Russell Trood (Queensland, Liberal Party) Share this | Link to this | Hansard source

The Senate is considering the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008 and amendments (1) to (6) moved by Senator Xenophon. The question is that the amendments be agreed to.

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

Since moving these amendments I have had further discussions with the government and my colleagues in the Greens and I therefore seek leave to withdraw the amendments standing in my name.

Leave granted.

The Temporary Chairman:

The question now is that the bill stands as printed.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

by leave—I, and also on behalf of Senator Xenophon, move Greens amendments (1) to (6) on sheet 5625:

(1)    Schedule 1, item 2, page 3 (line 15), omit “$75,000”, substitute “$70,000”.

(2)    Schedule 1, item 4, page 4 (line 21), omit “$150,000”, substitute “$140,000”.

(3)    Schedule 1, item 4, page 4 (line 21), omit “$153,000”, substitute “$143,000”.

(4)    Schedule 1, item 7, page 5 (line 7), omit “$75,000”, substitute “$70,000”.

(5)    Schedule 1, item 8, page 6 (line 14), omit “$150,000”, substitute “$140,000”.

(6)    Schedule 1, item 8, page 6 (line 14), omit “$153,000”, substitute “$143,000”.

These amendments change the threshold limit to $70,000 for singles and to $140,000 for couples. In moving these amendments, I think it should be understood that the Greens and Senator Xenophon have entered into a dialogue and an understanding that we want to see changes made. The Greens never believed that the $50,000 threshold was an adequate threshold and we believe that a move to $70,000 as a single threshold is a step in the right direction. Having said that, we are extremely pleased that we are going to be using AWOTE or tying the threshold to an earnings indexation. We are also, of course, extremely pleased that the government accepted our original amendments to ensure that the threshold was indexed and that the AWOTE indexation method will be used in order to index the threshold.

This will deliver benefits to a quarter of a million Australians at a very important time in Australia when families and singles need help, and it will also ensure that this threshold is now keeping pace, finally, with indexation from when this measure was first introduced in 1997. Having said that, we also seek assurance from the government that, as the government has stated previously, there will be no negative impact on the public hospital system and that they will look at any negative impact on the public hospital system. My next amendment deals with the review mechanism that will facilitate that.

We understand and we hope that the government accepts these new threshold levels. We all believe that we have moved substantially in order to achieve an outcome that we can all live with. I said to somebody last night that the Greens are used to consensus decision-making processes and are pleased that we have been able to reach a level of consensus. It would be fair to say that nobody is entirely happy with the outcome in terms of my stated position, which has been that the Greens do not support the rebate in the first place and we do not support a surcharge. But this is a significant step in the right direction.

We are very pleased that the government has agreed to indexation and has agreed to the AWOTE indexation mechanism, and that will have very clear regard for any impacts on the hospital system. We have been working very hard to ensure that there are no negative impacts on the public hospital system. We believe that, in the long term, this will result in a stronger public health system in Australia. That is at the bottom of where the Greens are coming from. We are strong believers in a strong public health system, and we believe this is a step in achieving that strong public health system.

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

Bad public policy does not become good public policy just because you water it down. This measure was bad public policy when it was introduced on budget night. It was exposed as bad public policy during the Senate estimates process and it was exposed as bad public policy during the Senate inquiry. This after the government was telling us that we were economic vandals for insisting on some proper scrutiny of a measure that was going to push up the price of health insurance premiums, including, and in particular, for older Australians. They said it was going to put additional pressure on public hospitals, it was going to see up to a million Australians leave private health insurance and it was going to take billions of dollars out of the hospital system.

We were accused by the government of economic vandalism for insisting on some scrutiny. Of course, the Senate estimates process and the Senate inquiry exposed all of those fundamental flaws. What we have seen over the last couple of months is nothing but a farce. We have seen a government that has been focused on political horse-trading rather than on what is good public policy. We have seen a government that has absolutely not been focused on what is in the best interests of our health system but has been trying to come up with a grubby deal somewhere in a dark back room to see whether they can save some face after they were exposed for not having thought through the implications of what it is that they are proposing.

