Louise Pratt (WA, Australian Labor Party) Share this | Hansard source

I am going to speak briefly on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008 because I am eager to see this important budget measure passed. Lifting the Medicare levy surcharge thresholds is an important principle that will get rid of what is an unfair tax on average income earners. As other speakers have highlighted, 465,000 people were subject to this levy—many of them unfairly, many of them not high-income earners and in fact many of them hit by the equivalent of bracket creep as their incomes crept over the $50,000 mark. People found that, when it came to tax time, they were subject to this levy and had not even had the opportunity to question or engage in the idea of whether they wanted private health insurance. That is certainly something that has happened to people I know. They were unexpectedly hit with this tax burden because it was not a question that they had put to themselves at the time they got their pay rise.

Many people know that health insurance is not the right health choice for them, but are they supposed to take it out anyway? According to the opposition, they must. The income thresholds for the Medicare levy surcharge, as we know, have not been changed since 1997. When the surcharge was introduced by the then Minister for Health and Family Services, Michael Wooldridge, he said:

High income earners will be asked to pay a Medicare levy surcharge if they do not have private health insurance. These are people who can afford to purchase health insurance.

The opposition are jokes if they believe that those earning $50,000 are high-income earners. That is why we have raised the thresholds to give relief to average earners, who are now being forced to pay the tax. The opposition’s lack of support for this bill illustrates their inequitable approach to public policy.

For some very important reasons, I reject the notion offered by the opposition that younger, healthier people should be coerced into subsidising health insurance for others. There is significant evidence to suggest that in many instances people hold cheap health insurance simply to avoid paying the Medicare levy. This was clearly evident in the inquiry of the Senate Standing Committee on Economics into this bill. When you hold health insurance and intend to use it, there is a significant need to insure yourself above the health insurance rebates. In other words, there are significant gap payments to be made. For many, that is something they are prepared and willing to do and they know that that is what will be required if they need to utilise their private health insurance.

However, despite the fact that many hold insurance, many people cannot afford a private hospital bed or a private practitioner. They hold cheap policies that offer limited benefits simply so they can avoid the levy. Many people who hold private health insurance still have no option but to occupy a bed in a public hospital because they cannot afford these gap payments. Some will pay a smaller gap, as charged by the public hospital; others, however, will make no claim against their health insurance and simply use the public system. So I would like to ask: who is subsidising whom? Not only do we have taxpayers who are healthy and do not need to use insurance but we also have taxpayers who have paid their insurance but cannot afford to use it. People who cannot afford to use it are subsidising the health insurance rebates from health funds for those who can. That is not an equitable position to put people in; it is not logical policy. You have people who can afford private health insurance, who can afford the gap payments for their private hospital and who can afford the gap payments for their own private room and their choice of practitioner and then you have less well-off taxpayers who are paying their private health insurance but cannot afford to use it, subsidising private hospital stays for more well-off taxpayers. It is not fair.

On top of this, the taxpayer is paying twice for these patients: once in the form of the 30 per cent rebate for health insurance they do not use and a second time for the care of the public patient in a public hospital. This clearly highlights the unjust, nonsensical nature of our current private health insurance penalties for those who cannot afford insurance. It also illustrates clearly why Labor’s bill should be passed, along with the many other reasons highlighted by my colleagues on this side of the house. The government supports a mixed-use health system with both public and private sectors working in tandem to meet the health needs of the community. However, hitting average-income taxpayers is not a reasonable way of proffering this support. I believe that only Labor can be trusted to look after both the health and the tax equity concerns of all Australians.