Wednesday, 9 September 2009
Fairer Private Health Insurance Incentives Bill 2009; Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009; Fairer Private Health Insurance Incentives (Medicare Levy Surcharge — Fringe Benefits) Bill 2009
Debate resumed from 18 August, on motion by Senator Faulkner:
That these bills be now read a second time.
In debating the Fairer Private Health Insurance Incentives Bill 2009 and associated bills, we are debating one of the many promises of the Rudd government in the health portfolio, as we discussed a few weeks ago. Before the election we were promised the world by the Rudd government on health, and they have delivered next to nothing. We were promised that they would fix public hospitals and, if not enough progress had been made by the middle of 2009, they would move to take over the running of public hospitals in Canberra. We were promised that they would leave intact and retain the existing private health insurance rebates and that they would retain the private health insurance policy framework put in place by the Howard government, which helped to restore balance to our health system. And, of course, we were promised by the Rudd Labor government before the election that they would not reduce the extended Medicare safety net. We were promised a new era of cooperative federalism on health—the Commonwealth working together with the states and territories to fix our health system. We have had broken promise after broken promise after broken promise.
Our public hospitals are under more pressure now than when the Rudd government was elected. Average waiting times for elective surgery are now longer than what they were when the Rudd government was elected. And what have we had? We have had a review for 20 months—the National Health and Hospital Reform Commission process—only to be followed by a review of the review. We now have the Prime Minister and the Minister for Health and Ageing, Nicola Roxon, travelling around Australia for photo opportunity after photo opportunity just to make it look as if they are doing something. There has been no progress whatsoever: no action, no outcomes, only bureaucratic processes and a political strategy to make people believe that there is something happening when there is nothing happening.
The private health insurance rebate promise was one of the most emphatic promises before the election. The Rudd Labor government was going to retain the existing private health insurance rebate. It was repeated by the Prime Minister and it was repeated by the now health minister, Nicola Roxon, again and again.
Indeed, no ifs or buts, as Senator Barnett quite rightly says. In fact, in Tasmania, Nicola Roxon, the then shadow minister for health, put out a press release accusing the coalition of running a scare campaign because we dared to question the sincerity of this commitment. The record is now here for all to see: Labor, as soon as they got back into government, returned to their bad, old-fashioned ideological crusade against private health. They said they would not do it but of course they have.
This is a very bad public policy measure for a range of reasons. Firstly, it will put more pressure on public hospitals, which are already under pressure. It will see more people leave the private health system, and the government agrees with this. We might have some arguments about the figures but the government agrees that it will see more people leave the private health system. Millions of people with private health insurance will see an immediate increase in the cost of their private health insurance—up to 66.7 per cent. We will see more people leave and there will be flow-on consequences. There will be flow-on consequences year on year as more people leave. There will be more pressure on premiums, more people will leave and we will end up back in that vicious downward membership cycle that we experienced in the 1980s and early 1990s. The Rudd government promised us that this would no longer happen as they had now learnt from their mistakes of the past and seen what a bad impact these sorts of measures had on the health system when they were last in government. But of course it has happened.
The government has done some modelling, and the modelling as always is part of a political exercise. The modelling underestimated the impact of this measure in terms of the number of people that will leave private health. It also underestimates the impact on public hospitals, and it does not assess at all the impact on future premium increases. Why is that so? Firstly, they have excluded altogether 1.4 million privately insured Australians from their calculations. Secondly, they have made the absolutely heroic assumption that nobody will downgrade their level of cover as a result of this measure. Experts, including those experts who say they support what the government is doing—not those that are supporters of the private health system, by and large—will say to you that the most rational decision for anybody caught by this measure would be to downgrade their level of cover. That is because of the combined effect of the rebate reduction measures and the increases in the Medicare levy surcharge. The government heroically says, ‘No, it is not going to happen.’ Reducing their level of cover means that people will face increased gaps or they will have to go to the public system to access those procedures that they have excluded from their level of cover.
The coalition has made a very constructive proposal on how we could actually achieve the same fiscal outcome for the budget—in fact a better fiscal outcome for the budget—in a better way for the health system. The Leader of the Opposition, Malcolm Turnbull, proposed that instead of pursuing this broken promise of the Rudd Labor government we should increase the excise on tobacco by 12.5 per cent. Again, what did we get from the government? A political exercise. They tried to go out there and talk it down and selectively leak some Treasury advice. But thank God for the opportunity of Senate estimates where we were able to ask some questions of Treasury. We know that, unlike what the Rudd Labor government tried to make people believe, an increase by 12.5 per cent in the tobacco excise will raise $2.2 billion, which would more than offset the cost of not going ahead with the means testing of the private health insurance rebate, which would save about $1.9 billion. Additional revenue of $2.2 billion versus $1.9 billion in budget cuts means that the budget will be $300 million better off. People will be better off because of reduced levels of smoking. The health system will be better off and there will be less pressure on public hospitals instead of more. But, instead of embracing the very constructive proposal that the opposition has put forward, all we have had from the government is sneering.
This is part of an overall agenda. We discussed earlier today the changes to the extended Medicare safety net—another part of the ongoing crusade against people who access healthcare services through the private system. Before the election we were promised that it would not happen and that Labor was now committed to both a strong public system and a strong private system. We were promised that they were now committed to ensuring that we have got the right balance in our health system. Instead, we have had broken promise after broken promise. This is bad public policy. The opposition is opposed to this legislation and we will vote against it at every step of the way—and we hope the Senate will join us in defeating what is a very, very bad piece of legislation.
I will start by stating the obvious, the Greens very often stated position: we are opposed to the private health insurance rebate. We have argued many times before that it is bad policy. It pours taxpayer funds into the pocket of the private health insurance industry as subsidies for their products at the expense of Australia’s desperately underfunded public health system. Our public hospitals and our health workers are struggling with a lack of resources, while $3.8 billion goes to the private health insurance industry. We believe that these funds would be much better directed to the public health system. We remain implacably opposed to this approach to health funding.
That said, we concede that means testing the private health insurance rebate is an improvement on the current flat rebate approach of 30 per cent to all private health insurance holders, irrespective of their income level and capacity to pay. Removing the rebate from those on higher incomes is a step towards the Greens position of getting rid of the rebate altogether.
I have in the past outlined the Greens’ position on the private health insurance rebate quite extensively. We believe that the Greens are not alone in this view. In fact, as has been mentioned in this place before, Treasury shared the Greens economically responsible position. In February this year, the Age ran on its front page an article saying that Treasury had advised the government that the private health insurance rebate was in fact bad policy and that the $3.8 billion would be better spent in our ailing public health centre, a sentiment with which we concur. The article cited documents from a Treasury briefing to the Rudd government shortly after the election. The article reads:
THE private health insurance rebate paid to millions of Australians is ‘very poor policy’ and should be dumped, according to a confidential briefing to Treasurer Wayne Swan ... The briefing said the billions of dollars lost annually to the rebate would be better spent on public hospitals.
The article then apparently quotes directly from a Treasury document, which says:
This rebate represents very poor policy. There is no doubt that its $3 billion annual cost to revenue could deliver far better health outcomes if directed to additional capacity in public hospitals.
Since that advice was provided some time ago, the annual cost of the PHI rebate has risen to around $3.8 billion.
Here we have people from Treasury, some of our leading expert economists, providing advice that is in fact in line with Greens policy on the private health insurance rebate as a funding model—the same Treasury that provides advice to government on critical issues such as Australia’s approach to the global economic crisis. Yet this government seems to be ignoring this advice, and the advice of others who believe that the private health insurance rebate is bad policy and that we would be getting better health outcomes if that money was spent on a much different approach. Even the finance minister acknowledged in the article that the possible merits of the policy are debatable. But the government still continues to ignore this advice, taking what we consider to be only baby steps in terms of dealing with the private health insurance rebate. In fact, part of the debate that we are having at the moment is about the surcharge. There are two different dynamics working here, one supposedly dealing with the rebate and delivering certain outcomes. Then you have the surcharge, which is about further encouraging people into private health insurance.
According to the finance minister, one of the reasons why the policy would not be changed substantially is because it is too important to people’s financial planning to be abolished. We do not believe that that is in fact an appropriate or sufficient argument when we are talking about $3.8 billion annually of taxpayers’ money that we believe should be directed to the public health system.
We have said many times that we do not believe that the private health insurance rebate is an effective mechanism to improve our health system. In fact, we believe that it is an ineffective and inefficient use of taxpayer dollars when we are talking about the delivery of health services in the broader health system. It does not directly fund the delivery of health services and it basically supports the private insurance industry.
