Alex Somlyay (Fairfax, Liberal Party) Share this | Link to this | Hansard source

I am pleased to be able to speak on the Fairer Private Health Insurance Incentives Bill 2011 and to say that I oppose it vigorously and passionately—as you yourself did, Mr Speaker, on the first two occasions this bill was presented. There is an article in today's Sunshine Coast Daily which says just that.

In the 2004 parliament, I was chairman of the House of Representatives Standing Committee on Health and Ageing and that committee carried out an inquiry into health funding in Australia. It was the most comprehensive examination of the public and private hospital systems ever carried out by this parliament. I tabled the report of the committee. It was called, of all things, The blame game: report on the inquiry into health funding. That is where the name 'the blame game' in relation to the health system originated. That report should have created a lot of interest and a lot of debate. However, I tabled it early one morning in late 2006 and, later on that morning, there was another significant event—the election of Kevin Rudd as Leader of the Labor Party. So the tabling of The blame game paled into insignificance and was largely forgotten. I do note, however, that the first two questions Kevin Rudd asked as Leader of the Opposition to then Prime Minister John Howard were based on quotations from The blame game about the public hospital system.

There is a fundamental principle of economics—if a government wants more of something, it subsidises it. If it wants less of something, it taxes it. The Howard government consciously decided that it wanted more people in private health insurance. It therefore introduced the rebate. I was part of that government, as were you, Mr Speaker. That rebate resulted in a dramatic increase in the number of people who took out private health insurance. In fact, in 2009-10, private hospitals treated 3.5 million patients. Private hospitals treat 40 per cent of all patients in Australia—a figure which was lower before the introduction of the rebate.

If that rebate is abolished, we will be doing the opposite of what I said—that is, subsidising something we want and taxing what we do not want. If we remove that subsidy, we will be telling people that we do not want them in private health insurance, with the result that the number of people who leave private health insurance will increase.

The main issue of concern in the electorate today is the cost of living. We hear about the carbon tax, the mining tax and the cost-of-living pressures that people are under. I cannot go into any shopping centre without someone raising the issue of the cost-of-living pressures they are under. The abolition of this subsidy, of this rebate, will only add to the cost pressures which people are experiencing right now.

It is not only those people on high incomes—those who will actually lose the rebate—who will be affected by the phase-out of the rebate. When there are fewer people in the system paying private health insurance, that puts the onus of the costs of private hospital cover—and so, effectively, the costs of the specialists who work in private hospitals—on fewer and fewer people. It is inevitable that there will be an increase in private health insurance premiums for everybody, not just the high-income earners, so that is a furphy.

As I said, this is the third time this 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 in a media release by the then minister, Nicola Roxon, in 2007.

The impact will be felt not just by high-income earners, as I said, who will incur a 43 per cent increase in their premiums; all Australians will face higher premiums in the future if these changes proceed. The coalition believes all Australians should have access to affordable health care and real choice in managing their healthcare needs. The coalition has strongly supported providing all Australians with choice through affordable private health insurance. As a result of the introduction of private health insurance rebates, the Medicare levy surcharge and Lifetime Health Cover under the previous coalition government—of which the member for Warringah, Tony Abbott, was a very good and effective health minister—private health insurance coverage increased significantly from 34 per cent in 1996 to 44 per cent by 2007.

Every dollar of funding provided for the private health insurance rebate saves $2 of costs that are then paid by private health insurers, according to private research. Private hospitals treat 40 per cent of all patients in Australia. In 2009-10 private hospitals treated 3.5 million patients. Private hospitals perform the majority—64 per cent—of elective surgery in Australia. Information that I have been given on Catholic hospitals by representatives of Catholic Health make it very clear that if this legislation is passed the result will be increases in the cost of private health insurance of up to 67 per cent for consumers aged over 65 who will lose access to the current 40 per cent rebate.

Research undertaken by Deloitte Access Economics for Private Health Australia, formerly the Australian Health Insurance Association, based on asking people how they would respond to these increases, found that these measures would result in:

Public hospitals are already struggling to meet their current workloads. The most recent data from the Australian Institute of Health and Welfare for 2010-11 shows public hospital elective surgery waiting times have increased by 12.5 per cent since 2006-07 from 32 days to 36 days. This has happened despite all the additional funding that the Commonwealth has provided to the states in recent years. The last thing the public hospitals need is additional demand from patients who were previously privately insured; it can only make this trend worse.

The AIHW's latest report on Australia's hospitals, for 2009-10, shows the significant contribution of the private sector to the health system: 41 per cent of hospital separations, or 3½ million out of 8.6 million in total, occurred in the private sector; in the last year, public patient separations increased by 1.9 per cent; private patient separations increased by 5.4 per cent; and separations for private patients funded by the private health insurers increased by 6.7 per cent. Between 1998-99 and 2007-08 overall separations increased by 37.3 per cent. Separations increased by 23.1 per cent in public acute hospitals and by 66.9 per cent in private hospitals, including freestanding day hospital facilities.

Private hospitals are an integral part of Australia's hospital system, including in regional areas and smaller states such as Tasmania. For example, many medical specialists in regional areas rely on their private hospital work to maintain a viable regional practice across both public and private sectors. If a reduction of private hospital separations threatens the viability of regional private hospitals, this in turn will threaten the viability of many regional specialist practices, leaving many regional communities at risk of losing access to even more medical services.

Treasury modelling has not taken into account the likely very large downgrading in policies held by the privately insured in response to large increases in premiums. Privately insured members subject to the Medicare levy surcharge can still avoid the surcharge by downgrading their membership in the comprehensive full-cover style of product to one subject to high excesses and exclusions from a number of conditions. The impact of many members downgrading, especially the younger and healthier members, will be a reduction in the money available in the total insurance pool and that will result in higher premiums down the track. This will adversely impact on the million privately insured members who earn less than $26,000 a year.

The new measures are very complex, with 10 levels of subsidy. The additional administration costs will total $69 million over five years, including $66.6 million to be spent by the Australian Taxation Office and $1.9 million by the Department of Health and Ageing. There will need to be additional matching administration resources deployed within health insurance organisations. Individuals will face an even more difficult burden in working out the bottom-line cost to them of selecting an appropriate health insurance product. Those who elect to receive their rebate through a reduction in premiums—the vast majority—and who underestimate their incomes will be subject to a significant tax bill at the end of the financial year.

The opposition vigorously and passionately opposes this legislation and we will fight to the last breath to defeat it.

Laura Smyth (La Trobe, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to speak in an important debate concerning the current health of our community and also the health of generations to come. The community will benefit enormously from the appropriate allocation of Australians' tax dollars, and the fairer private health insurance bills will achieve that by realigning the interests of ordinary Australians and making available money for important health reforms—money that is currently being tied up in private health insurance. In all of the policy initiatives of this government, in absolutely every policy reform that we have put in place since coming to office, we have been concerned to fix the inequities in our society and to provide for future generations. We see that right across the policy spectrum, from the changes we are putting in place through the minerals resource rent tax, which will see an increase in the superannuation available to ordinary Australian workers on their retirement by increasing superannuation contributions from nine to 12 per cent, to starting an important community discussion about and making plans for the national disability insurance scheme and putting in place important reforms such as paid parental leave. Through doing all of these things and so many more we are responding to problems currently in our system and providing for future generations.

This stands in stark contrast to those opposite, who simply oppose reform, who are not interested in dedicating appropriate resources to the needs of future generations. It is another example of a reluctance to see important change and progress. Contributing to the health needs of Australians through important reforms like the contribution of a significant amount—$2.2 billion—to mental health and dedicating funding to regional cancer centres are initiatives that Labor has embarked on and which the opposition has only seen fit to regard as wasteful spending on issues insignificant to the opportunities and lives of Australia people.

The bills before us are about bringing the greatest benefit from our health dollar to the most Australians that we possibly can. They will ensure a fairer distribution of benefits and in particular will ensure that those who are on lower incomes and who need the most assistance will be able to receive the best services from our health dollar. We are doing this because it is absolutely the right thing to do. The bills are estimated to save around $2.4 billion over three years. That is no small saving. From the things we have done so far people will understand that we have a very significant commitment to improving the health of all Australians, tackling things like mental health, ensuring that we put in place preventive health measures and ensuring that we respond to the health needs particularly of an increasingly ageing population.

