Jenny Macklin (Jagajaga, Australian Labor Party, Shadow Minister for Families and Payments) Share this | Link to this | Hansard source

First of all, I am making these remarks on behalf of the opposition. Our shadow health minister is unable to be here tonight but I commend her for the outstanding work she is doing in making sure we continue to have a strong universal health insurance system in this country. I move:

That all words after 'That' be omitted with a view to substituting the following words: 'whilst not declining to give the bill a second reading the House notes that the bill is one of many changes the government is proposing that will increase the cost of healthcare.'

The changes contained in this bill need to be considered in the context of the substantial overall changes to our health system. What this bill proposes is relatively simple, but these changes are not occurring in isolation. They are changes that bear some scrutiny because they are from a government that has no vision of how to improve Australia's health system but is intent on creating a two-tiered, user-pays health system.

In opposition, the now Minister for Health was hardly to be seen. He was certainly not seen making any meaningful contribution on health policy. Having now come to government with no plan whatsoever of how to improve Australia's health system, the minister's indolence has been exposed. This government does not have a plan for Australia's health system; instead it sees it as a cost to be eradicated. If this government does get its way, it will see almost no role for the Commonwealth in health care.

The Commission of Audit developed the blueprint for this ultraconservative agenda in its recommendation to exclude high-income earners from accessing Medicare, leaving it only as a residual system for the poorest of Australians rather than the universal insurance scheme it is respected as today. These are concerns that are not solely held by Labor. Indeed, the former Vice President of the Australian Medical Association, Professor Geoff Dobb, described the changes this government wants to make to Medicare as setting health care in Australia back more than 50 years. The current President of the Australian Medical Association, Associate Professor Brian Owler, has been similarly critical of this government's attempts to wreck the health system. Writing in the Sydney Morning Herald on 18 June this year, Associate Professor Owler said:

The health measures in the federal budget are almost universally opposed by the people who provide health services in Australia … The message is clear: the measures add up to bad health policy.

He goes on to say:

The health of Australians is too important for healthcare to be an ideological toy.

It does take a uniquely inept health minister to manage to unite the entire health sector against the government; but the poor policies, lack of consultation and ideological agenda this government has brought to health policy has resulted in exactly that. Dr Stephen Duckett, a respected health economist and former health department secretary, who is now the Health Program Director with the Grattan Institute, said in May this year:

Pre-budget softening up does not obscure the harsh reality of the 2014-15 budget decisions. Bulk billing is gone, health reform agreed by all states and territories is demolished, funding to the states is slashed and promises are broken.

The effects are known: budget savings will be made—over $1b a year—off the backs of the poorest and most vulnerable. People who miss out on the safety net will now miss out on care as well.

Likewise Mike Daube, a professor of public health at Curtin University, said:

This is a distressing Budget for anyone concerned for the community's health. Among the massive health system cuts and increased personal health costs, the once modest funding for prevention has become almost invisible.

The loss of the National Partnership Agreement for public health will mean cuts to important programs around the country dealing with obesity, cancer prevention, diabetes and other conditions that result in massive costs to the health system.

Increased health care costs for individuals will discourage people from seeking medical help—resulting in more preventable and expensive health problems.

Adam Stankevicius, the Chief Executive Officer of the Consumer Health Forum, the group that represents consumers in the health system including some of the poorest and most vulnerable in the community, did not mince his words:

This is a retrograde health budget that will shock Australians who thought this government was the best friend Medicare ever had.

It is important to appreciate the context within which this budget measure is being considered. We are not looking at a one-off increase in out-of-pocket costs but a coordinated campaign to undermine Medicare and relegate it to a safety net for only the poorest in the community. The campaign by this government is well underway: a $7 tax on GP visits that will hit the most vulnerable in the community; a tax on pathology tests; a tax on diagnostic imaging; a $1.3 billion increase to the cost of medicines; and unfair changes to the safety net that will see the safety net increasing by 10 per cent, plus the consumer price index, every single year for general patients and for two scripts per year for concessional patients. The effect of these changes will not only be that pensioners will have to pay an extra 80c for every script; by 2017-18 they will have to fill 68 scripts before they even reach the safety net.

There is also a proposal to bully the states into putting a tax on emergency department visits that will only penalise very sick Australians, who avoid hospital because they cannot afford it, potentially leading to catastrophic consequence. And of course there is the decision to cut more than $50 billion from Australia's public hospitals, a decision that will see the Commonwealth providing the lowest level of hospital funding in Australia's history and an inability for states to actually meet the required level of funding for hospitals.

South Australian premier Jay Weatherill has said that the cuts are the equivalent of ripping $655 million from South Australian public hospitals, which is the equivalent of closing the Flinders Medical Centre—the second-largest tertiary hospital in his state—or the equivalent of getting rid of more than 600 hospital beds, sacking 3,000 nurses and doubling the elective surgery waiting time. We know from evidence given by the South Australian department of health before the Senate Select Committee on Health that the impact of the GP tax on emergency departments will be an additional 290 emergency department attendances, costing the state an additional $80 million.

A New South Wales health document showed a similar impact, with the department there having modelled an additional $500,000 emergency procedures a year because of this retrograde step. On the specifics of the bill before us today, the Private Health Insurance Amendment Bill (No. 1) 2014 amends the Private Health Insurance Act 2007 to pause the income thresholds that determine the tiers for the Medicare levy surcharge and the rebate on private health insurance at 2014-15 rates for three years. What this will mean is that individuals and families with incomes marginally below each threshold will reach the higher threshold sooner.

The bill is to raise more than $599 million in the financial years to 2017-18, but these savings will not contribute to a greater investment in the health system. This does completely undermine the government's argument that spending on Medicare is unsustainable; the basis of its intention to break its election promise that there would be no cuts to health and no new taxes, while they introduce a GP tax. Instead of being reinvested back into improving Medicare, the $599 million to be saved as a result of this bill will contribute to the still-to-be-established Medical Research Future Fund.

Labor of course is the strongest supporter of health and medical research in this parliament. We demonstrated this support in government through a record commitment of more than $3.5 billion in health and medical research funding, including more than $700 million to build and upgrade health and medical research facilities across the country. But the Medical Research Future Fund is emblematic of the dysfunction of this government. We know that the Department of Health became aware of the fund only a matter of weeks before its announcement. The National Health and Medical Research Council had no idea the fund was to be established until budget night, and accordingly had no say on its development. Likewise, the CSIRO and Australia's Chief Scientist knew nothing about the fund until budget night.

This truly is the government's 'hollowmen' moment. Something dreamt up in the weeks before the budget to distract from the horrid landscape created by a budget that includes the $3.5 billion GP tax, a $1.3 billion increase to the cost of medicines and unfair changes to the safety net, more than $400 million in cuts to dental programs, and cuts of $57 billion to Australia's public hospitals that started on 1 July this year.

It shows how uniquely arrogant and incompetent this government is that it cannot, after only a little more than a year, recognise the damage it is doing; and frankly it ought to be ashamed. If one is to look at what this government promised before the last election, and what it is doing now, all that needs to be done it put a 'not' in every promise that was made.