Compelling evidence was presented to the Senate inquiry into the Fairer Private Health Insurance Incentives Bill 2009 and related bills by Dr John Deeble. Dr Deeble was a member of the old Health Insurance Commission for 16 years and a director of Medibank Private with responsibility for premium setting. He described the PHI rebate as wasteful and divisive in the way in which it separate the public and private health systems rather than integrating them. The Greens believe that the government is being irresponsible in ignoring this range of advice from both health and economic experts.
Ian McAuley, from the Centre for Policy Development, provided evidence to the Senate inquiry that showed that the rebate in particular has minimal impact on public health insurance membership and equally has had little effect on reducing public hospital demand. He provided the committee with evidence that showed that the public and private sectors deal with very different caseloads, so this rebate could never be expected to reduce the demand on public hospitals.
Dr Deeble provided the inquiry with evidence that showed that PHI membership was not sensitive to price but sensitive to income. In fact, he discussed quite extensively the inelasticity to price. When the 30 per cent rebate was introduced in 1999, there was little effect in the following two years after its introduction. Dr Deeble felt that a subsequent rise in coverage took place was the result of considerable advertising and a promotion of the fear that Medibank might not be able to meet the needs of consumers in the future. Dr Deeble spoke of his experience in Medibank Private. He said that it was possible to vary premiums without any discernible effect on membership and that there could be significant differences between insurers without any noticeable change in market share. He felt that it was almost impossible for people to understand all the various products that insurers offer and to be in any position to determine whether in fact they were being offered value for money.
We believe that there needs to be a more rigorous national debate in Australia on the kind of health care we expect and how we are willing and able to pay for it. Professionals and dedicated people in the health sector are often demoralised by and their communities dissatisfied with the current approach to health care. Australian expenditure on health care, as we all know, is rising rapidly. Ten years ago, it represented 8.1 per cent of GDP and now it is 10 per cent. The states have dramatically increased their health expenditures to the extent that in some cases it is almost 30 per cent of their budgets.
Taxpayers, we believe, have a legitimate right to ask, ‘Are we getting value for our money?’ We know that countries that grant significant public subsidies to private health insurance, such as Australia, France and the United States, have faced considerable pressures on their public budgets. We are concerned that all that the PHI rebate does is rearrange the queues, promoting some and shifting others to the back of the queue and that, even though it may help some with low-priority needs, it may lengthen waiting lists for those with greater needs. We believe that this is bad public policy and also that it promotes queue-jumping.
Ian McAuley presented evidence to the Senate Standing Committee on Community Affairs inquiry into these bills which argued that while the tax systems are far from perfect—and I think most people in Australia would agree with that—they do achieve a degree of equity. He pointed out that PHI is essentially a stealth tax which builds in inequities. He also says that there is little incentive to provide ‘public good’ services, such as promotion of healthy lifestyles, and that the costs of collecting tax through a single system are more effective than doing so by means of individual insurers. In fact, he is essentially arguing that we would be better off taking another approach.
The private health insurance industry has been successful, however, in conveying the impression that without private health insurance there would be a collapse of the private system and that Australia would be on the path to the madness of so-called ‘socialised medicine’. We should be asking, ‘Is this really the case?’ They have got away with making these claims are untested for years and it is time that we stood up and challenged them. John Menadue is one of those that do challenge them. John, who is from the Centre for Policy Development, calls private health insurance a ‘cancerous growth’ and says that it is not a health program, and we agree; it is corporate welfare.
The increase in the surcharge is the carrot to the industry. The government is introducing the rebate in an attempt to deal with some parts of an ineffective private health insurance rebate system and the subsidies to the private health insurance rebate. Of course, we have all heard the claims that membership will go down. To balance this, the government has decided to give to the insurance industry the carrot of increasing the surcharge on those with higher incomes. Bear in mind that those on higher incomes that do not have private health insurance are essentially conscientious objectors—they have already been pushed and pushed and pushed to take out private health insurance, and they have not done it. As I say, they are conscientious objectors; they are saying: ‘No, we do not believe in private health insurance. We would rather be part of the public system.’ But the government, by increasing the surcharge, is saying, ‘No, we will hit you conscientious objectors; we will still force you into private health insurance.’ These people effectively self-insure, and they are now being pushed into either paying a higher surcharge or taking out a rudimentary health insurance product, which is what a lot of people have been doing.
We do not believe that this is an appropriate approach to private health insurance. Why should the more than 100,000 people who are currently not taking out private health insurance be obliged to take up a rudimentary insurance product—a small policy with few benefits—which is what happens in some cases where people feel they are obliged to take out private health insurance? We do not believe that this is of benefit to either consumers or taxpayers. More health dollars are going to be spent by people who feel obliged to take out health insurance and who will then feel obliged to make the best use of the private health insurance that they have taken out. These health dollars will not be spent on dealing with necessary or life-saving interventions, and these are people who, understandably, feel that they should get something out of forking out for an insurance policy that they never really wanted in the first place. In other words, there is a potential that they will be using services that they do not really need, which, of course, leads to higher costs to our health system.
As the Productivity Commission has put it, increased levels of private health insurance ‘have been associated with a marked increase in the number of services performed and reimbursements for their services’. That has to lead us to question whether these services are necessary and whether the money that was put into the system to promote private health insurance is then in a vicious cycle of promoting the unnecessary use of services. People who may benefit from private health insurance—such as older people—cannot afford to pay their premiums and have to rely on the public health system. The winners in this system, of course, are the insurers—the ones that tell us that we cannot live without private health insurance. These are the people who say that, without their involvement, our entire health system would collapse around us. These are the same people whose administrative costs are double that of Medicare and who continue to push up their premiums every year.
We believe that private health insurance has failed to take the pressure off public hospitals. We know that it has allowed private hospitals to attract highly professional staff away from public hospitals, we know that it weakens Medicare’s capacity to control costs and quality and we believe that it is an inefficient way of promoting so-called choice. We also know so much about why it is unfair and inequitable, but here we are once again patching up bad policy.
As I have stated already, the Greens deep belief and policy is that we should be removing the private health insurance rebate and redirecting that $3.8 billion to the public health system. Look at the news just recently where the private health insurance profits are up—so much for them doing it hard! Ian McAuley calls this ‘the power of policy privilege’, and we believe that he is on the right track. We do not need subsidies to private health insurance firms to promote private health delivery. Private health insurance companies are not, in fact, health care providers. They are part of a financial world. There is evidence to suggest that private hospitals would be up to $2 billion year better off if they were receiving money as part of a subsidy paid to them, for example, and not receiving funds by financial intermediaries.
As I said, notwithstanding our position on the private health insurance rebate, it is simply inequitable that high-income earners should receive the same rebate as those on a lower income. While we are concerned and we do not believe that this is a fair system, we do believe that it is a small step in the right direction to introduce the means test that removes the rebate for high-income earners. It puts a little bit more equity into the private health insurance rebate. We will be supporting the rebate because, as I said, we believe it is a small step in the right direction. We believe that the resources saved should be injected into the public health system. We have made that comment repeatedly.
The Greens are deeply concerned that the government, during the budget, made cuts to health in what we believe are quite important areas, such as the work of the excellent National Prescribing Service and the Public Health Education and Research Program. We believe the money saved through this rebate scheme should be invested in improving our public health insurance system. We believe that programs such as those should have been supported.
The Greens will be supporting the private health insurance rebate means testing approach, but we do not support the increase in the surcharge. Unfortunately, the government have put these bills together in a cognate debate, so we are unable to vote separately on the rebate and the surcharge. I am putting on record here that we believe that the bills should have been separated so that we could vote separately on these two issues. The government are trying to have a bet each way. They are trying to means test the rebate to bring a bit more equity into it, but at the same time they are saying to industry, ‘Don’t worry. We’re going to encourage more people in by increasing the surcharge.’ We do not believe that that is an appropriate approach. We believe the government need to be taking a much more fundamental approach to our healthcare system. They are tinkering around the edges with some of these things and not making the fundamental changes that we need. They are not addressing the overall negative impact that the private health insurance rebate has on our healthcare system and the fact that that money would be better injected directly into our health system rather than being filtered through private health insurance companies and distorting the way it can influence good health outcomes.
The Greens do support the rebate. We do not support the surcharge. We encourage the government to split the bills to enable us to vote in a way that reflects the true opinion of the Greens—that is, support for one bill and not the other. The government may, in fact, by putting them together, force us to vote no for the whole package. That is what will happen if they do not put the question separately on the specific bills, because we will not be voting to support the surcharge.
