentive to provide for their own healthcare needs and get a little back from the government for doing so. This support, in the form of a 30 per cent rebate on eligible private health insurance policies, contributes back into the health system many times over through private health insurance premiums. For a couple in their mid-30s with two children, basic hospital and extras cover will cost at least $3,000 a year without the rebate. If people are going to be socially responsible and put their discretionary income towards their own healthcare costs, why should we punish them? Their investment in their health and, in turn, in the private health system, contributes to the resources that are available in both the public and private health systems. If this government decides to take away the incentive for people to purchase private health insurance, we risk losing the entire premium, and in turn create added pressure on the public system. This ideological attack on private health insurance may represent a short-term saving, but the longer-term implications on families are far-reaching.

The immediate financial impacts of this bill will not just be felt by the 2.4 million people on higher incomes who will face immediate increases of their premiums of 14 per cent, 29 per cent and 43 per cent. All Australians with private health insurance will face higher premiums in the future if these changes proceed. Deloitte have predicted that private health insurance premiums will rise 10 per cent above what they would otherwise be. In addition, Deloitte's analysis of the proposed changes shows that in the first year 175,000 people would be expected to drop their private hospital cover, and a further 583,000 are expected to downgrade their cover. Over five years, Deloitte's modelling forecasts that 1.6 million people will drop their cover and 4.3 million will downgrade. This is in stark contrast to the minister's figures of only 27,000 to drop their cover. Indeed, the government owned insurer, Medibank Private, has predicted that 37,000 of its members alone will drop their cover and 92,500 will downgrade.

How did the minister get it so wrong? This is yet another example of the government's botched attempts at health reform and lack of thorough planning in policy making. It is a case of this Prime Minister and Labor yet again meddling with a good policy that works, a policy that delivers and a policy that has provided quality health care to Australian families. This bill is already bearing the hallmarks of the Malaysia solution all over again. With each person either dropping or downgrading their cover, there is a flow-on effect of a net reduction of resources within the private healthcare system. Each policy downgrade will place greater pressure on the public health system, all the while punishing those who continue in the private health system.

The government has not even bothered to disclose the numbers of people expected to downgrade their private health insurance coverage. It is reasonable to expect that many people will seek a cheaper product with fewer procedures covered, which will have second-round effect for public hospitals. This represents $3.8 billion in additional recurrent costs for the public sector. In Macarthur 63,828 people are covered by some form of private health insurance, representing 47.8 per cent of voters. Suffice to say, this legislation will affect close to half of my electorate.

At the 2007 election the government promised, hand on heart, that they would not touch the private health insurance rebate. However, soon after elected, they tried to push through this legislation, not once but twice. The Senate soundly rejected it. Now the Prime Minister is relying on her good graces with the Greens to push this bill through and once again betray the trust of families in Macarthur and Australia-wide. I guess it must get easier the more you do it. The government have no foot to stand on when they say they will deliver on a promise. Just look at their track record. They have bungled every program and policy that they have laid their hands on. Now this government is attempting to undermine both the public and private health systems simultaneously. This legislation is nothing more than a noxious housewarming gift for a newly elected NSW government with the monumental task of fixing up more than 15 years of total and utter neglect of the public health system under Labor.

Allied health services are also expected to bear the brunt of this government's attack on private health insurance. It is expected that 2.8 million people with general treatment cover are going to withdraw and 5.7 million to downgrade over five years. This means fewer people accessing allied health services, which means less income and fewer jobs. Families in Macarthur are already financially stretched to the limit. Many pensioners are at the point where they have had to give up their private health insurance after the recent rise in premiums—and at a time of life where they cannot afford to lose it. The government's proposed changes are just going to make a bad situation worse.

The coalition has strongly supported giving Australians the choice of affordable private health insurance. The 30 per cent rebate on private health insurance premiums is a proven policy that we have seen works. Families in Macarthur are going to be negatively impacted by this legislation, and many will have no option but to forgo private health insurance and rely on the already stretched public system. This is a bad policy that will do nothing but harm both our public and private health systems and I would urge members of the House to keep faith with their electorates and reject it. So I say this to members opposite: stand up for affordable and accessible private health cover. Stand up for your community, your seniors and your youth. Stand up for a fair go for Aussie families. Stick to the ironclad guarantee that the Prime Minister previously made to the Australian public: 'Under no circumstances will we touch the private health insurance rebate.' As late as August 2010 the Prime Minister also stated, 'Medicare rebates are safe under Labor.' How safe? These bills change all that. No wonder there is a trust and credibility problem with this government.

George Christensen (Dawson, National Party) Share this | Link to this | Hansard source

In rising to address this Fairer Private Health Insurance Incentives Bill, I have some difficulty getting past the name of the bill itself. It makes it sound like the bill will make things 'fairer'. But this bill has nothing to do with fairness. In fact, it is the exact opposite of fairness. It is about trying to justify the introduction of what is most certainly not fair. I am reminded of the late master of wit Groucho Marx, who said: 'The secret of life is honesty and fair dealing. If you can fake that, you've got it made.' That is a rather appropriate quote for this bill, I thought, because the bill is anything but honest and it is trying to fake fairness. In reality it is not about fairness at all. It is actually more in line with the views of the other Marx, Karl, and penalising the so-called rich. It is about a desperate bid to create a surplus and it is about robbing the hard-working people of this nation who will do the work to create that surplus, if it ever happens. It has been 21 years since the Labor Party posted a surplus and it must be getting embarrassing for the government every year as they introduce new budgets. We have the Treasurer here trying to say that he is going to get one next year—because he will do anything to create the illusion of a surplus; just making it look like a surplus temporarily will do. But Australian families know that what this government says is only good for a few months at best.

But this time there is not enough smoke, there aren't enough mirrors. So now we see the Treasurer hoping to pull a rabbit out of the hat—a $2.78 billion rabbit. They were running around, rifling through the files, looking up old copies of Hansard, scanning the demographic data, trying to find a sector of the community that is getting ahead, trying to find someone who hopes for a better future and is willing to work hard to achieve it. That was their bunny and they found it: a dead and twice-buried plan to tax those people who work hard for a better life. They have found yet another way to rob the rewards that were earned by someone else. So here we are today, once again standing up to the Labor Party, the party of big tax. The title of this bill purports to be about a private health insurance incentive. That word is important: 'incentive'. The proposed legislation is not about incentive at all. There is no carrot here. This is the stick and stick approach. This government is pulling out the stick to those who pay for private health insurance. Anyone who has the gall to work hard and earn $80,000 or more a year will now have to pay more for their health insurance. That is not an incentive; that is a disincentive. It is a disincentive to earn more and it is a disincentive to purchase private health cover. Just in case this legislation means you cannot afford private health cover anymore, the government has another stick waiting for you—a baseball bat to slug more tax out of you in the form of the Medicare levy. So what we have is a lose-lose situation. This plan was beaten down twice before when there was so much opposition that even this government promised it would not happen again. Yet here it is again today. Prior to the 2007 election, we had Labor's then shadow health minister promising, in a media statement from 26 September 2007:

Federal Labor rejects the Liberal scare campaign around the private health insurance rebates. 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 rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

It goes on to say:

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

If this is absolutely untrue, then why is Labor introducing a bill today to do exactly that again? I thought maybe there was a typo in the media release and that the member for Gellibrand meant that it was absolutely correct. But then she was backed up two months later by then federal Labor leader, Kevin Rudd, the future Prime Minister, going to the 2007 election with this promise—this is what the member for Griffith wrote to Dr Michael Armitage of the Australian Health Insurance Association just four days before the 2007 election:

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.

We even had the current Prime Minister, back when she was shadow Minister for Health and Ageing, saying this to Laurie Oakes:

We will leave the 30 per cent private health insurance rebate undisturbed because we understand it's factored into family incomes—

a very interesting observation from the Prime Minister. Clearly the Australian Labor Party no longer understands Australian families or the fact that they have to factor these costs into their household budgets. So here we are debating a 'fairer' private health insurance incentive bill.

What is fair about this scenario? Consider two young men. Let us call one Bill. He lives and works in Melbourne and earns $79,000. The other—let us call him Ben—lives and works in regional Australia, participating in the resources boom that currently underpins our economy. Bill in Melbourne leads a pretty comfortable life. He has no trade and no tertiary studies behind him. He has spent long periods on unemployment benefits. He currently has a nine-to-five job which pays a good income of $79,000. He rents a large furnished apartment in the CBD for $450 a week. He does not need a car and walks to the MCG to watch his football team play, or to the cricket, and it is a pretty good life.