They said, 'No cuts to health'. That promise was broken even before the budget when the government made a decision to cut $264 million from the Priority Health Initiatives, including: $100 million for the redevelopment of Westmead Hospital; $12 million from the Millennium Institute at Westmead; $10 million from the Children's Medical Research Institute; $10 million from Nepean Hospital; $22 million from St George Hospital; $6 million for MRI in Mt Druitt; $10 million for the Queensland cancer package; $3.5 million for Biala Health Service; $15 million for Flinders neonatal unit; $10 million for the WA cancer team; $15.1 million for cancer care coordinators; and $50 million for the stroke package. All of this is gone as a result of this government's cuts.

And, despite promising 'no new taxes', we know the government remains intent on forcing a $3.5 billion tax on every Australian. But this is much more than just a tax on GP visits. We learned in question time last week that the Prime Minister did not even know what the impact of the abolition of bulk-billing incentive payments would be on medical imaging. A day later, the Prime Minister was finally briefed by his absent minister that the government estimated a one per cent reduction in the number of medical imaging services because of the GP tax. What that means in practice is that there will be more than 600,000 fewer medical imaging services in the first year—X-rays, MRIs, CAT scans—all of this, because of the dramatic change that this government is trying to implement.

The Australian Diagnostic Imaging Association, that previously on occasion bulk-billed patients, is now saying that people will face up-front costs of up to $1,263 for a liver cancer diagnosis, $1,326 for a thyroid cancer diagnosis, $2,207 to diagnose liver metastasis and $712 to diagnose breast cancer. These costs are obviously so prohibitively expensive that it should come as no surprise that the government is estimating such a large reduction in the number of medical imaging services: up to 600,000—or even more than 600,000—fewer medical imaging services because of this new tax. On this side of the parliament, we have very grave concerns that because of this very poorly-conceived policy many Australians will avoid services like MRIs, X-rays and PET scans simply because they cannot afford them. The consequences of doing so could be deadly.

The changes proposed by this government stand in stark contrast to the way in which Labor, in government, was able to make responsible changes and to find savings without gutting Medicare. Most significantly, of course, was the decision to means test the private health insurance rebate—something that the now Minister for Health was and remains extremely critical of. But, unlike the Minister for Health—who wants to introduce a GP tax; who has cut $57 billion from public hospitals; and who is seeking to privatise Medicare, creating a two-tiered American-style health system—the changes that Labor made to the private health insurance rebate, including means testing that rebate, will improve the budget bottom line by more than $20 billion in the decade to 2023-24.

In his contribution, the then shadow minister for health, the now minister, said:

Betrayal is becoming a constant of this government and certainly of this Prime Minister …

The minister then gave a righteous contribution that referred to promises that were 'clearly not worth the paper they were written on'. It is worth reflecting again on the context of these changes that we are now looking at and which have been put forward by this government, reflecting on the fact that the promises were certainly not worth the paper they were written on.

In his contribution to the debate on the bill to means test the private health insurance rebate in 2012, the member for Dickson, the now minister said:

In our country we have a universal health system. That means that, regardless of whether you earn one dollar or a million dollars a year, if you have a heart attack, are involved in a motor vehicle accident, have a crook hip, need oncology treatment or whatever, you can turn up at a public hospital and demand treatment free of charge. That has been an underlying principle supported by both sides of this parliament for a very long period of time—and long may that be the case. A universal system says to people that, in a country like ours in the 21st century, the best available services will be provided.

Well, what hollow words from this minister, who has launched the biggest attack on Medicare since it was first established!

I refer, of course, to the 'Coalition's policy to support Australia's health system' and in particular to the commitment on page 6, which is, in fact, the very first page of the coalition's plan after a long preamble and the usual vitriolic political rhetoric. But it is a very important promise and it says:

A Coalition government will support the transition to the Commonwealth providing 50 per cent growth funding of the efficient price of hospital services as proposed.

But the government will not honour this commitment. In fact it is ripping $57 billion out of public hospitals over the next 10 years. The level of hospital funding proposed by this government, contrary to the promises made before the election, is the lowest level of funding since the Commonwealth started funding public hospitals after the Second World War.

When the private health insurance rebate was means tested, the member for Dickson said:

It is interesting to look at some independent analysis of the changes—the Deloitte analysis, for argument's sake. They predict that, in the first year, 175,000 people would withdraw from private hospital cover and a further 583,000 people would downgrade their private cover. Over five years, they predict that 1.6 million Australians would drop cover and 4.3 million would downgrade their cover.

In fact, that is not what occurred. The number of Australians with private health insurance continues to increase. In fact, it is at the highest level ever, and continued to increase in spite of this change. So Labor was able to make changes that improved the budget bottom line by more than $20 billion without gutting Medicare and without hundreds of thousands of people cancelling their policies as the now minister warned.

When the then shadow minister for health made this assertion, 46.2 per cent of Australians had hospital cover; now, 47.2 per cent of Australians have private hospital cover. And when the then shadow minister for health made this statement back in 2012, 53.7 per cent of Australians had general treatment cover, whereas at September this year 55.2 per cent of the population had general treatment cover. It proves it is possible to make changes to ensure the sustainability of our health system without turbocharging Australia's acceleration towards a two-tier, American-style health system.

The $599.3 million to be saved as a result of this bill will not, as I said, contribute to Medicare or to the sustainability of Australia's health system but will contribute to the still-to-be-established Medical Research Future Fund. As I have mentioned already, Labor continues to be the strongest supporter of health and medical research. We demonstrated this again and again during our time in government and we will continue to do so. Our record in supporting health and medical research is clear, which is why we will continue to demonstrate it so that Australia continues to be a world leader in health and medical research. We want to make sure we do this, but we will not support funding research at the cost of taxing the sickest and most vulnerable Australians today.

Labor will not be opposing this bill but, as I have outlined, we do have very serious concerns about the context in which these changes are being made. They are occurring in an environment where we see the most concerted attack on universal health care in Australia since Medicare was introduced, driven by an ideological agenda to render Medicare a safety net only for the very poorest Australians and not the universal scheme it is today. Labor will stand up against this ideological attack by this government. As the party that introduced Medibank and Medicare, we will defend it, and the next Labor government will strengthen it.

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

I am delighted to hear that those opposite will be supporting the bill that is before us, the Private Health Insurance Amendment Bill (No. 1) 2014. At the same time, it was very clear from the speech that we just heard that they still do not understand what sustainability of a healthcare system looks like, so I will come back to that during the course of my speech.

Of course, the objective of this bill is to ensure that our Medicare system, our health system, is sustainable. We want to preserve universal access to health care and we do not want to undermine it, but that means making ends meet. It means ensuring that we have ways of managing the burgeoning costs of our healthcare system, which we know are rising at an extraordinarily rapid rate. It also means having a strong commitment to health and medical research, and that of course is central to the bill before the House.

The Private Health Insurance Amendment Bill (No. 1) 2014 implements a measure which was announced in the 2014-15 budget. It will pause the indexation tiers for both the Australian government rebate on private health insurance and the Medicare levy surcharge. The link between the rebate and the Medicare levy surcharge will be preserved, and this is critically important, because they operate together to ensure that people whose rebates are reduced because of Labor's means-testing have a strong incentive to retain their private health insurance rebate. That link is absolutely central and it is a link that this bill is intended to ensure is in place. It will be done by inserting a clause in the act to pause the indexation arrangements for three years. The indexation arrangements will remain at the 2014-15 rates in the following three years of 2015-16, 2016-17 and 2017-18.