Today I proudly stand here to oppose the government’s legislation and to say that I believe that the Labor Party in this place and around the country are both ideologically and pathologically opposed to private health insurance. They are opposed to it. They are hell-bent on putting to death private health insurance in this country. We have known that for a long time, but they have been putting up a charade. They put up a charade prior to the last election because they talked about not changing the system on countless occasions in the public arena and on the public record. The now Prime Minister and the Hon. Nicola Roxon, the Minister for Health and Ageing, made promise after promise that there would be not one iota of change to the private health insurance rebate—not one iota. And change is exactly what they have done. They say one thing; they do another.
That is not just with respect to private health insurance; it is with respect to a whole lot of things. I will give you another example: grocery prices. Prior to the last election, Mr Rudd promised that grocery prices would be lower under Labor. Of course, they got into government and what did they do? They set up the $13 million GROCERYchoice website, which, after many, many months, we all know was flawed and an absolute joke. They subsequently closed it down. That is why we have established a Senate inquiry into the GROCERYchoice website. It was a terribly costly stunt.
Mr Rudd promised that by 30 June this year there would be no more blame game. He said he would fix the problems with the public health and hospital system in this country. What have we seen? We have seen reviews and inquiries but no action. We know now that Labor pathologically and ideologically oppose private health insurance. On this side we support a balance. We think there should be support for public hospitals and proper funding and support for private health insurance.
I am going to read some of the government’s commitments into Hansard, to put them on the public record. The government’s policy proposals and this legislation, the Fairer Private Health Insurance Incentives Bill 2009 and related bills, will put further pressure on public hospitals. There will be increased waiting lists and increased waiting times as a result of this government legislation. It will increase the cost of private health insurance for millions of Australians and it will result in fewer people with private health cover.
Before I refer to the commitments of Labor prior to the last election—including their total commitment, without one iota of change, to the private health insurance system and the rebate—let us just recap where we are up to with respect to private health insurance in this country. At the end of March 2009, there were 9.7 million Australians who were privately insured. That was up from 5.7 million, a huge increase, since the downward spiral just after Labor left office, with health insurance levels bottoming out in December 1998. Remember, under the Hawke and Keating Labor governments, private health insurance participation rates dropped from 63.7 per cent in 1983 down to 33.5 per cent in 1996, at the commencement of the Howard-Costello years. Thank goodness for the coalition, which in 1996 put things back on track to provide a balance, to provide certainty, to take pressure off the public hospitals and to provide support for Australians who desperately needed decent health insurance. Policy initiatives such as the 30 per cent private health insurance rebate and Lifetime Health Cover certainly helped to turn things around.
Let us have a look at what Labor said prior to the last election, because I want to put this on the record. They should be red-faced with embarrassment about the promises that they made. On 20 November 2007, in a letter to the Australian Health Insurance Association, the opposition leader, Kevin Rudd, wrote:
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 rebates for older Australians.
That was their commitment. They put it in writing and they said it publicly. In a speech to the annual Australian Health Insurance Association conference in Melbourne on 10 October 2007—that is, private health insurance members and stakeholders from all around Australia—the then shadow health minister, Nicola Roxon, got up and said:
“This is why we have committed to the current system of private health insurance incentives—including the package of rebates, the Lifetime Health Cover and the surcharge.
Labor understands that people with private health insurance—now around 9 million Australians—have factored the rebate into their budgets and we won’t take this support away.”
They said they would not take that support away; they had factored it into their budget. They made that statement categorically and publicly, on the record, in writing and in every way, shape or form. But once they got into government, they broke their word. They broke their promise. That is wrong, dead wrong.
He did. He said exactly that. Well, that is what has happened. They are changing it all. As late as 24 February 2009, the federal minister, Nicola Roxon, reassured the public in response to a media inquiry from Leo Shanahan for his article, ‘Scrap health rebate: Treasury’, in the Age of that date. She said:
The government is firmly committed to retaining the existing private health insurance rebates …
What a shame. What a sham. What two-faced behaviour that is. It is a disgrace, and the Australian public will have the opportunity to express their disgust with this broken promise. What do members of the Australian Health Insurance Association think about this? Dr Michael Armitage put it succinctly when he said:
It would be difficult to have 100 per cent trust before any budget, given what has happened to us in the last two—particularly this decision.
He went on:
It would be difficult to have 100 per cent trust given that we have such a definitive letter from the Prime Minister, which has now been shredded.
That is what he said: it has now been shredded. Mr Michael Roff, Chief Executive Officer of the Australian Private Hospitals Association, representing all of the key private hospitals all around Australia, not just in the key states or certain territories, said this:
… these proposals constitute a fundamental breach of promise by the government. This entails reneging on clear commitments that were made not just in the lead-up to the last election but were repeated by a range of senior government figures, from the Prime Minister down, on numerous occasions both in public statements and private meetings since the election.
That is the sort of thing that sticks in my craw, and I know it upsets a lot Australians—that is, a broken promise, and this is a very blatant and hurtful one. I hope this legislation does not pass, because if it did we know that it would put upward pressure on private health insurance premiums and cause pressure on public hospitals—increased waiting times, increased waiting lists.
The impact on Tasmania would be significant. I have had contact in recent times with Colleen McGann from St.LukesHealth, a private health insurance provider, and I commend her for her leadership in and support for the private health insurance system across the board, and health generally. They are very good corporate citizens. They are based in Launceston and they employ many people in and around Launceston. They are to be commended, particularly Colleen McGann for her leadership across the community in Northern Tasmania. They have indicated that there will be a reduction in the number of people taking out private health insurance as a result of this measure. That is no surprise. Of course that is going to happen. The average age of a person taking up private health insurance is likely to increase, and people will of course change the type of policy they have. Ms McGann indicates that there will probably be higher excesses, meaning that, should clients require hospitalisation, the out-of-pocket expenses will be much greater and some clients will find they cannot actually afford the excess. So guess where they are going to end up? They will end up in the public hospital system, which is exactly what we have been saying. There will be further pressure on the public hospital system across the board. This is the concern that we have.
Last year, in relation to the government’s proposal at budget time, St.LukesHealth estimated that Launceston General Hospital could face up to an additional 10,000 patients under the changes that were to be put into effect at that time, with similar pressures affecting other Tasmania hospitals, and that on a population share basis—these predictions are concerning—up to 50,000 Tasmanians could transfer to the public hospital system.
That was last year based on last year’s proposal. These are the concerns we have. Particularly in Tasmania we have very poor health outcomes. We have the poorest hospital indicators of any state in the country based on the State of Our Public Hospitals report. That is a concern for all Tasmanians here of whatever colour or persuasion. Surely, we have to try and do better.
In conclusion, I say that I am proud to oppose this legislation and to stand up in support of a balanced approach and show support for the private health system and support for promises being kept. The government, I say again, says one thing prior to the election and then does another after the election. They have made a categorical promise; they have broken that promise, and that breach is going to hurt the hospital and health system across this country and will be disadvantageous to Australians, not just the 9.7-plus million people with private health insurance but all Australians. It is a very fearsome and concerning situation with which we are now presented. I thank Acting Deputy President Carol Brown and the Senate.
I join my colleague here in expressing his frustration, and not only his frustration but that of so many other Australians, with the whole administration of this portfolio—with the expectations that were given in the 2007 election and the non-delivery and broken promises afterwards. During this session of the parliament over the last month we have rightly been focusing in this chamber on the government’s waste, bias and incompetence with regard to the stimulus package—and rightly so. We have pointed out ministers who have mismanaged or have been just straight-out incompetent. Of course Mr Peter Garrett fits into that category very well, as does the Deputy Prime Minister with regard to the expenditure on the so-called ‘education revolution’.
This portfolio flies under the radar and has previously flown under the radar . The minister in the other House, Ms Nicola Roxon, would have to be one—and I can see that you are about to jump on me, Madam Acting Deputy President for using the wrong terminology—who comes into that category of portfolio mismanagement and incompetence. I venture to say that this minister has been put into this portfolio—because she is certainly not up to the job—as a puppet to run Labor’s ideology, to take the brunt of the broken promises, and the previous speaker spoke of those broken promises very well. I say that with the full understanding that this is a difficult portfolio, whoever takes it up and whatever side of the House takes it up. It happens to be one of the busiest. It is probably the busiest portfolio outside the Prime Minister’s office. It gets as much mail as the Prime Minister’s office, I am told.
