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

I rise to support the amendment moved by the Leader of the Opposition earlier today concerning the Fairer Private Health Insurance Incentives Bill 2011. The leader made the point that this abandonment of the solemn commitment to the Australian people by the government not to touch the tax rebates for private health was made soon after the 2007 election. The government has no mandate for this change in policy because in fact the last election was best described as a dead heat. In fact, the government won the negotiations, not the election.

Previously twice rejected by the parliament, this legislation has been brought back again by the government to test the House, despite the cast-iron guarantees of former Minister Roxon and Prime Minister Rudd prior to the 2007 election that they were totally committed to fully retaining the tax rebates. Even as late as 24 February 2009 the minister was saying that the government was firmly committed to retaining the existing private health rebates. Just 2½ months later the budget announced the abandonment of that commitment. It is inconceivable that, 2½ months before the budget, the Minister for Health and Ageing did not know what the intentions were.

This government has an appalling record of delivering on its promises. First, it was smaller things: GroceryWatch, Fuelwatch and laptops in schools for every student. Then came the bigger backflips: new taxes, starting with alcopops, AQIS charges, abandoning green loans and pink batts—which I must say they had to. Then came the really big ones: mining taxes and the most celebrated of all, the carbon tax, which has been abandoned twice, once in its abandonment and once again in the commitment not to introduce it. Then, of course, there was the abandonment of the commitment to the member for Denison on poker machines. In amongst all this we had the government turn its back on its electoral promise not to touch the private health insurance arrangements.

In the Grey electorate, surprisingly, almost half of its voters are covered by private health insurance—47.5 per cent, or 66,233 people. This is really quite remarkable, because there few places in Australia where a member of a private fund could expect less. There are just two private hospitals in the electorate: community based hospitals at Moonta and Ardrossan. There is a little history here. Both houses of this parliament supported motions condemning the South Australian government just last year for removing a small amount of public support for these hospitals, which only confirms Labor's ideological hatred of the private sector.

The fact that health cover is sold throughout my electorate at all is a telling statistic of people's general distrust in the ability of the public system to deliver when they need it. They retain cover because they are worried about the big issues in their lives: the complicated surgery, particularly elective, knees, hips and back operations and cancer treatments. The voters and consumers in Grey make a value judgment, even though they cannot access private hospitals on a regular basis, that they may need to go to Adelaide for these extensive services, to forgo much of the value of their private health insurance. Still, 47.3 per cent of them think it has value.

We know that, despite the government's promises to fix the blame game once and for all and to fix the health system, little has changed. Waiting times extend, queues get longer and key workers continue to burn out. Last week we had the extraordinary scene of the new Minister for Health, Ms Plibersek, dumping on the Tasmanian government during question time in response to a question from the member for Denison. I quote:

I can inform the House and those members who are interested that we will be requiring much closer oversight of the Tasmanian government's management of the health system in Tasmania. I think the saying might be 'We will be all over them like a rash' because this withdrawal of effort in elective surgery is very bad for the people of Tasmania.

She went further to rule out any Commonwealth takeover of the Tasmanian health system. Hang on! I thought there was a commitment to take the system over if the states did not perform, In fact, on 3 March 2010, not two years ago, then Prime Minister Rudd committed $30.7 billion to a takeover. Of course, that did not happen either. It is hard to remember something that this government has promised and delivered on, unless it is the error riddled, exorbitantly priced Julia Gillard school halls project.

The problem with this government is that it measures success in dollars borrowed and spent. It does not measure the outcomes or value for money. The Labor Party does not seem to get that, if someone chooses not to access public services, instead privately funding their personal access, it benefits everyone. It takes pressure off the public sector, it reduces costs, it provides choice and, most importantly, it fosters competition and raises the bar for all. Private health insurance is a demonstration, intentional or not, of individuals voluntarily taking a greater load. By comparison, these bills not only remove the taxation rebate for higher income earners but also impose higher penalties if they do not, supposedly of their free will, take up private insurance. It is a totally mixed message. The government wants the voters to insure, and it will effectively fine them if they do not, but it is not going to help them at all. In fact, it is going to make insurance much more expensive. The increase in the Medicare surcharge is just the latest example of a new tax.

It has already been mentioned in this debate that serious concerns at the level of dropout have been raised by industry and independent analysts. Deloitte expects 175,000 to drop out, 583,000 to downgrade and, over five years, 1½ million to quit private health insurance. Medibank Private's figures would tend to confirm these figures. This result can lead only to increased premiums for those who remain in private health insurance and increased demand on the already stretched public sector. Deloitte estimates a 10 per cent increase in premiums. I have just listened to the member for Lyne wax lyrical about this move to remove the taxation rebate and quote the head of Ramsay Health Care. I hope he is right, because if he is not the sector will be destroyed. It is worth throwing our minds back five or six years to the wine industry forecast for that industry. Perhaps Ramsay Health Care does not have the answer to every equation affecting private health insurance.

I spoke earlier about Labor's failures and abandonment of promises. One thing is consistent, though: everything costs money and the government is sustained by borrowing billions. This move by the government is a grab for cash but, much worse than that, it will cause irreparable damage to our private healthcare sector, and this will lead to similar damage in the public sector. For that reason I support my leader's amendment to the second reading, which calls for the government to delay the introduction of this bill until after an election has been called.

Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

In following the eloquent contribution of the member for Grey on the Fairer Private Health Insurance Incentives Bill 2011, I also support the second reading amendment of the Leader of the Opposition. I also support the contributions of all of those on this side of the House who have spoken on the bill. In a few minutes I will address some of the key concerns but, as the member for Grey pointed out, this side of the House has outlined in great detail the arguments about why this legislation will be so damaging. I want to deal with this debate in a couple of parts. I want to focus on the betrayal and then on the detrimental effect this legislation will have on private health insurance and on the public system—the detrimental effect it will have on health across Australia.

On this side of the House it has been said, quite rightly, that those opposite have always hated private health insurance. It is important to go back, because when the private health insurance rebate was introduced it had an immediate positive effect on private health insurance numbers. Those opposite knew that their deep opposition to it, their deep desire to rescind it, was not sustainable in the public arena. So, not only did those opposite promise before the 2004 and 2007 elections to maintain that policy position, which was introduced by the Howard government, but also they went out of their way, they bent over backwards, to tell the Australian people that the policies would be maintained. They did so in the full knowledge that fessing up before winning government was politically unsustainable and that once in government they would start to move away and perform their act of betrayal on the Australian public.

To comprehend the gravity of this betrayal it is necessary to go back, as previous speakers have done. The Leader of the Opposition pointed out late this afternoon the litany of quotes from previous Labor health spokespeople, including the now Prime Minister, whom he quoted as saying was sick and tired of being asked over and over again for Labor to maintain their commitment. The reason they were asked over and over again was that we knew in our heart of hearts that they had their fingers crossed behind their backs on this policy issue. They knew they would say one thing before the election but in government they would act to betray the promise they made.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

Did you miss the 2010 election?

Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

If the health minister is so sensitive to interject, that is fine. Let me make the obvious point: not only did those opposite promise they would maintain these rebates but the then leader signed a document pledging that he would keep the private health insurance rebates. It has become a very familiar story. It is not just a promise made by those opposite, it has become very familiar, hasn't it? They will even sign documents they know they are going to betray.

The member for Denison knows this well. He thought, innocently, that not only had the Prime Minister made a personal promise to him but she had signed a document with that in it. But, still, as he discovered at the start of this year, it was not worth the paper it was written on. I will now go to the letter from Kevin Rudd, the member for Griffith and then leader of the Labor Party:

Federal Labor has no plans to require private health insurance funds …

Et cetera. I have here a copy of this letter, which was to Dr Michael Armitage, the chief executive of the Australian Health Insurance Association. Well, that was not true. Labor had plans—secret plans. Members of the public heard that promise. Within a few months Labor were in office and they were restating that promise right up until the beginning of 2009, when they backflipped. As the Leader of the Opposition eloquently pointed out, those opposite did not run around screaming from the rooftops during the last election that this was their solemn policy proposal. Those opposite know that.

Just a few minutes ago we heard the member for Lyne outlining his position on this legislation. He will support the government on this legislation. I would be interested to know whether the member for Lyne, when he was seeking re-election, communicated directly and clearly with his constituents what position he would take on the private health insurance rebate. It may well be that in his re-election material the member for Lyne stated boldly and clearly to his electors that he would be voting this way on this sort of legislation if it arose again. If that is the case, I am sure the member for Lyne will happily produce those very clear, unconfused specific promises he made to those in his electorate with private health insurance.

These changes will be damaging. There are a number of issues related to private health insurance that not only affect private health insurance numbers and premiums but affect the entire system. As previous speakers have outlined, not only will these bills directly affect the premiums of those affected; just as significantly they will have the effect—which independent experts have outlined in the public arena—of people dropping out of private health insurance and reducing their cover. That sets off a downward spiral. As the pool of privately insured people reduces, the premiums for those remaining in that pool rise, kicking off a vicious circle of rising premiums forcing more dropouts, forcing rising premiums. As the Leader of the Opposition pointed out this afternoon, Deloittes have estimated a 10 per cent premium rise.

Those opposite only need to go back and look at the statistics of where they left private health insurance when they were last in government. Today we have a little over 50 per cent coverage of private health insurance. Back in 1996 it had dropped below 35 per cent, to 34 per cent. Even former health minister Graham Richardson, all those years ago, acknowledged that, once the level of private health insurance begins to fall, it has a very damaging effect on the entire public health system. In the remaining minutes, I want to address that point.

As people reduce their cover or pull out of private health insurance, they put more pressure on the public hospitals. That is the point Graham Richardson made many years ago. It is all there in Hansard back in 1996, when a then new health minister, Dr Michael Wooldridge, was tasked with dealing with this issue. To those elderly people who have paid for private health insurance for years and years—decades, in fact—the minister at the table, the Minister for Health, would say that they are unaffected by this if they are below the income thresholds. But what is not understood, or what this government does not care about, is that they are very much affected by the premium rises that result from the shrinkage in the pool of privately insured people. That is the price they pay for this government's failed policy.

The government knew they would do this all along. When they were in opposition, they knew it was unsustainable to be honest with the Australian people. There was always, with a Labor government, going to be this sort of legislation. We warned about it. It is here. As the Leader of the Opposition rightly pointed out this afternoon, we will see the same thing over and over again in areas like education and other areas of policy as long as those opposite remain in government.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

I rise to support the second reading amendment to the Fairer Private Health Insurance Incentives Bill 2011 moved earlier this afternoon by the Leader of the Opposition, because I think it is a prudent amendment which speaks for itself.

Here we go again talking about trust. I am still a relatively new member and already I have lost count of the number of times that I have come here to discuss legislation that represents an enormous breach of faith with the Australian people. It is quite depressing that here we are at the start of a new parliamentary year and already we are talking about another broken promise, another betrayal, another backflip.

Today we learnt in the House about some comments made back in 2007: 'Labor is committed to the maintenance of the private health insurance rebate, and I have given an iron-clad guarantee of that on a number of occasions. I grow tired of saying this. Labor is committed to the 30 per cent health insurance rebate.' Then what changed? But backflips are something that this government is used to. Before the election in 2010, on 12 August, the Treasurer on The 7.30 Report was asked about the issue of the carbon tax, and his response was:

We have made our position very clear. We have ruled it out.

On 15 August, on Meet the Press on Channel 10, a journalist asked the Treasurer:

Can you tell us exactly when Labor will apply a price to carbon?

Wayne Swan's response was:

Well, certainly what we reject is this hysterical allegation that somehow we are moving towards a carbon tax … We certainly reject that.

They went on to do an absolute backflip. I have just come from the Main Committee chamber, where I was speaking on the appropriation bills, in which $3.6 billion has been appropriated for the clean energy legislation. That is just another example of the betrayal of this government.

The second reading amendment to this bill basically speaks to putting this legislation on hold so that it can be assessed with full diligence by the Australian public after an election. This is another example of the Labor Party trying to wiggle their way off the hook of their own economic incompetence. More to the point, we are also here again discussing a so-called health policy that might as well have come from the office of the Treasury. It is worth reflecting that, despite the main bill before the House being named the Fairer Private Health Insurance Incentives Bill 2011, it has very little to do with fairness but everything to do with dollars—just like the alcopops tax or the attempt to slash the cataract rebate. This is Treasury policy dressed up as health reform.

This is the third time that 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 Minister Roxon on 26 September 2007.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

You slept through 2010 too, didn't you.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

We can have the debate about credibility. You may have just missed my comments on the Treasurer with reference to the carbon tax. I can repeat them but they are there in Hansard for you to peruse. Yes, both sides of parliament are probably not without blame. But if we are making a point about credibility, I have got ammunition.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

The GST 'never, ever'—how about that?

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

As recently as 2009, Roxon said the government was committed to retaining the existing rebates.

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

Mr Deputy Speaker, on a point of order, I just ask that the member be heard in silence, as a courtesy.

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

The chamber is relatively quiet at the moment. I am keeping an eye on that.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

Mr Deputy Speaker, I would ask that the member address the former health minister by her proper title.