Now let us look at Ben, the bloke in country Queensland. He spent three years doing an apprenticeship when he supplemented his income to survive by working a casual job on nights and weekends. He has never missed a day of work and currently works long hours to earn $80,000. He has to maintain a work ute to get to job sites and carry his tools. He pays $550 a week in rent and if he wants to watch the Bulldogs play football, he is up for $600 in flights and $600 accommodation before a ball is bounced. Groceries, fuel, even a cup of coffee in his area are much more expensive because a labour shortage and high freight costs are pushing up the price of everything. I am sure Ben cannot wait for the carbon tax because he will cop the worst of the cost increases, being in regional Queensland. He will not be compensated in any way because his income is deemed 'too high'. As a result, Bill puts his feet up in his Melbourne apartment, comfortable in the knowledge that, even though he has a lower salary, he has a much higher disposable income compared with Ben.

Under this 'fairer' legislation, Ben will also be facing higher costs for private health insurance. He works harder and longer hours. He has less money to spend but this government wants to tax him more, even though he already pays more tax than Bill. How is that fair? This is not an exaggerated case to make a point. This government wants to remove private health insurance incentives entirely from a family earning $249,000 this year. They would have us believe that this family sits around, watching a big plasma television, waiting for a $250,000 cheque to turn up in the mail. They would have us believe a family earning $249,000 or more a year are greedy, rich people who should be robbed with an unfair tax. This family is not just a statistic. It is a family of real human beings with real jobs, real children and real expenses.

For a husband and wife who both work in the mines at Moranbah in your electorate of Capricornia, Madam Deputy Speaker Livermore, where they live with their four children, to rent an average four-bedroom home they will be paying between $1,800 and $3,200 a week. Some rents are even higher. That translates to between $93,000 and $166,000 just for rent. By the time you take out income tax and rent, our family on $249,000 a year out in Moranbah probably cannot afford to feed the kids, let alone pay fully for private health insurance. This government would have us believe that these people are evil people of 'privilege'—the old class warfare bogey. This government does not even know these people because it stopped connecting with real people a long time ago. This government wants to smack such a family back down to the lowest level because they dared to have a dream—they wanted to get ahead.

I noticed an interesting headline in the Australian on Friday from a family talking about the costs this legislation will impose on them. The headline was a quote from Ms Kylie Richards from Adelaide, who, with her husband, owns a commercial flooring business. She said:

It's ridiculous—the better we do, the more the government takes … Every time we try to get ahead and don't rely on the welfare system, we get a guarantee they'll hit us again.

Ms Richards has summed up beautifully this government's fallback position: none shall get ahead. I can imagine the Minister for Infrastructure and Transport taking a quote from Gandalf. They shall not pass is what he is saying to Australian families. What this government will do with this bill is crucify both the economy and the health system.

According to this government, there are 2.4 million people living a life of privilege in this country, because that is how many people will be affected by this legislation. The result will be thousands—tens of thousands, I would say—of Australians dropping private health insurance because they simply cannot afford it anymore. In my electorate of Dawson, there will be hundreds, if not thousands, of residents who will be worse off. Families that are already under pressure from the escalating costs of living will have to make a saving somewhere else.

The minister has claimed 27,000 individuals would drop their health insurance cover if this bill were passed. But the government owned insurer Medibank Private suggests that figure is more, that in fact 37,000 of their members alone will drop their cover and a massive 92,500 people will downgrade their private health cover. That is just Medibank Private and what they see happening with their own members.

Taking an independent, industry-wide approach, the Australian Health Insurance Association commissioned Deloitte to assess the impact of this proposal. Their findings were that, should this bill be passed, 1.6 million consumers would drop private hospital cover, a further 4.3 million would downgrade their cover and a further 2.8 million would drop their general cover. Deloitte also has predicted that health insurance premiums would rise by 10 per cent over and above what they would otherwise be. So then everyone will cop it because of this government's bill.

As families and individuals leave private health in droves, this government will be rubbing its hands with glee. On the face of it—fingers crossed, guys!—that will be a massive saving for this year's budget deficit. It may be enough of a saving to create the illusion of a surplus. But the truth is that, for every dollar the government spends on health insurance rebates, the private health insurers are spending $2 on the provision of health services. Those private health services will now have to be provided by the public health system. What this government is hoping to do is throw a 'hospital pass' to the states for the sake of taxing Australian families and squeezing out its first surplus in 22 years.

Being a Queenslander, I find that a frightening proposition. The Labor government in Queensland has plumbed the very depths of incompetence already without having to cope with more pressure on its health service. Private hospitals currently treat 40 per cent of all patients in Australia—some 3.5 million patients in the 2009-10 financial year. How will the bungling Queensland Health system—an organisation that the Premier tells us has failed under her watch—cope with their share of the increased workload? Private hospitals currently perform 64 per cent of elective surgeries in Australia. Where will the funding come from for the public health system to cope with such an increased workload?

In creating this 'damned if you do and damned if you don't' situation for families with private health cover, the government is basically kicking an own goal. Even if this white rabbit is combined with enough smoke and mirrors to create the illusion of a surplus, it will be just a matter of time before the mirrors crack and the smoke clears. When it does, Australian families who can no longer afford private health insurance will see nothing but a rotting rabbit carcass that carries the stench of deception, incompetence and betrayal.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

I rise tonight to talk on the Fairer Private Health Insurance Incentives Bill 2011. There are three points that I would like to make loud and clear. The first is that what we are debating tonight is an issue of trust—whether we can trust this government to say one thing before an election and then do that after an election. It is sad to say that this private health insurance piece of legislation that we are debating tonight adds to the list of broken promises. I would also like to discuss its implications on the cost of living, which is increasing on a daily basis for Australian citizens. This piece of legislation, sadly, will once again add to this cost of living. The third point I would like to make is about what this bill will do to cost shifting from the Commonwealth to the states. The state governments are already facing increased health costs. The Labor government on coming into power said that they were going to do something about that, that they were going to stop the blame game, that they were going to fix our health system. But what do we see them doing with this piece of legislation? They are moving the cost of health care away from the Commonwealth and onto the states. Those are the three issues that I would like to garner tonight.

I will start on the basic issue of trust. Truth is a five-letter word and I suggest to the Prime Minister—if it is okay, Madam Deputy Speaker—that she might learn how to spell it and act on it because, as we saw with the carbon tax, one thing was said before the last election and one thing was done after it. To be fair to the Prime Minister, on this occasion she was the member of a cabinet. She was not the Prime Minister but she was a member of the cabinet when the decision was made to say one thing before the 2007 election on the private health insurance rebate and then do another thing afterwards. But it was a precursor of what was to come.

Let us look at the letter that Kevin Rudd wrote to the honourable Dr Michael Armitage. I think it is worth just briefly going through it. It says:

Dear Dr Armitage,

Thankyou for your letter of 29 October 2007 seeking clarification on Federal Labor’s policy regarding private health insurance.

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.

Federal Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge.

Labor will maintain the existing framework for regulating private health insurance, including the process for approval of premium increases. Zero per cent premium adjustment is not Labor policy;

I understand Nicola Roxon’s office has also confirmed with you that Federal Labor has no plans to require private health insurance funds to make equivalent payments to public hospitals for patients who elect to be treated as private patients.

I trust this allays your concerns. Federal Labor values its relationship with the private health insurance sector and we look forward to this continuing regardless of the election outcome on November 24.

As we know, Kevin Rudd was elected Prime Minister and Julia Gillard became a cabinet minister of the Rudd government.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

And an assassin.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

And later an assassin, as my good friend the shadow minister for tourism so rightly interjects. As soon as they got in—the alarm bell should have been ringing there and then—the spending got out of control and the budget forecast did not look too good, and what was the first thing they did? They looked at the private health insurance rebate as a way of trying to get the budget back into a state which could give some sort of credibility to the Labor government's very poor efforts in managing the economy. Having been quite prepared immediately before the 2007 election to say one thing and then do completely the opposite afterwards, we should have known that this was a precursor of what the government was prepared to do on the carbon tax before the 2010 election.

