Senate debates

Thursday, 15 September 2016


Budget Savings (Omnibus) Bill 2016; Second Reading

8:17 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | Hansard source

Under English law, 'the man on the Clapham omnibus' is defined as 'a hypothetical, ordinary and reasonable person used by the courts in English law', according to definitions I have read, where it is necessary to decide whether a party has acted as a reasonable person would—for example, in a civil action for negligence. The man on the Clapham omnibus is a reasonably educated and intelligent but nondescript person against whom the defendant's conduct can be measured. I guess here we have a case of, 'What would the man, or woman, on the government omnibus bill be saying about the fairness or otherwise of these measures?'

I think it is fair to say that the fact that there was no public hearing—something that both the government and the opposition combined to vote for—is wrong. For the Senate to do its job, it needs to have a process of public hearings, an inquisitorial approach, to assess the measures and the consequences, intended or otherwise, of a bill. And a bill such as this, traversing so many areas, is a bill that ought to have been looked at through a hearing. The concerns of stakeholders were not adequately assessed, and not even a half-day public hearing was set aside.

Senators had to hold a quasi committee hearing—and I congratulate Senator Rachel Siewert for the initiative. I took part in that on Monday, along with Senator Hinch and Senator Lambie, and there were other Greens senators, including Senator Di Natale, who took part in that hearing—which was actually useful. We heard from ACOSS, from Cassandra Goldie. We heard from Catholic Social Services. We heard from those involved in the dental space who were concerned about changes to dental programs, and from the Australian Dental Association. My colleague Senator Kakoschke-Moore was part of that hearing. We heard about military compensation changes—something that Senator Lambie and my colleague Senator Kakoschke-Moore are particularly concerned about. That process was useful in clarifying thinking about this bill, the Budget Savings (Omnibus) Bill 2016. And I note that the government has deferred the changes to dental funding for children, which would have a huge impact in regional communities, out in the bush, and also in the outer suburbs of our capital cities where young children still have much higher rates of dental decay, of dental disease, than children in inner metropolitan areas. We need to address that imbalance, and that is why that dental program has been so important.

What has happened, though, as a result of negotiations between the government and the opposition, is that there have been some positives. Funding has been restored, in part, to ARENA. There have been significant concessions to ensure that those on Newstart and disability payments, carers and those on the aged pension, are shielded. Bipartisanship is positive and it is what the Australian people want. I would like to think that the crossbench maybe nudged the two major parties together because we stood firm in relation to a number of measures. And I think that what shadow Treasurer Chris Bowen and Treasurer Scott Morrison did, by sitting down and trying to sort out the differences and coming to a compromise, was a good thing which is, I think, what most Australians want.

However, there are measures in this bill that the opposition rallied strongly against in the last parliament that they now seem happy to support. One of these is the cuts to the R&D incentive, and I will refer to that later in this contribution.

I note that Senator Kakoschke-Moore referred to the whole issue of military compensation changes which we, along with Senator Lambie, will be opposing, because they are wrong. They will prejudice veterans who are fighting for just compensation, because I think they will be disadvantaged as a result of those changes—something that the opposition previously stood firm on but does so no longer.

Can I just say, in relation to ARENA: I and my Senate colleagues, together with my colleague Rebekha Sharkie, the member for Mayo in the House of Representatives, welcome the fact that the $1.3 billion cut to the Australian Renewable Energy Agency will not go ahead as planned, but we are disappointed that the compromise will still see $500 million worth of funding cut from the agency. The long-term future of ARENA is less uncertain than it was just a few days ago, but I believe it can be secured in the long term if the financial arrangements for ARENA are extended to provide it with the capacity to provide investment funds as well as having equity in funded projects. So, if ARENA invests in a new form of renewable energy technology and it takes off and goes gangbusters—if it takes off in the sense that it becomes a huge commercial success—then why shouldn't that be paid back? Why shouldn't there be a discretion in the grant for that to be paid back or even to get an equity in that project on the part of ARENA so that ARENA's funds can be replenished?

I do not think it is an unreasonable commercial proposition that should be applied to ARENA, and I do not think the board of ARENA would regard it as unreasonable either if they are given the discretion. It is a discretion that they ought to have. If this approach is adopted, ARENA would be in a position to have grants repaid with interest if the project funded becomes a commercial success. ARENA having the option of taking equity in the project and reaping the benefits would be very positive for the fund in the longer term. It is all about being agile—something I would have thought the government would welcome. Under both proposals money would be ploughed back into the fund to replenish it. I now foreshadow my second reading amendment, to this effect, and I look forward to discussing this proposal with Minister Frydenberg at a later date in a constructive manner. Later I will move:

At the end of the motion, add:

", but the Senate is of the opinion that the financial arrangements for Australian Renewable Energy Agency should be extended to provide the Agency with the capacity to provide investment funds, as well as have equity in funded projects.".