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

Thank you, Minister. I am sure it will be to the benefit of everyone if we do stick to formalities.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

I thank the Deputy Speaker and I will do my level best to apply proper protocol. As recently as 2009, Roxon said the government was committed to retaining the existing rebates. A few months after that the wheels fell off and now some 2.4 million people are facing immediate increases in their premiums of 14 per cent, 29 per cent or 43 per cent, depending on how much money they make.

Before I go on, I would like to debunk this ridiculous, ludicrous theory the government is running that private health insurance is somehow the exclusive playground of the well-to-do. The Labor Party wants you to believe that private health insurance, which covers half the population, is a rich man's luxury. What a load of rubbish. Over 5½ million people who have private health insurance have an annual household income of less than $50,000, and 3½ million of them earn less than $35,000. We are not talking about the Packers or the Murdochs here. We are talking about older Australians who may be sick and do not wish to put themselves through the stress or the uncertainty of treatment through the public health system. We are talking about young parents with kids, trying to make sure their families are covered if the worst should happen. These are people who have made sacrifices in order to look after their own future and their own wellbeing. We should be applauding them, not slugging them with higher premiums. For Labor to argue that these people are living so high on the hog that they can afford to cop a bit more financial pain shows just how out of touch they really are.

The Treasurer came into the House today and talked about the strength of the economy. I met last week with a business owner who employs 80 people. He said to me, 'Scotty, it is tough out there—I have never seen it so tough.' There are increased energy costs; the list goes on. With reference to this legislation, cost-of-living pressures are biting and this is another tax that my people in the electorate of Wright could do without.

If this legislation passes, the results will be swift and potentially catastrophic. As you would expect, the first thing that will happen will be upward pressure on premiums, which will see a mass exodus from the private system to a public system that is already groaning at the seams. Those who elect to remain in the private system will be forced to pay higher premiums to retain current levels of cover or to take up cheaper policies with more procedures excluded. A report from Deloitte shows that around 175,000 people could be expected to abandon their private hospital cover and that more than half a million will downgrade. That is probably the more likely option, because there is that exit clause. The Labor government have got you there as well. On the way out, if you do not take the insurance coverage you are in for 1.25 per cent of your gross income. So they are going to tax you if you are not in it anyway. I suggest that you will see people wind back their insurance coverage and possibly stay in. Over five years you are looking at 1.6 million members leaving and 4.3 million downgrading.

These changes will also impose an enormous compliance burden on industry and individuals completing their tax returns. Private insurers will have to make significant changes to their systems to be able to adjust premiums according to incomes. It is not clear 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.

So why would anyone in their right mind try to do this? I will tell you. This government has inevitably succumbed to the same malady that eventually afflicts all left wingers: they have run out of other people's money. That they have managed to do it in just four years, after starting from a position of almost unprecedented national wealth, is an indictment of them and of the whole Labor philosophy. To support those comments I have Labor's debt figures for the last four years. I think it is interesting to reflect on those. Under Labor, in the 2008-09 year there was a deficit of $27 billion, in 2009-10 it was $54 billion, in 2010-11 it was $47 billion and in 2011-12—the reporting period—it is $37 billion, making a total of $165 billion.

The legislation before the House is an opportunity cost forgone as a result of the government trying to bring the books back into some type of order and return some type of economic credibility to its argument for pursuing a surplus. And this is one of the ways it is going to do it. It is going to put its hands into the pockets of mums and dads right across this country and force them to kick the tin a little bit more.

The reason the Labor Party is not bothered by the likely consequences of this policy is that in its heart of hearts it loves the idea of everyone being in the public health system. I am reminded of the famous quote by Winston Churchill about the inherent virtue of socialism being the equal distribution of misery. It seems particularly relevant here. Sure, our emergency departments are overflowing and the waiting lists in our hospitals stretch from here to eternity—we have now even created in our public hospital system a process that is a waiting list to go onto the waiting list; it sounds like a caricature out of something like Fawlty Towers or Yes Ministerbut none of that matters. The important thing is to make sure that nobody is better off than anybody else. Let me assure members that you cannot legislate a nation into prosperity.

These bills speak to fairness—the titles include the word fairer. I see nothing fair in them. One would like to think we have evolved beyond such bloody minded nonsense, but apparently not. I suppose we should not be surprised. Over the past four and a bit years the crowning achievement of the Labor Party on health policy has been to increase massively the number of public servants it employs. But that is what the so-called historic health reforms are: the states get more federal money to carry on doing pretty much as they always have done, as long as they employ another tier of bureaucracy to manage the whole thing. That is the Labor way. It is always a case of measuring inputs instead of outcomes. It is always about funding the expansion of the public service by slugging the private sector. The one thing it is not about is improving the lot of patients. Is it easier to get into a public hospital? Will I have to spend 12 hours at the ER before my kid gets some treatment? Is it easier for my Dad or Mum to get a hip replacement? Can I find a bulk-billing GP any easier than I could four years ago? As far as Labor is concerned the answer to those questions is: 'Who cares? Look at how much money we've spent. How impressive is that?' It is not impressive, it is a disgrace. Why? Because it is that attitude that has caused them to end up here, so short of cash that they are seriously proposing to save a few bucks by driving people back into a system that already cannot cope with demand. It is not right, it is certainly not fair and it deserves to be voted down. I encourage members of the House to support the amendment moved by the Leader of the Opposition.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

I rise today to speak on the Fairer Private Health Insurance Incentives, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) bills. I will be joining my coalition colleagues in voting against this plan by Labor, which will result only in cost increases for private health insurance of up to 43 per cent for households and put even more pressure on public hospitals, which are already under significant strain.

I represent an electorate of 730,000 square kilometres and nearly all hospitals in the electorate of Maranoa are public. There are two or three that used to be run by local government. There is one private hospital in Kingaroy but the rest are public. There are also private hospitals, owned by a health provider, that are combined with aged-care facilities in Crows Nest, Allora, Clifton and Killarney.

If this bill is passed some $2.4 billion will be taken out of the health system. The government will not put that money into the public health sector. It will put it on its bottom line to pay for its profligate spending and its mismanagement of the economy. That is why we see these bills before the House, notwithstanding the assurances that were given prior to the 2007 election, in which this government came to power.

I will be supporting the amendment moved by the Leader of the Opposition. I am sure that every member on this side of the House will be supporting that amendment. That amendment says that this bill should lie on the table and not be voted on until after the next election. In other words, let us take this issue to the people of Australia at the next election.

The government proposes to means test private health insurance rebates. It is absolutely wrong to assume that not enough people in rural and regional Queensland will be affected by the government's proposed means-test thresholds of $80,000 for singles and $160,000 for couples. The government does not understand that this will impact on the eight million Australians who live outside the capital cities. In fact, my own electorate, as I just described, is around 730,000 square kilometres in area with a population of almost 130,000, all of whom will be affected by these changes, should they pass both houses.

The Australian Health Insurance Association says that nearly 40,000 voters in my electorate have private health insurance. There are more, if you include the children of those families. The government says that around 30,000 people across Australia would quit private health insurance. I find the government's estimate incredible, when independent analysis says it is more likely that hundreds of thousands of people, up to as many as one million people over the next few years, will leave private health insurance—not the 30,000 people that this government claims. That is just fairyland stuff. It is a bit like its record when it comes to running a budget for this nation. It has no idea. No wonder their budgets are so far out, because their numbers on this are just totally unbelievable.

More than 2.4 million health fund members will face immediate premium increases of up to 43 per cent if the means test is introduced. Some 5.5 million Australians who are covered by private health insurance have incomes of less than $50,000 and, of those, three million have annual household incomes of under $35,000 per year—many of them in my own constituency of Maranoa. They cannot afford these extra costs.

The minister at the table will say that they will be covered by these bills and they will not be affected. When it comes to insurance policies and premiums the simple mathematics is that, if you have fewer people remaining in private health insurance and many of those people are in the middle- and high-income brackets—and many of them are—they will leave because of the implication of these bills on their private health insurance. When you have fewer people taking out private health insurance, what happens to premiums? They go up. And that is why more people on the lower income thresholds will leave because the premiums that they are paying now will be more expensive, and so they will opt out. The way in which the government is trying to sell this message to the Australian people defies logic.

Private health insurance has increasingly become a significant component of the Australian healthcare system; that is undeniable. The majority of Australians now hold some level of private health cover. In fact, private hospitals look after some 40 per cent of patients in Australia. In my own electorate of Maranoa there are close to 40,000 people who have private health insurance, and they make up a little over 40 per cent of the voters in my electorate.

I said earlier that we do not have many private hospitals in my electorate; but, like most Australians, regional and rural families and individuals want to have protection in the event of a serious medical emergency or just because the right thing to do is to take out private health insurance for some time in their life. Many see it as a lifetime commitment. It is not a commitment made on a year-by-year basis; it is a lifetime commitment. It also gives them—as the shadow parliamentary secretary for regional health services and Indigenous health, who is at the table, would know—the right to choose. It is about a question of choice. Across the entire country some 52 per cent of people hold private health insurance. It is the policies initiated by the coalition government which have led to such a high take-up of private health insurance across Australia. That is why we are going to defend our principles and our policies on this side of the House and not support this bill.

In 1997 the coalition introduced a one per cent Medicare levy surcharge on taxable income, and in 1999 the coalition government introduced the 30 per cent cash rebate. I want to talk a little bit about that tax rebate because often people say it is only for those people who pay tax; it is not. It is a cash rebate for people, including those on fixed incomes or pensions, who take out private health insurance. They get a cash rebate, and that cash is often a significant part of the cost of their private health insurance. If that insurance goes up and then there are increases in the cost of living as a result of the carbon tax, which comes in on 1 July, those people, the most vulnerable in many ways in our community, will start to say that private health insurance is one of those bills that they cannot afford to pay any longer, and they will opt out.

The year 2000 saw Lifetime Health Cover. From 2005, under a coalition government, the more elderly people in our community received greater rebates for taking out private health insurance. At every step of the reform process under the coalition, we saw more and more people taking out private health insurance. The figures speak for themselves. In the 12 months after the introduction of the 30 per cent rebate in January 1999, the percentage of Australians with private hospital health cover jumped from 30 per cent to 43 per cent. The numbers speak for themselves. People were voting with their feet. They took up private health insurance because of the way that the coalition government, led by Prime Minister John Howard, was committed to ensuring that more and more people should take out private health insurance, and people responded in droves by taking out private health insurance.

This has helped to keep downward pressure on premiums and also reduce pressure on our public health system. Regional hospitals like the South Burnett Community Private Hospital in Kingaroy in my electorate also accommodates visiting specialists for local residents. Any adjustment to the rebate that causes a cutback in demand in regional private hospitals will directly affect visiting specialists. They will just return to the cities and regional patients will no longer be able to readily access their services.

The public hospitals in western Queensland have visiting urologists, ophthalmologists and orthopaedic surgeons. These specialists leave large city practices to come out to my electorate. They still have to pay for their practice in the city, as the parliamentary secretary at the table would be aware. They have the cost of running that practice, yet they come out to bring their specialist services to rural and regional Australia because people are privately insured. What happens when these people opt out of private health insurance? The specialists will no longer come to these areas.

All specialists are important but one of the most critical specialists is the ophthalmologist, because for many people in rural areas their sight is a significant issue because of cataracts. Cataract surgery is giving people back their sight. When people have limited sight there could be some situations where that leads to an accident which otherwise could have been avoided if they had had better sight, and then that accident could lead to more complex health issues.

I say to the health minister at the table: you are welcome to come out to my electorate and visit some of the towns there. I will take you to visit the Royal Flying Doctors Service. For your own information, Minister, a third of the funds for the Royal Flying Doctor Service are raised by the local communities in order to bring a health service to their communities. They run rodeos, raffles and gymkhanas. People donate a beast and have a camp draft to raise money to bring a health service to their community. I am sure that if the Reverend John Flynn were with us today he would say that what this government is doing is absolutely wrong and that it will have a significant impact, particularly on those people in rural and regional remote areas who, in general, are on lower incomes than those living in more populated cities. It is just wrong to assume that because there is only one major private hospital in the Maranoa electorate, and three smaller ones, we in south-western central Queensland would not be affected by this proposal. The initial exodus of people from private health insurance is estimated to push up private health insurance by about 10 per cent, and these are independent figures.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

They are not independent. They were paid for.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

They are independent figures. When we look at the numbers on the Treasury benches on the other side of the House and look at their budgets and look at the way they are running this economy, and we have another budget blowout, I think I would believe independent analysis and independent research more than some of the stuff that might be coming from the way this government manages the economy.

The other thing I want to talk about is that this government promised that it would not touch the private health insurance prior to 2007. In September 2007 the then Health Minister, Nicola Roxon, released a media statement which said:

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

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

Madam Deputy Speaker, I raise a point of order. Speaker after speaker continues to ignore the 2010 election, where Labor clearly took this policy to the people.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

It is not a point of order. The member for Maranoa has the call.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

In fact, Madam Deputy Speaker, it is disorderly by the minister.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Maranoa is an occupant of the chair and he should realise that is not disorderly, but it is not a point of order.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Thank you, Madam Deputy Speaker. I take your ruling. What the former minister said in 2007 is on the public record; it is out there for all to see. What we are debating here is the future of the rebates for private health insurance.

I want to end—and I will leave this message for those opposite—with something that was sent to me by one of my constituents in the town of Kingaroy in the South Burnett, Elyssa Perrett. She wrote:

I would greatly encourage you as an elected representative to stand up for freedom of choice and vote against the removal of this subsidy and encourage others to do so.