But with all that, Minister Roxon has handled this portfolio like the lightweight she is. Just look at all the broken promises. Just look at the failed programs. Just look at the mismanagement of the whole portfolio and you will agree with me. I am certainly sure that those on this side of the chamber will agree with me that we have a very lightweight minister running a very heavyweight portfolio. This is a government—and she takes the responsibility, I suppose—where the Prime Minister promised coming into government that they were going to fix the hospital system in the states. They were going to stop the blame game within 20 months. Their first act was to set up an inquiry. That inquiry found after 20 months that nothing had improved. The primary yardstick, if you like, the length of surgery queues, had increased. So what do they do? They set up another inquiry to inquire into the inquiry. What inaction!
This was also a minister that promised with great expectation that they were going to increase the nursing numbers. I believe that they dedicated some $39 million over five years to a target figure of 7,750. To date, two years on, nearly halfway through the program, they have 541. They are not going to meet that target. What a disappointment—another failure. This is where their priorities lie. In the first budget they cut—and I could be corrected by the shadow minister—$100 million from the chemotherapy budget.
They have since backflipped but they did so under pressure after feeling the heat. While they have certainly backflipped, that was the announcement at the time. If they could get away with it, that was their priority. They do not mind spending money on pink batts; they do not mind wasting money on pink batts, but they had the audacity to announce in their budget a cut of $100 million on chemotherapy. That is the priority they are giving this portfolio. What about the cut of the cataract rebate for old people? There was another one that they announced in the budget.
The Acting Deputy President:
Order, Senator Polley, cease interjecting!
The Acting Deputy President:
Senator McGauran, I ask you to—
They promised not to cut it, and they seek to cut it. I do have the main part of this bill to get to—and I have done a great deal of research on this—to prove even more so what a mess this portfolio is in. One is tempted to get bogged down in all of the other issues. I want to answer the interjection. We never cut the cataract rebate, and older people would be the main people affected by that. We never tried to cut $100 million from the chemotherapy budget. I need not say whom that will affect—cancer patients directly. We never tried to take choice from women. Senator Polley might be interested in this. I wonder if she ever spoke up in caucus about cutting the choice for women to have a home birth, denying them a home birth and making illegal the possibility of having a midwife. Did you speak up in caucus?
The Acting Deputy President:
Senator McGauran, I ask you to direct your remarks through the chair.
Madam Acting Deputy President, do you think she ever spoke up on that issue? They have done a backflip on that I believe, or at least they have deferred the issue.
At all levels this portfolio is mismanaged. We have yet another case of a broken promise. If they think this will not have an effect down the track, they are delusional. I am sure they know it will but, as previous speakers have said, it is the ideology of the issue that is driving the change. I want to read for those listening to the broadcast the purpose of these bills as outlined in the Bills Digest. It states:
The Bills propose the introduction of three new Private Health Insurance Incentive Tiers, so that those on higher incomes receive a lower private health insurance rebate when they purchase a complying health insurance policy, and face a higher Medicare levy surcharge if they opt out of private health cover.
This measure was announced in the May 2009 budget. Of course, it followed the May budget announcement in 2008, which also attacked the private health insurance sector. In the 2008 budget the Medicare levy surcharge threshold was increased. In this policy change, by lifting the levy charge in the 2008 announcement the government is taking away a very significant incentive to take up private health insurance. If you like, they took away the stick and in this legislation they are taking away the carrot. In the two budgets they are attacking the private sector. By taking away the stick or reducing the stick, which is the surcharge, and by taking away the carrot by reducing access to the rebate they will reduce the take-up of private health insurance. They are dismantling the fundamentals of a balanced health system.
We on this side of the chamber stand for a balanced private and public health system. We do not do it on any ideological basis. You can accuse us of that if you like—I am happy to take it up as a point of ideology. But it is quite rational. Why do you think you would have a balanced private and public health system? Because the cost of a pure public health system is too great on any government’s budget. President Obama is going to find that out. It is being debated over there in congress right now.
We on this side of the house, who had the reins in the previous government, worked that out and we produced a balanced system. We ran those principles into policy. We ran an affordable health system, an accessible health system and a modern health system with the best of care. That means you have a balance between private and public. You take the pressure off the public health system so that those most in need can access it.
The sheer hubris that is coming from the other side in regard to health! I am happy to have a vigorous debate with you on any issue. I am happy to have a vigorous debate with you on the stimulus package, on education, on the Treasury portfolio or on Senator Conroy’s portfolio—what does he do with broadband?
He reads laptops. I am happy to have a vigorous debate where you can interject across the chamber, but not on health. Health directly affects people’s lives—working families and individuals. It is not to be played with politically or ideologically. Haven’t you learnt that yet? You will spend one term in government if that is the case. Are you a true public representative? Are those on the other side true public representatives or are they going to play politics with the health portfolio no less?
All my research is going out the window because those on the other side are provoking me. They have no sense of the oath that they made at this table. There is a time for politicking, but you never do it in the area of health. You cannot play with people’s lives like this. You cannot play with their household budgets. You cannot play with their emotions. What do you think people on chemotherapy think? What do you think the mothers who want a home birth think? You want to play politics with that? You want to take an ideological stand with regard to private insurance and with people’s ability to access care when they need it, when they are most ill?
Of course, Senator Polley is scuttling out of the chamber. She has had enough. Reality hits. What sort of public representative plays politics with the health portfolio? As I said, I would be happy to vigorously debate any other issue. I have been here long enough to understand the politics.
This side of the chamber does not play politics on health. It does not work, for No. 1. The public will not accept it. If you think you can, they will not accept it. They will vote you out on this issue alone. You can have all the stimulus packages and school halls and pink batts that you like, but you play around with health, as you are in every budget and in between the budgets, and you know the pressure that will come your way. You have had to back down on some issues so you know the pressure that comes your way—or you ought to. There is many an ignorant person across the other side, but there are some sensible heads who have sought to back down. Of course, I would like to think it was because of the cogent arguments put up by the shadow minister here in the chamber, Senator Cormann. He has carried the whole debate very well since we came into opposition and you went into government, but I would venture to say that even Senator Cormann—who probably rallied all the public protest himself—would admit that the backdowns have not necessarily come from our side. We do not really think that you listen to us that much or to the numbers in this chamber. We know that the backdowns that have been forced upon you from some of the idiotic budget announcements have come from the public.
Yes, people power. That is what you will face every time in this portfolio if you think you can get away from having made the clear, unadulterated election promises that you have. I must say I had not noticed the quote from Dr Armitage that was given by the previous speaker, Senator Barnett, but I have looked it up and I will quote it. Dr Armitage, the chief executive of the Australian Health Insurance Association, said:
It would be difficult to have a 100 per cent trust before any budget, given what has happened to us in the last two …
But the point I really like—
Mr Acting Deputy Speaker, on a point of order: we are debating very serious legislation. Can we stick to the point of relevance of this discussion and get back to the debate.
It is a gem. The Prime Minister promised in that letter—I repeat: promised—but you all know the Prime Minister anyway. I know you know the Prime Minister in that way, but Dr Armitage has put it in print. None of you would have the guts to do it, but he has put in print what he thinks of the Prime Minister about breaking his promises. The Prime Minister wrote to him that he would not touch the private health insurance rebate—and that is what this legislation is all about; he has touched it—and Dr Armitage said he shredded the Prime Minister’s letter. He shredded it, with the greatest of contempt. I love that line; I might frame it. What contempt Dr Armitage has the Prime Minister. He is the first person to really blow the whistle on this Prime Minister. That is all his word is worth: it ought to go into the shredder. And don’t just think that is a passing comment; that cuts deep, not just with Dr Armitage and the group he represents. That is now becoming the hallmark of the Prime Minister—just about everything he says you can now start to shred. I think Dr Armitage has started a trend: shred all the Prime Minister’s letters.
I know other speakers have said this but it ought to be put down again. This is what the Prime Minister said in a letter to the Australian Health Insurance Association on 20 November 2007, in the election period. As the then opposition leader, Kevin Rudd wrote:
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 all Australians.
That comment is shreddable—as it was.
But time is on the wing—I was utterly distracted by the contempt and the provocation from the other side, who just do not seem to understand the effects that this bill, for a reduction in the rebate, will have on working families directly, on people’s household income and their wellbeing and sense of security. It is going to have a direct effect on households. But overall, on a macro analysis, the reduction, along with the previous decision on the surcharge—as I said, first the stick and now taking away the carrot—is going to have a cumulative effect of reducing the numbers in private health, so you will have to revisit this issue because you will see the numbers starting to fall.
