Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

by leave—I move amendments (1) to (6) standing in my name on sheet 5616 together.

(1)    Schedule 1, item 2, page 3 (line 13) to page 4 (line 6), omit proposed section 5A, substitute:

5A What is the singles surcharge threshold?

        (1)    The singles surcharge threshold for a person for the 2008-09 year of income is $69,000.

        (2)    This threshold is indexed for each year of income after 2008-09 by multiplying the threshold by the indexation factor in subsection (3) and rounding the result down to the nearest multiple of $1,000.

        (3)    Theindexation factor is:

where:

CPI quarter means a period of 3 months ending 31 March, 30 June, 30 September or 31 December.

index number means the All Groups Consumer Price Index number (being the weighted average of the 8 capital cities) published by the Australian Statistician.

The indexation factor is to be calculated to 3 decimal places, but increased by .001 if the 4th decimal place is more than 4.

Calculations:

             (a)    are to be made using only the index numbers published in terms of the most recently published reference base for the Consumer Price Index; and

             (b)    are to disregard index numbers that are published in substitution for previously published index numbers (except where the substituted numbers are published to take account of changes in the reference base).

(2)    Schedule 1, item 4, page 4 (line 21), omit $150,000, substitute $138,000.

(3)    Schedule 1, item 4, page 4 (line 21), omit $153,000, substitute $141,000.

(4)    Schedule 1, item 7, page 5 (lines 5 to 24), omit proposed section 3AA, substitute:

3AA Meaning of singles surcharge threshold

        (1)    The singles surcharge threshold for a person for the 2008-09 year of income is $69,000.

        (2)    This threshold is indexed for each year of income after 2008-09 by multiplying the threshold by the indexation factor in subsection (3) and rounding the result down to the nearest multiple of $1,000.

        (3)    Theindexation factor is:

where:

CPI quarter means a period of 3 months ending 31 March, 30 June, 30 September or 31 December.

index number means the All Groups Consumer Price Index number (being the weighted average of the 8 capital cities) published by the Australian Statistician.

The indexation factor is to be calculated to 3 decimal places, but increased by .001 if the 4th decimal place is more than 4.

Calculations:

             (a)    are to be made using only the index numbers published in terms of the most recently published reference base for the Consumer Price Index; and

             (b)    are to disregard index numbers that are published in substitution for previously published index numbers (except where the substituted numbers are published to take account of changes in the reference base).

(5)    Schedule 1, item 8, page 6 (line 14), omit $150,000, substitute $138,000.

(6)    Schedule 1, item 8, page 6 (line 14), omit $153,000, substitute $141,000.

These amendments, as I foreshowed in my second reading contribution, seek to increase the current threshold of $50,000 to the sum of $69,000 for the 2008-09 year, based on CPI increases—that is my reading of the research I have obtained on CPI increases—and to continue to increase the threshold according to the CPI. Similarly the figure for the couples threshold is to be substituted with $138,000, which is again based on the CPI and will be indexed thereafter. I urge honourable senators to accept this compromise on the basis that I set out in my second reading contribution.

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

The opposition, Senator Xenophon, acknowledges your intent to improve slightly what is a very bad public policy measure which, if successful, would have a terrible impact on our health system. The serious issue with this legislation is that the government never even tried to properly asses the impact of this measure on our health system. They are trying to sell it as a tax relief measure without any regard for the impact it is going to have on our health system.

If they were really interested in providing tax relief to people in the income brackets between $50,000 and $100,000 they would be doing it another way. They would be doing it in a way that does not have the same bad impact on our health system. They would be doing it the way that Peter Costello did it year in and year out when we were in government. Senator Xenophon’s amendments expose the fraud of the government’s rhetoric. The government have been trying to hide their real purpose behind this piece of legislation, which is an ideologically based attack on private health, and is trying to dress it up as a tax relief measure.

They have made the point that this is about indexing a measure that has never been indexed before, but what they proceeded to do in their first piece of legislation on this measure was not to index the threshold for single income earners but to double it. Their rhetoric stated that it was a tax relief measure. They said: ‘This is what the previous government did wrong—they did not index it. Therefore we are now proposing to do what the previous government did not do.’ But, instead of indexing it, they doubled it.

Of course, Senator Xenophon is quite right to say that what the government has done in its original legislation and what it is still doing in this legislation is not indexing the measure. During the Senate inquiry I actually asked a whole series of questions of every single witness that came before us. I asked them what they thought about the proposition to index the Medicare levy surcharge thresholds rather than to double them. I asked that question of health funds, of health economists and of every witness that came before the committee. What has the government done? Even though we have given speech after speech opposing this fundamentally flawed public policy measure and even though we have written a very comprehensive dissenting report, the minister thought that she should use one of the questions I asked one of the witnesses on whether indexing it would be more appropriate than doubling it and presenting it as a statement of position. I asked the question—which, incidentally, the witness answered, ‘No, it would not be appropriate to increase the Medicare levy surcharge thresholds to $75,000’—and she is using and presenting it very misleadingly and dishonestly as a statement of position. It is typical Hollow Men stuff and the people in her office should hang their heads in shame. No doubt they got their inspiration from there.