I have to be the voice of my constituency. They do not have a voice in here. I am their voice and Elyssa is absolutely right. That would be a reflection of people right across the electorate of Maranoa. I will be voting against this bill. (Time expired)

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

Australia has one of the best health systems in the world, largely due to the balance which exists between the public and private health sectors. This Labor government is willing to put our health system at risk—grave risk. As of December 2010 more than half the population had some form of private health cover and during the course of the year to April 2011 private health funds had paid $12.4 billion in benefits towards the health care of 11.7 million Australians who held some form of private health cover. In the next financial year the Labor government proposes that individuals earning $83,000 or more per annum or families earning $166,000 or more will have their rebate for private health insurance decreased. Some people will receive no rebate at all. This is essentially a way of taxing the rich without calling it a tax. It is socialism in its purest form. Although Labor will make out that it is no modern-day Robin Hood taking from the rich to give to the poor, this legislation is going to have significant impacts on everyone, no matter what their financial situation is. Furthermore, it is yet another example of the Prime Minister saying one thing and doing another. Whilst shadow minister for health the now Prime Minister unequivocally promised, 'The private health insurance rebate is here to stay in its current form.' Mind you, the now Prime Minister also stated unequivocally just prior to the 2010 election, not long after her rise to power, 'There will be no carbon tax under the government I lead.'

When these proposed changes were first announced in 2009—

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

How is it different from the GST?

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

I can hear the minister crying out but she should sit there and listen. I have something important to say.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Riverina will be heard in silence and he does not get to reflect on the people at the table.

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

Yes, Madam Deputy Speaker. When these proposed changes were first announced in 2009 the Australian Treasury projected that following such a policy change 25,000 high-income consumers would withdraw from their private cover. A report by Deloittes estimates that 1.6 million consumers will withdraw from their private hospital cover over five years and 4.3 million consumers over five years will downgrade their level of private hospital cover following a policy change to the private health insurance rebate. The report also estimates that 2.8 million customers over five years will withdraw from their general treatment cover and 5.7 million consumers over five years will downgrade their level of private health cover. That is a total of 4.4 million people withdrawing from their private health insurance and 10 million people lowering their private health insurance level. So whilst Labor may stand here and say that the majority of people holding private health insurance, approximately eight million people, will not be affected, it does not appear that they have considered that their actions will make people think again about holding private health insurance.

These changes also pose a great risk to services in regional and rural communities, communities which are the heart of my electorate of the Riverina. There is already talk of doctors withdrawing services in rural communities and private hospitals and the services they provide will be at risk. In my electorate there are 66,683 people, at latest figures, covered by private health insurance. This means there are 66,683 people in the Riverina who will be affected by a change to the private health insurance rebate. Labor will tell you that this is not the case at all—and I do accept that these people may not have their rebate affected. However, a change to the rebate scheme will affect them nevertheless, as these changes will see an increase of 10 per cent to private health insurance premiums. This is 10 per cent above what would otherwise be expected. At a time when cost of living pressures are already casting a heavy burden on all Australians, the rise in private health insurance premiums is just another con and just another cost placed on people due to careless legislation proposed by this government.

The Prime Minister even acknowledged, whilst the shadow minister for health, that private health insurance rebates are part of the family's budget when she told the Sunday program with Laurie Oakes:

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

Where is that understanding now? Why does the Labor government believe it is acceptable now, in 2012, to place this additional pressure on family incomes? It would seem to me, and to many others too, that this government has a financial black hole that it needs to fix and that that bill has been introduced not for the good of the health system, mind you, but because Labor believes it will get its budget back into surplus. I will believe that when I see it.

The government has wasted billions of dollars and now it expects Australians with higher premiums on their private health insurance to pay for Labor's waste and Labor's mismanagement. As the member for Maranoa just pointed out, many specialists, including ophthalmologists, come out to rural areas because of private health insurance. Will this happen in the future if, as the member for Maranoa asked, people opt out of their schemes? This is just another nail in the coffin of the already tightened family budget. Families are doing it tough. Nowhere is this more evident than in regional Australia, in the member for Flynn's electorate, in the member for Maranoa's electorate, in the member for Cowper's electorate and certainly in the Riverina where health services are not what they should be and there is so much uncertainty due to volatile markets for farmers and certainly volatility in water availability.

Private hospitals treat 40 per cent of all patients in Australia, and in 2009-10 they treated 3.5 million Australians. Furthermore, it was private hospitals that performed 64 per cent of all elective surgeries—well over half of all elective surgeries performed. In Australia our hospitals are currently operating at high occupancy rates. With changes to the private health insurance rebate ensuring people will withdraw from private hospital insurance, this will increase the demand on already-stretched public hospital services. Any changes to the private health insurance rebates are going to have a significant impact on these figures and the use of private hospitals for treatment and for surgery. This increase will require patients to be prioritised on their level of need, and will ultimately result in longer waiting times and queues for services, particularly elective surgery. To alleviate the long waiting lists which would develop, the government would need to invest in increasing capacity for hospitals.

These waiting lists are already under undue strain in my home state of New South Wales, where, after 16 years of a Labor government who just let them grow, the Nationals-Liberal coalition government under Barry O'Farrell and Andrew Stoner are working hard to reduce them. But adding an influx of people to the system will only place further burdens on that system. And I know that the health minister, Jillian Skinner, in New South Wales is doing her utmost to ensure that long public waiting queues at hospitals are minimised.

Wagga Wagga cardiologist Dr Gerard Carroll has stated that the public health system is already 'bulging at the seams', and if patients from the private sector opt out to the public sector the imbalance will mean there are fewer opportunities for public patients seeking elective surgery. Often these public patients are in chronic pain and need elective surgery to help them. If this goes through, they will not be able to access that in the time frame that they so desperately need. The Deloitte report expects that the cost of servicing this increased demand for public hospital services will outweigh the savings to the government from the means testing of the rebate. As demand for public health care grows, the government will eventually need to make investments in increasing public sector capacity by increasing the number of new beds, operating theatres, labour and funding. Every dollar of funding provided for the private health system rebates saves two dollars of costs which are then paid by private health insurers.

Once Labor gets these changes through, then we can rest assured that the next changes will undoubtedly be to remove funding for private schools, on the same premise as this legislation—that 'the rich can afford to pay for it'. We heard the member for Corangamite this afternoon talk about these 'rich' and call them 'privileged'. Well, that is disgraceful. They are not privileged; they are just working families—hardworking Australian families. Private schools depend on fundraising by parents and friends associations, and a large number of wealthier families are opting to send their children to public schools due to, in some cases, a wide range of subjects and programs offered. As with private health insurance, private education is not just entered into by rich people. Hardworking Australian families often go without to ensure their child can access the best education they can afford. If the government opts to remove funding for private schools, then there is the likelihood that some will be left with no option but to shut their doors, leaving students to find education elsewhere and teachers without jobs.

It is important that Australia maintains our world-class health system, and that we ensure there is access to the health system for everyone. The current public and private partnership we have works extremely well, and helps to ensure Australians have access to the services they need, to the services they deserve. We need to guarantee Australians that they will continue to have access to health services without undue waiting times and undue private health insurance premiums. We need to be encouraging more people to take up private health insurance, not hitting them over the head with a sledgehammer for doing it and introducing legislation such as this that will only discourage people from going into private health.

The government and the Greens have labelled a deal over private health insurance as a 'win for fairness'. The health minister has reportedly already secured Greens support for the government's health legislation. The legislation allows means testing of the private health insurance rebate and an increase in the Medicare levy surcharge.

It means—

the health minister said—

that low income Australians won't be subsidising the private health insurance rebates of much higher paid Australians …

I hope I quoted you correctly there, Minister.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

You did. Well done.

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

Thank you. Labor has been trying to means test the public health insurance rebate for nearly three years. It represents a $2.4 billion boon to the budget. And here is the rub: a $2.4 billion boost to the budget bottom line. This is a win-win for Labor. Firstly, it gets to whack the aspirational, the successful, the so-called privileged, as the member for Corangamite called the middle class in his matter of public importance dissertation today. I am not sure how rusted on hardworking, blue-collar Labor families with two incomes just to pay the bills, with a mortgage, perhaps with three kids and rising power costs would react to being called privileged. But Labor has turned its back on these people. They are now the forgotten families. They are families who are tired of the party which actually once had a vision but which now does backroom, dodgy deals with the minority Greens and Independents just to stay in office, just to stay in power. There is nothing this government will not do or say or will not be to stay in office.

The other reason Labor is so keen to push this bill through is that it adds $2.4 billion to the Treasury coffers. For a government which is borrowing $100 million a day, which has a $38 billion deficit and a $200 billion debt, an extra $2.4 billion will be a welcome respite. In essence, the name of this bill is a misnomer—the Fairer Private Health Insurance Incentives Bill 2011. This is not fairness; this is class warfare by any other name. If and when this gets through, private schools will be the next to face the Labor budget blowtorch. And all for what? To hit and hurt aspirational working Australian families and taxpayers.

The amendment put forward by the Leader of the Opposition is commendable and appropriate:

That all words after 'That' be omitted with a view to substituting the following words:

'this bill, and the related bills, not be proceeded with until after the Parliament has met in the 44th Parliament.'

In other words, we should put this off until after the next election, which cannot come soon enough. It is not just this side of the House saying this but people out in voter land, the Australian public. It is certainly people with private health insurance, those so-called aspirational families. That more than anything would be delivering fairness.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

We have a health system in this country that depends on the interface between the private and public systems. Without the private sector the public system could not cope with the demand for services. Without the public sector there would be no safety net to ensure that all people get the medical care they need and deserve. We have a system that uses a combination of price signals and waiting lists to regulate its operation.

The reality is that the members opposite have a pathological hate of the private health insurance system. The Fairer Private Health Insurance Incentives Bill 2011 represents a step in their quest to dismantle private health insurance. They want to ensure equity by herding everyone into a public system that just will not cope. That may sound illogical, but this is Labor ideology at work. This represents just another broken promise from a Labor Prime Minister who cannot be trusted. When she was shadow health minister she repeatedly stated her support for private health insurance and the private health insurance rebate. She said:

The truth is I never had a secret plan to scrap the private health insurance rebate.

In 2004 she said:

Labor is committed to the maintenance of this rebate and I have given an iron clad guarantee of that on a number of occasions.

Later in 2004 she said:

I grow tired of saying this—Labor is committed to the 30 per cent private health insurance rebate

And this deception is not limited to our current Prime Minister. The former shadow health minister, the member for Gellibrand, said in a media statement on 26 September 2007:

Federal Labor has made it crystal clear it is committed to retaining all existing private health insurance rebates.

Let me move on to the current prime ministerial aspirant, the member for Griffith, who as opposition leader in a letter to the Australian Health Insurance Association before the 2007 election said:

I have made it clear on many occasions Labor is committed to retaining the existing private health insurance rebate.

How much clearer could Labor be? How much more blatant could the deception be? The Australian public have a right to be outraged. Just as the Australian people could not trust this Prime Minister with regard to the carbon tax and just as the Member for Denison could not trust this Prime Minister with regard to gambling reform, there can be no trust with regard to the issue of private health insurance.

What will the impact of these changes be? According to a study by Deloitte, commissioned by the Australian Health Insurance Association, called Economic Impact Assessment of the Proposed Reforms to Private Health Insurance, the figures are quite stark. Some 4.3 million consumers over five years will downgrade their degree of cover, which means less income for the private health insurance funds. Some 1.6 million consumers over five years will withdraw from their private hospital cover. The burden will shift to the public system. And what will that burden be? According to the study by Deloitte, it will be some $3.8 billion over five years. The real concern with this proposal is that it is nothing more than a reduction in the health budget. It is effectively withdrawing $2.4 billion from the current health budget and imposing a cost on our public health system of $3.8 billion.

I know many people in my electorate are very concerned by these changes. Many people who struggle to pay their private health insurance premiums are concerned by these changes. Many people who are worried that they will no longer be able to make those payments are very concerned about the increases in their private health insurance premiums. That is what this is going to do. We are going to see an exit from the pool, particularly by those healthy Australians who may feel it is something they can do without in the face of these changes and the increased costs they would otherwise bear. We will lose many healthy individuals whom the system depends upon to balance out the premium costs. So private health insurance is certainly under threat from these changes. The private health insurance system is also vital to attracting medical professionals to regional communities because they depend so often on a mix of public and private patients. If they lose their private patients, there will be insufficient work to maintain their practices in regional areas. What does that mean? It potentially means an exodus from regional areas by specialists. It potentially means a closing of private hospitals. It potentially means a loss of services in regional and rural areas. Who is going to suffer most from this? Is it the alleged rich or the alleged aspirationals that the Prime Minister is so keen to slug? No, it will be the most vulnerable who will be most hurt by this. It will be the elderly. It will be the poor. It will be the people who cannot afford to travel to a major metropolitan area to receive these services. They are the ones who will suffer most. It will not be those with the capacity to pay. It will not be those healthy Australians who will take the risk rather than pay the exorbitant costs which will be imposed as a result of this government's withdrawal of the private health insurance rebate. It will be the very people this government claims they should be protecting who will pay the price for these changes.

