David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

I am pleased to continue my remarks on this important piece of legislation and this important area of public policy. What I want to do in my remarks today is to bust a few myths in relation to health policy and talk about the important changes encompassed in the Private Health Insurance Amendment Bill. I will also talk about the financial situation that the government confronts, not only in health policy but in policy more generally because of the extreme waste of the previous government. Broadly, the government inherited, a fiscal mess—high levels of debt growing very rapidly. It is incumbent upon the government to address that debt and deficit situation, which we are doing, in a sensible and purposeful fashion right across the board in government spending. Indeed, we are returning the budget to near balance within four years and, importantly, investing in areas that require public investment, such as health, in a substantial way. So we want to get the budget back on track, back to a near surplus situation, while at the same time investing in health and other areas.

Let us go to some of the numbers to demonstrate the gravity of the fiscal situation we confront. When Labor came into office there was $50 billion in the bank, no debt at all and no interest payments—because you do not pay interest when you do not have any debt. Over the six sorry years of Labor administration we saw a consistent overspend—deficits of $27 billion, $55 billion, $48 billion, $43 billion and $19 billion, culminating in $50 billion in 2013-14, based on the previous budget. They are very consistent high levels of debt. We will recall that one of the excuses given for this financial mismanagement was that revenue had collapsed—there was this thing called the GFC, which of course was a very convenient excuse for the previous government. It was pretty much trotted out in virtually all situations but it was certainly trotted out as a reason why running these huge deficits on a continuing basis was unavoidable.

The problem with that excuse is that government revenue under Labor actually rose very strongly. In 2008-09, the first full year of the previous government, government receipts were $289 billion; in 2013-14, the last year they were in government, they were $361 billion; and in FY13 they were $348 billion. So over that six-year period government revenue rose by 25 per cent and in fact averaged an increase of 4.5 per cent every year—the compound annual growth rate, as it is called. So government revenue did not go down at all, with the exception of 2009-10 where it did pause momentarily; it went up very substantially. It went up in 2010-11 by six per cent, in 2011-12 by 10 per cent and in 2012-13 by another six per cent. These were very substantial increases.

So there really is no excuse for not being able to make the expenditure match the revenue, but that is of course what happened. As a consequence we have a very big debt that we must address. This government, therefore, has to take a different approach. We cannot sleepwalk into the future, pretend everything is okay and go on running up deficits of tens of billions of dollars every year. We will not do that. So what we have laid out in a methodical and detailed fashion is a plan that gets the budget back on track. The plan means that by 2017-18 there will be a deficit of just $3 billion, so next to nothing in the context of a $460 billion organisation. We have done that by making sensible changes to government expenditure right across the board. Obviously there have been changes in areas such as foreign aid, where we have quarantined some of the larger increases that were planned.

Obviously the principal focus of the discussion today is health. As I said, the government has provided for a situation which gets the budget back under control and gets it back broadly to a surplus while at the same time the government has provided for significant increased investment in health. It is absolutely not the case that government expenditure in health is declining; in fact, it is increasing quite substantially. So the health budget was $64 billion in 2013-14 and will go up to $79 billion in 2017-18. That works out to be an average increase in health expenditure over the next four years of about five per cent. That is a very important point. Health investment is not going down; it is going up and going up at a very solid rate.

There are a number of different areas in which the government invests in health care but the three biggest are Medicare and dental services—they are sometimes treated separately but for the purposes of this it is probably easier to treat them together—assistance to the states for hospitals and the PBS, the Pharmaceutical Benefits Scheme, which provides subsidised drugs to Australians. Let us have a look at what this government is doing in terms of investing in these areas. We should bear in mind that this is in the context of getting the budget back under control. We know that government spending is moderating because we know we are not going to be running massive deficits. We will actually be getting the budget under control but, whilst we are doing that, we will continue to invest very solidly in important health services.

Let us take a look at Medicare services and dental. In 2013-14 total expenditure was just over $19 billion and in 2017-18 the forecast total expenditure is just over $23 billion, so that is growth of about 21 per cent, or annualised close to five per cent. Let me be very clear. Expenditure by this government on Medicare and related dental services is forecast over the next four years to increase by more than 20 per cent. That is not going down by 20 per cent; it is going up by 20 per cent. That is a very important point to note.

