House debates

Thursday, 29 May 2008

Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008

Second Reading

Debate resumed from 28 May, on motion by Mr Bowen:

That this bill be now read a second time.

12:48 pm

Photo of Steven CioboSteven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | | Hansard source

I am pleased to rise to speak to the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008 because this bill really epitomises the Labor Party’s plans on how it is going to completely or virtually destroy private health insurance in this country. We know that the Labor Party has an ideological bent, and that is its profound belief in public health at the expense of all else. We know—and I notice that the Minister for Health and Ageing is in the chamber—that the Labor Party’s view is that, when it comes to health in Australia, the only system that should be embraced is the public health system. In many respects this particular bill underscores that ideological belief that drives the Labor Party.

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

Ms Roxon interjecting

Photo of Steven CioboSteven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | | Hansard source

I hear the minister for health interjecting about whether I am interested in health on the Gold Coast. Let me put on the record some very specific and pertinent facts about the Gold Coast for the minister for health. We are a city of 600,000 people that have a public health system groaning under the weight of that population. We have been the fastest-growing city for the last 25 years and we are anticipated to be the fastest-growing city for the next 30 years. I am happy to explain to the minister for health the situation on the ground on the Gold Coast. Only one week ago there was a lady who was forced to give birth on the floor in a storeroom in the Gold Coast Hospital. The minister for health will look at the Australian people and say that the proposal before the House today to drive one million extra people from private health into public health is going to fix that system.

I have a few more home truths for the minister for health. In this city of 600,000 the former coalition government had a very strong emphasis on making sure that there were opportunities for people to access health services, both privately and through the public system. One of the key measures that we introduced to make sure that people in the community had access to medical health was direct government assistance for after-hours medical care. We recognised that people do not always get sick between 9 am and 5 pm. People look to access health care outside of normal business hours. That is why the coalition had, as a very strong and key part of its focus, the desire to fund private GP clinics with additional funding so that members of the Gold Coast community could access those health centres.

The after-hours clinics, and in particular I would name but one GP clinic called Medcall, actually used those Commonwealth funds to provide after-hours care where the doctor would actually visit the patient. How is that for a health revolution? The doctor would visit the patient. I thought that this system was working well. It built on the coalition’s commitment in my own electorate, as well as my neighbouring electorates of Fadden and McPherson, to build two new medical schools on the Gold Coast. We were starting to make progress. Two new medical schools were being built to help solve the doctor shortage in a very meaningful and long-term way and additional funding was available to make sure that there was after-hours care available to Gold Coast residents.

Then the Labor Party came along and said, ‘We want to end the blame game.’ It was as though the Prime Minister had a piece of string coming out of his chest and when you pulled it he would say, ‘I believe in ending the blame game,’ and then you would pull it again: ‘I believe in ending the blame game.’ That was the sum total of Labor’s contribution, at the lead-up to the last federal election, on what they were proposing with health. They never unmasked their true plans, which the Minister for Health and Ageing has now done and which are encapsulated in the bill before the House today.

We know that only two weeks ago when a woman in my city was giving birth on the floor of a storeroom in the public hospital—where the public hospital is on bypass virtually more often than it is actually accepting patients through the emergency ward—we had the Labor Party stand up and say, ‘We believe the way to help solve this problem is through GP superclinics.’ How interesting that, with the rollout of 31 GP superclinics across Australia, not a single one was delivered for the Gold Coast—a city of 600,000 people did not receive a single GP superclinic. The GP superclinics, I remind the House, were Labor’s solution for people being able to access health care.

To compound the problem, not only did the Labor Party not fund a GP superclinic on the Gold Coast but they cut funding of after-hours medical care, and now public patients on the Gold Coast who are, for example, injured in the workplace or a car accident or require medical care no longer have the option of seeking after-hours medical care. They no longer have any chance of realising a GP superclinic, as the Labor Party promised. To make matters worse, they now have to fall back on the public health system, which, thanks to the bill that is before the House today, will have an extra million people from the private system pushed onto it. That is Labor’s brilliant plan.

