Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Hansard source

The opposition, Senator Xenophon, acknowledges your intent to improve slightly what is a very bad public policy measure which, if successful, would have a terrible impact on our health system. The serious issue with this legislation is that the government never even tried to properly asses the impact of this measure on our health system. They are trying to sell it as a tax relief measure without any regard for the impact it is going to have on our health system.

If they were really interested in providing tax relief to people in the income brackets between $50,000 and $100,000 they would be doing it another way. They would be doing it in a way that does not have the same bad impact on our health system. They would be doing it the way that Peter Costello did it year in and year out when we were in government. Senator Xenophon’s amendments expose the fraud of the government’s rhetoric. The government have been trying to hide their real purpose behind this piece of legislation, which is an ideologically based attack on private health, and is trying to dress it up as a tax relief measure.

They have made the point that this is about indexing a measure that has never been indexed before, but what they proceeded to do in their first piece of legislation on this measure was not to index the threshold for single income earners but to double it. Their rhetoric stated that it was a tax relief measure. They said: ‘This is what the previous government did wrong—they did not index it. Therefore we are now proposing to do what the previous government did not do.’ But, instead of indexing it, they doubled it.

Of course, Senator Xenophon is quite right to say that what the government has done in its original legislation and what it is still doing in this legislation is not indexing the measure. During the Senate inquiry I actually asked a whole series of questions of every single witness that came before us. I asked them what they thought about the proposition to index the Medicare levy surcharge thresholds rather than to double them. I asked that question of health funds, of health economists and of every witness that came before the committee. What has the government done? Even though we have given speech after speech opposing this fundamentally flawed public policy measure and even though we have written a very comprehensive dissenting report, the minister thought that she should use one of the questions I asked one of the witnesses on whether indexing it would be more appropriate than doubling it and presenting it as a statement of position. I asked the question—which, incidentally, the witness answered, ‘No, it would not be appropriate to increase the Medicare levy surcharge thresholds to $75,000’—and she is using and presenting it very misleadingly and dishonestly as a statement of position. It is typical Hollow Men stuff and the people in her office should hang their heads in shame. No doubt they got their inspiration from there.

The reason the opposition cannot support Senator Xenophon’s well-intentioned amendment is that he is proposing to index thresholds for singles, couples and families based on thresholds introduced in 1997 which were introduced at a level that was too high to be immediately effective. It was introduced as a new measure as part of a package of three policy measures that was aimed at turning the ship around and at fixing the problems that Labor had left us. It was aimed at fixing the problems that Senator Graham Richardson had very eloquently identified two or three years earlier before he was shot down by the ACTU caucus working party at the instigation of then Prime Minister Paul Keating.

You only have to look at the Senate inquiry evidence. Mr Kalisch, the Deputy Secretary of the Department of Health and Ageing, said, ‘When this measure was first introduced in 1997 it was not immediately effective.’ What Senator Conroy does not understand is that we are actually dealing here with a package of three policy measures that work together. We have Lifetime Health Cover, the 30 per cent private health insurance rebate and of course the Medicare levy surcharge thresholds. All of those measures together have been able to turn around the significant declines in private health insurance membership, which were having a disastrous impact on our health system, as was very eloquently identified by Senator Graham Richardson before he was shot down by the ACTU-caucus working party in 1994. We had to do the job and turn it around. But, as Mr Kalisch, deputy secretary of the health department, identified, the $50,000 singles threshold, the Medicare levy surcharge threshold, was not immediately effective.

You have to really look at what happened. After Lifetime Health Cover and the 30 per cent rebate were introduced, health insurance membership went up by about 13 per cent from the low of 30 per cent, which was the disgraceful state of affairs we inherited. Then it started to plateau. It went down a bit and then went up a bit, but it sort of plateaued around 43 per cent. Over the last three or four years health insurance membership has started to increase again. In fact if you look at the 12 months to June 2008, health insurance membership has increased by another 400,000 Australians who have made the decision to take additional responsibility for their healthcare needs. By doing so they are making a significant contribution to help keep private health insurance affordable for all Australians choosing to take it up and keep pressure off public hospitals.

This is what is being missed in this argument. With our unique system of community rating as it applies in private health, the more good risks, the more that younger and healthier people agree to take additional responsibility for their healthcare needs, the less pressure there is on premiums for those who are more likely to need access to quality hospital care. We need to keep private health insurance affordable for as many people as possible, in particular for low-income families, for pensioners and for the one million Australians earning less than $50,000—irrespective of the Medicare levy surcharge thresholds because they do not apply to them—who make a decision to take up private health insurance. This measure would actually force up the price of their premiums, whereas what the government is proposing to do is provide a tax cut in a very bad way to a very small cohort of people. The government would be well aware that we in opposition are always in favour of lower taxes. We had a record when in government of providing lower taxes. There is a way to provide tax relief, and this is not it. There is a way to provide tax relief without having the same disastrous consequences for our health system that this measure would create.

On that basis, the opposition will not be supporting Senator Xenophon’s amendment. I also make the point that previous speakers have said that people earning $50,000 to $60,000 are not high-income earners. I do not suggest they are, but the government should listen to the evidence. For example, the Queensland Teachers Union Health, whose membership is made up of an overwhelming number of people earning about $50,000 to $60,000 a year, evidence is that their members are frightened about this particular measure. They gave evidence about how their members are extremely concerned about how this measure is going to push up the price of premiums for their members. Why do you think that is? Senator Cameron was there in Brisbane on 17 July. I remember it like it was yesterday. We had the CEO of the Queensland Teachers Union Health fund essentially telling us that their membership was made up of average Australians on about $60,000 a year and they did not support this measure because of the bad consequences it would have on their health insurance premiums moving forward, because it would force their members to reconsider their health insurance membership and it would quite potentially force them into those long public hospital queues.

Senator Bilyk used an argument that I had not heard for a while—in the early days, the health minister used to say: ‘I don’t know what all the fuss is about, because it’ll be the young and healthy people that will be leaving first. The young and healthy people won’t need access to public hospitals. How can you suggest there is going to be additional pressure on public hospitals when it is the young and healthy that are leaving?’ That really demonstrates a fundamental misunderstanding of how our health system operates, it demonstrates a fundamental misunderstanding of our private health system and it demonstrates a fundamental misunderstanding of the principles of community rating. Every single person who is young and healthy and leaves private health might well be a person who would not have accessed public hospital care but they would have definitely contributed, out of their own private funding, helping to fund treatment for those that do need access to public hospitals. This is really what this is all about. The government put in a bad public policy measure, they never assessed the flow-on consequences of this measure on our health system and they tried to dress it up as a tax relief measure when all it is is an ideologically driven attack on private health and, quite frankly, this legislation should be defeated. I place on record that, for the reasons that I have outlined, the opposition will not be supporting Senator Xenophon’s amendments.