Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

The Fairer Private Health Insurance Incentives Bill and cognate bills before us today in essence seek to introduce means testing to one element of our welfare system, the private insurance rebate. This change was put to the last parliament by the previous government. It was passed by this House but defeated by the coalition and some of the crossbenchers in the Senate. The Labor government believes in this reform and we intend to prevail with this reform. So here we are again debating the merits of this legislation once again, as we did in the last parliament.

At the heart of the debate is a contest over one very basic idea: that taxpayer funded welfare should be means tested, that welfare should be for those who need it the most rather than everyone who wants it. If we were to agree in this and the other place on this point, the rest would be relatively straightforward. In fact, I think it would be easy. But, unfortunately, we are not in agreement. The schism within this and the other place, the Senate, given the incompatibility of values and principles continues. Today's debate is showing that.

It is pretty ironic that it is those referred to as conservatives that want more welfare doled out to the wealthiest members of the public, irrespective of whether they need it or not. And we know that those of us on this side of the House, sometimes referred to by members opposite as 'socialists' or as espousing socialist policies, are the ones always looking to reduce any waste and unnecessary drains on the public purse through exorbitant welfare outlays. So Labor is the party that believes in giving assistance to people in proportion to their need, and that has always been the case. But this should not be a surprise, of course, given the tradition established by Labor prime ministers Hawke and Keating in the 1980s and 1990s. We Labor members on this side of the House are extremely proud of our record in means-testing welfare and in the efficiencies and level of care we have been able to sustain over the years through using public funds for the maximum public benefit as they are required, not as they are wanted. So those of us in this House note this Labor government's position: giving welfare to those who need it, not everyone who might want it.

A couple months ago, a person sat down—an accountant who himself is married with a couple of teenage kids—and he spoke of means-testing of the family tax benefit and how families over $150,000 cannot access the benefit. As an accountant, he spoke of a client of his in a double-income family who had a child, and the mother stopped paid work for a period. That family, he said, was reduced to living off the income of only the husband, a doctor of some description who only earned $160,000 per year. This is what I was told of that scenario: 'They've only got $160,000 a year to live on. And they can't even get welfare. That's not fair.' That is what he said. It is virtually a direct quote. I know that it is tough and that some people do have huge mortgages. But the members of this single-income family earning something like three times the average wage say they need welfare to get by or to raise their child in a manner they think appropriate. I do not know what the people consider appropriate or what they consider to be the basics which they cannot do without. But it seems that they think the basics cost over $160,000 per year. I find this highly disagreeable. I think most of us would find it highly disagreeable.

We know that, when we had pensioners in my electorate, for example, scraping by on a lot less than what they get now, the government of the day decided to give hefty welfare handouts to people earning 10, 20 or 30 times what pensioners were expected to live on. The private health insurance rebate subsidises the lifestyles of people earning $200,000, $300,000 or $400,000 a year while pensioners, such as people on disability pensions or carers pensions, battle to make ends meet every single day of their life. To me this simply is not fair. This is not the way that I think business should be done and this is not why I came into this House.

The government says that some families and some people, like those earning three, four or five times the average wage, are not in need of assistance, unlike those earning much, much less than that, those families who are earning average wages or a little more, are paying off high mortgages or high rents and are paying money to educate their children et cetera. In the context of the bills before us, the government is saying that single people earning up to $83,000 will continue to receive the support they have and that couples earning up to $166,000 will continue to receive what they have been receiving. But those who are earning more should expect less in handouts. Those who are comparatively better off should be in less need of welfare.

Within this package, singles earning up to $83,000 and families earning up to $166,000 will see no change. Those earning a bit over these amounts are not having their handout taken away, just means-tested. They would still get rebates of 20 per cent for those up to 65 years, 25 per cent for those aged 65 to 69 and 30 per cent for those aged 70 and over. The Medicare levy surcharge for people in this tier who do not hold appropriate private health insurance will remain as it is, unchanged. Those who are even better off—for example, singles earning more than $96,000 a year and couples or families earning more than $192,000—naturally need less assistance than those on much lower incomes. Accordingly, they will receive rebates of 10 per cent for those up to 65 years, 15 per cent for those aged 65 to 69, and 20 per cent for those aged 70 and over. The surcharge for people in this tier will be increased by one quarter of one per cent. Singles earning more than $124,000 a year and couples or families earning more than $248,000 a year will not receive assistance.

Within the context of the state that I come from, South Australia, and using the last ABS figures and statistics for 2006, we are looking at the top 3.6 per cent of wage earners who will not get any of this welfare. I note that that is 3.6 per cent in my home state of South Australia. I cannot imagine why anyone would think that the top 3½ per cent of earners need welfare to get by. I do not believe that a single person, one for instance earning something like $3½ thousand clear per fortnight, would need welfare to survive. I do not believe that a family with an income of some $7,000 per fortnight is so impoverished that they need welfare and a handout from taxpayers. A lot of those taxpayers are earning a hell of a lot less than they are.

The idea that an ordinary member of our community—for instance, a single person earning an average wage of around $1,600 per fortnight—should be paying taxes to subsidise the lifestyle of someone earning double or triple what he or she earns is pretty wrong. It is wrong that people and families earning ordinary, average wages—doing it tough—or perhaps even earning a little bit more than the average wage, paying their mortgages, trying to get their kids through school and paying the bills, have been paying taxes for a long time to subsidise those households that are earning double, triple and quadruple what they earn.

The arguments about the government needing to dole out more and more taxpayers' money to preserve the integrity of the private health insurance industry are a smokescreen for a system of highly regressive wealth redistribution, making low- to ordinary-income earners hand over their hard-earned wages to fund the lifestyles of people who are far better off than themselves.

I do not see this as welfare, and neither do a lot of other people. This really should be stopped. There are better things for which taxpayers' funds could be used. Pensioners are calling out for more assistance. We see them struggling on a regular basis. I have one of the 'oldest' seats in the country, with the highest demographic of people over 65, and I see it every day, at street corner meetings and at forums. Pensioners are doing it tough and are calling out for more assistance. How can we justify giving out handouts to the top three per cent of earners in my state when at the same time we have people—pensioners especially, including people on disability pensions and their carers—who are doing it so tough?

For example, Public Service and Defence superannuants are calling out for better indexation. Again, how can we give welfare to the top three per cent of earners when we have people who do not get that indexation and are feeling the pinch, such as those superannuants of Defence and the Public Service? As I said, the disabled clearly need more help. In our electorates all of us come across parents who have children with disabilities, and we know how tough they are doing it. Certainly they need a lot more help. Sadly, the Liberal and National parties across from us disagree. But I think that it is much better that these people I have spoken about—people on pensions or disability, average income earners and maybe even those with a little bit higher than average incomes—receive the help they require, rather than that top 3.5 per cent of wage earners. As I said, those opposite disagree with that. They think that the top 3.5 per cent of earners should be subsidised by the rest of the people, who are earning far less than they are. I, for one, commend to the House the bills as well as the principles of fairness and prudential public administration on which they are based.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

The Fairer Private Health Insurance Incentives Bill 2011 is about two things. The first is the fact that once again the government has betrayed the Australian people by categorically ruling out means-testing of private health insurance rebates prior to an election but has then directly attacked these rebates once in government, doing exactly the opposite of what it promised. Breaching faith with the Australian people really has become part of the DNA of Labor, hasn't it? In fact, the primary deceiver in this parliament, the Prime Minister herself, said in 2006 of then health minister, Tony Abbott:

… the minister for health today claimed that I am opposed to the 30 per cent private health insurance rebate. This is not true.