The Minister for Health and Ageing dares to challenge me about whether or not I will support public patients on the Gold Coast. The minister dares to question my commitment to Gold Coasters by asking why I do not want to see them being forced to use the Gold Coast public hospital. It is because the social engineers that sit on the government front bench, who are completely and profoundly blind and driven by ideology, are so focused on their so-called public health utopia that they fail to recognise that they are destroying public health in this country with their ideological obsession. It just so happens that perhaps the clearest case in point is the city of 600,000 people that I represent.

I say to the minister for health: ‘Don’t you come in here and lecture me about public health.’ I say to the Rudd Labor government: ‘Don’t you dare lecture the 600,000 people on the Gold Coast about how your plans for health are going to be an improvement,’ when the only thing that they will be realising is that they will lose after-hours GP clinics, they will not get a GP superclinic and they will be forced to use the public hospital, which cannot cope with current demand let alone the million extra people who are going to be driven from the private system to the public system, thanks to the bill currently before this chamber.

I think it is time that the Labor Party seriously considered what it is doing. In its pursuit of ideology, it is clear that the inroads and the important steps that the coalition made over the last 11 years are being completely eroded. The coalition stand for one very clear principle: it is the right of all Australians to have choice when it comes to their healthcare needs. It is the right of all Australians to choose between whether they would like to use the public system or whether they would like to seek private medical insurance.

In many respects, it is interesting to have a look at the passage of time and the way in which social trends have been influenced by government policy. In the early 1970s about 90 per cent of the Australian population were covered in some form by private medical insurance. Then we had the great Labor icon Gough Whitlam. He decreed that public health should be universal so that millionaires could use the public health system and be subsidised by taxpayers. After that great Labor icon Gough Whitlam went about tinkering with Australia’s health system, we saw private health insurance rates plummet to basically an all-time low of about 33 per cent at the end of the Hawke-Keating era. So we went from about 90 per cent of people having private health coverage to about 33 per cent.

What was the consequence of that? We had so many Australians reliant on the public health system but it did not matter to the Labor Party whether they could pay their own way or not. It did not matter that you could have a millionaire lining up beside an Aussie battler on $30,000 a year, both seeking to use the same public health service. As a result, our public system started to collapse under the sheer weight of numbers. That is the reason why the former coalition government took the very considered and deliberate action of providing an incentive for Australians to utilise private health.

A key part of doing that was not just the 30 per cent rebate on private medical insurance and the introduction of community rating in private health insurance but also the fact that we introduced the Medicare levy surcharge. When the coalition introduced this policy, we took the view that if you earned over $50,000 you were in a situation where you could afford to make a contribution to your private health. And, in making that contribution, we wanted to make sure that people still had the choice of utilising it or not. If they chose not to take out private medical cover, they could remain in the public system but they would be charged an additional Medicare levy. We on this side of the House know—as much as the Labor Party is driven by and blinded by ideology to have one universal public health system, and that is it—that without that additional surcharge the public system will groan and strain under the sheer weight of numbers. That is why that policy was introduced.

With the bill that is before the House today, the Labor Party has now changed and moved the goalposts, so much so that on Treasury’s own forecasts, according to the budget, we are going to see 485,000 taxpayers—and I emphasise the word ‘taxpayers’—shift from private health back into the public system. I notice the parliamentary secretary at the table nodding in furious agreement. We now see that 485,000 taxpayers will move from the private system to the public system, and the Labor Party is happy about that. So now we will see—according to the private medical insurers, who have done their research—that those 485,000 taxpayers actually equate, when you start to take into account family units and so on, to nearly a million Australians making the transition from the private medical system to the public health system.