What will be the further result? It will be a blow-out in the public hospital waiting lists. It will be longer waits for elective surgery. It will be staff in our public hospitals under greater stress. It will be a run-down in the public system. Despite the best efforts of the staff and despite the best efforts of local communities to support their hospitals, many of our public hospitals are bursting at the seams. Many of our public hospitals are struggling to cope, yet we have a Labor government that is determined to wind up the pressure on our public hospital system, pull $2.4 billion out of the budget and not put a cent in. It is effectively a cost shift from the federal government to our state governments. It is effectively an abrogation of responsibility by the federal government to assist and encourage people into private health insurance. We saw in the past the catastrophe that can occur when private health insurance levels fall too low. The coalition government was able to address that primarily through the measure that this government is so intent on unwinding. The private health insurance rebate was a major tool in restoring the take-up of private health insurance. It is clear that it is those that the Labor government claims to represent that will be most adversely affected by these changes.

In my local electorate of Cowper I have a very fine private hospital, Baringa Private Hospital. It does a great job. It does a very heavy elective surgery workload. It provides outpatient services. It is the epicentre for a very large workforce of specialists. All of this is possible because of the dual system we have, which is heavily dependent on private health insurance. It is a great assistance to the Coffs Harbour Base Hospital in delivering services in what is a growing area with an ageing demographic and many people who are dependent on the public system.

If you were to lose your private health insurance, you may well lose your private hospital. If you lose your private hospital, you may well lose your specialists. If you lose your specialists, you lose the local provision of services and that is a bad outcome for all people in regional Australia. Having to travel 500 kilometres to Sydney is a bad outcome for the people that I represent. Having to go without procedures is a bad outcome for the people I represent. If you live in a regional or rural area, the sad fact is that it is likely that your medical outcomes will be inferior to those in metropolitan areas, despite the great work of the staff in regional areas. There are a range of reasons for this, such as people's reluctance to seek treatment when they are in a regional area and have to travel to metropolitan areas, but this winding down of services in regional areas can only make the matter worse.

It will be interesting to see how the Independents finally vote on this, whether they actually stand up for the people that they represent, whether they actually support the people in their electorates and support the services that the people in their electorates deserve. It will be interesting to see whether the member for Lyne, despite his words in the chamber tonight, will finally heed the words of the people who were actually demonstrating at his office against his possible move to vote for this legislation. It will be interesting to see what he does. Will he support his local electorate? Will he support the people who sent him to Canberra or will he sell out to a Prime Minister who cannot be trusted? Will he sell out and pass this legislation? He will be judged, because the people of the North Coast will be watching the member for Lyne. He has disappointed them before on the carbon tax and he has certainly paid a heavy political price for that. I fear he is going to disappoint them again in relation to private health insurance. We will be waiting and we will be watching because we expect, as people who live on the North Coast, that North Coast members support the sorts of services that people on the North Coast rightly deserve.

It is vital that these bills be opposed. It is vital that the private health insurance rebate be retained. It is vital that the Independents find it within themselves to support their local services and not support this Prime Minister. I certainly will be opposing these bills. They are bad for regional and rural Australia. They are bad for health services. They are bad for the very foundations of our health system and they are to be condemned.

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

When you look around the world you realise that, relatively speaking, Australia is blessed with a good health system. Most Australians know it and they cherish the system that we have got. There is of course plenty of room for improvement and we need to make every dollar spent on health count. That is why it is such a travesty of public policy that tens of billions of dollars have been spent, in the name of health policy, undermining the public system.

When the Howard government introduced the 30 per cent private health insurance rebate in 1999, they claimed it would encourage many Australians to take out private health insurance and thereby relieve pressure on the public system. But if there were ever any doubts about the merits of that policy, the evidence is now conclusive: it has been a massive failure on both counts. Multiple studies have concluded that the rebate did not drive many Australians to join health funds. And, in the wake of the rebate's introduction, utilisation of public hospitals actually increased. In short, it has been a massive and expensive failure and Australia's health system has suffered as a result.

The rebate was never a good policy. It had no backing by solid economic or public health research. It was a subsidy to an industry that came at the expense of the public health system. When the government provides such a massive subsidy for something, it might benefit the customer, but the industry even more so. Private health funds are doing very well thanks to the Howard government's largesse. It simply stands to reason. It is hard to image how a dollar spent in a public hospital, directly paying for an extra nurse or to keep an operating theatre open longer, can be less efficient than somehow relieving pressure by sending the money to a health fund. It was always a vague, hand-wavey argument and, since the rebate was introduced, the evidence has put the lie to it. The rebate may have lead to an increase in the utilisation of private hospitals but there has been no subsequent decrease in the use of the public system.

It is clear: the rebate does not take pressure off the public system—in fact, it makes things worse for the public hospital system. Private hospitals compete with the public system for nurses, doctors and other resources crucial to providing the best care to the taxpaying public. Australia's public hospitals are experts at providing quality emergency care and treating complicated, chronic illnesses. Private hospitals, by and large, do not. This is why the myth of relieving pressure will never be reality. A dollar spent on the rebate will never make the wait in an emergency room a second shorter.

It is true that, as many public health experts have noted, there has been an increase in the coverage of private health insurance since the rebate came along. But it is the introduction of lifetime cover that is widely acknowledged to be the biggest driver behind this change, and the contribution of the rebate has been understood to be minimal at best. This has been known for some time.

On equity grounds, the private health insurance rebate has to be one of the most inequitable expenditures of public money imaginable. Every year $4.5 billion is spent subsidising the healthcare of those most able to pay for it at the expense of those who cannot afford to pay. Low-income earners are paying for the care of others in a system they themselves cannot afford to access. We should be horrified by this. A glaring example is dental care. Millions of Australians cannot afford to see a dentist. Many languish on waiting lists that stretch into years. Most simply put off going until dental problems land them in the emergency room. This is a national crisis and a scandal. The Greens' plan for universal dental care, Denticare, is designed to fix this problem. But it will require a major investment in public funds to fix this inequity. But what do we have now? Every year $400 million of the private health insurance rebate money goes to the care of those with dental coverage on their policies. Imagine what that $400 million could do if it was directly providing services to those who cannot see a dentist at all. Instead, we are left with the absurd situation of taxpayers with no care subsidising that of high-income earners who can afford dental treatment. People with no teeth may be paying for those with a full set to get treatment! Such is the inequity of a two-tier system. I am very pleased that today agreement has been reached to put a down payment towards dental health going into Medicare. That is a very appropriate use of some of the money that is raised from one of the bills in this package of legislation. Going to the dentist should be like going to the doctor in Australia: you should be able to take your Medicare card there and access the same sorts of rebates and services that the GP is able to access when you present with your Medicare card. But to do that, we are going to need a significant injection of funds into the system, and using some of the money that is saved from the rebate would be a great place to start.

I have heard many on the coalition side during this debate talk about the two-tiered system as if it is a good thing. Well, I, and I think many other people, do not want the Australian health system to go down the US road, where you are asked first and foremost if you have private health insurance and, if you do not, you wait and you wait and you hope. This legislation is a first step to righting this inequity. It introduces a means test so the highest-income earners will no longer benefit from government largesse at the expense of those who cannot afford or do not want private insurance. These measures are forecast to save $2.4 billion over the next three years. It is imperative that these funds are reinvested in the public health system. I call on the government to commit these savings to the public health system, in particular the gaping hole of dental care needs to be filled. If these funds were reserved for the first step towards universal dental coverage, it would be a great step forward for the health of all Australians.

Dennis Jensen (Tangney, Liberal Party) Share this | Link to this | Hansard source

I begin by drawing the attention of the House to the concerns of my constituents in Tangney. Several have been hung up on while telephoning the office of the former Minister for Health and Ageing, the member for Gellibrand. Tangney residents were ringing to voice their concerns about this ill-guided plan to dramatically change the 30 per cent private health insurance rebate. All Australians have the right to inform the minister's office of their concern without being cut off from engaging with their government.

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

It's disgusting!

Dennis Jensen (Tangney, Liberal Party) Share this | Link to this | Hansard source

Absolutely. One of my constituents, Mr Charlton from Attadale, called the Prime Minister's office and was transferred to the minister's office. Mr Charlton was lucky enough to have his concerns heard, but was unhappy with the experience of both the Prime Minister's and Minister Roxon's offices and found the explanation for the repeal of the rebate less than satisfactory. I have expressed the concerns of these constituents, and the 1,687 Tangney residents who signed petitions against this legislation, to the shadow minister for health and ageing. The member for Dickson, I can assure the House, was far more interested in the opinions of my constituents and the financial burden this legislative change will impose.

Western Australians en masse have made their feelings clear to the coalition. WA has one of the highest rates of health insurance in the country, with over half of all Western Australians holding private hospital cover and many more investing in cover for ancillary services. Our state has a great deal to lose if these measures are passed. HBF Managing Director Rob Bransby late last year presented Liberal Western Australian members and senators in Canberra with a petition of around 35,000 signatures against means-testing private health insurance. These signatures were collected in just over four weeks.

Australians taking the initiative of providing for their family with private health insurance should not be put in the crosshairs of a government's desperation to achieve a pipedream of a Labor budget surplus, which is probably never going to happen. The coalition and I oppose this attack on Tangney residents and all Australians who have taken responsibility for their own health care.

The Howard government empowered Australians with choice when it came to private health insurance. The introduction of the private health insurance rebates, the Medicare levy surcharge and Lifetime Health Cover saw private health insurance coverage increase significantly from 34 per cent in 1996 to over 44 per cent by 2007. Since 1999 the 30 per cent rebate has been a key incentive to encourage Australians to take responsibility for their health through private health insurance.

Hot on the heels of its election victory in 2007, Labor began swiftly whittling away at these policies of the former competent government. In its first budget, income thresholds at which middle- and higher income earners paid the additional Medicare levy surcharge if they did not take out private health insurance were raised. In its second budget, Labor began its battle to means-test the private health insurance rebate. As we know, this measure was knocked back by the Senate and subsequently knocked back again. Yet here we are again having a third go in this chamber.

The Gillard ministry has been blowing its trumpet this week about how it helps and supports Australians. Yet on paper its continued efforts to pare back middle-income supports instituted by the Howard government speak volumes in this climate of the much-predicted budget surplus. The proposed means test would mean that many health fund members would see their rebate reduced significantly and many others would lose the rebate altogether. The 2.4 million people directly affected by these changes will face immediate increases in premiums of 14 per cent, 29 per cent and 43 per cent in their respective income tiers. As the Australian reported on 24 June, these Australians will be forced to pay up to $935 more per annum for their health cover.

Deloitte research shows that these premium increases will force significant numbers of health fund members to drop out or downgrade their cover, resulting in higher premiums for those who remain and considerable additional pressure on our already strained public health system. In the first year of these amendments, 175,000 people would withdraw from private hospital cover and a further 583,000 downgrade. This is considerably more than the 27,000 the minister has claimed will drop their cover throughout the entire sector. Over five years, 4.3 million people would switch to cheaper policies and 1.6 million would drop their cover altogether if the means test went through. In addition, the Deloitte research found that 5.7 million people would downgrade important ancillaries cover for services such as dentistry and physiotherapy, while another 2.8 million would drop out altogether.

Critically, those who are less likely to claim and those who are younger and healthier are less likely to retain their current level of private health cover in the face of price rises. It is the healthier individuals who are more likely to decide to drop their cover, leaving an unhealthier group of consumers behind and subsequent rounds of price increases as insurers move to cover rising costs from claims. Because of this, all Australians with private health insurance will face higher premiums now and into the future.

The government continues to discount the coalition's dissent from this bill with musings that it will only be the wealthy that pay more for health insurance under this policy. This just is not the case. It is predicted that by 2016 consumers will face premiums that are on average 10 per cent higher than they otherwise might have been. For the government to discount out of hand such analysis, as it has, is beyond belief. These figures are damning of a government that has health in its sights for cuts—and, no doubt, bungles and backflips.

Those who are unable to meet the cost impost of this policy are also the most vulnerable Australians and will be forced into an already overstretched public system. I refer again to the Deloitte research: the government's proposed changes will lead to $3.8 billion in extra costs for the public system, a 400 per cent increase in elective surgery waiting times and an additional 10 per cent increase in premiums.

Our public hospitals are already operating above capacity. Any additional demand for public health care will only translate into longer waiting list times and will likely require investment in new public sector capacity. Patients already face long delays for elective surgery and emergency department treatment. This bill will only make it worse.

I understand that universal health care can be one of the greatest sources of pressure for rising taxes for any government, state or federal. But getting more people into private insurance will only relieve pressures on our public hospitals and on our hardworking nurses and doctors. I fail to see why the government persists with this policy despite every dollar of funding provided for the private health insurance rebate saving $2 of costs that are paid by private health insurers. It makes no sense. The Member for Dickson was spot on when he said of the Gillard Government:

They are intent on taking money out of the pockets of Australians to pay for their phoney surplus in the next budget.

This policy change is set to offer the government a short-term windfall for the first four years—enough time to work on that budget surplus, I guess. Beyond that, total savings resulting from the proposed policy change will be less than the additional costs of servicing additional demand in public health facilities, but the Gillard government knows that by that time it will not be its problem.