The government had not done its homework. They came up with a measure to double the Medicare levy surcharge for singles and to increase it by $50,000 for couples and families. When we asked them what the impact was going to be on public hospitals and what the impact was going to be on older Australians who save their money every year to be able to afford their private health insurance premiums, they were not able to answer. They had not even asked Treasury or the Department of Health and Ageing to do any assessment, any modelling or any sort of costing whatsoever on what the impact on those Australians would be.

This measure, if it is successful today, will force health insurance premiums up for 10 million Australians, including one million Australians who earn less than $50,000 per year. These are one million Australians earning less than $50,000 per year who every year make the sacrifice and do the right thing by our health system by taking additional responsibility for their own healthcare needs by taking out private health insurance. Will they get a tax cut, Minister? Will those people earning less than $50,000 per year who continue to take out private health insurance get a tax cut? The answer is no. So here we are: we were talking about providing a tax cut for some people over here who are not prepared to take out health insurance but we are not prepared to give a tax cut to the one million Australians earning less than $50,000 per year who continue to do the right thing and who continue to take out private health insurance.

I received an email this morning from Mrs Judie Kearney-Wilkins. I will read this email because it really sums up what the fundamental problem is with this legislation.

Please seriously consider your vote on this. I am a disability pensioner who has NO choice but to have private health insurance as my primary medical condition cannot receive treatment in the public health system (Qld). Along with my husband who receives the Carer’s Pension, we are raising twin 4 year old boys. The possibility that these changes could lead to people dropping their insurance & premiums becoming even more expensive is VERY troubling. I find it offensive that people earning $50,000 cannot afford the levy if they do not have insurance. What about the MANY pensioners paying it with incomes much less than that! Our COMBINED income is $22,000.

This is from Mrs Judie Kearney-Wilkins from a town called Zillmere, which happens to be in the electorate of Lilley, and this lady is a constituent of the Treasurer, Wayne Swan. The Treasurer would be well advised to listen very carefully to the concerns of his constituents in Lilley. The crux of the matter is that this policy measure will force premiums up for people like Judie Kearney-Wilkins. The day people cannot afford to pay their premiums anymore because this measure has forced them up by another five to 10 per cent is the day those people will have to join long public hospital queues.

The reality is that the government have been flying blind on this. Very clearly, if the government had looked at the very eloquent statements made by then Senator Graham Richardson in 1993, when he made a terrible assessment of the impact of 10 years of Labor health policy by putting his finger on what these sorts of measures would do to our health system, they would have understood the impact that these sorts of measures would have on Australians on low and fixed incomes. They would have understood what this sort of measure does to our public health system and they would have understood that this is not the right direction to go in.

Watering down bad public policy does not make it good public policy. Any policy that will force more people into the public system and that will see more than half a million people leave private health insurance is bad public policy. Any policy that will see up to $3 billion in hospital funding walk out the door because the government is quite happy to see more than half a million people leave private health insurance is bad public policy. I have been saying all week that it is time that somebody reminded the Minister for Health and Ageing, Nicola Roxon, that she actually is the minister for health. She is not the Assistant Treasurer. Again yesterday, health minister Nicola Roxon said that delivering this tax cut was especially important given the need to stimulate the economy.