Well, it is absolutely true, Prime Minister—and once again you have demonstrated why the Australian people no longer trust anything you say.

Second, this bill is about the price hardworking Australian families are being forced to pay for Labor's billions and billions of wasted taxpayers' funds and for Labor's addiction to debt and deficit. Yes, the government is targeting hardworking Australians—the very people who help to keep communities and our economy strong, the people who take personal responsibility, the people we should be respecting, valuing and encouraging—something the coalition has been committed to while in government. It appears that the Labor government has declared war on individuals earning over $80,000 and couples earning over $160,000 a year by restricting their access to a range of government services.

The contempt this government has for Australians who are working hard to achieve a degree of financial security is a national disgrace. This is the third time the Labor government has brought this legislation to the parliament. Firstly, in the last parliament, despite those explicit and repeated promises at the 2007 election that 'federal Labor has made it crystal clear that we are committed to retaining all the existing private health insurance rebates,' Nicola Roxon went on to say, 'The Liberals continue to try to scare people into thinking Labor will take away the rebates.' Clearly people had a right to be scared. Repeated betrayals have proven they could not then and cannot now trust a single word anyone in this government says.

The Prime Minister to be, Kevin Rudd, made the same commitment in a letter to the Australian Health Insurance Association in 2007. How many more times do you have to say it? Far worse, however, have been the repeated attacks on aspirational Australian workers and working families that are simply part of a wider national Labor assault, highlighted by that 2011 budget.

But the greatest risk carried in this legislation is to the health system itself. According to the government's Australian Institute of Health and Welfare, total expenditure on health goods and services in Australia in 2008-09 was estimated at $112.8 billion. Recurrent expenditure was $107.1 billion, or 94.9 per cent of total expenditure. This equated to nine per cent of Australia's GDP. Of that funding, $49 billion came from federal government funding and $30 billion from state government funding. The remaining $34 billion was privately funded and included $19 billion paid by consumers themselves in using services, $6 billion from other non-government sources and $9 billion from private health insurance funds. According to the Private Health Insurance Administration Council, as at 30 June 2011 private health funds are paying out $15 billion in health benefits to provide for the needs of the nearly 12 million Australians who carry private health insurance. That is over half of the Australian population. Of these, some 10 million have hospital cover, which accounts for about half of these costs. An Econtech report said that every dollar of funding provided for private health insurance rebates saves $2 of costs that are then paid by private health insurers.

The question we should be asking today is: how many of those people who are investing in their own health by taking private health insurance will drop out or reduce their cover because of the changes proposed by the government? What cost this will add to the public hospital system and allied health services and how will this increase waiting times? In a regional area like my own, these are very relevant questions. It will also impact on all Australians with private health insurance. Those taking that responsibility will face higher premiums in the future.

The Deloitte report released by the Australian Health Insurance Industry Association in May this year stated that 175,000 Australians would drop private health insurance within a year of means tests being applied. The fact that millions would withdraw or downgrade cover over the next five years would prove disastrous for the health system as a whole. Specifically, Deloitte found:

Significant numbers of consumers will withdraw from their private hospital cover (1.6 million consumers over five years) or downgrade to lower levels of private health cover (4.3 million consumers over five years) following the proposed policy change;

Significant numbers of consumers will also withdraw from their general treatment cover (2.8 million consumers over five years) or downgrade to lower levels of private health cover (5.7 million consumers over five years) following the proposed policy change;

Private health insurance premiums will rise 10 per cent above what would otherwise be expected. As premiums rise, private health cover will become less affordable for all consumers—

That is something we all should be very concerned about—

that is, not just those who are in the tiers;

As people withdraw from private health insurance, the burden on publically provided healthcare rises. The findings indicate that the cost of treating consumers in the public hospital system are expected to rise substantially above what is currently anticipated by Government—Deloitte estimates that additional operating costs accumulated over five years will be $3.8 billion and $1.4 billion in the fifth year alone.

In time, it is expected that the cost of servicing increased demand for public hospital services will outweigh the savings to government from the means testing of the rebate.

In addition Anop Research Services Pty Ltd was commissioned by the Australian Health Insurance Association to conduct a detailed survey of the private health insurance population regarding the federal government's plans to means-test the private health insurance rebate.

Their report found:

There is likely to be a significant drop-out from private health insurance—up to 13% in hospital cover and up to a larger 18-21% in general treatment cover, to the extent that ancillary service providers (dentists, optometrists, physiotherapists etc.) will be severely impacted.

There will be an even bigger impact on the private health insurance industry as a result of the numbers who will downgrade their level of cover—at least 24% in hospital cover and at least 34% in general treatment cover.

Drop-outs and downgrades are likely to be higher among the healthier groups, leaving a pool of less healthy members in the privately insured population.

The public hospital system will be likely to feel the impact of the potential consumer drop out, with the Medicare Levy Surcharge not a strong driver to remain in private hospital insurance.

The government owned insurer, Medibank Private, has predicted that 37,000 of their members alone will drop their cover and 92,500 will downgrade. That is from the government's own private insurer. I understand that the AMA is also on record saying that a million people will drop their private cover.

There can be no doubt that the public health system will have to pick up the pieces of this policy by treating those clients who withdraw from private health insurance. Of course, the federal Labor government is counting on the fact that much of this additional cost will fall directly onto state governments providing public hospital services. State governments around the country are extremely concerned, and rightly so. This is basically an underhand piece of cost-shifting and it should be exposed for the public to see exactly what it is. Why is this government continuously punishing people who work hard and take personal responsibility by sharing with the government in the costs of their own health service provision?

The question before the House needs to be simplified to its core elements. The coalition believes in respecting hard work and letting people manage their own affairs. The government's actions continue to show the opposite.

In my electorate I have quite a number of people who pay private health insurance. I have received from my constituents a petition with thousands of signatures demanding that this bill be opposed and, so, I oppose this bill.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2011. It is interesting listening to the member for Forrest quoting all the Liberal Party's mates in the AMA and private health insurance rather than Treasury figures, which show that only 27,000 people will drop out. In fact, the Ipsos syndicated survey, Health care & insurance Australia 2009, released in November 2009, said that even fewer people, approximately 16,000 people, would drop out of private hospital insurance, which is much fewer than estimated by the Treasury. What the member for Forrest was waxing lyrical about was the notion that this would put pressure on the public health system. In fact, the 27,000 people who could drop out of private health insurance would, according to Treasury modelling, result in about 8,500 additional public hospital admissions over two years. That sounds like a lot, but it is not when you consider that there are about 4.7 million admissions each year. So the impact is very small indeed.

We took this particular policy to an election. In fact, we tried to get this legislation through in the last parliament. The bill was introduced into the House of Representatives on 27 May 2009. It passed on 2 June 2009. Then it was introduced again on 19 November 2009 and was passed again on 3 February 2010. So do not come into this place and say that we have not talked about this previously and that somehow we have broken a promise. We took this to the last election. The Australian public knew what we were going to do about this. We are bringing this legislation forward. The fundamental question that should be asked in relation to this is: what sort of health system do we want in this country? Do we want a health system that provides for only the rich or a health system that provides for the many? What sort of equity do we want in our health system?

