Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

I know Senator Xenophon has an interest in this bill; so, Senator Xenophon, when you wish to engage, please do so. I have a few questions that I want to get on the record. Minister, you indicated in your second reading speech that there would be basically no changes to the operation of the private health insurance industry but also that there are going to be savings. I would like some understanding of where those savings might be. You did indicate that they would align certain provisions with the APRA provisions, but I am at a bit of a loss to understand where these valuable savings are going to be and to whom the savings will flow. Naturally, I am interested in understanding that they will flow to consumers if in fact there are going to be any savings. Given that I did indicate in my speech on the second reading that the cost to a policy holder is something like 60c, I am still of a view that we need to understand what the motivation for these amendments would be. I will also go to protections of consumer access to information in some subsequent questions.

But where are the savings? What will they be? Who will benefit from any savings that may be achieved?

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

Senator McLucas would be aware that industry pays for APRA through levies. We anticipate that there will be back office savings, and therefore these will be passed on to industry.

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

What is the quantum?

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

I am advised that we do not have an estimate that we can provide at this point in time.

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

We do not have an estimate, so do we know that there are going to be savings? Do we actually know?

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

I am advised that there will be a reduction of four staff, so that represents a saving, but I can indicate that this is not going to cost more and that there is confidence that there are back office savings to be had.

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

So four staff we are going to save—is that what you said, Minister? Four staff? What is the cost of abolishing the industry ombudsman and PHIAC?

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

I will seek to obtain that for you, Senator, but the advisers do not have that to hand.

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

Thank you for taking that on notice. I am also interested in understanding this: 80 per cent of the staff are transferring, and four staff we would lose, which is a shame for those four people. Can you assure the committee that all the specialist knowledge that is held in PHIAC will transfer but then be maintained? That is the assurance that the Senate needs: that not only do we transfer in the first instance but, over time, that specialist knowledge will be maintained into the future.

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

Yes, it will be transferred and, yes, it will be maintained.

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

I am glad that is on the record, because that is what I wanted to hear, because that is the point: in the future, we need to be assured that we have the specialist staff and skills that are currently doing fantastic work to keep knowledge of private health insurance, as a different product to other insurance products in the array of insurance products in the country. Can I now have an undertaking from the minister that the website, with all of its capabilities, will be maintained into the future, and will it change its address?

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

I am advised that the website is maintained by the Private Health Insurance Ombudsman and that that will continue.

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

It is a legitimate question about the address changing.

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

I did not get an opportunity to make a contribution on the second reading. I will not as such, but I will just say that I express my reservations in respect of the Private Health Insurance (Prudential Supervision) Bill 2015, and I also want to express my concerns about the affordability of private health insurance generally. The coalition did walk away from its promise on the issue of restoring the rebate and issues of indexation. I think it is important that we have a health system where there is a good balance between the public and private systems. We know what the Productivity Commission said a number of years ago about this when it undertook an analysis of how the two systems operate side by side—the number of very good things that the public system does and the good things that the private system does. I am concerned that, as a result of changes under the former government, private health insurance is becoming less and less affordable and that we are heading to a dangerous tipping point where more and more people will downgrade their cover, which will force people onto the public hospital waiting lists for ancillary services and the like. Also, if you put more pressure on private health funds, it makes them less attractive, and ultimately you end up with a shift to the public sector, which is not a good thing in itself, because of additional waiting lists and the like.

I just want to ask for some clarification on two particular issues. I note that the legislation allows APRA to raise an investigation into a private health insurance fund where there are concerns that it has not acted in the best interests of its members. In principle, I do not believe there is any objection to this. Some concerns have been raised, however, with the drafting of that particular clause and how widely it might be applied. One example that has been raised is the issue of increasing premiums. An argument could be made that, in and of itself, paying more is not in the best interests of a fund's members, even though the fund is legally allowed to increase premiums. Of course, if a rise in premiums allows the fund to offer better services or to continue operating effectively, this should be taken into account. I would be grateful if the minister could clarify the application of this provision and how APRA may be able to use these powers. In other words, how broad will it be? How broad is it envisaged to be in respect of this?

While the minister is looking at that, I will just say parenthetically that issues that I raised in estimates about private health insurance affordability go to issues of prosthesis safety and quality and allegations of price gouging with prosthesis funding arrangements, where the private health funds, I think, have not been listened to sufficiently by government in terms of dealing with those issues. I think that dealing with those issues will be unambiguously good for both health consumers and private health funds. If there are less than optimal or, shall we say, somewhat dodgy prostheses, why are they getting funding? Why are they on the market? We have had two inquiries into this in respect of the TGA.

So my question is: how broad is this provision in respect of this, and how will it be used?

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

I am advised that the existing provisions are reflected but that there is not a change to the scope of the things that might be investigated and that they primarily relate to prudential concerns.

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

I have a further question. I understand that PHIAC currently holds funds paid by private health insurance for its operation. Can the government please clarify what will happen to those funds and whether they will be allocated to APRA specifically for its oversight of private health insurers?

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

I am advised that the reserves will be transferred to APRA.

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

I have some other questions, around the premium-setting arrangements. In your second reading speech, Minister, you indicated that you thought that there would be no change, I think, to premium-setting arrangements. So can you explain what the arrangements will be and how the new arrangements will operate?

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

The premium-setting arrangements will operate as they do now. There is not a change.

Bills agreed to.

Bills reported without amendments; report adopted.