We provided tax cuts that did not have a negative impact on the health system. Year in and year out the Howard-Costello government provided tax cuts and I will tell you the impact that had over the 11 years we were in government. A person earning $50,000 per annum on 1 July 1997 had a take-home pay of $35,898 per annum. As a result of our tax cuts they now have $5,102 per annum more in take-home pay. That is a $5,102 tax cut to people earning $50,000 per annum. For someone on $75,000 per annum the take-home pay as a result of tax cuts has increased from $49,148 to $58,500. That is a tax cut of $9,352 per annum. These are the sorts of tax cuts that the government should be pursuing. We are all in favour of lower taxes but not when it means having disastrous consequences for our health system. These are disastrous consequences that the government was too lazy to even properly assess. They were either too lazy or they did not want to know the answer. It is bleedingly obvious that if you put in a policy that is going to see more than half a million people leave private health insurance it is going to put pressure on premiums and it is going to put additional pressure on public hospitals.

Yesterday on ABC radio the minister for health did not even know what she was talking about. She was trying to tell the Australian people that about 400,000 people would leave private health insurance. The reality is that if she had looked at her own cheat sheet that had been circulated to the media she would have known that it was actually 583,000 people that were going to leave. I have not seen any information circulated on what the impact of this particular amendment is going to be. How many people is it going to affect? Five hundred and fifty thousand? Five hundred and thirty thousand? I hope that the government is at least going to tell us that. What is going to be the fiscal impact of this measure? How much money is the government going to be expected to save as a result of not having to pay the private health insurance rebates to those people that they expect will leave. That is the sort of information we need so that we can assess how much money this government is happy to see walk out of our health system as a result of chasing more than half a million people out of the private health system.

Over the last four months we have witnessed an absolute disgrace. Instead of focusing on good public policy, instead of focusing on how, as a government and as a parliament, we can ensure that Australians can have timely and affordable access to quality hospital care, instead of focusing on how we can encourage more people to take additional responsibility for their own healthcare needs by taking up private health insurance, we have seen a procession of deals and counterdeals. The government are not focused on how we can improve our health system but are focused on spin and on political rhetoric. They are focusing on an ideologically driven war on the private health system. Just call it what it is. Stop talking about tax break rhetoric. This is not about a tax break. If you wanted to provide a tax break you could find many other ways of providing it. This is about undermining the balance in our health system.

This is about going back to what Labor did between 1983 and 1996. Those who cannot learn from history are forced to repeat it. This is exactly what is happening. When the then Senator Graham Richardson, in 1993, put out his discussion paper, he was stunned. He said that in 1983, when Labor made those changes and introduced Medicare, they thought that some people would leave private health insurance. We are hearing exactly the same language now—’Some people will leave.’ Never mind that it became 485,000 people or that it became 644,000 people. ‘Oops. We did not remember that there were children involved.’ Never mind that industry experts estimated that it was going to be up to one million people or that you have not even gone out of your way to properly assess the impact of this.

Professor Deeble is hardly an apologist for private health funds. He is hardly somebody that can be said to have a vested interest on behalf of health funds. He said that the government should have done proper modelling to assess the impact on public hospitals. It is a no-brainer. If you take $2.9 billion out of the health system—because that is the amount of contributions that will go out the door as soon as those people leave private health insurance—of course you have to assess how that will flow through to the public health system. Of course you have to come up with a way of compensating the states and territories for the impact of this, and of course you should have worked with the states and territories to ensure that the impact of a measure like this is properly assessed and properly managed.

This government, when in opposition, pursued this mantra: ‘We’re going to end the blame game.’ ‘The buck stops with me,’ the Prime Minister said. ‘We’re going to be in this new era of cooperative federalism on health.’ This measure shows that that was a complete fraud. Not for one minute did the Prime Minister think that. The Prime Minister and the Minister for Health and Ageing, Nicola Roxon, are setting up the states for failure with this measure. They have flagged: ‘If the states can’t get their act together in sorting out those waiting lists, we’re going to come in and take it over.’ You are setting up the states for failure. How can the states address the serious issue of excessive waiting times, excessive public waiting lists, if you take $2.9 billion out of the health system without providing any proper compensation? And do not talk to me about this $600 million package. I explained yesterday in this chamber why that was a fraud. Do not talk to me about the infrastructure fund, because putting funding into infrastructure, as good as it is, will never, ever fund one additional treatment service. That is the reality.

