Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Minister for Human Services (Senator Ludwig) to a question without notice asked by Senator Carol Brown today relating to the Medicare levy surcharge.

We oppose the Medicare levy surcharge measure because it is fundamentally flawed. It was fundamentally flawed when it was first announced in an organised leak three days before the budget. It was fundamentally flawed when it was finally introduced on budget night. It was exposed as fundamentally flawed during Senate estimates and during the Senate inquiry. And it was still fundamentally flawed when it was being debated in this chamber last night. The reason it is fundamentally flawed is that the government failed to properly assess the implications of this measure for our health system. The government thought that it could do a little bit of fiddling with the Medicare levy surcharge and tried to tell us that this was about indexation but then doubled the threshold, without any consideration whatsoever as to the flow-on implications for our health system.

In fact, when the measure was first announced, for two hours the Treasurer was out there in the media trying to sell it as a tax relief measure, the same as the propaganda machine of the federal government is trying to do again today. But within two hours the Treasurer was pulled offline and ‘Mini-Me’ Treasurer Nicola Roxon, who somebody should remind that she is actually the Minister for Health and Ageing, was sent out there to try to salvage and explain what the government was trying to achieve.

The reality is this: an increase in the Medicare levy surcharge thresholds in the way it is proposed will put huge additional pressure on older Australians, on families and on the most vulnerable in our community. It will push up the price of health insurance premiums, it will put additional pressure on public hospitals and it will see up to one million Australians leave the private health system. Do you think that the federal government made any attempt to assess the impact of a measure like this on the health system? No, it did not. The only thing the federal government did was to cost and model the implications of this measure for its budget bottom line—‘How much will we save? How much will it cost us?’

On the day of the budget, I asked a question of Senator Ludwig: when did you advise the people about this measure before the election? He could not answer the question. If this was really a popular tax relief measure, don’t you think the then opposition would have announced it before the election? Don’t you think that they would have tried to use it to win some votes? But they did not announce it before the election and the reason was that they knew about the implications of this measure for our health system. They knew that it was going to be bad news for older Australians, for families, for the privately insured and for people who need timely access to quality hospital care. When did you last hear the minister for health explain to anyone how this measure will help people get better access to public hospital care? When did you last hear the minister for health explain how this measure will help ensure that private health insurance premiums will remain affordable for older Australians—those Australians most likely to need access to quality hospital care, those Australians who every year make the sacrifice to bring all of their money together so that they can afford private health insurance and have that peace of mind?

The government propaganda machine are working overtime out there. They are trying to tell people that this is a tax relief measure. If that is the case, why do the government discriminate against those Australians in lower income tax brackets who also take out private health insurance? If they want to provide a tax relief measure, why don’t they do it in a way that does not have the same negative consequences for our health system? If they want to provide tax relief to people on lower incomes, why don’t they do it in a way that is not going to have those disastrous consequences for our public hospitals, for our privately insured and for the overall health system here in Australia?

The reality is this is just about spin. This is an ideologically driven pursuit by the Labor Party, who have never liked private health. They are back at it. They are back at what they did between 1983 and 1996, when private health insurance membership was in free fall, when we ended up with a health system that was totally out of balance, when people could not get access to public hospital treatment and when more and more people were burdening public hospitals and joining the queues. That is what you will see as a result of this measure.

They introduced some amendments yesterday and I hear that in the other place they have now reintroduced the measure with a threshold of $75,000. You would be amazed—you would think there was going to be a significant change. We did not get any information in this chamber on how this would play out, but there was a propaganda sheet circulated around the press gallery. Do you know what the difference in impact is going to be? After three months we were able to get Treasury to concede that 644,000 people would leave private health insurance as a result of the original measure. Now, with this new legislation, do you know how many it is going to be? It will still be 583,000. (Time expired)

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

This really is a schizophrenic opposition. I looked at the questions that we were asked prior to this session now, and we had pensioners—this was the great issue for them. There was one question on pensioners. Then we went to climate change. Then we went to Medicare. Really, where are you going? We really do not know where you are going on anything. On the Medicare levy surcharge—

Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Link to this | Hansard source

Mr Deputy President, I rise on a point of order on relevance. I moved a motion that the Senate take note of the answer provided by Senator Ludwig. I think that Senator Cameron is straying well beyond the specific motion that I moved earlier.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Order! Senator Cormann, in taking note of answers there has always been allowed a very free-ranging debate, and Senator Cameron has only been answering for a little more than half a minute. I think he is probably entering what might be loosely called a free-ranging debate, so there is no point of order.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy President. In relation to the Medicare levy surcharge, we have an opposition who are so hypocritical in terms of their approach. They are so compassionate, they argue, but this compassion is weighed against the reality. You have to weigh this up against the reality of where they are coming from. They say that they want to look after ordinary Australians, and yet in their opposition to this change to the Medicare levy surcharge they are denying some of the neediest Australians a $1,200 tax cut—tax relief of $1,200.