More fundamentally, this is a blatant cost-shifting measure from the Commonwealth to the states. Remember, it was not that long ago that the states provided 100 per cent of the funding for both health and education. A quick check of the executive powers section in our Constitution shows that health does not appear on the federal government's list of things to do, and the states are left duly unprepared after decades of policy and funding centralisation. This place has twice rejected the government's plan to means test private health insurance rebates, so why will this government not heed this message and finally abandon these ill-conceived changes?

Our new Minister for Health, the member for Sydney, Ms Plibersek, said on the ABC's AM program on 19 January this year:

This is a very good time to introduce a means test for the private health insurance rebate.

From this statement it is obvious the minister has been absent from her electorate. Cost-of-living pressures are high, and for a government to increase the cost of health care, a staple function of a competent government, is beyond belief. There will be not only a direct cost impact on the consumer when the rebate is repealed but also, ultimately, a negative impact on the budget's bottom line as the government scrambles to inject more funds into a haemorrhaging public health system.

The coalition has always supported a strong public system and a strong private system, and it will continue to do so. There must be a good balance between the two, a status quo that is maintained as legislation stands. This bill is yet another setback for families in Tangney who are already struggling with increased cost-of-living pressures from a government that has lost its way, and which has done nothing to enhance private health insurance and health in general in our country. I, along with my coalition colleagues, will continue to oppose this and all bad Labor policies, and we are committed to ensuring that all Australians have access to affordable health care.

Unfortunately, this is yet another example of the politics of envy. Those opposite seem to forget, when they say that the lower income earners are subsidising those higher income individuals who are taking out private health insurance, that, in fact, they pay a Medicare levy and higher taxes. They are more than paying their way already.

Andrew Robb (Goldstein, Liberal Party, Chairman of the Coalition Policy Development Committee) Share this | Link to this | Hansard source

I rise tonight to speak on the Fairer Private Health Insurance Incentives Bill 2011 and related bills. These bills are clearly a reflection of the creeping class warfare nonsense that we are increasingly hearing from this government. We are starting to hear it from the Prime Minister, the Treasurer, Wayne Swan, the Minister for Employment and Workplace Relations, Bill Shorten, and others who are sowing the seeds of division in this community. This is another classic example of a means by which they are seeking political advantage.

We are harking back decades. The BLF influence in the CFMEU is starting to manifest itself in a grubby and ugly fashion. It is true, this is a problem. The culture is changing. Why would they play the politics of envy? Why would the Prime Minister, and other senior ministers, come in here day after day and, in a grubby and irresponsible way, start to build resentment against people who are making money, who are employing others and who are already carrying much of the cost of taxation within this community? This is a further sign of the collapse of this government's moral fibre. In a rush for a cash grab by what is one of the most profligate governments in our history—in fact, it is the most profligate government in our history—we are seeing that they are prepared to pit Australian against Australian, and to do it in a most disingenuous way. Even the Minister for Finance and Deregulation, Senator Wong, responded last week:

We don’t think as a government it is fair for low-income Australians to be subsidising the health insurance of millionaires.

This goes straight onto the theme of building resentment—the politics of envy—in an attempt to pit Australian against Australian by totally misrepresenting the impact of this bill. They are prepared not only to take away this highly effective measure just to acquire moneys to meet the four record deficits of this government, and try to pay some contribution to that, but also to misrepresent the effect of this.

Of course, it will be low-income people who will pay for much of this measure that we are debating here tonight. Low-income people will form part of the smaller pool of those who are insured, and as a consequence we will see that they will be paying higher and higher premiums. Low-income people who cannot afford insurance will now find themselves lining up for longer and longer, with increases of months and months in the availability of healthcare services, as people flock to the public health system and away from the private health system. This government is so far out of touch with everyday Australians it is breathtaking. They are prepared to offend, to pit Australian against Australian, to pitch the politics of envy and to get down in the gutter in this way simply for their political advantage. These bills have been rejected by the parliament twice, but this government just does not get it. It has no respect for the view of the parliament. It is just another broken promise, after Labor solemnly vowed not to attack the 30 per cent rebate. But after what we saw on 7.30 tonight, it is little wonder. We are getting used to a government whose word cannot be trusted. No wonder there is a crisis of confidence, and this bill will add to that crisis of confidence, which is starting to permeate every household and business in the country. This government has lost direction. This is another classic example of this government's failure on so many fronts. This government is willing to do things that are not rational or sensible on any basis so that it can exploit the politics of envy and resentment, which is what it is doing with this debate.

This attack on private health crystallises the clear philosophical difference between the coalition and Labor. It is the difference between backing personal choice and personal responsibility and more of the insulting nanny state, government-knows-best approach that is so typical of Labor.

There are many millions of people on very low incomes who make enormous sacrifices to take out private health insurance. They are very proud of the fact that they are taking personal responsibility for some of their health care, and they also feel they have some control. If in the next decade or two they find themselves with a medical problem, they feel that taking out private health insurance is a sensible thing for them to do. It gives them some control. They are not reliant on whether or not there is an understaffed public hospital emergency ward that can meet their needs. They do not have the fear that when they come to need vital services those services will not be there, or they will be there 12 hours later after they have sat in an emergency waiting room for some overworked doctor to make an assessment and do something with them. It gives them peace of mind. It gives them a sense of personal responsibility. It gives them control over one very important element of their lives: their health, and how it can be managed.

The government is oblivious to the sentiments and sense of self-worth of so many people who make huge sacrifices, who have not really got the money but are prepared to do it. It is at the heart of the philosophical difference. We have seen it writ large in so many things with this government.

These changes will force everyday Australians to drop private health or go onto cheaper policies with more exclusions. There is no doubt about it. Already people are becoming anxious about the impact it is going to have. My electorate of Goldstein has amongst the highest number of people in private health insurance in the country—74.5 per cent of voters in my electorate are in private health, with more than 106,000 covered, including more than 24,000 families. This will push up premiums for those remaining in private cover, including retirees and families with children battling to make ends meet.

The public response in my electorate to this proposal has been white hot, and so it should be. The anger is palpable, with the rhetoric of the likes of Senator Wong, the Prime Minister, the Treasurer, the Minister for Health and the Minister for Employment and Workplace Relations spreading the evil of the politics of envy and resentment to people who might have a bit more money. These are people who are working overtime and whose partners are working so that they can have things like private health insurance. These are the people who are concerned that they will be affected. It is coming from families who have mortgages, car loans and kids at school and are earning a combined $160,000—if you listen to the government, of course they are the filthy rich! Two teachers earning $75,000 each are the filthy rich in this country! It is coming from singles who are earning $80,000 to $93,000. These people are not the rich. These are everyday Australians. It is coming from couples on low incomes, including pensioners and self-funded retirees, who see themselves paying higher premiums because of a smaller pool of insured people or people taking out cover with fewer features than they currently have. It is coming from people who have no private health cover and see themselves as being disadvantaged because of overstacked public hospitals as people move away from private hospitals.

I would like to share with you part of an email from a constituent of mine who has clearly had enough of this government's attacks on working families—the forgotten families. It reads:

Dear Andrew,

We are very rarely moved to contact our local representatives, but the news that the government appears to now have the numbers to pass legislation to means test the private health insurance rebate has sufficiently infuriated us to do so. If and when this motley collection of spendthrift amateurs and union criminals enacts the legislation, through the complicity of the intellectually vacant hillbilly Independents, our family of five will be forced to find something in the region of a further $1,600 annually.

The alternative is to lower our insurance cover to a level where we and our children are not adequately protected in case of illness or injury, or to pay extra income tax. Some choice. As usual, under this atrocious government those who work the hardest and the longest end up penalised instead of rewarded. We trust that the next election restores some sanity, responsibility and decency to government, and we seek a commitment from the coalition that once in government it will abolish any means test on the private health insurance rebate.

If you are single and earning more than $124,000, the rebate is gone. If you are a couple earning $160,000 the rebate is slashed. Those forced out of private health will be hit with a higher Medicare levy, rising from one per cent to 1.25 per cent or to 1.5 per cent depending on the tier. All this government knows is taxing, borrowing and spending. This is another example. This is a cash grab simply to meet the borrowing and spending habits that this government has got into. There will be 2.4 million people directly affected by these changes and face immediate increases in premiums of 14 per cent, 29 per cent and 43 per cent in the respective income tiers.

Deloitte analysis of the changes shows that, in the first year, 175,000 people would be expected to withdraw from private hospital cover and a further 583,000 to downgrade. Over five years, it is expected that 1.6 million people will drop cover and 4.3 million will downgrade. Typically, this government will not disclose the numbers of people expected to downgrade, but, as premiums increase significantly for those in the income tiers, logically many will seek cheaper alternatives.

Most perversely, these changes will add new pressure to our stretched public health system. The private health system plays a critical role in easing pressure on overcrowded public hospitals. 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 of elective surgery in Australia, 64 per cent. Twelve million Australians, or nearly 53 per cent, have private health insurance. There are 10.3 million people, or 46 per cent, who have hospital treatment cover. Under the Howard government, we saw support for private health go from 34 per cent to 44 per cent. Sixty-four per cent of the population believe the rebates represent a good use of taxpayers' money.

The changes will present an enormous compliance burden on industry and on individuals completing their tax returns. Deloitte predict that private health insurance premiums will rise by 10 per cent above what they would otherwise be. There will be $3.8 billion in additional recurrent costs for the public hospital system. Where is the money for that? The government has no idea—just shove that off to the states. This is a government that has lost all control of finances. You can never trust Labor with money. This legislation is an abomination.

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 to downgrade over five years. This legislation is the price that everyday Australians are paying for this government's profligacy, its record levels of debt, deficit and waste. It makes a mockery of the government's claims to be concerned about cost of living. It is doing this and then it is going to add a carbon tax on top, which will increase the costs for pensioners heating and cooling their houses and increase the costs for families of their power bills and everything else. At the same time, the government is potentially increasing the cost of private health cover for an average family by anything up to $1,600 a year. Imagine how these families are going to feel when that increased $800 bill comes half-yearly. What is the compensation for the carbon tax? It pales into insignificance and only meets the costs of some people. I urge Australians who are adversely affected by these changes to mobilise, to bombard the Minister for the Health and the Prime Minister and tell them that they are not going to accept this sort of change. (Time expired)

Sophie Mirabella (Indi, Liberal Party, Shadow Minister for Innovation, Industry and Science) Share this | Link to this | Hansard source

I rise to support the second reading amendment to the Fairer Private Health Insurance Incentives Bill 2011 moved by the Leader of the Opposition. This government legislation is very simple. It kills two birds with one stone. It allows those dinosaurs, those outdated class warfare warriors who have kept their true colours hidden for such a long time, to get what they want and at the same time it helps a desperate, divided, directionless, shambolic government to try to claw back some money to pay for their gross extravagance and mismanagement. They are going to gut $2.4 billion out of the health system. And why? Because they have always actually wanted to do it. They have protested too much over the years, claiming our predictions that they would do exactly what they are doing today were so wrong. The Prime Minister in a previous political incarnation was absolutely sick of having to repeat the Labor Party's commitment to not cut the private health insurance rebate. We all know they were misleading statements.

The member for Bass interjected yesterday when this debate was proceeding in this chamber. He yelled out: 'Middle-class welfare!' and 'Support for the rich!' He was speaking the truth for so many members on the other side. The reason it is an easy get is that their blind ideology has clouded their perception of the real world, of the Australia of 2012 and of the fact that there are over 11 million Australians who are covered by private health insurance. They have conveniently tried to use good old-fashioned class warfare to excuse gutting the healthcare system of $2.4 billion. What do you expect? How else are they going to try to find the money to fill the big black hole of the record debt and deficits that they have delivered over the last four years? They are still borrowing $100 million a day. They have to find the money somehow to make up for all the money wasted on the pink batts fiasco, in a very dangerous manner; on the overpriced schools halls, which ran into billions of dollars; and on the cheques—do we remember those stimulus cheques?—that went to dead people. So it does kill two birds with one stone.

What it will mean is that, whether you are a young family, or a young couple planning to have a family, and you are trying to have access to what you believe is the best possible care by taking out private health insurance, or whether you are an older Australian quite anxious about getting access to the right treatment, to timely treatment, in the latter part of your life, and you are trying to get that bit of security that we know so many people have when they take out private health insurance, then you, and many more Australians who try to plan for contingencies, are going to end up paying higher premiums for your private health insurance, if you can even afford to maintain your insurance premiums in the first instance. We know that every dollar of funding provided for the private health insurance rebate saves $2 of costs that are then paid by private health insurers. We know that over 10 million people in Australia have private health insurance for hospital treatment. In my electorate of Indi, which is a comparatively low-income electorate, many people in the north-east of Victoria choose to have private health insurance. Despite the fact that they face very challenging household budgets, people in Indi do maintain a very high level of private health insurance, particularly because there is restricted access to bulk-billing and specialist services—and this applies to so many other rural and regional parts of this country. In my electorate more than 48,000 people are covered by private health insurance.

I have been inundated by so many people in my electorate and elsewhere who are feeling bombarded, absolutely oppressed and at their wits end with the rising cost of living, the rising cost of energy, the spectre of a carbon tax and the increase in costs to their basic living with the flow-through that will occur, including with energy. Every time they switch on the light and every time they open the fridge, they know that costs will go up. They are trying to be responsible; they are trying to do what has always been the Australian way—take responsibility and plan for a rainy day. This government is crushing the aspirations and the freedom of Australians to plan and live their lives as they see fit.