Over the last couple of months we have seen a government which is not interested in good, sound public health policy. We have seen a government that has reverted back to type. We have seen a government that always hated private health. In the lead-up to the election, Labor was trying to keep the issue quiet, trying to make people believe: ‘Yes, we’ve stopped our war against private health. We’re no longer the Labor Party of the 1980s. We’re no longer the old Labor. We’ve moved on from our ideological battles of the past. We’re no longer the caucus-ACTU working party’—which essentially shot then Senator Graham Richardson down in flames when he wanted to introduce a Medicare levy surcharge because he could see that this was what was needed to restore the balance in the health system.

Essentially, you have committed this big fraud on the Australian people. You never told them before the election that this is what you were going to do. You introduced this measure in the budget. It was exposed as being fundamentally flawed during Senate estimates and during a Senate inquiry. None of the changes that have come before this chamber make enough of a positive difference for this to actually work. We will not support the amendments moved by Senator Xenophon and the Greens. We absolutely deplore the way the government has handled this. It is irresponsible. It will put significant pressure on the most vulnerable in our community—the one million Australians who will continue to take out private health insurance and who earn less than $50,000, the one million Australians who are doing the right thing by our health system by putting additional resources into our health system to the tune of $2.9 billion. (Time expired)

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

It is not too late for Senators Fielding and Xenophon and the Greens to strike a blow for the health system in Queensland. I know none of them come from Queensland but I beg of you: understand the situation in Queensland. I want to enter this debate again today to highlight the situation in Townsville. A front-page story in the daily Townsville Bulletin revealed that the Queensland government has a secret plan for what is needed for the hospital in Townsville: a $700 million extension to the public hospital. But the Premier of Queensland, Anna Bligh, went to Townsville last weekend and, with great fanfare, announced that she would be commissioning extensions to the tune of $100 million. That is $600 million less than what is currently needed in Townsville. If this amendment goes through, that situation will be further exacerbated.

Could I just indicate the statistics for the Townsville Hospital. This hospital serves a major provincial city of some 200,000 people. It is a five-year-old hospital. It was built to replace an existing hospital and it has fewer beds than the previous hospital. The corridors of the hospital are now as full as the wards. Patients are actually in beds in the corridors. They are now closing down some administrative rooms in the Townsville Hospital to put beds in. It has been revealed that currently at the Townsville Hospital the total number of overnight beds, day surgery beds, chairs and trolleys is 516. That is what we currently have at this major provincial hospital.

Before the last election Anna Bligh promised 586 beds. So they are 70 beds short of what was promised just a year or so ago by way of an election commitment. But the third statistic is that Townsville Hospital actually requires 918 beds. Currently we have 516 beds. We were promised 586, but we need 918 beds in Townsville Hospital alone. I say to Senators Xenophon and Fielding, imagine what this amendment will do to the Townsville Hospital alone. Forget about the hospitals in Mackay, Cairns, Mount Isa and Brisbane—and I am sure that all the hospitals in Western Australia, South Australia, Victoria, and New South Wales are in the same boat. I can speak from experience of the critical situation in Townsville Hospital, yet this amendment will exacerbate the problems with what is already a crucial and critical hospital system. I see Senator Heffernan is here. Will you be talking about hospitals in New South Wales?

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

Senator Heffernan interjecting—

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

Every day in the papers there is a report of a crisis in hospitals in New South Wales. I am sure someone will mention them; I will not go into it. I plead with the Greens: it is not too late to try to help the people of Townsville and North Queensland with this one hospital. I could go into every hospital up my way and tell you that they are already overcrowded. There are critical bed shortages and they are getting worse. But if you put these amendments in, things just have to get worse again. I can understand why the Labor Party would do this. They cannot manage money. They have to increase taxes, which is the hallmark of Labor governments. I understand that. They are very bad money managers. We only have to look at the last 10 months to see how pathetic they are at managing money and managing the economy. But I cannot understand why the two Independents and the Greens would want to make the public hospital system in my state of Queensland and my city of Townsville so much worse than it currently is. I plead with the Greens: please do not do this. Reject the amendments so that the already critical situation in places like the Townsville Hospital will not get worse.