Sadly, when it comes to this issue of truth, we have also seen it raise its ugly head when it comes to what happened on Australia Day. It seems very hard—

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

Order! The member for Wannon will restrict his remarks to the Fairer Private Health Insurance Incentives Bill.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

One of the key points which need to be made on this bill is around the issue of trust.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

Order! The member can make it in the context of the bill.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

The second point that I would like to make refers to cost of living. This piece of legislation will add to the cost of living in this country. Those on the other side may argue that this is a one-off in adding to the cost of living and therefore it is something that needs to be done. But the truth is that it is not a one-off. We have seen the price of insurance rise incredibly in the last three to six months. People have seen their bills go from $500 to $5,000 in the invoices they have been issued in the last couple of months. We have seen electricity prices rising exponentially, and they are going to get worse, sadly. We have seen the cost of child care rising. The cost of living is biting; it is hitting hard. What is the government's answer? To increase it even further. That is what this bill will do.

The sad thing is that the cost-of-living increase will hit those who can least afford it. It will hit the pensioners who save so that they can take out private health insurance and who want to have the surety of knowing that they can get the medical help they desire later in life. They will be the ones who will hang onto private health insurance. They will be the ones who have to put up with the increases in premiums. Because of the cost increase as a result of this decision, the more mobile, younger and healthier people will decide that they do not see a need to continue to take out private health insurance. This will put pressure on premiums. It will put pressure on those who want to take out full coverage—elderly Australians. Premiums will rise as a result of this decision by this government. Sadly, once again, we are going to see cost-of-living pressures on those who can least afford it as a result of this government's policy.

This is not only going to add to the cost of living. It will also add to the healthcare bills of state governments. When Labor was elected in 2007 it said it was going to stop the blame game when it came to the health sector in Australia. For too long, the Labor Party said, the argy-bargy between the states and the Commonwealth had led to the sector declining, to waiting lists growing and to people having to wait in emergency too long to get the attention that they need. Yet what do we see now? Firstly, we see the great reforms that were promised to the health sector amount to nothing. What was finally agreed did nothing to end the blame game. All it did was see the Commonwealth try to take some power off the states in the way the hospital system was managed without providing any real increases in finances to help the states do their job.

Now what are we seeing? We are seeing the Commonwealth come along and once again shift more costs onto the state government. There is no-one who argues against this fact leading to more pressure on our public health system. The Commonwealth should do the right thing by the states and say: 'We are going to take this decision to try to get our budget back in order. We have spent far too much on things like pink batts and school halls. We have wasted billions of dollars. We need to get our budget back in order. Therefore we are going to cost-shift on you. But we are going to do the right thing and help you do that. We are going to give you some of the cost to help you deal with the increased demand that you are going to see in the public health system.' They have not done that, so the states are going to have to cope with the increase in public hospital waiting lists which will occur as a result of this legislation. They are going to have to deal with the increase in demand in the emergency areas of hospitals which will occur as a result of these changes. And what are the Commonwealth doing to help the states deal with that? Nothing. They are blatantly cost shifting, and they need to own up and say that that is what they are doing. That is how desperate they have become to try to get a budget surplus in May, to try for the first time in over 21 years to get a Labor government budget surplus.

The Australian people will not be fooled by the way that this government is going about it. It is smoke and mirrors, and it is doing nothing to fix the structural imbalances that we currently have in the economy. These need to be fixed so that we can have a reduction in the $132 billion of net debt which will peak this year and so that we can see reductions in the way this government spends its money and in the way that it tries to account for getting its budget into surplus.

There are three points we need to look at. The first is the issue of trust, and I will make one simple point on that issue. I quote Nicola Roxon on 26 September 2007:

Federal Labor has made it crystal clear that we are committed to retaining all of the existing private health insurance rebates.

What happened instead? Only a year or so later we saw a complete reversal of that explicit promise that was made to the Australian people before the 2007 election. That decision was made collectively by then Prime Minister Rudd and then cabinet minister Gillard.

The second thing this legislation will do is add to the already growing list of cost-of-living pressures that this government is putting on the Australian people: insurance costs, electricity costs, childcare costs and private health insurance costs. I could go on and on. The third thing that this bill will do is shift costs from the Commonwealth onto the states, and it will do it despite this government saying that it was determined to stop the blame game and to fix the Australian health system once and for all. It was very clear who was raising money, where the money would be spent and how the services would be delivered so that people could point to where the system was and was not working, rather than having the federal government and state government saying, 'The whole issue depends on the service delivery and the costs and you aren't getting that right.'

That is why I stand here today opposing these changes. They are a breach of trust, they will add to the cost of living and, worse than that, they will shift the cost of delivering health care from the Commonwealth to the states at a time when the states need help in delivering the services they want to deliver. They do not need extra costs being put on their health services.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise tonight to speak on the Fairer Private Health Insurance Incentives Bill 2011. It is a rather Orwellian name, for it is certainly not fairer and it certainly has nothing to do with incentives. If there was one single reason that this bill should be opposed it is the issue of credibility and trust. Even the learned member for Lyne has recently and openly stated that our current Prime Minister, and therefore our government, has a credibility problem.

Let us just have a look at what this Prime Minister and members of this government have said in the past on the issue of private health insurance. Exhibit No. 1 is a press release from Julia Gillard, shadow minister for health, transcript of doorstop interview, state parliament Melbourne, 22 August 2004:

Reporter: Can the Labor Party make a commitment to do with private insurance if they were to be elected?

Ms Gillard: Labor has committed to keeping the 30% private health insurance rebate.

I seek leave to table the Prime Minister's broken promise on keeping the 30 per cent private health insurance rebate contained in the press release dated 22 August 2004.

Leave not granted.

Exhibit No. 2 is the transcript of an interview on the Sunday program on 29 August 2004 between Laurie Oakes and the then shadow health minister and current Prime Minister:

Laurie Oakes: What about the 30 per cent health insurance subsidy?

Julia Gillard: We've said that we will keep the 30 per cent private health insurance rebate. That is out there now in the community. It's a payment that's been factored into family budgets, into people who are working and struggling with the bills and the mortgage and the payments for the kids, and also into the family budgets of older Australians who have private health insurance.

It went on:

We will leave the 30 per cent private health insurance rebate undisturbed because we understand it's factored into family incomes.

I seek leave to table the Prime Minister's broken promise of 29 August 2004 in the interview with Laurie Oakes on the Sunday program.

Leave not granted.

Exhibit No. 3 is a transcript of an interview between Tony Jones and Julia Gillard on ABC's Lateline on 12 September 2006. It says:

Tony Jones: … Are you going to look again at the private health care rebate. Is that sacrosanct?

Julia Gillard: No, the private health insurance rebate will be staying under Labor. We committed to that at the last election. Indeed, we committed to it at the election before. From time to time the Howard Government runs out with a scare campaign here but the private health insurance rebate will stay.

I seek leave to table the Prime Minister's broken promise on keeping the 30 per cent health insurance rebate contained in the transcript of the interview between Tony Jones and Julia Gillard on ABC's Lateline.

Leave not granted.

Exhibit No. 4 is a media statement dated 26 September 2007 entitled 'Liberal scare campaign on private health insurance rebates—Federal Labor to retain rebates'. It says:

Federal Labor rejects the Liberal scare campaign around the Private Health Insurance rebates.

… … …

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

… … …

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

This is absolutely untrue.

I seek leave to table the Labor government's broken promises on keeping the 30 per cent private health insurance rebate contained in a media release dated 26 September 2007.

Leave not granted.

Exhibit No. 5 is a letter from the then federal Labor leader, the member for Griffith, to Dr Michael Armitage, CEO of the Health Insurance Association. It reads:

Dear Dr Armitage,

Thank you for your letter of 29 October 2007 seeking clarification on Federal Labor’s policy regarding private health insurance.

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 rebates for older Australians.

…   …   …

I trust this allays your concerns.

I seek leave to table the letter from the then federal Labor leader to the Australian Health Insurance Association containing the broken promise on keeping the 30 per cent health insurance rebate.

Leave not granted.

Exhibit No. 6 is from the Hobart Mercury and is a letter of 2 September 2004 from the current Prime Minister, and then shadow minister for health. It states: 'Tasmanian Liberal deputy leader told two lies in the Mercury when he said that a Labor government would scrap the private health insurance rebate. I grow tired of saying this: Labor is committed to the 30 per cent private health insurance rebate.'

I seek leave to table the letter in the Hobart Mercury of the current Prime Minister, and then shadow minister for health, dated 2 September 2004, containing this further broken promise that Labor was committed to maintaining the health insurance rebate.

Leave not granted.