The reforms being contemplated in these bills are about freeing up money that could be better used for treatments, hospital services and infrastructure—things like regional health, responding better to the needs of a population which is living longer and providing more money for things like children's health, dental health and mental health. These are all of the things that ordinary Australians who approach members of parliament are interested in ensuring for themselves and for their children. These are the things that the money recouped through these bills should be going to. Other programs can also be supported by the estimated $100 billion over approximately 40 years that will be available as a result of the measures in these bills.

Members opposite should bear those very significant figures in mind. They regularly call for additional funding for particular issues in their electorates, and they are certainly not shy about calling for that funding. But, at the same time, they do not ever manage to tell us where they anticipate deriving that funding from. We have regularly heard about their inability to make their figures add up, and we know about their $70 billion black hole. Members opposite often do not tell their electorates what it is that they oppose in health spending. While this government is embarking on endeavours like the reforms in these bills to make better use of the health dollar, those opposite often do not go back to their electorates and tell people what it is that they have actually opposed—that is, what we are trying to do to put in place better measures for Australians' health.

Andrew Laming (Bowman, Liberal Party, Shadow Parliamentary Secretary for Regional Health Services and Indigenous Health) Share this | Link to this | Hansard source

Superclinics?

Laura Smyth (La Trobe, Australian Labor Party) Share this | Link to this | Hansard source

I hear the member opposite's remark. I was very pleased to be at the opening of the superclinic in my electorate, in Berwick, one of the fastest growing parts of Melbourne. I know the Liberals opposed the establishment of that superclinic. Members in my electorate and members who have superclinics in their own electorates, or are having them built, should make their local residents aware that these facilities are intended to provide for the training of GPs and other medical professionals. They are intended to provide support, advice, medical assistance and treatment for people in electorates such as mine, who rely very much on these services and who I am sure would like to see an increase in these services. Unfortunately, one of the things that is not often talked about by those opposite when they are talking about the importance of health is that they oppose measures such as this.

This government has absolutely made health one of its key priorities. We came to government after a period of chronic underinvestment in health. We all know very well on this side that, as John Howard's health minister, the Leader of the Opposition slashed health funding. He cut $1 billion from public hospitals. It is important to remember that that is enough to fund over 1,000 hospital beds. He increased out-of-pocket health expenses by 50 per cent through that coalition government's decision making. He froze GP training places, which had the effect of leaving six in 10 Australians in suburbs and towns around our country without enough doctors. On this side we are trying to respond to those imbalances. Since coming to office, we have tried to restore health initiatives in this country following the significant underinvestment during the period of the Howard government.

Those are the kinds of priorities that those opposite have for health care. Their priorities are around slashing spending and ensuring that GPs are not being trained effectively. So it is really quite surprising today to hear them talking so passionately in this place about our health system because at every turn they have indicated their unwillingness to fund a functional health system. This really does follow in the great tradition of Liberals who even opposed the establishment of Medicare. It is really no surprise today that they are lining up to speak on this bill and to undermine significant public health commitments because they have never really been about universal health care; they have really been about ensuring that they stand up for only the privileged few.

We however have made our priorities in health very clear. We have increased hospital funding by $20 billion since 2008. We have committed to more cancer services, including 22 regional cancer services. We have committed more than $2.2 billion to mental health—the largest ever mental health package in Australia. We have provided funding for preventative health and for primary health care. We have removed the cap on GP training places. We are funding over 1,000 new nurse training places every year. These are some of the headline changes that we have made in health. But there is so much more to do. In this debate, it is important to remember that there is so much more to do and that is why we are trying to get the balance right and ensure that funds which are currently going back to some of the wealthiest people in our society are more appropriately used for the betterment of the health of more Australians—Australians who really rely on public health services and Australians who I am sure would like to get access to some of the new treatments that we know are available and which this bill would allow government spending to be freed up to be used for.

We know that under the bills before the chamber today, a single person has to earn above $129,000 a year and a couple $258,000 a year before they stop getting the private health insurance rebate. To put the fearmongering by those opposite in context, it is important to know that around 20 million Australians will not be affected at all by the change. Most Australians understand that means-testing is about giving the greatest benefit to those in our society who need it most. That is what the government have been about since coming to office. It is what Labor have always been about. I think that most people would rightly be shocked to learn that the way that the private health insurance rebate is structured actually gives the greatest benefit to those who need it least. They would find that somewhat peculiar. They would find it something that government should act on and act to reform. That is certainly what we are doing today.

We have heard quite a lot in this debate and through the previous debate on this issue from those opposite about the prospects of the private health insurance industry seemingly taking pressure off public hospitals. Yet it is interesting that in at least a couple of studies into this issue no meaningful correlation has been found between the private health insurance rebate policy and reduced pressure on public hospitals. Indeed, one of these studies is reflected in the Australian Health Review September 2004. It states:

The presumption that an increase in the number of private hospital patients (associated with the increase in PHI membership) would reduce the 'pressure' on public hospitals and decrease queueing for public hospital services is not necessarily correct.

It is fairly interesting to read and I would encourage those opposite to have a look at it. It goes on to state:

... while the policies to support PHI have been successful in expanding the uptake of PHI, this has been a costly way of channelling resources into the hospital sector and has had little, and possibly a perverse, effect on access to public hospitals.

That is a report from 2004 by Jeff Richardson and Leonie Segal. It seems to indicate that there is in fact no correlation between the PHI rebate policy and reducing pressure on public hospitals. But I am sure that will not stop those opposite from continuing on with that line of argument.

Those opposite have been remarkably quiet about the prospect of repealing the means-testing measures in the bills before us today. They have queued up to speak on this legislation—they have come out in their droves—because ultimately they are about enshrining benefits for those who effectively could afford to pay more tax dollars towards the health budget. They are about standing up for those members of society who are earning the most. But we have not heard much from them about what they would do if they were in a position to repeal this, or whether indeed they would repeal it. It seems as though those opposite are unable to give a clear picture to their own constituency about their position on this bill, a bill that is about reforming our health system for the better and making Australian taxpayers' dollars go far further in relation to health than would be the case under a regime operated by those opposite.

I am very pleased to be able to speak in favour of this legislation today. It is an important reform. It is about making the greatest benefit available to the most people in our society. That is what this government has stood for since coming to office, and we continue to stand for it in all of our reforms.

Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

Once again, here we are debating the introduction of a means test for the private health insurance rebate. Despite going to the 2007 election with a promise not to alter private health insurance policy—that is, not to reduce the rebate—the Labor government, under then Prime Minister Rudd, blatantly backflipped and introduced a bill similar to the ones we are debating today into parliament in 2009. While the member for Griffith has since been relieved of his position as Prime Minister and the member for Gellibrand of the health portfolio, it is now one of the first acts of the new health minister, the member for Sydney, to introduce this appalling legislation to the House of Representatives.

The government failed in its attempt to have this legislation passed in the Senate in May 2009. That was because the legislation was rightfully considered to represent a broken election promise—yet another deception of the Australian people. However, the government was not content with this outcome and attempted once again to pass the bill in November 2009. Members and senators, representing the views of their constituents, voted down this legislation not once but on two separate occasions. So this legislation has been put before parliament on two occasions and defeated on two occasions, yet this Gillard government still sees fit to introduce it a third time. This is indeed a sustained attack on private health insurance.

I wonder what a certain Russell McGregor, a reader of Queensland's Courier Mail, would be thinking today. Does he remember the strident response on 23 September 2004 from then opposition health spokeswoman Gillard to his letter to the editor expressing concern for the future of private health cover? I quote:

Your correspondent Russell McGregor (Letters, Sept 15) should have no concern 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 of that on a number of occasions. –Julia Gillard , Opposition health spokeswoman, Canberra

I too can give this House an ironclad guarantee, and that is that this legislation will significantly erode the private health insurance incentives, implemented by the coalition, by reducing the 30 per cent rebate and increasing the Medicare levy surcharge for those without private health insurance in accordance with their income. This is quite literally making it more expensive to have private health insurance while simultaneously making it more expensive to not have private health insurance. Either way, with or without, Australian families will be paying more, yet will have more strain on their cost of living—the stress of their mortgages, electricity prices, the flood tax, reduced discounts for paying university fees upfront and the other huge broken election promise: the carbon tax.