It is important to note that only four per cent of the 6.2 million private health insurance policies held at December 2013 will be actually affected by this measure. As we will see in a moment, they are those of the highest income earners. These changes will not affect individuals with an income that remains below $90,000 or couples and families with an income that remains below $180,000. It is deliberately intended that those who can afford to pay this do.

As we heard from the previous speaker, all savings from this measure will be invested in the Medical Research Future Fund. There seems to be a schizophrenia about this from those on the other side of the House. On the one hand they claim to be extremely supportive of health and medical research, but we hear again and again their criticism of our putting in place one of the biggest funds in health and medical research—potentially the biggest—in the world. The 2014-15 budget committed to establishing this $20 billion fund, and once fully established it is expected to deliver an additional $1 billion into medical research each year, effectively doubling our current yearly investment. So this is a massive commitment to health and medical research, something which Australia is good at and something which we know is critically important to sustaining our budget.

The fund will be the largest of its kind, at least, in the world and will build on Australia's world-class research capabilities. We see those in our universities and research institutes time and time again. The extraordinary role that so many of our researchers have played in addressing serious Australian and global health problems is a real tribute to the quality of those people and the work that they do. All of this is in stark contrast to Labor, who claim to be supportive of health and medical research but who tried to rip $400 million from the pockets of medical researchers in 2011—something that I think Labor would prefer to forget.

I said that we needed to understand a measure like this within the context of the budget. It is very important to remember that the fastest-growing and the largest items in the budget are health costs. To put this in perspective, the MBS costs in the budget are growing at about nine per cent nominal a year—almost 10 per cent a year. For the private health insurance rebate, it is a similar number. These numbers come from the Parliamentary Budget Office. We know that the costs of public hospitals are growing at about seven per cent a year and the PBS a little under six per cent per year. At the same time, we know that growth of the actual revenues coming into the government is much slower, at perhaps five per cent or, in a very good year, even six per cent. The fact of the matter is that, with fast-growing costs and with revenues to the government below that, there is a problem. Those opposite do not like to call it a crisis. We can call it what we like; we have a very serious problem here that we need to address or else our health system will not be sustainable. There are two ways you can attack this. One is you can reduce spending and the other is you can increase taxation. Given that we hear time and time again that those opposite do not want to reduce spending, we can only assume that their solution, if they were to get into government—and I am hoping that we will hear this before the next election—can only be raising taxes. I look forward to hearing from them about how they are actually going to do that.

Paid parental leave does not go anywhere near what is required to deliver on the huge number of promises that they are making to the Australian people around money they are intending to spend. Much of that spending, cleverly, is always beyond the forward estimates. We will need to hold them to account as they start fessing up to the Australian people about what their spending really is going to be if they ever get into government—God help us.

But we know that right at the centre of these costs we face in the health system is chronic disease. We know that it is absolutely critical that we address chronic disease and that it is exactly what the health and medical research funding that we are supporting in this legislation is intended to do. I want to give you an example of a chronic disease problem that is very serious, perhaps the most serious, and that is diabetes. We know that the mortality and morbidity rates associated with diabetes mean that the cost of the disease, both for the individual and for the health system, is considerable, and that is a cost that research must be focused on attacking. We know that right at the centre of this is comorbidity.

We see heart disease at about three per cent of the population but amongst those with diabetes, it is closer to 16 per cent. Across the population, stroke occurs in about two per cent but amongst those with diabetes there is a 10 per cent chance that you will suffer from stroke. Across the population, we see depression incidents at about three per cent but if you have diabetes it is seven per cent and so on. Vision loss across the population is one per cent but if you have diabetes it is six per cent. We know these comorbidities are hugely important and studies have shown that the average direct healthcare cost for a person with diabetes is approximately $6,100 a year and substantially higher for those with complications. That means that the direct healthcare cost is about $6 billion to the Australian taxpayer and to the health system.

Between 2000 and 2009, health costs associated with diabetes grew at about 10 per cent in nominal terms per year compared to substantially less for all other diseases over that period. Hospitalisations account for about 35 per cent of those direct healthcare costs for people with diabetes and 26 per cent of avoidable hospitalisation are due to diabetes. These costs are enormous and they are the costs we must address. We know from experience over decades that the costs associated with chronic disease are best addressed through fundamental research and applied research, which is exactly what we are intending to do with this health research fund.

In my electorate of Hume, health is one of the top issues. It is extremely important because Hume does have an older population and because Hume has a rural population. The chronic diseases of diabetes, heart disease, cancer and so on are serious problems in the rural parts and more broadly across my electorate. Indeed, it is worth saying at this point that my predecessor Alby Shultz is one of those constituents in my electorate who is suffering from cancer right now in Cootamundra hospital. I am sure all others in this chamber and all other members in this House would join me in wishing him well at what is very difficult time for him and his family.

We are blessed in my electorate with fantastic health professionals at every level. But we face a number of challenges. As we came into government, we knew that we had insufficient GPs in many of these areas. If you look across the major cities, we average one GP for 1,100 patients. But if you move to outer regional areas, it is one to 1,400 and if you move right up to the remote regions it is one GP to 2,000. If you look at the towns of Boorowa and Grenfell in my electorate, before we got into office the numbers were worse than one in 2,000. Fortunately, we have been working hard to address that issue. When we got into office, even in the outer suburban areas of Wollondilly, we saw numbers of 1 to 1,500 or of one to 2,000. We are working hard to address that as we speak. There are also great challenges with access to specialist services and great challenges with the quality of the infrastructure, particularly the Goulburn hospital and just outside my electorate in the Bowral hospital.

The full suite of the government's reforms are intended to address these issues, to attack a fast-growing cost base and to deliver better health outcomes. One of those is the Medicare co-payment. Research from my time as an economic student in the 1980s, ably supported by research from the member for Fraser, shows us that a co-payment is an effective way to reduce health costs. The New Zealanders know that, many European countries know that and we see that time and time again. In fact, a very famous paper—I read it in the 1980s—published in the American Economic Reviewprobably the leading journal for economists—demonstrated that the fastest way to reduce health costs whilst maintaining health outcomes was to establish a co-payment. We know that by putting a price on the service, both GPs and their patients will look to use the doctor's time as effectively as they possibly can.

I have also talked about the important reform in the medical research fund. As I said, the focus of that fund will be dealing with those very significant chronic disease problems that we see right across our population and I see particularly in my electorate. Around the country we see all levels of government experimenting with pilots in alternative approaches to service delivery, approaches that better integrate primary and secondary care and reduce avoidable hospital costs, approaches that change the current chronic disease care funding model to incorporate flexible funding models targeting resources with which they can realise the greatest benefit. It is very important that we as a government continue to support those pilots which are already yielding very exciting results. These pilots recognise that there are a number of opportunities to improve outcomes and the quality of care for people with diabetes and other chronic diseases in Australia, and we will continue to support them.

Of course, there are other critical reforms, particularly in regional Australia. We are supporting health infrastructure for training for doctors, and in my electorate we will continue to lobby hard for some of that infrastructure. We are also focusing on providing effective incentives for practitioners in regional areas.