Photo of Gary GrayGary Gray (Brand, Australian Labor Party, Parliamentary Secretary for Regional Development and Northern Australia) Share this | | Hansard source

Mr Gray interjecting

Photo of Steven CioboSteven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | | Hansard source

I notice the Parliamentary Secretary for Regional Development and Northern Australia saying that it is about exercising choice. Let us put this in another perspective. Is it fair for those who cannot afford to exercise choice to have to wait in a public hospital room for emergency treatment for seven or eight hours because they do not have a choice? Is it fair for someone who earns $30,000 a year and might have two kids to have to line up in a public hospital room and wait for seven or eight hours to get access to public services? Is that a fair choice? Or is it fairer that those who earn significantly higher incomes than the Australian average should be given incentive to take out private medical cover? That to me is a much more sane and logical public health policy than the bill that is before the House today.

What the Labor Party say is that they want to take away any incentive that exists, basically, for private medical cover. So I ask the parliamentary secretary: is it fair that someone who cannot afford private medical cover should have to give birth on the floor of a storeroom in a public hospital? Is that fair? Is it fair that a woman who is having a miscarriage should have to do that in a public toilet at the Royal North Shore Hospital because they are so understaffed that they do not have a situation in which they can tend to that woman’s miscarriage? Is that fair on that woman? Is it fair that they should have to suffer that kind of trauma?

The reality is that we have seen wholesale failure by the Labor Party when it comes to public health. Again, there is no clearer example of the kind of failure that we see by the Labor Party than what exists in the Queensland health system. The Labor Party has been in power in Queensland for over a decade. And what have we seen over that period? We have seen the Queensland public health system basically collapse. It is a disgrace that in a modern-day country like Australia we should be laboured with the kind of public health system that we see in Queensland or indeed in New South Wales. That is a reflection of a decade of state Labor government ideology, the same ideology that permeates the front bench of this government and that, I believe, is in the longer term basically going to destroy any public confidence that still exists in the public health system.

So I suggest to members opposite that they do not lecture us about choice. They might like to go out to their electorates in Western Sydney, western Melbourne, the south side of Brisbane and to places like Nerang on the Gold Coast and explain to those who cannot afford the luxury of choice why they should have to line up in a public hospital for five, six or seven hours alongside someone who could not only afford to be in the private system but should be given the incentive to be in the private system. I would also like the Labor Party, while they are at it, to explain why it is that, when the Labor Party solution is a GP superclinic, a city of 600,000 people is not getting one. To make it worse and to rub salt into the wound, not only are they denying 600,000 people a GP superclinic but they are cutting after-hours medical funding. That is what the Labor Party’s plan is for public health.

I cannot believe—and I find it galling—that the Minister for Health and Ageing came into this chamber at the start of this debate and questioned my commitment to public health on the Gold Coast. So I say to those Labor members opposite that they need to have a good long hard look at themselves. Do not stand up and say to the Australian people that this bill that drives a million people from the private system back into the public health system at a time when our public health system cannot cope with the demand that is already on it is in some way going to be beneficial. I am yet to hear a single speaker from the Labor Party stand up and explain how the public health system is going to cope with a million extra people.

When I hear a Labor member stand at the dispatch box or in their place and say that there is so much capacity in the public health system that they can accommodate a million extra people, then I will start to take them seriously. But none of them say it because they know the truth—that a woman having a miscarriage in a toilet in a public hospital foyer, a woman giving birth on the floor of a storeroom in the Gold Coast Hospital and emergency rooms being put on bypass basically as often as they are accepting patients are signs that our public health system is in crisis. Under the former government, when the coalition were in power, we were looking about doing something to improve that situation—

Photo of Gary GrayGary Gray (Brand, Australian Labor Party, Parliamentary Secretary for Regional Development and Northern Australia) Share this | | Hansard source

Mr Gray interjecting

Photo of Steven CioboSteven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, the Service Economy and Tourism) Share this | | Hansard source

We did a lot of things. We took policy initiatives to make sure that we did improve it. We did that by making sure there was incentive for those who could afford to pay to go into private medical insurance, and the proof is in the pudding, more importantly. When the former government took over in 1996 about 32 per cent of the population had private medical insurance. When the former government left office the figure was about 50 per cent of the population. So our policies had a real impact. What is more, under the Australian healthcare agreements that the former government negotiated with the state Labor governments, we saw record funding flying from the Commonwealth government to the state governments.