History bears this out. When we sought to increase the numbers in private health we introduced three policies: the surcharge, the rebate and the life health cover. We found that we had to have the three in place. One did not do the trick—it did not increase the numbers; two did not increase the numbers; three had to be in place before the effect started to occur. And of course it did occur: when we left office more than 40 per cent—some 45 per cent, I believe—were in private health, and that was increasing. As for the effect you are going to have, you single out that the surcharge has had no effect—yet. But add it to this and you will start to get the cumulative effect in reverse and the numbers will start dropping. That is predicted in the dissenting report in the Senate Community Affairs Legislation Committee’s report of its inquiry into this bill. So that prediction is there and we will be revisiting this issue.
It is an absolute pleasure to be able to follow Senator McGauran, Senator Cormann and all those from the coalition side who have outlined in such an eloquent and passionate manner the reasons why this government’s approach on this issue is just so flawed. Senator Cormann, who has become the Senate’s pre-eminent advocate for the health industry over a range of issues in this chamber over the last 12 months or so, has pointed out time and time again in various debates on private health insurance that this government is simply out to do this industry in. It is purely an ideological crusade from those on the other side of this chamber who wish to destroy the private health insurance industry.
This is an industry which provides a service that millions of Australians choose to take out. Some 9.7 million Australians at the end of the March quarter of this year had private health insurance. Some of them, I am sure, would be listening right now to the broadcast of the Senate’s proceedings. There are 9.7 million of them out there who dip into their pockets and pay a little bit out of their hard-earned income to provide for private health insurance.
Why is this important? It is important because it injects balance into the health insurance system. It injects alternatives into the health system for Australia. A health system which relies purely on the public sector, which relies purely on public health, Medicare and our public hospitals, is a health system that is a stool trying to stand on just one or two legs. It will not work.
The private health sector—private hospitals and private health insurance—is the important third leg to that stool. It is what will make it stand, make it work and make our health system survive. Instead it is being gutted by policy measure after policy measure of this government.
The government have a track record. They have form, as Senator McGauran alluded. When the Labor Party were last in government, they decimated private health insurance and they are on the way to doing it again this time. When they were last in power, private health insurance participation rates dropped from 67 per cent in 1983 to 33½ per cent in 1996. So, in the 13 years of the Hawke-Keating governments, they almost managed to halve the participation in private health insurance.
If they were to do the same to the nearly 10 million people with private health insurance in Australia today, it would wipe five million people out of the private health insurance industry. Is that the goal of the Minister for Health and Ageing? Is that the goal of the Prime Minister—to take five million Australians out of private health insurance? That sure seems to be the plan they are pursuing. That sure seems to be what they are pushing towards with the types of measures that they have pushed in their last budget and again in this budget.
Senator McGauran did an excellent job, as did Senator Cormann, of outlining how this is a breach of faith with the Australian public. It is another breach of faith, layered upon the many others, where the Rudd government has broken its word, broken its bond and broken its commitment to those Australians who voted for it. They should have every right to feel let down and disappointed by the fact that, time and time again, they have been doublecrossed by a government which gave its word and went on to break it.
Senator McGauran referred to the letter sent and signed by Kevin Rudd, federal Labor leader and member for Griffith, dated 20 November 2007, to the Australian Health Insurance Association. It says:
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 rebates for older Australians.
There it is in black and white—it may have gone to them in colour at the time; I do not know: a demonstration that the now Prime Minister, the then Leader of the Opposition, was willing to say anything and do anything to con his way into the office of Prime Minister.
Indeed, Senator Cormann, nobody can trust a word they have to say on this issue because their record, their form, is very clear: broken words and broken promises, time and time again. We indeed have the letter from the Prime Minister to the private health insurance industry association, but he was backed up by the words of the then shadow health minister and now minister, Nicola Roxon. The minister, then shadow minister, at the Australian Health Insurance Association conference on 10 October 2007, made it very clear:
This is why we have committed to the current system of private health insurance incentives—including the package of rebates, the Lifetime Health Cover and the surcharge.
Labor understands that people with private health insurance – now around 9 million Australians—have factored the rebate into their budgets and we won’t take this support away
That is what the now minister had to say before the election: ‘We won’t take this support away.’ Well, so much for her word. So much for what she stood up there and told the health insurance industry and ordinary Australians, because ‘take this support away’ is what they are doing. So much for those Australians, many of those nine million Australians who will be affected by this measure if it passes, who, to use the now minister’s words, factored the rebate into their budgets.
This government likes to talk about helping working families. It likes to talk about helping households along the way. It likes to talk about how it is helping people with the pressures in their lives. Well, there is no evidence of that—no evidence of that at all. The government is certainly not helping people with their budgets, because, if people have factored this rebate into their budgets, they are about to get one hell of a shock when this rebate is taken away from them and they find they are going to be paying more.
Everybody involved in private health insurance will be paying more because of this. It is not just those who might lose the rebate; it is every person who takes out private health insurance who, over time, will face the cost pressure of rising premiums.
Senator Cormann is indeed right. There are nearly 10 million Australians with private health insurance. Those who keep it will pay more. Some will pay a lot more because they will lose the rebate. Some will play a bit more because the cost pressures will see premiums rise. But the other 10-plus million Australians out there will also suffer longer hospital waiting lists and more crowded wards. They will pay the price of this measure as well.
No Australian will be left unaffected by this change. No Australian with an interest in health care—which, of course is each and every one of us—will be left unaffected by this change. No-one will benefit from it. Everyone will be harmed by it. This is the reality that people need to face up to, and hopefully this Senate chamber will recognise that and will ultimately choose to reject this measure.
I have cited a couple of commitments made by the government, but they were not the only ones. The then shadow minister also made it quite clear on 26 September 2007:
Federal Labor rejects the Liberal scare campaign around the Private Health Insurance rebates … The Liberals continue to try to scare people into thinking Labor will take away the rebates. This is absolutely untrue. The Howard Government will do anything and say anything to get elected.
Excuse me, Mr Acting Deputy President, if I need to roll around in the corridor here and have a bit of a belly laugh at present, because the Labor Party say that the Howard government will do anything and say anything to get elected! We have just canvassed the bald-faced untruths that have been told by the Rudd government to get themselves elected.
Time and time again they kept saying: ‘Don’t you worry; we’re not going to take these rebates away. Don’t you worry; we know you’ve got them factored into your budget. Don’t you worry, health insurance industry, we know that you are relying on this to survive. Don’t worry out there in the health sector—doctors in private hospitals—we know that you are relying on this to keep your doors open. Don’t worry, state governments, other owners of public hospitals and workers in public hospitals; we know that you want a balanced system and that you want to make sure that the private health industry is there to take some pressure off you. None of you need to worry.’ But, no, they were just saying and doing anything to get elected. That is what Ms Roxon and Mr Rudd were doing when they were talking about health insurance.
Indeed, as Senator Cormann just mentioned, even after the election—in fact right up to 24 February this year—the federal health minister was continuing to say:
The government is firmly committed to retaining the existing private health insurance rebates.
Anybody who knows anything about the federal budget development process knows full well—Senator Cormann and others exposed this as true during the Senate estimates process—that by 24 February you would have a lot of these plans in place. You would have been doing a lot of the background work and would know that you are well and truly considering, if not already committed to, changes to measures such as this: changes to the private health insurance rebate.
The government were by no means firmly committed to retaining the existing private health insurance rebates on 24 February 2009. They were not committed to it at all, because they were actually doing the work behind the scenes to change it. So they were misleading the Australian people not only throughout the lead-up to the election but afterwards. They were continuing right up until the budget this year, just hoping that they could scoot this one under the radar and that nobody would notice that they had broken this very significant promise—this very significant trust and bond—that they had tried to establish with the Australian people.
The Prime Minister likes to talk, in his own quirky language, about changes to things and to give assurances that he would not change things. Indeed, in talking about private health insurance he used one of those quirky phrases he is renowned for. He said that they would not change it: ‘Not one jot; not one tittle.’
What is a tittle? We will leave that for others to look up. Perhaps that can be an adjournment speech for you one night, Senator McGauran: the meaning of the tittle. ‘Not one jot; not one tittle.’ Maybe ‘tittle’ is a word for broken promises. Maybe there was code buried in that statement.
Maybe it was Chinese, Senator Cormann. That is quite possible! Perhaps if we check the Mandarin books we will find that ‘tittle’ means ‘this is a promise that I intend to break later on’.
