House debates

Tuesday, 2 June 2009

Fairer Private Health Insurance Incentives Bill 2009; Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009; Fairer Private Health Insurance Incentives (Medicare Levy Surcharge — Fringe Benefits) Bill 2009

Second Reading

9:10 pm

Photo of Nicola RoxonNicola Roxon (Gellibrand, Australian Labor Party, Minister for Health and Ageing) Share this | Hansard source

I appreciate the opportunity to sum up on this debate in which many members of the House have spoken. I thank them for their contributions. The Fairer Private Health Insurance Incentives Bill 2009, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 will amend the various acts to give effect to our recent budget measures to introduce three new private health insurance incentive tiers.

The government has made clear that it supports a mixed model of balanced public and private health services, and striking the right balance is something the government is determined to do in maintaining a universal system with both public and private providers. In our health system we see this as a complementary way that services can be provided. They do not need to be supplementary or competitive. To help ensure that the private health system remains a sustainable part of the system, the government is rebalancing support for private health insurance. The government believes that our targeted reforms will provide a fairer distribution of benefits because the government does not believe that low-income earners should be subsidising the private health insurance for high-income earners. At the same time, high-income earners will also face increased costs if they opt out of health cover.

I would like to respond briefly to a number of comments raised in the debate, particularly by the member for Dickson. Firstly, we have changed our policy in respect of the private health insurance rebate because the rebate was becoming unsustainable. In a budget that has taken a $200 billion hit as a result of the biggest global financial crisis in 75 years, this is not surprising. Clearly this presented a challenge in the current fiscal environment. The global financial crisis forced the government to make a tough decision about what was right for Australia in the long term, and the $1.9 billion saving to government expenditure over four years associated with these reforms will help ensure the government’s support for private health insurance remains fair and sustainable. We believe we need to use taxpayers’ money wisely, and those that can afford to pay more should pay more. I can assure you that this was a hard decision and one that was not taken lightly. But it is the right decision for Australia’s long-term financial future.

In respect of sustainability, I have previously indicated that these reforms will bring government support for private health insurance in line with the principle underpinning the Australian tax transfer system—something understood very well by the member for Dickson—that the largest benefits are provided to those on the lowest incomes. In fact, we heard very many speakers from the other side feigning concern about those on the lowest incomes who have private health insurance, when in fact these changes do not have any impact on the rebate that those low-income earners receive. In fact, it is quite the opposite—what these changes mean is that low-income earners will no longer be subsidising the rebate paid to high-income earners, like those of us in this House who can well afford to contribute to our private health insurance ourselves. Putting the private health insurance rebate onto a sustainable footing also ensures that the government will have the capacity to continue to support the rebate into the future for those who most need our support. This is a fairer, more sustainable system and a better use of the precious health dollar.

I do have to ask whether members opposite seriously think it is fair that high-income earners should have their health insurance costs subsidised by people who are not nearly as well off. This side of the House does not think so, and we do not think that such an arrangement is affordable. Spending on the current rebate was growing quickly and was expected to double as a proportion of health expenditure by 2046-47. Obviously those health projections are a long way out, but that level was not sustainable into the future. Annual indexation, however, of these new tiers is tied to average weekly earnings and will ensure that these changes remain equitable into the future. These changes are logical and even more logical given the global financial situation, and it is a targeted, sensible change. Separated from much of the rhetoric that we have heard in this debate and that often surrounds the health debate, it is just a reasonable change for us to make.

Many of the speakers opposite also raised concern about the impact on public hospitals—this is, I might note, for many of them a newfound concern for public hospitals. However, in my second reading speech, which I will not go through again in detail, I explained that the estimated impact of this measure is that around 25,000 people may drop their private health insurance, of which about 8,000 people over two years would require admission to hospital. On the basis of that modelling, when you consider that our public hospitals admit 4.7 million people every single year—that is over nine million admissions every two years—this is a drop in the ocean. The Australian Healthcare and Hospitals Association made that clear in their statements:

AHHA dismissed the concerns of the Opposition and the private health insurance industry that means testing would result in increased pressure on the public health system. There is no evidence to support this claim and as a peak body for public health services AHHA has no such concerns, provided the funds that are saved by this measure are directly invested back into public health care.

Of course, the government’s record investment under the new $64 billion Council of Australian Governments agreement, where hospitals will receive 50 per cent more than they did under the previous government’s last agreement, clearly demonstrates that the government is serious about boosting capacity and services in public hospitals. Further, our investments in preventative health will assist us in keeping people out of hospital in the first place.

Regarding the effect on premiums, a matter also raised by a number of members in the debate, we expect these changes to have minimal adverse impact on private health fund membership because 99.7 per cent of insured people are expected to retain their private health insurance. This is because, of course, those with higher incomes who receive a lower rebate will face an increased tax penalty if they avoid private health insurance. The member for Dickson quoted doom and gloom from a few health sector figures—the Australian Health Insurance Association and the Australian Private Hospitals Association—but there are many other views with a contrary perspective, such as, as I have already indicated, the AHHA but also, for example, Professor John Dwyer, former chair of the Australian Health Care Reform Alliance, who said:

The people that are heavy users of private health insurance or would anticipate that they might be, especially older Australians, will bite the bullet and stay in the system because they had private health insurance before the 30 per cent rebate came in anyway.

Finally, I come to the amendment moved by the member for Dickson to impose more tax on tobacco. Firstly, after railing in another context about how we do not need any new taxes, something must have happened to the member for Dickson—he has found a road to Damascus. Now, all of a sudden, it seems that new taxes are de rigueur, which is particularly curious given his complete lack of action in this area when he was the Assistant Treasurer in the previous government with control of the tax policy levers.

In terms of tobacco taxes, there are two processes currently in progress which we will look at on their merit: firstly, the Henry review of taxation; and, secondly, the National Preventative Health Taskforce. When the government has received these reports, it will consider its position in a considered fashion taking into account all the evidence. So we will not be supporting the amendment as part of this debate. If the opposition are serious about taxes, they should now support the government’s alcopops measure.

In summary, we believe that this measure will make the private health insurance system fairer and more balanced. It will keep our health budget on a more sustainable footing in the long term. By maintaining a carefully designed system of carrots and sticks, it will have a negligible effect on both premiums and the public hospital system. I also table some minor corrections. I understand the figure of $1 needs to be added in a number of places to the explanatory memorandum and I table those corrections.

Question put:

That the words proposed to be omitted (Mr Dutton’s amendment) stand part of the question.

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