The reform proposed in this bill is a crucial reform. It is a reform that should be viewed within the context of a broad range of healthcare, health system initiatives designed to ensure that our health system remains sustainable for many decades to come—decades which the Labor Party typically ignores in its thinking about the future and in its ignorance about how to actually reduce healthcare costs for decades to come. This is the sort of reform that will address that underlying issue of burgeoning health costs, whilst delivering improving health outcomes at the same time.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

It is great to be up here in support of this bill, the Private Health Insurance Amendment Bill (No.1) 2014, and obviously to second the amendment. Of course, this bill utilises some $599 million worth of savings and that is why it is receiving our support. It is qualified support, of course, but it is receiving our support. This follows on from some $3 billion in savings that the previous government achieved by means testing the private health insurance rebate. That was a sensible thing to do and it contained the highest-growing area of costs in our health budget. That was a sensible saving, one that was bitterly opposed by those opposite—constantly and bitterly opposed—but one that, in this bill, they seem to be embracing. They seem to be embracing, finally, a sensible saving which is ploughed back into the health budget, ploughed back into the sorts of services that Australians expect.

Of course, it has had absolutely no effect on private health insurance numbers, notwithstanding what those opposite said—the doomsayers and the people who were out there scaring everybody and telling everybody that it was going to be the end of the health system as we know it. Quite to the contrary, what we found was that savings were sensibly reinvested into health. In my electorate we saw a number of important cancer centres opened at the Lyell McEwin Hospital, the Gawler Hospital and the Clare hospital. People up in Clare, up in the country—and people further north in the seat of Grey—do not have to drive hours and hours and hours to get to the centre of Adelaide to receive chemotherapy services. It is a very, very important thing. I met people at the opening of those centres who proved to me just what a big difference it has had in their lives.

Mr Ewen Jones interjecting—

It is a sensible approach. I heard about what the member for Hume said, and I am sure the member for Herbert will get up, full of bravado, and talk about all of the government's programs: the GP tax and their cuts to hospitals. I just wish they had talked about them prior to the election.

Of course, in their Our planReal solutions for all Australiansin section 16, 'Delivering Better Health Services', this is what the member for Herbert stood on last election, and it does not mention any of these things. It does not mention any of their broken promises—$50 billion plus in cuts to hospitals. You had better believe that will show up in Townsville. The GP tax: there was no mention of that in Real solutions at all. Of course, that is because those opposite do not want to own up to before an election, do not have the courage or the decency, to actually tell the Australian people their real plan, which is to destroy Medicare. That is always what they have been about.

If we go way back to 14 February 1986 John Howard said that if the Hawke government:

… had not been elected to office the Commonwealth Budget would not contain the absurd and bloated expenditures on Medicare that honourable members opposite have added.

That is what John Howard said about Medicare. He was plain with people. On 21 August 1986 he said if elected he would:

… put choice back into Medicare by a number of steps. Firstly, we will allow individual Australians to opt out of Medicare; that is, not pay the levy provided they take out private insurance. Secondly, bulk billing will be abolished except for such people as pensioners who really need it.

That is what John Howard said. Say what you like about the former member for Bennelong, at least he had the courage and the decency to let people know what his true intentions were. When he finally did change his mind on Medicare, well, at least he had the gumption and the good sense to stick to his word. The member for Herbert and the Leader of the Opposition wanted to lie to people before the election—absolutely mislead people at the last election in order to get their votes. And then after the election we get this budget, cutting $50 billion out of health and the $7 GP tax.

Of course, we do not have to go all the way back to John Howard. We can go back to Fightback! This is the document that led me to join the Labor Party. It politicised me no end. It is often forgotten by those opposite. They remember the GST—that is hard-wired into their brain—but they do not often remember that one of the reasons that John Hewson and the Liberal Party were defeated in 1993 was their all-out assault on Medicare. Remember page 7 of that document:

Bulk-billing will be retained for over four million pensioners, health care providers and the disabled, but will no longer be available to other Australians.

That is what they said in Fightback!This is the other point:

A government monopoly on medical insurance will be abolished and there will be a provision for gap insurance in medical bills.

On and on it goes. Later on in the document it explains their plans in some detail about how they intended to destroy Medicare. That was their intention. Their long-term aim is to commercialise health, to privatise health and to shift costs on to working families. That is not just going to be felt in Labor seats; it is going to be felt particularly in seats in the bush. They will feel it most of all. What we will have in this country is a system of health haves and health have-nots, and that will be determined by your income and by where you live.

If those opposite were paying attention to this, if I was a backbencher on the government side and I was from the bush, I would be terrified about the impact of this. I would be hoping that it would be blocked in the Senate. I would not be putting my name to it if I was a government backbencher from the bush. We had the member for Hume in here proudly telling us about how charging people $7 to see the doctor is somehow going to help the plague of diabetes in this country. It is just extraordinary. There are $80 billion in cuts to health and education, and over $50 billion in cuts to hospitals. That will affect people in the outer suburbs. That will affect people in regional centres. That will affect people in the bush—you better believe it will. And there is the GP tax—$7 every time you wander in and out of the waiting room at your local GP, $7 every time you get a blood test.

We now know the true effect that this will have on diagnostic scans. The Australian Diagnostic Imaging Association has told us exactly the effect of this. People will have to start paying up-front costs: for an ultrasound, $106 to $189, and the real cost that people will face after the Medicare rebate will be somewhere between $16 and $99; for CT scans, the up-front costs will be from $280 to $383 and the out-of-pocket costs $35 to $136; for X-rays, $45 to $92 up-front and the out-of-pocket costs $10 to $56; for an MRI, the up-front costs will be from $403 to $500 and the out-of-pocket costs $65 to $163.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

Is this from the standard talking points?

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

The member for Herbert is telling me that these are some things out of the talking points. They are not out of the talking points; they are out of the budget submission from the Australian Diagnostic Imaging Association. Are you saying they are giving me talking points? I am telling you what is in their submission. I am warning the member for Herbert. I am telling him the effects of his policy and of the bill he has not seen. We have heard about the $7 co-payment, but have we seen the bill? Do we know how it will operate? Can any of those opposite provide me with some assurance about how it will operate? No, because the health minister is somewhere in this building, somehow sharpening up his plans for this disastrous policy of his.

In case you are wondering how that might affect someone with rheumatoid arthritis who needs some scans, the up-front costs will be somewhere between $289 and $549 and the out-of-pocket costs $55 to $316. That would terrify the member for Herbert's constituents and they would be right to be concerned about it. My constituents would be concerned about it too. In the case of breast cancer, the out-of-pocket costs between $46 and $348 and the up-front $410 to $712. These are extraordinary figures, not out of some Labor Party talking points but out of the Australian Diagnostic Imaging Association's submission to a Senate committee on the budget.

We know what is going to happen: 600,000 scans will be missed. What effect will that have on public health and preventative health? What kind of disastrous consequences will that have for individuals, for families and for communities? One million missed GP visits across the country will be missed and 500,000 the year after, with people presenting instead to emergency departments. Those are the consequences of the policies of those opposite—and it was not mentioned in Real solutions, you can be sure of that. On top of that, they are increasing the cost of medicines by $1.3 billion. They are cutting $368 million out of preventative health. How is that going to help the impact of diabetes and other diseases in our country? How will that work?

