Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Link to this | Hansard source

We have said it before and we say it again: the Rudd Labor government have been an absolute failure in the health portfolio. They promised the world before the last election and have delivered next to nothing. They promised to fix public hospitals, they promised to end the blame game, and they promised a new era of cooperative federalism. The Prime Minister promised the buck would stop with him and, of course, the Prime Minister and the then shadow minister for health and ageing, now the Minister for Health and Ageing, Nicola Roxon, promised most emphatically that they would retain the existing private health insurance rebates as an important part of the policy framework underpinning our health system.

We have seen a Prime Minister in absolute panic. The reality of inaction in the health portfolio over 2½ years has caught up with him. He is desperately looking for a political fix. That is what we witnessed last week: a Prime Minister desperate to find a political fix to try and make it look as if he is doing something when in fact he has done nothing. Here we have yet another broken promise. Let us just remind ourselves that before the last election not only did the Prime Minister say that he had a plan to fix public hospitals but he was going to work cooperatively with the states. I went back to some of the early entries on the Prime Minister’s website when it came to his commitments in health. I remind the Senate that for the first year on coming into government the Prime Minister said this on his website under the headline ‘Fixing our hospitals’:

The Rudd Government is committed to achieving national health care reform in partnership with State and Territory governments.

‘In partnership’ with state and territory governments, he said. He also said:

However, if significant progress toward the implementation of the reforms has not been achieved by mid-2009, the Government will seek a mandate from the Australian people at the following federal election for the Commonwealth to take financial control of Australia’s 750 public hospitals.

Note he said ‘if significant progress toward the implementation of the reforms’ has not been achieved by the middle of 2009. We as an opposition, holding the government to account in a very important public policy area—in an area where they promised the world and have delivered next to nothing—asked the government: what does ‘significant progress’ mean? Were the states and territories told what was expected of them in terms of improvements to our public hospitals by the middle of 2009 so that we, the states and territories and patients across Australia could scrutinise whether or not the states and territories had been successful in meeting the targets that may or may not have been set by the government? The answer was, ‘There was no definition.’ The states and territories to this day have not been told by the Rudd Labor government what is expected from them in terms of improvements in public hospitals across Australia.

So what did the Prime Minister do after we raised some questions about what his plans were for fixing our hospitals and the definition of ‘significant progress’? Did he come out and develop some targets? Did he come out and fix the fact that there had not been any action? Did he go out and talk to the states and territories and demonstrate a bit of cooperative federalism in health? Did he work with the states and territories on improving things for patients across our public hospitals? No. Do you know what he did, Acting Deputy President Trood? He changed his website. It was an absolute fraud committed on the Australian people. He made very clear commitments before the election. Those commitments were still reflected on his website in October 2008. Do you know what it said a couple of months later, after we started asking some questions? Fixing our hospitals had all of a sudden become ‘Improving our hospitals’ and ‘significant progress toward’ the implementation of health and hospital reforms became:

While immediate action is important, Australia also needs to consider the long term future of the health system.

Weasel words if ever I heard them. And there was this:

The Government has established the National Health and Hospitals Reform Commission, chaired by Dr Christine Bennett, who has extensive experience in the health sector. The NHHRC will develop a long-term reform plan for the health system—

so it ‘will develop a long-term reform plan for the health system’? A year earlier that was ‘significant progress toward the implementation of the reforms’. All of a sudden that became:

... will develop a long-term reform plan for the health system, in consultation with health experts, professionals and consumers, by the middle of 2009.