Private health insurance has not got much attention in the course of this debate, but it ought to. This measure has not attracted much attention, not many people get excited about private health insurance except when there is a premium increase, but it is an issue that I have long had an interest in. Back in 2008, when the Hon. Nicola Roxon was health minister, I held out on a piece of legislation that the then Rudd government wanted to get through on the basis that there should be a thorough Productivity Commission investigation on the interaction between the public and private health systems, the first comprehensive study of its type, and I think it was a good benchmark to see where the strengths of the public system were, where the strengths of the private system were and where the two complemented each other. I commend that for anyone who is interested in long-term good public health policy in terms of how we maximise taxpayer involvement in the health system to get the best value for money for taxpayers and the best outcomes for patients.

At a recent speech I gave to the Health Insurance Restricted and Regional Membership Association of Australia, or HIRRMA, I spoke to a number of not-for-profit private health insurance providers. These providers include two great providers in South Australia, the Police Credit Union and Health Partners. They look after one million people. They are not-for-profit providers; they provide exceptional service and value for money. Not-for-profit and member-owned health funds have for the past 11 years consistently reached 97 to 98 per cent overall customer satisfaction—if only any of us politicians could get anywhere near those numbers!—and they incur far fewer complaints with the Commonwealth Ombudsman than large for-profit health insurers.

In 2012, when the Gillard government was in power, the federal parliament was debating the introduction of means testing for the private health insurance rebate and I moved an amendment to the government's legislation which I called the Roberts amendment, after a pesky ABC press gallery journalist, George Roberts, who was badgering me at the Senate doors one morning asking me, if I wanted to talk about transparency, what would I do about it. I moved an amendment that would have required the Productivity Commission to prepare an annual report to the health minister, for presentation to the parliament, relating to changes in the composition of the persons insured under private health insurance including information about the number of persons who have ceased to be insured and the number of persons who downgraded their level of insurance. It also required the Productivity Commission to make recommendations for addressing the reductions in the number of persons insured and the downgrading of their level of insurance. That is the sort of information we want in order to guide good public policy so that we do not have a situation where health funds effectively end up stalling and going into a nosedive because of the drop-off in the number of people who are in them or the sort of cover they had.

The then opposition, the coalition, was effusive about those changes. They supported the amendment, though we missed out because the Australian Greens did not support it, which I regret. In 2014 I moved virtually the identical amendment, the Roberts Amendment, and guess what? The coalition government rejected that transparency measure because they said it was not necessary—they had got advice from the department, the bureaucrats. So that was that. I can indicate that I will not be moving this amendment this evening; however, it is an issue that I will be pursuing. Transparency is the key to driving better outcomes in savings in the health system—just look at what the Swedes have been doing. They have brought down the level of expenditure in the health system through greater transparency measures and innovative policies that get better outcomes for their patients. That is something I think we need to look at.

Schedule 6 of the bill pauses income thresholds for the Medicare levy surcharge and rebate at the 2014-15 rates for three years from 2015-16. The explanatory memorandum states:

Continuation of the pause in income thresholds at 2014-15 levels could result in individuals with incomes below each threshold moving into a higher income tier as their incomes increase. As a result:

      In theory this sounds like a good idea. The more people who have private health insurance, the smaller the impact on Australia's already overstretched public health system. Statistics released by APRA in February 2016 showed a record 11.3 million people have private hospital insurance. However, when you dig a little deeper, as Westfund Health Insurance did—a not-for-profit community health fund based in regional New South Wales—a worrying trend becomes evident. The number of full-cover policies is at a record low, and the proportion of policies with exclusions or restrictions has exceeded 55 per cent for the first time. This is a direct consequence of the Gillard government's approach. The coalition, when in opposition, were deeply concerned about it and they are now ambivalent towards it. They do not seem to care—it is too hard for them to tackle. If a policyholder needs treatment for an excluded procedure, such as joint replacement, they are likely to seek that treatment at a public hospital. With restricted policies, many consumers face high out-of-pocket costs and are also likely to seek treatment at a public hospital. This negates the whole idea of having private health insurance in the first place, and increases the pressure on the public hospital system.

