Guy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

I stand here proudly opposing the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 [No. 2], albeit knowing that the government thinks that this might be a trigger for a double dissolution election. If that is the case, I say, ‘Mr Rudd, bring it on!’ Health is critically important to all Australians and this legislation is going to adversely impact on our health system. We want to have a balance, as I said yesterday, between the public and the private sector. We know the consequence of this initiative, and that consequence will be increased pressure on public hospitals and increased pressure on private health insurance premiums. We have seen in the media today suggestions that there are likely to be increases in private health insurance and we do not want that made any worse as a result of Mr Rudd’s miscalculation.

What is very important, though, with respect to this legislation is that the government has breached its word, the government has broken yet another promise, and that is on top of the promise with respect to GROCERYchoice and the shocking waste of taxpayers’ money, Fuelwatch, the promise of childcare centres being established in schools and the establishment of GP superclinics. The government has failed dismally. The superclinics were promised before the previous election and the government has not delivered. The government promised to fix the public hospital system by 30 June 2009 and it failed—it has not responded. Here we are heading into the second quarter of 2010 and the government still has not responded. It said it would take over the public hospital system. The government has not. It has breached its word; it has broken its promise. As families, as mums and dads, we tell our kids that truth and honesty is important and that you do not break your word. Mr Rudd, you should take that lesson. You should know that that is the case. You have children and you should be aware of that. I am sure that is what you have told them as kids.

There are so many promises that have been broken. I have a copy of a letter to the Australian Health Insurance Association from Mr Rudd dated 20 November 2007. It promises no change to the private health insurance rebate scheme. And then we have a whole range of promises. On 12 May 2009 the Australian Health Insurance Association commented on how upset they have been with respect to the broken promise by Mr Rudd. The Australian Medical Association, on 12 May 2009, said:

Changes to the 30 % Private Health Insurance Rebate mean many Australian singles and families will pay a lot more for health insurance, and if you don’t keep your private health insurance you’ll be slugged with an increased Medicare Levy surcharge. They get you both ways.

I was at a rural doctors breakfast this morning. We were talking about the importance of health in rural and regional Australia. There were some very good demonstrations of that in the presentations that were made. This is not just going to hurt in the capital cities; this will hurt in rural and regional areas, places like northern Tasmania and north-west Tasmania.

Kerry O'Brien (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Senator O’Brien interjecting—

Guy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

I hear Senator O’Brien interjecting. What we want is real change in Tasmania on 20 March, because we know the state Labor government has failed dismally when it comes to health and the provision of health services in Tasmania. They made a promise to move the Royal Hobart Hospital onto a working port. They spent millions of dollars on consultants and reports to make that happen and guess what happened? They did a backflip. They changed their mind and wasted all that money. What a shocking waste. I have it here. It says:

After three years of planning costing in excess of $10 million—

of Tasmanian taxpayers’ money—

in May 2009 the State Labor Government again changed its position to redevelop the hospital on the current site but defer completion until 2030 …

Hello? Yes, 2030, in 20-odd years time from now. What a joke that is.

In terms of health services in Tasmania, Tasmanians deserve real change. They deserve better. Let us see what else we can learn from the health situation in Tasmania, knowing it is a very important issue, one of the top issues for Tasmanians as they make their decision on 20 March 2010. They will decide whether they want real change with the Will Hodgman led Liberal government post that special day.

In 1998 the state Labor Party promised to reduce waiting lists, but today there are thousands more Tasmanians on waiting lists. Tasmanians wait much longer than the national average. They promised to do better and they have failed, just like Mr Rudd promised and has not delivered. At the end of May 2009 there were 4,094 Tasmanians who had been waiting longer than the clinically recommended times—more than half of the waiting list. Of the 4,094 overboundary cases, there were 2,847 waiting at the Royal Hobart Hospital, 875 at the Launceston General Hospital in my home town of Launceston, 292 at the North West Regional Hospital in Burnie and 80 at the Mersey. These people were promised better services. They were promised that the waiting list would reduce and they have been let down by the Bartlett Labor government. They should do so much better. Tasmanians, as I say, have an opportunity to decide on 20 March.

It is clinically recommended that patients in categories 1, 2 and 3 be admitted within 30 days, 90 days and 365 days respectively. Waiting longer than clinically recommended for elective surgery, let us face it, often means more pain. That is what has happened, sadly, to the Tasmanians who have had to wait on these lists—they have suffered and endured, in many cases, more pain.

What did Lara Giddings, the Tasmanian Minister for Health, say in budget estimates on 20 June 2009? She said:

We do know people who have been on elective surgery waiting lists become emergencies.

So we know what is going to happen. Once that list stays long—and it will stay long under Labor—people will end up in accident and emergency. That is not what we want for our fellow Australians and fellow Tasmanians.

Kerry O'Brien (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

If you’re worried about waiting lists, why did you sell them?

Guy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

I do not mind the odd interjection from Senator O’Brien, who is a Labor senator for Tasmania. I hope he is passing on this factual information to his state Labor colleagues so that we can get a good deal for Tasmanians when it comes to health and health care right across the state.

In May 2009 only 72 per cent of category 1 patients, 51 per cent of category 2 patients and 68 per cent of category 3 patients were admitted within clinically recommended times—a poor performance. In Tasmania, in the year to June 2008, there were 2,886 patients who waited more than a year for surgery and, of those, 173 waited longer than—wait for it—500 days. They had to wait 500 days. Even the federal government’s own state of our hospitals report last year showed that the number of Tasmanians waiting longer than a year for surgery was 10 per cent—in fact, 10.1 per cent—compared to 1.8 per cent in New South Wales and the national average of three per cent. Why do we lag behind? Why are we suffering so much under the Bartlett Labor government in terms of health and health care? It is totally unacceptable. It is very unfair on Tasmanians.

The acting CEO of the Royal Hobart Hospital, Michael Pervan—and you would think he would be reasonably balanced and independent—said in evidence to a parliamentary inquiry in 2009:

Our performance on elective surgery at the Royal Hobart Hospital has been lacklustre to say the least …

We know that the Tasmanian Liberals are committed, under Will Hodgman and his team, to fix the problems and make it better. I congratulate Will Hodgman and Brett Whiteley, the shadow minister for health down there, who has worked hard. He has consulted with all the key stakeholders to make a real difference, to make a real change. I hope that is delivered not just for him but for Tasmanians on 20 March, in a few weeks time.

In conclusion, what will definitely occur as a result of this legislation under Labor—whether it be federal or state Labor—is increased pressure on public hospitals, increased waiting times and waiting lists under Labor and increased pressure on private hospital insurance premiums. The Rudd government promised up hill and down dale, in cold hard writing and in face-to-face meetings with the key stakeholder groups and the public prior to the election that there would be no change. They have broken that promise. That is a great shame. But it is consistent with their breach of promises on a whole range of issues, and not just in the area of health. It is consistent with their mismanagement and maladministration of our economy generally and, more recently, of the installation program. What a disaster of mismanagement and maladministration. The government should be ashamed, but it seems that the government have no shame. Instead, they have used the Sergeant Schultz response: I know nothing. That is the response they have made. It is not good enough, and I call the government to account.

Judith Troeth (Victoria, Liberal Party) Share this | Link to this | Hansard source

I too would like to make some comments in the debate on the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 [No. 2] about the management by this government of what is a $100 billion a year system—big business in anyone’s terms. The coalition government had a good track record of managing that $100 billion a year system, but in a few short years Labor has shown that it cannot do it. The Labor government has been an abject failure on health. Prime Minster Kevin Rudd promised big and delivered little. Of the billions of dollars splashed around in stimulus packages, not one cent went to health. The private health insurance rebate changes are a tax on health—a tax that Kevin Rudd promised he would not impose. In opposition, the now Prime Minister and the Minister for Health and Ageing, Nicola Roxon, both stated before the election that they would not alter the health insurance rebates. They even put it in writing. In a press release dated 20 September 2007, the current health minister—and I know my colleague Senator Humphries quoted this yesterday but it will not do any harm to quote it again today—said:

On many occasions for many months, Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private Health Insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians. The Liberals continue to try to scare people into thinking Labor will take away the rebates. This is absolutely untrue.

The Prime Minister put the same commitment in writing to the Chief Executive of the Australian Health Insurance Association in November 2007 prior to his election as Prime Minister.

The coalition rejected Labor’s attack on private health, and it was defeated in the Senate. This new tax has been rejected by the parliament, but Labor is determined to impose it. The health rebates were one of three pillars introduced by the Howard government to strengthen private health. These measures saw membership of private health funds rise from 34 per cent under the Keating government to 44 per cent today. I am very proud to say that the coalition has always believed in a balance between public and private health. After all, a strong and affordable private health sector alleviates pressure on state public hospital systems.

The fact is that all Australians will pay a price if this new tax is imposed. On the government’s own estimates, tens of thousands of people will drop their insurance coverage. It would force people to rely on our already stressed public health system. Queues at emergency departments and waiting lists for surgery would grow longer. It would affect not only the public hospitals but also, as people drop out of insurance, those who continue to keep their private health insurance who would see their premiums rise. Higher premiums would continue to make it harder for many to keep their insurance and possibly deter young people from taking out a private health insurance policy for the first time. Public hospitals are already stressed and strained and broken. Remember that the Prime Minister promised to fix them by mid-2009, but he is yet to produce a plan to fix hospitals, a plan that he said he had before the last election.