Australians are struggling. This Gillard government may not realise that, but my constituents certainly do. Students, singles, families, pensioners and self-funded retirees—people across the spectrum—are seeing their hard-earned wages meet fewer and fewer of their needs. This Gillard government wonders why retail is struggling, why jobs are being lost, why Australians are angry. It is because they are all feeling the impact of the Labor government's poor and reckless financial management. It is because it is getting more difficult for them to provide for themselves and for their families. And it is because innovation and hard work are punished rather than rewarded under this government. These bills represent yet another step in that direction. They show, yet again, that this Labor government is out of touch. It has introduced 19 new taxes in the last four years and done nothing to relieve the strain on Australians or businesses—this from a government who undertook to introduce no new taxes.

The bills we are debating today make yet another essential cost of living—health care—more expensive. It is not only the direct loss of the rebate for those who remain in private health care but the increased premiums for everyone covered by private health insurance—that is, everyone, both those whom this Labor government thinks are wealthy and those whom it thinks are not wealthy. Deloitte has estimated that premiums will rise 10 per cent above what would have otherwise been expected—hardly an incentive to join private health cover. More than 104,000 Ryan residents are currently covered by private health insurance. These are families who will face higher premiums—more strain on their cost of living—if they make the decision to help ease the burden on the public system. This is just another example of how this Labor government punishes self-sufficiency and innovation in Australia.

This government considers that, possibly, it will not hurt Australians too much—just a couple of dollars more per week. We continue to hear that the carbon tax will raise prices by just a couple of dollars a week and that the flood tax will cost Australians only the price of a cup of coffee. That may be true when looking at the isolated facts. But, coupled with the effects of the 19 new taxes Labor governments have introduced since 2007, it all adds up to a considerable amount. But it is more than that. These simple cups of coffee, these few dollars on the weekly grocery bill or that pair of school shoes have a multiplier effect throughout the entire economy. Just one cup of coffee less for each resident at Chapel Hill who visits Simon's Gourmet Gallery in my electorate of Ryan certainly adds up to a large loss for that business, for its suppliers and for its employees. Those extra few dollars mean that perhaps the Chapel Hill newsagency next door will sell 100 fewer magazines to 100 fewer customers, again having rather a large effect on a small business. This bill today will simply add to these negative effects—again multiplying through the economy.

People value their health, as they should. Over 10 million Australians have made a choice to sacrifice in order to provide for private health insurance, rather than relying on an overburdened public system. This is a good choice for our nation and for our hospitals. The Howard government recognised that the relief that this individual investment generates was of great benefit and introduced the private health insurance rebate accordingly. The proof is in the pudding, as they say, as private health insurance membership increased from about 30 per cent in the 1990s to 44.7 per cent in 2008. The Howard government took this measure as dwindling private health insurance membership was of real concern after being decimated by 13 years of the Hawke-Keating Labor governments. During that time, private health insurance participation rates dropped from 67 per cent in 1983 to just 33.5 per cent in 1996—13 years of Labor governance halved private health insurance membership. That is why this rebate is important. It improves participation rates, which then have a flow-on effect or multiplier effect, if you will, of relieving the strain on our public system.

The Australian Institute of Health and Welfare has reported that private funding contributes to approximately 57 per cent of all surgery in hospitals—over half. In some areas, such as same-day mental health episodes, private funding covers about 70 per cent. The Wesley Hospital, in my electorate of Ryan, has written to me raising major concerns regarding this proposed legislation, as they perform more than 32,000 procedures annually. They fear the impacts of this legislation not out of greed or a wish to retain business, but out of great concern for their patients, who do not need the direct increased cost that will be added through the reduced rebate. They are also worried about the indirect cost impacts, including increased premiums, as membership decreases and about the additional burden on already strained public hospitals. The Wesley Hospital also has a dedicated breast clinic whose tireless work I have witnessed on numerous occasions. When you consider approximately 55 per cent of all treatment for malignant breast conditions is privately funded, it is obvious why the Wesley Hospital is concerned.

If private funding is already contributing to more than 50 per cent of serious health services and we are all aware that our public system is already under enormous strain, how will this rebate cut assist a system that is already struggling to cope? The reality is that it will not help in any way. Furthermore, would this government have even chosen to go down this path if they had not so totally mismanaged the economy? They certainly were not considering it when they were riding high on a zero net debt legacy left to them by the Howard government. Both former Prime Minister Rudd and his then health minister, Nicola Roxon, repeatedly reassured the Australian people that the private health insurance rebate was not under any threat from them, making statements such as:

Labor understands that people with private health insurance—now around 9 million Australians—have factored the rebate into their budgets and we won't take this support away.

Perhaps this statement explains the government's attitude: they cannot seem to get their own budget right, so they may assume that ordinary Australians treat their money with the same disregard as they do.

It has been estimated by the Gillard government that as a result of this proposal, 27,000 people will drop their private health insurance cover, resulting in only 8½ thousand additional hospital admissions. I doubt that the patients who have been waiting for years for elective surgery will be comforted by the news of an influx of an additional 8½ thousand people into the system. And if they already baulk at that conservative figure, imagine their reaction when they listen to Medibank Private's estimates of 37,000. Taking that to a national level, a Deloitte report commissioned by the AHIA found that up to 175,000 people will drop their membership in the first year alone, with over half a million people downgrading. That is not an outcome I want to see. I do not think it is good for our health system and I do not think it is good for Australians and that is why I oppose this bill.

The Gillard government's Labor colleagues in Queensland have so destroyed the public health system that this could prove to be the final straw. The basket case that is the Queensland public health system is not coping now and an influx of thousands more patients could spell its death knell. This is bad legislation—legislation that totally lacks vision for the bigger picture. In the short term it may save this government some money, funds for which they would not be so desperate if they had not ploughed ahead with such reckless financial management over the past four years. It comes at the cost of great additional strain to the public health system. Australians need to be encouraged to take out private health insurance and relieve the strain on the public system.

Our health system is struggling. Already it is not coping with the demands placed upon it. Yet this government seems to believe that it can support even more people who will drop their private health membership when they can no longer afford it. This does not make sense and it is not fair in any sense of the word. It is ironic that the name of this bill is the Fairer Private Health Insurance Incentives Bill. Abolishing a rebate for higher income earners does not suddenly mean that health insurance is fairer for lower income earners, or indeed that it will become cheaper. As we have seen from numerous reports and heard from many speakers, this 'fairer' private health insurance will actually make it more expensive and make public hospital queues longer. What is fair about that?

Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2011 and associated bills. Labor is the very proud builder of a modern healthcare system. I think it is worth reminding the House that Labor has invested significantly in our healthcare system both now and when it was in government in the eighties, not only to make it fairer but also to put in place the capital to build a modern healthcare system that can treat people no matter what their individual backgrounds are and no matter how wealthy they are. Labor fundamentally believes that the healthcare system should be strong and should be capable of treating people no matter what their financial circumstances are. It was Labor that put in place the Medicare system to ensure that everyone can access the healthcare system when they need it.

To find a contrast with the efforts of Labor in office in building a modern healthcare system we need look no further than when Tony Abbott, the Leader of the Opposition, was the health minister in the Howard government. His agenda was to rip money out of the public healthcare system and make it harder for people to access the healthcare system when they need it. Labor is the proud builder of a modern healthcare system that enables people, no matter what their financial circumstances are, to be able to access high-quality treatment, whereas the coalition's approach has been to remove money from the healthcare system and deliver budget cuts which make it much harder for our hospital system to treat people when they need access to the Medicare system.

Labor has also invested substantially in ensuring people are able to access the hospital system in their local communities. Down my way we have invested very substantially in the broader Geelong area to ensure that we have a modern healthcare system. I am very proud of that record of investment that we have put in place. I see at the table my parliamentary colleague Richard Marles, who has advocated with me to ensure the government is investing in the local Geelong community. I think we have managed to secure substantial funds to improve our system. In the last budget we were able to secure a lot of investment for a modern cancer centre to help people who are dealing with cancer. It will be interesting to see whether the Baillieu government comes to the table and matches the contribution that we have made to ensure that that cancer centre is delivered. I will be talking to the Baillieu government about the importance of having a modern cancer centre in our area to support cancer sufferers.

The reality is that we do have very challenging fiscal circumstances. We have come through the global financial crisis and our economy is strong, particularly if you look at our economy in the context of how Europe and the United States are going, but for us to build that modern healthcare system that enables everyone, no matter what their financial background is, to be able to access high-quality care, we do need to put in place mechanisms to ensure that money is going where it is required. I certainly do not believe it is appropriate for people earning salaries perhaps as high as those of cabinet ministers or indeed the Prime Minister to get a tax break from the government for them to be able to buy private health insurance. That is middle class welfare. It is inefficient and it will mean that we are not able to invest at the bottom end and give everyone the opportunity to access affordable healthcare when they need it. These very important Labor reforms are about putting additional money into the healthcare system where it is required. It is required for families who are perhaps earning $50,000, $60,000 or $70,000. That is the approach that we have taken.