They are deferring $398 million in public dental care, which will blow-out the waiting lists and leave those affected in pain, and compound their problems and their other health problems. We have had the debate on the dental bill and we know what Professor Newell Johnson said—'It is going to make it worse for people who rely on the public system.' Dr Karin Alexander said, 'The waiting lists are going to grow and you are going to have people sitting there in pain once again.' That is where the government are going on dental gentle. We know we have a system in dental care of haves and have-nots, thanks to the states and the fact that dental is not in Medicare, and that should concern every Australian.

I do not care whether you are a Liberal voter or a Labor voter, whether you live in the city or the country, any time in public health you have a system of haves and have-nots based on your income and the geography of this country and your access to services that is not Australia. That is not decent. That is not the type of country I thought we were.

On top of that, they are privatising Australian Hearing. That is what those opposite are intending to do—privatising an organisation that was created in 1947 by the Chifley government and expanded during the Holt years. It has been around for 67 years to help veterans and the sufferers of rubella with their hearing problems.

Josh Frydenberg (Kooyong, Liberal Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

It still will.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

We have the sorts of guarantees from the parliamentary secretary opposite and we know what they are worth. We know what your word is worth after the last election.

They have dismantled Health Workforce Australia. So no more planning for our health workforce, no more planning for doctor shortages or nurse shortages or allied health insurance—all services that are so important out in the regions and out in the bush.

We know that they have just abolished Medicare Locals at huge public expense, shifting boundaries, messing about with organisations which were just getting on with the job. I went out to Seppeltsfield for the Indigenous Marathon Project. Robert de Castella was there. We were all running. It was a very good program. Medicare Local was there, doing what they should be doing, talking about preventive health, and what are those opposite doing? They are closing it down. They are shifting the boundaries in another bureaucratic reorganisation. They have the gall to stand up in this parliament and tell us all that they are abolishing red tape—that is what we heard in the previous debate— well not for the doctors, not for pathology, not for diagnostic services and not in health. There is more red tape and more out-of-pocket costs than ever before.

They are setting up entire billing systems which have not had to exist before. That is the record of those opposite in health. It should be terrifying the backbench on the opposite side. They should be terrified every time the health minister gets up and says, 'We're the best friend Medicare ever had.' If you think anybody believes that after the litany of broken promises, broken commitments made with a sense of completely bad faith, manipulative and wrong, you will not get away with it. At the next election there will be an army of Labor candidates campaigning against you, stopping you destroying Medicare. There will be more than a few doctors, more than a few nurses and more than a few people from the country who want to stop this assault on Medicare, this assault on the public health system and this assault on the Australian way.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

If I could quickly address the member for Wakefield, he should be very careful who he calls a liar in this place. He spent a fair bit of time talking about dental and I would like to ask whether the axing of the Chronic Disease Dental Scheme was taken to an election. No, it was not. Was getting rid of means testing of the private health insurance rebate taken to an election in 2007? You were in government. You did not take it in 2007. I always like to think that when the facts change I change my mind—I do not know what you do. When Bob Hawke won in 1983 he basically junked his entire election platform because the circumstances around the budget had changed completely. So he changed his mind.

On a personal note, I would like to wish Alby Schultz a speedy recovery. If the old saying that only the good die young holds any truth, Alby is good for another 30 or 40 years. So if he keeps his chin up and makes sure he does what Gloria says, he will not get into any trouble.

I also note that the shadow minister prefers to go on television as opposed to turning up to the second reading debate. I think that shows where her priorities lie.

We went to the election with a four-pillar promise: that we would axe the bad taxes which we have done, that we would stop the boats and there has been only one successful boat arrival this year, that we would build the roads and the infrastructure of the 21st century and over $800 billion of environmental approvals have been given and over $150 billion of infrastructure has started, and we said we would fix the budget mess.

Behind social security, health is the biggest spend in the budget. The federal government will spend $68 billion this year alone as its contribution to health in this country and that figure will rise to $79 billion by 2017-18. Each state and territory government has significant expenditure on health as well. To that end, we spend over $150 billion a year on the health of our nation. We are a First World nation and we expect and demand high-quality, cutting-edge medical treatment. The issue is, though, while technology and robotics make things in general circulation cheaper and more available, quite often when it comes to health it makes it very expensive. What we have to do, as a government and as a people, is pay for it. Private health insurance forms a very large part of that process.

This bill pauses the income thresholds which determine the tiers for the Medicare levy surcharge. It also amends the Australian government rebate on private health insurance at 2014-15 levels for three years. This will be done by pausing the indexation arrangements under the Private Health Insurance Act 2007. I voted against Labor's means testing of the private health insurance rebate; in fact, I railed against it because it should be about choice. Labor went to the 2007 election stating emphatically that there would be no change to private health insurance rebates, but they changed their mind and tried repeatedly until the Greens and the crossbenchers provided support to get it through. We said we would reverse it as soon as the budget position enabled it. I am personally disappointed that we are not at that place at the moment where we can drive private health insurance memberships and choice in treatment further. But, faced with the budgetary position we inherited from the previous government, we are not able to make those sorts of decisions.

No matter what part of the budget you choose, we are under pressure financially. I am personally sick and tired of the argument about emergency. We face growing debt and, even if you disagree with our projected gross debt figure of $667 billion, we face a situation where the previous government handed down budget deficits totalling $195 billion. So whether you choose to engage in any level of argument over the numbers or projections, the base line number of $195 billion cannot be argued.

Additionally, both sides agree that running surplus budgets is a good and desirable thing to do. Everyone around Australia will understand that if you have no debt you can spend all your money. Everyone around Australia will understand that if you have a lot of debt, your spending capacity is reduced. So, when you are faced with a debt and you are a company, you have to consider options. You can either to pull your head in and try to save as much as possible or you can spend and stimulate to try to generate the sales required to make money to pull you out of debt.

The second option is what this parliament decided to do when faced by the global financial crisis in 2008-09. Incidentally, that is also what the Howard government did when faced with the Asian financial crisis of 2001 and it worked

We went into deficit during the Asian financial crisis by $6 billion for that year, but we came out of it strongly.

The thing is you can only spend so much before it becomes counterproductive. Our political opponents will always say that Australia's gross debt to GDP ratio is comparatively low when compared to world standards. That is 100 per cent correct. But debt is more than just a comparison; you have to be able to service it and then pay it down. That is where the problem starts and ends. What we have in this country is a small population and, therefore, we have low holdings of cash. Places like Japan have massive debt to GDP rates but they also have massive national savings. The more debt we carry the more we are exposed to accidents overseas. What do we do if we get hit by another GFC? How will we pull out of that one when we have rising debt now? That is what you have to look at and that is what you have to look for—the next issue, the next problem or the next opportunity.

I have never had a problem with debt, but debt must have a purpose; it must produce a return. That is why, after backing the first round of the stimulus, the coalition walked away from the second round of stimulus. The Rudd government then continued to borrow and spend to create that stimulus. Unfortunately, some of the stimulus was still being rolled out long after the emergency had subsided. Remember, the Asian financial crisis stimulus by the Howard government resulted in a budget deficit of $6 billion and lasted one year. All this time the then government—the Howard government—was still projecting downward trends on our overall gross debt situation.

