Doug Cameron (NSW, Australian Labor Party) Share this | Hansard source

The Liberals do not change their spots. It is quite clear that on the one hand the argument is for looking after Howard’s battlers but, when they have an opportunity to actually look after ordinary Australians, what do they do? They impose a tax on them—a tax that is actually $586 a year for ordinary Australians. Five hundred and eighty-six dollars is significant tax relief for taxpayers who choose not to join a private health insurance fund. Where is this argument that I have heard for years from the Liberals about choice? There is no real choice for ordinary Australians as to whether they want to access private health insurance. The carrots are far outweighed by the sticks in the legislation, and the biggest stick is the tax imposition on ordinary Australians in this country. Average income earners are bearing a disproportionate amount of the Medicare levy surcharge. It is not equitable. It is not in keeping with the original intent of the policy.

The Liberal Party wants to reduce taxes for the Lamborghini and Maserati drivers of this country but they want to impose an inequitable tax on ordinary Australians. After 11½ years of economic mismanagement by Costello and Howard, many Australians are battling to keep their heads above water. This is a Liberal Party that wants to keep an unjustifiable and unconscionable subsidy for the big end of town. It wants to keep tax breaks for the North West Shelf consortium and to slug ordinary Australians with a Medicare levy surcharge—tax breaks for the rich and powerful and tax penalties for the ordinary worker; that is the reality of the Liberal approach. This is an opposition that masquerades as the defender of the poor and defenceless, when it is doing exactly the opposite with this legislation.

In government, the Liberals presided over massive transfers of wealth from ordinary workers to the corporate sector. The transfer of wealth was squandered on outrageous executive salaries and corporate greed. Productivity fell, manufacturing exports declined, jobs were lost, workers’ rights were stripped and the politics of fear were the politics portrayed by the Howard government. Now we have the politics of fear all over again—the fear that the health industry will be gone, that we will not be able to go to a hospital and that workers will not be able to afford decent health care because of this policy of giving ordinary workers tax relief. It is the politics of fear; it is not based on any evidence that came before the inquiry. No evidence justified what has been put forward here by the Liberal speakers.

It is absolutely essential that this bill is passed in order to provide justice for ordinary Australians. The Medicare levy surcharge is a unique tax, not only in Australian terms but in global terms. It is not the progressive tax that we heard Senator Birmingham talk about when he was lauding progressive taxation. This is what is called a reversionary tax. It hurts people more the more money they earn and it makes a real problem for ordinary Australians who are around that tax threshold area. It is absolutely essential that this tax is a progressive tax and does not act in that reversionary manner.

As we debate the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008, I think it is appropriate to have a look at how the private health industry operates. What we have here is a great defence of the private health insurance industry. Surely the defence should be for ordinary Australians who want decent health services, not the defence of a private health insurance industry, an industry that comes to the Senate inquiry and argues for a massive public subsidy for what is essentially a private business. It is an industry that seems happy to accept massive public funding at the expense of ordinary workers. The private health industry is a complex industry. It is a unique and somewhat bizarre industry, I must say. It is an industry that fails all the tests that the Liberals would apply for market forces. It relies on government support to remain viable and produce ‘profits’.

In 2006, the 30 per cent refund cost taxpayers $980 million. With such a massive public subsidy, the government of the day is entitled to make changes that bring about fairness for taxpayers, something that those on the other side seem to have forgotten about—fairness for ordinary, battling Australian families; fairness for workers who are battling to keep their heads above water; fairness for workers who are battling to pay their bills and their mortgages because of the incapacity of the previous Howard and Costello government to really make a strong economy for this country.

This is an industry that is so complex that it spawned a client industry that relies on the complexity of the health insurance system to establish a business and make profits. Companies like iSelect are doing so well that they can afford to go to the most expensive econometric modellers in the country, on public funds, in a feeble attempt to build a case against reducing taxes for battling Australians. This is a company that relies on taxpayers’ dollars to survive and make a profit, and it has the gall to spend profits arising from taxpayers’ subsidies to deny ordinary Australians a tax break. Despite the best efforts of Access Economics, a report for iSelect was forced to concede:

The complexity of the private health insurance market and the interaction of several different types of subsidies and regulations within health insurance and healthcare delivery make it a challenge for a model to capture the entire spectrum of likely impacts from a Medicare levy surcharge threshold change. In addition, underlying changes to the economy such as income growth and population change add to the complexity.