Let us look at assistance to the states for hospitals. Mr Deputy Speaker, you may have heard stories of supposed cuts to spending by the Commonwealth on hospitals. That is absolutely false. There is $13.8 billion in FY14 and that is forecast to rise to $18.9 billion in FY18. That is an increase of 37 per cent, or about eight per cent on an annualised basis. So again it is absolutely flat out false to suggest that Commonwealth spending on hospitals is declining. It is not declining; it is increasing substantially. This government is spending significantly more on public hospitals than the previous government ever did. That is an important point: this government is spending considerably more on assistance to public hospitals than the previous government ever did. It is going up very substantially. In fact, by 37 per cent over four years.

Alan Tudge (Aston, Liberal Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

What? Thirty-seven?

David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

The member for Aston is commenting on that very substantial increase. This government is spending 37 per cent more than the Labor Party ever spent on assistance to public hospitals. That does not seem to be consistent with the narrative of those opposite, but it has the tremendous virtue of being true. There is a 37 per cent increase in investment in public hospitals.

Let us look at the investment in the PBS. There are sensible changes to the PBS but nonetheless government expenditure on the PBS will be increasing by 10 per cent over the next four years, an average growth rate of about 2.5 per cent. We see incremental money coming in for the medical research fund—going up to $4 billion by 2017-18—and a total annual increase in health expenditure of just over five per cent per year. That is not five per cent going down; that is five per cent going up. But importantly, whilst there is an increase it is an increase which is being managed in the context of a sensible budget, under which we say goodbye to the years of rampant uncontrolled spending and we say, 'How do we as a government sensibly plan to get back on track for a surplus whilst at the same time invest as required in important areas such as health?' It is very important that that narrative is understood. We see investment in Aboriginal and Torres Strait Islander health increasing over the next four years. We see investment in the subsidies to private health insurance going up in the next four years.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

No joke!

David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

These figures—and I am quoting directly from the budget, so I don't know if the member for Shortland has a different interpretation on numbers which are factual—are a very significant increase in health expenditure. The changes in this bill are a part of that sensible approach to health expenditure. The freezing of the indexation in relation to the private health insurance rebate and related matters will assist in addressing some of those broader budget challenges whilst at the same time being part of an overall approach to the health area of government policy, where health expenditure continues to increase—going up, not down—on an annual basis every year. That is a very important point to note.

What we cannot and will never do as a government is go into that intellectually dishonest and lazy place of putting out press releases, saying there are going to be surpluses and not doing the hard work to actually make them happen. That is not what this government are about. We are about sensible and methodical planning and a part of that is sensible planning which enables continuing investment in health services.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I strongly encourage members of the government to agree to the amendment. The contribution from the member for Banks was a disgrace: an absolute disgrace. It shows just how statistics can be manipulated. No wonder people distrust the Abbott government as much as they do. The member for Banks is a stark contrast to the previous member for Banks, who was such an honest and straight-shooting member of parliament. I would encourage him to go and talk to the health minister in New South Wales and to talk to the Premier in New South Wales, and see whether or not they believe that this government—the Abbott government—is actually ripping money out of the health budget. In actual fact it is over $1 billion a year that it is ripping out of the budget.

Listening to the member for Banks talk about returning the budget to surplus and investing in health, then in between the lines I got the feel of a member who is arguing in favour of a GST and a GST being placed on health along the lines of all the other things that this government has done. They promised before the election that there would be no new taxes—and I will talk a little bit about the GP tax in a moment—and now there is the possibility of a GST. You get the GP tax plus on top of that you get your GST. Really that is an absolute disgrace. No cuts to health? Well, I will be dealing with that in great detail as I go through this speech because this is a government that is cutting essential services. This is a government that is making cuts to health and making cuts to education. It is a government that has absolutely no commitment whatsoever to universal health care, which underpins our health system here in Australia.