Which brings me to this bill: it will result in savings to the budget of nearly $600 million over the forward estimates. That is a massive amount of money. But if you contextualise it with the overall spend by the federal government alone of some $280 billion over the same period, you will see that we are only playing at the edges of our debt problems. This bill represents a saving of 2.14 per cent over the forward estimates. That is all. So why do it at all? Because the budget has to be fixed and that is the business we are in. This government is in the fixing business and we all must play a part. My Grandma Jones would always say, 'Look after your pennies, laddie, and the pounds will take care of themselves.' The problem with fixing something though is that, invariably, it costs money. That money comes out of your pocket. It does not come out of your gross income; it comes out of your net income, it comes out of your cash. It does not grow on some magic tree in the backyard, as my kids seem to believe; it comes out of your pocket no matter the case.

It is like when you are moving into a new house. You have just purchased it and you love it, but as soon as you move in problems appear: the downstairs toilet leaks, a couple of windows will not open and the interior needs a repaint. You can continue to live with them or you can fix them. Me? I fix them. Sure I know it will cost money, but if I do it now the cost will be lower over time. Again, the thing to remember here is that I have purchased this house and owe a tonne of money on it. The debt is already there and has to be serviced. The extra bits have to be done and they have to be financed. That financing comes out of my pocket, my net income. It hurts and it hurts now. I will have to adjust my lifestyle accordingly because I cannot simply go and get another credit card to pay for it. They will probably lend it to you, they will probably give you the money, but sooner or later you have to pay it back. Does that make me a bad financial manager? I do not think so. What it does is make me a realist. The ultimate goal of any person who takes out a mortgage is to not have to pay it anymore. That should be the goal of our parliament and our gross debt standing: to be able to get it down to that stage where we are debt free because if we are debt free, we have options. What we handed over to Labor in 2007 was not without its problems, and I admit that. It was not without its structural problems, and we have to address those as well. But what we handed over was a clean set of books, and if we do not address that now we are in for all sorts of strife.

This $599 million will go into an offset account. You will hear the others say it is not even going into debt reduction; the $20 billion medical research future fund is an offset account. It will not only assist with providing money for research but it will also work as an offset account against our overall debt position. It is just the same as having your mortgage, your living account and that sort of stuff. It is your net position that you have to watch for; it is the overall debt position. The money goes into that $20 billion sovereign health fund that will work towards providing cures and research into medical research around this country, which will help us into the future with things like diabetes type 1, things like arthritis, things like heart disease and things like all of those cancers that we have to deal with on a daily basis. We can be that smart country—we are that smart country—and we want to be able to provide that sort of thing.

But the way we are with the budget at the moment it is like one side of this parliament, our side of the parliament, is saying, 'We've got to remember "A stitch in time saves nine,"' whereas the other side of the parliament seems to be saying, 'Let her rip!' We just have to try to understand where we are coming from here. I understand where we come from; I understand there are different philosophical positions. I am happy with that, and I can live with people's philosophical positions. I heard the member for Blair in here last week telling me that people on that side also ran businesses, and he ran his business for 20 years and invariably it was very successful. But I bet he did not risk it by continuing to borrow and I bet he ran his business at a profit, because that is what you have to do. If you do not have money in the bank you cannot do anything. That is what we have to do—that is, address the basic issue here of financial management. At the end of the day, health, education—no matter what it is, it comes down to economics; it comes down to who is going to pay for it and how. That is what it comes down to.

So while I admit this is a massive amount of money that this saving will be for the person in the street to get their head around—$599 billion—when you consider it over the forward estimates of $280 billion worth of spend, we are not talking about a massive percentage of saving here. What we are talking about is putting the money somewhere where it will be safe, somewhere where it cannot be taken into the future and somewhere where it will be used for medical research and for the benefit of all Australians.

I will not be supporting the amendment, but I do support Minister Dutton. I support what he is trying to do here and I support the Treasurer, Joe Hockey. I do support what they are trying to do with our budget situation. So while I will not be supporting the amendment, I will be supporting the bill.

Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

This bill amends the Private Health Insurance Act 2007 to pause the income thresholds that determine the tiers for the Medicare levy surcharge and the rebate on private health insurance at 2014-15 rates for three years.

Nothing is more important to most people than high quality health care. In the spirit of that, Labor will support the savings measure in this amendment, but it is worth pointing out a few things in this debate and getting them on the record in this place. I want to canvass a few ideas about the history of the Private Health Insurance Act, like many that have spoken before me, and what this bill, when matched with this government's budget, says about this government's understanding of health care, its attitude to health care, its priorities when it comes to health care and some issues around where the savings will be spent.

There is some irony in the histories that we have heard from the member for Wakefield. The Medicare levy surcharge, of course, the private health insurance rebate and the Lifetime Health Cover measures were introduced by the Howard government in the mid 1990s. It was purported that they were introduced to stem the decline in private health insurance membership. I well remember that legislation being brought into the House, because I have vivid memories of the scare campaign that was run through the television screens around Australia. I remember watching those advertisements in my lounge room. The punitive nature of the advertising campaign was scaring me at the time—I was a single mother with three small children and was working part-time as a teacher to balance the budget and pay off a mortgage. My children were not spoilt, because they could not afford to be spoilt. I remember having nightmares—nightmares—about whether or not I could afford private health insurance. It was a moment I well remember.

These measures were put in place to encourage the take-up of private health insurance, with the argument that it would reduce pressure on the public health system. When the previous Labor government made changes to the threshold to this act and introduced means testing, we saw another scare campaign. This time the then opposition opposed the measure on the grounds that people would drop private health care cover. This, of course, did not eventuate. Indeed, the current level of private cover is the highest we have seen.

Contrary to that scare campaign, health-insurance is healthy and growing. That is one of the ironies in why we stand here to support this bill and we will not go into the scare campaign on it. Another irony is that this government is now doing exactly what it said would lead to people pulling out of private health insurance. Let's face it: this is a small save when compared to other cuts to health in the budget.

But the sweetest irony in the area of health is a little more complex. We hear the minister saying how important the sustainability of health care is to him and to the country. He does this while he introduces the GP tax, claiming it to be modest, yet in many households around the country it will not be modest. The introduction of that tax will also raise out-of-pocket expenses and front-up expenses on diagnostics, increase in the cost of medicines, change to the PBS safety net, cut various preventative health programs and—I think this is the most ironic, of course, because we are talking about savings measures to make health care less expensive for the government—cut preventative health measures, particularly when we have the challenges like obesity and diabetes. Cuts to dental programs have been canvassed—certainly by the member for Wakefield. We have the closing of the Medicare locals. They will all be closed, then reopened and rebadged to the cost of, according to reports, $200 million.

The worst, though, is the dismantling of bulk-billing incentives and $50 billion cuts to hospitals. And what is the justification used for these cuts? It was a budget emergency. Health spending was out of control. So we had a lot of fearmongering around health spending being out of control and health overtaking everything else in the budget, but of course that has been summarily dismissed of late with the Australian institute of health and welfare last month reporting that growth in health spending was actually at its lowest level in decades. In fact, the Australian Medical Association president associate Prof Brian Owler—and I note today in question time that the Prime Minister said he had a lot of expect respect for the AMA—said: 'The figures in the Australian Institute of Health and Welfare's report really make a mockery of the government's claim that health care spending is out of control.' Prof Owler went on. He said, 'These figures actually show that health care spending is certainly not out of control, and there is absolutely no need for them to introduce a GP co-payment.' So the premise for the savings across the health budget are being challenged. The facts are that health spending by the federal government fell in 2012-13 2.4 per cent in real terms. State health spending fell by 1.5 per cent. All of this is backed up against the fact that private spending on health for Mr and Mrs Average went up by 6.9 per cent with an increase in private health insurance.