We have seen broken promises galore in regard to this—broken promises galore, which, as I said before, will hurt every single Australian. How will the broken promises hurt them? They will hurt them in all manner of ways. The Health Insurance Industry Association has made it quite clear in a range of evidence provided to a Senate inquiry into this, and to many Senators as well, that there will be impacts on people.
The Australian Institute of Health and Welfare reports that private funding contributes to about 57 per cent of all surgery in hospitals. For example, it supports about 55 per cent of procedures for malignant breast conditions, 55 per cent of chemotherapy cancer treatments and 70 per cent of same-day mental health episodes. These are serious conditions. These are serious issues that Australians face. More than half of the treatments in these instances are covered by private health insurers.
When we step beyond this bill, if it is passed, we will see that they are not covered by private health insurance—that Australians will face higher costs to have that health insurance. There will be fewer people in health insurance, therefore there will be more people queuing up in the public system. It will not take much before less than 50 per cent of all surgery in hospitals is covered by private health insurance in some way and before less than 50 per cent of chemotherapy treatments are covered.
Suddenly, this will place enormous extra cost pressures onto the public system. The Health Insurance Industry Association estimates that up to 240,000 Australians with private hospital insurance are likely to exit their cover as a result of the means testing of the 30 per cent rebate. Up to 240,000 Australians! A further 730,000 Australians are likely to downgrade their level of hospital cover, and an additional 775,000 persons will exit their general treatment extras cover as a result of this policy change. Hundreds of thousands—indeed, more than one million Australians—will be reducing their cover in some way, shape or form as a result of this, with all of the flow-on and commensurate impacts that will have for those who are left in the system or for those who never were in the system but were relying on the private health system to make some difference to the public system—to provide those extra legs to the stool.
Many of the nearly 10 million Australians who have private health insurance come from my home state of South Australia. We have one of the older populations in Australia and some of the electorates within South Australia have some of the highest rates of elderly Australians of any of the electorates in Australia. Older people have traditionally clung to their private health insurance through thick and thin. That is why, in fact—contrary to popular belief—so many Australians with private health insurance are on relatively low incomes. Lots of them are retirees and lots of them are pensioners, but they are not game to give up their private health insurance. Who can blame them? State governments everywhere are running the hospitals into the ground.
Let us look at the number of people who would be affected in my home state of South Australia. In the electorate of Wakefield, there are some 44,567 voters with private health insurance, or indeed nearly 63,000 people across the electorate who are covered by that insurance—that is, young people and children who may not be enrolled to vote and others. But what has Mr Champion done to stand up for them? He has done nothing at all. In the electorate of Grey, there are 64,500 people—that is, 47 per cent—covered by private health insurance. I know Mr Ramsey has been fighting hard for those people in his electorate who will be impacted by it.
An excellent new member for Grey, Mr Rowan Ramsey has been doing an outstanding job on this issue and on many others, championing them across his vast and wide electorate. Forty-seven per cent of voters in his electorate will be hit by this slug on their private health insurance. All the rest will be impacted in other ways. Another good member is Mr Patrick Secker. Forty-eight per cent of voters—getting up to 69,828 people across the electorate—in his electorate of Barker are covered with private health insurance. These are massive numbers and these are the seats in South Australia with smaller numbers of people who are covered.
A new member I have not heard standing up for the 67,400 people in his electorate who are covered by private health insurance is Mr Mark Butler in Port Adelaide. I have not heard him out there talking about the impact it will have in his electorate, an electorate that has many social problems and that will be seriously hit with health issues by this. Another new member is Ms Amanda Rishworth. Fifty-five per cent of people in her electorate have coverage—that is, 75,431 people. What has she done? The honourable Kate Ellis, a minister in this government, has 68 per cent of people in her electorate with coverage—that is, 89,020 people living in the federal electorate of Adelaide are covered by private health insurance and will be hit by this government. Indeed, of all Labor members in South Australia, the monte is Mr Steve Georganas in Hindmarsh: 69 per cent of voters in his electorate have private health insurance—68,000 voters and 89,193 people in the electorate of Hindmarsh have private health insurance. Many of them are older people.
You are right, Senator Cormann: he has done nothing to stand up for them. He has done nothing to stand up for them with regard to them keeping their private health insurance. Those voters of Hindmarsh, those older people in Hindmarsh, have every right—as does every other voter across Australia—to private health insurance. They have been let down by this Labor government, who lied their way into office and misled voters that they would keep the private health insurance rebate intact. They have not done so. They are not planning to do so. The only thing standing between them and doing so is this Senate, and I urge the Senate to reject these bills.
The Fairer Private Health Insurance Incentives Bill 2009 and related bills if passed will affect all Australians and their access to health care. Around 11 million Australians currently hold some form of private health cover, giving themselves peace of mind should they require hospital admittance or ongoing medical treatment and making it more affordable to access health services such as optometry, dental care or physiotherapy—to name a few. However, private health insurance can be costly for the average Australian family. For a family, for example, it can cost a few hundred dollars per month to have hospital and general treatment cover. But many would argue it is money well spent. What makes private health insurance accessible and affordable for many Australians is the 30 per cent rebate. Since the introduction of the rebate and other measures, the uptake of private health insurance rose from 30.4 per cent of the population to 44.6 per cent. The fact of the matter is that, without the 30 per cent rebate, most Australians on the average salary would struggle to afford private health insurance, especially during these difficult financial times. Unfortunately, though, health is something that one cannot afford not to take seriously, so almost half the population do what they can to budget for their own and their family’s private health insurance.
Based on data from the Australian Bureau of Statistics, one million Australians with private health cover live in households with an annual income of less than $26,000. But, if things are difficult now with the 30 per cent rebate, imagine how much harder it will be for the average Australian family to find the extra money if these bills are passed. The government suggests that the impact would not be great. It argues that private health insurance is at its highest level since March 2002 and that, during the period of March 2007 to March 2008, there was an increase of 225,000 people in private health insurance. Further, it points to figures released in July that Australian private health insurance membership was at record levels at the end of the June quarter. The government points to these as an indication of a steady increase in private health insurance, despite the recent changes in relation to the Medicare levy surcharge. The proposed changes were modified as a result of compromise and negotiations with the government, and the impact would have been much greater had the government’s original plan gone ahead without amendment by the Senate.
It is important to note that the data on which these claims are based were sourced prior to the end of the full financial year, which would have excluded the full impact of the Medicare levy surcharge changes. Indeed, figures released one week later by the Private Health Insurance Administration Council show that the annual growth in privately insured Australians has fallen to its lowest levels since 2006. Since the announcement of the changes to the Medicare levy surcharge in May 2008 the number of Australians taking up private health cover has steadily decreased, month by month. If we look at yearly comparisons between June 2007 and June 2008, 389,000 Australians took up private health cover. However, following the changes to the Medicare levy surcharge, just 211,000 Australians took up private health cover. There may have been other factors, but clearly it was a factor.
The Australian Health Insurance Association forecasts that up to one million Australians will abandon or downgrade their cover as a result of the changes proposed in this bill. The AHIA figures predict that 240,000 Australians will cancel their plans wholly and a further 730,000 will likely downgrade their cover to the bare minimum. The number of Australians who will downgrade their health insurance to just basic ancillaries, so that they will maintain a level of health insurance but be unaffected by the changes to the Medicare levy surcharge, is concerning. This will be a hidden statistic and one that will greatly impact on our already struggling public health system.
Drawing again on the AHIA analysis of Roy Morgan data, the projected impact of these changes from the 2009 budget are: firstly, an extra 189,771 bed days for public hospitals at a cost of over $195 million; secondly, over 4.3 million fewer services covered in allied healthcare due to dropouts; and thirdly, a fall in funding of dental services of 1.8 million at a cost of around $99.3 million. Given my ongoing discussions with the health minister on funding for dental care for Australia, I would urge the Senate to reconsider that because I think with some modifications the government’s plans for dental health are preferable to the status quo for acute and chronic care—
There is Senator Cormann, as usual, with a very useful interjection. Senator Cormann, I think that South Australians, in my home state, will be much better off with what the government is proposing than they would be with the status quo. South Australians have accessed only something like two to three per cent of that funding, which is a disproportionately poor outcome for South Australians. I think public dental waiting lists are missing out because the money for the acute care program has not been used as effectively in some cases as it should have been. That is a separate issue but I would urge the government to sort that out as a matter of urgency. I am willing to continue to talk to the government about that because it is long overdue that we have some changes to that.