The Labor government says it needs this tax because of the global financial crisis, but its attack on private health started in its first budget before the global financial crisis. The Labor government misleads people about the need to tax private health insurance. Kevin Rudd says the money is needed for health reform, and he told Australians that the recent Intergenerational report would show that the tax would deliver $100 billion over decades to come. But there was no mention of the $100 billion in the Intergenerational report. Ms Roxon, the health minister, said the money from this new tax would be used to fund e-health. Then she said it would be used for new medicines and improved technology. That just proves that Labor is willing to say anything to support this tax increase.

The fact is that in regional, rural and remote Australia e-health could be used to great benefit. With only a small number of medium-sized regional towns, doctors in outlying areas, particularly in Western Australia and the Northern Territory, could use e-health to have faster diagnoses, faster treatment and faster recovery times for the many patients that they have to treat. But, at present, if there are no advances in e-health—and advances are technically possible in this day and age—many patients must make the very long round-trip to regional hospitals to get a diagnosis, go home and then come back to be treated and, hopefully, get well in the long term. It is estimated that the measures that Labor is putting forward in the Senate today will save $1.9 billion over the forward estimates. Anyone would have to say that that is a drop in the bucket compared to the cash splashes Labor has thrown around without one cent going to health.

For instance, the wasted funding of the failed Home Insulation Scheme has cost more than this will save. The coalition suggested increased excise on tobacco as an alternative, but Labor refused to consider this. Let’s face it: Prime Minister Rudd and Health Minister Roxon are ideologically determined to hit those Australians who pay to look after their health needs. The changes to the private health insurance rebate are just the latest phase in Labor’s unrelenting war against private health insurance—Labor hates private health insurance. When in government the coalition introduced an open-ended private health insurance rebate because, for every rebated dollar, a privately insured person contributes two more to our health system as a whole. We believe in the right of all Australians to take charge of their own healthcare needs and plan for the future. We have always worked hard to deliver incentives to promote the uptake of private health insurance and take the pressure off Medicare.

People will now drop out of health insurance because they cannot afford the much higher premiums. With interest rates no doubt on the rise, people will be thinking, ‘What do we pay for this month? Do we pay the mortgage’—which is more or less obligatory—‘do we pay school fees and provide for our children; do we buy food to put on the table; or do we go on with private health insurance?’ It will be very tempting for them to scrap the latter option. That will restart the catastrophic premium membership death spiral of the 1980s and 1990s, when Labor almost wiped out private health. It took a herculean effort on behalf of the coalition to reinstate that when we came to government.

Under this scheme, the private insurance rebate will decrease on a sliding scale for singles earning over $75,000 and couples on $150,000 per annum. The 30 per cent rebate remains for people with an income up to $75,000 a year for singles and up to $150,000 for couples. The rebate will decrease to 20 per cent for people on incomes of $75,000 to $90,000 for singles and $150,000 to $180,000 for couples. It will decrease further to 10 per cent for people on incomes of $90,000 to $120,000 for singles and $180,000 to $240,000 for couples. Payments cut out completely at that upper level of $120,000 for singles and $240,000 for couples. The Medicare levy surcharge will increase to 1.25 per cent for people on incomes of $90,000 to $120,000 for singles and $180,000 to $240,000 for couples. The Medicare levy surcharge will rise to 1.5 per cent for people at a higher income level. It is currently one per cent for people earning over $70,000 for singles and $140,000 for couples.

Over 9.5 million Australians are covered by private health insurance for hospital cover—that is 45 per cent of the population—and over 11 million people have some form of private health cover; 1.3 million people insured are over 65 years of age, which is 50.3 per cent of all Australians in this age group.

Members of health funds contributed $10.6 billion to the Australian healthcare system in 2008, an increase of 10 per cent on the previous year. Fifty six per cent of all the surgical procedures are performed in private hospitals. Most of these are covered by private health insurance. And almost 15 per cent of public hospital admissions are privately insured patients. It is estimated that premiums will increase at rates of around 10 per cent, or possibly more, per year from 2010 to 2011, rather than the five to six per cent as now. Inevitably, there will be demands from the states for additional public hospital funding from the Commonwealth over the next Australian healthcare agreements to compensate them for extra pressure on their public hospitals.

If this measure goes through, we are talking about increased financial pressure on the federal government, increased financial pressure on the state governments and increased financial pressure on families and individuals as they start to make what could be catastrophic choices for them between paying for health as they would like to and choosing other forms of expenditure. I urge the Senate to defeat this measure.

Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

I too rise to contribute to the debate on the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] and the related bill. The history of politics in Australia tells us many things. One of the things that it tells us is that a government will only remain in office as long as it faithfully retains the public’s trust and confidence. At times, however, and rather unfortunately, we have a government that attempts to manipulate the trust and confidence of the people of Australia by making very specific promises to them in the run-up to an election while, at the same time, having a secret political agenda whereby it never has any intention of actually delivering on those promises. The Rudd government was very big on making promises in the run-up to the 2007 election—and it never had any intention of delivering on those promises. The Rudd government, many times over now, has clearly shown to the people of Australia that, when making a pre-election commitment, it will do anything, it will say anything and it will promise anything, but it has absolutely no intention of ever carrying out those policy commitments.

We on this side of this chamber have often described the way that the Labor Party manipulates the voting public of Australia as ‘spin over substance’. We see that spin every single day in his chamber as ministers stand up and provide sham or non-answers to questions related directly to their portfolios, and then we go home and we see the spin again on the TV at night as ministers and Mr Rudd make their shallow political excuses. Senator Conroy, in his portfolio, is a direct example of someone who makes very shallow political excuses in relation to Labor’s repeated failures to carry out their policy commitments.

It is also accepted that a political party may make a promise that it genuinely believes will be in the national interest. It makes that promise based on the best advice that it is given at the time, and then the political party may find out later that due to circumstances that are so radically changed it would actually be irresponsible to put that promise into effect. The global financial crisis was not such an excuse. I think it is also fair to say, and indeed fair to acknowledge, that in the run-up to an election, in the heat of an election battle, a future prime minister, a party leader, a minister or a shadow minister may overreact in a given situation and, in promising a remedy to an issue, may actually overreach themselves and their good intentions. However, there is a clear difference between overreaching or overreacting as part of election fervour and blatant lying by a political party as part of its party platform. In the case of Labor the record is very, very clear. The Labor Party gave a commitment to the people of Australia that it would not change the existing private health rebate system should it be elected into office. That is the promise that Mr Rudd made to the people of Australia. The next election will be all about trust and confidence, and Mr Rudd, by his repeated actions, has destroyed the trust and confidence that the Australian people had in his government.

Before I deal with the specific issues surrounding this legislation, I would like to just remind the Senate of some other promises that Mr Rudd made in the lead-up to the election that yet again he never had any intention of delivering on. Perhaps the most famous one was when the now Prime Minister uttered the words: ‘I am an economic conservative, and as an economic conservative I believe in budget surpluses.’ Mr Rudd told the people of Australia that he was an economic conservative, because he had worked out that was the faith and the confidence that the people of Australia had put in former Prime Minister John Howard. There was a true economic conservative. Mr Rudd realised that, if he could hang off the shirt tails of Mr Howard, if he could portray himself as being an economic conservative, that would do well in the lead-up to the election. So the voters, based on the promises made by Mr Rudd, based on the words that were uttered by him, placed that faith in him. What we now see, though, is that, with the record debt levels that this country is in, Mr Rudd would have trouble even spelling the word ‘surplus’ let alone delivering one as part of a budget to the people of Australia.

Mr Rudd also told the people of Australia that he would keep our borders safe. Who can remember these famous words on 15 August 2007 by Arch Bevis, the then homeland security spokesman for Labor? He made this promise to the Australian people: ‘Labor places the highest priority on national security, both defence and homeland security.’ I see Senator Humphries, our now shadow parliamentary secretary, here smiling. Yes, you are right, Senator Humphries: that was once again merely a promise that they never had any intention of delivering on. What are we up to now? Eighty-one, 82, it could be 83—I have not checked the news in the last hour—but I understand there were 82 boats at the last count since the Labor Party relaxed the coalition’s strong border protection policy in 2008.

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

Mr Acting Deputy President, I rise in a point of order on relevance. I am truly enjoying the colour and movement of the debate, but the bills are to do with the private health industry rebate. We have had about five minutes on refugees. I am wondering whether at any stage the good senator would like to wander back to debate the bill.

Scott Ryan (Victoria, Liberal Party) Share this | Link to this | Hansard source

I understand that the tradition in this place has been to allow wide-ranging relationship to the legislation. I remind Senator Cash of the bills and call upon her to continue.

Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

I thank you very much for that, Mr Acting Deputy President, because clearly the Labor Party have no idea why we are in this chamber today. It is just another piece of legislation to them—another broken promise which they would like this Senate to put through without scrutinising. We are here today because of the broken promises that Labor made to the Australian people. I note that not one member on that side has the guts to come into this place—

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

Mr Acting Deputy President, I rise on a point of order. I add sound to colour and movement in my earlier point of order.

The Acting Deputy President:

There is no point of order. Senator Cash will continue.

Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

We are here today because the Australian people voted those on the other side into office based on the specific commitments they made prior to the 2007 election. How disappointed they now must be with the performance of the Rudd Labor government, because the bills that we are debating here today are just others in a series of broken promises by the Rudd Labor government. The Rudd Labor government made the promise to the people of Australia that, if elected to govern, they would not change the private health insurance rebate regime for the 11 million Australians who take responsibility for their own health care needs by taking out private health insurance and thereby relieving the pressure on the public system. That was the Labor Party’s promise to the people of Australia. Did they say it once? No. Did they say it twice? No. It was a little bit like Christmas when this promise was being made. Let us have a look. What did Nicola Roxon say when she was shadow minister? She had the audacity to accuse us on this side of saying that we did not have any faith that the Labor Party would deliver on the private health care rebate promise. This is what she actually said:

Federal Labor has made it crystal clear that we are committed to retaining—

sorry, I am almost laughing as I am saying this—

all of the existing Private Health Insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

The Liberals continue to try to scare people into thinking Labor will take away the rebates.