What a surprise; they simply do not want to know. Does anyone see a pattern here with the infamous broken promise on the carbon tax? Not only do we have Labor misleading the public on important policy issues but they take the misrepresentation further by accusing those dastardly Liberals of a scare campaign by daring to suggest that Labor cannot be trusted.

It is not just broken promises on the health insurance rebate and the carbon tax. We have seen this government mislead the member for Denison and leave him hanging out to dry. We have seen them mislead the public on the issue of gay marriage. But I think the most appalling example of this government's misleading conduct is their statement in regard to the National Disability Insurance Scheme. For the Prime Minister to get up in front of a room full of disabled people and their carers at last year's national disability awards and claim that the NDIS will be the defining achievement of this government, when they have not committed one brass razoo and not one single cent to funding for the NDIS was absolutely shameful.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

I remind the member for Hughes that we are debating the Fairer Private Health Insurance Incentives Bill 2011 and to remain within the parameters of that bill.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

This pattern of repeated misleading conduct not only has destroyed the Prime Minister's credibility but is weakening our entire democracy. What person is ever going to believe another word that this Labor government says. If they told you it was raining outside, you would need to go outside and check for yourself. If this bill is passed, as we go into the next election—based on this government's track record—any commitment, any promise, is not going to be worth the paper it is written on.

I say to the Independents: there is a heavy responsibility upon you when it comes to voting for this legislation. In years past, the Independents have justified their place in this parliament by sitting here under the motto of 'keeping the bastards honest'. But if the Independents vote with Labor on this bill, they will have simply aided and abetted this government's dishonesty.

This bill has nothing to do with attempting to improve health insurance. It has nothing to do with creating more hospital beds. It has nothing to do with improving health services. It is all about a short-term revenue grab—a desperate attempt to cook the books to show a wafer-thin surplus in the next financial year. This is despite having run up the four largest budget deficits in Australian history—a combined total of $167 billion. The so-called saving from this bill of $2.8 billion is a further cooking of the books for it does not take into account the $3.8 billion in additional costs that will be generated down the line and generated on state budgets. Make no mistake, this government's inability to manage a budget is the only reason we are debating this bill here today, and today, as every day, they are showing how little they care for the challenging costs of living faced by people in Sydney and the rest of our other major cities and country areas.

If this bill passes parliament, it will start off a vicious circle which will ultimately punish working families. Firstly, with so many cost-of-living pressures being inflicted by this government—electricity prices, childcare costs and the spectre of the carbon tax predicted to fall on the economy like a sledgehammer—removing this rebate will simply see people either downgrade their existing private health insurance or drop it altogether, thereby pushing more people into the public health system. A Deloitte analysis has shown that in the first year 175,000 people would withdraw from private health insurance cover and a further 583,000 people would downgrade their coverage. The answer is obvious to reasonable Australians: by driving people away from private health insurance, the cost of premiums for those that remain in the system will be forced up. The Deloitte analysis predicts a 10 per cent rise in premiums above what they would otherwise be. With fewer people paying for private health insurance, existing premiums will continue to increase, thereby setting off another round of people either downgrading their private health insurance or dropping it altogether—again, pushing another lot of people away from the private system and into the public health system.

The report goes on to estimate that, over five years, 1.6 million Australians will drop their cover and a further 4.3 million will downgrade it. Ultimately, the people who will be most hurt by this bill are the Australians earning less than $50,000 that make up 50 per cent of Australians with health insurance. It will lengthen hospital queues. It will cause pain, suffering and hardship. Millions of Australian families that are doing their bit for the economy, even though they are already struggling with cost of living pressures, will be hurt by this bill. No wonder there are no government members left on the other side to defend this broken promise which will penalise Australian families at the time when they can least afford it.

In my seat of Hughes there are 91,000 people that rely on their private health insurance cover, and many of these 91,000 people will be forced to fork out an additional $935 a year. That has been made clear by the recent Deloitte report. This bill—the so-called Fairer Private Health Insurance Incentives Bill—and its associated bills will rip support from families doing the right thing by our public health system. The millions of Australian families that will be hurt by this bill are doing their bit for the country, even though they are already struggling with cost-of-living pressures—and this will only be made worse by the carbon tax. We are again seeing Labor driving the dagger of cost of living into the heart of middle-class working families. Shame on this government for introducing this bill, and shame on every Labor member who votes for it. I call on the Independents to live up to the motto 'keep the bastards honest' and vote against this bill.

Teresa Gambaro (Brisbane, Liberal Party, Shadow Parliamentary Secretary for Citizenship and Settlement) Share this | Link to this | Hansard source

I rise to oppose the deceptively entitled Fairer Private Health Insurance Incentives Bill 2011 and two cognate bills. I describe these bills in this way particularly because the content of this legislation is anything but fair. It does not matter how much the government tries to dress these bills up; it will not change the fact that it proposes a severe impact on families, the private health industry and public health services in Brisbane and across the nation.

In Australia we face many policy challenges in the area of health. As the population and the average life span continues to grow, the demand on our health system will increase quite dramatically. The percentage of health spending in state government budgets increases every single year, yet they seem to make very little progress when the waiting lists grow longer and longer. That is why it is important to ensure that as many people as possible have the capacity to purchase private health insurance to alleviate the pressure on our public health system.

The Howard government recognised this. According to the Private Health Insurance Administration Council 2009-10 annual report to the government, in the 15 years between 1984 and 1998 the percentage of Australians with private health cover had halved to just a little over 30 per cent of the population. To fix this decline in membership, the then government—which I was proud to be a part of—introduced a number of initiatives: in 1997 the one per cent Medicare levy surcharge for high-income earners who had not taken out private health insurance and the 30 per cent premium tax rebate for taxpayers who had taken out some form of private health insurance. These policy measures worked. The take-up of private health insurance has taken off since then—so much so that last year $12.4 billion in benefits was paid to some of the 11.7 million Australians who now hold some form of private health insurance cover. This is approximately 52 per cent of the Australian population. This is also reflected in my electorate of Brisbane where 89,920 persons are covered by some form of private health insurance, and 66,676 of these are voters. This equates to 72.1 per cent of the voting population, which is 20 per cent above the national average.

This Labor government wants to undo this great work through the suite of bills we have here before us tonight. It is the third time they have come before this chamber. They were rejected twice by the Senate in the last parliament, and yet here we go again. These bills create a three-tier system in the private health insurance rebate, slashing the rebate and increasing the Medicare levy surcharge for Australian taxpayers within certain income categories. The rhetoric coming out of the Labor Party is that somehow this is rectifying a situation where the rich are being subsidised for their private health insurance by those on lower incomes. Yet, under tier 1, the rebate is slashed by 10 per cent for singles earning over $80,000 and couples earning over $160,000 per year. Let us be clear about this: we are talking here about a teacher married to a policeman. These are the hardworking forgotten Australians aspiring to success. Since the announcement of these measures there has been a litany of evidence produced showing the absolutely disastrous impact that they would have on the public hospital system and the private health insurance industry. These changes will do one thing and one thing only: they will force people to drop their private health cover or choose cheaper cover with more procedures excluded, thus creating upward pressure on premiums and forcing more people into an overcrowded, overstretched public health service system. Every dollar of funding provided for the private health insurance rebate actually saves $2 of costs that are then paid by the private health insurers. Private hospitals in this country treat 40 per cent of all patients in Australia and in 2009-10 they treated 3.5 million patients. They performed some 64 per cent of elective surgery in Australia.

Treasury projected that following these changes only 25,000 high-income consumers would withdraw their cover across the whole sector. This was then clearly proven to be inaccurate when the government-owned insurer Medibank Private came out and said 37,000 of its members alone would drop their cover and some 92,500 members would downgrade—an enormous number of people. A report into these measures by the highly regarded consultancy firm Deloitte for the Australian Health Insurance Association produces some very, very telling findings. Their analysis relies on the results of a survey by ANOP Research Services of 2,000 holders of private health cover on their intentions and the effect of a slashing of the rebates.

I note that the former Minister for Health and Ageing, Ms Roxon, in her second reading speech took aim at the ANOP survey, saying it was wildly inaccurate, but she cannot ignore the fact that she was the health minister then. It was a very simple survey asking people what their intentions were and the importance of the rebate to them. It was really interesting to note that one of the people who designed and interpreted the survey was none other than Mr Rod Cameron, who for many years was an ALP pollster and numbers man. So his expertise and his wonderful work was good enough for the Labor Party to use and to rely on over many years, yet as soon as he produces something that they do not like they do not want to hear about it—they attack the work that he produces.