Families and individuals who pay private health insurance premiums are eligible for the 30 per cent private health insurance rebate that was brought in by the previous coalition government. Anyone who pays hospital or general private health insurance premiums for a complying health insurance policy to a registered health fund can get a 30 per cent reduction on the cost of their private health insurance. That policy, as I said, was brought in by the previous coalition government.

We have always said that that policy was one that effectively favoured the wealthy rather than the poor and workers. The truth is that that health policy is typical of the health policies of those opposite. They took $1 billion out of the health system when the Leader of the Opposition was health minister. The first act of the previous coalition government—and this was not just about health—was to immediately hit pensioners with an 18.5 per cent price hike for drugs listed on the PBS. That was in 1996. That was the first thing that they did when they came to power. And all through the time that they were in power they tried their level best to systematically dismantle the Medicare system.

Medicare exists in this country because the private health insurance industry failed. In fact, in those countries where private health insurance dominates, such as the US, they spend on average about 17.4 per cent of their GDP on health costs. In Australia, we spend about nine per cent. It is about nine per cent in the OECD. And those countries with a more socialised public health system are countries where there is greater equity and fairness. Health costs in Australia and in other nations with a generally more socialised approach are less. In countries without that, the private health insurance companies have more power and run the show. Anyone who does not think that the private health insurance companies do not run the show when they are powerful should look at the United States and how difficult it was for the Obama administration to get through more affordable health care. That was fought tooth and nail by the private health insurance industry.

We are not saying that the health and hospital system in this country should not be a mix of government funding, private health insurance, out-of-pocket expenses and third-party payments. But we are trying to reset the balance, because at the moment we have got a situation in which electors in my electorate of Blair in South-East Queensland, who on average earn about $57,000 a year, are effectively subsidising people in Toorak and Vaucluse and giving them a benefit. The $2.4 billion that we will save as a result of this initiative will over the next three years pay for about 13,000 doctors and 26,000 nurses.

This government has a history of implementing great health reforms. Those opposite think that you should defund health; disinvest in it. That is what the Institute of Health and Welfare Found in October 2007 just before the 2007 election. They confirmed recently that this government has increased the proportion of the budget spent on health. We have increased health expenditure in this country to about 9.4 per cent of Australia's GDP. This government has made a massive investment in health. Over the next so many years we will spend about $19.8 billion extra in health. That will fund things from GP superclinics to more doctors, to more nurses, to more cancer clinics. Those are the consequences of this government's commitment to health care as opposed to the lack of commitment by those opposite.

We are making modest changes here. But we are saving the taxpayers about $100 billion over the next 40 years through this initiative. The cost of the private health insurance rebate has blown out from about $2 billion to about $4.7 billion. It is a very big impost on the Australian taxpayers. We want to get back to surplus. We want to reduce the size of government debt. We want to do that because it is the responsible thing to do. As the Treasurer has said many times, you cannot be a Keynesian in just the good times; you have to be a Keynesian in the good times and the bad times, expanding in bad times and contracting in good times.

The trouble is, when it comes to this particular legislation, which will affect or impact only a few hundred people in my electorate, those opposite do not quite get it. What they are arguing is unethical and unfair. They know that. If they came to government and reversed it, they would immediately put a huge burden on the taxpayers. The $70 billion black hole would be added to. In the last few days, we have seen the Leader of the Opposition and the shadow minister for health asked repeatedly on radio and TV—and it has not mattered on which program, whether it is Capital Hill, Sky or Meet the Press—and in the print media to say that if they were in power they would reverse this legislation. They have not answered. On the carbon tax and the mining tax they get all bolshie and almost 'go to the mattresses'. It is almost like The Godfather, the way that they go on: it is sealed in blood that they will change it all. Here, they will not commit. They will not commit because it will add to the black hole that they already have. Remember, they are starting $70 billion below us. They know it is unfair but those opposite come in here, giving speech after speech, quoting their mates, quoting surveys and research done on their behalf. It is so typical of the coalition. They are never on the side of the workers; always the wealthy. They are never for the masses or the many; they are always for those with money. And that is exactly the situation here. Why should people in poorer electorates and workers earning, say, $20,000 or $30,000 a year be subsidising millionaires? Why should they? It is wrong to do so. I think it is simply outrageous.

I do not often quote the Australianin speeches in parliament, but I thought Mike Steketee was brilliant in his analysis of this matter on 11 February in the Australian. He talked about this rebate and he described it as 'one of the most unfair government subsidies ever devised'. I agree with what he has to say. He blows open the lie about it. The argument from those opposite—and I have heard it said many times—is that what they did when they brought in the private health insurance rebate was induce people to go back into private health insurance, to raise the number of people who were covered. But Mike Steketee makes the point that that is not the case. He makes the point very well, and I urge anyone who might be listening to this speech to read his article. He talks about the fact that one of the things that induced people to increase their coverage, or take out coverage in the first place:

… was lifetime health cover, under which people older than 30 pay a penalty for every year they delay joining a health fund.

And the second thing, he said:

… was a large, government funded advertising campaign urging people to "run for cover" to ensure they were protected by private insurance.

He is absolutely correct in that regard. And he put it well:

In other words, it was not the now almost $5bn-a-year rebate that produced the rise in membership, but two other initiatives that cost the government hardly any money.

But those opposite, when it comes to this particular issue, really have failed. They have argued with faulty research, they have used faulty argument s—the facts do not bear out what they have to say. The truth is that what we are seeing here is a government that is committed to making sure that there is greater equity in the system.

It is always curious to me that, when it comes to health or economic issues, those opposite always argue that they are the great economic managers of the Australian public purse. We know, and the Treasury figures make it clear, that under this government the average tax-to-GDP ratio is much lower than it was under those opposite. In fact, the Howard government, proportionately, were the biggest-taxing government in the history of the country. And they did that, of course, without spending on infrastructure, schools and public hospitals. They did not invest. The public know this, because they are seeing schools being rebuilt, they are seeing hospitals being rebuilt, they are seeing roads and ports being built—there has been a doubling of funding in my home state on roads, ports and infrastructure.

When he oversaw the health budget the now Leader of the Opposition chose to spend the money that he got on subsidies rather than on hospitals and primary care. And what we are seeing here today is simply the coalition saying no yet again: 'no' to good public policy, 'no' to good economic management, 'no' to low- and middle-income earners—just as they said 'no' to a rise in superannuation from nine to 12 per cent for all Australians. They are really effectively saying no to health reform, just as they said 'no' to GP superclinics, 'no' to Medicare locals, 'no' to GP after-hours hotlines, 'no' to the NBN. But all we see is a 'yes'—for subsidised health insurance for the wealthy.

They claim the high moral ground on financial matters, but on this particular policy I think they stand condemned. They really have failed. There is no justification for their position. They know that very well. I do not understand why people in electorates like Wide Bay, Maranoa and Wright in Queensland, which are not wealthy areas, are represented by Liberal-National Party members who really should know better. We know how important it is to say yes to good public policy, good health policy and good economic management. But they are saying no to good health policy and good economic management. By saying no to a fairer private health insurance system they are effectively giving rebates to the rich. I do not understand why people of Somerset or Ipswich who are in those positions should be doing so.