      Trying to find savings in the private health insurance space has resulted in what seems to be a furious battleground. It started in 2009, when the coalition was in opposition, over the freezing of the private health insurance rebate. I voted against the freeze then, as did the coalition. I thought back then, and still do, that it would make private health insurance less affordable and, ultimately, put more pressure on our public hospital system. Similarly, in 2011, when the Gillard government introduced means testing, it was a delayed double whammy, also opposed by the then opposition. I thought it would lead to distortionary effects, with consumers opting for the lowest, 'bare bones' health cover and dropping ancillary benefits, which in turn would cause additional blowouts in the public sector, or, worse still, Australians not getting treated for conditions early, which would actually become much bigger problems for them and for our overall health budget down the track. You have seen the ads, particularly in June, which claim that you may save on tax if take out private health insurance by 30 June. Putting aside the potentially misleading aspects of such advertisements, I believe that many Australians are taking out 'bare bones' private health insurance policies just to avoid paying tax.

      This measure has the explicit purpose of encouraging people to purchase private health insurance and avoid becoming liable to pay the Medicare levy surcharge. I have great concerns that this measure will see an increase in the number of people holding exclusionary or restricted policies, which will result in people still utilising the public hospital system, despite holding a private health insurance policy. Additionally, the government does not reveal the amount of premium rebate paid for policies with restrictions or exclusions. Westfund estimates that the government is outlaying premium rebates of $1.5 billion on policies with restrictions or exclusions. I would like to find out from Minister Sussan Ley just what this cost is and the impact it is having on our public health system. It is not an easy problem to fix, but I think the government could take a step in the right direction by disqualifying policies with exclusions for common major procedures from the government premium rebate, or reducing the rebate entitlement on them.

      On research and development, I last spoke about cuts to R&D tax incentives almost one year ago. What I said then is just as relevant now. The second measure contained in this bill proposes a reduction in the rates of tax offsets under the research and development tax incentive. In a country with a long and proud history of inventors, inventions and innovations, it seems the importance of encouraging research and development is critical. From the humble rotary clothes line, the Hills hoist, to the black box flight recorder, the photocopier, the bar code and, more recently, wi-fi, the depth of talent in Australian inventors cannot be underestimated. The potential of this innovation for our economy must not be lost on any government. In my home town of Adelaide, SupaShock is gaining attention around the world for its development of a shock absorber that is credited with the Ford racing team winning V8 supercar races because of what it does to a car's handling. Not so long ago, they won a Formula E race through the Virgin Atlantic team. That gives you an idea of the potential of R&D. I know that defence industries around the world are looking at this technology—technology that could drive more jobs in my home state of South Australia, as we see auto making fall of a cliff in this country, and, with it, many tens of thousands of jobs.

      The coalition had two attempts at passing this measure and both attempts were met with steadfast opposition from the Australian Labor Party. There were some terrific comments on R&D, on this measure. I genuinely have enormous admiration for Senator Kim Carr and the way he has cooperated with me on issues of industry in our car-making sector. On 2 March 2015, he said:

      The government is using these changes to the R&D tax incentive to gather savings, not to make the R&D tax incentive more effective. This is typical of the way in which this government has failed to understand the crucial role of innovation in an advanced industrial economy.

      He went on to say:

      The measures proposed in this bill, however, will only erode certainty and transparency. The effect of the bill will be to discourage R&D investment in Australia. In particular, the bill punishes small- and medium-sized enterprises.

      Dr Leigh, the member for Fenner, is a renowned economist and a very smart man. On 17 June 2015, he said:

      What is this apart from a cash grab by a desperate government? Why else would the government be trying to hack into the productive potential of the Australian economy, hack into that research base, at the very same time as the government—which began bereft of a science minister and continued by cutting CSIRO—has so put itself offside with the science community and so jeopardised the potential of the Australian economy to create new jobs?

      Mr Acting Deputy President Ketter, there is even a quote from you, but I will not be cruel and quote it—unless you want me to. Basically, it is on the same theme—that this is a counterproductive cut in relation to R&D. It is a shame that the opposition has decided to change its position at a time when we need, more than ever, to be fostering and supporting innovation in this country, not destroying it.

      I cannot support a measure which will have a retrograde effect on small and medium businesses involved in research, and I will be moving an amendment to oppose schedule 22. When it comes to R&D, we need to keep those current incentives in place so that those 200,000 jobs—which could well be lost in Victoria and South Australia by the end of 2017, when the car-making sector closes down—have a fighting chance of being replaced. In terms of student start-up scholarships, Rebekha Sharkie, the member for Mayo, made a contribution in the other place about how these changes will be retrograde and will disadvantage regional students.

      I am pleased there have been some compromises. I am concerned about those matters where there has been no compromise, particularly in terms of R&D. I acknowledge that we do need to undertake budget repair, but let us undertake budget repair fairly and in a way that does not take away from the productive capacity of the Australian economy. Let us do it in a way that is fundamentally fair, so that the man or woman on the 'Clapham omnibus' would say that it was a fair deal.


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