It is a government of broken promises and a government that does not really understand health. The Prime Minister did not understand health when he was actually the health minister. When he was the health minister bulk-billing rates in the Shortland electorate were 60 per cent. Following the time since we had the Gillard and the Rudd governments in power, bulk-billing rates were not 70 per cent, not 80 per cent, but 82 per cent. So on one hand we had in the Howard government, when the current Prime Minister was health minister, a man that undermined the universality of our health system.

I think it is really important to make comparisons to health systems in other countries. In Australia, we spend about nine per cent of GDP on health, which is much less than the UK and much less than the US, which is the model that I am sure the Prime Minister would like to see introduced in Australia. I am thinking about the legislation that has been introduced by the health minister. Last week we debated dental legislation. The dental legislation was not legislation to ensure that all Australians had access to dental health; rather it was legislation to waive the debt that dentists incurred when they did not abide by the guidelines of the chronic dental health program. This government and the previous Howard government have an appalling record on health.

To get to the bill that we are talking about today, the Private Health Insurance Amendment Bill (No. 1) 2014: it pauses the income threshold which determines the tiers for Medicare levy surcharges and the Australian government rebate on private health insurance. Talking of private health insurance, that reminds me that this government, when in opposition, said they were going to remove the means testing from private health insurance. We have not seen that legislation in the parliament yet and I suspect we will not, which will be another broken promise. But I think it was a promise that was very sensible for the government to walk away from.

When we looked at the independent analysis before the last election and when the means testing was placed on the health insurance rebate, the detailed analysis predicted that in the first year 175,000 people would withdraw from private health hospital cover and a further 583 people would downgrade their private health cover. Over five years they predicted 1.6 million Australians would drop cover and 4.3 million would downgrade their cover. Now let us look at the facts: in fact, private health insurance is at its highest level ever and continues to increase despite the means testing. Just for the record, before the election the Health Minister asserted that this level of private health insurance would decrease. It was 46 2.2 per cent; now it is 47.2 per cent of Australians who have hospital cover—hardly a decrease.

Everyone knows that those on the other side of this House, those in government will manipulate every figure and will cut services to those people that need them. They have no compunction whatsoever about cuts and putting new taxes on those people that cannot afford them. The effects of this budget that still has not really passed through the parliament is that the budget savings of over $1 billion a year will be made off the backs of the most vulnerable Australians. And people who miss out on safety nets will now miss out on care. So if a person cannot afford to pay for their health care, what they will do will be go without.

This is a government that has wielded unfair cuts on so many Australians in this budget. It just shows its lack of understanding of the struggle that people have each and every day to pay their bills, to be able to afford their health care, to be able to buy their medicines and to be able to access the quality universal health care that has become the rule not the exception in Australia. I really believe that many of those on the other side cannot remember what it was like before there was Medicare, which morphed into Medibank, which morphed into Medicare. They cannot remember how people were constantly hauled before the courts simply because they could not pay their hospital bills or how people did not get the treatment that they needed.

The broken promises and the unfair agenda, the attack on people through this budget is phenomenal. We on this side of the House really strongly support health and medical research. We demonstrated this support when we were in government through commitments of more than $3.5 billion in health and medical research funding, including $700 million to upgrade the health and medical research facilities across the country. In actual fact, the Hunter Medical Research Institute was a beneficiary of that investment in health. It is a fine institution and the research that is being undertaken there is second to none. I would like to put on the record my congratulations to the Hunter Medical Research Institute. I know that they will continue to undertake cutting-edge research.

But what this government has done is give us an excuse the reason it is hitting Australians with a GP tax that will go into medical research. Those in the department did not even know anything about it until three weeks before and is sending medical researchers that should be undertaking research and working in their institutions to Canberra to talk to members of parliament to try and convince them that there is a valid reason to support the change. When questioned, they say, 'We are still working on the higher level aspects of it and we cannot give you any details whatsoever.' So there are absolutely no details about it. There has been no consultation. They did not consult with the Chief Scientist until afterwards then tried to blackmail the health and medical research sector into coming down to Canberra to support a very flawed proposal.