The reason the opposition cannot support Senator Xenophon’s well-intentioned amendment is that he is proposing to index thresholds for singles, couples and families based on thresholds introduced in 1997 which were introduced at a level that was too high to be immediately effective. It was introduced as a new measure as part of a package of three policy measures that was aimed at turning the ship around and at fixing the problems that Labor had left us. It was aimed at fixing the problems that Senator Graham Richardson had very eloquently identified two or three years earlier before he was shot down by the ACTU caucus working party at the instigation of then Prime Minister Paul Keating.

You only have to look at the Senate inquiry evidence. Mr Kalisch, the Deputy Secretary of the Department of Health and Ageing, said, ‘When this measure was first introduced in 1997 it was not immediately effective.’ What Senator Conroy does not understand is that we are actually dealing here with a package of three policy measures that work together. We have Lifetime Health Cover, the 30 per cent private health insurance rebate and of course the Medicare levy surcharge thresholds. All of those measures together have been able to turn around the significant declines in private health insurance membership, which were having a disastrous impact on our health system, as was very eloquently identified by Senator Graham Richardson before he was shot down by the ACTU-caucus working party in 1994. We had to do the job and turn it around. But, as Mr Kalisch, deputy secretary of the health department, identified, the $50,000 singles threshold, the Medicare levy surcharge threshold, was not immediately effective.

You have to really look at what happened. After Lifetime Health Cover and the 30 per cent rebate were introduced, health insurance membership went up by about 13 per cent from the low of 30 per cent, which was the disgraceful state of affairs we inherited. Then it started to plateau. It went down a bit and then went up a bit, but it sort of plateaued around 43 per cent. Over the last three or four years health insurance membership has started to increase again. In fact if you look at the 12 months to June 2008, health insurance membership has increased by another 400,000 Australians who have made the decision to take additional responsibility for their healthcare needs. By doing so they are making a significant contribution to help keep private health insurance affordable for all Australians choosing to take it up and keep pressure off public hospitals.

This is what is being missed in this argument. With our unique system of community rating as it applies in private health, the more good risks, the more that younger and healthier people agree to take additional responsibility for their healthcare needs, the less pressure there is on premiums for those who are more likely to need access to quality hospital care. We need to keep private health insurance affordable for as many people as possible, in particular for low-income families, for pensioners and for the one million Australians earning less than $50,000—irrespective of the Medicare levy surcharge thresholds because they do not apply to them—who make a decision to take up private health insurance. This measure would actually force up the price of their premiums, whereas what the government is proposing to do is provide a tax cut in a very bad way to a very small cohort of people. The government would be well aware that we in opposition are always in favour of lower taxes. We had a record when in government of providing lower taxes. There is a way to provide tax relief, and this is not it. There is a way to provide tax relief without having the same disastrous consequences for our health system that this measure would create.

On that basis, the opposition will not be supporting Senator Xenophon’s amendment. I also make the point that previous speakers have said that people earning $50,000 to $60,000 are not high-income earners. I do not suggest they are, but the government should listen to the evidence. For example, the Queensland Teachers Union Health, whose membership is made up of an overwhelming number of people earning about $50,000 to $60,000 a year, evidence is that their members are frightened about this particular measure. They gave evidence about how their members are extremely concerned about how this measure is going to push up the price of premiums for their members. Why do you think that is? Senator Cameron was there in Brisbane on 17 July. I remember it like it was yesterday. We had the CEO of the Queensland Teachers Union Health fund essentially telling us that their membership was made up of average Australians on about $60,000 a year and they did not support this measure because of the bad consequences it would have on their health insurance premiums moving forward, because it would force their members to reconsider their health insurance membership and it would quite potentially force them into those long public hospital queues.

Senator Bilyk used an argument that I had not heard for a while—in the early days, the health minister used to say: ‘I don’t know what all the fuss is about, because it’ll be the young and healthy people that will be leaving first. The young and healthy people won’t need access to public hospitals. How can you suggest there is going to be additional pressure on public hospitals when it is the young and healthy that are leaving?’ That really demonstrates a fundamental misunderstanding of how our health system operates, it demonstrates a fundamental misunderstanding of our private health system and it demonstrates a fundamental misunderstanding of the principles of community rating. Every single person who is young and healthy and leaves private health might well be a person who would not have accessed public hospital care but they would have definitely contributed, out of their own private funding, helping to fund treatment for those that do need access to public hospitals. This is really what this is all about. The government put in a bad public policy measure, they never assessed the flow-on consequences of this measure on our health system and they tried to dress it up as a tax relief measure when all it is is an ideologically driven attack on private health and, quite frankly, this legislation should be defeated. I place on record that, for the reasons that I have outlined, the opposition will not be supporting Senator Xenophon’s amendments.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