This is absolutely untrue.

She also said this:

The Howard Government will do anything and say anything to get elected.

How words come back to bite you. On 20 November 2007, in a letter to the AIHA from the now Prime Minister, this is what Mr Rudd said:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

Federal Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge.

But the promises did not stop there; they continued. In February 2008, as quoted in the Australian, the Prime Minister said:

The Private Health Insurance Rebate policy remains unchanged and will remain unchanged.

In May 2008, on Macquarie Radio, Nicola Roxon said:

We continue to support the 30 per cent, 35 per cent and 40 per cent rebate for those Australians who choose to take out private health insurance.

It goes on. In October 2008 in a speech to the relevant association, Nicola Roxon said this:

Private health insurance consumers will still be able to claim the 30 to 40 per cent rebate and the lifetime health cover incentives will remain in place.

And then there was another one on 24 February 2009, as quoted in the Age newspaper. She is now the health minister of this country. Nicola Roxon said:

The government is firmly committed to retaining the existing private health insurance rebate.

So when is a promise not a promise? When it is given by the Australian Labor Party in the lead-up to a federal election. The fact that we are here today, yet again, debating these bills in the Senate, after they have already been rejected by the parliament, goes straight to the Labor Party and the lack of credibility that it has. All these bills show the Australian people is that Mr Rudd and the Labor Party made these promises as part of what one might describe as a contrived scheme of deception aimed at conning the Australian voters into believing one thing, when Mr Rudd knew that the Labor Party never had any intention on delivering on those promises.

Putting aside the fact that the bills that we are debating today represent nothing more and nothing less than yet another one of the broken promises by the Labor Party, if we actually look at the policy itself, the policy is fundamentally flawed and, if implemented, will actually have a detrimental impact on the people of Australia. The Labor Party tells us that the measures contained in these bills are estimated to save $1.9 billion over the forward estimates. And when one actually looks at those figures in terms of the Labor Party and its spending, one might say it is really just a drop in the bucket compared to the cash splashes that were thrown out by them, but with not one cent being spent on health. Do you know why? Because these bills have nothing to do with saving money. That is just the ruse, that is just the excuse that the Labor Party are giving. These bills represent nothing more and nothing less than the politics of envy. The Labor Party is ideologically determined to hit those Australians who are prepared to pay up and look after their own health needs. These bills represent nothing more and nothing less than Labor’s ideological push to target the so-called rich of this country.

These changes represent just another phase in the unrelenting war that the Labor Party rages against private health insurance, because at the end of the day we all know one thing: Labor hates private health insurance. But that is where the Labor Party is so wrong. The problem for the Labor Party—that is, in targeting the so-called rich—is that the damage that will be caused if this legislation is passed is going to be much more widespread. It will end up affecting those people who cannot afford to look after their own health and take out private health insurance. So much for the Labor Party telling the people of Australia that they are the ones who try to look after the battlers.

The fundamental flaw in this legislation is that, whatever money the Rudd government tells the people of Australia it is trying to save by implementing these measures, the actual effect of the policy once implemented will be the fact that the consumer, the average Australian person, will actually end up paying more either in terms of increased hospital waiting lists or increased private health premiums. People will actually drop out of private health insurance if these measures go through, and the only end result of that can be more pressure on the public health system. How is that a solution to the health crisis that this nation is actually facing? It is not a solution. It is bad policy. But, what is worse, it is bad policy based on nothing more and nothing less than an ideological war. The end result is going to be the restart of the catastrophic premium/membership death spiral of the 1980s and 1990s, when Labor almost wiped out private health insurance and almost destroyed Australia’s health insurance system. So much for fixing our hospitals.

But what is new in that regard? Labor has been an abject failure in health previously and their record to date shows that they continue to be an abject failure in health. Remember Kevin Rudd—Mr Rudd, the now Prime Minister? He was the chief bureaucrat in Queensland under the Goss Labor government, which began widespread hospital closures and the removal of more than 2,200 hospital beds. That is how Mr Rudd fixes a hospital system. He balloons the bureaucracy while actually taking away the beds on the ground. That is a Labor Party solution to solving the health problems that Australia faces! These bills are not about saving money. They represent nothing more and nothing less than an ideological war that the Labor Party wages on those people who are able to afford—and only just, some of them—to take out private health insurance. It an ideological war against those Australians who put aside money every week to take responsibility for their own healthcare needs.

It has been noted during the debate that it appears to be only those on this side of the chamber who have stood up to contribute. I note that not one Labor senator has yet fronted this chamber to justify to the Australian public why we are again being asked to push these bills through the Senate—not one member from the other side. Where is their explanation to the people of Australia as to why the Labor Party has done a complete backflip on a 2007 election promise and a 2008 promise when elected, continuing into 2009? Maybe they know that you actually cannot come into this place and defend the indefensible.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] and related bill. The fact that I am standing here today speaking on these bills astounds me. I recall clearly Minister Wong standing up immediately after the defeat for the second time of the government’s CPRS legislation late last year and stating loudly and clearly that the legislation would be reintroduced as a matter of priority this year. Of course, this statement followed the pronouncement by the Prime Minister that the CPRS legislation was required to address the greatest moral challenge of our time.

So what has the government done with the CPRS? It has used its numbers to ram the legislation through the other place, but incredibly it failed to give the CPRS bills sufficient priority to bring them on here before the cut-off date. That is right, the government could not get its act together to get the legislation in here by the cut-off date—legislation that the government claims is needed to address the greatest moral challenge facing this generation, legislation that the minister said would be put before the parliament at the earliest opportunity. Clearly there appears to have been a greater moral challenge for the government, and that can only be the breaking of a clear promise to the people of Australia to maintain the Medicare levy surcharge and the private health insurance rebate.

It is clear to all this week where the priorities of this government lie, pressing forward with measures that are in clear breach of undertakings made to the Australian people. What is not clear is the government’s motivation. Did the Prime Minister really believe climate change to be the greatest moral challenge, or was it just a convenient political ploy that worked to wedge the then coalition government before the election? The lack of priority provided to their flagship measure for addressing climate change suggests it was probably the latter. Similarly, what motivations are behind the promise to maintain the levy surcharge thresholds in the private health insurance rebates followed by their current attempt to breach them? Again, a cynic would conclude the necessity of avoiding electoral backlash from everyday Australians with private health insurance cover may have had more to do with their promises prior to the election than any sort of commitment to maintaining the measures. Their current actions are illuminating in that regard.

The impact of the federal government’s proposed changes to the Medicare levy surcharge thresholds on the public hospital system are of serious concern and should frighten all Australians who care about the public health system, and all state governments due to the impact on the responsibility for delivery of primary health care. Not only have Kevin Rudd and Labor broken an election promise on private health insurance—one that he put in writing, I note—but they have also broken a promise not to impose new taxes, which is exactly what this is: another great big new income tax. By the late 1990s, private health insurance membership had collapsed to around 30 per cent of the population. In the June quarter 2008 it was 44.7 per cent. Make no mistake, this was all down to the Howard government’s success in encouraging Australians to take out private health insurance cover, to take pressure off the public purse and the public health system—a system which was designed to help those who do not have the financial resources to cover their health requirements.

This was a remarkable turnaround, from 30 per cent in the 1990s to 44.7 per cent in 2008. It did not just happen in a vacuum. The turnaround was achieved through the deliberate and persistent introduction of measures in the first few years of the Howard government. Upon its election in 1996, that government saw the need for urgent and decisive action to redress the neglect that the private health insurance sector had suffered under 13 years of Labor, which had led to the numbers of privately insured falling consistently for many years prior to the election of the Howard coalition government. It is important to remember that this is not just a question about the health of the private insurance industry or even about those who can afford private cover. What Mr Rudd is proposing in these bills will punish those who have been paying to look after their own health and, by the government’s own assessment, force tens of thousands of them into the public system, taking away resources from those who do not have the financial capacity to access the private system.

The issue is of huge importance to all Australians with healthcare needs and those who are close to them. Put simply, as the number of Australians and their families with private insurance falls, the number of Australians needing to access their healthcare needs through the public system increases, with consequent increases in demand for those publicly funded services and a greater inability by the public system to cope. And, as was happening in the early to mid-1990s, the more people who drop out of private cover and take their chances on the public system—in general and for obvious reasons, the people who drop out of private cover tend to be those with no immediate healthcare needs—the more expensive the premiums become for those remaining in the private system, who for obvious reasons tend to be those who actually do have current healthcare needs, and the more likely it is that those remaining will be forced to drop out because they can no longer afford the higher premiums that result. As this works through the system, that will include many of those who do actually have immediate care needs but cannot afford the higher premiums. In the 1990s the result was an impending explosion in demand for public health care, with detrimental consequences looming for all Australians’ healthcare needs. Wisely, the Howard government sought to address this through a series of three targeted measures now known as the three pillars: the 30 per cent rebate, lifetime health cover and the Medicare levy surcharge. With the three pillars and the delicate balance that they provide, the decline in private health coverage was arrested and we are now back at the levels of private health cover that we see today. But changes proposed by the government in these bills threaten to undermine the effectiveness of the three-pillars approach to private health funding, with enormous potential consequences for public health care in this country.