That was the 20-month review we had. Before the election the Prime Minister led people to believe that he had a plan to fix public hospitals. The Australian people went to the ballot box thinking that they had an incoming Prime Minister who had a plan to fix public hospitals. After the election all we had was a review over 20 months which was subsequently followed by a review into the review and of course photo opportunities for the Prime Minister and Minister Roxon across Australia. People clearly were getting a bit bored with those photo opportunities, so the Prime Minister and Nicola Roxon thought they would make the footage a bit more interesting for people, because I am sure that the television stations were getting a bit tired of the Prime Minister and Nicola Roxon in front of a board with slogans on it and just talking from a podium. So now they are wearing the surgeon’s uniform. They are there with the head cover, making it look real. If you are not doing anything, make it look as if you are. Make it look as if your Prime Minister Rudd is about to go into the theatre and provide open-heart surgery, like he himself is going to reduce elective surgery waiting lists! What a joke! What an absolute joke!

But the real commitment that this Prime Minister and this Minister for Health and Ageing did give before the last election is that they would retain the existing private health insurance rebates. It was a most solemn promise. Yet the only action that we have seen from this government in the health portfolio is a continuation of the age-old ideologically based Labor crusade against private health. What the government is doing with this bill will not improve things in our health system; to the contrary, this legislation will make things worse for our health system.

We have had a 20-month review into our public hospitals and last week we get this rushed announcement after 2½ years of inaction, where clearly the Prime Minister had not done his homework by talking to the states and territories beforehand. So much for cooperative federalism and for ending the blame game. Here he is, right at it, pursuing a political strategy of trying to beat up the states and territories. Quite frankly, on this occasion, who can blame the states? The government did not give them any targets and did not tell them at all what was expected of them. They rushed this announcement out as a political fix and of course the states are going to say: ‘Well, hang on. Let us look at the detail. Where is the additional money? There is no new additional money in this.’

The Prime Minister is pursuing a strategy whereby he wants to beat up the state and territory governments because he wants to be seen as a strong man and he wants to hide the fact that he has not done a thing over the last 2½ years. He wants to take the Australian people for fools. He wants the state and territory Labor governments to jump up and down and attack him because he thinks that when those unpopular state Labor governments attack him that somehow that is going to make him look like he is doing something. It is all part of a political con, and I call on the Australian people to look very carefully at what is happening here.

We had this 20-month review by the National Health and Hospitals Reform Commission, followed by a review into the review. Now did the Prime Minister make any announcements in relation to any of the recommendations out of that 20-month review followed by a review into the review? No, he did not. The only thing in his announcement that related in any way, shape or form to something that was mentioned in the National Health and Hospitals Reform Commission report was related to the Commonwealth taking a greater role in primary care. We support that, but that is something that was initiated by the Howard government. We did not need to waste 2½ years of meetings and sitting around the table and coming up with yet another report that can gather dust somewhere just to come up with that particular initiative that was part of a package with not much detail last week.

This is a government that is in an absolute panic because the Prime Minister knows that the perception out there is that he promised the world and that he delivered next to nothing in the health portfolio. That is what people think out there; that is what people are telling us every day. The things that he said he would not do he is pursuing—for example, this piece of legislation. This piece of legislation, if it were passed by the Senate, would put additional pressure on our public hospitals; it would see people leave private health insurance. Even the government accepts that people will leave private health insurance. There would be a squabble on the numbers, but even the government accepts that there will be fewer people in private health insurance as a result of this legislation. It will put upward pressure on premiums and it will take us back into this downward spiral which Labor governments have taken us down before. On this side of the chamber we want a well-balanced health system in which all Australians can get timely and affordable access to quality hospital care. In order to achieve that we need both a strong, well-funded public system and a strong, well-supported private system. Nothing out of what the Prime Minister and his government have announced so far would in any way, shape or form improve things for our health system or improve things for patients across Australia.

As for this plan last week, it was cobbled together at the last minute. It was clearly driven by a need to have something for the Prime Minister to say during his National Press Club address. It is exactly the same modus operandi that has got this government into so much trouble with the Home Insulation Program. It is all about the spin, with nothing about the substance. It is all about talk but no action. There is no additional money in it, something that was very eloquently pointed out by the Premier of Victoria—the Labor Premier of Victoria, I hasten to add. There is absolutely nothing in there other than trying to provoke the states into a reaction, which the Prime Minister will use politically to help him to look as if he is doing something.