The savings are being made in an environment where the government is really making significant cuts to the health system despite what previous member for Banks said on the other side of the parliament. He is really holding the people of Australia in contempt by making those very flawed statements and he is also showing just the difference between him and the previous member for Banks, who was in there always fighting for the constituents that he represented in this parliament. Rather than fighting for his constituents, fighting for Australians the current member for Banks is making excuses.

The taxes on GP visits are also taxes on pathology and diagnostic imaging. We heard in this parliament over the last week just what sort of an impost those increases, those taxes will have on people. Those opposite have increased the cost of medicine and they have made changes to the pharmaceutical benefits safety net. All these cuts, all these changes are hurting people when they are sick, when they are vulnerable and when they need to look to the government to ensure that they are going to have access to universal health care. But unfortunately the Abbott government does not have that commitment to universal health care.

It is cutting $368 million from the National Partnership Agreement on Preventative Health. One of the first actions of this government was to get rid of the Preventative Health Authority, a body that was undertaking some cutting-edge work in the area of preventative health. The minister and the Abbott government as a whole do not understand that the biggest savings in health can be made in prevention. If people can change their behaviours, if they can undertake activities that will lead to better health outcomes, then our health spending will decrease. But, unfortunately, this government does not see it like that. That was funding that the states relied on for preventative health. That $368 million helped tackle obesity, smoking and alcohol abuse, and now it is gone.

Cutting $229 million from the dental Flexible Grants Program. Once again, that is an attack on dental health; once again, it will to lead to poorer dental health outcomes. Dental health cannot be looked at in isolation because dental health impacts on a person's overall health. Those on the other side of this House do not get that. Every area you look at in relation to dental health care this government is walking away from it. They have made changes based on lies about the sustainability of the health system—a system that is much more sustainable than the UK system, or the US system. This government would like us to replicate the US system, but no-one agrees with the government on these issues.

Professor Owler, the President of the AMA, said that these figures in relation to healthcare spending are not out of control and that there is absolutely no reason to introduce a GP tax. This government stands condemned for its attack on the health system. (Time expired)

Stephen Jones (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Regional Development and Infrastructure) Share this | Link to this | Hansard source

It is a great pleasure to follow the member for Shortland in this important debate. You could not find a more passionate advocate for the interests of health consumers in this country. It is an area of long-standing interest for the member for Shortland—indeed, before she came to parliament she was an allied health professional herself.

The bill before the House is an important one. It deals with private health insurance, the government's subsidies to the private health insurance industry, and how they can be managed in a sustainable way over the long term. It gives parliament the opportunity to focus on how we fund our health system and the role that private health insurance has in that funding arrangement.

Private health insurance is important. It costs the Commonwealth budget in terms of the rebate approximately $5.8 billion a year. That's right: $5.8 billion in 2014-15, which is a little bit less than 10 per cent of the Commonwealth's total health expenditure. It is right and proper that Commonwealth government and this parliament regularly focus on the performance of private health insurance and how much we are paying for this subsidy.

In terms of how private health insurance funds the contribution to total health expenditure in this country, it plays a very important role. The Commonwealth does the heavy lifting directly; nearly 41½ per cent of total health expenditure in this country is paid for by the Commonwealth; followed by states and territories at close to 27 per cent. It may surprise many on the other side of the House who are stern advocates for a price signal when it comes to access to primary healthcare services to learn that individuals already foot close to 18 per cent of total health expenditure in this country. Private health insurance is about eight per cent of the total expenditure on health insurance. So it is an important part—by no means the most important part—of health expenditure. At nearly $6 billion a year, it is something the parliament ought to focus on.

When this bill came before the House, it was met by a collective arching of the eyebrows from those on this side of the House, from each and every Labor member of parliament. That is because the subject matter of the bill is interesting. It was perhaps once seen as controversial by those on the other side of the House. It freezes the threshold for private health insurance rebate and the Medicare levy surcharge. The bill has the effect of reducing the amount of health insurance rebate that will be paid compared to if indexing were to occur as usual—that is, it freezes the rate at which the private health insurance rebate cuts out. It also—and this is not known by everyone—means that some individuals who would not pay the Medicare levy surcharge will pay that surcharge compared to if the surcharge was left alone.

