Fiona Martin (Reid, Liberal Party) Share this | Hansard source

I rise to speak on the Private Health Insurance Amendment (Income Thresholds) Bill 2021. This past year has reinforced how incredibly important our healthcare system is and the importance of our health and medical workforce. When I was practising as a psychologist, I saw firsthand the quality and the standard of our country's healthcare system. While it is not always perfect, the fact is that no matter who you are or what you do for work, every Australian has access to help. In Australia, we are so fortunate to have universal health care in the form of Medicare, a program that protects all Australians in a way that makes us the envy of the world. Even highly developed countries like the United States do not offer the generous and worthy support offered here. However, despite the generosity of Medicare, it is still incumbent upon us to incentivise higher income earners to financially contribute toward their own healthcare cost or to pay the Medicare levy surcharge. By doing this, Australians are not only taking control of their own health care but easing the burden on taxpayers and supporting those in our society who are most in need of Medicare's coverage.

It is for this reason the government is amending the Private Health Insurance Act 2007. The Private Health Insurance Amendment (Income Thresholds) Bill 2021 extends the indexation pause on the Medicare levy surcharge and private health insurance rebate income tiers for another two years, until 30 June 2023. It ensures the recommencement of annual indexation at the current income thresholds following the end of the pause. How does the indexation work? The Private Health Insurance Act describes indexation of private health insurance income thresholds as being calculated using an indexation factor. It also lays out the three private health insurance income thresholds for individuals or singles and families. The bill amends the income thresholds to the current 2020-21 levels to apply right up until 2022-23. It specifies the formula for applying indexation across the income thresholds each financial year from 1 July 2023. The pause provides stability for consumers and stakeholders regarding the operation of these important private health insurance incentives. As COVID outbreaks still occur around the country and the world continues to grapple with the virus, we cannot become complacent. Health care and proper coverage for all Australians is extremely important. By continuing to incentivise consumers to purchase and maintain private health insurance cover we ease the burden on Medicare and continue to protect Australians.

The Private Health Insurance Act 2007 makes provision for the setting and annual indexing of private health insurance income thresholds. Legislated private health insurance income thresholds are used to determine government funded private health rebate amounts that may be available to consumers with eligible private health insurance cover and to determine Medicare levy surcharge income thresholds and rates. The Medicare levy is an additional contribution you pay on your taxable income unless you qualify for a reduction or exemption. The Medicare levy funds some of the cost of Australia's very generous public healthcare system. The Medicare levy surcharge is levied on Australian taxpayers who don't have an appropriate level of private health insurance hospital cover and who earn above the taxable income threshold, which, as it stands at the moment, is $90,000 for a single or individual and $180,000 for a family. The amendments will pause the legislated indexing of private health insurance income thresholds for a further two years from 1 July 2021, allowing for annual indexation to recommence from 1 July 2023.

The Private Health Insurance Act provides for the annual indexation to be determined by changes in average weekly ordinary time earnings each financial year from 1 July 2023. Average weekly ordinary time earnings is an Australian Bureau of Statistics measure of earnings by Australians from ordinary time worked each week. It is reported publicly by the ABS quarterly. The bill amends the indexation factor's financial year references to reflect current income thresholds for indexing from 1 July 2023. These changes do not alter the Medicare levy surcharge rates or private health insurance rebates. The extension of the pause means that $90,000 remains the base income threshold for a single and $180,000 remains the base for a family for two more years until 30 June 2023. Pausing indexation of the income thresholds helps to restrain the growth of private health insurance rebate expenditure while a detailed study into the effectiveness of the operation of the tiers and incentives is undertaken. It would be counterintuitive to attempt to change the income thresholds whilst investigating whether the tiers are even effective.

As a government, we encourage those who can access private health insurance to do so. These amendments do just that. They continue to incentivise higher income earners to contribute financially towards their own health costs or pay the Medicare levy. Australians look out for each other, and paying the Medicare levy is just one way we as a proud nation can put our hand around those who need it. Those who currently have private health insurance should not worry. These amendments will not affect you negatively. The bill means that for the next two financial years the private health insurance rebate income thresholds remain unchanged, at $90,000 for a single and $180,000 for a family. These will remain as they are until 30 June 2023.

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