There are a number of facts that are relevant to this debate. Labor says it needs this tax because of the global financial crisis and its impact on the government’s ability to fund health measures. But the fact is the government’s attack on private health started in its first budget, before the global financial crisis, when it was still predicting large surpluses—and those were the days! Labor says that these measures will save $1.9 billion over the forward estimates, this coming in the same week that we see the pink batts program exposed as throwing away and wasting billions of dollars. The government says that scheme and other measures—such as the bungled Building the Education Revolution—are stimulating the economy. But the reality is that all these measures contain massive waste and inefficiency and any actual benefits could have been achieved for far less with better targeted measures that were better thought out. There is a total sum of around $94,000 million, or $94 billion, committed to stimulus measures. If better targeting and management could have resulted in just a 10 per cent saving on that spend, some $9,400 million, or $9.4 billion, could have been saved—not to mention the interest savings of at least half a billion dollars each and every year as less would have had to be borrowed. It becomes clear that Labor’s attempt to disenfranchise middle Australians from their private insurance health cover cannot be justified on good management grounds.

While Labor rips $1.9 billon out of the hands of private individuals, the government continues to borrow billions, raise taxes and distort the economy with ill-conceived, non-productive and badly run programs. If it isn’t pink batts or Building the Education Revolution, it is the nationalisation of the communications network and a program of central control of the economy which is clearly going to see health nationalised as part of the government’s head-long ideological rush towards a failed system that we all thought had ended decades ago. Raising the cost of people’s private health cover will not fix the massive and unnecessary national debt that Labor has created. And the fact remains that encouraging people who can afford to make a long-term commitment to private health is good for the overall viability of a health insurance system built on the community rating approach, under which insurers are prohibited from charging premiums assessed on the basis of risk; that is, they cannot price-discriminate on the basis that a potential insured person is, for example, a smoker or on the basis of their age or family background or medical history or even their current medical condition. Indeed, having healthy people participate is a vital component of a system based on the community rating approach.

It is also important to note that private health insurance adds money to the health system. Over 10 million Australians have private health insurance. This means that over 10 million people are adding an amount, generally equal to 70 per cent of their private health insurance premiums, to the overall amount of money available to fund health care across Australia. And of course, yes, the government has also paid 30 per cent of each premium. As such, for every 30c in the dollar that the government spends on health care supporting the privately insured, a further 70c is contributed by individuals to the overall amount of money being spent on hospital health care across the country—but not if Labor has its way and introduces a reduced rebate. Looking at it the other way around, on the fairly sound assumption that without the delicate balance provided by the three-pillars policy people would drop out of private cover and that they may, sooner or later, require hospital care which would then need to be entirely funded from the public purse, the government is getting a return on its expenditure through the 30 per cent rebate of over 200 per cent; that is, for every dollar it spends assisting the private health insured it saves over another $2.

In a sense, rather than the federal government subsidising people’s private healthcare needs, the system is actually subsidising the expenditure of all Australian governments on primary health care to the tune of 70c in the dollar for every privately health insured person in this country. But the government is prepared, through the measures contained in these bills, to put all this at risk. As a result of these bills, the delicate balance achieved through the three-pillars process will be destabilised, leading to a mass exodus—by the government’s own figures as released in Treasury modelling last year—from the private health system mainly by, and this is important, those with little immediate need for hospital care. This will then lead to the semifailure or even the complete failure of the community rating system as the loss of the premiums provided by those who have little need for current care will leave a greater proportion of those privately insured who do have high-care needs, thereby leaving the private insurers with the majority of expenditure while suffering a severe loss in income. As such, private health insurance premiums will go through the roof.

This in itself is bad. In the short-term it will lead to far higher premiums but it will probably have little impact on the public health sector, as the first wave of people leaving private health insurance as a result of higher premiums will have little immediate need to call on public health resources since they are probably the healthier of those who are currently insured. But what will be the further consequences? As private health premiums rise, the number of insured persons with little ability to pay higher premiums but with high hospital care needs—particularly older Australians—will increase. Shamefully, many will be forced to abandon their private cover because they simply cannot afford higher premiums. This is when the public health system will start to feel the full consequences of this measure—when the loss of the 70c in the dollar subsidy that privately insured persons provide, from their own pockets, to the overall healthcare spend in the nation will come home to roost.

Over 10 million Australians are covered by private health insurance for hospital cover. There are 1.3 million people insured who are over 65 years of age, which is 50.3 per cent of all Australians in this age group. Members of health funds contributed $10.6 billion to the Australian healthcare system in 2008, an increase of 10 per cent on the previous year. Fifty-six per cent of all surgical procedures are performed in private hospitals. Most of these are covered by private health insurance. Almost 15 per cent of public hospital admissions are privately insured patients. It is estimated that premiums will increase at a rate of around 10 per cent or more per year from 2011 to 2012, rather than the five to six per cent increase that we see currently.

Inevitably, in the next Australian healthcare agreements there will be demands from the states for additional public hospital funding from the Commonwealth to compensate them for extra pressure on their public hospitals directly arising from the passage of these bills. The consequences for the private health sector—not just private health insurance but the providers they fund—and the public hospital system are completely ignored by this government and, tellingly, by the state Labor governments. Hopefully, there will be a couple fewer of those in a few weeks time.

The changes to the private health insurance rebate are just the latest phase in Labor’s unrelenting war against private health insurance. It is undeniable that Labor hates private health insurance. The coalition introduced an open-ended private health insurance rebate, because, for every rebated dollar, a privately insured person contributes two more to our health system as a whole. The coalition believes in the right of all Australians to take charge of their own healthcare needs and plan for the future. We have always worked hard to deliver incentives to promote the uptake of private health insurance and take the pressure off Medicare. People will drop out because they cannot afford the much higher premium increases. That will restart the catastrophic premium membership death spiral of the 1980s and 1990s, when Labor almost wiped out private health.

If tens of thousands of people now give up their private cover, the Prime Minister and this government will be directly responsible for a massive blow-out in public hospital waiting lists. At this stage, there is no indication that any meaningful compensation or allowance will be made by the Commonwealth to compensate for the impact on the states and territories of this measure that we are debating today. The Australian Medical Association has said:

Changes to the 30 per cent Private Health Insurance Rebate mean many Australian singles and families will pay a lot more for health insurance, and if you don’t keep your private health insurance you’ll be slugged with an increased Medicare Levy surcharge. They get you both ways.

Labor clearly promised prior to their election that they would maintain the Medicare levy surcharge, but they are now opening the door for thousands of people to leave private health insurance. Sick people already wait for hours in public hospital emergency departments, despite the big increase in bulk-billing since 2003. Australians still wait months for elective surgery, despite a 16 per cent real increase in federal funding for state-run public hospitals by the previous government under healthcare agreements. People who leave private cover as a result of these changes will now add more waiting time and people to these lists.

Fewer people covered by the surcharge means less money invested in the health system. At present, a family on $100,000 a year takes out private health insurance or pays an extra $1,000 to Medicare. Statistically, most families in this situation have private insurance, which means that they do not compete with less financial people for elective surgery in public hospitals, or they can contribute to public hospital revenue by electing to be treated as private patients. Under the measures contained in this bill, these families will have far less incentive to be privately insured.

On 12 May 2009, The Australian Health Insurance Association said:

The Rudd government’s decision to dismantle the private health insurance rebate will place increased pressure on the public hospital system and force up premiums for those Australians who take responsibility for their own health care by taking out private health cover. Every single one of the more than 11 million Australians with private health insurance (one million of whom live in households with an income of less than $26,000 pa) will have to pay more for their private health insurance as a direct result of this policy.

The Prime Minister himself has undertaken not to play with the three-pillar system. In a letter to the Australian Health Insurance Association, the Prime Minister said:

Both my minister for health, Nicola Roxon, and I have made clear on many occasions this year that federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians. Federal Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge.

No wonder Australians are questioning the Prime Minister’s ability to do what he says he will do. Let us not forget Labor’s abject failure in health. Kevin Rudd has promised big but delivered little. Of the billions of dollars splashed around in the stimulus package, not one cent went to health. The billions spent on insulation batts have been more important to this government than people continuing to fund their own health needs—or building hospitals or paying doctors or nurses more money.

Labor’s overriding promise was to ‘fix’ the nation’s hospitals. Labor ‘had a plan’, Mr Rudd told Australians, ‘to end the buck-passing’ between Canberra and the states. He had ‘a long-term plan’ to fix the nation’s hospitals, and the ‘buck would stop’ with him. Mr Rudd went further—he promised to ‘fix’ hospitals by mid-2009 and said that ‘if significant progress’ on hospital reform had not been achieved by then his government would ‘seek a mandate from the Australian people at the following federal election for the Commonwealth to take financial control of Australia’s 750 public hospitals’.

But the hospitals remain unfixed and, as evidenced by the legislation we are debating today, it has not taken long for the old ideological hatreds within Labor to emerge in the government. This attempt to limit access to private health insurance rebates—which would see people downgrade or drop their cover—is an instance of that. We see the government’s attempt to introduce superclinics—there are only 12 operating out of the 36 promised—along with their attack on private hospitals and health insurance, and we have to ask: are they trying to move us to a British-style national health system?