What is crazy about what the government is proposing is that we know we are going to end up with a worse public health system. We are going to end up with worse public health outcomes. It is short-sighted, politically opportunistic and driven by an out-of-date, out-of-touch ideology of hatred and, dare I say it, that nasty chip on the shoulder.

Here we have a Deloitte report that has looked at some of the impacts of this legislation. We see that, over a five-year period, 1.6 million consumers will withdraw from private hospital cover and a further 4.3 million will downgrade. Deloitte also concluded that a further 2.8 million consumers will withdraw from general treatment cover and a further 5.7 million will downgrade. As consumers withdraw and downgrade from the public health insurance system, we will see premiums rise. It is as simple as that. That is what will happen. It will become much, much less affordable. We will see families, couples, individuals and those older Australians who have planned for their future have the choice taken away from them about what sort of healthcare security they can have, because it will be absolutely unaffordable.

As more and more people withdraw from private health insurance cover, what will happen? Well, the inevitable. There will be a greater burden on the healthcare system, on hospitals in the public sector. We have heard the figure time and time again in this chamber during the debate, and I will repeat it: we will have an additional 845,000 separations needing to occur in public hospitals between 2012 and 2016 as a result of changes to the means-testing of the rebate. What would possess a government that purports to look after the social welfare and the health needs of Australians and that purports to care about so-called working families to be so short-sighted as to burden the public health system in such a way? There are already problems out there, in every state—we know it; we see it. Yet this insane ideological drive that we know has been at the heart of the Labor Party for such a long time is driving this.

Of course, we know that the money taken, gutted out of the health system—$2.4 billion—is not going to go back into health. It is fascinating when you look at what the Labor Party has said. Sometimes—often, actually—political parties make claims, make assertions and make analyses about what their opponents are saying, are doing, will do or have done. That is a natural part of our competitive political system. It must be highlighted: every single time a political party protests that it has been painted in an unfair light and feigns outrage it should be reminded of the hypocrisy and the deception in which it has engaged. It is not just about the carbon tax; it is not just about the promise to Mr Wilkie; it is not just about the promise to the car industry, which was then gutted by $1.4 billion; it is not just about the promise not to challenge Kevin Rudd; it is about something that goes to the heart of the health and welfare of so many Australians—health. Do we remember when the Prime Minister said that she was 'sick and tired of being asked over and over again about Labor's commitments to private health insurance.' Of course she was sick and tired of being asked over and over again, because in her heart of hearts she wanted to gut it. We know that. The more we find out about this Prime Minister, the more we know that, in her heart of hearts, she is a cold, calculating, Machiavellian, ruthless politician not just to her own but to the people in the Australian community she considers as class opponents. She does not understand that fundamentally she is pitting herself against the majority of Australians. She is pitting herself against what it is to be Australian: to have a go and to aspire to better services, to a better life, to better opportunities and to safer health opportunities for you and for your family. We heard her say in parliament in 2006:

… the minister for health today claimed that I am opposed to the 30 per cent private health insurance rebate. This is not true. The minister for health has in fact himself on an earlier occasion conceded on national television that support for the private health insurance rebate is now bipartisan policy. I use his own words against him.

How clever was that. A Liberal minister said it, so it must be true. I wish the Prime Minister would apply that principle today: belief in the words of Liberal politicians. That way she would get more sense and a more accurate reflection of reality, not some weird made-up land on top of the Faraway Tree, where she seems to spend so much of her time.

We know that the leader of the Labor Party, their former shadow minister for health, made statements in favour of the rebate. Do you know why? They said whatever they needed to in order to get rid of a political problem; to get rid of constituents who were concerned about private health insurance. As Graham Richardson said: 'whatever it takes.' If it means perpetuating a lie, a deception, say what you need to say to get elected. Do what you need to do, do over who you have to. That is the mantra and that will be the political epitaph of Julia Gillard. (Time expired)

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

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2011 and the related bills. This legislation provides yet another example of this government breaking promises to the Australian public. We all know that Labor went to the 2007 election promising that it would not make changes to private health insurance, yet here it is doing just the opposite. It is a disgrace. Not only did it break that promise in this parliament, it tried to break it in the last parliament. It is in writing. As recently as 2009 the former health minister, Nicola Roxon, said that under no circumstances would the government walk away from the 30 per cent rebate. Unfortunately, that is what we have come to expect from this government.

It is a sad time for politics, because the Australian public cannot believe a word this government says. The Prime Minister said, 'There will be no carbon tax under a government I lead,' but she changed her mind and Australia is facing a carbon tax. I ask this government: what can the people believe? These bills we are debating are proof that this government cannot be trusted. The Prime Minister seems to think it was okay to break the 2007 election promise, because the government took it to the 2010 election, notwithstanding the fact that it tried to break it in the last parliament. It was always going to happen with Labor, wasn't it, because in its heart it hates private health insurance. The Prime Minister gave her guarantee when she was shadow minister for health that the Labor Party would retain the rebate. But as Prime Minister she is doing the opposite.

I take this opportunity to call on the crossbenchers to stand up for the people of their electorates. The member for New England correctly said on the weekend that this legislation would be a devastating blow for health in regional areas. I know that, he knows that and all other regional and rural members know that. The member for Lyne spoke in this House earlier tonight and said he wanted to turn unsustainable health systems into sustainable ones. What a great goal. But I say to the member for Lyne: that is backward logic. Making private health insurance unaffordable for the majority of Australians does not make it sustainable. I am standing up for the people of Barker by standing up against this legislation, because I believe regional areas will be worse off.

Regional health relies on private health insurance. Visiting specialists to regional areas rely on both public and private patients. If the number of private patients drops off, which is inevitable, the visiting specialists will not visit anymore. Just on this fact, what does the government expect will happen if private health insurance is made more expensive? Of course people will drop out of private health. This means insurance will go up for those remaining in the system, weakening the health system not strengthening it. I would like, yet again, to highlight the Keith and District Hospital, which is in my electorate. I have told this House about Keith hospital on many occasions before but I would like to highlight a specific point. The Keith hospital is a community owned hospital which was opened in October 1954. The community donated land, crops and endless hours of volunteer work to make it happen. The Keith and District Hospital Inc. operates under the Associations Incorporation Act 1985 and is governed by a board of management who volunteer their time to serve the community.

The way the hospital is run is really quite remarkable. However, disappointingly, the hospital is sometimes referred to as a private hospital, which is wrong—it is a community hospital. The Keith hospital does not operate for a profit, the usual definition of a private hospital, yet I have heard this government refer to the hospital as private on many occasions. This is not correct. Both the state Labor government and the federal Labor government have tried to fob off the funding crisis at Keith hospital by saying that it is a private hospital. That is not good enough.

Last year I introduced a motion calling on the federal Labor government to directly fund Keith hospital and to take the funded amount away from the state. I am outraged that, to this date, the government has done nothing for the Keith hospital. My Senate colleagues introduced the same motion in their place and the motion passed, as it did in this House. But still there is no action from this government. It is an outrage. This government is defying the will of the parliament. In both houses the government let the motions pass without dissent, yet nothing has been done.

On many occasions in this House I have called on the former Minister for Health and Ageing to take action on Keith hospital. Now I call on the current Minister for Health, the Hon. Tanya Plibersek, to step up and honour the motion passed last year by both houses of parliament and to help Keith hospital. To do so will not cost the federal government or the taxpayer one cent. The community of Keith are still struggling to support their hospital, but they have been long forgotten by the Labor government, both state and federal, because Labor does not care about regional Australia and it hates private health insurance.

I want to make the point to the House that Keith hospital is a perfect example of why this bill before the House is short-sighted. Most patients at Keith hospital have private health insurance, thereby reducing the burden on the public health system. I suspect Keith has the highest rate of private health insurance in Australia—because the people of Keith support their local community hospital. I can tell you now: there are not a lot of rich people in Keith. You would think the government would reward the residents of Keith for not adding extra strain on the public system. But, no—quite the opposite.

Mr Somlyay interjecting—

As the Chief Opposition Whip says, yes, they are punishing them.

On 9 February last year, I heard the government's ignorance on Keith hospital once again. Senator Ludwig, in response to a question without notice from Senator Xenophon, said:

Minister Roxon and this government understand the importance of local private hospitals to regional communities and the role they play in keeping sick and aged patients in their local areas. However, on behalf of the minister, the level of subsidy the South Australian government pays to community private hospitals such as the Keith and District Hospital is clearly a matter for the state government of South Australia.

Just like Pontius Pilate—washing his hands. I find it hard to believe that the government in charge of this country and the services in this country cannot even get its facts straight. Keith hospital is not a private hospital; it is a community hospital and should be treated as such.

If either the former or current health minister bothered to visit the Keith hospital, they could see for themselves the community that built the Keith hospital and they could meet with the board—the state minister has refused to meet with them—who, as I said earlier, volunteer their time and who are very professional in the way they do it. In fact, they do it at a cheaper rate than the state government system. I find it hugely disrespectful to the people who tirelessly give up their time for their community, for a not-for-profit hospital, to be told by this government that they are someone else's problem because they are a 'private' hospital. The Keith community is a typical regional community. Like any regional area, the wages are typically less than those in the city areas and most people are not what this government would call wealthy.

We know that 5.6 million Australians who have private health insurance are on incomes of less than $50,000. As a result of this government introducing this legislation—

Mark Dreyfus (Isaacs, Australian Labor Party, Cabinet Secretary) Share this | Link to this | Hansard source

Their rebates will be the same. Tell the truth.

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

tens of thousands of people will drop out of the private health system, as they will, I am sure—

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

Order! The honourable parliamentary secretary will show more restraint than he currently is.

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

because it will be unaffordable for many, patients at Keith hospital will also drop out. This will create a two-tiered system, like the USA, because it will be the less well-off who drop out but those better-off will mostly be able to stay in private health insurance. This is backward logic. The government does not see the logic here because it is not just Keith hospital, it will be hospitals all around Barker and all around Australia.

This government will not be taking pressure off the public system—it will be adding to it in an enormous way. In the instance of Keith hospital, very clearly, by trying to save $300,000 they will probably add $2 million to the public health system. It is the worst form of cost-benefit analysis and, obviously, it has not been done. There will be a huge influx of people who drop off the private health system and onto the public health system. Private hospitals support 40 per cent of all patients in this country and, in regional areas, it is much higher. They cover the majority of elective surgery.

It is estimated around 12 million Australians hold private health insurance and, as I stated earlier, nearly half—5.6 million—of those earn $50,000 or less. Of those, 3.4 million earn less than $35,000. This government is seeking to punish those who have done the right thing by taking out private health insurance. I have heard those on the other side state that we are wrong, that not many people will be affected and those will be just the rich. Well, the rich will still afford to stay on. It will actually be the poorer who drop off—and who cares about them? That is what the government thinks.

I have no doubt that premium prices will rise. Due to the shrinkage from dropouts, premiums will rise for those who the government calls rich, when in fact it will not be those who drop out. I believe that about 2.4 million will be affected by increases in their premium of various stages from 14 per cent to 29 per cent or 43 per cent, depending on their incomes. Deloitte has predicted that up to 1.6 million Australians will drop their cover over the next five years. They have forecast that up to 4.3 million Australians will downgrade their cover over the next five years. Not only this, but premiums will increase 10 per cent and an extra 845,000 Australians will be admitted to public hospitals. This is a huge addition to an already struggling public system and there does not seem to be anything in the forward estimates to take account of that.

This government states that only 25,000 people will drop out of the private health system. Well, like that good Aussie film says, 'You've got to be dreaming' if you think it is only 25,000 people compared to the 1.6 million modelled by the Deloitte analysis. Discrepancies in this government's numbers are something that the Australian public is getting used to, and it is a pretty sad state of affairs. Labor hates private health insurance—it is in their DNA. This is just the first step. This is the first of the many changes with which this government will seek to wind back private health insurance. You only have to look at their record from 1983 to 1996, when such a wind-back actually happened. It is a fallacy to say that the poor subsidise the rich, because the so-called rich will always pay more through their Medicare levy anyway. This legislation has been twice rejected by the Senate and I will be watching its progress closely, as the Greens are still stating that they are opposed to the Medicare levy surcharge aspect of it.

The coalition supports private health rebates; the coalition understands that private health insurance helps reduce waiting lists and keeps pressure off the public health system—which is already under so much pressure because it has been mismanaged by many Labor state governments over many years. This legislation is bad for the health system. I do not support these bills and I call on the crossbench members to stand up for the people in their electorates, who will be worse off under this government and this legislation.

Warren Entsch (Leichhardt, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2011. The 'fairer' component of the title should be well and truly removed. I raise serious concerns about the grave impact these changes will have on our public health system, in my electorate and around Australia. The public health system is already significantly overstretched. As result of the introduction of private health insurance rebates, the Medicare levy surcharge and lifetime health cover under previous coalition governments, private health insurance coverage increased significantly, from 34 per cent in 1996 to 44 per cent in 2007. There is no doubt that this current initiative is a blatant cost-shifting measure, shifting costs from the Commonwealth to the states' public system, and again I suppose it shows just what a financially fragile position the government has put this country in.