Under the coalition there was record health funding, a massively significant increase in the number of Australians who had private medical cover and increased incentive for those who were on the margin of whether they could afford private medical cover, by giving them a 30 per cent rebate. Now we have the new Rudd Labor government, and one of its first acts is to rip the carpet out from underneath all of those incentives and, in a perverse way, to proudly stand up and say, ‘Oh, yes, we know that the bill before the House, this policy initiative, is going to put even more strain back on the public system.’

It is extraordinary that such a short-sighted and ideologically driven policy would be implemented by a government at a time when our public health system is in crisis. And it is extraordinary that even in this debate I have had the minister for health and the parliamentary secretary at the table challenge assertions that are based on fact. They are not based on ideology and not based on a mistaken belief but based on fact: the fact that our public health system cannot cope at the moment—and they want to inject a million more people into it—and the fact that under the coalition private health insurance went from the low 30s to nearly 50 per cent of the population.

This Labor policy is now going to reverse that. The fact is that, at every state level, the state Labor governments, which have been in power for over a decade, have seen a revolving door of employment as doctors leave the private sector, come into the public system, work there for about six months, have enough of it and then leave it again. The state Labor governments say, ‘We don’t understand what’s wrong.’ Let me explain to the Labor Party what is wrong with their policies. Having massive numbers of patients, so that people wait six, seven or eight hours in public hospitals, is not great for doctors’ motivation. Having doctors, along with the auxiliary staff of nurses and others, work in a public system under so much pressure, faced with people who are angry—because not only are they sick but they have been forced to wait for seven hours—is not good for morale. That is the reason it is a revolving door of employment not only in Queensland but also in New South Wales, Victoria, South Australia, Western Australia and Tasmania. Each of these state health systems is a reflection of a decade of state Labor administration. Now, because we have a pull-a-string Prime Minister—when you pull the string, he says, ‘I want to end the blame game,’ and that is the extent of it—we are faced with a situation where it is going to get even worse.

1:08 pm

Photo of Gary GrayGary Gray (Brand, Australian Labor Party, Parliamentary Secretary for Regional Development and Northern Australia) Share this | | Hansard source

I rise to speak in favour of the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008. Labor has always accepted and supported a balance between public and private when it comes to delivering hospital services, GP services, specialist services and other services. It is a balance that traditionally has cut the cost of health care in our country by delivering excellent health care of a very high quality. Over the years, we have been able to lower the cost and deliver a better service than those generally available in countries to which we like to compare ourselves: the US, the UK and Canada. It is a great achievement. It is an achievement that has been arrived at through a system that blends public and private.

Let me put a bit of history on the record to provide a bit of context. In the early 1980s, Labor was elected to power on a promise to deliver Medicare. It was a promise which Labor delivered because we said we would do it. This is a concept foreign to those opposite, but it is what we do. A system was created that won not only massive support but also, inevitably, the opprobrium, the hatred, of those opposite. At the 1984 federal election, the Liberals opposed Medicare. Andrew Peacock campaigned up and down the country to oppose Medicare, to rub it out. At the 1987 election, the then leader, John Howard, did the same thing: he campaigned up and down the country to get rid of Medicare. At the 1990 election, we were back to Andrew Peacock. He campaigned up and down the country to get rid of Medicare. At the 1993 election, John Hewson campaigned to get rid of Medicare.

Suddenly, by 1996, the new leader of the Liberal Party—that is, the old leader of the Liberal Party—had achieved a status that those opposite have failed to understand. John Howard understood the importance of trial and error learning. By 1996 he made a commitment. Astonishingly for the Liberal Party, they funded radio ads in all markets across our country, telling us that the Liberals in 1996 would support Medicare, telling us that Medicare would not be changed and telling us that the position of the then opposition and the then government on Medicare was identical. Why did he do that? He did that because Medicare was held in high regard by the Australian community and by the OECD. By any international comparison, healthcare delivery costs in Australia were substantially lower than those in other comparable OECD economies—and they were not just lower cost; they were actually a better service.