Ross Gittins last week wrote something interesting as well. He said:

Actually, the real fall in federal spending seems to be largely the product of savings measures taken by the previous government, particularly its tightening of rules for the private health insurance rebate - which the Coalition fought so hard to stop happening.

So the last government, the Labor government, made real savings, opposed by those opposite—in fact demonised by those opposite—with stories of the sky falling in and people dropping out of private health insurance. We find that now not be the case and that the savings were made by the previous government.

So Labor will support these savings measures as we introduced the means test to bring a savings measure into the health budget. But there is a danger here—perhaps an unforeseen one: perhaps with this government's apparent loathing for modelling we have not seen any of the risk in this assessed, because perhaps the measure introduced by Labor that the then opposition thought would bring down the sky and instead saw the highest rates of private health insurance ever might have a negative impact this time.

As I alluded to earlier, I well remember the scare campaign to get Australians to take out private health insurance. I well remember it because I was not in a position to take up that option. I well remember the sleepless nights I had and the fear I lived with because I could not make that choice. I am concerned that, when combined with the other cuts to families in this budget, other families may now find themselves in that space. Perhaps when it is combined with the 6.9 per cent rise in premiums that the minister has approved since coming to office it will in fact have that effect. We will see in time.

Labor support sensible health savings and support savings going back into the system for further improvements, like preventative health measures—something it seems this government has little regard for—but we do question the savings being directed to the Medical Research Future Fund. We do this on a few grounds, but mostly because of the lack of detail around this fund. There has been no information about its establishment. The federal and state health departments have not been involved. The Chief Scientist has not been consulted. There was no dialogue with the health and medical research sector before it was introduced on budget night. So we have some concerns about making savings supposedly for a budget emergency but then, rather than using them to cover some of the cuts that are carried through in the budget, putting them into a research fund that has very little detail around it. It all reaffirms for me that those opposite know the price of everything but very little about the value.

Labor has a record of heavily investing in health and medical research—a total of $3.5 billion since 2008. This funding supported 8,500 researchers working to improve Australia's health at over 80 institutions, including hospitals, medical research institutes and universities. Through its Health and Hospitals Fund Labor also invested $700 million to build and upgrade medical research facilities across the nation. Labor also knows the value of embedding health and medical research into all aspects of the health system—not separate, not sitting outside, but built in—because health services conducting research deliver better health outcomes for patients.

The cuts this government are making in health are all based on ideology. They seem keen to dismantle Medicare and create—and they do not like to hear this but this is what it will in fact be—a two-tier American-style health system where one tier can pay and have access to the benefits of medical research. Their access to health provision is determined by their wallet. Labor believes there should be universal access to high-quality health care. Medicare was established to do that. It is a legacy of the vision of former Prime Minister Gough Whitlam. When we do the history lessons again we will see it was dismantled by Prime Minister Fraser and then reintroduced by Prime Minister Hawke.

Labor will continue to stand up for Medicare and for universal health care. Although I support this savings measure, I do have some concerns about what the combined impacts of those things might be. I think it is worth me standing here as the member for Lalor and raising those issues because there will be many families in my electorate who will be having to make clear decisions about whether they will be able to continue to afford private health cover, given some of the other measures contained in the budget, if and when they get through. So Labor will support the savings measure but would prefer to see the savings redirected to the health sector to minimise the impact of the other cuts across the health sector that were contained in the budget.

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

This is a really important debate on the Private Health Insurance Amendment Bill (No. 1) 2014. I know all of Australia is listening to this debate on the future of private health insurance. I think the member for Lalor, the previous speaker, was quite right to say that coverage continues to increase to over 55 per cent of the Australian population. As you travel around the OECD you see that that does reflect that we are a nation that equally gives Australians the opportunity to contemplate public or private provision of social services both in health and education. We have a delicately balanced system in both school education and health as a result. That is something to be very proud of.

I am also proud of the coalition's continuous support for the important role that private health insurance plays in this country. We do not need to apologise for that. We are one of the few nations in the world that still have the appetite for a debate over whether private health service provision is a bad thing or not. Most other economies have moved on now and appreciate the role that that plays, but here we have a rancid partisan debate—a continual and utter fixation on destroying private health insurance from the Labor Party. It is something that has held back health reform over the last two decades significantly.

When you have the Labor Party that can see no further than what can be provided for free and protecting the dream of Gough Whitlam's Medicare into perpetuity—nothing beyond that—then it is almost impossible to have a constructive debate about where the health system is heading. Well, this is where it is heading. It was Michael Wooldridge who had the foresight in the late 1990s to rescue plummeting private health cover levels by introducing the three-legged policies of Lifetime Health Cover, community rating and a private health insurance rebate. Academics have looked at these three and tried to evaluate which was the most powerful incentive for people to take up and maintain private health cover. I think most agree that it is the Lifetime Health Cover model unique to Australia which applies to those individual citizens who do not take up by the age of 30 private health insurance but were financially able to do so. When they choose to take out cover at a later time, two per cent is added to their premium for every year of life after 30, capping out at a 70 per cent premium approximately for those who take up private health cover for the first time at the age of around 65. That additional LHC is paid for a 10-year period, after which the premia revert to the normal levels. That Lifetime Health Cover model has had an extraordinarily powerful uplift effect on private health cover in this country. It is something that a former health minister, Michael Wooldridge, can take the credit for, as can the then coalition government. So it goes without saying that, when it comes to reforming the health system to ensure that both the private and public health systems can thrive, it is coalition governments that pursue that objective. At the moment, however, there is a Labor opposition constantly nickel-and-diming the private system and doing their best to undermine it.

I appreciate that Labor are absolutely captured by the notion that every piece of interference they can run against the private health system is in some way a dollar that goes back into the public hospital system. If only it were that simple! If only making it tough for families to keep their private health insurance in some way made our public hospitals better, that might be a debate we could contemplate. But it is sheer rubbish. It is not the case at all. In fact people who take out private health insurance fund their way through an enormous amount of health services in this country. More than half of all the hips and eyes—all the high-expense, rapid throughput surgery—done in this country are done completely on the private purse, with nothing more than a Medicare rebate for the procedure. Many of those Australians pay significant out-of-pocket costs to be part of that system. This is Health Insurance 101—but Labor continues to have a problem in understanding the role of private health insurance.

When Labor were looking for savings, where else would they go but after the hardworking Australians paying private health insurance? They thought there was easy money to be gained there of course. The first thing they did—after promising before being elected that they would not touch anything, which we know was a great distortion of the truth—was to suddenly come up with tiers. Suddenly, if you earned more than $90,000 as an individual, you were wealthy and deserved a lower private health insurance rebate. Keep in mind what a rebate on your insurance policy is. A rebate is saying, 'Thank you for taking out your own health insurance', because—wait for it—when there is a 30 per cent health insurance rebate, for every dollar that goes into the system, the federal government pays back 30c to say thank you. Were that system not in place, that 70c would never have been invested in the health system.