Working families, low- and fixed-income earners, the elderly and people living in rural and regional Australia will be hardest hit by the consequences which will flow from this ill-conceived policy. This legislation represents bad policy, appears hard to justify on any of the measures put forward by the government and will ultimately lead to the undermining of the public-private healthcare balance achieved in this nation.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 [No. 2]. I will commence my contribution to this debate by commending Senator Bushby, who, like a number of my other colleagues, raised the issue of the Prime Minister’s promise to the nation prior to the last federal election that he would not remove the private health insurance rebate. This to me has been the core of this debate. Articulated by coalition senators throughout this debate has been the core issue of a broken promise. It is worth repeating again. It will be in Hansard many times so that, when people read each of these speeches in coming months, they can clearly understand the core promise that was broken by Mr Rudd. I will read it again for the benefit of listeners:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including—

as Senator Bushby clearly said a moment ago—

the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

Mr Rudd said that in a letter addressed to the Australian Health Insurance Association on 20 November 2007 which has since become public.

The core issue is commitment by a government to the people of Australia. If you make promises during an election campaign, the people, when they go to the ballot box, expect to have those promises fulfilled. Promises on health matters are always core promises. Health matters are very significant. I have three quotes I wish to read out on the theme of promises or commitments that the Prime Minister made to the Australian people prior to the last election. The first one is from a press conference held by the Prime Minister on 29 February 2008. This is generally on keeping election promises. He said:

Trust is the key currency of politics, and unless you can be trusted to honour that to which you’ve committed to do, then, I’ve got to say, you’re not going to obtain the enduring respect of the Australian people.

Well, Mr Rudd has broken his own promise as well as breaking other promises. In breaking this commitment on the private health insurance rebate, he does not have the enduring respect of the Australian people. He then said, to the National Press Club, on 27 August 2008:

When we formed government, I said I had no intention of recycling the absolute cynicism of previous governments - making a swag of pre-election commitments then reneging on them as “non-core” promises.

He also said, at the Australian War Memorial, on 17 March 2008:

We’re going to adhere to the integrity of the budget process but all working families, all working families will be protected by our Government in the production of that budget and we will honour all of our pre election commitments. Every one of them, every one of them.

Well, he is not going to do that. If protecting working families does not involve keeping the private health insurance rebate, what does? That is an essential element in the budgets of many families. That is what keeps them in the private health insurance system.

My colleagues have indicated, in previous contributions to this debate, that the burden upon the public hospital system will be increased exponentially in some areas because of people dropping out of the private health insurance system. We have an overburdened system as it is. To add complication to this by removing the rebate is just beyond comprehension. I cannot understand why a government with the flavour of Labor want to hurt families. That does not make sense. Their rhetoric is certainly not matched by their actions in relation to this legislation.

I contrast a promise that Prime Minister Howard made in 1996. Mr Howard has often been badgered about this promise, but let us get clearly on the table the facts about how his honesty and integrity stand up to Mr Rudd’s. In 1996, Mr Howard promised there would be no goods and services tax introduced, and he kept that promise throughout that term of government. During that period it became obvious that a GST was required and would be—as it has proven to be—very beneficial to this country. What did Mr Howard do? He said: ‘I gave a commitment not to introduce the GST. However, on the evidence now facing me, I want to introduce a GST. But I will go back to the people and let the people of Australia decide before that implementation takes place.’

Let us contrast that with what Mr Rudd has done. Mr Rudd said prior to the election, ‘There will be no removal of the rebate.’ Now he has introduced legislation into the parliament to remove that rebate, to hurt the working families he so wants to protect, without giving the people of Australia a chance to make a decision about that. A promise was given by Mr Howard. He changed his mind and then went back to the people in a very open, honest and sincere manner. A promise was given by Mr Rudd. He changed his mind and said, ‘Let’s run the legislation through the parliament; let’s not include the people in this decision.’ That shows a huge contrast between the style of government that Mr Rudd has now and the honesty and integrity that we had when we were in office. We had the guts and the fortitude to say, ‘Yes, we have changed our minds but we’re going to go back to the Australian people to get their approval before we implement legislation which is going to have a serious impact on their lives, financially.’

Mr Rudd’s legislation is going to have a serious financial impact on people’s lives. That is one aspect of this debate, and that has been covered adequately by all of my colleagues. However, the main aspect is going to be the psychological, emotional and physical comfort of the Australian families who will have to opt out of the private system and go into the public system. The public system, as we know, is overburdened.

I want to highlight some issues from my home state of Tasmania in relation to the overburdening of the public system. We have an election coming up on 20 March in Tasmania—as you would be aware, Acting Deputy President Hurley, as you are also from the lovely state of Tasmania. The election will be fought on a number of issues, but a contrasting issue will be health. We have a leader, in Will Hodgman, and a shadow health minister, in Mr Brett Whitely, who wish to improve the waiting list times in our Tasmanian hospital system, enabling Tasmanians to have elective surgery and other aspects of treatment at a rate that the current Labor government cannot achieve.

If Mr Rudd’s bills concerning the rebate pass through this place, the good work that the Tasmanian Liberals are about to undertake if they win office—and all indications are that they are going to come very close to winning office—will be undone. The hard policy line that the Tasmanian Liberal team want to take will be undone because of the additional workload that will be placed on hospitals. There are 218,000 Tasmanians who currently have health insurance—that is 43.2 per cent of the population covered by private health insurance—which is assisting to take the burden off the public sector. If this rebate is removed, that burden will be placed squarely back onto the public sector by the so-called ‘working families’ that Mr Rudd wants to protect.

We are talking about income levels where the rebate will be removed. We are talking about income levels that are not really high. Take a married professional couple with three or four children. The combined income of the two professionals—teachers, policemen or nurses—will be hit fairly significantly by the rebate. This is an important aspect that I think the Prime Minister and his health minister have overlooked—the rebates are going to cut into ordinary families. The thresholds are ridiculously low for families who get out there and work, contribute and assist in easing the burden on the public system.

Waiting times in Tasmania, as I indicated, have increased from 34 days to 46 days, and 7,750-odd people are on these waiting lists at any given point in time. That is an increase of 600 people on the waiting list since 2006. Now, if the rebate is removed, we are going to have the terrible situation of additional people being placed on those waiting lists. Our hospital systems, as they are currently managed, could not run with those additional burdens.

We have had others indicating that the rebate should not be removed. In particular, some of the key industry stakeholders have indicated that the rebate should stay. We could argue that, yes, the private health industry has a vested interest in maintaining rebates. However, the fact is—as Senator Bushby put it—that every one dollar that is placed into the private health system saves two dollars in the public health system. That has to be a good thing. That has to be something that this government should want to continue.

Why does the government—in the false set of economic figures—want to remove that assistance from the private sector and place it squarely on the public sector? It just does not make sense. Again, as I indicated, if Mr Rudd is concerned about looking after working families why is he doing this? What is the purpose of putting this hurt onto families? As some of my colleagues have asked, is it some kind of ideological warfare? The facts do not add up. The argument that it will be assisting working families does not add up. And there will be a public backlash, which the government probably has not even thought of.

Is this something deep-seated, deep-rooted? Is this an evolution of something that started way back in the past? Does it not really matter what the facts and figures are or how they are presented—do they just think, ‘We don’t want to see people on a salary over $60,000, $70,000 or $80,000 getting a rebate’? Is there some deep-seated issue that we are not of aware of and that the government are not coming clean about?

I do not know; I just know that the policy does not make sense and that the community backlash would be enormous. That is why—I go back to my point about broken promises—the Rudd government will, mostly likely, not go to the people on this issue. There would be a backlash. So they have to pass it in the mid-term or towards the latter days of this period of the parliament. If we went to the coming election with this policy, I am sure Mr Rudd would feel the full brunt of the people of Australia. And maybe, if this bill did pass through the Senate and become law, the people would remember and there would be a backlash towards the Rudd government for breaking yet another promise.

This goes to the core of what Mr Rudd’s government is doing in breaking promises—more than any other government that I have ever seen. A litany of promises is slowly but surely being compiled and documented. The original shine on this Prime Minister, along with the original thought that this Prime Minister would be good for Australia, is slowly but surely coming off. It is becoming a talking point throughout this country that Mr Rudd is not standing up for what he first said.

I go back to my point about the contrast with Prime Minister Howard. When he changed his mind he had the guts and the decency to go to the people of Australia and say: ‘I’m changing my mind. The coalition has a different view to what we had prior to the last election. I’m going to give you, the people of Australia, a chance to make a decision on this, and you can throw me out of office or re-elect me.’ History tells us that we were re-elected on that issue, and the GST has become a prominent part of Australia’s economy and has assisted the states enormously.

So Mr Rudd needs to rethink this. He needs to really consider the impost he is placing on families. He needs to really consider the implications of breaking yet another election commitment. If he does have any decency about him, he should just come clean and say: ‘It’s a mistake. We are focused on an ideological issue here. It does not make sense. Let’s just drop it.’ But I think we have come to see that there is a little bit of arrogance creeping into the prime ministership. I think the Prime Minister thinks he is not vulnerable at all. I just hope that the Australian people judge him correctly on this issue and try to sort through the smokescreens to see why the government wants to remove this rebate and really consider the other promises that the Prime Minister has made and failed to deliver on.

These promises go over many, many issues. I do not have enough time to highlight them all, but there are a lot of things: Fuelwatch, GROCERYchoice and the takeover of hospitals that was intimated by the Prime Minister. Now he just wants to have a takeover of discussions about hospitals; he does not want to take them over at all. He said he would be simplifying paperwork and reining in corporate salaries. He has had issues with bank deposit guarantees and even with where he was going to live, as well as the Special Envoy for Whale Conservation. The list of issues that this Prime Minister is committed to and has completely ignored or failed to deliver upon goes on and on.