Labor does support the legislation and we will support responsible measures, well-targeted measures, which are aimed at keeping health spending at sustainable levels, and I will go through some of the measures that Labor took in government. When Labor was in government, we introduced measures that ensured that private health insurance incentives were means-tested and made fairer. That was just one of the measures that we put in place.

At the time, those who introduced this bill before the House today opposed it most vehemently. When in opposition they opposed similar measures that we brought before the House. I have to say that, of the many vanities that we accuse the current government of, a dogged adherence to principles is not one of them; when you turn your thoughts to many of the things that were said in this place in 2012 in relation to Labor's fairer private health insurance legislation, you are left rolling around the floor laughing because there is such a gap between what was said then and what is being said by members opposite now in support of similar legislation.

The member for Flinders had this to say:

Significant numbers of consumers will withdraw from their private hospital cover—

1.6 million consumers over five years, he estimated—

or downgrade to lower levels of private health cover (4.3 million consumers over five years) following the proposed policy change.

So there you have it: the member for Flinders predicting a massive exodus as a result of the introduction of means testing for the private health insurance rebate. We know what happened, and that is the exact opposite. Private health insurance coverage rates continue to increase. In fact, they were at record levels when we left office.

But the member for Flinders, never one to be slowed down by facts or principle, had this to say:

That is the threat to the ability of low-income earners and middle-income earners to maintain their private health coverage.

He called Labor's reforms a 'retrograde step' in terms of public health policy.

He was not alone. I am very much looking forward to the contribution of the member for Leichhardt in this debate because when he comes here he will have to retract the things that he said in 2012 when he spoke on Labor's bill, which introduced the private health insurance rebate threshold. He had this to say:

I raise serious concerns about the grave impact these changes will have on our public health system, …

He called it 'blatant cost-shifting':

… blatant cost-shifting measure, shifting costs from the Commonwealth to the states' …

I welcome the comments that were made by the member for Leichhardt in respect of his concern about cost shifting. He did not have the same things to say about cost shifting when the GP tax legislation was before the House. In fact, we did not see him in there backing in the Liberal-National Party government's comments about the government's budget cuts through the tearing up of the health and hospital agreements, where the Liberal and National Party premiers said that there would be immediate impacts on front-line services.: from 1 July this year there will be a reduction of funding for 1,200 hospital beds across Australia. Where was the member for Leichhardt? Backing in his own LNP colleagues in Queensland, in New South Wales and right around the country when the serious criticisms were made about the government's policies.

There is more embarrassment for those on the other side. The then member for Barker had this to say—and I am always very concerned about the impact of any health measure on regional Australia:

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,–

according to the member for Barker—

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.

You have to wonder, Mr Acting Deputy Speaker, whether the new member for Barker agrees with what the old member for Barker had to say on this measure.

I expect the member for Cowper to make a powerful contribution as well. He always does when he comes into this place. In 2012 in relation to Labor's legislation, he said:

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.

I can just imagine the member for Cowper's contribution in the party room caucus: was he channelling the member for Cowper in 2012 or had he a conversion—a Damascene conversion—in view of the obvious facts? So while we welcome the legislation we are deeply cynical of those opposite; as I said at the outset, of the many vanities that we can accuse those opposite of, a dogged and adherence to principal and consistency is not one of them.

The reason that we are willing to support the government in the passage of this legislation is because we are willing to be consistent when it comes to this area of health policy. The private health insurance rebate legislation in 2012 achieved savings of around $3 billion. And despite the fear mongering of those opposite, we did not see a massive exodus from private health insurance in this country. In fact, those Australians who had private health insurance coverage continued to rise.

We need to have a look at the broader context for this legislation, because I have heard many speakers on the debate. I heard the member for Banks earlier, saying that the sole reason that this legislation is necessary and the reason why the Prime Minister had to abandon an article of faith—his promise to remove the rebates on private health insurance—the reason that he had to breach that firm promise to the Australia people, was because health spending was in a crisis and it had to be brought under control.