They have not thought this through; they have not done their homework. And of course they do not even intend to implement the announcement last week because this is yet another announcement that is not going to start tomorrow or next month or on 1 July 2010. Guess when it is supposed to start: sometime in 2012-13—after the next election, of course. So what the Prime Minister yet again wants the Australian people to believe is this somehow—‘Trust me, I’m from the government. My name is Kevin; I’m from Queensland.’ Well, I say to the Australian people: you cannot trust this Prime Minister. Look at his record: he promised the world before, he has delivered next to nothing, he has overpromised and underdelivered. The things that he promised he would do he has not done and the things that he promised he would not do he is doing. This legislation is the most emphatic broken promise in this term of government, and the Senate should not support it. This is an absolute breach of faith with the Australian people because it will lead to bad outcomes not only for privately insured Australians but also for those Australians who will have to compete with increasing numbers of Australians leaving the private health system and seeking access to their hospital care through the public health system.

This is not the way to improve the health system. And in any event the Rudd government conducted the National Health and Hospitals Reform Commission strategic review, and to this day we have not received a response from the government on which part of the recommendations they will support and which ones they will not. Why would you go ahead with something like this—if it is going to have a bad impact on our health system overall and if it is going to have a bad impact on our private health system—without taking an overall strategic view? This is a government that is up to its old tricks. It is driven by ideology rather than by what is good public policy. It is not focused on the best interests of patients; it is focused on its ideological crusade against private health.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I will start my speech in the second reading debate on this bill by restating the Greens policy on this issue, which is that we oppose the private health insurance rebate. We have done so since its inception.

Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Link to this | Hansard source

At least you’re honest about it.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I will accept that small intervention—that is, Senator Cormann said at least we are honest about it. In his speech he talked about the Labor Party’s ideological belief around the insurance rebate. I would put the proposition that the coalition has an ideological belief that private health insurance will save our public health system. We do not believe that is the case and I will argue that point shortly. In fact, we have argued in this place many times that we believe this is bad policy. It does not deliver good health outcomes and we would be better off directing the money that we invest in the private health rebate directly into our public health systems. This policy pours billions of dollars of taxpayers’ funds straight into private health insurance.

In fact, what we are doing is filtering the resources that we are supposed to be putting into our health system through the private health insurance rebate. We do not believe this is an appropriate way to address our chronically underfunded public health system. We should be directing those funds directly into our public health system. Our public health system and health workers are struggling because of the lack of resources and because now $3.8 billion is channelled into the private health insurance industry rather than into our hospitals. We have opposed, and we will continue to oppose, this approach to health funding. However, we do concede that means testing the private health insurance rebate is an improvement on a flat rate of 30 per cent to all private health insurance holders irrespective of their income level and capacity to pay. Certainly removing the rebate from those on higher incomes, we believe, is a step towards the Greens position of getting rid of the rebate altogether, and it is bedded in the current system.

I have outlined previously our concerns about the private health rebate. In fact, as I think I have also said before, we are not alone in our concern about the economic wisdom of the private health insurance rebate. Treasury does not always or very often support the Greens position but in this issue it appears that it does in fact support the Greens position. This was highlighted in the Age last year, when the revelations were made that Treasury had advised government that the private health insurance rebate was bad policy and that the billions that go towards this policy would be better spent on our ailing public health sector. Let me quote from the article in the newspaper at the time, which cited documents from the Treasury briefing, we understand, to the Rudd government shortly after its election:

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.

It goes on to state:

The briefing said the billions of dollars lost annually to the rebate would be better spent on public hospitals.

That is a sentiment we very strongly concur with. Then it directly quoted from the Treasury document:

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.”