Is it fair that a family earning $65,000 living in Bundamba, in my electorate, who cannot afford private health insurance, should be paying to subsidise millionaires? I do not get that. In all good conscience, they cannot hold to their position. They cannot hold with integrity, good character and truthfulness to their position. I do not understand why they do. Means-testing the private health insurance rebate is a system that brings fairness and equity. Means-testing is the only conscionable way—the carrot-and-stick approach does work. People earning $83,000 or less, or families earning $166,000 or less, effectively will not be affected.

So I support this legislation. I think it is fair. I think it shows, once again, that the only 'liberal' thing about the Liberal Party is the liberality with which they pay money to the moneyed in this country. I support the legislation.

Jamie Briggs (Mayo, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | Link to this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2011 and associated bill, which are before the parliament for the third time. It really is another example of a government that has failed to be honest with the Australian people about its intentions prior to an election—because, again, it told the electorate something very different to what these bills seek to do prior to the 2007 election, in the clearest of terms. The former Prime Minister and soon to be again Prime Minister, the then Leader of the Opposition, the member for Griffith, wrote to the Chief Executive Officer of the Australian Health Insurance Association on 20 November 2007, just prior to that election, and made it very clear, for those seeking clarification on federal Labor's policy regarding private health insurance:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

He went on:

Federal Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge.

Labor will maintain the existing framework for regulating private health insurance, including the process for approval of premium increases. Zero per cent premium adjustment is not Labor policy.

They made very clear to the Australian electorate before the 2007 election that this policy would be kept in place. In addition, on 26 September 2007, the then shadow minister for health and now Attorney-General put out a media release that said:

Federal Labor rejects the Liberal scare campaign around the Private Health Insurance rebates.

The Liberal Party scare campaign this morning reared its head in South Australia.

On many occasions for many months, Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private Health Insurance rebates …

So their intention prior to the 2007 election was very clear: they would not change this. Yet this is the third time we have seen this bill before the House. It is of the ilk of the there-will-be-no-carbon-tax-under-a-government-I-lead promise and is consistent with the way that the federal Labor Party refuses to take seriously its commitments to the Australian people. Prior to an election Labor says one thing to get elected and then does the very opposite afterwards. We have seen it with issue after issue. Labor refuses to be honest and upfront about how it intends to govern after an election. Instead, it says what it feels that it needs to say to people before an election.

There are very good reasons why this means-testing will have a genuine effect on the private health insurance system and, therefore, on the public health system. We heard the previous speaker make the point that anyone earning over $80,000 is now rich. They could not possibly be someone that the Labor Party would be interested in, because they are rich and can sustain themselves, so there is no need to help with policy for those people. The Labor Party campaigns against the rich—we hear it every day in here. It campaigns against aspiration and it campaigns against people who try to make the most of their own ability. Now it is trying to make it harder for people who earn over $80,000.

We in this place all know that families in Australia who have an income of $160,000 are not rich. Particularly in our big cities, like Sydney, Melbourne and Brisbane and even in Adelaide, the cost of living for those families is quite high. So things like private health insurance become very real choices for those families. That will be a real outcome of this bill if it is successful, and that is why we oppose it. If you take away this assistance, people will look at the discretionary spending they have—private health insurance fits into that area, particularly for those people who can afford it. They will look at their budgets as things get tougher from the impacts of things such as the carbon tax and, sadly, job losses throughout our country. They will start to look at their budgets and decide whether they should keep things like private health insurance.

Some of us know that the make-up of the insurance pool is very important in setting the price of premiums. If you take away the people who pay substantially for it and do not use it very much, you will impact enormously on the costs. If those people do not have an incentive to continue with their private health insurance it will lead to increasing pressure on the public health system. We often hear from the Labor Party the line that apprentices should not be paying for rich people's private health insurance subsidies. What the Labor Party fails to mention when it says this, or when it uses this example, is that apprentices will find it even harder to get health care if you take away the incentive for people to be in the private health insurance scheme in the first place. We want people who can afford to use the private health system to do so, because it takes pressure off the public health system. We want the apprentices to be able to access those services. They are the people the public health system is there to help. It is a safety net to ensure that people throughout Australia are well cared for.

If you make it harder on a government's budgets—and we know that with an ageing population we have a demographic challenge; we have a structural deficit coming at us—it will get harder and harder for those services to be delivered. So the example that is used, the class warfare example that we hear day in and day out from the Labor Party, actually backfires on the very people Labor claims it represents. It backfires the most on people such as the apprentices. If private health insurance is a discretionary payment, if someone can decide not to have it because they do not need it and so take their money out of the insurance pool, it will impact on the price significantly. It makes it harder for those older people in our society who scrimp and save to pay their private health insurance; it makes it very difficult for those people to continue with it. It puts more pressure on the public health system and it has a major impact on the ability of governments to deliver the universal service that we in Australia are used to and expect for the apprentice who is often cited in this chamber.

When we hear these arguments, we must look beyond the spin of the Labor Party. Putting aside the broken promise, the impact of another broken promise on the trust that people have in this government, people do not trust what the government says. They cannot trust that the government will deliver what it has said before an election that it will. Whether it be on the carbon tax or on this issue, the government cannot be honest with the Australian people about its intentions. We know that it cannot manage a budget. That is why we are in this position and why we are debating this bill again. Having been in the fiscal position of being $20 billion in surplus some five budgets ago, we are now some $300 billion in debt. We have a net debt approaching $140 billion, if the government does not spend any more money in the coming months, under this budget. We know that the Labor Party does not know how to manage its budget properly. We had the hilarious situation just two weeks ago when the Prime Minister delivered a speech about fiscal responsibility, about making the hard decisions, and then announced another uncosted spending promise. The Labor Party cannot make the right decisions to manage our budget, and it impacts on issues like this. This is a cost-saving measure that the government is moving. It will have a genuine impact on people in my electorate because it will increase the cost of private health insurance for people. It will mean fewer people take up private health insurance. We have seen the statistics that have been released. That will have an impact on services, particularly in a state like South Australia and a regional area of South Australia where the state government is defunding hospitals like the Keith hospital, which is losing money. The priorities for the modern Labor Party seem to be sports stadiums and not health services. This decision will make it harder for people in my electorate and harder for people in regional South Australia, who are already coping with fewer health services because of the way this is managed.

We know that every dollar funded by private health insurance saves two dollars of costs in the public system. Private hospitals treat 40 per cent of all patients in Australia. In 2009-10 they treated 3.5 million people who had chosen to have private health insurance, taking that pressure off the public system. They perform the vast bulk of the elective surgery. We hear often about waiting lists for the public elective surgery system, and this funded private health insurance system assists in taking that pressure off. So that is another impact we will see through this bill if it is successful in this parliament. As the Leader of the Opposition said, we will fight this bill because it is an important policy matter to ensure that we have a sustainable funded health system to look after those people who are often quoted by those on the other side.

The impact of this bill is that 2.4 million will be directly affected by these changes and face immediate increases in their premiums—14, 29 and 43 per cent, depending on their income tiers. A 2012 survey found that 64 per cent of the population believe that the $4.5 billion a year the government spent on the rebate was a good use of taxpayers' money, and of course using taxpayers' money involves choices about what the role of government is. This is an important role because this is about taking pressure off the public system. This will impact enormously on the ability of the private health system to cope with the changes with people's choices about whether they keep cover or not.