It is no surprise to see Senator Cormann could not last the distance on this. Clearly, Senator, your heart is not in this. You know that ultimately this is an important measure. This is about security. This is about the economic security of this country and the economic vandalism of those opposite, who think, like they did when they were in government, that they can just spend and spend and spend and it does not matter. We used to refer to the Democrats as the fairies at the bottom of the garden. Well, the new economic fairies at the bottom of the garden are sitting on the opposite side of the chamber, because they think it all does not matter. They can spend the budget money and they can block all these measures and that does not matter. The budget surplus—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

That you inherited!

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

is what has allowed us to put forward yesterday’s response.  The budget surplus has allowed us to put forward yesterday the economic security package that will protect us and make sure that this country continues—

Opposition Senators:

Opposition senators interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I keep hearing these calls from those opposite about what a great job the former Treasurer did. They are hankering after the former Treasurer. Well, Senators, you might hanker after him but he ain’t hankering after you. You offered him the job and he did not want it.

He did not want to lead the rabble over there. He did not want to be responsible for the economic vandalism that you lot over there are perpetrating on this country at the moment. That is why he did not want the job. He knew that he could not possibly sign up to the vandalism that you guys are demonstrating at the moment, given the economically irresponsible positions adopted by the previous leader and now by the current leader. That is why he did not want to be the leader of your party. You are a rabble! You have lost the plot! The economic security of this country is being challenged by economic circumstances, and you just continue to play cheap politics.

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

It is about sound public policy.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

That is why your heart is not in this, Senator Cormann. That is why you could not manage 15 minutes in the committee stage on this bill.

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

Senator Cormann interjecting—

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

Senator Cameron interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Yes, when it came to the crunch and Senator Cormann had to actually stand up in here and put his case without written notes in front of him, he could not sustain the distance.

I will deal with Senator Xenophon’s amendments and then I will come back to the economic vandalism being perpetrated. Firstly, the threshold that is proposed would prevent 100,000 Australians from receiving the tax cut they need and deserve. Those opposite have been demanding that we bring forward tax cuts. Here is one in front of them and they are denying it to Australians. Secondly, this threshold is based on the consumer price index. Labor is proposing indexing the threshold in line with wages growth. This makes sense. It is after all an income threshold. As such it should rise with income, not prices. Allowing it to rise with the CPI will soon land us back in exactly the same position we are in now, where the threshold may rise more slowly than people’s wages and become a tax trap. Is that what you over there support? So you actually want to create tax traps.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Give them tax cuts.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

This is a tax cut.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

This is why Reba Meagher went. She was worried about this bill.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

There have been some long bows drawn in this chamber but that is one of the longest. Thirdly, the Rudd government has listened. We listened to a variety of stakeholders and we listened to senators, and on the basis of those consultations we have offered a new proposal. But Senator Xenophon is remaining stubbornly fixed to his own proposal, refusing to budge an inch, refusing to acknowledge the government’s willingness to engage and he is determined to deny 100,000 Australians their due tax cut. Senator Fielding has now made a clear show of economic responsibility. He has declared he will support this measure. So now it is time for you opposite to demonstrate whether you are interested in economic vandalism or in waking up and smelling the roses, like Senator Fielding has, and recognising that it is too important right now to play this sort of politics and it is too important to the economic security of this country to be irresponsibly blocking measures that deliver that security. That is what is important. We want to make sure that 330,000 Australians get the tax cut that they have been waiting for. Senator Williams, 330,000 Australians get a tax cut today if you vote for this legislation. You should understand that otherwise it is vandalism. You should understand that it is not good enough to sit over there and play politics—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Senator Williams interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Former Senator Macdonald would have to disagree on that one, I am afraid, Senator Williams. But I am not going to be critical of people who engage in preselection contests—

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

Senator Cameron interjecting—

Opposition Senators:

Opposition senators interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

How do you support Senator McGauran on this one? The bloke rattled on you. Fair dinkum! He actually ratted on you. He used to sit in the same party room as you, he used to attend your national conferences like you did—and he is sitting over there and you want to barrack for his position! It is time the National Party actually woke up and realised what that lot are about. They are about destruction. We are your opponents; they are your enemies. We are your political opponents; they are your political enemies—they want to eat you alive. We just contest with you.

So it is time to wake up and smell the roses. Senator Barnaby Joyce has shown some very wise judgements over the last few years. He called them out for what they were.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Who was that?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Joyce. He went to school with them, he said. I remember it was a very good speech. He said, ‘I went to school with these people. I know what these Riverside boys are really like. They’re not interested in anything other than the leafy green suburbs. They are not interested in the bush; they are not interested in regions.’