I will not go through the entirety of the Deloitte assessment. However, I do want to quote a brief passage from the executive summary, which summarises the findings. It states:

Significant numbers of consumers will withdraw from their private hospital cover (1.6 million consumers over five years) or downgrade to lower levels of private health cover (4.3 million consumers over five years) following the proposed policy change.

The Deloitte assessment has some very significant figures here. It also says:

Significant numbers of consumers will also withdraw from their general treatment cover (2.8 million consumers over five years) or downgrade to lower levels of private health cover (5.7 million consumers over five years) following the proposed policy change.

The interesting fact that it also mentions is that private health insurance premiums will rise 10 per cent above what would otherwise be expected. So we have a situation whereby premiums will rise and private health cover will become less affordable for consumers—and that is not just those in those tiers. As people withdraw from private health insurance, the burden on publicly provided health services will continue to rise and rise. These findings indicate that the cost of treating consumers in the public hospital system is going to rise substantially above what is currently anticipated by the government. Deloitte estimates that the additional operating costs accumulated over five years will be $3.8 billion—$1.4 billion in the fifth year alone.

These findings are a damning indictment on the measures included in these bills. All because of what? The inability of the ALP to manage Australia's finances responsibly—that is what this is all about. So what do they do? Since the election of the Rudd government in 2007, the billions of dollars of waste and government expenditure have been absolutely scandalous. We know the stories of the pink batt waste, the $900 cheques being paid to deceased persons and the school halls program, just to name a few. The Labor Party is desperate to find a way to deliver the budget surplus and turn around a $37 billion budget deficit. These proposals are nothing more than a lazy financial quick fix and are not based on any sound policy whatsoever.

Whenever the Labor Party finds itself in a mess, they revert to class warfare. We saw it in question time last week when the Prime Minister was asked about private health insurance. They are interested only in creating a class warfare situation and this is, of course, absolute nonsense. The only contribution the Labor Party has to make in this country is to play the politics of envy. In this case, this supposed attack on 'the rich' will end up hurting the low- and middle-income families in my electorate the most.

I will always stand up in this place for the constituents of the electorate of Brisbane. On behalf of the 89,920 people in my electorate who have private health insurance cover, I will oppose these bills.

Wyatt Roy (Longman, Liberal Party) Share this | Link to this | Hansard source

I rise to speak to the Fairer Private Health Insurance Incentives Bill 2011 and related bills that are before the House. The intent of the bill is to reduce the private health insurance rebate and increase the Medicare Levy Surcharge for those people who opt out of private health insurance, because it will become prohibitively expensive without the rebate.

It is a fundamental right of all Australians to expect that they will receive quality health care. It is the coalition's view that this is best done by giving people choice in the form of access to affordable health care providers, thereby relieving the pressure on the public health system. It is the coalition's view that access to health care should not be ideologically driven, and it should not be socially engineered. But that is precisely what is happening with this legislation.

There are a few issues here. One is that the Labor government is philosophically opposed to the notion of choice. The second is that the Labor government is scrambling to balance its books before this year's budget and it needs to find the dollars where it can. The third is the impact that this legislation will have on the hard-working people of my community of Longman.

When the coalition government introduced the private health insurance incentives that Australians currently enjoy it increased the ability of many households to choose. In fact, private health insurance coverage increased from 34 per cent of the population to 44 per cent. More Australians have more choice now. Those Australians who do not have private health insurance can access the public system.

But those of us who have gone through the public health system for care have seen firsthand the pressure it is under. There is no denying that much needs to be done to improve the public health system. It is fortunate that we are not holding our breath for delivery on former Prime Minister Kevin Rudd's promise to fix the public health system and end the so-called blame game once and for all.

However, imagine what the pressure on the public health system is going to look like if Australians already labouring under soaring cost-of-living pressures decide to jettison their private health insurance because they simply cannot afford it. Some 2.4 million people will be affected by the increased cost of private health insurance. For those in the first income tier, premiums will increase by 14 per cent; for those in the second tier, premiums will increase by 29 per cent; and, for those in the third tier, premiums will rise by a huge 43 per cent. The Labor government claims that the impact these changes will have will be negligible. It claims that only 27,000 people will drop their private health insurance and that this will result in only 8,500 additional hospital admissions.

That is not what Medibank Private is saying and it is not what Deloitte is saying. Medibank Private has predicted that 37,000 of its members alone will drop their cover and a further 92,500 will downgrade. Deloitte's analysis indicates that 175,000 people will dump their private health insurance and 583,000 will downgrade in the first year alone. Over five years, it is expected that 1.6 million people will drop their private health insurance and 4.3 million people will downgrade their cover.

What does this mean for allied health services—physiotherapists, for example? There has been no talk about the impact this legislation will have on ancillary cover, which is so vital to ensuring the continuing viability of the allied health sector. This legislation represents a removal of choice for Australian families. It is ideologically driven by a government which does not support Australians being able to decide what is best for them. And for what possible benefit? Family budgets are under pressure and the public health system is under pressure. These measures are only going to make those pressures worse.

Apart from ideology, the Labor government could have only one other reason for introducing this legislation—it is desperate to claw back some of the money it has squandered in reckless spending on failed programs. To do so, the government is attacking private health insurance. What other explanation can there be for yet another litany of broken promises from this government? On 27 September 2007, just before the 2007 election, the current health minister said that Labor rejected what she called 'the Liberal scare campaign around the private health insurance rebates.' She said:

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

It is crystal clear now—crystal clear that this was just another promise made just before an election and destined for the wastebasket of this Labor government's electoral opportunism.

What is really important to me is the effect that this legislation will have on my community of Longman. As I have said on numerous occasions in this place, life is getting harder for the families in my community and they are doing it really tough. The price of everything is going up—electricity, water, food, fuel, car registration and the public transport that so many working families in my community rely on to access the city where they work. It is getting more and more difficult for the hardworking members of my community to make ends meet.

Yet again, this high-taxing and recklessly spending Labor government is determined to make the lives of ordinary Australians harder. And this legislation will do just that. Many members of my community have contacted me, increasingly angry about the fact that this Labor government is not acting in their best interests. It is destroying confidence, spending recklessly and taxing and taxing and taxing.

But there is another issue here and that is the effect that an exodus from private health insurance will have on health services in my community. The hardworking medical staff at the Caboolture Hospital do a fantastic job, but they need more resources. Demands on local health services are already too high for the infrastructure that is available and demand will only increase with population growth. Waiting times, unrealistic nursing workloads, insufficient funding and the services available to mental health patients are among issues that are raised with me all the time.

During the last election campaign, issues around the Caboolture Hospital were among the greatest concerns expressed by the people of Longman. Just recently, a distressed father of a young baby wrote to me to say that he had had to wait for 12 hours before his child could be seen. The locals in my community deserve to be confident that, when their child has a raging ear infection after hours, they are not going to have to wait most of the night to be seen. When you are taken by ambulance to the hospital with an acute emergency, you should not be 'ramped' or redirected to another hospital across South-East Queensland.

According to the Department of Health and Ageing, the population in my region is expected to reach some 200,000 people. However, at the moment the underresourced Caboolture Hospital has 187 beds available and 21 bays in the emergency department. It is estimated that, to meet the demand of the growing population, 600 beds and 52 emergency bays will be required to service the region by 2026. According to the AMA the Caboolture Hospital is operating, on average, at over 100 per cent occupancy, showing significant overstrain of capacity. A safe occupancy rate is an average of only 85 per cent.

The expansion of the Caboolture Hospital is of fundamental importance to the people of Longman. Everyone in the community wants it to happen—the locals, the medical staff at the hospital. It is one of the keys to growing our region and making it a desirable place to live. But with this legislation, even if the people of Longman were to see a long awaited expansion of the hospital, the increased pressure placed on services because of the increased number of people no longer able to access private health care would negate the benefits of any expansion.

This legislation represents yet another betrayal of the trust of the Australian people. We are getting used to it now with this Labor government, but that does not make it right. The price of private health care will increase for so many families at a time when they are already struggling to balance their books. The exodus from private health care will place additional pressure on an already overburdened public health system. In my community, I know that the many families who have contacted me regarding soaring costs of living will jettison their private health cover because it will be unaffordable for them. The pressure on the Caboolture Hospital will become even worse than it already is, causing even more distress for my community. In conclusion, that is why, as a member of the coalition, I will not be supporting these bills.