It is, as a starter, another breach of trust. A direct letter which could not be any clearer from the member for Griffith, the now Foreign Minister, when he was leader of the Labor Party said they would not do this. Yet this is the third time the Labor Party have sought to breach that promise in this parliament. It is the third time they have sought to bring additional costs on already struggling families in our country, those they describe as rich, those families which we say are the people who are the backbone of our society. They try to put more pressure on those people by this decision, a decision based largely on their class warfare approach to politics and their inability to manage the budget. It is a bad decision; it is a bad bill. It should not be supported. It will impact on our future opportunities and will impact worst of all on those whom these people claim that they represent.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

It will be no surprise to this parliament that I will portray a very different picture than the picture that was previously portrayed by the member for Mayo. I do not portray it from any class war point of view but from the point of view that funding health is about funding health, not funding insurance. I have great pleasure in rising to speak on the Fairer Private Health Insurance Incentives Bill 2011 and associated legislation that we have before us today. It is very important legislation because the introduction of means-testing does provide a saving, and that saving will go directly towards delivering health services to all Australians. The proposed measures that are being introduced in this legislation are means-testing of the private insurance rebate and also increasing the Medicare surcharge levy, which I did not hear the member for Mayo speak about. That is the incentive part of encouraging people on higher incomes to retain their private health insurance.

It is a whole package of legislation that we are debating here today. Yes, it has been introduced to the parliament before. It has passed through the House on a number of occasions but it has not passed through the Senate. I am a strong supporter of this legislation because I believe that, as I started my contribution to this debate by saying, when dollars are allocated for health they should go into health, not into insurance. The means-testing will make the rebate fairer. Approximately 14 per cent of single taxpayers have incomes over $83,000. I do not think that they are wealthy people but I think that they are more able to contribute to their private health insurance than the pensioners in my electorate who struggle each day to be able to pay for their private health insurance. I think that they can afford to pay a little bit more for their private health insurance than a pensioner who is on under $700 a fortnight or a pensioner couple who receive in the vicinity of $520 each a fortnight. For them, finding up to $300 a month to pay for their health insurance is a lot more difficult than it is for a single person in receipt of an income of about $83,000 a year. I have to say that any increase in health insurance does impact on all those people who scrimp and save to be able to pay their insurance, as opposed to somebody who has a lot more disposable income. When you have disposable income you can make a decision as to how you want to spend that income, but if you are on a fixed income and a lower income it is harder.

The other aspect of this legislation that I alluded to at the beginning of my contribution is the Medicare levy. Somebody on a higher income, a single person who receives $83,000 to $96,000, will have to pay a Medicare levy of one per cent if they withdraw from private health insurance. The incentive to retain their private health insurance is that they do not have to pay the levy, so it will cost them if they withdraw from private health insurance. Similarly, about 12 per cent of couples—taxpayers—have incomes above $160,000 and they currently receive approximately 21 per cent of the private health insurance rebate. I do not think that is fair. I think that that private health insurance rebate should be directed to those people with the greatest need. This is not class welfare; this is about ensuring that people who can afford to pay do pay and that those who need the rebate actually receive it. That is very fair and very straightforward. It is not about ensuring that those at the top end have their private health insurance contributions covered by a rebate.

I will give a snapshot of my electorate of Shortland. In Shortland, 49 per cent of the residents have private health insurance. I am one of those. I am also one of those that the rebate will impact on. I think that is fair. I think it is fair that I should have to pay a little bit more because I know that, of the 49 per cent of people in the Shortland electorate who have private health insurance, a very high proportion of those people are pensioners. Shortland is the 11th oldest electorate within this parliament, which means that a very high proportion of people living there are pensioners. I know that when I have a young person who comes to see me who is on a higher income and a pensioner, it is invariably the pensioner who has the private health insurance. This legislation will not impact on those pensioners in any shape or form.

I also decided to have a look at the income composition of the Shortland electorate. The proportion of families in the Shortland electorate who are earning under $650 per week is 29.2 per cent. That is an incredibly large percentage of people on a very low income. Of those, I know that there are a large percentage who do have private health insurance. The median income in the Shortland electorate is $1,046, which would put the median annual income of people in the Shortland electorate well below that $83,000.

I also know that there are a number of people in the Shortland electorate who need medical services and they have to wait to be able to get those medical services. It will benefit them a lot more if the money is spent directly on health rather than on subsidising my private health insurance. To me, there is no question about the best way to spend your health dollars.

It is interesting to note that the 2010 Intergenerational report said that the private health insurance rebate is the fastest growing component of the Australian government's health expenditure and will increase by over 50 per cent in real terms for the period 2012-13 to 2022-23. That is not how we should be spending our health dollars. We should be spending our health dollars on delivering to those Australians who need a bed in a hospital, who need an operation or who need to be able to see a doctor when they are sick. That money should not be spent delivering money to private health insurance.

The Gillard government, and the Rudd government before it, has sought to rebalance its policies in the area of private health insurance. That is what this legislation is about—rebalancing. It is about trying to ensure that Australians maintain their private health insurance whilst at the same time taking the subsidy away from those people who earn more than the pensioners I referred to or more than the people on $83,000 a year. Those people, I think, can make a little bit more of a contribution to their own health insurance. I know members on the other side of the House are always very supportive of user-pays systems, so I think that those people who can afford to pay, can pay a little bit more for their contribution.

The rebate will remain unchanged for low- and middle-income earners. The pensioners in the Shortland electorate will not have to pay any more for their private health insurance. Those who have no private health insurance will be able to access services in their public hospitals a lot quicker because the money saved from putting money into insurance rebates—the fastest-growing component of the Australian government's investment in health—will go to the delivery of direct health services. That is very, very important. The changes in the Medicare surcharge levy are, once again, an incentive to ensure that people on higher incomes, not necessarily on super-high incomes, who can afford to make a contribution will have that incentive to retain their private health insurance. There is also another incentive for people to retain private health insurance, and that is the fact that we have Lifetime Health Cover, which has not been talked about very much in this debate. Lifetime Health Cover means that if you take out private health insurance by the age of 30 you pay less than if you take it out over the age of 30. For every year after that there is a two per cent increase in the cost of your private health insurance and after you join there is a 10-year moratorium on it. So if you take out private health insurance at the age of 40 you will be paying 10 per cent more than somebody who takes it out at the age of 30. This is about rebalancing, as I mentioned a moment ago, and encouraging younger people to take out private health insurance earlier, particularly younger people with greater disposable incomes.

These reforms will provide a fairer distribution of benefits, ensuring that all those people who need assistance with their health insurance rebate obtain it and that those who can afford to contribute do so. This will result in savings of $2.4 billion for the government over three years, and $2.4 billion invested in health will make a real difference to health services on the ground. I know, coming from my electorate, that there are many people who would be advantaged by having greater access to services. It is all about greater access, more money put into primary health care and a better balance of the health system. I do not think there has ever been a government that has put more into rebalancing the health system in a number of ways than the Gillard and Rudd governments.