Senator Cormann should actually reflect on what he is saying in this debate and weigh it up against the debate that we had this morning on Woodside Petroleum and the need to tax multinational corporations to pay for the necessities of a decent society. How could you stand up this morning and say that a company who is earning a billion dollar profit and who has had special concessions for 30 years should not pay its proper rate of taxation and then talk about Medicare and problems with the private health system? It just does not match up. You see, you cannot have compassion for people on the one hand and then say that multinational corporations should not pay their proper tax. You cannot come here and say that you want to look after the Lamborghini drivers and the Maserati drivers and then say, ‘I’ve got compassion for people who are not earning a lot of money and I want to make sure that the Medicare levy surcharge is maintained at its current level.’ What you are doing is exposing the hypocrisy, the absolute hypocrisy.

The more I see the Liberal opposition in action in this place, the more I am convinced that you have never had an economic brain in your heads, that you have never understood the need to balance the market and the needs of the community. You just do not balance it.

Opposition Senators:

Opposition senators interjecting—

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Order! I do not mind a free-ranging debate, but we are not going to have a free-for-all across the chamber. Senator Cameron will be heard in silence.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The opposition really is the Australian branch of the Gordon Gekko fan club. There is no doubt about that. ‘Greed is good’—that is the position that we hear every day from the opposition. It is about looking after the big end of town and it is not about having any compassion or any care for ordinary Australians in this country. What did you do in government? You argue about looking after people, but you spent $1 billion of taxpayers’ funds promoting your own programs—promoting Work Choices, promoting getting rid of rights for ordinary working people.

Your position on Medicare has been destroyed. Your argument has been destroyed by evidence from Professor Deeble. Professor Deeble looked at it—

Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Link to this | Hansard source

Five per cent, he said—an additional five per cent.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Every time Senator Cormann stands up you hear, ‘Give us an econometric model.’ Well, what did Professor Deeble say? ‘You cannot model human nature.’ You cannot model what people will do and you certainly cannot model the greed that is being displayed on the other side. They are making sure that they look after the big end of town and that the ordinary working people get left behind. This is nothing other than wrecking the government budget. It is economic irresponsibility. (Time expired)

Judith Adams (WA, Liberal Party) Share this | Link to this | Hansard source

I also rise to take note of the answer given by Senator Ludwig on the Medicare levy surcharge this afternoon. Earlier today the Minister for Health and Ageing, Nicola Roxon, presented a redrawn Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill (No. 2) 2008 into the House of Representatives. With this move, Ms Roxon has admitted once more that her legislation is full of flaws. Whilst I welcome the fact that the minister has given this legislation another thought, I believe she has still not thought it through fully. Today Ms Roxon suggested the provision of a singles threshold of $75,000 and to index the threshold to wages growth. As the couples threshold would remain unchanged at $150,000, Ms Roxon believes her new measure would be the magic trick she needed to make sure that small income earners would not be forced to pay the bill of this piecemeal legislation.

Ms Roxon has got it wrong again. Neither Ms Roxon nor Mr Swan did proper modelling on the effects of this bill. Ms Roxon clearly does not understand the impact this legislation will have on the public health system, nor does she understand the effects this legislation will have on families and older Australians, who will have to suffer from massive hikes in private health insurance premiums. Ms Roxon said today, ‘Unfortunately we will not be providing tax relief to as many people as we would have liked.’ This bill is not able to deliver tax cuts. Changes to the Medicare levy surcharge are not really a tax cut, as Labor wants us all to believe. It is a measure that will raise revenue and increase prices. It will push up private health insurance premiums, drive hundreds of thousands of people out of private health and add even more pressure to public hospital queues and waiting lists. If Labor were truly interested in delivering tax cuts, they would put their rhetoric aside and deliver this through the tax system. The government still has not answered how it plans to prevent premiums going through the roof for low-income earners and pensioners. More than 200,000 pensioners over the age of 65 live on less than $20,000. For them it does not matter if the old or the newly drawn up bill comes into effect. Pensioners will lose out again, not being able to afford private cover.