Andrew Southcott (Boothby, Liberal Party, Shadow Parliamentary Secretary for Primary Healthcare) Share this | Link to this | Hansard source

The fairer private health insurance legislation represents almost $2.8 billion being ripped out of the pockets of Australians who hold private health insurance. At the last election the Labor Party, in their dishonest ads, talked about the Leader of the Opposition taking $1 billion from health when it was actually a $10 billion increase in public hospital funding, but here we have a clear example of the Labor Party ripping out almost $2.8 billion, with their hands in the pockets of ordinary Australian families and individuals who are having a go, who are covering themselves and covering their families with private health insurance. Is this money going to health? No, it is just an inevitable consequence of the fact that the Labor Party have lost control of spending. They have wasted billions of dollars on pink batts and billions of dollars on school halls, and now, unfortunately, we are seeing broken election promises—a consequence of the fact that, as usual with a Labor government, they have lost control of their spending.

We on this side of the House understand that private health insurance plays a key role in reducing waiting lists and keeping pressure off the already struggling public hospital system. It allows people to have a choice of doctor, a choice of specialist, a choice of surgeon, a choice of anaesthetist and a choice of hospital. The coalition have always recognised this and will continue to fight for the role of private health insurance in our health system.

In a sense this is history repeating itself. When Labor were last in power the level of people covered by private health insurance plummeted from 50 per cent of the population to a low of 30 per cent in the mid-1990s. A number of Labor government decisions made during the second term of the Hawke-Keating government, between 1984 and 1986, had the effect of ripping money away from people who had private health insurance. As a result of those decisions Labor took when last in office we saw premiums rise by almost 40 per cent. The consequence was that people dropped out and as younger, fitter, healthier people dropped out the insured pool become more likely to claim and the premiums rose, in a vicious cycle. That required the introduction of the private health insurance rebate, along with lifetime health cover, in 1999, which arrested and reversed that fall in private health cover. In 2004 we came up with the proposal for increased rebates for people over 65 and people over 70 in recognition of the fact that many people on the age pension or part pensions and self-funded retirees were on fixed incomes and holding private health insurance. We needed to do this to make sure that private health insurance in Australia was on a sustainable footing.

Unfortunately, as I said before, Labor have a track record of dismantling private health. For the current Prime Minister's views on private health insurance there is no better guide than The Latham Diaries. That book shows how ideologically opposed to private health insurance the Prime Minister was when she was the Labor Party spokesperson for health. In fact, as we heard in question time today, the current Prime Minister gave an ironclad guarantee when she was shadow minister for health that the Labor Party would maintain the rebates. Her robust defence seemed to be that 'we did break that promise in 2007 but we took it to the 2010 election so then it was okay'. That ignores that the ironclad guarantee had an expiry date of not much more than 15 months into the Rudd government. I will come to that later.

Private hospitals treat 40 per cent of all patients in Australia—3½ million patients in 2009-10. It covers the majority of elective surgery. Around 12 million Australians hold private health insurance—52.9 per cent of the population—and 45.6 per cent have hospital treatment cover. Of these people, any single earning over $83,000 per annum and any couple earning over $166,000 per annum will see their rebates reduced, with those on higher incomes receiving no rebate at all. These changes will mean a return to the old days of people dropping out of private health insurance left, right and centre. Around 2.4 million people will be directly affected by immediate increases in their premiums of 14 per cent, 29 per cent or 43 per cent, depending on their income tier. Deloitte has predicted that up to 1.6 million Australians will drop their cover over the next five years. They have also forecast that up to 4.3 million Australians will downgrade their cover over the next five years and that premiums will increase 10 per cent above what they otherwise would have. We will see an extra 845,000 Australians admitted to public hospitals and an extra $3.8 billion in additional recurrent costs for the public hospital system. It is worth noting that the government maintains that only 25,000 people will drop their private health insurance under its modelling compared to the 1.6 million modelled by the Deloitte analysis. There is quite a discrepancy there—the Deloitte analysis is 64 times the government's predictions. Medibank Private, the government owned insurer, claims that 37,000 of their members will drop private health insurance. They are about a third of the market in Australia. Just extrapolating the Medibank Private numbers, this measure will see more than 100,000 Australians drop private health insurance. This shows that the government's claim of only 25,000 is not realistic.

It is not just those on higher incomes who are going to be affected—5.6 million Australians with private health cover have annual household incomes of less than $50,000, and of those 3.4 million have annual household incomes of less than $35,000. Despite Labor's rhetoric, private health cover is not just for the rich. It has always been this way. People on age pensions, part pensions and self-funded retirees all maintain private health insurance. People on fixed incomes and those in low income households will be hurt most by this move. It is the part-pension recipients, self-funded retirees and young people who will be hurt the most from this. Young families who have responsibly taken out private health cover will be hurt. These people have all sacrificed to secure their own health and this government want to impose an extra financial burden when cost-of-living pressures are already so high.

These people may not be hit with a reduction in their rebate but they will be hit by premium rises as a secondary consequence of people dropping their private health cover. This is very simply a broken promise by the Labor government. These broken promises are stacking up, day by day. It is a betrayal of the electorate and a betrayal of the 12 million Australians with private health insurance.

Just four days out from the 2007 federal election, Kevin Rudd wrote to Dr Michael Armitage, the chief executive of the Australian Health Insurance Association, and 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. Labor will maintain lifetime health cover and the Medicate levy surcharge.' That was clear cut and black and white in writing.

It is clear now that this is just a first step for the Labor government. Labor have delivered four budgets since they were elected in 2007 and in every single budget they have proposed to rip money out of private health insurance or to slug people to take out private health insurance. My prediction is that if Labor have the chance, this will be just the first step. There will be many more bills like this where Labor will continue to undermine private health, to wind back the support for private health and to continue their relentless attack on the private health insurance rebates. In every budget delivered by the Labor Party, they have attacked private health insurance.

This bill has already been rejected by the Senate on two separate occasions, yet the government continue. They just cannot let it go. The Labor Party hate private health care. They pursue this as an ideological argument, without considering or even caring about the consequences. This government cannot manage money. They have wasted billions and billions of taxpayers' money—for example, pink batts; and the school halls, which schools did not want. In health, you need only look to the $650 million GP superclinics program, where there is no proof that a single hospital has seen a reduction in waiting times for patients arriving at the emergency department. Because of this endless waste by this reckless government, they are now looking to dismantle effective measures like the private health insurance rebates to plug the hole in their budget. For those opposite, this is not about the good health of Australians; it is about balancing the bottom line of their budget which they have lost control of.

The effect of this legislation on my electorate of Boothby is going to be very detrimental. There are 96,728 people in Boothby who are covered by private health insurance—72.3 per cent of voters on the roll have private health insurance, 63.3 per cent of voters hold hospital treatment insurance and 71.5 per cent hold general insurance for extras. There are two private hospitals in my electorate which are likely to be affected, Flinders Private Hospital and Griffith private hospital. Glenelg Community Hospital and Ashford Hospital sit outside my electorate, but are frequently used by the residents of Boothby.

Voters in Boothby will take a very dim view of the Labor Party's decision. This is a bad measure for Australia and a bad measure for my electorate. It is such a bad measure that over 2,000 residents in my electorate have petitioned to have the private health insurance rebate retained intact. It is a petition that I will be presenting later this week. The opposition have no choice but to oppose this measure, as we did in 2009 and in 2010.

Natasha Griggs (Solomon, Country Liberal Party) Share this | Link to this | Hansard source

I rise to contribute to the debate on the Fairer Private Health Insurance Incentives Bill 2011. As some of my colleagues have already stated, we are debating a betrayal of the Australian people, a betrayal of 11 million Australians who contribute to private health insurance arrangements. Forty-five per cent of households in my electorate of Solomon have private health insurance arrangements. Over 40,000 people are covered by these arrangements—40,000 Territorians who are being betrayed by the Gillard Labor government. This is the very same government that promised at the last election that there would be no carbon tax under the government the Prime Minister led. We all know where that promise ended.

As has been reported in media outlets by many commentators, Australia's healthcare system—and I refer to the balance in the relationship between public and private providers—is envied by many overseas countries. The Treasurer himself is on record with regular reference to how Australia is the envy of the world. It is apparent that our current healthcare system, if media commentators are to be believed, is in fact envied outside our shores. To refer to a turn of phrase distinctive to our vernacular, if it ain't broke then don't fix it.