The opposition are saying no to this measure, as they have been saying no to most of the initiatives that this government has been taking. In my community in Geelong people do not believe that it is appropriate for people earning hundreds of thousands of dollars a year to get middle class welfare from the Commonwealth to help support them in having private health insurance. People are saying to me that there should be support for people taking out private health insurance, but it should be means tested. That is the approach that we have taken.

As I said earlier, it is Labor that has had a very long track record of building a modern hospital and health system. The reforms that we have put in place are important reforms. They are reforms that will make our healthcare system more sustainable, recognising that as we live longer our health needs become greater and we need additional money in the system to support people.

There are a number of initiatives that I might also inform the House about that I think are important, particularly in the Geelong context. I had the great delight late last year of attending the graduation of the first lot of doctors from the School of Medicine at Deakin University. It was delightful to see men and women coming out of the medical school who have a real passion for medicine and importantly have a real passion for the regions. I have worked, as has the member for Corio, very closely with Deakin University to help deliver the resources from the Commonwealth that are required for Deakin to train additional medical practitioners. We have both advocated strongly on behalf of the university. And I note, Madam Deputy Speaker, that you also have a Deakin University campus in your electorate—and I am sure you have been advocating as well on behalf of your community the important role that Deakin plays.

Over the last few decades the role of Barwon Health and Deakin University have become increasingly important to the Geelong community. The efforts that the Geelong community have put into Barwon Health, our hospitals and the university are leading to better health outcomes in our region. Again, it is through the efforts of Labor, and a strong Geelong community, advocating for a strong healthcare system, that have seen these additional resources being put in. But we do have to pay for it. We do have to ensure that the budget bottom line of the Commonwealth is strong and that we return the budget to surplus. And we should be removing, where it is not appropriate, middle class welfare—and certainly high-income earners should not be getting a tax break from the Commonwealth for them to be able to have private health insurance.

In conclusion, these bills are fair. They are appropriate. It has been a consistent position that we have held for a long time. People understand the approach that we have adopted on this. I encourage everyone in this House to vote in favour of this so that we do have a fair healthcare system that is sustainable and is providing resources where they are required, particularly for working families. I think that is very important. I commend these bills to the House.

John Alexander (Bennelong, Liberal Party) Share this | Link to this | Hansard source

I rise to speak in opposition to these private health insurance bills. This is the third time we have debated this legislation. It was bad legislation the first time, it was bad legislation the second time and—lo and behold!—it is still bad legislation.

For the average Australian concerned about protecting themselves and their family's health, this is most certainly third time unlucky. These changes will directly force people to cancel their private health insurance cover or to select a cheaper level of cover. The government does not deny this. This will place immediate upward pressure on the insurance premiums paid by mums and dads wishing to have some security for their family and will force more people into our already overstretched public hospital system. The government does not deny this. On this Valentine's Day it is clear to see that there is not a lot of love coming from the government benches to those dependent on private health cover.

What we are witnessing here is a simple game of cost-shifting from the federal purse to the states, of passing the buck, of inflaming the blame game that former Prime Minister Rudd promised to end. This government's warped policy focus, regardless of the impact on broader society, is chalking up yet another victim. The government uses fanciful metaphors about the circumstances of the cleaners of this chamber to justify this money grab as a tax only on the rich. However, it is without doubt that the people who vacuum the floors and empty the rubbish bins in this place will be slogged with higher insurance premiums or forced to wait in even longer queues in the public hospital system as a direct result of these changes—not to mention that those who pay the largest portion of tax and contribute to our economy through wealth creation and economic productivity will face premium increases of up to 43 per cent.

This government has put together a consistent record of punishing those in our society who succeed: the carbon tax, the mining tax and now what is effectively a health tax. What this government fails to understand is that an economy is driven by those striving to get ahead. Whilst we must protect those in disadvantaged circumstances, we must also ensure that the road out of disadvantage is not littered with obstacles and punitive measures. The coalition has long supported a policy that all Australians should have access to affordable health care and have real choice in the management of their healthcare needs. This includes the choice for private health insurance, and the Howard government was active in supporting that choice in order to take pressure off the public health system. As a result of that policy, private health insurance coverage increased from 34 per cent in 1996 to over 44 per cent by 2007.

In my electorate of Bennelong there are 101,274 people covered by private health insurance—72.9 per cent of the voters in Bennelong depend on private health insurance. Labor's insistence on ripping away the much-needed security from the mums and dads of Bennelong is just another example of this government's total disconnect from the reality of life in the real world. They will claim that it is only the rich who will pay, yet 2.4 million people will face immediate premiums increases in the order of 14 to 43 per cent. Curiously, the government, despite their protestations of the benefit of this change, have kept hidden their predictions on the number of people expected to downgrade their cover as a result of this change. One does not need to be a brain surgeon to realise that, as products become more expensive, mums and dads will seek out cheaper products that will then leave more of the load to be carried by the public hospital system. Do not just take my word for it: the government owned insurer, Medibank Private, has predicted that, as a result of this legislation, 37,000 of their members will cancel their cover and 92,500 will downgrade their level of cover. Internationally acclaimed auditing firm Deloitte predict that, across the industry, 175,000 people will withdraw from private hospital cover in the first year of this change and a further 583,000 will downgrade. What a beautiful set of numbers—not! Over the next five years they expect that 1.6 million will drop cover and 4.3 million will downgrade. This will put an astonishing level of stress on the public system. But of course the federal government can then just blame the states for that. For those that stick with it, Deloitte predict that premiums will rise by 10 per cent above what they would otherwise be without this flawed legislation.

Private hospitals treat 40 per cent of all patients and perform 64 per cent of elective surgeries in Australia. Independent economics firm Econtech has found that every dollar of funding provided for the private health insurance rebate saves $2 of costs that are then paid by private health insurers. Any argument for this change simply does not stack up.

We all know that this government has little concern about making a promise before an election and doing something else afterwards. So I can only presume that government members are not concerned that the former health minister put out a press release just prior to the 2007 election, stating:

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

Perhaps members on the other side will share a greater concern about a recent Ipsos survey that found that 64 per cent of Australians believe that the $4.5 billion a year the government spends on the private health insurance rebate is a good use of taxpayers' money.

Or perhaps their collective moral compass will be attuned to the fact that the changes in this bill will impose an enormous compliance burden on the industry and individuals completing their tax returns—that is, our constituents and those who care for the health of our constituents. There are many residents of Bennelong who do not have steady or predictable incomes. It is a great unknown how insurers will administer a system that will adjust premiums according to an individual's income.

Or perhaps members opposite will show concern because Deloitte has estimated that the public hospital system will face additional operating costs totalling $3.8 billion over the next five years, including $1.4 billion in the fifth year alone, as a direct result of this change. So far we have seen no concern from the opposite side about the multifaceted impact this legislation will have on all levels of our society.

In conclusion, I will read a succinct email from Mr Simon Hughes, one of many Bennelong constituents who have written to me recently on this issue. He wrote:

Dear Mr Alexander,

Analysts predict the Federal Government's proposal to means test the Private Health Insurance Rebate will make health insurance more expensive for everyone.

The Private Health Insurance Rebate doesn't just affect patients with private health insurance. By encouraging more Australians to choose private cover, it takes pressure off our overburdened public hospitals.

But as the means test forces Australians out of private insurance, queues for life-saving treatments will get longer and longer.

I call on the Government to retain the rebate in full, in its current form.

Failing that, I intend to reassess my private health insurance needs and costs as a result of this stance by the government in what can only be seen as a slap in the face for ordinary Australians attempting to provide health care for their family and another election promise that has been broken.

Kind regards, Simon Hughes

This is a bad policy. It was the first time, it was the second time and it is again. Labor's attempt to turn this bad policy into a type of class war, an attack on the rich, can be seen as the transparent move that it is—a feeble effort to resolve a budget in crisis.