As I said in my opening remarks, nothing goes to the core of Australian issues and honesty as does health. Health is a very important issue in this country. Health is a very important issue for all the working families and others in Australia. Promises that were made—promises that potentially could have changed a decision at the last election—have not been kept. A promise on health is one you do not break, and you do not continually break promises on health through an election period or through the cycle of a parliament. I think Mr Rudd really needs to take a long, hard look at where he is going with the health rebate and stop the silliness and apologise and come clean to the Australia people.

Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I am honoured to follow my colleague Senator Parry in condemning this legislative attack on private health insurance. The coalition remains steadfastly opposed to the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 [No. 2] despite the fact that our vote on this legislation will hopefully lead to its defeat. This will, of course, give the government another mechanism by which it could dissolve both houses. That does not deter us from our determination to see this horrendous and outrageous legislation defeated. We say that because, as my colleagues have emphasised, this is one of the most extraordinary and blatant breaches of a profound and clear and unqualified election commitment by the Labor government that we have ever seen.

These changes to implement a means test for the private health insurance rebate and increase the Medicare levy surcharge for certain income levels will affect all Australians reliant on the health system in this country. This attack, as it is, on private health insurance is a clear indication of the inherent ideological contempt that the Labor Party has for private health insurance which we have seen repeatedly over the years. Most importantly, it is a breach of a fundamental election commitment made by the Labor Party to the Australian people before the last election. They promised the Australian people that they would keep the private health insurance rebate as it was. On the eve of the last election, in a letter to the Australian Health Insurance Association, then opposition leader, Kevin Rudd, said:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year—

that is2007—

that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 45 per cent rebates for older Australians.

It could not have been clearer or more unqualified. We have never trusted Labor on this. We have always said to the Australian people, ‘You should not trust Labor on the subject of private health insurance.’ Labor has a longstanding and deeply rooted hatred of private health insurance. But, of course, in 2007 Labor accused us of running a scare campaign on the matter. Then shadow health minister, Ms Roxon, said in a press release on 26 September 2007:

The Liberals continue to try to scare people into thinking Labor will take away the rebates. This is absolutely untrue.

As we now know, it was absolutely true. Only one party has now proven that it misled the Australian people prior to the last election, and that is the Australian Labor Party. They promised the world prior to the last election, and it is now catching up with them. As we have seen, they have broken this fundamental commitment in relation to the private health system.

While in government Labor continued publicly to commit to leaving the rebate unchanged, even as late as February of last year, but we now know that the Minister for Health and Ageing was getting advice on imposing a means test on the rebate. It was only because of the coalition’s belief, when in government, that Australians should have a choice in regard to health care that the significant decline in private health fund membership brought about by Labor’s last term in government was curtailed and reversed. Through a series of measures under our government, such as the rebate on premiums and Lifetime Health Cover, the former coalition government, frankly, rescued private health insurance in this country, bringing membership levels up to a sustainable 44 per cent of the population, compared with 34 per cent under Labor when we came into office.

We as a coalition have always believed in a balance between public and private health as being fundamental to the health system in this country. We do believe that a strong and affordable private health sector eases the pressure on the state public hospital systems, which we all know are under relentless pressure. Members of private health funds contributed $10.6 billion to the Australian healthcare system in 2008, an increase of 10 per cent on the previous year. According to the Australian Health Insurance Association, its data:

. . . also demonstrates that the private health sector has contributed to a greater increase in the provision of in-hospital treatments since the introduction of the 30 per cent rebate. Since 1998-99, when the rebate was introduced, in-hospital treatments in the private sector have risen by 60 per cent, compared to a 25 per cent increase in the public sector’s capacity in the same period.

I go on to quote the AHIA:

The rebate is therefore an important policy component which assists in keeping premiums as low as possible for all Australians with private health insurance, especially the 1 million Australians who live in households where the household income is under $26,000 a year.

So there is no doubt that the private health insurance system does play a fundamental role in our healthcare system. The association stated in their submission to the Senate inquiry into this matter:

The 30% Rebate represents an effective investment in the health system by the Australian Government because every dollar that the government contributes towards the private health insurance rebate is matched by more than two dollars by the individual. The AHIA is concerned that the means‐testing of the rebate, with its projected savings-to-government of $1.9 billion over five years, could reflect a total withdrawal from the health system of up to $6.3 billion in funding over that period.

Any attempt to undermine private health insurance will inevitably have a dramatic impact on the public system as more people inevitably abandon their private health insurance to rely solely on the public system. We in the coalition are certainly not convinced by the government’s arguments in relation to the rationale for these bills. Nor are we convinced that they have acknowledged the full ramifications of this attack on the private health insurance industry.

This package of measures, as we know, imposes a decreased rebate, on a sliding scale, for singles earning over $75,000 and couples earning over $150,000. The rebate will decrease to 20 per cent for single people on incomes of $75,000 to $90,000 and for couples on combined incomes of $150,000 to $180,000. The rebate will decrease further to 10 per cent for single people on incomes of $90,000 to $120,000 and for couples on combined incomes of $180,000 to $240,000. Payments will cut out completely at $120,000 for singles and $240,000 for couples. The government, on its own figures, admits that 40,000 people will drop private cover as a result of this measure. On the government’s figures that comprises 25,000 people expected to drop their hospital and general treatment cover; 10,000 with hospital and general treatment cover expected to keep the hospital cover but drop the general cover; and 5,000 people with general treatment expected to drop that cover.

But I think there is evidence that the Treasury modelling is unduly optimistic. The Australian Private Hospitals Association said in their submission to the Senate inquiry:

Both Treasury and the Department of Health and Ageing, in providing advice to the government, have made some assumptions that are, to say the least, open to serious question.

Catholic Health Australia commissioned research by Access Economics which showed that five times the number of Australians would quit their private health insurance as a result of these changes. Their commissioned research indicated that approximately 100,000, or more, Australians would abandon private health insurance. The CEO, Martin Laverty, told the Senate inquiry that the difference in the results of the Access Economics modelling and the Treasury modelling was due to Treasury assumptions around price elasticity. Catholic Health said:

Treasury is assuming that an income earner on $75,000 a year has the same spending power as an income earner on some $250,000 a year. Treasury has applied a price elasticity formula to someone on $75,000 as it has to someone on $250,000. If you think about that for a moment, it is assuming that, if there is a 10 per cent increase in the cost of private health insurance for someone on $75,000, that would mean an average policy is going to be about $2,000. That would represent 3.4 per cent of the take-home income of someone on $75,000 as opposed to 1.2 per cent of the take-home income of someone on $250,000.

So, clearly, there are major flaws in the Treasury assumptions by which they have arrived at the numbers of people they think will drop private health cover. The CEO of the AHIA, Dr Michael Armitage, told the Senate committee examining these bills that their research indicated that significantly more would abandon their private health insurance as a result of this disastrous policy. Dr Armitage told the committee:

… up to 240,000 Australians are likely to exit their cover as a result of the legislation. This number represents a decline in membership 10 times greater than that projected by the Department of the Treasury. Further, we have calculated that 730,000 Australians are likely to downgrade their level of private hospital cover and an additional 775,000 Australians will exit their general treatment cover for matters such as dentistry as a consequence of the policy.

So this decision to means test the private health insurance rebate, representing as it does a fundamental breach of an undertaking to the Australian people, will have a dramatic effect on premiums and on public hospital waiting lists. Catholic Health Australia estimates this measure would mean another 36,000 people joining public hospital queues. Inevitably, that will mean there will be demands from the states for additional public hospital funding from the Commonwealth in the next Australian healthcare agreements to compensate for the extra pressure that this government, by dint of this disastrous policy, is going to put on the public hospital system.

It is estimated that premiums will increase at a rate of around 10 per cent, or possibly more, per year from 2010-11 rather than the five to six per cent as of now. We have just seen a six-odd per cent increase approved by this government—well, just watch this space: the increases that would result from this policy, were it to be implemented, would all be that much greater. Private health fund Bupa told the Senate committee that premium increases as a result of this policy will affect all holders of private health insurance, not just the so-called ‘higher income earners’ which this government is attacking. Further, Bupa highlights the risk that it is younger people who are expected to downgrade or abandon their cover. The Australian Private Hospitals Association, like others, are concerned about how these changes will undermine the community rating system as those least likely to make a claim drop out of the system. They highlight:

… major changes that undermine the fragile balance of the insured population—

such as these proposed changes to the PHI rebate—

will have severe effects on the capacity of health insurers to continue to pay claims without needing to raise premiums.

The Private Hospitals Association also points out, as have many others, that waiting times for public hospital waiting lists can only go up as a result of the government’s means testing of private health insurance.

And there is a double hit to these individuals and families, of course—not only does the rebate decrease but, if you drop your private health cover, the Medicare levy surcharge increases. So they get you going both ways. It will go up to 1.25 per cent for people on incomes of between $90,000 and $120,000 for singles and $180,000 to $240,000 for couples. Then it rises to 1½ per cent for single people on incomes over $120,000 and families earning over $240,000. ‘Sock it to the’—so-called—‘rich’ has been a Labor mantra from the beginning of the Australian Labor Party’s existence.

There is an overwhelming weight of evidence that this is a deeply flawed policy that will impact on the entire healthcare system in a very damaging and detrimental manner. What we have seen this government progressively do is try and impose means testing on a number of programs as a way of finding savings rather than getting into the business of addressing the core issue of its reckless spending. We have seen the recklessness of that spending on a grand scale with the disaster of the Home Insulation Program.