Under Treasury estimates, the provisions of this bill would mean that means testing the rebate will impact around 2.3 million Australians who currently hold private health insurance, with incomes above $75,000 for singles and $150,000 for couples. The AHIA estimates that these Australians will see their cost of health insurance increase by between 14.3 and 67.7 per cent. Those with private hospital insurance and incomes below the rebate reduction thresholds will be faced with increased premiums as a result of the members who will cancel their private health insurance plans.
This presets a real risk of adding further pressure to an already struggling public health system and I do not believe there has been any specific modelling done on that. One of the questions I will ask the government—should this go into committee—is what modelling has been done on people downgrading their private health cover so they are not caught by the surcharge changes. It has been estimated by Catholic Health Australia that means testing and a tiered approach to the 30 per cent rebate will result in an additional 36,000 people joining public hospital waiting queues.
While I applaud the work of those in the public health sector and praise our public hospitals for the tremendous work that they do on a daily basis, there is no denying that our public health system is struggling. Waiting lists are already considerable at public hospitals around the country. Non-emergency operations are repeatedly cancelled at the last minute or postponed often only to be postponed again and then once again. Put simply, our public health system cannot afford more patients than it already cares for.
It is against this background that I wish to make two more points that will influence my final position on this bill. I said this before during the Nation Building Funds Bill debate last December when I referred to these words of social commentator, Hugh Mackay:
A culture of broken promises in politics increasingly erodes public confidence in our political institutions.
With every broken promise or policy backflip, the level of cynicism grows and grows. By the government’s own admission, this is a broken promise and a policy backflip. In 2007 Australians were promised by the then opposition leader, Mr Rudd, and the then shadow health minister, Ms Roxon, that Labor would not alter the private health insurance rebate if they were to win government. It was an explicit promise. I quote from a letter from the then Leader of the Opposition to the CEO of the Australian Health Insurance Association confirming:
… Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate …
It was an explicit promise; no ambiguity whatsoever. And yet here we are. Firstly, the introduction of this bill is a broken election promise. But, secondly, to me this bill represents another broken promise, in a sense. It is a promise that is perhaps not as formal as an election promise but it was a promise made in the spirit of good faith in negotiations over the Medicare levy surcharge in October last year. By way of history, that bill also sought to change the funding underpinning private and public health through changing the Medicare thresholds.
When faced with the complex cases for and against these changes, I was struck by the lack of information about how our health system worked, about comparative funding and even basic information on health outcomes, particularly of comparisons between the public and private systems. It was in response to these concerns that I sought a Productivity Commission inquiry as part of securing my support for passage of that bill.
Minister Roxon, to her credit, established this inquiry in May of this year. The Productivity Commission has commenced its examination of comparative hospital and medical costs for similar procedures in public and private hospitals, the rates of fully informed financial consent, relevant performance indicators and the most appropriate form of indexation. Clearly, the changes to funding, indexation and the public/private balance that will result from this bill should be informed by the Productivity Commission’s considerations of such matters. If not breaking the spirit of a promise made through genuine negotiation, then these bills pre-empt important information that should be available so that the Senate might responsibly consider this bill.
One of the mantras of this government has been to use an evidence based approach to decision making. I commend the government for that approach and I am all for that too. I am a strong believer in the principle of keeping governments to their election promises but I am also aware that, on rare occasions, circumstances and context may require a change in policy. The onus is then on the government to provide compelling evidence for the need to change. Only then can senators ascertain whether policy should be opposed, policy should be changed or policy should be returned to the people to decide. I do not believe that a compelling and complete case can be made for this change in position without the results of the Productivity Commission’s inquiry into public and private health.
It is for this reason that, at this second reading stage, I move the amendment that has been circulated in my name:
At the end of the motion, add “but the Senate:
- notes that the measures in these bills pre-empt the findings of the Productivity Commission inquiry into the relative performance of the public and private hospital systems; and
- resolves that further consideration of the bills be an order of the day for the first sitting day after the final report of the Productivity Commission on that matter is laid on the table.”
I cannot support this bill at the second reading stage unless this amendment is successful and the government commits to await the outcome of the Productivity Commission inquiry. To do anything else would involve recklessly risking the balance between our public and our private health systems.
Australian families are doing it tough. Thousands of workers are losing their jobs and those with jobs are being forced to tighten their belts. Many families have been left wondering how they will have enough money to pay their next bill and every additional expense now feels like an enormous burden. The Rudd government is now looking to deal families another devastating blow by cutting back on the 30 per cent private health insurance rebate.
Cutting back the health insurance rebate is not a decision of little consequence. It is not a decision which will affect only a marginal group of people and leave the rest of the population either untouched or better off. Cutting back the health insurance rebate is a decision which will affect thousands of families who rely on their private health insurance for peace of mind and as a necessity. It is a decision which will push more people into the public system and will therefore affect the millions of Australian families who depend on an already overburdened and broken public health system. In short, cutting back the health insurance rebate is a flawed policy.
Over 11 million people have some form of private health insurance. The number of Australians with health insurance has gone up significantly since the introduction of the 30 per cent rebate in 1999, and this has been widely been accepted as further evidence of the policy’s tremendous success. Fortunately, for many Australians private health insurance is not something they are forced to rely on regularly. But health insurance is something they take out for peace of mind, because their health is too important to them to take any chances with an underfunded and overburdened public system that is clearly in disarray. Health insurance is a big expense and places a strain on the family budget, but, in the eyes of many people, it is not only a worthwhile but a necessary expense.
Family First believe that we need a strong public health system and a strong private health system. The government is at risk of undermining both public and private systems by cutting back the health insurance rebate. The decision by the Rudd government to means-test the health rebate is likely to tip the balance—premiums will go up, which will mean that private health insurance will become an expense many people cannot afford. The government has claimed that, even with the increases, more than 99 per cent of people will continue to stay in the private health system. These numbers look like they have been taken from the back of a cereal box rather than from proper, rigorous analysis. They are based on the false assumption that private health insurance is relatively inelastic and, therefore, the price of health insurance is not likely to drive consumer behaviour.
Perhaps for the Prime Minister and the Treasurer several hundred dollars seems like small change. After all, they have excessive superannuation entitlements that will see them walk away from parliament with massive pension payments, guaranteed for the rest of their lives. But most Australians are not as fortunate. Several hundred dollars more each year is a large amount of money. It is enough to be the difference between continuing with private health insurance and letting a policy lapse. Either way, it is a lose-lose situation for everyone. It is bad for those people who will decide to stay in the private system and will need to find the extra money to cover their rising expenses. It is even worse in the case where people are forced to give up their private health insurance and place even greater strain on our overburdened public hospitals.
At the Senate inquiry we heard that over 200,000 people are expected to drop out of the private system under the proposed means-testing provisions. Also at the Senate inquiry we heard that 730,000 Australians are likely to downgrade their private hospital cover and an additional 775,000 Australians could exit their general treatment cover for matters such as dentistry as a consequence of the government’s policy. How will our overburdened and broken public hospitals possibly cope with those Australians that exit the private system? It begs the question of whether the government has even considered this prospect before launching into this flawed policy. It is a further example of the government’s short-sightedness. It is willing to save money now even if that means costing much more later on.
Family First supports a strong public and private system. In Australia we have a very delicate balance between the public and private systems, and any changes must be carefully crafted. The current changes, I think, are flawed. The current changes do not do enough to help working families. Remember that this is the same government that went to the last election promising to help working families. This is the government that said at the time that one of the biggest challenges was offering help to working families under financial pressure. The government has now gone back on its word. It is a government that has once again betrayed the trust of the Australian people and cannot be believed. It is a government that has proven that what it says and what it actually does are two entirely different things.
Family First is mindful of the current economic situation Australia finds itself in. We understand that these are tough times not only for the Australian people but also for the Australian government. We have seen tax revenues collapse, social security payments go up and a strong budget surplus be transformed into a $57.6 billion deficit in the blink of an eye. Accordingly, we accept the idea that those who can afford it should shoulder some of the burden to make life easier for everyone else.
Family First certainly does not want to see multimillionaires running around with a 30 per cent rebate in their pockets either. However, the current thresholds set by the government in means-testing the health rebate are not fair. The thresholds are unfair because they focus too much on household or individual income and do not sufficiently take into account how many children there are in the household. As any parent knows only too well, the cost on families can increase significantly depending on the number of children cared for. Under the government’s proposal, the thresholds will only increase by a stingy $1,500 for every child in the household, and this does not even apply for the first child in the family. This means that a couple with three children will be allowed to earn just $3,000 more each year between the two of them before they start to lose part of the 30 per cent government rebate.