Again, that is a sentiment we support. Since that advice was provided, apparently in November 2007, the annual cost of the private health rebate has risen to $3.8 billion. We are edging up very close to that $4 billion mark. Here we have Treasury providing advice in line with the Greens policy on the private health insurance rebate as a funding model—the same Treasury whose advice the government relies on for many other important economic issues. Yet this government has ignored the advice on the private health insurance rebate and seems to buy the previous government’s ideological belief that private health insurance is the saviour of our health system. That is certainly yet to be demonstrated. I think the time for that experiment is over.

We have said on many occasions that we believe the rebate is very poor policy. It is not an effective mechanism to improve our health system. It is an ineffective and inefficient use of taxpayers’ dollars within the broader health system. It does not directly fund health service delivery, and it basically supports the health insurance industry. Compelling evidence was presented to the Senate inquiry into these bills by Dr John Deeble. Dr Deeble was a member of the old Health Insurance Commission for 16 years and was a director of Medibank Private, with responsibility for premium setting, so he has had a long-term involvement in this area. He described the private health insurance rebate as wasteful and divisive in the way in which it separates the public and the private health systems rather than integrating them. The Greens believe that government would be irresponsible if it ignored the advice received from a broad range of health and economic experts.

Ian McAuley from the Centre for Policy Development provided evidence to the Senate inquiry that showed the rebate in particular has had minimal impact on private health insurance membership and equally has had little effect on reducing public hospital demand. He provided the committee with evidence that showed that the private and public 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 private health insurance membership was not sensitive to price. He pointed out that when the 30 per cent rebate was introduced in 1999 there was almost no effect in the two years following its introduction. Coverage rose by about two per cent. Dr Deeble felt that the only reason the subsequent rise in coverage took place was the considerable advertising and fear that Medicare would not cover consumers in the future. Dr Deeble spoke of his experience at Medibank Private. He said 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 it was almost impossible for people to understand all the various products that the insurers offered and be in any position to determine if they offered value for money.

There should be, we believe, a national debate in Australia on the kind of health care we expect and how we are willing to pay for it. Professionals and dedicated people in the health sector are demoralised, and the community is dissatisfied. Private health insurance subsidies encourage specialists who would otherwise be available to public hospitals to shift to the higher paying, less stressful private system. Stampeding patients into private health insurance whose prime priority is profit rather than the health system is a recipe for a US-style system, without doubt the developed world’s least efficient. This is why the US spends 17 per cent of its gross domestic product on health, while Canada and Australia spend 10 to 15 per cent and have better health outcomes in terms of longevity, infant mortality and morbidity than the US. However, Australia’s healthcare expenditure is rapidly rising, and we have talked about that at length in this place. Ten years ago it represented 8.1 per cent of GDP. Now it is 10 per cent. The states, as we also know, have increased their health expenditure to the point where it covers up to 30 per cent of their budgets. Taxpayers have a legitimate right to ask, ‘Are we getting value for our money?’ We already know there are private patients in public hospitals, and now we are talking about public patients in private hospitals—the situation gets even more crazy.

We know that countries that grant significant public subsidies to private health insurance—Australia, France and the US—have faced considerable pressures on their public budgets. All that private health insurance does is to rearrange the queues, promoting some and shifting others to the back, and although it may help some with low-priority needs it may lengthen waiting lists for those with greater needs.

We believe this is bad policy and we should be rethinking it. Ian McAuley presented evidence to the committee that argued that while the tax systems are far from perfect they do achieve a degree of equity. He pointed out that private health insurance is essentially a stealth tax which builds in inequities. There is no incentive to provide ‘public good’ services, such as the promotion of health lifestyles, and the cost of collecting tax through a single system is more effective than by individual insurers. The private health insurance industry has been successful 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 ‘socialised medicine’. We should be asking if this is really the case.