This is the third time that the parliament has had to consider this legislation. It was introduced in the last parliament and in explicit promises in the lead-up to the 2007 election—cast-iron promises, or cast aluminium promises—federal Labor made it crystal clear that they were committed to retaining all existing private health insurance rebates. That was in a media release by the then health minister, Nicola Roxon, in September 2007. Frankly, the government has squandered a lot by incompetently managing initiatives such as the $2.5 billion home insulation scheme, which tragically cost the life of a young lad in my region. The National Broadband Network is costing $43 billion, and it is still ratcheting up. Then there is the $886 million blowout to pay for the government's failed border protection policy—and that is still going up; I think it is over $1 billion now.

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

Confetti.

Warren Entsch (Leichhardt, Liberal Party) Share this | Link to this | Hansard source

It is just petty cash. Of course we all remember the school halls fiasco. That is to name just a few of the government's mismanaged projects. If they had been managed appropriately we would not be here today having to deal with government cost-cutting and cost-shifting, which is clearly the intention of this legislation.

The impact of this legislation will not be felt only by those in the higher income brackets, as has been suggested by those on the other side. They are again trying to create a class war. This group will see increases in their premiums of up to 43 per cent, but all Australians with private health insurance will face higher premiums in the future if these changes proceed. Mr Speaker, 2.4 million people will be directly affected by these changes and face immediate increases in premiums of between 14 and 43 per cent in the respective income tiers. A 2012 Ipsos survey found that 64 per cent of the population believe that the $4.5 billion a year that the government spend on the rebate is good use of taxpayers' money.

The changes are certainly going to impose an enormous compliance burden on the industry and on individuals completing their tax returns. Private health insurers will have to make significant changes to their systems to adjust premiums according to incomes. It is not clear 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. Under the current economic climate and under current government policies that is a serious consideration. There is a lot of uncertainty in the workplace and you only have to look at the thousands of jobs that are currently being shed by banks and by industry—the aluminium industry in particular and the car industry et cetera. But those opposite say that this is a necessary adjustment. These people are also going to have to factor in those changes when calculating whether they have an entitlement in relation to this Medicare rebate.

The government's own insurer, Medibank Private, has predicted that 37,000 of their members alone will drop their cover and 92,500 will downgrade. This is considerably more than the 27,000 that the Minister for Health has claimed will drop their cover throughout the entire sector. The Deloitte analysis of the changes indicates that in the first year 175,000 people will be expected to withdraw from private hospital cover and a further 583,000 will downgrade. Over five years, it is expected that 1.6 million will drop off and 4.3 million will downgrade. The government certainly have not disclosed the number of people expected to downgrade, but as premiums increase significantly for those in the income tiers it is reasonable to expect that they will seek cheaper products, which will have a second-round effect for our public hospitals.

Deloitte also predict that private health insurance premiums will rise by 10 per cent above what they otherwise would. Of course, that is going to affect every single individual with private health insurance irrespective of their income stream. The changes will also have an impact across the allied health services, with 2.8 million people with general treatment cover expected to withdraw and 5.7 million people expected to downgrade over the next five years.

The government certainly assume that middle-income earners can afford a rise in private health insurance cover. People in this bracket will be affected as much by the changes as anyone. They certainly do not receive the concessions that low-income earners receive such as subsidised housing. They do not get any concessions in relation to their rates. They do not get any concessions in relation to their power or their transport costs, or their medical or anything else. They do not get any concessions, in many cases, in relation to the costs of their children attending school. All of these are additional cost burdens that these families will have to bear. Add that of course to the very significant increases that we have seen over the last couple of years in the general cost of living.

People who are seen by the other side as being comfortable middle-class income earners are really doing it tough. Imposing this additional cost is going to have a profound impact. This additional cost will certainly hurt them and it will certainly force them to choose between maintaining full private health insurance or taking the risk and going without, putting more pressure on our public system. These changes will undoubtedly force people to drop out of private health insurance cover or choose cheaper cover with more procedures excluded. It will certainly cause upward pressure on insurance premiums. We have seen that already. We already have an inquiry in relation to insurance premiums in my area where premiums have already increased by up to 1,000 per cent and, in doing so, are starting to force people out of their homes. This type of impact is only going to accelerate that scenario.

This will have a devastating impact, particularly on the Cairns Base Hospital, which is already classified as a facility at absolute breaking point by the Australian Medical Association. It has resulted from extremely bad planning by the existing state Labor government, from a lack of support and from a lack of focus on this area. It has also suffered immensely from a lack of support from this federal government.

Cairns Base Hospital is already under immense strain. It can barely cope with the workload it faces currently. The hospital is the referral health centre for the entire electorate of Leichhardt, which has more than 61,000 people at present who have private health cover. There is no secret that the Cairns Base Hospital is struggling financially. Last month the Cairns Physicians Group, a lobby group comprised of public doctors, revealed that the hospital was trying to save $11 million by freezing positions, by not renewing temporary contracts and by finding jobs to make redundant. The Physicians Group and unions say the hospital is lacking either staff or resources in at least 16 departments ranging from vital specialties such as dialysis, neurology and respiratory medicine to allied health services such as speech therapy, occupational health, physiotherapy and rehabilitation. There was even a protest recently because the hospital could not afford to buy pyjamas for patients.

The Far North Queensland health system relies very heavily on patients having private health insurance cover, taking a hell of a lot of pressure off the public hospital as it is able to divert patients to the one private hospital in Cairns. It is certainly not equipped with the resources, the staff or the beds to cope with the current population of public patients, let alone tens of thousands more.

Another challenge at the Cairns Base Hospital is that many of the patients who depend totally on the hospital come from remote communities throughout Cape York and the Torres Strait, a population with very high health needs. To take away the opportunity to provide for those needs by having such a significant additional call on the services of Cairns Base Hospital quite frankly is totally irresponsible and shows that the government have no understanding at all of what they will create by pushing this legislation through.

The coalition believes that all Australians should have access to affordable health care and real choice in managing their health needs. The coalition strongly supports providing all Australians with a choice of taking out affordable private health insurance. Through the rebate we have not picked or chosen people who are prepared to do that. We do not see that middle-income earners are somehow or other deemed to be the wealthy elite, as the Labor Party claim. We also recognise that even middle-income families, given the demands on their income, are entitled to that level of support. We are certainly happy to do that. This is certainly in contrast to the government's apparent mission to force more patients into the public health system, which will only reduce the choice for Australians and add a very significant strain to public hospitals already crippled by an overload of patients and underfunding by this government.

I also very strongly support the amendment that was put up by the Leader of the Opposition earlier. I think that something of this significance needs to be deferred. The amendment put up was that this bill and its related bills not proceed until after the 44th Parliament meets. That is a practical way of dealing with this. The government have made a hell of a lot of mistakes which have cost the Australian taxpayer an absolute fortune. They would be better off focusing on dealing with a lot of those areas and on better policy rather than trying to rip the guts out of something that has been incredibly successful. Unfortunately, they seem to be doing it by conning those on the crossbench who are totally reliant on the government for their political survival. I would certainly urge members on the crossbench to think more about the best interests of the community than their own political survival. (Time expired)

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

On rising to speak on this, I hope we have a clear understanding of it. The health department will get this 30 per cent extra to spend and, therefore, they will be able to increase the services provided to the public. The people who leave the private health system will go into the public system and cause enormous problems within the public system. I appreciate the minister being in the House while the matter is being debated. That brings up one of the drawbacks I see in this parliament in comparison to the state parliament I served in for two decades. In the time that I have been watching this debate on the television, the minister has been in here and so she has heard what has been said. Tony Burke also does this, but no other minister in this place ever seems to. If you are not game to face the music then you damn well should not be a minister. In the Bjelke-Petersen government in which I served, you were ordered to be there. You made the decisions, so you faced the music. The head of the department in each case was also forced into the parliament to listen.

As my honourable colleague and well-loved neighbour the member for Leichhardt has said previously, all we can do is talk about that half million of us who live in the northern third of Queensland—more than live in Tasmania. If we include Mackay we are around one million people, with probably another 100,000 tourists who are visit throughout year. The system there is under immense strain. We had one single heart doctor who could operate in North Queensland at one stage, and we have not had one for a period of two years. You can say, 'You can fly people to Brisbane,' but I will use the case of my own daughter. She had a very bad car accident. The car rolled many times. She had a suspected fractured skull. It was 15 hours before we could get an aeroplane. Two of them were down for maintenance, two of them were out of hours and one was up in the Torres Strait or somewhere. By the time it turned around it was the best part of another 12 hours from where we were at the time. In the whole of the midwest, in the 1,000 kilometres between Townsville and Mount Isa—an area of 12,000 square kilometres where arguably some 40,000 people live—there is no operating theatre. So, if a person has bruising to the skull and their skull has to be drilled into, it has to be done without a single operating theatre. That is very dangerous indeed. As for the idea that you can just fly an aeroplane in and fly people out, I am sorry—it does not work even remotely that way. The member for Leichardt and I live in an area which is fraught with cyclones and flooding and very heavy rainfall. All these things create enormous problems if you are trying to fly people out, so we have to depend upon the system which is there. But this system, which is supposed to serve one million people—five per cent or one in 20 of the Australian population—does not have even one person who can operate on a heart. I do not have to tell the parliament that 20 or 30 per cent of deaths are caused by heart ailments.

My very brilliant and clever chief of staff decided that we would have 'listening post' meetings where I would have to shut up—which is a bit of a challenge for me!—and she enforced it with an iron fist. When I was doing one of these 'listening posts' I was absolutely appalled to find out that just near Gordonvale, which is effectively in the suburbs of Cairns, there was a person who had had to extract his own tooth. The problem had gone on for seven months, and every time he had gone in for his appointment they had said: 'We've got a more urgent case than you. I'm sorry—we'll have to put you off for another month.' At the end of the seven months he was in great pain and could not wait any longer, but he could not afford private health insurance because he was a pensioner and did not have much money at all. So he extracted his tooth on Channel 9 and gave the health department a good send-off while he was doing it.

I thought it might have been an isolated case, but when we went out to Richmond there was another person who had had to extract his tooth himself. As I said to the minister the other day, in all of my lifetime until 20 years ago, when they abolished the hospital board, I cannot remember the midwest area—Hughenden to Cloncurry and the four towns, which is where I come from; it has been my family's homeland for 120 years—having been without three dentists. But in the last 20 years we have had no dentists, and, as often as not, when I get a complaint from Hughenden about the lack of dentists, I find that we do not have a dentist in Cloncurry either, let alone one in Richmond or Julia Creek. What is a health system if it cannot supply a dentist? They cannot even supply a dentist in Cairns! What is going on here?

What worries me is that Paul Ramsay hospitals are deeply troubled. I must confess to a kind of pecuniary interest here—my sister is on the board of Mater Hospital in Townsville, which I think is the second or third biggest hospital in Northern Australia—but the Ramsay hospitals are really scared, and if they are scared I am scared. If they are down here doing the sort of lobbying that they are doing at the present moment, then you can rest assured that they are extremely worried. If they are extremely worried, they know that there is going to be a huge movement of patients away from them.

The leader of my party in Queensland, Aidan McLindon, quotes my son. He made the statement that they spent $66 million on refurbishing the Mount Isa Hospital, yet it does not take one extra bed—they spent $66 million, but there is no change in the services provided! I was around when they spent $26 million on the Innisfail Hospital, and I gave them a big blast. What is the use of giving us $26 million for a lovely new wing with nice flooring and walls and so on and having the minister there opening it and getting his photograph in the paper when 30 per cent more patients were going to Cairns Base Hospital or Townsville? There were 30 per cent fewer people in the hospital, yet they were spending $66 million on refurbishment!

Surely it would be logical to have taken that $100 million and spent it on providing some dentists. I mean, $100 million put in the bank and getting the interest would buy you a fair few dentists. I would have thought that would have been a pretty logical approach to use.

Clearly as a party that I hope will be in government in Queensland, and we might be very hopeful and aspiring in that ambition but we certainly have every intention, it is incumbent upon us to say, 'What are you going to do about it?' I have interviewed 13 or 15 doctors, I cannot remember now, who have been doctors or have been superintendents at hospitals and they have been doctors for 25 or 30 years. Every single one of them agrees with the AMA president in Queensland when he said that for every patient contact person in a hospital there are three non-patient contact people in the hospital. Every one of those 13 doctors said to me that they believe that would be roughly correct and if you go back 25 years it was the other way around. So there is huge wastage. We are well aware that there are nurses on $1,000 a day, that sort of figure. I am not sure what they are called, but they have them on standby and they are on order from various organisations that provide people who are nurses or doctors. Excuse me for not knowing the technical terminology.

Tony Crook (O'Connor, National Party) Share this | Link to this | Hansard source

Locums?

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

No, not locums. The doctors might be on close to $2,000 a day. If you have to have this huge unit of people being provided by suppliers in the system, one has to be very suspicious about this. With this sort of money going around and someone getting a percentage of it, there is reason to believe that it might influence the judgment of a lot of people. But if you replace these on-order people from private enterprise nurse and doctor supplying companies with employees, which was the situation 20 years ago, then clearly you overcome that problem.