John Williams (NSW, National Party) Share this | Link to this | Hansard source

What has this got to do with the Medicare levy?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

This is about why you are blocking the legislation, why you are being led up the garden path to deny 330,000 Australians a tax cut. You are being led astray by people who are leading you to your destruction. They systematically set out to destroy the National Party when they were in government, and Senator Joyce worked it out and called them on it. The press around you, Senator Williams, said that you were a smart bloke and that you recognised what they were doing to you. Well, they are doing it to you again. They did it to you in government—they took you down the garden path; they sneaked up and stole your seats. They are your political enemies. And you have even got rats in the ranks. There are those who have criticised Senator McGauran but there are those who have described him as a visionary for bailing out on the National Party. I have to say to you: I go with the second category. Senator McGauran saw the trap that the Liberals were leading the Nationals into and he bailed out. He did a deal for himself, he secured his preselections and he went out the door.

That is what this is about. Those are the choices that are faced by National Party senators today, Senator Williams. You do not have to be led up the garden path like you have been for the last 11½ or 12½ years. You should be standing up for the 330,000 Australians who should get a tax cut—and you can deliver it for them today, not follow like a lemming as has happened over the last 11½ years. What did that 11½ years in government deliver for the National Party? Less seats, less opportunities, less jobs, less voters. That is a pretty impressive performance!

I thought you had come here to change that, but you are being led down the garden path once again and ultimately you will end up doing what Senator McGauran did if this keeps up—ratting on the party and jumping. So you have to decide whether the National Party is going to continue to be led up the garden path by the Liberals, who want nothing more than your destruction—nothing less, nothing more. They want to obliterate you. They want every single one of your seats, and you are agreeing to it again. You are walking down the garden path. The economic fairies at the bottom of the garden in this chamber are sitting over there at the moment.

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

Senator Cameron is going to vote National, isn’t he?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Senator Cameron will be voting in support of sound public policy and economic responsibility. Senator Cameron has a long and proud tradition of campaigning on behalf of working families in this country and he is keeping it up today. Because when it comes to a choice between giving or not giving a tax cut to 330,000 Australians, he will be voting for it, unlike those opposite. They are leading you down the garden path, Senator Williams. They are leading you to your ultimate destruction. They intend to continue to take your seats. They intend to continue to try and lock you in to mindless economic vandalism that threatens the economic security of this country. And I thought you were smarter than that, because I know you want to try and represent working Australian families. You have raised questions recently in this place representing the interests of working families in this country, and yet today you have a chance to stand up and be counted—and 330,000 Australians will benefit immediately if this legislation is passed—

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

Don’t wimp it, whacker!

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

Exactly. ‘Don’t wimp it, whacker!’ is the call. So let us be clear about this. You have an opportunity today to stand up and be counted, and to say, ‘I’m not going to be led to my ultimate political destruction by those whom I sit next to’—because that is their objective, and in your heart you know it. You actually understand they want every one of your seats. You guys need to have an age rule which will ensure that your sitting members can go till they are 120, because if you do not they will come and try to take your seats. You should actually double the age rule, not reduce the age rule.

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

Your heart is obviously not in the health system.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

My heart is in sound public policy and in delivering 330,000 Australians a tax cut today. They will get a tax cut today if you stop being economically irresponsible. You can relieve the pressure on working families. You can relieve the pressure on all those working families who have suffered from 12 interest rate rises caused by your government.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Senator Williams interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

You have delivered pressure equivalent to and higher than the interest rates that you are talking about, because with the volume of debt that Australians have now the impact, Senator Williams, is greater than in the period you are discussing.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

No, it’s not.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

It is. The statistics from the ABS do not lie on this. You have perpetrated a greater economic pressure on Australian families because the proportion of their income that is spent on interest rate payments is greater than in the time that you complain about and shout about. You talk about a nominal rate, but what we are talking about is the actual impact on the proportion of their weekly budget. Something you could not refute under the previous government, and one of the reasons you are sitting where you are today, is that Australian families got it. You might want to pretend about the nominal rate debate and try to run up the flag—and you did. To be fair, you put this test to the Australian people. You said, ‘Hey, look! They have 17 per cent or 23 per cent or 25 per cent’—whatever the rate was—and you put that test to the Australian people. They said, ‘Well, actually we don’t agree, because we’re under pressure right now from the interest rate increases caused by your government, which take a greater proportion of our income than they did in the period you’re talking about.’ It is a statistical fact.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Rubbish!

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

The Australian Bureau of Statistics proved it. And it is not rubbish, because the Australian public actually made the judgement. They said—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Senator Williams interjecting—

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

You are taking your advice, I am pleased to see, from at least a sensible source, as opposed— (Time expired)

Progress reported.