We have said time and again that the government’s corporate subsidy to private health insurance is bad policy. John Menadue from the Centre for Public Policy Development calls it a cancerous growth. He says that it is not a health program, and we agree. It is corporate welfare. The Productivity Commission has pointed out that the increased levels of private health insurance have been associated with a marked increase in the number of services performed and reimbursements for their services. But when people really need that insurance—when they are elderly and find they cannot afford to keep up the payments—where are the insurers then? The only winners here are the insurers who, in some cases, have been collecting money from those people for a very long time. The insurers—the same ones who tell us that we cannot live without private health insurance—are the winners out of this system. 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 those of Medicare and who push up their premiums every year, in some cases two or three per cent ahead of the inflation rate.

We know that private health insurance has failed to take the pressure off public hospitals, we know it has allowed private hospitals to attract highly professional staff away from public hospitals and we know it weakens Medicare’s capacity to control costs and quality. We know it is an inefficient way of promoting so-called choice. We know so much about why it is unfair and inequitable that here we are, again, trying to patch up bad policy. We just keep patching and patching and patching to make up for bad policy.

As I have stated on many occasions, the Greens are opposed to the private health insurance rebate. I think that is patently obvious. We believe that the money that is directed towards corporate welfare of the private health insurance industry would be better directed to our public health system. Ian McAuley calls it the power of policy privilege—and he is right. We do not need subsidies to private insurance firms to promote private health delivery. Private health insurance companies are not healthcare providers; they are part of the financial world. This is a financial product for them. Private hospitals would be up to $2 billion better off if part of the money that is spent on insurance were given straight to them as a subsidy, for example, and not via financial intermediaries.

Notwithstanding our position on the private health rebate per se, it is simply inequitable that high income earners should receive the same rebate as those on lower incomes. If the government is not prepared to bite the bullet and get rid of the rebate altogether, at least it could make it fairer. The Fairer Private Health Insurance Incentives Bill 2009 [No. 2] introduces a new income means test on the private health insurance rebate and removes the rebate altogether for high income earners, for singles earning over $120,000 and families earning over $240,000. The Greens will support the rebate and continue to call for any money saved from means-testing the private health insurance rebate to be allocated to public health and hospitals. As Ken Davidson wrote recently in the Age:

There is not much point in starving the health system of funding to minimise taxes if it shifts the burden from citizens as taxpayers by creating an even bigger burden for them as consumers.

Ian McAuley noted in last year’s Senate inquiry that the private health insurance industry has administrative costs that impose an unnecessary 10 per cent on premiums because its overheads are higher than Medicare’s overheads. Private health insurance enjoys a $3.8 billion subsidy, dwarfing that of most other industries. Yet, as Davidson, McAuley and others have noted, the major purpose of private health insurance is to give its customers the chance to jump the queue for elective surgery while allowing providers to overservice and overcharge their patients.

The provisions of these bills were announced as budget measures, designed to raise revenue and create a fairer system. As I have said, with reservation, the Greens acknowledge the intent of means-testing the private health insurance rebate and strongly believe that the money raised from this over the next four years should be directed to the public health system. We have identified a range of areas, which is by no means an exhaustive list, where the money would be well spent.

For the reasons I have outlined here, the Greens will be supporting this rebate because we think it is a step in the right direction. But nobody should be under any illusion that the Greens support the rebate in general. We do not. We believe that it should be scrapped and that we should be directing that money into our public health system so we are not funnelling it through insurers, who are financial entities and in it for financial gain, and not promoting and providing an efficient and effective healthcare system in Australia that benefits all Australians.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

I rise on behalf of the coalition to say that we rejected the two surcharge bills and we will be opposing the Fairer Private Health Insurance Incentives Bill 2009 [No. 2] as well. I am going to start by stating a number of facts. There are over 9.5 million Australians with hospital cover through private health insurance. That is 45 per cent of the population. Over 11 million people in this country have some form of private health cover. This piece of legislation will affect every single one of those 11 million people. Around 1.3 million people with insurance are over 65 years of age, which is 50.3 per cent of all Australians in this age group. Members of health funds contributed $10.6 billion to the Australian healthcare system in 2008, an increase of 10 per cent on the previous year. Around 56 per cent of all surgical procedures are performed in private hospitals, and most of these are covered by private health insurance and 15 per cent of public hospital admissions are privately insured patients. Those are the facts.