In relation to private health, they have sought to implement these changes with very little real and well-based analysis of the flow-on effects to all those who are privately insured and the dramatic effects that this will have on the public hospital system of this country. The opposition remains completely opposed to these unjustified policy changes. We condemn Labor for an extraordinary and blatant breach of an election commitment, for which they have given no rationale and no excuse to the Australian people. This is very bad policy. We remain steadfastly opposed to this ideological ALP attack on private health insurance.

As I said at the outset, this is the second time that the Senate has considered this disastrous package of measures. The opposition urges the whole Senate to oppose these bills yet again, despite the fact that that would give the government a second trigger for a double dissolution election. Labor has broken a fundamental promise that it made to the Australian people in a completely unqualified fashion. It is a crusade by the Labor Party to undermine the private health system and, by dint of that action, increase pressure on the public hospital system that is so important to so many Australians. These measures should not be supported. The government should find other ways to reduce the massive debt and deficits that it has created by its reckless spending in office.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

The Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] is before us. It is entirely linked to the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 [No. 2]. They go hand in hand. They are completely linked. You cannot debate this bill without debating the other bill to cut the health insurance rebate for thousands of Australian families. They need to be considered together.

The Rudd government wants to hike up the Medicare levy surcharge that Australian families will have to pay if they decide not to take up health insurance. Why is the government doing this? It knows very well that cutting the 30 per cent health rebate, which many Australian families rely on and depend on, will make private health insurance more unaffordable for many Australian families. The government also knows that, if you drastically reduce the health rebate, you face the huge risk of people exiting the private system and further overburdening our public system, which is already under the pump. Already, many families are going to feel the pinch after the announcement yesterday that health insurance is set to go up by another 5.8 per cent—around that figure—from April this year. That means that the costs to Australian families of comprehensive health insurance—which does not even include extras such as optical, physio and many dental services, and all the other expenses that families rack up throughout the year—will be just short of $3,000.

What is this government trying to do to help? I do not know about help: it is trying to jack up the Medicare levy surcharge so that all those people who cannot afford the increase in health insurance will be forced to grin and bear it—otherwise, they are going to be slugged with a higher Medicare levy surcharge. That is not fair. It is another Rudd slug.

This is like a double blow. It is like whacking the Australian public for six and then the very next ball whacking them for six again. First you get told that your health insurance is going to go up. Then you get told that there is nothing that you can do about it. This hardly sounds like the kind of policy that should be coming from a government that pretends to be looking after working families. The Rudd government has proven itself to be a phoney with health. It is all talk about helping families, but when push comes to shove it is all spin and no substance. The Rudd government is most vulnerable on health. I have been saying this for a while. The Rudd government has overpromised and underdelivered on health. This is clearly an issue for the Rudd government. They are not listening to the Australian public. The idea of making it harder for Australian families with health is not on. We will not be supporting a clear breaking of an election promise on the health insurance rebate. We will also not be supporting this idea of penalising families with a higher Medicare surcharge just because of the other bill that you are bringing in. It is wrong. The Rudd government needs to be held to account on this issue.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

I thank the Senate for the opportunity to speak on these important pieces of legislation, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 [No. 2]. These are measures that speak volumes of the contempt that the Rudd government holds for the Australian people and for what the ALP said and did going into the last election. This legislation is a clear example of the government saying one thing to get elected and doing another thing in office. That is the tragedy behind so many stories of the way that the Rudd government has approached these things. But private health insurance stands out as one of the strongest and clearest examples of failings by the government to live up to its word and to live up to the promises that it made to millions of Australians.

Private health insurance is an issue that affects all Australians, whether they have it or they do not. That is something that is often misunderstood and misinterpreted by those on the other side in the way that they present information in this debate. A strong private health insurance industry helps all aspects of the health sector. A strong private health insurance sector that keeps people utilising private hospitals and private health facilities reduces demand on the public health sector. It is a very simple formula. It reduces demand on public hospitals and, in doing so, helps to ease what are very long and unacceptable waiting lists and delays at a state level.

The problem with the approaches and the policies of the Rudd government is that they will reduce the incentives for people to take out private health insurance and strip support for the taking out of private health insurance from many thousands of Australians. In doing so, they will ensure that the take-up rate of private health insurance is lower and that public support for and utilisation of the private healthcare sector is reduced. As a consequence, demand and pressure on the public sector will increase.

That is why this issue affects all Australians, whether they have private health insurance or not. All Australians should be concerned that this government—which promised not to fiddle with private health insurance rebates and which from Prime Minister Rudd down gave its solemn word in the run-up to the last election that it would not change anything—wants to break its promise on this and that, for the second time around, has brought legislation to this place to try to break its promise in this key area. Once again, we see the Australian Senate acting as both the barrier between the government and the breaking of its own promises and the body that tries to keep the government honest on what it delivers to the Australian people.

Between nine and 10 million Australians have private health insurance, and many of these people will be directly impacted by the changes that this government is attempting to introduce. We know that when Labor was last in power the private health insurance sector was a shadow of what it is today. It was a shadow of what the Howard government helped it to build itself up to. We saw during that period of Labor government that the participation rates in private health insurance dropped from 67 per cent in 1983 to just 33½ per cent in 1996. In 13 years of the Hawke-Keating Labor government attempting to manage private health insurance we saw this massive reduction—that is, a halving of participation in the private health insurance sector.

What will we see under the Rudd government? Based on its current policy and approaches, we will see the same type of outcome. We will see that its attacks on the health insurance sector and the taxes that it is applying to ordinary Australians who want to do their bit to look after themselves, their families and their health insurance will cause these rates to plummet yet again. The government broke its word to the Australian people after the last election, and I am sure that this will be the first of many assaults that this government launches on the health insurance sector, the nearly 10 million Australians who have health insurance and every single Australian who has an interest in the private health sector and, indeed, the health sector overall.

This debate impacts on every single electorate across Australia. Many of the South Australian electorates are directly affected by private health insurance. South Australia has among the highest numbers of older Australians in Australia. Older Australians cling to their private health insurance because they know how important it is. They go without to hold onto their private health insurance because they know how important it is. South Australians in every one of our federal electorates hold onto their private health insurance because they know how important it is for them to be able to access the private healthcare system, to do their bit to look after themselves and, in doing so, to ease the pressures on the public healthcare sector.

Let us look at some of those electorates where there will be a very direct impact on thousands and thousands of South Australians. In the electorate of Wakefield, there are some 44,567 voters who are estimated to have private health insurance. Nearly 63,000 people across the electorate are covered by that insurance—families with younger people—

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

And Labor voters.

Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Link to this | Hansard source

Indeed, many of them are Labor voters. In the seat of Wakefield, which the Labor Party won from the Liberal Party at the last election on the promise that they would not fiddle with private health insurance—‘not one jot, not one tiddle’ were the famously bizarre words of the Prime Minister when giving his commitment not to fiddle with private health insurance—there are 63,000 people. Where has Nick Champion, the local member, been on this issue? What has he been doing to champion the many people in his electorate who will be negatively impacted by the tax and attacks on private health by this government? In the electorate of Grey, 64½ thousand people have private health insurance—that is, around 47 per cent—and I am sure that a good many of them are Labor voters, as Senator Fierravanti-Wells pointed out before. I know that Rowan Ramsey, the member for Grey, has been pursuing this issue passionately, and at least he has stood up for the voters in his electorate.

I am sure that 47 per cent of voters in Grey will be grateful to Rowan, as will the people in Barker, where the local member, Patrick Secker, has stood up for the 48 per cent of people in that electorate who have private health insurance. Nearly 70,000 people in the electorate of Barker have private health insurance and will be impacted by this legislation. Patrick Secker has been out there with Rowan Ramsey talking about the impact in his electorate and standing up for his voters.

That stands in stark contrast to the electorate of Port Adelaide, where the local member, the Parliamentary Secretary for Health, Mark Butler, is a key defender of these attacks on private health insurance. He is defending them notwithstanding the fact that 67,400 people living in his electorate have private health insurance coverage and that those people will be impacted by his and his government’s decision to attack the private health insurance industry and make it harder for them to maintain their private health coverage. That is what it comes down to: it is making it harder for them to maintain it.

Another seat that the Labor Party won at the last election was Kingston. Another new member, Amanda Rishworth, joins Nick Champion, from Wakefield, in having gone silent on this issue. She has been dead quiet when it comes to standing up for her electorate. But she should be standing up for her electorate because, in Kingston, 55 per cent of people have private health insurance—that is right: 75,400-odd people living in the electorate of Kingston have private health insurance, which is the majority of households and families. They are doing their bit to look after themselves and will be penalised by the decision of the Rudd government that their local member, Ms Rishworth, is supporting.

An electorate with an even higher proportion of private health insurance is Adelaide, represented by Kate Ellis, a minister in this government, no less. She is, once again, defending this policy despite the fact that 68 per cent of households in her electorate are covered by private health insurance. That is up to around 89,000 people in the electorate of Adelaide who have coverage—old people and young people, on the roll and not on the roll. A clear majority of people in the electorate of Adelaide who commit themselves to doing their bit to help the system overall will be penalised by the decision of Ms Ellis and the Rudd government to make it harder for them to keep up their private health insurance.

In the adjacent electorate of Hindmarsh, Mr Steve Georganas, who chairs one of the parliament’s committees on health and ageing matters, seems to think it is acceptable to attack the private health insurance industry. This is notwithstanding the fact that, estimated on previous figures, 89,193 people—or some 68,000, or 69 per cent of, voters—in Hindmarsh, an electorate that statistically has been shown time and again to have one of the highest proportions of older Australians anywhere in the country, have private health insurance. Many of them will be hurt by this decision. Where has the Chair of the House of Representatives Standing Committee on Health and Ageing been? Where has the member for Hindmarsh been in standing up for nearly 70 per cent of his electorate? Where has he been as the representative of the electorate in Australia with one of the oldest populations and therefore, unsurprisingly, such a high level of private health insurance? These members all stand condemned for their failure to champion the issues in their electorates.

