Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Health) Share this | Hansard source

They told us that that would be the approach that they would be taking. As we have heard a number of times, they have set up in the order of 140 or 150 reviews of policy since they came to government and one of the major reviews that they put in place was the Health and Hospitals Reform Commission. The Health and Hospitals Reform Commission is to inform the government on its approach going forward to health policy. It is also to inform the government on its approach to the renegotiation of the Commonwealth-state health agreements, which is obviously a very important arrangement between the Commonwealth and the states underpinning the funding particularly of our public hospital systems. It sets out the arrangements and responsibilities between the Commonwealth and states with respect to the funding of health between each of the two bodies.

Having established the Health and Hospitals Reform Commission—and that announcement was made in March this year—they have made the change to the Medicare levy surcharge threshold without any reference to that very important body that is informing the government on its approach to health. You would have thought that having established a body that was going to consult around Australia—and I know that the Health and Hospitals Reform Commission has been consulting around the country and the submissions are available to have a look at if the public wish to do so—such a major reform that would have a broad impact on the delivery of health services would have been referred to the Health and Hospitals Reform Commission for an opinion. Yet it was not. So a fundamental change, one that has far-reaching effects, has not been referred to the major body that the government has put in place to look at health reform in the country.

It is not just the opposition that is saying that this is not a reasonable approach, that it is a scattergun approach, that it is not a considered approach in health reform. In fact the ACT government in its submission to the inquiry conducted by the Senate said:

The commonwealth should avoid further ad hoc policy tinkering and cherry picking of isolated reforms in private health insurance.

That is what the ACT government submission to the Senate inquiry said. So it is not just the government saying that this is an ad hoc approach; it is also what is being said by other governments, even those of the same political persuasion as the Labor Party.

Having not referred this to the commission, when the government started to do its costings on the process all the Treasury did was look at how many people they thought might resign or relinquish their membership of private health insurance, and their initial estimate was 485,000 people. During the estimates process when we started to analyse the calculations that the Treasury had made, it became apparent that they had only considered policyholders. They had not considered the entire impact of the measure on the health system and the potential users of the health system. So instead of 485,000 that was the initial forecast provided by the Treasury, once you included dependants into the calculation the number rose significantly—closer to 700,000 people.

There are a range of other estimates from industry that have been submitted to the Senate inquiry and to members on both sides of the chamber as part of the lobbying process this bill has been through to this date. Instead of the 485,000, the estimates from the government are now closer to 700,000. The private health insurance industry estimates something like 617,000 individuals will exit their cover and when you round that up to include dependants it is closer to 900,000 people. So in any person’s language this is going to have a significant impact on the health system in this country, particularly the health insurance sector in this country. And as I will outline as my presentation continues, it will have a significant impact on the delivery of health in this country.

Interestingly, the government’s consultation with respect to this process again was minimal, as we have heard with a range of other measures. They did not consult with state governments, even though state governments fund or half-fund the delivery of health services through the public health system in Australia. There has been no consultation with state governments. But then, that is another concern and I think it provokes the response that we saw from the ACT, where they suggested that the government should avoid this ad hoc policy tinkering approach.

The Labor members will come in here and tell us that this is about giving low-income earners a tax break. They will tell us that there has been no indexation and they will tell us: ‘We are looking after those who need a tax break and we are providing assistance to those people, so we have taken this number of $100,000’. If you earn over $100,000 as a single or $150,000 as a couple, you will be subject to the Medicare levy surcharge. This seems to be a number that the Labor Party have decided upon. It is a threshold that they have applied across a number of measures. What they are saying to people is: ‘If you earn over $100,000 as a single or $150,000 as a couple, you are rich, so you do not deserve to participate in a number of the programs that the government runs.’

There is no justification for this figure. If they are talking about indexation, and that is the intent of the government, then indexation of this measure would have put the threshold at about $75,000 or $76,000. So I do not see how the government can claim that this is an indexation of the threshold. It is basically a decision that the government have made. They have decided on these arbitrary numbers of $100,000 and $150,000 which, if you earn over them, as a single or a couple, you are rich and you do not qualify for the assistance. That is what the Labor Party will tell you when they come in here and make their presentations. But what they do not tell you is what they told the industry before the election.

When Kevin Rudd, the Prime Minister, wrote to the industry before the election, he made a number of promises to them. He said in his letter to them: ‘Labor will maintain the existing framework for regulating private health insurance, including the process for approving premium increases. Zero per cent premium adjustment is not Labor policy. I understand that Nicola Roxon’s office has also confirmed with you that federal Labor has no plans to require private health insurance funds to make equivalent payments to the public hospitals of patients who elect to be treated as private patients.’ He also said: ‘Federal Labor will also maintain lifetime health cover and the Medicare levy surcharge.’ We might revisit that a little bit later on.