As Senator Cormann and other speakers have said, of all Labor’s broken promises this is probably one of the greatest. Broken health promises have overtaken the so-called greatest moral dilemma of our time. The government is now putting health on the agenda because it does not want us to be talking about that.

Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Link to this | Hansard source

It is a great distraction.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

It is indeed, Senator Cormann. The government does not want us talking about climate change and its big new tax on everything. The government promised before the last federal election that they had this grand plan to fix the hospitals and health. We did not see anything. Interestingly, three weeks ago the secretary of the Department of Health and Ageing admitted in estimates that there was not a plan. They could not even produce the back of an envelope when I asked questions in estimates. Now all off a sudden they are scrambling. Because the pressure has been on, suddenly the Prime Minister has come out with his big health plan so that—as Senator Cormann said—he can traipse around the hospitals with his little hat on and pretend that he is actually doing something.

After two-and-a-half years of gestation, this plan still is very light on policy detail. There is absolutely no detail on how it is going to be funded. After two-and-a-half years with no grand plan, all of a sudden we see something, which has obviously been cobbled together because everybody kept asking him where his hospital plan was. And all this plan actually does is put in place another layer of bureaucracy. We already have 5,000 health bureaucrats in Canberra. So what are we going to do? We are going to add more health bureaucrats and not one single extra bed. That is all that the Prime Minister’s grand plan is going to do. It is not going to fix the hospital systems.

Anybody who has seen the New South Wales hospital system knows that the area health systems are not working. So what is this government going to do? It is going to put another layer of bureaucracy on top of the area health systems. There is nothing there that is going to fix the New South Wales health system. The plan is so ramshackle. But this government is going to come along and put a few more extra bureaucrats in place and they are somehow—so the Prime Minister is telling us—going to fix the hospital system.

Health insurance is integral to health in this country. The legislation that we are debating today is a tax on health insurance; a tax that Kevin Rudd promised that he would not impose. Both Kevin Rudd and Nicola Roxon promised repeatedly before the last election that they would not alter the health insurance rebates. Mr Rudd even put his promise in writing. As I said previously, that promise was not worth the paper that it was written on. This new tax has already been rejected by this parliament, but Labor is ideologically fixated on imposing it.

All Australians will pay a price if this new tax is imposed. By the government’s own estimates, tens of thousands of people would drop their insurance coverage. Then those people will have to rely on the public health system. And the queues at the emergency departments and the waiting lists for surgeries would grow longer, especially in places like New South Wales. As more people drop out of insurance, premiums will rise for the 11 million Australians who have private insurance. When I spoke on the surcharge bills, I spoke of those thousands of people who have private health insurance in many of Labor’s own seats, such as the 72 per cent of people in the federal seat of Bennelong, Maxine McKew’s seat.

Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Link to this | Hansard source

Maxine who?

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

That is right, Senator Cormann: make an appointment for between two and four on certain days of the week and you might find her in the office. Higher premiums will make it much harder for many to keep their insurance. What will happen is that even more people will drop out. Public hospitals are already stressed and strained. As I have said, now we have this grand plan. Except that it is not really a grand plan, because we do not have any great detail. We certainly do not know how it is going to be funded.

Labor has been saying that it needs this tax on private health insurance because of the global financial crisis. But let us not forget that its attack on private health insurance started in its first budget, way before the global financial crisis, so their argument is very misleading. Kevin Rudd said that he needs the money for health reform. He told Australians that the recent intergenerational report showed that it would deliver $100 billion over 10 decades to come. He forgot the fact that there was no such figure written into the intergenerational report. But what is a fact? When does this Prime Minister ever let facts get in the way of spin over substance?