The public hearings of the Senate Standing Committee on Economics inquiry into Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008 have shown this very clearly. Coalition senators heard clear evidence that working families, low and fixed income earners, the elderly and people living in rural and regional Australia would be hit hardest, with the Rudd government even saying that it would be primarily younger people dropping their cover in large numbers. Is this what we want? This means that good risk members will abandon private cover, leaving behind bad risk members—primarily older Australians—with the result that their premiums will have to go up. If premiums are too high, people will drop their cover, including many members with poorer health. Is this really what the government wants: to overrun our emergency departments and our waiting lists? Does the government really want to hurt pensioners again? Was it not enough denying single pensioners an increase of $30 a week, as they did just this week? Does government really want to drive them into a situation where they will not be able to have the choice to have surgery, such as hip and knee replacements, when they need to without having to wait for extended periods? Clearly, the minister has not thought this legislation fully through.

Have a look at the example of the effects this legislation would have on the public health system. At the hearing of the economics committee in Perth, the Acting Director General of the Western Australian Department of Health, Robyn Lawrence, stated that the proposed changes to Medicare are likely to cost the state an additional $53.6 million a year, increasing demand on the public health system and affecting its ability to perform elective surgery. Dr Lawrence predicted that an extra 268 public beds would be needed by 2017 and an estimated 50,000 Western Australians may drop out of private health insurance.

However, Dr Lawrence admitted after questioning from the Liberal committee members that the Labor government would save $959.7 million through not having to pay the 30 per cent private health insurance rebate. Such savings are likely to put higher pressure on tight health budgets. As a result, the industry is already exploring ways to cut their spending on other portfolios. (Time expired)

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I would like to remind the Senate that when the Medicare levy surcharge was first introduced by the former Howard government in 1997, it was intended to apply to high-income earners, or roughly around eight per cent of single taxpayers. This measure, after 11 long years of wilful neglect by the former government, will see the levy once again applied to around about the same percentage of taxpayers for whom it was intended. This means bringing an end to the pressure placed on average-income earners in Australia by the former Howard government.

I will also take the opportunity to again remind the Senate of what Senator Ludwig said earlier today in question time. It was a statement made by Senator Simon Birmingham who has conceded that $50,000 was not a high salary. I quote: ‘It’s certainly not a high salary.’ Indeed, it is a working salary. So the thresholds which the Liberals are determined to uphold were not logical, not designed with any thought for the consequences that are now hitting people who even the Liberals admit are on working salaries.

I would also like to draw the chamber’s attention to the comments made in August 2006 by the new shadow minister for health when the then Assistant Treasurer, Mr Dutton, revealed the numbers of taxpayers who were hit by the Medicare levy surcharge and revealed that they had doubled since the introduction of the new measure in 1997. Last Wednesday, the new Leader of the Opposition also made the argument for us. In his first press conference, Mr Turnbull said:

I know what it is like to be very short of money ... I know Australians are doing it tough and some Australians, even in the years of greatest prosperity, will always do it tough.

There is a simple question to be answered here today. Do the Liberals—and we know that some do not—agree that people on $50,000 deserve a tax cut? We know some members of the parliamentary Liberal Party understand that $50,000 is an average wage and they are not the people that this levy was designed to capture. Dr Wooldridge, the former federal health minister, said that when he introduced this levy. They are not the people that this levy was supposed to apply to. The whole of the opposition in the Senate know that.

The Rudd Labor government is trying to give some tax relief to those Australians who have been caught up in the system; the Liberal Party is playing politics once again. We have seen it on the pensions and we see it now with the Medicare levy surcharge.

Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Link to this | Hansard source

Do you think that pensioners do not take out health insurance?

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

We have seen you play politics on pensions—

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

On a point of order, Mr Deputy President: Senator Cormann seems to feel it is necessary to consistently and continually interject while Senator Brown is on her feet—

Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Link to this | Hansard source

It is a very important issue.

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

and is interjecting now even when I am on my feet on the point of order. I would ask you to call him to order to accord Senator Brown the courtesy she should be accorded.

Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

On the point of order, Mr Deputy President: it is a reasonable proposition but it does rely on the proponents of such a proposition behaving accordingly themselves. I regret to say that is not a mark of the behaviour of the Labor Party when coalition senators are speaking. We are happy to oblige Senator Wong’s request on the understanding and observation that the same rules will apply to Labor senators when coalition senators are speaking.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

On the point of order, interjections are disorderly, as part of standing orders, but I do recall that earlier in this debate there were some robust interjections, particularly from this side, and there were some from my left as well. When I thought it got too unruly, I brought interjectors to order. I did call Senator Cormann to order just before Senator Wong took her point of order and I am not sure that he did ignore me. I remind senators that those who are on their feet have a right to be heard in silence.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy President. What I was attempting to say is that the opposition are playing politics with not only this issue but the issue of pensions. I think senators opposite know that is exactly what I was attempting to say. They are playing politics with the pension issue. They did not do anything in the 11½ years they were in government—actually, that is not true; they voted against it in the cabinet. I am not sure how many people raised it in their caucus but they did vote against a rise in their cabinet.

The Rudd Labor government is trying to give some relief to those Australians who are caught up in the system and the Liberal Party is playing politics. You have to ask yourself why they hate working families. Why do they not want to support a tax cut? If the Leader of the Opposition really believed in a bipartisan approach to economic responsibility, he would join us in the Senate. We have listened to what stakeholders and senators have to say and we have— (Time expired)

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

Let me say in unambiguous language to the Senate that this debate about the Medicare levy surcharge legislation is not a debate about tax relief. Let me put it in another way. Senator Carol Brown posed the question: do people on $50,000 deserve a tax break? The answer to that question is yes but not through the device the government have introduced of raising the threshold for the Medicare levy surcharge. The reason is that, although it provides some relief to individuals who might be hit by the surcharge at the present time, it has a downstream effect on the integrity of our health system which is absolutely devastating. Whether the number of people affected by this change is 450,000—the government conceded that may well be the number affected and tempted to give their private health insurance away—or the million that the industry estimated might give up private health insurance, whichever figure is correct, you still have a massive effect on Australia’s already strained public hospitals when those people move from private health coverage into the public health system. That is the point that this opposition is making about this legislation. It is not about tax relief.

We are not opposed to the government putting forward tax relief. I put this invitation to the government: bring back your $660 million worth of ‘tax relief’ that you were providing through this Medicare levy surcharge legislation and instead give it directly to people by way of a tax cut. Transfer this same dollar amount into a tax cut and we will put our hands up to support that legislation, without any hesitation. Such a measure would have no effect on public hospital waiting lists, but to support your Medicare levy surcharge legislation in its present form would have a massive downstream effect on the quality of already strained public hospitals in this country.

Senator Cormann posed a very good question: if this legislation is so outstanding, why was it not announced before the last election? Why did you not go out and bang the drum about your relief to people who pay private health insurance? It was because you knew that it was very problematic. This issue needs to be focused on, rather than the question of tax cuts. Even Professor Deeble, who was quoted by Senator Cameron in the course of his remarks, conceded that as a result of these changes premiums would have to rise. He estimated that they would rise by five per cent.

We were talking earlier this week about older Australians and the pressures on older Australians. Older Australians take out private health insurance in very large numbers, and yet those opposite, who have been talking about how they want to relieve the pressure on older Australians—not by way of a $30 a week increase in their pensions, mind you, but they want to do something about the living standards of older Australians—are perfectly happy to sit there and support a measure that puts up pensioners’ premiums for private health insurance by five per cent. That is a very big cost for a person on a limited budget. Many older Australians are actually pensioners. Pensioners do, believe it or not, take out private health insurance. The government are happy, on the admission of their own champion, Professor Deeble, to push those premiums up by an additional five per cent. That is a cost that many of those old people do not feel that they can let go.

The fact is that this is a very dangerous piece of legislation with downstream effects that have a very significant impact. The downstream effect, of course, is to remove a very large amount of money out of Australia’s health system—$3.2 billion is sucked out of the system by virtue of a combination of people withdrawing their private health insurance, and the rebate disappears in that respect and so does the effect of people putting money into private health insurance. If the government are going to put that money back again into the system by way of higher taxes then fine, they should announce they are going to do that, but they are going to have to face the downstream consequences of this decision. (Time expired)

Question agreed to.