The previous coalition government brought The Blame Game report to the House Standing Committee on Health and Ageing. That identified a number of problems. There were problems related to insurance. They did nothing. The Gillard government and the Rudd government have acted to put money directly into health and to resolve the problems in the health system that the previous Howard government refused to address. This is good legislation and it should be supported by all the members of this parliament.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Immigration and Citizenship) Share this | Link to this | Hansard source

I rise to speak on the measures that are outlined in these bills—yet again. This is not the first time that this government has sought to force these measures on this House. Here we are again having the same debate. The government simply does not seem to get the point. I rise to speak on these bills because our position on these bills has been a matter of faith for the Liberal Party for a very long time. We have always sought to encourage and reward people who seek to take responsibility for themselves and to support those in their family and around them in their community and other places. These bills are very much an attack on that notion of self-reliance in our community.

More significantly, though, is that these bills before us again show that it is another day under this government and another Labor deceit. This is another broken promise thrown on the scrap heap along with the infamous words we all know so well in this place—and, more importantly, which are known well beyond this place—that there would be no carbon tax under the government the Prime Minister led. That is a reality, and the promises that were made to the Australian people prior to 2007 have also been broken in the way the carbon tax pledge was broken by this government. Minister Roxon said in a release prior to the election when she was the shadow minister that:

… Federal Labor has made it crystal clear that we are committed to retaining all of the existing private health insurance rebates …

She did not say 'some' or 'one' or 'two'; it was a categorical statement on all of the existing private health rebates.

She claimed:

The Liberals continue to try to scare people into thinking Labor will take away the rebates. This is absolutely untrue.

Clearly this is a total breaking of that pledge to the Australian people. Those who sit in this place and like to think that they hold the government to account and keep them honest should oppose this bill if for no other reason than to make this government understand that you cannot go to an election and make a promise of this nature and then so flagrantly and blatantly walk away from it on the other side of an election. For those who sit in this place who like to hold themselves up as pillars of virtue in ensuring the credibility and integrity of this chamber, in holding government to account they must oppose this blatant deceit by the government in bringing these matters before this House. Clearly, Labor’s word and its promises to the Australian people mean absolutely nothing, as demonstrated again in these bills.

Here we are today faced with yet another attempt by the government to means test the private health insurance rebate—a measure the parliament has already rejected twice. These are dishonest bills. Contrary to the position being put, including by the former speaker, abolishing incentives for private health insurance is not about more funds for health. That is not what it is about. That is not what is being provided for here. That is the spin that they want to put on it for the Australian people, but it is not what is being provided for. Abolishing incentives for private health insurance, which these bills of this government propose, in breach of their promise, is about taxing Australians more. It is about taxing Australians more, yet again, to pay for the waste and mismanagement of an incompetent and failed government. The health tax we now have in the form of this bill, the carbon tax and the mining tax are all about this government reverting to its old Labor type of taxing and spending. We see it yet again in the nature of these measures. Nothing is safe from this government's wrecking ball. People will pay a price for a carbon tax that they do not need and certainly do not want, because their Prime Minister deceived the Australian people. The bill before us would not only put more pressure on the budgets of Australians, who are already doing it tough under this government's policies; it would also put further strain on our public health sector, which is already pushed to the limit, a problem which this government pledged to solve.

Should these changes come to pass, Australians will be faced with a choice of struggling to pay for health insurance, which many cannot afford, or being forced into a queue at an increasingly overcrowded public hospital as a result of these measures because this government has, once again, gone back on its word.

Our health system is finely balanced. I note that the former Labor speaker, the member for Shortland, said the government does want to rebalance it, in another effort of this class-envy struggle that it fabricates and perpetuates in this place but that has no place in this country. Those days went long, long ago.

The reason for what the government describe as their 'great departure' has long departed. They sit continually on this notion of class warfare and envy. They need to move on. Those days have passed. Australia is a different society today where people can actually move forward, take responsibility for themselves and their families, provide for themselves—and they should be encouraged to do so. That is the Australian way and it is being objected to in this bill.

The private and public sectors are inextricably linked. They depend on each other to meet the needs of our community. This is an important part of our health system. We do not just have a public health system, and neither do we just have a private health system. One thing that has been very successful in this country, although not perfect, has been the nature in which we have fostered the development and investment in both parts of our health environment. It is important that we have people operating on the private side of the healthcare industry and in the provision of health care as well as they operate on the public side. A change of this magnitude to the cost of private health insurance cover will only drive people out of the doors of private facilities and onto the waiting lists in overstretched and under-resourced public sector facilities.

In June last year, Minister Roxon said the proposal would only affect 'in the order of hundreds of thousands' because the means-testing plan was scaled. Three days later, it was revealed that more than 2.4 million Australians with private health insurance would be forced to find up to $935 extra a year for their premiums if the means test for the 30 per cent rebate were passed. That is certainly not negligible or minimal, as this government has claimed.

One in four of the 10 million Australians who have health insurance will be slugged by this measure. Perhaps the minister should take another look at her spreadsheet. In the order of 2.4 million people will be directly affected by these changes. They will face an immediate jump in the premiums by 14, 29 or 43 per cent, depending on their income tier.

This is typical arrogance from a government that clearly does not care about Australians who make an effort to look out for themselves—people who work hard to set themselves up for life and who make sure they can take care of their families when accidents happen or illness strikes. It is not just those on higher incomes who will feel the pinch of these hikes. Deloitte predicts that health fund premiums across the board will rise by 10 per cent for all those who are paying private health insurance. Public elective surgery waiting list times will surge by 400 per cent. This bill will have very real consequences for millions of Australians.

In 2010, private health funds contributed $12.4 billion in benefits towards the health care of 11.7 million Australians who held some form of private health cover. In my own seat of Cook, in Sydney's Sutherland shire, 72 per cent of residents are covered by private health insurance. That is more than 100,000 people in my electorate who are supported, assisted and provided with some relief from these measures. They do not ask for much and they are not asking for anything to be changed. They just want a fair go. They do not want this government continuing to whack them at every opportunity through some sort of class-envy driven agenda, which likes to somehow stereotype people in electorates such as mine or in other places as being rich, or things of that nature. It is just not true. More than 100,000 people in my electorate will be impacted by these changes.

Measures such as the private health 30 per cent rebate and the Medicare levy surcharge make private health insurance more affordable. They achieve two goals: easing the strain on wallets for those who choose to set aside money to look after themselves when they get sick and easing the burden on our public hospitals.

In my electorate, along a main road in the shire there are two hospitals that sit opposite each other at a set of traffic lights: Sutherland Public Hospital on one corner, Kareena Private on the other. I think this is symbolic of the way our public and private health systems work together. These two hospitals are seemingly independent of each other. They stand alone, yet they meet the healthcare needs of my constituents and service the growing demands of an ageing population in my electorate. They become inter-reliant. It is a finely balanced equation.

Private hospitals currently treat 40 per cent of all patients in Australia. Private hospitals perform the majority of elective surgeries. But if premiums leap and rebates are slashed and people cannot afford to meet those changes, something will have to give. People will literally cross the road, cross The Kingsway, to go from Kareena Private Hospital to the Sutherland Public Hospital.

Last year I was at the opening of some new facilities at Kareena Private Hospital. One point was made by the company that runs that hospital: the high level of private health insurance that exists in the Sutherland shire means they can make a positive business decision to continue to invest their private resources in improving the facilities and infrastructure for healthcare needs in my community. It is that high level of engagement and take-up of private health insurance in the shire that leads to that, and that is what is at risk.

