Kerry Nettle (NSW, Australian Greens) Share this | Hansard source

The Australian Greens oppose the private health insurance rebate because it is a scandalous waste of public money. It is money that should be spent on public health. In the committee stage today, on behalf of the Australian Greens I will move to abolish the rebate.

Earlier this month there was an article titled ‘The injustice of middle-class welfare’ which went into the issue of the private health insurance rebate. It described it as ‘the most poorly designed social policy measure of the past decade’ and as being ‘utterly regressive’ in its manner. In the next financial year, the government intends to waste $3.169 billion of public money on the private health insurance rebate. That is a clear budgetary decision that indicates that the government would rather subsidise the private health insurance industry and the wealthier Australians who access that industry with $3 billion than spend that money on ensuring that all Australians can access a quality public health system based on their medical needs rather than on their capacity to pay.

The Greens believe that we should have a quality, top-class public health system and that abolishing the rebate and redirecting the money into public health is a step that we need to take in order to head us in that direction. The private health insurance rebate has been a massive failure by the government in their responsibility to ensure that all Australians are able to access that quality public health system. Even by the government’s own standards, the private health insurance rebate has been a massive failure. They claimed that it would relieve pressure on the public hospital system, and we have not seen that occur. If, however, the private health insurance rebate was really designed as a mechanism to subsidise the private health insurance industry then they have achieved their goal with extraordinary efficiency. They have also created an efficient mechanism for both bolstering health cost inflation and transferring health resources to the wealthiest Australians.

The private health insurance rebate has always been a subsidy for the private health insurance industry and the wealthier Australians who access that service. Australian Greens’ research, based on a survey of more than 55,000 Australians by Roy Morgan Research, showed that 19.6 per cent of households with people earning below $20,000 a year have private health insurance, yet for households earning over $100,000 a year the average private health insurance uptake is 63.85 per cent. A recent article in the Australian Financial Review outlined some research on this issue by an economist who used data from the ABS. This research showed that more than 80 per cent of people living in areas with the highest socioeconomic index would have purchased private health insurance even if there were no rebate, yet only 10 per cent of people living in the lowest-rating areas would have done the same. The article stated:

The rich-poor ratio is a staggering 8 to 1.

It went on to say:

Those who don’t buy private insurance don’t get the rebate, but they still have to pay taxes, from which the rebate is funded ... The uninsured who use the public hospital system also suffer in at least two ... ways. First, they face a reduced level of services at public hospitals due to underfunding. The amount spent on the rebate could have been used to provide much needed funds for public hospitals.

Australians without private health insurance still require and are entitled to public health care services in our public system, but our public system is put under even greater pressure due to the over $3 billion shift in resources and personnel towards the private system, which has the cash flow to deal with less urgent or optional health care needs. These are additional arguments to support the Greens’ position that we should transfer the money for the 30 per cent private health insurance rebate to our public health system.

Greens’ analysis of the Roy Morgan data on the uptake of private health insurance in Sydney and Melbourne revealed that there is a massive gulf between the nature of the services provided in affluent regions of the city and those provided in areas where people with lower incomes live. These differences are particularly acute when you compare Commonwealth electoral divisions held by the Labor Party to those held by the coalition. There are also considerable discrepancies in the location of private hospital beds.

The Greens’ research showed that 14 Sydney based federal electorates held by Labor have 1,311 private hospital beds compared to 2,594 beds in seats held by the coalition. This equates to 913 voters per private hospital bed in Labor held seats compared to only 470 voters per private hospital bed in coalition seats. The data also showed the discrepancy in private health insurance cover between Labor and coalition held seats. In the 14 seats held by Labor in Sydney, an average of 27 per cent of the electorate has private health insurance, whilst in 14 coalition seats an average of 48.75 per cent of the electorate has private health insurance cover.

In Melbourne there is a similar story. In the 16 seats held by Labor, 37 per cent of the electorate has private health insurance, while in the seven coalition seats 51 per cent of the electorate has private health insurance cover. We also see the same pattern in private hospital beds. The seven Melbourne based electorates held by the Liberals have 2,135 private hospital beds—that is, 290 voters per private hospital bed. In comparison with the Labor held electorate, there are 3,763 private hospital beds—that is, 381 voters per private hospital bed. This analysis shows that the private health insurance rebate effectively means that Labor voters in Labor held seats pay for a subsidy that mainly benefits wealthy Liberal voters living in wealthier suburbs.

