Simon Birmingham (SA, Liberal Party) Share this | Hansard source

I am pleased to make a contribution to the important issue of the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008. At the outset, it is important to note the underlying strength of Australia’s healthcare system. We do indeed live in a lucky country and it is often easy to forget that and, occasionally, it is easy on this side of the chamber for those of us who are not in government to overlook the strengths of our healthcare system. Australians enjoy ready access to health care that is in most instances of a very high standard. It is of a standard that people around the world would wish to be able to access. Certainly, if you ask many Australians where else in the world they would rather go, they struggle to name somewhere with a comparable standard of health care.

We are not without our problems. We regularly see tragic and terrible stories of a lack of access, of waiting lists, of problems in public hospitals in particular and of unfortunate instances of malpractice. These rightly concern the public, because whilst we have a great system we should always be striving for that great system to be even better—to be a system that the world continues to look to with great envy. And the world does look to the Australian healthcare system with great envy because we have been a nation that, in recent times in particular, has sought to get the balance of how we deliver a world-class health system right.

We deliver it by ensuring that we cater for the mix of needs—that we cater for those who are less fortunate in society and that we have a strong safety net in our healthcare system, as we do in our social welfare system, which ensures ready access to people who could otherwise not afford it. That is the strength of Medicare and of our public hospitals system: being there to support those who otherwise may not be able to access it.

But we also strive to get the balance right here in Australia because we support and have supported and have worked to develop a private system that runs in tandem with and is complementary to the public system of health care. It is a private system that ensures that those who can afford to pay that little bit more not only choose to do so but are encouraged to do so. In doing so, they make a greater contribution towards their own healthcare costs and ease the burden and the requirements on the public healthcare system.

Regrettably, this is a bill that harms that system. This bill hurts the private system and in doing so it hurts the public system. It knocks out of balance what we have sought in Australia to build up over many years—and particularly what the former government sought to build up. Upon coming to office in 1996, the former government recognised that, although Medicare was important and was operating strongly, there was scope to improve both Medicare and, in particular, our private healthcare system. We worked on Medicare through the course of our period in government to improve it by introducing the Medicare safety net as time went on. We ensured, of course, that we were a true and good friend to Medicare and that we supported those who needed support—those who were less fortunate in society and faced higher medical costs.

But we also worked very hard to develop and strengthen the private health insurance industry. We did that through a multifaceted approach. We recognised that there had to be, if you like, carrots and sticks applied to ensure that those who could afford to be in the private healthcare system had every incentive to do so and every support to do so. There was a mix of measures. We introduced the 30 per cent rebate on private health insurance, which has been grasped by many Australians and is seen by so many people as being the difference between keeping private health insurance and not keeping it.

For older Australians in particular—for whom it was a matter of balance, of juggling their budgets, but who held on to their private health insurance because they value the choice of doctor and the safety in the knowledge that they will be able to get a hospital bed or the treatment they seek when required—the 30 per cent rebate has been a critical component in ensuring the right balance between private and public health care in Australia.

We introduced lifetime coverage to ensure that there was an incentive, particularly for younger Australians—people, dare I say it, of my generation—to think about taking out private health insurance earlier in their lives and maintaining it throughout their lives. This was a recognition that a private healthcare system purely made up of older Australians would be an unsustainable private healthcare system. We need the spread of ages encouraged into the marketplace, incentivised into the private healthcare system. Consequently, lifetime coverage does that. It makes younger people think about it, it makes them consider making the choice and it has been one of the three key factors in our success.

The third was the Medicare levy surcharge. The third, if you like, was the stick. We had the carrot. The carrot, of course, was the 30 per cent rebate. We had some practical measures, but we also had a threshold—the Medicare levy surcharge that comes in at a threshold of income. That is important as well. It is important to make sure that we recognise that society says, ‘Actually, just as we have a progressive tax system that recognises that those who earn more contribute more in taxation, those who are a little bit wealthier in society should be encouraged to contribute a bit more towards their healthcare needs, to play a role in supporting the balance, Senator McLucas, of private and public health care.’ And so we had these three pillars. From that, we saw great, strong growth in private health insurance over the years the previous government were in office.

