Christopher Back (WA, Liberal Party) Share this | Hansard source

The private hospital system in this country treats 40 per cent of all patients, being over three million annually, and performs over 60 per cent of all surgery in Australia each year, on over a million patients. The Productivity Commission looked into public and private health care and found that private hospitals treat patients more cheaply than public hospitals in this country. As we know, we have an ageing population. We have been told, and we do not disagree, that it will more than double the demand in hospital admissions by 2030. Why would the government be wanting to discourage participation in private health cover? The further one examines the question of providing health care in Australia the more obvious it becomes that the cost sharing of this burden is critical if we are to at least maintain, if not improve, health care for Australians.

It is no wonder that the Labor Party, prior to the last election, committed itself to continuing the rebate for private health to Australians. The Prime Minister, who was then the Leader of the Opposition, did this by media release, as has been referred to, by speeches and in writing. Why is Labor going back on an election promise in a climate that would surely be encouraging greater participation, not less, in private health care? If the Productivity Commission is to be believed, then the government should be encouraging the more cost-effective and efficient private hospital and healthcare systems. If the statistics available to me, as I have mentioned, are that 40 per cent of Australians are treated privately and 60 per cent of surgery is done privately, what is this telling us about the desires and actions of the community? Clearly, they want to see a strong health system and they want to see a well-funded and reasonably accessed public health system.

I turn to young people. What is going to be the impact of these legislative changes that are before us, if approved by the Senate, on young people? What is the message that we are sending to younger members of the community at the very time when we should be saying to them, ‘Given your earning capacity, you should be looking to your own resources to provide your medical and hospital cover into the future’? Naturally, from a systemic point of view, this is the very group that we actually do want to be funding private health cover because we know that they will draw less upon it than their parents’ or their grandparents’ generations. This is called, according to the documentation, a fairer health insurance incentive. I do not see the incentive and I do not see where it is fairer.

I turn from younger to older members of our community. We are living longer and we are healthier than our parents’ and grandparents’ generations. Participation in private health cover by older members of the community must be a decided health advantage, from an administrative perspective, and I cannot see the rationale of the government wanting to put this at risk. We must encourage older people in the community to stay in private health insurance for their own good and for that of the overall system.

The Productivity Commission shows that costs for patients in the private hospital system are lower. The system provides safer treatment and costs the taxpayer less money. Figures available to me from Health Expenditure Australia indicate that the government spent $30.8 billion on public hospital services in 2007-08 in this country, and we know the figure grows annually. By contrast, the government spent $1.7 billion on private hospitals through private health insurance. The figures look very attractive to me. If they are accurate, then I am at a loss to understand why the government is hell-bent on forcing private health insurers out of that system, to become more reliant on the public health system.

We are all acutely aware that the health budget is assuming an ever-increasing proportion of our revenue base at the national level and at the level of the states and territories. When I commenced work in the early seventies, there were some 10 people working to support one who was not working. At the moment, that ratio is around four to one, and the Treasurer told us recently it will diminish to fewer than two people working to support each who is not. Given the predominance of health as a cost burden to the economy, surely logic dictates that we must encourage people to take responsibility for their own health needs, to invest in their own private health insurance and to remove themselves from being a burden on the public system. Further pressure on the already overloaded public health system will surely cause it to implode. From the perspective of one who does contribute to the private health system and who has the primary care responsibility for an aged parent, it is blindingly obvious to me that every effort must be made to protect, preserve and encourage participation in private health for as many members of the Australian community as can afford it.

The point should not be lost that it is taxpayers who fund the public health system, through our Medicare levy. As this government went to the last election promising to leave the levy unchanged from that of the Howard government, it is incumbent on this government to go to the people in a general election and seek a mandate to interfere with a process that is delivering a well-balanced, if under funded, mix between private and public service provision in this country. The government has this opportunity during 2010 or 2011—when the next general election is held—to put this question to the people of Australia, rather than waste the Senate’s time in trying to push the legislation through the Senate.

I turn to the administration of rebates. The current rebate—as we all know, because we put in our tax returns—is simple, transparent, easy to understand and easy to audit. I have been informed that, under the new proposals, there will be no fewer than 10 levels of entitlement or surcharge depending on a person’s income and age. How will people work out where they stand in this? It is another huge administrative burden, another cost to government and another cost to the private health funds. If the government proposes that it will enjoy savings as a result of its amendments to the private healthcare rebates, then what costs have been factored in for the administrative burden that it will create? If history is any indicator, I suspect the savings will be minimal and they will be more than taken up in administrative costs for the government and the private sector.

I would like to refer to funding in the health system as a health pool of money—and to the effect. Senator Williams made reference to the 30 per cent rebate. Think of it in these terms: when the government pays 30 per cent rebate to a privately insured person, it pays 30 cents of each dollar into that pool, but, more importantly, the privately insured person pays 70 per cent and 70 cents into that pool. When that person leaves private health insurance, the government gets its 30 cents back, but the pool loses the other 70 cents that the privately insured person was previously willing to contribute. This fact should not be lost. The pool loses more than the government gains. Where the sense is in reducing the rebate and discouraging people is absolutely beyond me. I have not yet seen a cost-benefit analysis that points to this being anything other than another tax on health insurance and a cost burden on—guess who?—middle income earners in this country. But as my colleague Senator Fifield said, this comes as no surprise, as this Labor government’s ill-conceived attack on middle Australia can scarcely be concealed.