All these arguments from the other side about the economic models are thrown out by the economic model that has been put forward by Access Economics. Access Economics concede that they cannot model the outcome. How can you model the complexity of human behaviour? That is what you are trying to model here, human behaviour, and economic models cannot do that.

In my view, the model that has been used by Access Economics cannot predict with any accuracy public behaviour and therefore there is no basis to the doom and gloom scenarios espoused by the Liberals, the private health industry and some doctors with vested interests.

There have been many contributions from those opposite, but we did not hear any contributions about the public funds that are being used to subsidise massive bonus payments to the private health insurance industry—bonus payments of over $1 million to privatise the private health insurance industry, picked up by executives in the industry. I take the view that we need to make sure that public funds are not used to line the pockets of health executives in the private health insurance industry.

The fear factor that is being used is that increased surcharges will increase waiting lists in the public hospital system—that there will be a flood of Australians out of the private health system and that that system will collapse. There has been analysis done on this. Professor Stephen Duckett, from the School of Public Health, La Trobe University, says that legislators must be very careful about the rhetoric that the private health system reduces waiting lists. There is much analysis to be done on that. None has been done by those opposite. There was Canadian Health Services Research Foundation analysis done that showed absolutely no evidence that pouring money into the private system reduces waiting lists in the public system. There has also been analysis done by Duckett and Jackson that says that the subsidy cannot be justified on efficiency grounds. They did analysis of the technical efficiency of the public and private health systems, of the allocative efficiency and of the dynamic efficiency, which is how quickly you can respond to change. On the available evidence, it was clear that hospital care in the public sector is at a higher level of technical, allocative and dynamic efficiency than in the private sector. So all of these arguments that if the private sector is diminished then we will have all of these problems are just denying the effectiveness of the public health system in this country.

I would take Professor Deeble’s point of view before any of the arguments that I have heard from the other side today. Professor Deeble has had 51 years of experience in hospital management. He became a PhD 40 years ago. Professor Deeble says that the proportion of people in the public and private sectors has not changed much since the sixties. So all of the funding that the public has put into the private industry has not delivered what you on the other side would wish for. Professor Deeble also argues that the public system gives better access to technology. Where do you go for your heart? You do not roll up to emergency at a private hospital; you go straight to the public system, and that is where you get looked after. Professor Deeble also said that funding in public hospitals has always been tight, but it has got a lot worse over the last 10 years—the last 10 years under Howard and Costello and that lot over there; that is when it got tighter and that is where the problems in the public health system emanate from. They emanate from the cutting back of costs and the privatisation of the public health system by the Liberal Party. In fact, in 2000 the Liberals withdrew $700 million from the public health system.

In his argument, Professor Deeble destroys the assertions being made from across the floor—that is, if you simply put the price up then people will leave. Professor Deeble and others have argued that membership in the private health system is dependent on income, not prices, and that membership has to be looked at in relation to habit, social reasons, risk aversion and preference for private services over public ones. No-one can model them. Neither Access Economics, a state government, nor the Treasury can assess these human foibles. In summary, what Professor Deeble argues is that ignorance, apathy and uncertainty mean that no-one can actually model what is going to happen. I would accept Professor Deeble’s position before I would accept Senator Cormann’s position. Professor Deeble, in his submission to the Senate Standing Committee on Economics inquiry into the bill, states:

• the economic effect of the proposed changes will be to reduce the cost of public hospital care by 40% for single people with incomes between $50,000 and $100,000 per annum, and for families with combined incomes of between $100,000 and $150,000 a year.

Professor Deeble is saying that you can reduce health costs for ordinary Australians—and the Liberals do not want to do it. You would prefer to subsidise the Maserati drivers of Australia than do anything about this. Professor Deeble’s submission goes on to state:

• that will have some effect on the membership of private health insurance and on the private hospitals and doctors that private insurance supports. The shift in membership is most likely to occur amongst younger people whose use of hospital services is lower than the average.
• however the effects will be quite small. Based on hospital usage in the relevant age groups, the number of people covered by private insurance is expected to fall by about 8% but benefits paid would fall by only 3%. Premiums for the remaining members would rise by just over 5%. That would not threaten the viability of private insurance.

So the doom and gloom merchants on the other side, those who would pander to the fear factor, are really not in this debate when you listen to someone who knows what they are talking about. You can only say, ultimately—