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

While we are waiting for Senator Xenophon, I just thought I would add to the points that I made earlier today. I thought I would draw the attention of the Senate to some comments made by the Minister for Health and Ageing, Nicola Roxon, on 891 ABC this morning in an interview with David Bevan. These comments show that we have a minister for health who does not actually understand the impact that this measure will have on our health system. She does not understand the impact it will have on public hospitals. She does not understand the impact it will have in terms of the number of people leaving private health insurance as a result of this measure.

We have consistently criticised this measure because we think it is fundamentally flawed because it is going to have disastrous consequences for our health system—because it will put pressure on public hospitals, because it will put pressure on older Australians who decide to keep their private health insurance and will be faced with significant increases in premiums and because it will see hundreds of thousands of people leaving private health insurance. Even under this revised measure, that will be 583,000 people.

What did the Minister for Health and Ageing, Nicola Roxon, also known as the budding Assistant Treasurer, say on ABC Radio this morning? She was asked by Mr Abraham:

What sums have you done, your projections this would have on private health insurance premiums, if people start dropping out of private health insurance and using the public system?

That is a very good question, a question to which we have sought an answer for the last four months, and we still have not received it from the government. Do you know why we have not received it from the government? Because the government did not actually want either Treasury or the health department to do any modelling on it. They did not want to know the answer because the answer would have embarrassed them out there in the Australian community. Mr Abraham asked:

What sums have you done, your projections this would have on private health insurance premiums, if people start dropping out of private health insurance and using the public system?

ROXON:

Well, we do have the Treasury projections about there will be some people who will then choose to drop out of insurance.

‘Some people’ is exactly what Senator Ludwig said on budget day when I asked him the question, ‘When did you first tell the Australian people that you were going to do this on winning government?’ because they never did. He said, ‘Some people will leave.’ Eventually, ‘some people’ became 485,000 people. Oops, as I said this morning, they forgot about children, and it became 644,000 people. Even under this measure, it is 583,000 people. Mr Abraham then said:

What sum? What does Treasury say?

ROXON:

For these new thresholds, it’s just over 400,000 people.

Wrong! The minister still does not understand the impact of this measure. She still does not know that there are going to be 583,000 people, more than half a million people, that the government expect will leave private health insurance as a result of this measure.

I can understand why the minister is confused, because the government certainly did not provide any of that information in the explanatory memorandum that was circulated in the Senate. If you wanted to find an answer to the question, ‘How many people does the government expect to leave?’ you needed to circulate around the press gallery and find the propaganda sheet that was circulated by the minister’s hollow men. If she had had a look at the propaganda sheet which was circulated, titled ‘Medicare levy surcharge background brief: what is the government’s policy; why is the government doing this?’ and she had turned to page 2, she would have found exactly the information that I have just presented to the Senate—that is, a total of 583,000 people are expected to leave private health insurance as a result of this measure.

Let us go on through the interview. What else did Minister Roxon say? Mr Abraham asked:

And how will you stop them from putting up their rates—

that is, private health funds—

to compensate for this, because you wouldn’t want them to go broke, would you—

particularly in the current context of a global financial crisis, when investment returns by health funds are likely to be seriously affected, which in itself will put pressure on health insurance premiums, and this will of course put additional pressure on those health insurance premiums and put pressure on older Australians on low and fixed incomes. This is what Minister Roxon said:

Well, no, that’s why I say, you’ve got to balance those things and—

listen to this—

I don’t want to pretend to the community that, you know, there isn’t an inevitability of some increases …

Here we go. All morning, senators on the other side have been accusing us of scaremongering: ‘Coalition senators are suggesting that premiums are going to go up. It’s scaremongering. It’s just not true. There’s no evidence.’ Well, here the minister for health, on ABC Radio this morning, said:

… I don’t want to pretend to the community that, you know, there isn’t an inevitability of some increases…

It gets better. Mr Abraham then asked:

What’s the Treasury projections if you lose 400,000, and it could be more, but let’s say that 400,000 is a ballpark figure—

which of course it isn’t. He continued:

What’s the projection, Nicola Roxon, Health Minister, on 891 Mornings, of the impact of that on health premiums? Is it five percent, 10 percent, over and above what would normally occur?

ROXON:

No, look, there aren’t any projections that have been provided by Treasury because there are too many variables.

So here we go: Treasury has not actually modelled the impact of this measure on future premium increases. That is the crux of the matter. They are giving us figures here in the budget and in this revised measure today which actually do not stack up. They are telling us that they expect to save $879 million from not having to pay the private health insurance rebate to people they expect to leave. But they have not included in those costings the impact of future—inevitable, according to the health minister—increases in those premiums. I just make the point again: all we need is a 2.43 per cent additional increase for that supposed $354 million overall saving to be totally eradicated.

Senator Cameron earlier pointed out that Professor Deeble gave evidence at the Senate inquiry, and he did. And do you know what Professor Deeble said? He said that, in his estimation, according to his assessments and his modelling, he expected private health insurance premiums to increase by an additional five per cent. Now let us assume for a second that Professor Deeble is right—because he is hardly an apologist for health funds; he is hardly running the political agenda for private health insurance vested interests and allegedly big businesses in private health. If it is five per cent, and you apply five per cent across the $14.5 billion forecast to be spent by the Commonwealth government over the next four years on the private health insurance rebate, that is actually $728 million in additional expenditure that is not currently shown in the budget but is hidden in the contingency reserve. There is no saving. This is actually going to have a negative bottom-line impact.

I actually asked the question of Professor Deeble—and I respect that he might have a different perspective from mine on this, from a policy point of view; he is broadly supportive of what the government is trying to do—as an expert and as a professional, I asked him: ‘Don’t you think that, whatever the impact is going to be, if there is going to be an impact on the health system, the government should have properly modelled or assessed the impact on public hospitals of a measure like this?’ And the answer was: ‘Yes, they should have.’ And I said, ‘Well, the government say’—as Minister Roxon said today on ABC radio—“It can’t be done; it’s too difficult—we can’t possibly, with all these variables.” ‘But you know what? There are actuaries around—I am sure there are actuaries in Treasury, and the Commonwealth government have a chief actuary—and that is their core business; that is what they do.’ And Professor Deeble made a very simple statement. He said: ‘I could do it, so I am sure they could.’ Never a truer word was said.

If Professor Deeble can do it, if Access Economics can do it, if a whole heap of other organisations can do it, why can’t the Commonwealth of Australia? Because the government did not want to know the answer—they did not want to see in black and white the impact it would have on future health insurance premiums; they did not want to see in black and white what it would do to public hospitals; they did not want to see in black and white the funding that would be lost to the health system overall as a result of this measure. So they essentially started to hide behind, ‘Oh, these are second-round effects. In accordance with convention and with what happened in the past, we do not have to assess second-round effects.’ Well, I thought things were going to change. How can you have the Rudd Labor government today trying to rely on statements like, ‘Oh well, that is the way the previous government did it.’ That is absolutely not the point. Kevin Rudd and the then Labor opposition campaigned on the mantra that things would be different: ‘We’re going to start a new era of cooperative federalism on health. We’re going to end the blame game. We’re going to take responsibility.’ Well, start taking responsibility. Start telling us exactly what is what. Start telling us what the impact of this measure is going to be on our health system. And withdraw this measure immediately.