The interesting point to be made, whilst the government is attacking middle Australia, is that more than one million households earning less than $26,000 per annum take out private health insurance, on what we would regard as a minimal family income. You might immediately say, ‘Yes, but they will not be impacted by the government’s tax grab.’ Of course, they are. Despite the fact that they are under the threshold, they will be adversely affected, in two ways. The first, is the size of the pool to which I have referred. The pool gets smaller; they are disadvantaged. The second is that they will be heavily impacted, as more people queue at public hospitals and outpatient facilities. So do not think this is only an attack on middle Australia—those who this government seems so keen to pull down. It is an attack across the board.

What does the government itself say will be the impact of attacking private health insurance in this way? The government estimates that tens of thousands of people will drop their cover. It recognises that, as people drop out of private health insurance, then premiums must rise for those who remain. And what happens to the pool? It rapidly becomes a puddle. In my own state of Western Australia, the impact will be greater. Why? Because a higher proportion of people in WA carry private health insurance, so therefore a higher proportion of people will be at risk. But this comes as no surprise. There will be no defence on the other side from Western Australian Labor senators or others, because they too seem to have forgotten the state of Western Australia.

I have spoken about the young and I have spoken about older members of our community. What do young families do? We all know, particularly those of us who have had young families, that people starting families or adding to their families are the very ones who need to be covered by private health insurance. Interest rates are rising and capacity to meet mortgage commitments is being stretched even further. Private health cover is an easy cost to give up. The very people who should not be giving up private health insurance will be those who are forced to do so.

The Prime Minister, having repeatedly told the Australian electorate that he would not alter health insurance rebates, now proposes to do so. This is the person who was going to fix public hospitals around Australia by June last year. As I remember, it was his intention to take over the administration of public hospitals if they were not, to use his expression, fixed. This is another broken promise. All we have seen is a deterioration of the confidence which the Australian community has in the public health system, the Prime Minister and his Minister for Health and Ageing.

This in no way reflects on the excellence and commitment of those who provide health and hospital services, private and public, in this country. Nobody in this chamber would deny or dispute their professionalism. Like most Australians, I am open in my admiration and appreciation of the doctors, the nurses, those who provide complementary medical services, the other paid providers and the army of volunteers who worked tirelessly in our public and private hospitals to render what must be the world’s best health service.

Anyone who doubts the excellence of our service need go no further than to talk to young doctors, nurses and health providers from the UK system. They say to me: ‘Why is this being done? To work in the Australian public health system compared to that of the UK is like going on a holiday.’ I have been asked why we are attacking private health cover when we have got the balance right in this country. As we know, it will only lead to breaking an already stretched public health system by encouraging those in private health insurance to divest themselves of their cover.

As a person who has served on the boards of both private and public health facilities in two states of Australia, I can assure the chamber and the Prime Minister that any effort to centralise control of the public health system in Canberra will be a total and unmitigated disaster. I recall my experience in a public health facility in Western Australia during the transition from local board membership of public facilities to centralised management in the metropolitan area of Perth. And no—to answer those who ask the question—the board was not dominated by Liberal or coalition parliamentarians. It was dominated by local members of the community with a passion for the provision of health services in that community, a group who absolutely and utterly felt disenfranchised when the decision was made to go across to the metropolitan area.

I can assure you, Madam Acting Deputy President, the experience of those who used that system was that, following its centralisation in the metropolitan area, the quality, efficiency and effectiveness of that service deteriorated rapidly. I can also assure you that central management now not a few kilometres away but rather some thousands of kilometres away from the locations in which the services are rendered will undoubtedly lead to a further deterioration in the quality of those services.

If this proposal has no basis in the provision of high-quality medical and hospital care, if it does not stack up economically, from a cost-benefit point of view, if it is not supported by the medical profession or other health service providers, then I am left pondering: what is this government’s motive to break an election promise and impose added costs on an already stretched system? The answer, I fear, is that it is nothing other than a new tax. And why do we need the new tax? We have heard the variety of answers by an earlier speaker, by the Prime Minister, by his health minister and by his Treasurer. The Treasurer spelt it out during his budget speech and subsequently as being the need to increase the age pension support. But surely it has not been lost on others that the aged are the very group who are going to be further disadvantaged by more pressure on the public health system as those in private health insurance leave it and add to the burden on public health care provision.

Following the budget in 2009, the coalition proposed to this government an increase in the excise on tobacco as an alternative to this flawed tax proposal. The advantages are obvious to anybody: lower tobacco consumption, less pressure on the entire health and hospital system and, obviously, less cost to the taxpayer. But we saw Labor fight and refuse to accept what was an entirely sensible measure.

We have been faced with the national embarrassment of yet another failed government scheme in the last week, being the $2.3 billion roof insulation program. This is yet another example, regrettably, where inexperience, incompetence and arrogance—this time by Minister for the Environment, Heritage and the Arts, Mr Garrett—has further eroded taxpayers’ money and confidence in public administration. We are all lumped into this failing of confidence. It is ironic that the cost to the Australian community of this failed program will probably equal the so-called savings to be made by this government in its changes to the private health insurance rebate.

In conclusion, if this Prime Minister wants to reverse his own strongly stated and frequently repeated election commitment of 2007, then this bill should be withdrawn from this chamber and the Prime Minister should have the intestinal fortitude and the common decency to go back to the people of Australia in an election and allow the community to decide their own position on private health insurance.