Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Hansard source

I would like to thank senators who have contributed to the consideration of the Fairer Private Health Insurance Incentives Bill 2009 [No. 2]. I would like to take the opportunity, in summing up, to respond to some of the matters that have been raised in the debate. This is not the first time that we have considered this legislation, and it was clear that senators felt the need to range widely across the whole area of health and health policy. It is important to set in context the government’s reform agenda. I think it is appropriate that we restate that, to perhaps correct some of the claims that have been made. So, in my summing up, I want to address some of the issues that have been presented.

Senator Barnett made some points about the situation in Tasmania. The Tasmanian government has strongly supported the reform agenda of the Commonwealth, and the national approach that has been adopted by the Tasmanian government will serve the people of Tasmania extremely well. As far as the Commonwealth is concerned, the government have been elected with a clear mandate to prepare this country for the challenges of the 21st century. One of our great challenges is to ensure that future generations in this country are able to enjoy world-class, universally accessible health care. We want to maintain into the future the quality and standards of service delivery that Australians have traditionally enjoyed. In fact, we have the third longest life expectancy anywhere in the world. I think that is a measure of the successes that have been enjoyed by the healthcare system in this country traditionally.

The truth of the matter, however, is that we cannot continue on the basis of the status quo because, without major changes, rising health costs will outstrip revenue growth and state budgets will essentially be overwhelmed by changing demands. If Australians are to enjoy access to world-class health care then there has to be major reform of our health and hospital systems and it has to occur now. That is why this government has advanced the National Health Reform Plan—and we trust we will be able to reach agreement with the states at the next Council of Australian Governments meeting. It is our intention to deliver the most significant reform to health and hospitals since the introduction of Medicare. We will deliver one of the biggest reforms this country has ever seen, and it will provide much better health and hospitals for all Australians. The government is seeking to become the major funder of hospitals to place the Australian healthcare system on a sustainable footing and to ensure a self-improving footing which lasts for future generations. We will create a nationally united and locally controlled national health and hospital network. With that in mind, this new network will build on the major health reforms the government has already introduced, which have seen the delivery of record funding for public hospitals, an increase in the number of elective surgery procedures, enormous pressure being taken off emergency departments, a record investment in the training of doctors and nurses and a dramatic improvement in the level of support for medical research.

Without the reforms the Rudd Labor government is proposing, the challenges the country is currently facing will effectively see the state governments around the country, which are under increasing fiscal pressure, being unable to respond to the needs of our people. We are noticing already the increasing workloads of overstretched staff and the increasing pressures in terms of hospitals’ capacity to actually deliver to patients. We run a real risk that state governments will not be able to meet their health spending obligations as a result of the rapidly rising costs, and we will see enormous pressure on our health system as a result. What we are trying to do is to get ahead of that. By implementing these reforms, the Commonwealth government recognises the importance of the continuing role of private hospitals and private healthcare providers in delivering strong health outcomes. This is especially important in terms of the challenges this country faces with the ageing of our population. We are seeing dramatic growth in the number of aged people in this country, a significant burden in terms of chronic disease and a significant cost expansion.

The Fairer Private Health Insurance Incentives Bill 2009 [No. 2] therefore has to be seen as part of a package of measures this government is seeking to pursue as part of the measures under the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009. This bill was defeated by the Senate at its second reading on 9 September 2009. The Senate has already rejected for a second time the other bills that were part of the package. These bills, I repeat, are intended to amend various acts to give effect to our 2009-10 budget measures and introduce three private health insurance incentive tiers. We believe these reforms are essential to make the rebate fairer and more sustainable for the future. The rationale for this bill and the two associated bills is crystal clear: with the demand for health services increasing, and with limited resources, the government has a responsibility to ensure the sustainability of government support in both the public and private spheres.

The government provides extensive support for public health services but also provides very significant funding for the private sector through Medicare, through the PBS, through aged care, through veterans health and through private health insurance rebates. The cost of the rebate has ballooned over the past decade from about $1.5 billion in 1999-2000 to $4 billion last year. It is the government’s view that such an increase is unsustainable. When the government introduced the 2008 budgetary Medicare levy surcharge threshold measure, the opposition claimed Australians would leave private health insurance in droves—and we have heard similar statements in this chamber today. The shadow minister at the time claimed that up to one million people would leave private health insurance. In fact, the reverse has happened: almost 475,000 extra people have taken out private health cover since the government was elected. The opposition’s predictions in respect of the fairer health insurance measures have been similarly dire. However, Treasury modelling has estimated that only 25,000 people would drop their private health insurance. This has been supported by an independent survey, conducted by Ipsos, which found that only 15,900 people would drop out of hospital cover when aware of the whole package that is actually on offer.

So there is a small reduction in hospital coverage which is expected to result in some 8,000 extra admissions to the public hospitals over two years. This represents an increase of just 0.1 per cent of the nine million presentations at public health over the same period. By any measure this is a minuscule increase and it needs to be seen in the context of the government’s 50 per cent increase in hospital funding to state governments that has occurred in a little over two years. Neither of the peak public hospital bodies, the Australian Health and Hospitals Association or the AMA, expect large numbers of Australians to drop their cover with the introduction of these measures.

Whilst sustainability is vital, the government also puts a high priority on fairness, and currently there is an imbalance with the distribution of funding under the rebate. Approximately 12 per cent of couple taxpayers who have incomes of over $150,000 currently receive approximately 21 per cent of the total rebate paid to couples. Under the government’s reforms, this would fall to a more reasonable nine per cent of the total rebate. The government’s support for private health insurance needs to be directed to the hard-working Australians who need the most assistance, not to the high-income earners who do not. This government is charged with using taxpayers’ money wisely. We believe that those that can afford to pay should pay more. We believe it is the right decision for Australia’s long-term financial future.

In summary, these measures are there, with this bill and the accompanying two bills, to make private health fairer, more balanced and more sustainable in the long term. This is a positive step for Australia’s economic future and it will help this country maintain the mixed public-private health system that we value. So I call upon the opposition not to threaten the sustainability of the private health insurance rebate and the budget in terms of its contribution.