Some 44.6 per cent of the population are covered by private hospital coverage, according to the Private Health Insurance Administration Council. That is nearly 9½ million Australians who are covered and who recognise, through the mix of incentives and encouragements to get people supporting private health care, the need to make that contribution. That is a vast number of Australians who see the need for balance and who are contributing to that balance in our system between private and public treatments.

Along came the budget this year and, out of the blue, as was the case with so many aspects of budget announcements, the government announced that they were going to lift the threshold on the Medicare levy surcharge from $50,000 to $100,000 for singles, and from $100,000 to $150,000 for families. When the government introduced this, did they say that these figures are simply indexed from the time of the introduction of the surcharge? No, they did not. As for many of their budget measures, they plucked the figures and the measure effectively out of thin air. They picked nice, round numbers. That is perhaps the justification they used. They were nice, round numbers, but that is the full extent of their rationale it seems for the figures they chose. Just as the government chose to introduce an increase in the luxury car tax, just as they chose to whack a tax on condensates, just as they chose to means-test solar rebates, all of these measures were plucked out of thin air and were undertaken with zero consultation with industry or the affected parties. All of these measures have a punitive effect on the industries involved and the government just charged ahead without any consideration and without any sound rationale applied to the decisions they made and to the figures in particular that they advocated.

You might think that, because this is a surcharge on the Medicare levy, the government’s move will cost them money. That might be what you think. The government have indeed tried to argue that this is somehow a tax relief measure for families. But, in reality, the government presented their budget figures and claimed it as a saving. They claimed it as a saving because they are budgeting on a whole lot of people not taking out private health insurance and therefore the government not having to part with the 30 per cent rebate for that private health insurance. So they know full well going into this measure that it is going to drive people out of the private health insurance industry and they treat it, therefore, as a savings measure.

Is it a savings measure? Of course it is not a savings measure if you consider the overall net impact on the healthcare system of Australia. It is not a savings measure because it is a cost-shifting measure. It moves costs from the private sector over to the public sector. From the government’s perspective, they are looking at it and saying, ‘It is not a direct cost to us because the states pick up the tab for public hospitals.’ So whilst it may help to prop up a little bit more the budget bottom line and the surplus that Mr Swan, Mr Rudd, Senator Conroy and others like to spend so much time talking about—the surplus that they, of course, inherited from the previous government—it is actually not a saving for the country but in fact a higher cost to the country.

It is a higher cost because Australians will need the same amount of Medicare, the same amount of health treatment and the same number of hospital admissions, but they will be looking through the solely taxpayer funded system of the public health sector to provide it rather than chipping in their bit and going into the private healthcare system. It is broadly recognised that it will cost the states more. Not all of the Labor states had the courage to admit it, but I am pretty sure they all recognise that this is a cost-shifting measure that they will have to recoup. Indeed, the outgoing Western Australian Minister for Health, Mr Jim McGinty—who I am very pleased to see will no longer be the Western Australian Minister for Health, and I note how happy my colleague Senator Cormann is about the change of government in his home state of Western Australia—was at least honest enough as a Labor minister to note:

… the real problem I think for our state hospitals is one of capacity. So even if compensation is paid, will we be able to find the extra operating theatres, the surgeons, the anaesthetists, the nurses, the beds in the state hospital system to be able to accommodate a significant increase in the number of people wanting elective surgery?

That was the hypothetical question he posed. Firstly, even if you accept that compensatory funding will be provided to the states, do they even have the capacity to meet this influx of extra people? Of course, the answer is no, not without massive additional investment in hospital infrastructure and in the healthcare systems of the public sector because, no doubt about it, this will shift large numbers of people into that sector. They do not have the capacity and, of course, they do not have the funding commitments.

My South Australian colleague the shadow minister for health in South Australia and deputy opposition leader, Vickie Chapman, has made strong pleas for our state Labor government in South Australia to have the courage to at least stand up and demand extra funds from the Commonwealth if this measure is to go through. She recognises that it is going to cost more. The fact that the state health minister has failed to secure a guarantee of any financial compensation for the extra burden is something that our state cannot afford to meet—

The lights having gone out in the chamber—

Obviously the Senate cannot afford to meet the power bills at present either.