Policy experts—Professor Deeble and Professor Swerissen—all argued for the integrity of the Medicare system. After 13 years of opposing Medicare in opposition, the then Leader of the Opposition sought to neutralise the issue by saying there was no difference between the then opposition and the government. But he planned to damage Medicare through insurance, through a tax. How? Through the surcharge. Let me explain. The surcharge was put in place to drive people, by tax, into private health insurance. In so doing, he also shifted funding from the public sector into the health insurance sector. It was not about healthcare delivery; it was actually about insurance companies.

Earlier today, we had hours of the parliament’s time taken up while those opposite argued for the big oil companies. Now we see the arguments for the big insurance companies. It is not an argument about health care; it is an argument about the health insurance companies. Let me tell you: they are big enough to look after themselves.

While you are in bed with the insurance companies, look at who else you are in bed with: the AMA. The last time the AMA engaged in political processes in my home state of Western Australia, it was under the guise of Liberals for Forests. They did that in the guise of Liberals for Forests because they did not like the then position of the coalition government. You need to pay more attention to the people you are in bed with: health insurance companies and the AMA. No wonder you all look tired. No wonder you cannot sleep.

This bill has been attacked by those opposite, but it is good public policy. It is policy to remove a tax trap that was catching hundreds of thousands of Australians, particularly many thousands of Australians who did not earn the average wage. We pursue a balance in public policy and health care—a mix between public and private.

Former health minister Michael Wooldridge had some very strong points. On medical research, he is simply outstanding. I believe he also understood when he introduced the surcharge that it should have been indexed to wage movements. But it was not because those opposite saw a cash cow that had to be driven into the hands of the private health insurance companies.

Let me explain how that works. Those opposite talk about a million people being driven into the public hospital system. You know full well that that million people are younger Australians. You know full well that that younger cohort generally has less need for high-cost healthcare measures. Some have specific needs, and they need to be looked after, but in general the younger, healthier cohort does not need the kind of health insurance which is offered at such high cost. So if they make the choice to opt out of that health insurance, they make that choice in an informed and understanding way. The problem with the tax, which those opposite support, is that it drives young people into private health insurance. Of course it will. We on our side of the House have always argued that human behaviours can be changed by tax. We would like them changed for the better. That is why we will introduce legislation and take measures to increase tax on highly alcoholic drinks that are drunk by younger people. Tax drives behaviours.

In this context those opposite want to use tax to drive healthy young people into a product which otherwise they do not need—private health insurance. They want to use healthy young Australians simply as cash cows. There will not be a tsunami of people descending into public hospitals. Those opposite know that. The healthy insured certainly know that because they are the cash cows. They do not use the system that they are being asked or forced to pay for under this ridiculous and punitive tax surcharge. In 1997 when it was introduced it was intended to get high-income earners into private insurance. It was to drive them into private insurance through the surcharge. The choice: insure or pay the tax.

You would have expected it to be indexed. It was not. We propose through this bill to effectively restore the intent that the former government had when it introduced the levy in 1997. So this bill will increase the Medicare levy surcharge thresholds for individuals and families. It will shift the threshold because that is the answer to bracket creep. The Medicare levy surcharge imposes a one per cent increase in Medicare levy liability on certain individuals who do not have appropriate private patient hospital cover. If we do nothing for the 2007-08 income year, individuals with taxable incomes over $50,000 and couples with a combined income of $100,000 may well be liable for that surcharge. Those opposite think that is fair. The government does not.

This bill increases the threshold to $100,000 for singles and $150,000 for couples and families. It is reasonable. It is thoughtful. It is good public policy, and it is a reasonable threshold. The Medicare levy surcharge imposes an additional one per cent Medicare levy on taxpayers who do not have private patient hospital cover. When the Medicare levy surcharge was introduced the policy at the time was targeted at high-income earners. At the time the then health minister, Michael Wooldridge, said:

High-income earners will be asked to pay a Medicare levy surcharge if they do not have private health insurance. These are people who can afford to purchase health insurance.