Given all these facts, it is astounding that the Labor Party continues to support the 30 per cent private health insurance rebate. I have certainly attended meetings with the ACTU where they have been calling for the abolition of the private health insurance rebate, because they are well aware of this discrepancy and are well aware that it is an inequitable subsidy from the government to the private health insurance industry and to wealthier Australians.

It is also noted in the Greens’ analysis that for both Sydney and Melbourne the number of private hospital beds decreases the further the electorate is away from the city centre—a pattern that continues outside of metropolitan areas. Rural Australians do not benefit from the private health insurance rebate. The rebate not only fails people on lower income areas but also particularly fails rural Australians. In rural parts of Australia, private health insurance cover is very low.

On the weekend we heard Nationals leader Mark Vaile at the New South Wales Nationals state conference calling for additional health funding to be directed to rural and regional hospitals. Such additional funding is desperately needed and is something that the Greens and other organisations, like the Rural Doctors Association, have been calling for some time. But, if you look around for those much-needed public health funds, the elephant in the room is the over $3 billion of public health funding that is spent each year on the private health insurance rebate. If the National Party are serious about alleviating the shortage of public health care services in rural and regional Australia—as they talked about on the weekend—they need look no further than the private health insurance rebate and the $3 billion of public funds that sit there and are spent subsidising the insurance industry each year.

The Australian Greens’ research, based on a survey of more than 55,000 Australians by Roy Morgan, showed that the private health insurance rebate was skewed towards subsidising wealthy city based health insurance customers at the expense of their less affluent country counterparts. The research shows that an average of 35 per cent of households in country areas have private health insurance; yet wealthy city seats, like the one held by the health minister in the northern Sydney electorate of Warringah, have a private health insurance uptake of 80.6 per cent.

Low rates of private health insurance in regional areas are hardly surprising when we see that many of these areas have no hospitals and no specialists. The delivery of health services was highlighted in a recent Four Corners program which showed the difficulties that people in rural Australia have in accessing much-needed health services. That program reinforced for the Greens the conclusion that the lack of services leads to a perception that there is little need for people in these communities to take out private health insurance—yet the National Party continue to support a system that does not benefit the people for whom they claim to speak out. The evidence also shows that the private health insurance rebate is a powerful catalyst that drives health cost inflation. Since 2001 we have seen health insurance premiums rise by nearly 40 per cent. Those people who have enough to pay the health insurance premiums inequitably receive the largest cut of the rebate pie to support and subsidise their private health insurance.

As the Greens have repeatedly said, it is the public health sector that is best able to provide the most efficient and equitable health services, based on people’s medical needs rather than their financial ability to pay for services. Unfortunately, the current private health insurance rebate policy heads us in the direction of the United States style of a two-tiered health system: one standard and set of rules for the wealthy and a safety net based welfare system for those who cannot afford the exorbitant private health costs.

The government continues to use our public funds to give ever-increasing subsidies to the private health insurance industry. The Greens want to see an end to this inequitable transfer of public funds into the private health insurance industry. The amendments that I shall move in the committee stage of the debate will abolish the rebate by repealing the act that established it and also repealing a related taxation act. They will do so in nine months time, which would give sufficient time for private health fund members to notify their fund if they wish to change or cancel their insurance as a result of the withdrawal of the rebate.

The private health insurance rebate is a shameful waste of public funds—funds used to subsidise the private health insurance industry. Those funds can and should be spent on ensuring that there is a quality public health system for all of us. I can think of no other industry that gets this level of government support. For what other industry does the federal government use our taxation system to penalise people who do not buy the services of that particular industry in the way in which it does for the private health insurance industry? Our taxation system is used to penalise people who refuse to take up the services of the private health insurance industry. Knowing all of the subsidies that this government provides to a range of different industries, I cannot think of another industry that is given that level of support by the federal government. And the people who lose out are poorer Australians and Australians living in rural areas.

People who wish to support an equitable public health system have the opportunity to do so by supporting the Greens amendment to abolish the private health insurance rebate that I will move in the committee stage, so that that money can be spent investing in a quality public health system that all Australians can use regardless of their capacity to pay.