The member for New England has been pointing out in regional areas that this bill threatens the operation of private facilities in attracting the specialists and others into regional areas because of the existence of private facilities. That is not just true in the bush; it is also true in the shire. It is true that, where there are high levels of private health insurance take-up, companies are more inclined to invest in increasing the level of infrastructure in private health facilities that are available to these constituents.

At the end of the day, this bill will mean more people sitting on seats in public emergency rooms rather than being in private hospitals. More people will take up beds in wards and places on waiting lists because they have no other choice. And our public hospitals will struggle to meet the demand. We are not just talking about one or two people. Deloitte found that, as a result of means testing, 1.6 million Australians would exit their private hospital cover over five years compared with Treasury estimates of just 25,000. Another 4.3 million will be forced to downgrade their level of cover, and the public sector will experience $3.8 billion in recurrent costs.

I received a letter from one of my constituents who is at the end of her tether. She is a single person earning over the threshold and she has sat down and done the sums like many responsible Australians have. She tells me that if her health insurance was to go up by much more she would have no choice but to drop her membership as she simply could not afford it. She writes:

… even though I am on what most would consider a good income, when you are the sole earner paying a mortgage … there is often no 'fat' in your budget to accommodate such increases.

She goes on to say:

I feel that I am working hard, contributing income tax, paying off my own home and paying for private health insurance. All these things ensure that I am not a burden on the state now or in the future. If health insurance premiums are increased so dramatically I will not be able to maintain the insurance and will have to give it up.

My constituent works in the public health sector and says very clearly:

I don't wish to add myself to an already overstretched system. However, if it comes down to being able to afford a roof over my head, the insurance will have to go.

These are real people doing it tough, and all they get from this government is another slap in the face.

Treasury estimates claim that savings from the means testing will equate to $1.9 billion over four years but, if you apply the basic principle of cause and effect, people exiting the private system en mass can only head in one direction. Deloitte estimates that the increased demand for the public hospital system over four years will cost $2.4 billion, so by the fifth year the total costs from this bad policy will exceed and outweigh the projected savings, something fairly common in tax increases that this government introduces. In estimates last year, Medibank Private revealed that for its company alone 37,000 customers would likely drop their private health cover because of the means test. Repeating this pattern across the nation's other 38 providers makes for a very grim picture.

Australians are living longer than ever before and preventative health has become immeasurably more important. Our healthcare sector needs to be more than just reactive. Making good lifestyle decisions is now critical. It is important to be proactive and have regular checkups, to be able to visit the dentist, the physio, the optometrist or the psychologist as needed to prevent problems developing down the track. This is just as important for the individual as it is for the society that cares for them. Preventable diseases account for almost 20 per cent of Australia's total health costs, and private health insurance has played a vital role in ensuring Australians have access to preventable health advice and services to save both pain and money in the long run.

This is what will be affected by the bill that is in front of us. This is what is at risk. This government has come into this place to introduce an envy driven measure simply to try to raise some cash to fund its ever-increasing blowouts. In my shadow portfolio alone, blowouts on border protection are almost $4 billion and counting. I do not think people should have to give up their private health insurance simply because this government cannot manage its borders, its finances or anything else.

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

Madam Deputy Speaker, I extend my appreciation for your assistance with my participation in this debate today. I support the three bills before the House: the Fairer Private Health Insurance Incentives Bill 2011, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2011.

It is my intention to briefly deal with the content of the bills that are before us and to put that on the record, and also to address both the implications for my own electorate and some of the arguments that have been presented in opposition to the bills. I acknowledge at the outset that those arguments in opposition have not been followed by a commitment to have a different position after the next election, so it will be interesting to see what the sustainability of those arguments will be.

It is proposed in these bills that there be three new private health insurance incentive tiers introduced with the intention of better balancing the mix of incentives for people to take out private health insurance. The proposed measures will, firstly, introduce means testing for the private health insurance rebate and, secondly, increase the Medicare levy surcharge for people on higher incomes who do not hold appropriate private hospital cover. The proposed private health insurance tiers will operate in accordance with new thresholds for the 2012-13 financial year if they are implemented on 1 July this year.

The reality of these new tiers is that a single person earning $83,000 or less will see no change. A family earning $166,000 or less will see no change. The changes to the rebate and levy commence at the first tier level for people earning $83,000 to $96,000 as a single and $166,000 to $192,000 as a family. There are two further tiers, so that for a single to not have a rebate at all they would have to be earning more than $129,000 while a family would have to be earning more than $258,000—that is, they would need to earn more than a quarter of a million dollars before the rebate was gone on private health insurance. The Medicare levy surcharge would continue for those three tiers at one per cent, but for people earning $86,000 or less as a single or $166,000 or less as a family there would be no change to the levy surcharge.

That is the proposition being put in place through these bills. It is a new means-testing arrangement and its intention is to make the rebate fairer and more sustainable over time. It has been a priority of this government to ensure that we get the balance right between government subsidy and personal responsibility regarding these sorts of costs, and we believe that that is what these bills do.

It is important to point out that the Treasury estimates, that contribute to these bills, indicate that 99.7 per cent of people are expected to remain in private health insurance under the combined initiative of these three bills. Around 27,000 individuals with incomes between $83,000 and $96,000 for singles and $166,000 and $192,000 for families may drop their private health insurance cover, according to the Treasury estimates. It is also important to acknowledge that there are 7.75 million Australians whose private health insurance cover will not be affected by the changes in these bills, and they are the people, as I indicated earlier, earning under their commencement tiers—that is, under $83,000 for singles or $166,000 for couples. It is also important to acknowledge that around 1.7 million adults—that is, 670,000 singles and 520,000 families—will receive a reduced rebate and pay a higher net premium. It is important to recognise we do not deny the fact that we are seeking a greater individual contribution from those we believe are capable of making it. Many on the other side have put the argument that this is about calling these people rich and not acknowledging the pressures on them of the cost of living. Far from it! It is an acknowledgement that people pay and contribute according to their capacity, and we believe in the tiered system that as people's income increase they have the capacity to make a co-contribution towards these particular levies.

I want to indicate what those figures mean for my own area of Cunningham. In Cunningham there are 1,060 singles and 520 couples who will be impacted by the changes to the tiers for the payment of the rebate. In putting this in the local context it also important to acknowledge that in my own area there has been an unprecedented investment in health—in particular, health infrastructure and the health workforce—that I had not seen prior to Labor coming to government and which certainly did not happen under the Howard government. Indeed, it did not happen under previous state Liberal governments in my area. I well remember for many years the western end of Wollongong Hospital being a hole in the ground. It had been dug out by the previous Labor government in preparation for a whole new wing and it remained a hole in the ground until a Labor government was re-elected and the new wing of the hospital was built.

I am also pleased that under a federal Labor government there has been a significant contribution to the capital for the Cancer Care Centre at Wollongong Hospital, and a significant amount has gone to the Shoalhaven outreach arm of that cancer care so that cancer services across our region are far more effectively delivered now than they have ever been. Only recently I announced new capital injections for a range of GPs in my areas to expand their own private clinics to be able to provide a wider range of services and more preventative health services than they were able to do previously. So there has been for the constituents of my area a significant increase in the health services being delivered. The new Medicare Locals and the new hospital boards will further see a better local responsiveness to those sorts of health needs.

It is true that there will be a percentage of people in my electorate who will look at paying a higher Medicare private health insurance payments than they currently do. I do not believe what I would consider to be scaremongering about the number of people that will drop private health insurance because they have to pay a bit more for it.