Yet again, we on this side of politics stand united, voting in the best interests of the Australian constituents we have been sent here to represent and protect. On behalf of the 101,274 people in Bennelong with private health insurance, and all the others reliant on the public system that will also suffer as a result of this legislation, I strongly oppose this bill. I urge all my parliamentary colleagues to stand with me in opposition to this attempt to replace a good, working system that has the support of the wider community with yet another example of ill-conceived, flawed government policy.

Chris Hayes (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

I also rise today to speak about 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, which implement the 2009-10 government budget commitment. This is the third time that these bills have come before this parliament. In the hope of developing a system of fairness, a system of preserving equity, let us hope that, the third time, the legislation receives the assent of parliament.

The amendment bills before us today effectively institute a change of the start date from 1 January 2012 to 1 July 2012. The new start date will align with the start of the incoming financial year. The main purpose of the bills before us is to introduce three private health insurance incentive tiers. These tiers will ensure that taxpayers with progressively higher incomes will receive decreasing proportions of government rebate for private health insurance, while offering higher costs if they opt out of the private health system. The rebate will progressively fall as incomes increase—in other words, the bills will create a means test for private health rebate entitlement.

The first tier is for individuals who are earning over $80,000 a year and for couples who are earning over $160,000. The rebate will be at 20 per cent with a one per cent Medicare surcharge for those who opt out of private health insurance. The second tier is for those who earn more than $93,000 or, as couples, $186,000. They will have their rebate at 10 per cent with a surcharge of 1.25 per cent should they elect to opt out. The third is for singles that earn more than $124,000 a year and couples earning more than $248,000 a year, who will receive no rebate but will have a 1.5 per cent surcharge should they not take out private health insurance.

The surcharge applies in order to ensure higher income earners acquire and keep their private health cover. This would alleviate a significant amount of pressure on our public health system. Having an incentive to take out and keep private health insurance is not new, but what is new is having a tiered system where the 30 per cent government subsidy for people taking out private health will be affected. The tiered system is effectively introducing a means test on a progressive basis for those who can afford to take out private health insurance.

These bills will also ensure a fairer distribution of benefits within the health system. The Labor government has traditionally stood for a fair distribution of benefits, ensuring that those who need assistance are the ones who receive it. The Labor government believes that the main purpose of private health insurance rebates is to assist working families, those people struggling to make ends meet, and to make sure that they, first and foremost, are able to be protected. Private health insurance rebates also ensure that retirees are able to meet the costs of their premiums and get access to proper health care. I do not know about you, Madam Deputy Speaker, but singles earning $124,000 a year are not exactly the people that I would describe as being on struggle street. They are obviously hardworking; nevertheless, what goes with that is privilege and the capacity to be able to meet private health insurance.

The bill also allows us to ensure that low- to middle-income taxpayers are not forced to spend over $2.4 billion a year to subsidise the insurance of higher income earners. This taxpayer money is better spent on priorities such as health, schools, hospitals and pensions. Health is an area that needs particular attention, with increasing demands emanating from new treatments, new medicines coming onto the market and new technologies to do things such as preserve life and increase the quality of life in our community. This money can be better used to ensure that further development occurs in those areas.

The changes that would be implemented by the bills before us would also ensure that the rebate matches more closely not only the means of the various groups but also the population share. For instance, since 14 per cent of taxpayers earn more than $80,000 a year, their private health insurance will be in the vicinity of 12 per cent of the total rebate. Compared with the present, theirs would accumulate to 28 per cent. Similarly, 12 per cent of taxpayers earn over $160,000 a year. Under the new system they will receive nine per cent of the total rebate, rather than 21 per cent.

The rebate will remain at 30 per cent for individuals on less than $80,000 a year and, in fact, will be higher for various groups, particularly our elderly—and rightfully so. The elderly are the ones who are going to ordinarily need more assistance in the provision of healthcare services, but they are also the ones who are often most financially disadvantaged. I am therefore glad to see that the bills include a special provision for them. For instance, 65-year-olds on a lower income will receive a 35 per cent private health rebate. Indeed, a 70-year-old will receive up to 40 per cent of the rebate. That is not something that has been spoken about much so far in this debate, but it is providing a rebate to people who probably need it most.

As I have already mentioned, fairness and the fair distribution of benefits is one of the main purposes of this bill. You are aware, Madam Deputy Speaker, that I come from an electorate which is rated very lowly in the socioeconomic rankings. As a matter of fact, according to the ABS, my electorate of Fowler is ranked the second lowest. I have the most multicultural electorate in the whole country. Many in my electorate are newly arrived to this country. They work very hard for themselves and to look after their families. It is difficult for many of those who come here at a later stage in their lives to complete higher education and, as a consequence, many of the jobs that they take are very much in the lower income bracket. That does not mean that they will not work two or three jobs to try to look after their children—they do. Approximately 88 per cent of individuals in my electorate earn well under $80,000 a year. According to the most recent census data, less than one per cent earn over $160,000 a year.

I know this is not going to be a debate just about who earns what and what people are entitled to, but I clearly state that in an electorate such as mine the vast majority of people will benefit not only by having their rebate held as is but also from the additional benefits that are being put into health, particularly in that area. Mine is one of those very much working-class areas, mine is an area that is home to many new Australians and mine is an area that needs greater investment. We should not do what the state government has just done, which is to rip money out of our systems, particularly in the south-west of Sydney, to go on some other ventures across the other side of the river. I represent an area that needs to be viewed positively when it comes to providing welfare income assistance. This is a debate that gets us to look at that. The area I represent is one of high need. The people I represent are low-income earners. Yet we have this discussion taking place on the other side where they reckon that we should not discriminate and that everyone should be entitled to be subsidised in terms of their health rebate, because if you do not subsidise them people will get rid of their cover.

Alby Schultz (Hume, Liberal Party) Share this | Link to this | Hansard source

Come on, Chris, my background is a lot poorer than yours.

Chris Hayes (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

Not even the member for Hume would really believe that. They have a written script on this thing. If you look through the contributions from the other side of the House, they have all been identical: this is about a right to be subsidised.

This is not the first occasion when we have had a debate such as this. Go back to 2008, when we increased the Medicare levy threshold. The member for Hume sat in the chamber at that time, as did many others. People remember the contribution of the member for North Sydney, when he pounded away and said it was Armageddon and that it was going to be what destroyed the health system of the country. The coalition waxed lyrical about millions of people who would abandon private health. They said that the public health systems of New South Wales and Victoria would be destroyed because they would be overstretched to breaking point by people wanting to vacate the private health system. What happened? Since 2008 there has been an increase in people taking out private health insurance.

Despite the politicians wanting to try to score points, the truth is that mums and dads out there do what is necessary to look after their families. Mums and dads in my electorate will work their two or three jobs to look after their families. I imagine that mums and dads in the seat of Hume or anywhere else are going to do similar things. After hearing the earlier contribution from the member for Bennelong, maybe they do not have to work their two or three jobs to do that. But parents take their responsibilities seriously. They do not get a set of rules. They do it to look after their families. They take that part seriously. No amount of discussion in this chamber is going to change that. Mums and dads are going to do what is necessary to look after their families. The member for Hume—and I know his electorate quite well—too, should be thinking seriously about this because I know the age distribution in his electorate and a significant proportion of them are going to be the ones whose rebate will increase by up to 35 per cent, and many of them will be up to 40 per cent.

In their approach to this debate, people should have a clear view as to not only what has been said in the back of the party room but to what we are going to say in this chamber. I have not seen one member on the other side come in here and say, 'If we get the power at the next election we will scrap this and bring the rebate back in.' The reason they have not said it is that they are never going to do it. They are looking for us to make the hard decisions. They are going to go out and score political points, but they are not going to come in here and change that system, because they know this is the right way to do it. We have had the courage to pursue it.

Alby Schultz (Hume, Liberal Party) Share this | Link to this | Hansard source

I do not think you are in a position to lecture us about what we will and will not do.

Chris Hayes (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

I challenge the member for Hume, or anyone else, to get up on their side and say how they would pledge to reinstitute the rebate to private health, because it is just not going to happen. They are not going to do it because they know it would be bad policy. But in the process they want to score political points. I commend the bills to the House.

Alby Schultz (Hume, Liberal Party) Share this | Link to this | Hansard source

I rise to raise my very serious concerns regarding the Fairer Private Health Insurance Incentives Bill 2011 and cognate bills and the inevitable implications for both the private and public health sectors in Australia, should the bills be passed. It was interesting to hear the comments of the previous speaker, the member for Fowler—a member of a government that has never honoured promises to the Australian people.