It is interesting that Mr Rudd said in his letter that Labor will maintain the existing framework for regulating private health insurance. I think it is reasonable, having received that letter, that the private health insurance industry would have some comfort that there are not going to be major changes to the parameters within which their industry operates—that they can look at setting their premiums appropriately and that they can move forward with the comfort that life will go on essentially as normal—yet obviously that is not the case. I go back to a statement that has often been made to me: do not listen to what Labor say; watch what Labor do. Again, Labor has given the impression that things will remain the same, but obviously in practice that is not the case. We saw it with respect to grocery prices. The Prime Minister led us to believe before the election that he would bring grocery prices down; that has not happened. He led us to believe that he could bring petrol prices down, and that has not happened. He led the health insurance industry to believe that life would be continuing as normal, and of course we now know that will not happen.

I talked earlier of evidence based policy, so let us have a bit of a look at the evidence. I did note that there had been no second-round impacts investigated by the government as part of this process. Yet they have in place, as I have said, the Australian Health and Hospitals Reform Commission, whose task it is to inform the government on changes. We know that the government have not referred this to the Health and Hospitals Reform Commission. When we started to interrogate the government about what this might cost the overall health system, they were not prepared to tell us because they had not done the work. We know this measure is going to have an impact on public hospitals around the country because state governments have told us that it will. Very conveniently, under this new world of cooperative federalism, when it got to appearing before the Senate inquiry, not too many were all that keen to present any hard figures or estimates of what they thought might be going to happen. Apparently they would rather be friends with each other and not let the public know what the impacts of these measures are going to be.

Fortunately, the Tasmanian government, before they had been reminded of their obligations under cooperative federalism, put a line item in their budget papers. That line item relates to public waiting lists. We know that the government has made an election promise to spend $600 million over the cycle to reduce public hospital waiting lists. We welcome that funding. We all know how much stress the public hospital system is under, and we have seen some of that money starting to flow. But, unfortunately, in my home state of Tasmania we have not seen the impact on public hospital waiting lists, quite probably because of the incompetence of the Tasmanian government in managing the hospital system down there.

We see in their projections for waiting lists that their target for 2007-08 was 8,323 and for 2008-09 their target is 8,950. Their explanatory note on why there is this further increase, and why there had been an increase to 8,323 in 2007-08 from 7,119 in 2006-07, says there was a significant increase in the waiting list during 2007-08 in part attributable to the theatre closures at the Royal Hobart Hospital to accommodate building works as well as an increase in demand for elective surgery. I find it amazing that the Tasmanian government make no provision for the fact that they are going to close one of their theatres or try to do something to minimise the impact of that on waiting lists, given that they have made promises to the Tasmanian people to minimise the growth of waiting lists and that they are getting about $8 million from the Commonwealth government to reduce elective surgery waiting lists. But then the note goes on to say, with respect to the increase from 2007-08 to 2008-09, that it is ‘anticipated that demand will further increase as a result of the recent changes in the Medicare levy surcharge threshold which is likely to result in a fall in participation in private health insurance and a consequent increase in the number of patients’. That increase of 627, based on the targets from 2007-08 to 2008-09, is an increase of seven per cent.

If that increase is mirrored around the country then that is going to have a major impact on the delivery of health services through the public health system across the country. There has been debate through the Senate inquiry process as to the quantum, and I will accept that that quantum has varied a bit. But here we have one government who are saying that they expect a seven per cent increase in their public hospital waiting lists as a result of this particular measure that the government is proposing.

But what of the other costs? One thing the government did not talk about, which the inquiry did consider as part of the process, is the increase in premiums and what further impact that may have on people remaining in the system. There seems to be within the reports a consensus that it will be between two and five per cent. But when you add that to what is expected to be the underlying increase—the annual increase that we have come to expect because of health inflation—we are looking at an increase of somewhere between 7½ and 10 per cent in health insurance premiums. Again, that is something that the Australian government has not told the Australian people. We will wait to see what happens with that and we trust that it is not going to have too significant an impact. But it certainly is going to have an impact on the Health and Hospitals Reform Commission process and the Commonwealth-state health agreements going forward.

The Commonwealth expects as part of this process to have a net gain of about $300 million over the next four years. That is what the budget papers tell us. But in the budget papers there is absolutely no allowance for the additional funds that the Commonwealth will have to pay the states to compensate for this measure. When you consider that this measure will take something like $2.7 billion out of the Australian health system based on the government’s proposed savings and the loss to the system of premiums that will be paid, I am sure the states are not going to want to stump up 100 per cent or even be keen to stump up 50 per cent of the increased costs of running hospitals because of a Commonwealth government measure. The states are going to want the Commonwealth to stump up the lot. But even if it is a 50-50 split, if the Commonwealth only stumps up half, that represents a $600 million loss to the Commonwealth government over the forward estimates, based on health insurance industry numbers. So there is going to be a significant cost, and we do not know what all the costs are yet. I think there is great reason for concern about this measure. And it is because of those arguments and those that I am certain my colleagues on this side will quite eloquently put as this debate continues that the opposition will be opposing this measure.