Nick Xenophon (SA, Independent) Share this | Hansard source

I will respond to Senator Siewert’s remarks. I have great regard for Senator Siewert in the limited time that I have got to know her in the work we have done on committees together. My dilemma has always been this: to what extent would you get a tipping point of having such a significant number of people exiting from the private health system that it would put upward pressure on premiums directly as a result of those people leaving the private health system, and as a consequence of those premium increases there being a cascading effect of even more people living the private health system?

I have always acknowledged that the government’s bill in its current form would see 330,000 Australians receiving a tax cut in that they would no longer be subject to the threshold, which would be increased to $75,000. With $69,000 it would be about 220,000 people who would receive a tax cut, based on the figures that I have obtained from Treasury on its actual impact. Treasury’s own forecasting indicates that something like 583,000 people will drop out of private health insurance, which includes the dependants of policyholders, as a result of what the government is proposing, $75,000. You would see about 100,000 less dropping out at $69,000. My concern is the tipping point in terms of the impact that it will have on premiums and on the public system. I note the work that the health minister has done, and I congratulate her for that work, on injecting further funds into the public health system. These are all very laudable measures and no doubt the government will be making more statements in the future about the public system. But why put pressure on an already stretched system? Why put pressure unnecessarily on a system where a number of states are having real difficulty in managing their health systems? Why mess up what I think is a pretty reasonable equilibrium between the public and private systems in this country?

The other issue is that when the then coalition government introduced this measure in 1996, coming into effect from 1 July 1997, at $50,000 and $100,000 respectively, it was not indexed for inflation. I would like to ask Senator Cormann a question in relation to the coalition’s position on this. I am grateful for the dialogue we have had and the material he has provided to me, which has been very helpful. But my fundamental problem is that it is a question of getting the balance right. I do not believe it is fair to keep the threshold at $50,000, the same as when it was introduced back in 1997. It is not tenable to have it $8,000 below what are currently average weekly earnings. I do not think that is fair. But I also do not think it is fair to put pressure on private health insurance premiums by having many people jump out of the system, as has been forecast by Treasury. We note from the private health insurers that they are saying an even greater number would drop out. I think there is a difference of 30 to 40 per cent between the figures of the private health insurers and the Treasury’s own forecasts. That is my concern.

That is also why I flagged in my second reading contribution several weeks ago on the earlier version of this bill that I would be pushing for a Productivity Commission inquiry into the comparative outcomes in the private and public health systems with surgical outcomes, infection rates and informed financial consent. I want to acknowledge the work that the health minister has done in relation to this. I think most recently in the Weekend Australian the health section flagged the work that the health minister had done in relation to that, and she deserves to be commended by every health consumer in this country for pushing the issue of informed financial consent as a significant priority. But I believe that we need to get to the facts of how our health system works, and the government, the public system and the private health insurers could not answer some very basic questions on comparative health outcomes when I put that to them. I am not blaming anybody for that; that information is not available and the comparison has not been made. The best way forward is to get the Productivity Commission to look at that. I believe the Productivity Commission would give it a robust analysis without fear or favour. The Productivity Commission is the most appropriate and I believe most capable body to actually deal with that. I hope that tomorrow there will be an opportunity for the Senate to vote on a motion requesting that the Productivity Commission move forward on that, although of course it would be preferable for there to be an instruction from the Treasurer, under the legislation that governs the commission, to allow fast-tracking of such an inquiry.

My point is this. In these times, private health insurers will inevitably feel pressure in that a significant proportion of their income comes from investments which have taken a hammering because of the financial market meltdown, notwithstanding that Australia is in a better position than other parts of the world, fortunately. I am concerned that that will put increased pressure on private health insurers in the context of premium increases. But my sympathy is not with the private health insurers of this country. It is with the private health policy holders, close to 11 million Australians who have private health insurance or are covered by private health insurance.

I would like to pose a question to Senator Cormann. Does he believe it is untenable—I will rephrase that, Mr Temporary Chairman, so I do not put it in such an inflammatory way. This measure was introduced by the coalition back on 1 July 1997, when the threshold was $50,000 for singles and $100,000 for couples. Does he consider that was above average weekly earnings? I do not have the figures in front of me; perhaps Senator Cormann may have those figures, although I do not expect him to have them at his fingertips. We now have a situation where the $50,000 threshold is some $8,000 below average weekly earnings. Given the intent and rationale given at the time by the then Treasurer, Peter Costello, of this encouraging people to get into private health insurance, does he consider, given that times have changed and 11 years have elapsed, it appropriate that there be a shift in that threshold of $50,000, given all the reasons that the coalition gave at the time, given the policy intent and given the fact that, in terms of what $50,000 meant, it was for those earning above-average incomes, compared to average weekly earnings back in 1997?