The Minister for Health asserted last week in question time that the Labor government want to implement this legislation so that they can spend every dollar well—that is, siphon rebate moneys paid to hardworking Australians with private health insurance towards Labor initiatives in the health sector. I want to know why hardworking Australians should believe that Labor are suddenly going to spend every dollar well when they do not have the track record necessary to make such a commitment, which is particularly concerning when we are talking about health. I often use the phrase, 'Don't believe what Labor say, look at what they do,' and I think people are doing that more today than they were a couple of years ago.

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:

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

That was a quote from a media release from the then Minister for Health and Ageing, Nicola Roxon, on 26 September 2007.

In stark contrast to the Labor Party, the coalition believes all Australians should have access to affordable health care and real choice in managing their healthcare needs. The coalition has strongly supported providing all Australians with choice through affordable private health insurance.

The measures currently before the House are expected to have considerable impact upon some 52.9 per cent of Australians with private health insurance through direct increases to insurance premiums, which will force people out of private health and into the public health system. In turn this will affect all Australians who seek health care, no matter how much money is thrown their way.

A total of 2.4 million Australians will be directly affected by these changes, with immediate increases in premiums, from 14 to 43 per cent, depending on their income tier. As many as 175,000 Australians are expected to withdraw their private health cover altogether within the first year alone—increasing to 1.6 million over five years, according to a Deloitte analysis. This huge influx of numbers from private health into the public health system will create insurmountable problems for an already overburdened system as more and more individuals and families are forced to relinquish their right to private health care as a result of the Labor government's proposals. This increased burden will not only result in more and more debate about the inefficiencies and incompetencies of our health system; it will also, significantly, fail to achieve anything in the provision of health care in this nation.

I am particularly concerned for healthcare services for my constituents within my electorate of Hume, for whom the adverse effects of changes to private health insurance will be costly. I am against this legislative change as it will damage regionally based health services and discourage health professionals and services—which we remain in desperate need of—from coming to country areas.

As a result of the introduction of the private health insurance rebate, the Medicare levy surcharge and Lifetime Health Cover under the previous coalition government, private health insurance coverage increased significantly, from 34 per cent in 1996 to over 44 per cent by 2007.

The issues around the impact that this change will have on country people in particular are very significant and should not be treated as lightly as they are being treated by those on the other side. Over 40,000 residents of Hume, the equivalent of 46 per cent of the electorate, hold some form of private health insurance. This significant proportion of constituents will be directly affected by a rise in insurance premiums, which will see a majority forced to downgrade or drop their cover altogether. This will place significant additional stress upon public hospitals and specialist services across the electorate.

I believe there are people who are currently on elective surgery waiting lists who have been waiting, in some instances, up to 18 months in the areas that I represent in the electorate of Hume. We will see nothing positive in this move by the current government, with its ideological attack—class warfare—on private health insurance. This blatant cost-shifting measure is irresponsible as it takes away my constituents' rights to accessibility of health care.

The introduction of legislation that will impact so significantly upon the way in which Australians choose to ensure and safeguard their own health is indicative of Labor's utter contempt for their right to choose. Labor is once again legislating for the removal of the average Australian's right to choose what is in their own best interests in terms of health care, a right which enables people such as me to receive timely and urgently needed surgery.

What is this change going to do for people who may be in a situation like I was in February 2011, when I had major surgery? I was fortunate, because of my private health cover, to get access to some IT equipment that is going to prolong my life for the next 15 or 20 years. Why are we not thinking about the impact that this attack on private health insurance is going to have on those people who are struggling and who were referred to by the previous speaker? They are struggling and going out of their way to raise enough money to put into insurance schemes so that they do not have to be confronted with a significantly costly outcome from a piece of major surgery in the future. I dread to think that any constituent of mine experiencing a life-threatening illness will not be able to receive the care they need because an increase in private health insurance premiums as a result of this legislation has forced them to drop out of private health insurance and go onto public health waiting lists.

It must be made clear that the implications of this measure do not only affect high-income earners who will cease to receive private health insurance rebates; they will impact upon the average Australian who scrimps and saves to provide their family with peace of mind, knowing that their sacrifices will have been worth while when urgent health care is required, as I alluded to in my previous comments. These people are going to be penalised for taking greater responsibility for their health, and the rest of Australia will suffer as a result of the inevitable flow-on effects across the system.

In addition to the impact upon private health membership in Australia and the consequences for the public health system in the process, the implementation of a means-tested rebate is yet another way in which this Labor government has proposed to bureaucratise the administration of health care in this country. Labor has also once again created ideological aspersions about those who have private health insurance in Australia, as being undeserving of the 30 per cent rebate.

Every dollar of funding provided for the private health insurance rebate saves $2 of costs that are then paid by private health insurers. Private hospitals treat 40 per cent of all patients in Australia. The people treating that 40 per cent make up about 60 per cent of the surgeons that operate in this country—great surgeons with great skills, who are amongst some of the best in the world. In 2009-10, private hospitals treated 3.5 million patients. Private hospitals perform the majority of elective surgery in Australia, approximately 64 per cent. Twelve million Australians, or 52.9 per cent, have private health insurance. Ten point three million people, or 45.6 per cent, have hospital treatment cover.

Let us look at the impact that this change by the government will have. A 2012 Ipsos survey found that 64 per cent of the population believed that the $4.5 billion a year the government spent on the rebate was a good use of taxpayer money. The change 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—which is not unusual for this government, because it does not do its homework—how the rebate will be administered under these arrangements, especially where a person is not able to accurately predict their income for the current financial year. There are many people in professions that cannot do that. Of course, that is not known to those people in the bureaucracy, who have their regular rates of pay coming to them on a day-to-day, week-by-week, month-by-month, year-by-year basis. The government owned insurer, Medibank Private, has predicted that 37,000 of their members alone will drop their cover and that 92,500 will downgrade. That is considerably more than the deceptive figure of 27,000 that the minister has claimed will drop their cover throughout the entire sector. So once again we have got the Labor Party spin and deceit out there, not telling the people of Australia the full truth of what they are about.

Deloitte analysis of the changes show that, in the first year, 175,000 people are expected to withdraw from private hospital cover and a further 583,000 are expected to downgrade. Over five years it is expected that 1.6 million will drop cover and that 4.3 million will downgrade. The government has yet to disclose the numbers of people expected to downgrade, but as premiums increase significantly for those in the income tiers it is reasonable to expect they will seek cheaper products, which will have second-round effects for public hospitals. Deloitte predicts that private health insurance premiums will rise 10 per cent above what they would otherwise be. There will be $3.8 billion in additional recurrent costs for the public hospital system. The change will also have an impact on access to allied health services, with 2.8 million people with general treatment cover expected to withdraw and 5.7 million expected to downgrade over five years.

This bill is the result of the Labor government once again misleading the public as to what they would undertake in government. I oppose this legislation because it will create even more pressure on the public health system by forcing Australians with serious health issues to wait in a life-threatening queue for treatment while well-equipped private hospitals, surgeries and their associated professional medical teams stand by.

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

It is a privilege to follow my colleague the member for Hume and his fine remarks in relation to this legislation. I rise today to oppose the Fairer Private Health Insurance Incentives Bill and cognate bills purely on the basis that this government is once again revenue raising at the expense of good public policy. Whenever you see the word 'fairer' in the title of a Labor Party bill, you can bet your bottom dollar that it is anything but fairer for the hardworking people out there who have to generate the resources to build this country. Fairer for whom? That is the question that should be asked in relation to this legislation. It is certainly not fairer for those hardworking mums and dads who put aside their hard-earned money to pay their own capital into the private health system and take out insurance, thereby lifting the burden off the public system.

It is Orwellian for us to hear about this fairer system that Labor want to introduce without putting in context the health debate in Australia today, without going back and saying, 'Well, the Labor Party were the ones that brought in so-called universal health care so that extremely rich people would get access to the same public system as anybody else.' It was their idea. It is quite Orwellian for Labor to come in here and tell us that this is all about poor people.