Along with nearly 53 per cent of the country or some 12 million other Australians, I pay into private health insurance. My husband and I recognise the importance of having private health insurance. We recognise the importance of choice and we recognise the value of not relying upon and adding to an already overworked and stretched public health system. Further, we recognise that with an ageing population the reliance on health care will increase, as will the pressures on both the public and private providers. Statistics show that in the 2009-10 financial year private hospitals treated some 3.5 million patients across Australia, with those private hospitals responsible for the delivery of 64 per cent of elective surgeries.

Australians in general have an expectation for the delivery of certain services. Health care is one of those areas of expectation. An Ipsos survey this year found 64 per cent of the population believe that the $4.5 billion the government spends on the health rebate is a good use of taxpayer money. At present, 5.6 million Australians who pay private health insurance have an annual household income less than $50,000. Further, 3.4 million Australians with an annual household income of less than $35,000 pay into private health insurance—a further example of the value placed on this commodity by Australian citizens. Astute Australians, mums and dads, singles, the aged—in fact, Australians from all walks of life—all currently pay for private health insurance, yet the current federal Labor government wants to change this. Why? The system is not broke. The Deloitte analysis of the changes proposed by this government, if passed, are expected to see many of those astute Australians I have mentioned who pay into private health insurance funds withdraw from private health or downgrade their current level of cover. The government's own insurer, Medibank Private, predict that potentially 37,000 of their existing members alone will drop their cover and 92,500 will downgrade their cover, yet the Minister for Health has claimed that some 27,000 people across the entire sector could potentially withdraw from private health care—a considerable discrepancy. How can this government get it so wrong so often?

At present the existing private health rebate is 30 per cent with an increase to 35 per cent and 40 per cent rebates for older Australians. Proposed changes will see the introduction of three new income tiers. The first tier will see a reduction of the healthcare rebate from 30 per cent to 20 per cent for singles with an annual income of between $80,000 and $93,000 and families with a combined income of between $160,000 and $186,000. Aged Australians between 65 and 69 years will see their rebate reduced from 35 per cent to 25 per cent and for those aged 70 and over the rebate will fall from 40 per cent to 30 per cent. Without looking beyond the first tier, it is quite evident that this government assumes any single or family whose income exceeds the thresholds to be wealthy. I am reliably informed by my constituents that this is not the case.

Many in remote, regional and rural Australia—who already pay additional costs associated with supply and delivery of goods and services; who already pay dearly for childcare facilities, for basic food commodities for fuel; who go without the advantages associated with pricing competition similar to that within urban environments; and who pay mortgages or who pay rent—are far from rich. These average Australians continue to struggle and should not be considered wealthy. Within my own electorate of Solomon, many of the constituents I have spoken to on this issue are angry. I paraphrase: they are sick to death of being bashed by this Labor government on a daily basis for apparently being wealthy. When I say 'constituents', I refer to people from all walks of life, from small business operators to businesses who employ staff to contractors, from police officers to nurses, to public servants and teachers, all hardworking aspirants of this country. All of them sound the same drum and sing the same song. These proposed changes are not about improving our health services but about the inability of the current government to balance its books. Once again, it is the working backbone of the country who will be hurt—those who already give and continue to give towards every tax and levy imposed by a government in crisis.

This Labor government does not understand that healthcare costs vary from region to region, as do wages, but no consideration has been given to the high cost of living facing Territorians today. Many young families I know will be affected if this legislation is passed, and they are already struggling. Like me, the member for New England believes that this new health tax being imposed by the Gillard Labor government will be very bad for regional hospitals and in fact regional health services. What I do not understand is, if the member for New England believes this legislation will be bad for regional hospitals and regional Australians, why the member for Lyne has not arrived at the same conclusion. Then we have the member for Denison. In his electorate six out of 10 people have private health insurance. Surely, the message to him is quite clear: he must not support this legislation. This legislation will most certainly put pressure on public hospitals. It will absolutely take more money out of people's household budgets. At a time when Australians are already facing extra cost-of-living pressures, Prime Minister Gillard's new health tax is just not sustainable. This government has a history of broken promises. A case in point: in October 2007 the Chief Executive of the Australian Health Insurance Association, the Hon. Dr Michael Armitage, sought clarification from Labor's federal opposition leader in respect to its private health insurance policy. The response to Dr Armitage, signed by the then federal Labor leader, Mr Kevin Rudd, stated:

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 percent general rebate and the 35 to 40 percent rebates for older Australians.

The response further included that Labor would maintain the existing framework for regulating private health insurance. What has happened in the interim? We have a government that finds itself in difficult economic circumstances largely of its own making, a government that started out with money in the bank and an economy strong and vibrant, an economy with stability. Today we see circumstances in which the government has spent billions and billions of taxpayer dollars to the point where we now have the fourth-largest deficit of any Australian government in history.

It is evident from the comments from my constituents that they clearly understand the impetus of why this government now wishes to tinker with the private health system—the envy of many other nations—not for the betterment of the system or as a value-add for the Australian taxpayer but for fiscal reasons. Simply put, the government is desperate to find money to try and fill the black hole which continues to expand. This is bad policy and it is the third time this parliament has considered this legislation. The first was in 2009. It was against a backdrop of commitment by the member for Griffith, the then federal Labor leader, in 2007 when he affirmed:

Federal Labor will maintain the existing framework for regulating private health insurance, including the process of approval of premium increases.

These three bills as introduced failed on that occasion. But here we are in 2012 again debating measures to alter the status quo in terms of private health insurance.

As I indicated earlier, many of my constituents are angry. The impact of the potential changes will impact the back pockets of most Australians with increased private health insurance premiums. The changes will impose an enormous compliance burden on the industry and individuals completing their tax returns. Private health insurers will have to make significant changes to their systems to be able to adjust premiums according to incomes. It is still not clear how the rebate will be administered under the new arrangements, especially where a person is not able to accurately predict their income for the current or the future financial year. Deloitte's analysis of the changes show that in the first year 175,000 people will be expected to withdraw from private hospital cover and a further 583,000 will downgrade. Over five years it is expected that 1.6 million will drop cover and 4.3 million will downgrade. These figures are absolutely alarming.

I would like to go back to the sentiments of my constituents. The following was sent to me by a constituent whose name is Lee. In her own words she said:

… "the harder I work the luckier I get". I want to share my journey in becoming the new "bashed and hated wealthy" My husband and I started our working life as bank teller and a refrigeration mechanic. We built a 3 bedroom 1 bathroom house in—

the suburbs of—

Adelaide, which was all we could afford. We raised 2 boys initially on 1 wage. My husband Chris had to take on additional work on weekends just to pay the mortgage and keep food on the table when interest rates reached 16% in the early 80's

We both worked to provide the boys with private school education. Family holidays were camping trips in an old camper trailer and when the boys left home we moved to the NT—

Northern Territory—

and started our own business

The journey of Lee and Chris is similar to that of many others that have worked hard, raised families, and understood the need to provide for themselves in retirement. In Lee's own words:

… this labor government hates us, it hates the fact we have some degree of financial comfort, it hates the fact we have private health insurance, it hates the fact we were prepared to work hard to provide the best education for our children. We are the people that got the hit from the flood levy, we are the people that are now to be hit by the health rebate means test, and next we will be the same people that will be hit by less money for private schools. We are small business people, we employ others, we pay tax, we look after ourselves in retirement, we are the backbone of this country and NOW UNDER THIS GOVERNMENT WE ARE HATED

How concerning is this sentiment? But this is exactly what this Labor government is doing: it is trying to bring back the class war, turning hardworking people that do have aspirations for a better life against those that do not.

In conclusion, this piece of legislation is absolutely not about a health policy. This is about a government trying to rip money out of people's back pockets as a patch-up for the waste and mismanagement that this government has undertaken over the last four years. This is bad policy and I will be voting against this piece of legislation as this bill is not about 'Fairer Private Health Insurance Incentives'. This is another Labor broken promise. This is another betrayal of the Australian people.