Bill Heffernan (NSW, Liberal Party) Share this | Link to this | Hansard source

Senator Macdonald has raised a matter on behalf of Queensland. I want to raise a matter which will also affect New South Wales hospitals. It goes to the very heart of the actuarial assumptions behind the levy and behind the fees charged by private healthcare organisations. It is the commercialisation and monopolisation of cancer susceptibility genes like BRCA1 and BRCA2. As the government knows—and it does not know what to do about it—the ASX announced on 11 July that Genetic Technologies Ltd had made a commercial decision to enforce the rights granted to it under an exclusive licence from Myriad Genetics in America. What this means is that all laboratories testing for breast cancer in Australia—and prostate cancer will follow because there is a patent out there on the gene technology—are going to be centralised and monopolised. I wonder what effect that is going to have on the actuarial assumptions behind this levy? Senator Conroy is scratching his head because the government does not know the answer to this either.

Genetic Technologies Ltd said in 2003 that they would give this patent to the Australian people. They are now going to enforce the patent on the Peter MacCallum institute in Melbourne and, to avoid litigation, they want all the Peter MacCallum institute’s testing done through their laboratory. A spokesman for the Auckland District Health Board—and I would like the government to explain this in view of the actuarial assumptions behind the levies—said:

The Australian government had told the MacCallum clinic—

that is, in Melbourne—

to continue testing and had promised it would be indemnified for any dispute over the intellectual property rights of this gene technology.

I will not take up the time of the committee much further. My question is: has consideration been given to the long-term implications of giving non-protein, as well as protein, gene patents to private companies around the planet? In Canada it has doubled the price of testing. In America, Myriad have gone into ultimate wide screening at a huge impost on the cost of health care. In the specific case of BRCA1 and BRCA2, the cost of the tests will affect every woman in Australia who has breast cancer. I think it is a disgrace. The government ought to have the guts to say, ‘We’re not going to tolerate this,’ and do something about it, given that Genetic Technologies Ltd said in 2003 they would give it to the people of Australia and New Zealand and are now, in a monopoly situation, going to charge them. It is a disgrace.

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

I have just a couple of questions of the minister about the impact of this amendment. What is going to be the fiscal impact, in terms of the expected savings, of not having to pay the private health insurance rebate to people whom the government expects will leave private health insurance? What is going to be the impact, in terms of revenue, of not collecting the Medicare levy surcharge from those who no longer will be caught by it? What is going to be the impact on private health insurance premiums, moving forward? What is your expectation of future additional increases to private health insurance as a result of this measure? What is your expectation of the degree of funding lost to the health system as a result of people leaving private health insurance? What is your intention in terms of compensating the states and territories for the impact of this measure on their public hospitals?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I would like to address a number of issues but, as I do not have the chance to do that now, I will just give you the information that you are seeking and come back to other comments that I want to make. I believe the number of dropouts will be 492,000 and the revenue $380 million. In terms of tax relief, 250,000 Australians will receive a tax cut because this bill will now pass the chamber.

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

You have not actually answered the two core questions that I asked. I am not asking for the net fiscal impact, because that is what you usually circulate; I am asking you very specifically: how much do you expect to save from not having to pay the private health insurance rebate? For your reference, it was $959.7 million in the budget papers and under your revised version, version 2, it was $879.3 million. I want to know how much that is going to be now and what you expect your comparative loss in revenue to be.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

The rebate saving is $740.6 million, less tax received of $360 million.

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

Minister, what is the expectation of the Australian government in terms of increases in private health insurance premiums moving forward as a result of this measure?

Progress reported.