Then you had Minister Roxon. She said that the money from this new tax would be used to fund e-health. Then the minister said that it would be used for new medicines and improved technology. Then the Treasurer came along and spelt out in the budget that the new tax was to pay for the increase in the age pension, which put the lie to what the Prime Minister and the health minister were saying.

This measure is supposedly estimated to save $1.9 billion over the forward estimates, at the expense of so many Australians. It is actually a mere drop in the bucket considering the billions of dollars that this government is squandering. They cannot even put pink batts in ceilings, let alone try to fix the health system in this country. They have wasted so much money on schemes like the Julia Gillard memorial halls, the pink batts—you name it. In everything that this government has touched it has squandered money.

From our perspective, at the last budget we suggested that we could potentially offset these moneys by an excise on tobacco, but of course this government refused to consider that alternative. The reality is that this government is ideologically determined to hit those Australians who pay to look after their health needs. The changes that the government is now proposing, yet again, and which have already been rejected, are just the latest phase in the government’s unrelenting war against private health insurance, because Labor hates private health insurance.

The coalition introduced an open ended private health insurance rebate because for every rebated dollar, a privately insured person contributes two more dollars to our health system as a whole. The coalition believes it is the right of all Australians to take charge of their own health care needs and plan for the future. We have always worked hard to deliver incentives to promote the uptake of private health insurance and take the pressure off Medicare. People will drop out because they cannot afford the much higher premiums. They will restart the catastrophic premium membership death spiral of the 1980s and 1990s, when Labor almost wiped out private health insurance.

Let us have a look at what Labor said and promised on this issue of private health insurance before the last federal election. On 26 September 2007 Minister Roxon said:

On many occasions, for many months, Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private Health Insurance Rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians. The Liberals continue to try to scare people into thinking Labor will take away the rebates.

This is absolutely untrue.

Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Link to this | Hansard source

It is a lie.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

Of course it is a lie, Senator Cormann. If you watched parliament prior to 2007, the then health minister said time and time again that Labor would means test the private health insurance rebate. Of course, it was Tony Abbott who said that. We made those comments, and the now Deputy Prime Minister stood up and accused Tony Abbott of telling lies. Well, he was telling the truth, because that is exactly what this government has done. Then, as I mentioned, in November 2007, in a letter to the Australian Health Insurance Association that is not worth the paper it is written on, the Prime Minister wrote:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions 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 older Australians. Federal Labor will also maintain Lifetime Health Cover in the Medicare Levy Surcharge.

Of course that was a lie. This piece of legislation puts a lie to those comments of 20 November 2007. And there is another one in February 2008, in the Australian, the quote of the Prime Minister: ‘The private health insurance rebate remains unchanged and will remain unchanged.’ ‘Absolutely! Believe me!’

Mathias Cormann (WA, Liberal Party, Shadow Minister for Employment Participation, Apprenticeships and Training) Share this | Link to this | Hansard source

‘Trust me!’

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

‘Trust me! I am Kevin and I am from Queensland!’ That does not say very good things about Queenslanders, but, anyway, in May 2008 on Macquarie Radio, Health Minister Roxon said:

We continue to support the 30 per cent, 35 per cent and 40 per cent rebate for those Australians who choose to take out private health insurance.

Lying yet again. In October 2008, in a speech to the Australian Health Insurance Association Conference, Minister Roxon said:

Private health insurance consumers will still be able to claim the 30 and 40 per cent rebate and the Lifetime Health Cover incentives.

Another absolute lie. On 24 February 2009 there was a comment by Health Minister Roxon in the Age:

The government is firmly committed to retaining the existing private health insurance rebates.

They were absolutely dishonest on this issue. As late as February, in that quote that I have just read from the Age, the government was maintaining the falsehood that they had no intention of launching this attack. Yet during Senate estimates recently it was revealed that whilst Minister Roxon was giving that public assurance, behind closed doors she and other senior members of the government were seeking advice on how to progress changes to those private health insurance rebates. Whilst they were ‘firmly committed’—there they were in public, hand on heart, telling the Australian public that they were firmly committed to retaining the existing rebates—secretly they were working on plans to reduce and scrap them.