That brings me to the issue I want to address, in the last half of the time I have to address the bills before us, about the arguments that have been put in opposition to these bills. The member for Mayo spoke not long before I contributed to this debate. Broadly, there are a couple of things that the opposition are basing their arguments to these bills on. Firstly, they are putting the argument—it is a bit ho-hum, but to be expected I suppose—about broken promises, which they argue that this is. I indicate to them that this is the third time these bills have been brought before this House, and they were brought before this House before the last election. In fact, this is a continuation of an attempt by this government to deliver a better balance in this area. It was certainly clearly outlined as we debated the issue—as many of those opposite have pointed out—before the last election. So it is important that we put the record straight on what the history of these bills has been before this chamber.

Secondly, the argument by those opposite about whether or not people are rich—this sort of class-warfare debate—is a fairness debate. I sometimes find it quite astonishing that I stand in this place arguing about what I would have thought were long-term traditional Liberal Party values about self-resilience, self-reliance and getting rid of the hand of government in our lives. It was fascinating during the carbon tax debate to hear this side of the chamber arguing for a market based solution and the other side saying: 'No, we want a managed economy. We are going to pick and choose winners and where we put government money to address a problem.' Here we have the same thing again. Here we have our side of the parliament arguing that government should only be intervening and providing support where it is necessary and those on the opposite side arguing that it does not matter how much you earn, you have got a right to expect something from the government. I think most Australians are at a much more balanced position than that. They think that governments should provide support but they also think that people should be able to provide support for themselves and their families according to their capacity. That is what these bills are working towards doing.

I mention the member for Mayo contributing to the debate because I acknowledge that on 7 February he had a column in the Australian Financial Review where he outlined what I would have thought were the very arguments that would underpin the importance of this particular debate and provide support for the position that the government seeks to put in place with these bills. In this article the member for Mayo said:

Rather than lecturing European governments over their debt crisis, our Prime Minister would be better advised to tend to her own backyard. After years of waste and mismanagement, Australia's budget future hangs in the balance.

Many of Europe's debt problems are due to popular but overly generous social welfare programs.

Most commentators now acknowledge that European governments have been writing cheques for years without any consideration of whether they could afford to do so. This has resulted in an intergenerational debt crisis.

Unfortunately, Australia's long term fiscal position is in danger of being placed in an eerily similar position because of a growing government-driven culture of dependence.

I was quite surprised, therefore, when the member for Mayo got to his feet. I anticipated on the back of this writing and public contribution to public policy debate that he was about to announce that he was supporting these bills, because these bills do exactly what it is that he was arguing in his column good government policy should do. He further quotes the Leader of the Opposition:

Tony Abbott's framework economic speech last week made a fundamentally important point: governments should do only what people can't do for themselves, and no more.

That is exactly the foundation and the concept behind the bills before us. I am astonished that those opposite would continue to oppose them, except that it is clear it is purely a political position.

Finally, in the few minutes I have left I want to address the final argument which is that this opposition to the bills is about greater good for all because all of these people will drop out of private health insurance, they will all be back onto the public system and therefore it is an impost on everybody, not just on those who are on the higher tiers of income. The reality is that this drop out has never happened previously. In 2008, when the government increased the Medicare levy surcharge threshold, there were insurers predicting that 913,000 people, about ten per cent of those with hospital cover, would drop their private health insurance as a result of the threshold changes. That was a PricewaterhouseCoopers report commissioned by the insurers peak body.

The opposition spokesperson on health said that one million people would leave private health insurance as a result of that change. The reality is that that drop out never happened; instead, the number of people with hospital-level private health insurance has steadily increased since that time. As at September last year, 10.4 million people in Australia have hospital cover. That is the highest number since the introduction of Medicare. Even the evidence of what has happened with previous changes to the levy surcharge does not sustain the scare campaign of those opposite. These are sound bills based on good health policy, sound economic management and good fiscal responsibility. It is astonishing that those opposite continue to oppose them. We can only assume that they do it for gross political benefit.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

Once again, I stand in this House to speak on a bill that is a direct result of another broken Labor promise—the Fairer Private Health Insurance Incentives Bill 2011 and related bills.

I would like to start by reading a letter sent to the honourable Dr Michael Armitage, the chief executive of the Australian Health Insurance Association, dated 20 November 2007 and signed by the then leader of the Labor Party, Kevin Rudd:

Thankyou for your letter of 29 October 2007 seeking clarification on Federal Labor's policy regarding private health insurance.

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions … that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

Federal Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge.

Labor will maintain the existing framework for regulating private health insurance, including the process for approval of premium increases …

I understand Nicola Roxon's office has also confirmed with you that Federal Labor has no plans to require private health insurance funds to make equivalent payments to public hospitals for patients who elect to be treated as private patients.

I think this clearly bears out my opening comments that this is another broken Labor promise. Contrary to that letter, we stand here today witnessing another betrayal of the Australian people. This is a government that continues to go back on its word, continues to break promises and continues to implement bad policy aimed at increasing the cost of living for every Australian.

Proposed within this bill is a provision to implement three new income tiers. It is interesting to look at the part of the argument that says that the poor are subsidising the rich and there is inequity in the system. Let us have a look at some real figures. If you are on an income of $30,000 per year, you are paying approximately $4,000 per year in tax and Medicare levy. If you double that income to $60,000 per year, your tax and Medicare levy payments go up to about $12,500 per year—that is three times more. If you triple your income to $90,000 per year, your tax and Medicare levy surcharges grow by five times. When we look at those figures it is quite clear that, in direct contrast to statements made by colleagues opposite, as you earn more income, you pay more tax and you pay a higher Medicare levy: you are already contributing significantly to the economic welfare of this country. People earning a lower level of income are certainly not subsidising those earning higher levels of income.

The tiers will determine the amount of rebate that families will be entitled to. We are facing increasing costs of living and higher taxes through the carbon tax coming in from 1 July and these add to the growing list of pressures that people are facing daily. That is the big concern. As was pointed out earlier, previous increases or changes may not have led to a large exodus from private health insurance. But we are in a different economic environment today. The key findings of the Deloitte report were that 1.6 million consumers would walk away from private health insurance and a further 4.3 million would downgrade their cover.

Even if those figures are not all realised, there is going to be a significant additional cost to our public health system at a time when it is already struggling to maintain pace with the requirements on it. In addition, the Australian Health Industry Association has conducted some phone polling. Of those people polled, around 11 per cent said they would drop their hospital cover and a further 24 per cent would downgrade their policies. More than half of those surveyed said they would drop their ancillary or general cover. This is very concerning at a time when we are looking to rein in the costs of our public hospital system and where we are looking for that system to be able to meet the pressures that are presently on it. This mass exodus from private health insurance will only add to that strain.

You only have to look at today's Gold Coast Bulletin to highlight this argument. There is an article talking about a 67-year-old lady who could not feel her fingers and waited for more than four years to see a neurosurgeon because she was classified as a semi-urgent patient. This woman is among 2,000 Gold Coasters currently waiting to see a neurosurgeon. In addition, neurosurgery and ear, nose and throat surgeries are all reported as having some of the highest waiting periods. Another article in the Courier Mail referred to the fact that parents of children with ear, nose and throat problems are being told to consider paying for private treatment despite living in one of the most disadvantaged areas of South East Queensland.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.