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

Indeed, no ifs or buts, as Senator Barnett quite rightly says. In fact, in Tasmania, Nicola Roxon, the then shadow minister for health, put out a press release accusing the coalition of running a scare campaign because we dared to question the sincerity of this commitment. The record is now here for all to see: Labor, as soon as they got back into government, returned to their bad, old-fashioned ideological crusade against private health. They said they would not do it but of course they have.

This is a very bad public policy measure for a range of reasons. Firstly, it will put more pressure on public hospitals, which are already under pressure. It will see more people leave the private health system, and the government agrees with this. We might have some arguments about the figures but the government agrees that it will see more people leave the private health system. Millions of people with private health insurance will see an immediate increase in the cost of their private health insurance—up to 66.7 per cent. We will see more people leave and there will be flow-on consequences. There will be flow-on consequences year on year as more people leave. There will be more pressure on premiums, more people will leave and we will end up back in that vicious downward membership cycle that we experienced in the 1980s and early 1990s. The Rudd government promised us that this would no longer happen as they had now learnt from their mistakes of the past and seen what a bad impact these sorts of measures had on the health system when they were last in government. But of course it has happened.

The government has done some modelling, and the modelling as always is part of a political exercise. The modelling underestimated the impact of this measure in terms of the number of people that will leave private health. It also underestimates the impact on public hospitals, and it does not assess at all the impact on future premium increases. Why is that so? Firstly, they have excluded altogether 1.4 million privately insured Australians from their calculations. Secondly, they have made the absolutely heroic assumption that nobody will downgrade their level of cover as a result of this measure. Experts, including those experts who say they support what the government is doing—not those that are supporters of the private health system, by and large—will say to you that the most rational decision for anybody caught by this measure would be to downgrade their level of cover. That is because of the combined effect of the rebate reduction measures and the increases in the Medicare levy surcharge. The government heroically says, ‘No, it is not going to happen.’ Reducing their level of cover means that people will face increased gaps or they will have to go to the public system to access those procedures that they have excluded from their level of cover.

The coalition has made a very constructive proposal on how we could actually achieve the same fiscal outcome for the budget—in fact a better fiscal outcome for the budget—in a better way for the health system. The Leader of the Opposition, Malcolm Turnbull, proposed that instead of pursuing this broken promise of the Rudd Labor government we should increase the excise on tobacco by 12.5 per cent. Again, what did we get from the government? A political exercise. They tried to go out there and talk it down and selectively leak some Treasury advice. But thank God for the opportunity of Senate estimates where we were able to ask some questions of Treasury. We know that, unlike what the Rudd Labor government tried to make people believe, an increase by 12.5 per cent in the tobacco excise will raise $2.2 billion, which would more than offset the cost of not going ahead with the means testing of the private health insurance rebate, which would save about $1.9 billion. Additional revenue of $2.2 billion versus $1.9 billion in budget cuts means that the budget will be $300 million better off. People will be better off because of reduced levels of smoking. The health system will be better off and there will be less pressure on public hospitals instead of more. But, instead of embracing the very constructive proposal that the opposition has put forward, all we have had from the government is sneering.

This is part of an overall agenda. We discussed earlier today the changes to the extended Medicare safety net—another part of the ongoing crusade against people who access healthcare services through the private system. Before the election we were promised that it would not happen and that Labor was now committed to both a strong public system and a strong private system. We were promised that they were now committed to ensuring that we have got the right balance in our health system. Instead, we have had broken promise after broken promise. This is bad public policy. The opposition is opposed to this legislation and we will vote against it at every step of the way—and we hope the Senate will join us in defeating what is a very, very bad piece of legislation.