Most people forget this, but it is private health insurance that is building, all around this country, the private hospitals of tomorrow that will care for me and my cohort when we need them. Let us be honest: when there is a sudden demographic requirement for additional hospital places and hospital beds, there is no point trying to build them then. By the time you need them, it is too late. They have to be there beforehand. It is the private health insurance premia paid all around this country by nearly 11 million Australians that will ensure the hospitals are there. I can say that because I have worked in public hospitals, private hospitals, public general practice and private general practice. The great Australian system, which delivers some of the best health outcomes in the world and gives us the second-longest quality-adjusted life expectancy in the world, is achieved relatively modestly. Part of that is because of private health doing its part to take people off public hospital waiting lists.

In debating tonight's amendment, recognise that Labor made it virtually impossible for us not to have to contemplate not only a continuation of these tiers but, in our case, a freezing of indexation for those tiers. For a very small number of Australians, that means that they will potentially—because these tiers will not go up as incomes increase—be tipped into higher tiers and therefore receive slightly smaller private health insurance rebates. Other Australians will also come up against these tiers and find themselves contributing a larger Medicare levy surcharge—increasing, for instance, from one per cent if you are earning around $105,000 to 1.25 per cent the minute you tick over that. That rate then applies up to $140,000, at which level it ticks up again. Those three tiers remain, but they will not be indexed up for inflation. As people's incomes increase over time, they will move into higher tiers. The incentive to take out private health insurance, however, will be just as strong, because you will face a higher Medicare levy surcharge if you do not. From this you can see that some Australians will be paying more, but the sum total of those extra contributions will be directed into the Medical Research Future Fund. That will be a very important contribution.

When Labor is in power, they pretty much completely ignore and blacklist the private health insurance system—unless they can see the chance to rip some money out of it. It is fascinating that, after six years of Labor, we still have 34 health insurers. But it is an enormously complex terrain. Treasury modelling was constantly trying to identify whether fiddling with the system—first of all by creating these tiers and means-testing the private health insurance rebate and, secondly, by saying that the lifetime health cover component of your premium would not be eligible for the rebate—would cause people to drop their cover.

There were a range of predictions—from Treasury saying there would be almost no effect through to the private health insurers, who had great reservations about the impact of Labor's changes. In the end, I think the score was one all. The fall in private health insurance has not been anywhere near what was predicted by the private sector. But where Treasury got it wrong was in failing to predict the number of people who would downgrade—those Australians who would say, 'I have to get just enough private health insurance to avoid the Medicare levy surcharge, but I am going to get as many exclusions and downgrade as much as I can, simply to avoid the tax.' How utterly rational! Possibly up to two million Australians did that. It is difficult to pick through the numbers and work out how many were genuine downgrades and how many were simply phoning up iSelect and being told there was a cheaper policy somewhere else and taking it. In the end, though, two million out of 13 million Australians took out more trimmed-down private health insurance cover.

How could that possibly matter? If you live in a regional town, if you live somewhere outside of the capital cities where there are no private hospitals, suddenly it does matter. When people drop their ancillaries and no longer have cover for optometry or cover for allied health, suddenly a whole lot of work disappears for our regional allied health providers—who are there backing up the local, often solo, GPs. Allied health providers form a modest but very powerful, in fact elite, health provision network in some of the most remote parts of the world. This is Australia's secret: we can deliver some of the highest quality health care to remote populations and to small population centres

That is what gets undermined by Labor's approach, because in those towns the propensity to take up private health cover begins to be undermined. Why take out the cover if there is no clinician to see in town? Sure, you have a general practitioner; and most Australians in those areas, regardless of their income, are paying full tote to see their general practitioner—in many cases bulk-billing rates are very low and there are large out-of-pocket expenses—only to suddenly find, through Labor's reforms, that the allied health providers are leaving town and the only hope is driving to a nearby public hospital and being in a very long queue for care. That is the alternative—but, in the end, that is Labor's picture, isn't it? Labor's vision for health is simply to undermine private health insurance at every opportunity and do their best to drive every Australian down the road to the local public hospital.

That is not the Australia I want to see in the future. I have a vision that Australians will always have a choice. I know that at least 10 per cent of people with private health cover are low-income earners. These are people who are earning, often, a minimum wage and are weighing up whether they take out private health insurance or choose to send their children to a low-fee, independent school. I celebrate that we live in a country where we have that choice because there are plenty of nations where there is not. The first thing you do, if you want to undermine that, is start taking away the incentives that work.

Why does this sound familiar? Why does this ring true? Doesn't this have a flavour of the immigration debate when, under Kevin Rudd, they slowly and steadily unpicked and unravelled, with no idea what it was going to do to people movement? That is exactly what happened in private health. There were promises before the election not to touch the rebate and the reality afterwards was they hooked straight into it, creating tiers and undermining insurance. For those of you out there who thought you were getting a 30 per cent private health insurance rebate, let us look at the numbers now. If you are between the ages of 65 and 69 and you are earning over $105,000, that rebate is now under 15 per cent. If you are under 65 years of age and you are lucky enough to be earning over $105,000, that rebate has now fallen to 9.68 per cent. True, people have not pulled out in numbers as large as some predicted; but I have made the really clear point that it is the downgrading that matters. It is the downgrading that kills off regional and remote. And we have exclusions that are even more concerning, because Australians looking for the cheapest way to avoid the Medicare levy surcharge will start looking for the cardiac exclusion or the arthritis exclusion—they will start looking for any clinical exclusion to get the policy slightly cheaper but still get the full-tote, 30 per cent rebate, or as much of it as they are able to get. The result is that those costs are simply transferred back to the public hospital system. In the end, that will come home to roost. That is obviously another one of those Labor impacts.

Lastly, when Labor attacked private health insurance with these tiered approaches, we saw a complete gaming of the system with Australians rushing out to prepay their health insurance prior to July 2012. Wasn't that ridiculous? 'Let me pay one more year in advance so I can secure as much of the private health rebate as possible.' That was a another mistake by the then Labor government.

In conclusion, let us be honest: if you like private health, then for goodness sake, you want to keep Labor Party fingers off it. If there are areas where you can improve private health insurance, it is not going to happen under that mob over there. Right now we know there can be improvements. There are 34 insurers and they are working to build membership. They cannot promote their services to individual cohorts within their membership. I lament that the first time that many private health insurers know they have a member with diabetes is when they get the bill to take off the toe. They need to know much earlier than when there are catastrophic items being charged for under Medicare and seeking a rebate, so that private health insurers can be part of health prevention. They are still not able to do that.

Lastly, there really is a role for looking again at the reinsurance model which says that, where high-cost patients are borne by the private health insurance system, they are effectively shared among a pool of reinsurance—to ensure there is a community rating in place so that no insurer will be reluctant to take on high-need patients. But in the end we also need to make sure that, if insurers are going to do their best to reduce those costs in those complex chronic-disease patients, they get the full reward of their work. If they can halve the cost to the hospital system of some of these patients, why should that not simply be shared around the reinsurance model? Those are two very pertinent points made by the private health insurance industry.

In closing, the coalition was the architect of private health insurance. We built it back from near death in the mid-nineties, after 12 years of Labor. It is the coalition that continues to fight for its right to exist. We are the party that can see the role of private health insurance in overall health and hospital reform. I urge everyone out there who has seen their premium nickel-and-dimed over the last six years: we must do everything we can to keep private health levels as high as possible.

Debate adjourned.