I do not believe, as I have said to the Prime Minister, the Leader of the Opposition and the last Leader of the Opposition, that you can overcome these problems unless you go back to local hospital boards. If you have a hospital board in Cloncurry and one at Hughenden-Richmond, or Hughenden-Richmond-Julia Creek, as we had before, two hospital boards, those people live in that community. If there is no dentist there, when they go to their local Lions Club meeting or the local CWA meeting they might just get kicked to death. They are under terrific pressure to deliver a dentist. But if the decision maker is some sophisticated PR person living in Townsville or in Cairns then you are not going to get anyone who really cares whether there is a dentist out there in the mid-west or whether there is not. She is answerable to Brisbane and all Brisbane wants to know is has she cut costs. They do not ask about services.

In Queensland there is a government that is about to be annihilated in the forthcoming election—I do not believe it is unreasonable that they might not win a single seat, if you compare the polling with 1972. In actual fact they may not win a single seat in Queensland. You say, why? I will tell you why. We had a doctor that was killing people. Every single newspaper, every single person has called him Dr Death. And did they do anything about it when they found out about him? Yes, they did. They shredded all the evidence. That is what they did! They did not sack him, they did not replace him and they did not stand him down; they shredded the evidence! This is all a matter of public record. But if you do that and you think you can get away with that, well I have news for you. After my nearly 40 years in parliament I can tell you that you cannot if you treat the people with contempt.

The Treasurer in Queensland believed that you can amalgamate all the cities and shires in Queensland because it was very efficient. We did not understand it because we were simple country bumpkins; we would not understand the sophisticated knowledge that he had. This sophisticated knowledge is going to take his party into absolute oblivion in two months time, and quite rightly so. But we plead with the current government, and I must say that I was impressed with the fact that the current minister was on top of her game. I do not often run into ministers who are on top of their game. She understands. But I must say to the minister that understanding it is a long way from changing it, and at the present moment I am telling her that the health services in this country are down to Third World levels.

You have a person on the outskirts of Cairns who had to take their own teeth out. He told them that he was going to do it on Channel 9 and they still did not care! Is it any wonder that they are about to be annihilated in the forthcoming election? If you think you can treat the people with contempt, you cannot. We would plead with the minister to understand that you are not going to be able to reverse what is occurring with the shorter hospital boards. If a person in Richmond and a person on the outskirts of Cairns have to extract their own teeth you are living in conditions that even a Third World country would not be proud of.

We plead with the minister to take these things into account. She has inherited the proposal coming forward this evening. I disagree with it, and we hope that she will listen to and address the other aspects which we addressed tonight. (Time expired)

Tony Crook (O'Connor, National Party) Share this | Link to this | Hansard source

Thank you, Mr Speaker, for the opportunity to discuss the Fairer Private Health Insurance Incentives Bill 2011 and related bills today.

As a member of the Nationals WA who sits on the crossbench, I consider two main issues when considering any piece of legislation that comes before this House. Firstly, I ask, 'How will this legislation impact or benefit my electorate of O'Connor?' And, secondly, I ask, 'How will this legislation impact or benefit the rest of regional Western Australia?'

Over the months I have held various discussions with a range of stakeholders on this issue. I have discussed the issue with doctors, insurance companies, government representatives and analysts. Importantly, I have also discussed this issue at length with various constituents and community leaders. Following this consultation I have come to the conclusion that in imposing a means test on the private health insurance rebate, residents of O'Connor and regional Western Australia will be worse off and, as such, I will not support this legislation.

The first issue that I would like to address this evening is the state of our regional public health system. From the outset of this debate I have consistently stated that my major concerns about this legislation relate to the impact it is likely to have on the public health systems of regional Western Australia. As a former national president and chairman of the Royal Flying Doctor Service Western Operations, I have a strong understanding of regional health issues.

Since my election to this House, I have done my best to keep regional health issues on this government's agenda. Sadly, this government, like previous governments, has failed to give regional health the attention it deserves. As a result, throughout regional Western Australia all aspects of the health system have been underfunded by successive federal governments on both sides. The neglect is most evident in regional Western Australia's doctor shortage. Right now in regional Western Australia alone there is a shortage of 97 doctors. There are shortages across the wheat belt, the goldfields, the south-east, the south-west, the Great Southern, the Midwest, the Pilbara and the Kimberley. Around 80 per cent of these vacancies are classified as an area of need.

Whilst to many ministers, government members and opposition members this doctor shortage is just a number, the situation for many families in my electorate, as indeed around the state, is much more real. The reality for many regional Western Australian families is that they are simply unable to access basic healthcare within a reasonable distance or reasonable time frame. It is not uncommon for families in regional Western Australia to have to wait a month or longer to access a doctor, nor is it uncommon for families to travel up to 200, 300 or even 400 kilometres on a round trip to visit a GP in another town. The reality for many regional Australian parents is that they do not have the local GP to take their children to when they are sick and they never have a family doctor that lives in their town long enough to really understand their family's medical needs. The reality for many local governments in regional Western Australia is that they are forced to use their limited cash flow to pay extraordinary incentives, including the provision of houses, cars, a surgery, practice management and additional cash benefits in an effort to attract a doctor to the town.

The reality for many doctors in regional Western Australia is that they are professionally isolated, forced to work without proper support networks and burdened with the responsibility of being the only lifeline for their entire community—and sometimes neighbouring communities as well. This is a fundamental issue for my electorate.

The neglect by governments of regional health continues to undermine efforts to create vibrant regional communities while placing the wellbeing of many of my constituents at risk. Through this debate, through these negotiations and through the years of previous governments, these issues have not been addressed. In the interests of regional Western Australia I will not support a proposal that puts more money into the federal government coffers without proper investment into the regions.

Further to this issue, I have always had concerns that removing incentives for people to have private health insurance may further burden the ailing public health system. These concerns were validated by the Deloitte report, which indicated that this legislation could see as many as 1.6 million Australians drop their private health cover over the next five years. This is equivalent to the entire population of Perth. This would involve a shift of patients to public hospitals which are already operating the recommended occupancy rate. This would also result in waiting lists for surgery increasing to untenable levels. Analysis of the Deloitte study has suggested that this may result in waiting lists for surgeries blowing out from an average of 65 days to 295 days by 2015. In the areas where our health system is already struggling, these events would be disastrous.

Not only will the legislation negatively affect our overburdened public health system but it could also have damaging effects on our existing private health insurance schemes. The government has failed to address the reality that the abandonment of private health insurance by a significant number of Australians will lead to the increase of costs in private health insurance. HBF has estimated that if the 30 per cent rebate was lost it could add around $500 to the average premium for an individual with combined hospital and ancillary cover. For families, HBF estimates that the average increase at well over $1,000. This will impact on the families with private health insurance regardless of means testing.

I would like to take the opportunity to briefly address the assumptions that have been made about the effect that these reforms will have on regional Australians. Many commentators, and indeed some members of this government, have argued that regional Australians have more to gain from these reforms because regional Australians have less access to private health facilities. As such, they argue that the regional Australian taxpayers have more to gain from winding back private health insurance rebates. There are a number of problems with this assertion.

First and foremost, the argument assumes that the money saved from the rebate reforms will be redirected to regional health systems. However, many years of neglect of regional health issues tells us that this will not happen. In fact, many of these rebates will come directly from the hands of regional voters straight into the federal government coffers, where it will quickly disappear into projects promoted by the east coast and metropolitan centric policies of the major parties.

Secondly, the argument incorrectly assumes that regional Australians do not see private health as significant. From the many discussions that I have had with constituents, I can firmly say that this is not the case. Even if it means travelling to a larger city in the case of an emergency, many of my constituents view their private health insurance and the rebate that comes with it as extremely important. Thirdly, given that the state of the public health system in regions is more dire than in the city, the damage that will be done by people migrating from private health cover will be much greater.

I have clearly outlined the tremendous uphill battle that regional Western Australia has ahead of it in relation to health care and the doctor shortage. While I appreciate that there is no silver bullet to resolve this issue, I am not convinced that the Labor government has addressed this issue with the urgency that it demands. I believe that many families and communities in regional Western Australia would have looked on this legislation much more favourably—as I would have—had the federal government made a commitment to reinvest the considerable savings from the legislation back into regional health. Even a portion of the $2.4 billion worth of savings would have a dramatic and positive impact on regional Western Australia. I am very disappointed that the Labor government has not made any steps to address these concerns.

As already mentioned, this government is not solely responsible for this issue, and I am disappointed that the opposition has not done more to put this issue on the agenda. We must acknowledge that this issue did not develop overnight; it has been ongoing for the last 20 to 30 years. Both parties must accept responsibility for the poor state of the regional Western Australian health system. For the past two years I have tried to convince the government of the need to support regional health in Western Australia. We are currently 97 doctors short. People do not leave the region because the roads are no good; they leave because they cannot see a doctor and they cannot educate their children.

In the interest of creating sustainable and vibrant regional communities, I call on this government to address the doctor shortage and associated health issues rather than concentrate on cost-cutting measures to counterbalance their other misspending. This federal government needs to look at addressing the issues and addressing them urgently. I will not support any reforms to the private health insurance rebate until the health system in Western Australia is properly supported by the federal government.

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

It gives me great pleasure to oppose the Fairer Private Health Insurance Incentives Bill 2011 and the cognate bills. The reason is not out of some great ideological preference, although there is clear philosophy behind our position on this, but out of a practical concern for the impact on the cost of living for millions of low-income Australian workers and pensioners, and out of a concern for the long-term sustainability of not just our private health system but also our public health system.

Let me start by setting out the framework of the impacts of these bills on the real world. Let me begin not with any presumptions of the opposition or assertions that others might make but with the hard world of Deloitte's Australian Health Insurance Association study, entitled Economic impact assessment of the proposed reforms to private health insurance, dated 28 April 2011. The first and most significant figure is a simple one, taken from page 1 of the executive summary:

Private health insurance premiums will rise 10 per cent above what would otherwise be expected. As premiums rise, private health cover will become less affordable for all consumers, that is, not just those who are in the tiers.

By 'tiers' they mean those to be affected by the phase-out of the 30 per cent rebate. What is fundamental here is that this bill is not simply a change in the rate of rebate for upper income earners, as has been presented by the government. It is a major change in the cost of private health insurance for all Australians, and that means that low-income earners, pensioners and single-parent families will simply have higher costs. The answer is very simple.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

Oh, that's just not true, you know that's not true.

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

Let me refer the minister who denies Deloitte's report—

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

I do.

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

that there will be a 10 per cent increase above what would otherwise be expected. It is fine for the minister to attack other members of parliament, but the minister expressly, clearly and absolutely lives in the fantasy that one of the world's leading accountancy firms is carrying on as if it is a fraud.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

It's a fiction. Bought and paid for.

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

I want to repeat what this minister has just said for the record. The Minister for Health, a cabinet minister of Australia, has just said that Deloitte is 'bought and paid for'.

Tanya Plibersek (Sydney, Australian Labor Party, Minister for Health) Share this | Link to this | Hansard source

I'll say it again.

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

Deloitte is bought and paid for! She wants to say it again. The firm will have its chance to respond to a casual accusation of professional incompetency, professional negligence and professional malpractice from a cabinet minister of Australia. That is the position that we have reached with this government: where there is disagreement, not from the opposition but from the highest levels of the professional accounting sector not just in Australia but globally, there is not just disagreement but a gross and vile accusation of professional misconduct.

Let us go on, though, to what Deloitte has said:

That is the threat to the private health sector. That is the threat to the ability of low-income earners and middle-income earners to maintain their private health coverage. So this is framed as an assault on some unfair entitlement for higher income earners, but its consequence, its outcome and its inevitable conclusion—just as we warned, to dismissal and derision from the government, over the Home Insulation Program—will be damage to the sector on a grand scale: the waste of money, the loss of resources and a retrograde step in terms of public policy.

The second great area which will suffer as a consequence of these changes is the provision not just of private health services but of public health services. Let me turn now specifically to the third key finding of the Deloitte report:

The chain of events triggered by the proposed policy change is expected to place additional burden on the public health system

Deloitte estimates that:

That is an inevitable consequence. It is not the intended consequence, but it is the inevitable consequence. To continue:

Between 2012 and 2016, 845,000 additional separations will need to occur in public hospitals as a consequence of the means testing of the rebate

In other words, it is not just bad for the cost of living and for the private health sector; it is a disastrous result for the public health sector, which will inevitably have to pick up the pieces. That is something about which all Australians should be concerned. Whether you believe in private health or you do not believe that there should be any assistance for that, if the public health system deteriorates then it is bad policy masquerading as some form of phantom, phoney class war activism.

Let me go on a little bit further, because we have terrible public policy consequences in terms of both cost of living for lower income earners and the impact on the private and public hospital systems, but we also have a fundamental breach of faith. Let me go back to the statement of the then shadow health minister, Nicola Roxon, on 26 September 2007:

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

Similarly, on 20 November 2007, on the eve of the election, the then candidate for Prime Minister—once again soon enough, no doubt—said:

… I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates.

Those statements, which were declared as an article of faith, an article of principle and a belief which could be trusted, were wrong, false and incorrect. As has always occurred, events are used as a pretext to revert to type and to revert to pathology. So these bills are an assault upon the cost of living, they are an assault upon the viability of the private and public health systems and they represent a grand breach of faith.

Debate interrupted.

House adjourned at 23:00