I am sure many members of this House would have had the time last night to witness the Four Corners program and the dynamics in the leadership of this government. Once again the victims of that dynamic, of this leaderless government floating around, are the ordinary, hardworking Australian people. In a desperate attempt to get into surplus this year they have cast around and asked, 'What is it we can axe desperately? What policies can we quickly pull off the shelf so that we can grab together billions of dollars to cover for the waste?' They have just announced billions of dollars to subsidise the car industry. They have just announced billions of dollars to subsidise the aluminium industry. They are spending tens of billions of dollars on a broadband network that will make broadband more expensive in this country, competing with the already existing market. But of course we have to rip $3 billion out of private health to try to rebalance the books after all that expenditure, not realising of course—perhaps actually realising it but not caring—that in doing so we will increase the burden on the public system, the cost to the public health system. We will probably do a lot of damage to the revenues of the government in the future when people are simply unable to afford private health insurance due to the changes proposed by these bills.

We know that in Australia today most Australians do take out private health insurance in addition to their rights under universal health care. They do so so that we can have a system which can fairly treat as many Australians as possible. But many poorer Australians put aside their money—they scrimp, they save, they work hard—so that they can guarantee a standard of care for themselves and their families.

We know of course that the Labor Party promised not to do this. This is the third time proposals of this nature have been considered in this chamber since I have been here. It is the third time they have been considered since the election. They have already been rejected twice by the parliament. This is the third time they are seeking to do the same thing to the Australian people. Why has it been rejected twice in the past? Call me old-fashioned, call me a liberal, but we keep our promises that we make to the electorate. And of course that is a little old-fashioned in terms of politics. I know the new dynamic is beyond 'whatever it takes'. 'Whatever it takes' was what Graham Richardson said. I note that the Parliamentary Secretary for Agriculture, Fisheries and Forestry, who is at the table, agrees. It is now 'whatever it really truly does take' to get the budget into surplus, which involves breaking your promise to the Australian people that you would not alter the private healthcare rebate for Australians—'We desperately need those billions. The future of the healthcare system? Secondary.'

This is not a crusade about a better health system. This is not a crusade on behalf of poor people. In fact, you know a political party in this country is truly desperate when they reintroduce the notion of class into this country, because we are one of the greatest societies on earth today, having in effect a pretty classless kind of place. We do not have people being treated, upon their birth, in any special way. Yet in the last week, Labor has deliberately sought, through this legislation, to reintroduce the notion of class in Australia today such that poor people—cleaners—are subsidising wealthy people, are subsidising billionaires' health care. Labor is completely in denial of the absolute fact of our healthcare system: universal health care was brought in by a Labor government. Everybody pays a one per cent surcharge under the Medicare levy—in some cases huge amounts of their income. Taxes are paid by the wealthy on a sliding scale, and of course there are people who earn more money and who work very hard for that money. What we see in these changes is that people who are not so well off will be adversely affected. If they decide not to have private health care or decide to scale back their insurance, as is their right, the burden will fall on the public system to the detriment of everybody.

There is a concept in Australian politics, and in politics more generally, that you should lift everybody up, not push everybody down. Labor, of course, in a desperate attempt to balance the budget, has proposed in these bills the abolition of the 30 per cent private healthcare rebate. It has done that to raise $3.5 billion. What it is really trying to do is restart a series of fake class warfare ideas that somehow poor people are paying for rich people. Why? To mask the fact that it is breaking an election commitment. The abolition of the private healthcare rebate is another election commitment that has been broken. We know that, given that this is the third time the parliament has considered this legislation, the Labor Party is pretty determined to break this commitment to the Australian public. We must now look forward and say that any commitment that the Labor Party makes prior to an election should not be trusted. It is not just the cynical nature of politics to think that. We now have good documentary evidence in relation to the private healthcare rebate—three times it has attempted to break its promise, even though ironclad commitments were given prior to the election—and the carbon tax. It has a regular pattern of breaking promises in relation to its election commitments. I think people have really had enough of that.

Anyone who cares to analyse what these changes will do, whether it be private health insurers, Medibank or anyone else, will see that it is an almost complete certainty that premiums will rise in one shape or another for everybody because of these changes. That is a very serious contention. If this were so good for poor people who were subsidising rich people—the words of the Labor Party—then they would somehow be better off because of these changes. How will people who are on lower incomes and who take out private health insurance be better off? We know that 11 million Australians on all kinds of incomes, some on very low incomes, take up private health insurance. How will they be better off under these changes? How will they be better off if premiums rise? If you have fewer people in any insurance system, if the pool of capital available to insurers is reduced by punitive changes, how will insurers be able to provide that product at the same rate to their customers? Everybody knows the answer. The government knows the answer. The government knows that premiums will rise, but it does not care: it will blame the greedy companies. The Labor Party has a constant notion that it is the government versus the economic generators. Just as the Treasurer is relentlessly targeting the banks: 'How dare they manage their businesses the way they need to? How dare they raise or lower interest rates with the demands of the price of capital in the marketplace?', so it will be the health insurers' fault: 'How dare they raise premiums? How dare the health insurers do this?'. That is the line the government will take, there is no doubt about it. But actually, in this case, those increases, or at least significant parts of those increases, will have been generated by these bills, which remove a piece of public policy brought in by the Howard government. As we know, the government's borrowing in the capital markets has put pressure on interest rates for the banks. If the government sucks up all the available capital to borrow, banks have to look further and wider to find the capital at higher and higher rates, so of course there will be pressure on interest rates.

By any benchmark that you care to examine this is poor public policy. We have done recent surveys, and they are good quality surveys, of the Australian population that say that 64 per cent of people think that money spent on health rebates is a good use of taxpayer funds. I endorse that sentiment of the Australian community. That is why we argue for such high rates of taxation generally in Australia today. We say we need to pay all this tax so we can have a good quality healthcare system and so that we can look after those people who cannot look after themselves ordinarily. It ought to be one of the first priorities of business for a government to put that money into health care. Why would 64 per cent of Australians support healthcare rebates, even if they were for wealthier people? It is because they know that under that small incentive based policy you provide great benefit for the healthcare system. Not only do you give a rebate, the 30 per cent rebate given by the Australian government, you encourage those people who can afford to put more of their capital into private health insurance to do so. They put more of their capital into the healthcare system and so the total pool of people putting money into healthcare increases. It is better for every stratum of Australian society. That is good public policy.

That is why the coalition is so committed to these measures. It is why we introduced them. It is why the coalition is fighting so hard for the private healthcare rebates. We know that this produces a better healthcare system for every person in this country today. That is an inescapable fact that the government refuses to acknowledge. Instead, it focuses on class warfare, cleaners versus billionaires—its fake construct. If focuses on anything that will disguise the fact that it is desperate for revenue because it is throwing away billions of dollars of Australian taxpayers' money on every crazy project going around. Industry that cannot compete? Here is $3 billion. Couple of hundred workers in a key seat? Have another billion.

The Prime Minister responded to a tweet of mine. She said that Labor is providing $3.5 billion for the aluminium industry. It is vey unusual for the Prime Minister to respond to a backbencher on Twitter, but she did—her team did, I should say: JGteam. As I tweeted back to her, it is not the Labor Party that is providing that $3.5 billion for the aluminium industry; it is the Australian taxpayer. It is not her money and it is not the Labor Party's money. She is taking that money from hardworking Australians—or in this case borrowing at high interest rates money that will have to be repaid by future Australians—and giving it to the aluminium industry. It just so happens that the $3.5 billion that the Labor Party and Julia Gillard have now handed to the aluminium industry on behalf of Australian taxpayers is the same amount of money that the abolition of the private healthcare rebate will recoup in the first year. Once again, every time you hear one of these announcements from the government, you know that there is a significant price to pay in relation to good public policy. Every dollar of funding provided for by the private health insurance rebate is estimated to save $2 in costs paid by private health insurers—that was determined by Econtech in 2004—and it could be even more. It is a worthwhile public policy goal to have as much money going into health and into education as possible, and it is not unreasonable at a governmental level to put in place incentives in order to encourage people in society to do so. It is a proper function of government to encourage people to put their capital into health and into education. That is what this public policy does. We know private hospitals today treat 40 per cent of all patients in Australia. Private hospitals treated 3.5 million people in 2009-10. They are already doing a significant amount of the work that cannot be done by the public system. So why would we interfere with a system that is making it easier for us to administer public hospitals by getting people who can afford it out of that system? Any measure that would damage that system or encourage people back to the public health system should be opposed.

Most people in my electorate have private health insurance. In fact, over three-quarters of my electorate has private health insurance today. The people who can afford it and the people who cannot afford it view it as a worthwhile use of hard-earned capital. It is appropriate that the government provide incentives, not subsidies, for people to take out private health insurance—and the government knows it. It is desperate for revenue to get into surplus. This is low-hanging fruit for the government to target—the people who put aside their hard-earned money into private health—and that is why I oppose this legislation.

