Steve Fielding (Victoria, Family First Party) Share this | Hansard source

As with many issues that come before parliament, the key is working out who gets what and making sure that ordinary Australians get a fair go. The Medicare levy surcharge threshold issue is no different. In this case it is about who gets a tax cut, who can cobble enough cash together to afford health insurance and whether the government can squeeze even more cash into a huge budget surplus. It is our job in the Senate, the house of review, to make sure that the distribution of cash is fair. This Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2008 is a lot of things to a lot of people. To the government it is a source of $300 million in revenue. To singles earning between $50,000 and $100,000 it is a hefty tax cut of up to $1,000. To families or couples earning $100,000 to $150,000 it is also a hefty tax cut—this time, up to $1,500. But there are many ordinary Australians who miss out. For all those who get a tax cut, there are more who get nothing. In fact, there are plenty who will end up paying for this tax cut out of their own pockets. Does that sound fair? Family First does not think so.

Those people who are below the original thresholds and who are paying for health insurance are going to be stung by an effective tax increase because the increases in the thresholds are expected to drive up health insurance premiums. The changes in thresholds may also lead to longer public hospital waiting lists as more people switch to the public system. Those earning less than $50,000 as a single and less than $100,000 as a couple or family who do not get the tax cut will end up paying higher health insurance premiums or queuing longer on hospital waiting lists. They are, in effect, facing higher costs as a result of the raising of the Medicare levy surcharge thresholds. These are people who can least afford to pay more for health insurance, but they are the ones who are getting the least help from the government under these changes. Family First is here to advocate for those families.

Families buy health insurance to ensure that they have access to health care for themselves and their loved ones. By dropping that insurance they lose that peace of mind. The government is encouraging people to drop their health cover without giving them the guarantee of better access to public hospitals. That is why this issue is complex. Reducing tax is one thing but reducing access to hospital care is another. There are more than four million couples or families earning less than $100,000 a year. Compare that to the 800,000 families who are earning between $100,000 and $150,000 who will get a tax cut. There are around four million single people earning less than $50,000 a year, some of them pensioners. Compare that to the 850,000 single people who earn more than $50,000 a year, many of whom will get the tax cut. Around 80 per cent of singles and about 80 per cent of families will not get any tax cut but, if they are paying for health insurance, they face a hike in premiums. It is good news that around 15 per cent of families and around 18 per cent of singles get a tax break, but Family First does not believe it is fair to give those tax cuts at the expense of lower income families and singles who are left to pay for higher health insurance premiums while others face the cost of increased public hospital waiting lists.

Most people giving evidence to the Senate committee that examined the increased Medicare levy surcharge thresholds agreed that the increases would lead to people dropping out of health insurance cover, which would lead to increases in the cost of health insurance premiums and would put pressure on public hospitals that are already buckling at the knees with huge waiting lists. Under the government’s proposal, any single person earning between $50,000 and the new threshold of $100,000 would get that tax cut of $1,000, while families or couples earning between $100,000 and $150,000 would get a tax cut of $1,500. For higher income families and singles that is good news. However, those on lower incomes already under the Medicare levy threshold will not get that tax cut but will be forced to pay higher health insurance premiums. Evidence to the committee estimated that there would be an increase in health insurance premiums of up to five per cent as a result of changes to the thresholds, let alone other cost increases to the health sector.

Family First wants to look after those ordinary Australians who miss out on a tax cut but are likely to be worse off under the increased Medicare levy surcharge thresholds. Health insurance is a huge cost to many Australian families. More than one in two adults has made the financial sacrifice to take out health insurance, with the highest take-up rates among couples with children. There is little statistical information available on how much families pay for private health insurance, but a quick look at the online calculators for various funds shows that a family could easily spend about $340 a month, or $4,000 a year, for health insurance. A five per cent increase would cost an extra $200 a year, which is significant to families already struggling with the cost of living.

Under the increases to the Medicare levy surcharge thresholds, some families, as I was saying before, get a tax cut of $1,500, while other families on significantly lower incomes get an increase in their premiums. Families buy health insurance for all sorts of reasons, and price is just one of those factors they take into account, but, in an environment where many families are doing it extremely tough under high mortgage interest rates, high petrol prices and high grocery prices, families are making a significant sacrifice to keep their health insurance. These families, struggling to pay for health insurance, are making a decision in the interests of their loved ones and their own health, but they are also taking some of the burden off the public hospital system.

Family First does not want these lower income families to be worse off and unfairly disadvantaged by the increased Medicare levy surcharge thresholds. Family First wants the Rudd government to ensure lower income families are not worse off and urges the Rudd government to amend the legislation to ensure lower income families and singles—and that includes pensioners—are not unfairly hit by increases to their health insurance. Family First has proposed to the government a simple way of ensuring lower income families are not worse off, by increasing the health insurance rebate by an additional five per cent. Family First wants the Rudd government to look after lower income families and singles to ensure they are not slugged unfairly with higher health insurance premiums.

Debate (on motion by Senator Sherry) adjourned.