The final electorate in South Australia is Sturt, represented by Christopher Pyne. It has the highest, 70-plus per cent, coverage of private health insurance in South Australia. Christopher Pyne, Patrick Secker, Jamie Briggs in Mayo, which has an equally high level of private health insurance coverage, and Rohan Ramsey in Grey have all championed the tens of thousands of families in their electorates who will be hurt by this measure. But we have heard not a peep from any of these Labor members, in particular Mr Georganas, who represents an electorate with such an aged population. This is the shame of it.

I have gone through those statistics to demonstrate that there is a clear reason why the opposition is taking a strong stance on this issue. We are taking a strong stance because the policy issues stack up. As I explained at the beginning of my contribution, it is about protecting the private health insurance sector so that we can sustain the public health sector in a strong way. But it is also about standing up for voters, standing up for people who will be adversely affected by this measure and standing up for the people who heard the promises of the Rudd Labor government during the last election campaign that it would not change anything to do with private health insurance rebates—not one jot; not one tiddle, as I have said before. Instead, the Rudd government has come in and, in one fell swoop, is attempting to hit so many voters so hard on this issue that is so important to them.

That is why we will continue to stand steadfast in our opposition to these changes. We will continue to oppose the government. We will continue to ensure that, no matter how hard the government try to break their promises, we will be there holding them to their promises, holding them to do what is right and, in doing so, standing up for the millions of Australians who will otherwise be hit by this seriously wrong policy measure.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Link to this | Hansard source

in reply—I thank senators for their contributions and appreciate the opportunity to sum up the debate and respond to the points raised. The Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2] and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 [No. 2] will amend various acts to give effect to our 2009-10 budget measure to introduce three new private health insurance incentive tiers. They are part of a package with the Fairer Private Health Insurance Incentives Bill 2009 [No. 2]. We believe that these reforms are needed to make the rebate fairer and more sustainable for the future.

These bills were defeated by the Senate at the second reading on 9 September 2009. When defeating these bills last September, the Senate dismissed one of the government’s key measures to deal with the fiscal impact of the global financial crisis. If these bills and associated legislation are defeated again today by the Senate, it will have a $2 billion impact on the budget over the forward estimates. Taking a longer view, Treasury advises that the private health insurance rebate will be the fastest-growing part of our health expenditure over the next 10 years, growing by more than 50 per cent above inflation. If this measure is not passed it will increase health spending by 0.15 per cent of GDP, or around $100 billion, over the period 2049 to 2050.

The Minister for Health and Ageing has announced that in 2010 private health insurance premiums will increase by an average of 5.78 per cent. This is after the government had sought resubmissions that reduced premiums for 8.5 million Australians, or 75 per cent of the people covered by private health insurance. While the government acknowledges that any increase may place pressure on insured people, careful scrutiny of private health insurers’ applications has kept increases to the minimum necessary. This is unlike the opposition’s policy as put forward by the shadow Treasurer at the National Press Club last week where he said that he preferred a pure market and criticised that the minister has the power to set rate increases. The rate rise reflects that in 2008-09 private health insurers paid more than $11 billion in benefits to members—an increase of 10 per cent—compared with the previous year’s $10 billion. Benefits paid to members were around 87 per cent of total premiums paid by members. This increase in benefits is highlighted in the Intergenerational report findings that the private health insurance rebate is going to be the fastest-growing aspect of our health expenditure. Spending on the private health insurance rebate has grown from $2.1 billion in 2000-01, the first full year of operation, to $4.2 billion last financial year. This spending is unsustainable, particularly in light of the global financial crisis and since the 2008-09 budget tax receipts were revised down by around $170 million. This is why the government has reintroduced these bills and is firmly committed to seeking their passage in this form.

The government does not support a mixed model of financing and delivery for health services in Australia and recognises the essential role of the private health sector. However, government support for private health insurance must be directed to those hard-working Australians who need the assistance most, not the high-income earners who clearly do not. Hairdressers, secretaries and taxi drivers will continue to receive benefits, but not the millionaires and politicians who, quite frankly, do not need it. Under the fairer private health insurance budget measure, those who most need the rebate will be completely unaffected and the overwhelming majority of insured Australians will not see any change to their rebate. An estimated 75 per cent of Australians with private hospital cover will be totally unaffected by these changes, but high-income earners who have a greater capacity to contribute to the costs of their health care will no longer have their premiums subsidised by those on much lower incomes.

In designing the reforms a key element has been to ensure Australians maintain a high level of private health insurance membership. Already almost 475,000 more people have taken out private hospital cover since this government was elected. This is not something we want to see reversed. The opposition predictions that previous changes to the Medicare levy surcharge were going to lead to a massive exodus of people from private health cover have been shown to be false. To maintain this high level of insurance we need to use the complementary levers of the Medicare levy surcharge, lifetime health cover and continued support of private health insurance rebates for those who need it. Treasury advises the government that by balancing the measures we can ensure that 99.7 per cent of privately insured Australians keep their cover. Treasury estimates that only 25,000 people will drop out of private health insurance. These Treasury estimates have been supported by the independent Ipsos private health insurance survey where the results show only 15,900 people would drop their hospital cover, based on members’ responses when the package was explained to them.

The Department of Health and Ageing estimates that the small reduction in hospital cover will only result in 8,000 extra admissions to public hospitals over two years. The President of the Australian Medical Association, Dr Andrew Pesce, agreed, saying that their modelling showed that ‘there isn’t going to be a huge dropout at this stage.’ The peak public hospital body, the Australian Healthcare and Hospitals Association, has said that there will be ‘little or no impact on the numbers of people with private health insurance’.

There is one politician on the opposition side in this chamber who has spoken honestly about this legislation: Senator Joyce. He said that the opposition should consider the legislation with ‘an open mind’. He said, ‘If there is a net saving, you would have to positively consider it.’ I call on Senator Joyce and all members of the coalition to look at the evidence of the net saving to budget, to be financially responsible and to support this measure. The ministers for health and finance have written to Senator Joyce offering him evidence and further information if he needs it on how this is a net saving to budget.

In relation to the position of other members of this chamber, I am aware that the Greens have proposed two positions. Their first was that they support the rebate reduction but not the Medicare levy surcharge changes, which is why we are now dealing with these three bills separately and not as a package. The government’s position on this is very clear. These bills need to be agreed to as a package which is how we can ensure that the membership rate of private health insurance will stay high. Ensuring this high level of participation requires increased Medicare levy surcharge rates for higher income earners so that the increased costs of insurance for high-income earners after the reduction in the rebate is balanced by an increase in tax penalties for those high-income earners who drop out of or refuse to take out private health insurance. It is important to note that this measure is not being introduced in isolation. It is just one element of the reforms that the government has been implementing. Since coming to office, the government has been working hard to reform Australia’s health system, including a $64 billion package on health and hospital funding.

I would also like to deal with a number of issues that have been raised by senators during this debate. Senator Fierravanti-Wells—it is fortunate that she is in the chamber today—accused the Prime Minister of misleading the public by saying that the cost of not passing this package is $2 billion over four years, $9 billion over 10 years and $100 billion over 40 years. I can explain this to the Senate. The cost of the program grows over time. All of those figures are correct; they have been verified by Treasury. If the opposition does not pass this package, the cost will continue to go up. Not passing the package will cost the budget $2 billion over the forward estimates, $9 billion over the next 10 years and a whopping $100 billion over the next 40 years. This is why you need to rethink your outright opposition and particularly how it will impact on the nation’s finances.

Senator Siewert raised in her speech a suggestion, and has tabled an amendment, that the total cost of the increase in the surcharge should be devoted to mental health. The government agrees that mental health is a priority and has been increasing funding in this area since coming to office in addition to the 50 per cent increase in the Health and Hospitals Fund. However, I will be clear with the senator that we cannot support her amendment. This measure is part of the budget package; it is not an additional available pool of expenditure. Further, we need to reform our health system in a methodical and strategic way, not on the run.

Senator Bernardi made the bold claim that the Howard government delivered the record high participation rate of private health insurance. I can assure the senator, although I know he is loyal to the Howard government past, that this is not the case. Firstly, rates of private health insurance before the introduction of Medicare were much higher as there was no universal scheme. Secondly, we now have a higher rate of participation than the Howard government did: 0.5 per cent higher than when the previous government left office; almost 475,000 extra people have private hospital cover. And just this morning the shadow health minister said to reporters:

The $1.9 billion in this measure, in this attack by the Rudd government on private health, comes from people dropping out of private health.

This is clearly not correct. It is a concoction by the opposition and typical of their ability to be very liberal with the truth on these bills. As we have said many times before, 99.7 per cent of members are estimated to retain their membership. The savings come from the increase in the surcharge under this bill and the reduction in the rebate under the other bills—certainly not from any dropout beyond 0.3 per cent of members. To continue to reform our health system and to cope with the ageing of the population, we will have to spend smarter, putting the health dollars where they are needed most. These bills will help the government to do just that.

In summing up, by maintaining a carefully designed system of carrots and sticks, the government’s budget measure will have a negligible effect on both premiums and the public hospital system while increasing the sustainability of the rebate and the fairness with which it is applied. With that contribution, I thank all of the speakers in the debate and commend these bills to the Senate.

Question put:

That the amendment (Senator Siewert’s) be agreed to.