Karen Andrews (McPherson, Liberal Party) Share this | Link to this | Hansard source

Today I rise to speak on the Fairer Private Health Insurance Incentives Bill 2011 and associated bills. I note that it is the third time this legislation has been brought before the parliament. I do not support this bill. It is yet another Labor government attack on the aspirations of all Australians, their choices and their cost of living.

I would like to begin by highlighting the poor history that Labor has on this issue and what appears to be an entrenched pattern of behaviour—which is not to honour its promises. At the 2007 election, Labor promised Australians that if it were elected to government all existing private health insurance rebates would be retained. Like most of the promises made by Labor, it was a commitment that it would not keep. In May 2009, less than two years after forming government, the Labor government announced that there would be changes to private health insurance. This was near the beginning of what would be a long list of appalling policy backflips from this government. I am not sure whether this was a promise that the Labor government set out intending to keep or whether it never had any intention whatsoever of keeping it from the start. However, whatever its intentions were, the reality is that the Gillard government is pushing ahead with its poor public health policy, walking away from a key commitment and demonstrating little regard for the impact that this will have on the everyday lives of millions of Australians.

As Michael Roff, Chief Executive Officer of the Australian Private Hospitals Association, recently said:

Means testing the private health insurance rebate will affect everyone. If you have health insurance you will pay more, regardless of your income. If you rely on the public system you will wait longer for treatment and the increased cost to taxpayers will outweigh any savings the government makes.

Anyone who tells you that you won't be affected doesn't understand the full impact of the measure.

The Gillard government's plans to means test the private health insurance rebate through this legislation will mean that private health insurance becomes more expensive for 2.4 million Australians. For these people there will be an increase in their premiums, which, depending on their income tier, will be 14 per cent, 29 per cent or 43 per cent. This is a significant hit on household budgets, and it comes at a time when singles, couples and families are continually being hit with rising costs.

The 30 per cent rebate is only a relatively small part of total healthcare expenditure—less than 10 per cent. It is important to note that the rebate has increased proportionately by only 0.2 per cent over 10 years. It is therefore hard to rationalise the claims by the Labor government that this is the fastest growing area of health expenditure. It is also difficult to understand why, when this rebate has not escalated significantly over the past 10 years, the Labor government is prepared to inflict an additional cost burden on so many Australians.

I would now like to look at some key statistics relating to private health insurance—statistics that demonstrate the inherent danger in Labor's proposed changes. Over 12 million Australians or over 52 per cent of our population have either hospital or ancillary or both types of private health insurance cover. Over 45 per cent of the population—that is, approximately 10.3 million people—has hospital cover. Figures for 2011 from the Australian Health Insurance Association, now known as Private Healthcare Australia, show that 71,174 people from my electorate of McPherson on the Gold Coast are covered by private health insurance. The fact that such a large proportion of Australians seek to have private health insurance cover is a positive, and it should be recognised as such. It should not be seen by the Labor government as another opportunity to impose a disincentive, which is precisely what means testing the private health insurance rebate is.

I note particularly our senior Australians who, as they age, become more frail and focused on their health needs. By taking out private health insurance our older Australians—pensioners, part-pensioners and self-funded retirees—find peace of mind knowing that they have chosen their health coverage and are not reliant on the public system. There are two important aspects which Labor will be harming: firstly, the choice of individuals to take out private health insurance and the opportunity and means to do so; and, secondly, the pressure which is taken off the public health system by the private health system.

The impact on seniors is significant. On the Gold Coast we have a large seniors population—people who have worked hard, saved and done their very best to get ahead. And now, at a time when their earning potential is likely to be not as great as it was five, 10 or maybe 20 years ago and they have reached the stage in their life where they need more health and medical support, they are faced with difficult choices because the government is going to means test the private health insurance rebate. What can they do? They can reduce their overall expenditure, which for many is simply no longer possible, they can reduce their level of private health cover or they can withdraw from the private health sector altogether and rely on the public health system. None of these are attractive options. None of our seniors should be placed in a position where they need to be considering this decision.

The government is attempting to justify these changes by claiming only the rich will be affected. This is just not true. I mentioned earlier that there were 12 million Australians who have hospital cover, ancillary cover or both types of private health insurance cover. Government figures show that 5.6 million people have an annual household income of less than $50,000 and, of those, 3.4 million have an annual household income of less than $35,000. These are not rich people, as claimed by the government, and it is their premiums which will rise courtesy of the Gillard government's private health insurance changes.

We are fortunate enough in Australia to have a healthcare system that allows us to present to a public hospital and receive treatment at no cost. This is a principle supported by both sides of politics in Australia. What we do not want to do is push people out of the private health system and force them into the public health system. The government claims it is trying to get the balance right, but the reality is that these proposed changes will not get the balance right. They will simply overload an already stretched public health sector.

The public health system in Australia is under pressure, there is no doubt at all about that, and we need to take steps to alleviate that pressure not increase it. An obvious way to do so is to encourage more patients to access private health providers. Private hospitals treat 40 per cent of all patients in Australia, equating to 3.5 million patients in 2009-10. And most of the elective surgeries are performed in private hospitals as well. The private health insurance rebate has seen an additional eight million patients treated in private hospitals over the past 10 years. This has taken pressure off our public health system and has saved taxpayers $26 billion. We need to continue to encourage Australians to take up private health insurance cover. We should not be implementing policies that will force people out of private hospitals and into the public system. In 2009-10 there were approximately 37 registered private health insurers offering a range of policies. Approximately $12.23 billion of benefits were paid by these private health insurers to policyholders during this period.

There is no doubt that this legislation will drive up the cost of living and detrimentally affect those millions of Australians I mentioned earlier who are not rich but have private health insurance. For those Australians who do have private health insurance there will be an effective increase in their premiums of between 14 and 43 per cent. Premium rises are already driven by several factors, such as an ageing population, that increase utilisation and benefit outlays. Younger people are also forgoing health insurance and this has resulted in adverse selection, despite the fact that they will endure higher premiums the longer they do not take up insurance. Taking into account these factors, which already play a role in premium increases, it is amazing and very disappointing that this government is still happy for premium increases of between 14 and 43 per cent to take place.

People in my electorate of McPherson on the Gold Coast are already hurting from increases in the cost of living and they cannot afford yet another Labor government induced price increase like we have seen in electricity, water, petrol and groceries. The southern Gold Coast also has a significantly older population. Those who have private health insurance will be hit hard. Many of these seniors are on fixed incomes and these increases in their premiums could force them out of their private health cover altogether. There are people who just will not be able to withstand these increases and they will either opt out of private health insurance or change to less expensive coverage.

The government knows this but claims that there will only be 27,000 people with private health insurance who will drop their cover. But a Deloitte analysis of the changes predicts significantly different figures. Deloitte's figures show that 175,000 people will withdraw from private hospital cover in the first year of these changes. Their analysis also predicts that 583,000 people will downgrade their private cover. Medibank Private for example predicts that 37,000 of its members will drop their cover, while 92½ thousand will downgrade their cover. Deloitte's analysis predicts that over the following five years 1.6 million Australians will drop their private health cover and 4.3 million will downgrade it. The people who drop their private health cover will end up in the public hospitals. Why would a government seek to implement a change such as this, which further puts the squeeze on our already stretched public hospitals?

The public health system on the Gold Coast is already under significant pressure to deliver the health services needed in a region that has both a growing and an ageing population. I believe that we are a nation of people who ultimately want to help ourselves by making the right choices for ourselves and our families. Australians invest money towards their health care and by doing so help alleviate the costs of government. If cheaper outcomes are achieved for government and choice of healthcare service is achieved by individuals then we ultimately reach a mutually beneficial balance between costs and service providers. The Gillard government's changes to private health insurance will not do this; but rather exacerbate current public health system pressures and push up already high costs of living.

I would like to make it unequivocally clear that I am extremely concerned about this bad health policy proposed by the Gillard government. The people of McPherson, particularly pensioners and low-income earners, will be most vulnerable to these changes. While Labor remains consistent about its inconsistency in policy commitments, we on this side of the House stay committed to our opposition to these changes. We oppose the means testing of the private health insurance rebate and increases to the Medicare levy surcharge.

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

Order! It being 2 pm, the debate is interrupted in accordance with standing order 97. The honourable member will have leave to continue speaking when the debate is resumed.