Ken Wyatt (Hasluck, Liberal Party) Share this | Link to this | Hansard source

I rise to oppose the Fairer Private Health Insurance Incentives Bill 2011 and the suite of related bills. I do so on the basis that what is proposed means that there is a reduction—and I will not cite all the figures because they have been evident in all the speeches that I have been listening to during the course of the day—and it will impact on the health system. When I first entered parliament during the reform period under the Rudd government—and later in its continuation with the Gillard government—I saw incredible hope and opportunity for the reforms to be effective and for the private sector, through private sector funding, to be a key player in all of this and I saw that the 30 per cent levy would allow people the opportunity of moving between the health services provided within both public hospitals and the private sector. I give an example of St John of God in Perth that has robotic surgery for men who have prostate cancer. The cost of that is significantly high and the difference in price is covered by the private health insurance that is provided through membership and underpinned by the 30 per cent element that assists people to continue with their private health insurance.

The other thing that disappoints me is that A healthier future for all Australians talked about a continuity of care, access to specialist services and the ability to be part of making a choice about the type of healthcare service delivery you would access and the point at which you would access it. The National Partnerships Agreements that have been negotiated make reference to the fact that all Australians should have the opportunity of moving between the choices that exist for them, but they do not always have the capacity to pay. There are private and government hospitals that have differing services and certainly a significant number of the specialists tend to operate within the private health sector. If you are covered by private health insurance, your movement through the elective surgery waiting lists and surgery is enhanced because you are sometimes advised to take the opportunity to book into a private hospital in order to expedite that service. It means that you do not remain on a waiting list for a substantial period of time.

But the articles that have been appearing in the papers in recent times have made some very interesting points for this debate. The headline in the Australian today was 'Both sides failing the test on health'. It states:

Labor's policy lacks coherence but this should not let the opposition off the hook.

The article says:

First, as the public and private systems compete for health professionals, it would increase costs and reduce quality in the public system. Second, it will make the PHI even less affordable for low-income consumers, ensuring that we truly do end up with two healthcare systems: one for the better off, who will be forced to have private cover, and one for those with lower incomes, who will have to rely on the public hospitals.

Again, 'Gillard confident on health rebate' was a headline in the Australian Financial Review on Tuesday, 7 February:

Prime Minister Julia Gillard said yesterday taxpayers should not have to subsidise private health insurance for wealthy people and the government would continue discussions to get the changes passed.

…   …   …

Greens leader Bob Brown yesterday softened his party's resistance …

"We don't believe people should be penalised because they make the choice to go the public health system," he said. We are continuing to talk with the government.

I have been dismayed also by the fact that there have been a number of speakers on that side of the House who referred to a welfare or class system when it comes to the subsidisation of the health rebate, because to me it is not that. I think we have to be serious in considering that we want to encourage people to access the opportunities to reduce the burden on the public hospital system.

One of the continued debates I had when I worked in health, when we used to meet as an executive, concerned the choking of public hospitals with people who could not access the private health sector or access specialists whose time was principally involved with the private health sector. What worries me with this one is that, if these figures about the 1.6 million consumers dropping their health insurance or the number that fall in under each of the tiers are correct, we will see an increase in the number of people accessing the public hospital system. That in itself will increase the requirement for funding to meet those health needs when it could be covered within the private health sector.

In reading through the National Partnership Agreements, there are some provisions for increased funding where there are pressure points within the public health sector under each state and territory's jurisdiction and to negotiate a variation to those actual costs. I suspect that we will see an increase in requests for additional funding by states and territories. With that in mind, today's Hobart Mercury had the headline 'Private insurance bypass—Doctors warn rebate changes will up pressure on public hospitals'. The article states:

Tasmania's public hospitals will be hit with more patients under plans to means test the private health rebate, the Australian Medical Association says. Premiums are tipped to rise by up to $1000 a year for families from 1 July with Gillard government legislation to be voted on in coming days.

…   …   …

AMA Tasmanian president John Davis said …

"What we're already seeing is the Royal Hobart Hospital working at capacity at what should be a quiet time of the year."

If that is the case at a quiet time, then those proposed changes will have a significant impact on hospitals. I was down in Tasmania recently and I was speaking with a senior official from health who indicated that the quantum of money received to provide for their hospitals and for the types of services required for the public of Tasmania is not sufficient. On that basis, I suspect that we will see health ministers coming back to the discussions with the federal minister seeking to increase their share of the Commonwealth funding that would assist in the provision of the health care that we expect and take for granted in this country.

I know that the Minister for Health believes these changes will ensure that those with a greater capacity to pay will make a larger contribution towards the cost of their private health insurance. The government says it will ensure that government support for private health insurance remains fair and sustainable in the future. This is simply not the case. In my electorate of Hasluck, which is geographically and economically diverse, there are many people who are feeling the pressure points of increased costs of living. Those increased costs of living are impacting on their capability and capacity to pay their private health insurance premiums. I have had constituents say to me that they will be dropping the level of contribution they make to private health funds. To me this is a pity because when there is an illness of some magnitude which requires coverage of the full fee, or at least the gap, they will be deprived of that and their out-of-pocket expenses will certainly increase. The extra costs will hit families hard and drive more towards the public system. The public health system is already under strain and this could be the straw that breaks the camel's back. Increased living costs will be created not only by hospital costs and the payments needed for anaesthetists and some of the surgical procedures but also by the medications that will be required. Over 1½ million Australians, including thousands in Hasluck, will face significant increases in private health insurance costs. $1,000 might not sound a great deal to many in this chamber, but there will be people who will struggle to find that within their tight economic circumstances, particularly with the other added pressure from the banking sector where there is an increase in home interest rates.

Private hospitals treat 40 per cent of all patients in Australia and perform over 60 per cent of elective surgeries. What happens to the public system when these patients scrap their health insurance? The government owned insurer, Medibank Private, has predicted that 37,000 of its members alone will drop their cover and 92,500 will downgrade. This is considerably more than the 27,000 the minister has claimed will drop their cover throughout the entire sector. To me, this is another example of the Labor Party playing the politics of envy and punishing those who are able to take financial responsibility for their health care instead of having the Liberal Party economic philosophy of reward for effort and providing people with choice and financial opportunity.

Many of the people who have taken out private health insurance in Hasluck are not super-rich as those opposite would have you believe. In the near future, you will hear more political-speak coming out of the Labor Party--things like, 'They are the rich; why should they get subsidies for private health?' This is social engineering coming to the fore yet again. These people are already paying for the services of private health insurance and this takes a significant load off our public health system. We will all have seen articles over a period of time in which health systems and jurisdictions talk about the burden of cost in the delivery of health services. I have had firsthand experience of actually working in the health sector at a senior level and I know the strain many in this system are under. These changes will just make things worse.

The phasing down of the healthcare rebate to nil would see the need for nearly 200,000 hospital bed days to be created. One million extra patients are expected to flood the public health system. The Gillard government is acting out of desperation to balance its books and is doing so at the expense of many hardworking Australians and people in my electorate of Hasluck. Instead of creating hope for the people of Australia that if they work hard and pay their way they will be rewarded, it penalises the people who are paying their way.

Cost of living, as I have said, is a serious issue in my electorate. The so-called luxuries will be jettisoned, and I fear that private health insurance will be one of them. The cost-of-living pressures will only get worse under the carbon tax regime. This wasteful government is introducing another burden. The deceit shown by this government knows no bounds. Every new tax or levy that is introduced chips away at the household budget. People in Hasluck are struggling and this typical tax-and-spend approach to economics is damaging to the social fabric of this country. I would ask the Minister for Health to come to Hasluck and talk in a forum directly to families that will be hit by the amendments to the legislation. Previous governments have rejected these changes, and I call on this government not to dig its heels in and to stop this lunacy.

What makes this worse is that the Prime Minister previously stated in opposition that she would not seek to remove the rebate, yet when it is politically convenient she once again goes back on her word. The former Prime Minister, the Hon. Kevin Rudd, and the former Minister for Health and Ageing, the Hon. Nicola Roxon, have both gone to great pains previously to say they would never support this move. What has changed? This is the third time the parliament has considered this legislation. It was introduced in the last parliament despite explicit promises at the 2007 election that:

… Federal Labor has made it crystal clear that we are committed to retaining all the existing Private Health Insurance rebates.

That was said in a media release by Nicola Roxon on 26 September 2007.

I call on the Independents to actually stick up for the people in their electorates and vote down these amendments, which will hurt everyday Australians. I think we have the basis of an incredible health reform agenda that is providing a wide range of health outcomes and improvements for Australians, consistent with the objectives of the national partnership agreement and the National Health Reform Agreement. I would rather see the strengthening of those and not their diminution through the impact of this legislation in reducing the rebate that is currently given to all Australians. I oppose this legislation.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

Order! It being almost 8 pm, the debate is interrupted.