Unfortunately, the facts do not agree with the member for Banks or anybody else who mounts this spurious argument. If we have a look at what has happened to health spending we are told that 10 years ago the PBS spending was half of what it is today. And we are told that 10 years ago Medicare—the MBS—was 50 per cent of what it is today as well. But the facts are somewhat different. Ten years ago PBS was 3.2 per cent of government spending—that is right, 3.2 per cent of government spending. And if you expected a runaway break-out in costs for PBS—an important part of our overall health spending—you would expect as a proportion of government outlays for that to be three, four, five or six times what it is today. Unfortunately, that is not the case for those who put that spurious argument. In fact, it is less: 3.2 per cent of government outlays 10 years ago; just 2.3 per cent today—in large part because of tough measures that Labor put in place, including the accelerated disclosure regime, which was not always popular but necessary to rein in costs. Ten years ago, Medicare cost 4.8 per cent of government spending. Again, if you expected a galloping, out of control, unsustainable increase in health spending, you would expect it to be three, four or five times what it is today in terms of total government outlays. It is not. It has actually gone down, slightly—I do not make a big point of that—4.8 per cent of government outlays 10 years ago; 4.6 per cent today.

These spurious arguments that are put up by those opposite about the need to introduce a two-tier health system, where we effectively remove bulk-billing, where we put in place massive increases in the costs of medicine through changes to the PBS safety net, where we massively reduce the support that the Commonwealth is giving to the public hospital system and the state-run health and hospital system in this country—around $55 billion worth of cuts—are all built on a fabrication, and it is the Australian people who are going to pay for it.

You must have some sympathy for the Australian people, who are facing massive increases in the cost of their health care on top of one of the largest increases in private health insurance premiums that has been seen in decades—approved by this government, one of the largest increases in private health insurance premiums that we have ever seen. Far from being the champions and far from those who are moved by the DNA, the articles of faith and whatever else floods through their veins, what we have seen is inconsistency and broken promises. But we, on this side of the House, are not going to take an unprincipled approach to it. In government we supported similar provisions. In face of the opposition of those, we will support a similar measure here today. (Time expired)

Andrew Robb (Goldstein, Liberal Party, Minister for Trade and Investment) Share this | Link to this | Hansard source

I appreciate the opportunity to sum up the Private Health Insurance Amendment Bill No. 1 2014. In doing so, I would like to thank all of the members for their contribution to this debate.

The purpose of the Private Health Insurance Amendment Bill No. 1 2014 is to implement a budget measure that pauses the income tiers for the Australian government rebate on private health insurance and the Medicare levy surcharge at the 2014-15 rates for three years. These amendments are being made to the Private Health Insurance Act 2007. It is important to note that these changes will not affect individuals with an income that remains $90,000 or below, or couples and families with an income that remains $180,000 or below. It is estimated that the changes will only impact four per cent of private health insurance policies.

These initiatives, along with many others over previous weeks and more to be presented, formed part of a most substantial budget in May this year. They were required because the coalition have inherited an enormous debt. These measures are just a small part of the government's strategy to clean up the mess left behind by the former Labor government. If we do not tackle these issues, if we do nothing and if we have no policy change at all in the years ahead, we would see what is now a $1 billion interest bill a month—$12 billion a year—grow in a short period of time to some $3 billion a month. That is $36 billion a year. Seventy per cent of all of our public debt is owed to foreign interests. In other words, we would be paying $36 billion a year back overseas and, as a consequence, we must clean up this mess. This bill is all about that.

In summary, this bill will amend the Private Health Insurance Act 2007 to pause the income threshold for the Australian government rebate on private health insurance and the Medicare levy surcharge at the 2014-15 rates for three years, and I put the bill to the House.

Brett Whiteley (Braddon, Liberal Party) Share this | Link to this | Hansard source

The question is that the amendment be agreed to.

Question negatived.

The question now is that this bill be now read a second time.

Original question agreed to.

Bill read a second time.