Shortly afterwards, Australians paid hundreds of millions of dollars into private health insurance. The government at that time then launched a massive advertising campaign to back up the stick which it had introduced with advertising. So it was not just a carrot and a stick; it was all stick—a punitive tax measure matched up with a massive barrage of television advertising.

But the income thresholds for the Medicare levy surcharge have not been increased since 1997, and since 1997 of course average weekly earnings have increased significantly. This measure simply increases the thresholds to an income level around that which originally applied in 1997. That is to say, if the original levels had been indexed, it is fair. In his address in reply to the budget the honourable Leader of the Opposition, Dr Nelson, addressed a whole part of his budget speech to the issue of bracket creep. He said:

We know that, as incomes rise over time and workers move into higher tax brackets, the value of today’s tax cuts will be eroded in the future. Economists call it ‘bracket creep’. We call it tax increases on the sly.

Those opposite do not refer to their current measures to keep this tax in place as a ‘tax on the sly’. Of course they do not. They think that it is about standing up for people who need hospital care. It is not. It is standing up for the private health insurers in the same way as those opposite have been standing up for big oil companies.

What the honourable Leader of the Opposition has ignored in this debate is that more and more people on average wages have also been required to pay the Medicare surcharge. Bracket creep has done massive financial damage to Australian families who have been struggling under the burden of higher food prices, higher cost of living and interest rate increases and a former government which did not seem to understand that relieving pressure on the family budget was a reasonable and proper thing to do. To put this into perspective, around eight per cent of single taxpayers are estimated to have exceeded the Medicare levy surcharge threshold in 1997-98 when it was introduced. Under the changes announced in this budget, the proportion will be restored to around 8½ per cent. At the end of the forward estimates a single taxpayer is likely to exceed the new singles threshold in years 3 to 4, which is eight per cent in 1997 and eight per cent in 2008. If we did not act, the proportion would be much closer to 50 per cent. So by acting we make the proportion close to 8½ per cent; by not acting—by doing what those opposite wish us to do—it would be 50 per cent.

The increase in the threshold will help reduce financial pressure on many working families who have previously been subject to the Medicare levy surcharge. And yet we still support the public-private reality and the same relativity that has been established a decade ago.

We often hear that the Liberals are the party of choice. We heard that repeatedly from the previous speaker. I would have thought that the party of choice would support lifting a tax on people who are not high-income earners that is designed to force them into certain behaviour. People on $50,000 a year should have a choice about how they spend their money and not be taxed because of an ideological policy. Those on the government side have been accused of having ideology in this debate. Those opposite have the ideology and the baggage, and simply read from the script prepared by the AMA and the private health insurers. People should have a choice: there should be a choice as to whether they are insured or not and a choice between the insurers that they select. This measure does provide real choice. Taxpayers can choose whether to take out private health insurance without the imposition of higher penalty rates unless they are on high incomes.

The amendments that we propose today will apply to the years 2008 and 2009, and later income years. Full details of the measures are of course contained in the explanatory memorandum. But the detail of the bill is only part of the story. The real story is that those on the government side are acting to restore not just choice to families in Australia but to lift a financial burden from Australian families. Those opposite are acting in the interests of big insurance companies, the AMA and, frankly, themselves. A curious alignment has taken place in this House: after one debate that ran for the better part of four hours, where the interests of big oil companies were put front and centre, the next debate is a debate where those opposite put the interests of big insurance companies. It makes you wonder what will come next. Where stand the rights and interests of ordinary Australians in the face of an opposition that has not just lost its way but also its sense of decency? It is an opposition which does not care about the interests of a viable healthcare system, mixing a balance of public and private, delivering high levels of excellent service and delivering to ordinary Australian families. No, it is a debate which is actually about the interests of big insurers. I commend the bill to the House.

1:25 pm

Photo of Anthony AlbaneseAnthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | | Hansard source

I move:

That the question be now put.

Question put.

Original question put.

Bill read a second time.