Is the Rudd government living in fantasy land? Does anyone in the Labor Party have a real idea of how much it costs to raise children? Let me tell you, if the Rudd government thinks it costs nothing to raise one child and only $1,500 for each child after that, they must be living on a different planet to the rest of Australia. Does the Rudd government have any idea of how much it costs to buy school uniforms, school books, clothes, extra food and more petrol so that you can drive your kids to sports training, and pay medical bills for sick kids, and the rest? Clearly it does not, because there is no way you can add up all those expenses and tell me that it makes sense to increase the thresholds by just $1,500 per child.
Having children is one of the biggest joys in the world, but it costs a lot of money and the government needs to recognise this more with its policies. There is a huge list of expenses that families with children face every day. The list only grows longer the more children you have. Family First has been pressuring the government to increase the thresholds for means-testing. Family First have been pressuring the government to increase it by $6,000 for each dependent child in the household. Even that is pretty light on for what it actually costs to raise a child. Increasing this amount takes into account more of the costs involved in caring for children, which families of no children do not face. Quite simply, increasing the thresholds for dependent children is common sense and the government should support this threshold.
As I was saying before, this change is a serious issue that needs to be addressed. The government seem hell-bent on undermining the private health system in Australia. The Rudd government’s undermining of the private health system is a very dangerous policy as it will leave many families worse off. The Rudd government have to be careful not to make the same mistake the Howard government made when they started to take families for granted. The Rudd government have overpromised and underdelivered on health—a very important issue. This is a mistake that the Rudd government will live to regret. Health is a touchstone issue for most Australians. They have overpromised and underdelivered on health. They gave the impression that they would not undermine the private health system and they are doing the exact opposite.
I believe in a strong public system; I believe in a strong private system as well. It is a big mistake to undermine either the private system or the public system, but the government seem hell-bent on doing both. They are penny-pinching. The Rudd government are most vulnerable on health because they have overpromised and underdelivered on health. No matter how much spin they use on health, they will get caught out in the end. I saw this with the Howard government when they took Australian families for granted, and this government is in danger of doing the same thing with health. They have broken another core election promise on health. They said they would take over the health system if it were not fixed. Blind Freddy, even with his cataracts, could tell you that the public health system is broken and that the government promised they would take it over. That was the impression and intent of their commitment. Go out to the suburbs and ask the Australian public. They know the government said they would take it over—they know the system is still broken—and they have not. The government squibbed on that. The government are undermining the public system and the private system by tinkering with it.
I am not confident that you folk know what you are doing. You are at risk of taking Australian families for granted. We all know what happened to the Howard government when they started doing this. It is a very serious issue. You are very vulnerable on health. Go out and talk to the people in the suburbs. You have overpromised and underdelivered. You should be careful. I saw this with the Howard government. When you start to take Australian families for granted, health is a touchstone issue. It is an issue that they hold very dear to their hearts. Most Australians believe in a strong public system and a strong private system. When you start to tinker and undermine them, you affect both.
I thank senators for their contribution in the debate this evening. The Fairer Private Health Insurance Incentives Bill 2009, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 will amend various acts to give effect to the recent budget measure to introduce three new private health insurance incentives tiers. The global financial crisis forced the government to make tough decisions about what is right for Australia in the longer term. The rebate as it stands is quite simply unsustainable, particularly in the context of a budget that has taken a $200 billion hit as a result of the biggest global financial crisis in 75 years. Spending on the current rebate is growing quickly and is expected to double as a proportion of health expenditure over the next 40 years. The $1.9 billion saving to government expenditure over four years associated with these reforms will help to ensure that government support for private health insurance remains fair and sustainable.
This is a hard decision and one that was not taken lightly. But it is the right decision for Australia’s long-term financial future. The government supports a mixed model of balanced public and private health services, but we have to strike the right balance. These reforms have been carefully crafted and well targeted so as to provide a fairer distribution of benefits, because the government does not believe that low-income earners should be subsidising private health insurance for higher income earners. At the same time, higher income earners will also face increased costs if they opt out of their health cover. So we are using what is characteristically called the carrot-and-stick approach.
Senators in this debate have raised the potential impact on the public hospitals. Treasury has estimated that this measure will result in about 25,000 people being no longer covered by hospital-level private health insurance, of which about 8,000 people over two years might require admission. This must be considered in the context of our public hospitals having well over nine million admissions over this same two-year period. Hospitals will not be overwhelmed. This also needs to be considered in the light of the Rudd government’s record investment under the new $64 billion COAG agreement, where hospitals will receive 50 per cent extra funding over and above the old Australian healthcare agreements. This clearly demonstrates that the Rudd government is investing in the private health sector. These are facts and they are supported by the public hospital sector. Here is what the Australian Healthcare and Hospitals Association, the public hospitals peak body, had to say on 8 May this year:
The AHHA dismissed the concerns of the opposition in the private health insurance industry that means testing would result in increased pressure on the public health system.
Some speakers, of course, have asserted today and in this debate more broadly that private health insurance would suffer. In terms of the effect on premiums, these changes are expected to have a minimal adverse impact on private health fund membership, because about 99.7 per cent of insured people are expected to retain their private health insurance. This is because those higher income earners who receive a lower rebate will face an increased tax penalty for avoiding private health insurance.
We heard last year from the opposition and the industry lobby group, the AHIA, that lifting the Medicare levy surcharge threshold, the level at which high-income earners pay extra if they do not have private health cover, would cause an exodus from private health cover. They do really remind me of people who will not settle on the facts, who will not look at the evidence and come to a conclusion, but prefer simply to pick up rumours and continue to use scaremongering tactics. So back then they also predicted a mass exodus of people from private health insurance. Not only did that not happen but the latest official statistics from June 2009 show that there are now 211,000 more people with hospital-level private health insurance than there were at the same time last year. They did not get it right then. Here is what AMA President Dr Andrew Pesce had to say on the matter on Meet the Press on 7 June 2009:
The AMA has had some modelling done itself by Access Economics, and this would seem to show that there isn’t going to be a huge drop-out at this stage …
The opposition have no credibility and they are just scaremongering again. It is disappointing to see the opposition doing this. Quite frankly, either they do not understand the debate or they are simply scaremongering because they do understand the debate and have no argument to put. Anyone who experiences an increase in private health insurance costs due to a reduction or removal of the rebate will be on a higher income and will have received tax cuts through the budget that in most cases more than offset this increase in costs. But, of course, it is what you would expect from the opposition—nothing more than hot air; no debate but scaremongering tactics thrown in.
But I would like to thank the minor parties for their constructive contribution in this debate. It has not been an easy debate. I think the Greens contribution has been measured. The government’s policy on private health insurance comes as a balanced package of incentives and penalties—or carrot and stick, as I earlier referred to it as—and cannot be split and considered separately. The government supports a mixed balance of private and public health. This will make the system more equitable by ensuring that those who have a lesser capacity to pay are provided with more support.
I understand that Senator Xenophon has a longstanding interest in this. I know he has had useful discussions with the health minister on this issue and other issues. As I understand it, he suggests that we delay the passage of this legislation until the Productivity Commission reports back on a comparison of public and private hospital systems. The government looks forward to this report’s findings, which will dovetail into the government’s work on its response to the National Health and Hospitals Reform Commission. However, its findings will not change the fact that the global financial crisis has given the Australian budget a $200 billion hit, will not change the fact that rebate costs are ballooning unsustainably and will not change the fact that the rebate can be made fairer.
In addition, Senator Xenophon has given a compassionate speech, but those issues that we are faced with really do need to be reflected upon in making this decision. I ask Senator Fielding to do likewise. His contribution, as always, was about, in part, ensuring that families, particularly large families, are taken into account. I add this in thanking him for his contribution: singles earning $75,000 and under and families earning $150,000 and under will not be personally affected by these reforms. I can add more specifically that both the rebate and the NLS tiers will be increased by $1,500 for every second and subsequent child. It is a system that is designed so that families are taken into account.
In summary, this measure will make private health fairer and more balanced, and more sustainable in the long term. By maintaining a carefully designed system of carrots and sticks, this measure will have a negligible effect on both premiums and the public hospital system. This is the right thing to do for Australia’s economic future and to maintain a sustainable mixed public-private health system. With that contribution, I thank all of the speakers in this debate.
Original question put:
That the motion (Senator Faulkner’s) be agreed to.