We know that Minister Roxon first obtained advice from her department on 12 January 2009. Advice on how to change the rebate had been sought by the health minister’s office as early as December 2008. The Treasury provided advice on means testing the rebate on 20 February 2009 at the request of the Treasurer. The Department of Finance and Deregulation provided advice on the same measure on 22 February and the Department of the Prime Minister and Cabinet provided advice on 23 February.

What does that tell you about this government? They are prepared to say and do anything to get into government. Then, of course, they continued this falsehood to the Australian public about what they were going to do while behind closed doors they were secretly getting advice from their bureaucrats about what they were going to do. It does beg the question: what other promises are we going to see this government break? We are seeing, as Senator Cormann pointed out, these major promises in relation to fixing health being watered down to: ‘Oh, dear me, I want to do something but of course now I have to get cooperation from the states.’ So much for cooperative federalism, because now the premiers and their health ministers are asking the very hard question in relation to this flaky policy—that is: what are the real details about it? According to a New South Wales report that has been out for some time, 117 hospitals in regional and rural areas are going to be affected as a consequence of this policy. What is going to be the viability of these hospitals? Kevin Rudd tells us that there is going to be an efficiency amount. What is the efficiency cost of having an operation in Sydney as opposed to having it in Inverell in northern New South Wales or anywhere in rural and regional Australia? Those costs are going to be different and it is important that we see this detail and not just the usual blah, blah, blah that we get from this Prime Minister.

The proposed changes will not deliver control of public hospitals to local people. All they will do is create more bureaucracy. Only the coalition’s plan for community controlled hospitals and the establishment of local hospital boards will put the budget, staffing and capital requirement decisions into the hands of those people at the local level who know and use the hospitals. Doctors and nurses have seen endless shake-ups in the bureaucracy which have never really led to more resources or local empowerment. They are going to now see another shake-up which is not going to deliver for patients. Are they really going to notice any difference to their hospital services with one extra level of bureaucracy? Where are the details about the extra beds? All this is going to do is add extra bureaucracy. It is certainly not going to affect hospital services at any time. Despite all the promises in 2007 to fix the public hospitals by mid-2009, Mr Rudd’s new hospital proposal is not going to start until 2012. If it is such a great idea, Prime Minister, why not start it now? You have been talking about this since 2007. You said you had a grand plan, but when you came into government there was no plan. It is clear from estimates hearings that there was not even a back of the envelope plan to hand over to the Department of Health and Ageing for it to start working on your grand plan. It is another plea. It is another ‘trust me’ from a government that cannot be trusted. It cannot be trusted on pink batts or on education and it certainly cannot be trusted on health.

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

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2009 [No. 2]. I also am pleased to speak on this issue again as it serves as an opportunity to remind the Australian people of the significant broken promises of the Rudd Labor government. During the election campaign the Prime Minister made a solemn promise to the Australian community that a Labor government would not tamper with the private health insurance rebate. Mr Rudd’s broken promise is represented by this bill before us today. Here it is: Labor’s broken promise on private health insurance.

The private sector is one of the cornerstones of the Australian health system—our system simply could not cope without it. Without it waiting lists and queues at public hospitals would be impossible to deal with; but I see from the Prime Minister’s proposed plan for public hospitals that this is probably what we are going to see. Following the 2009 budget, the Australian Private Hospitals Association said:

The changes to the private health insurance rebate announced in tonight’s budget are a clear breach of election promises made by the Rudd Government. The changes will lead to a system that is confusing, complex and costly for those millions of Australians who take responsibility for their own health care costs.

Labor detests the private health industry and did its best to water it down in the 1980s and 1990s. They wanted everyone to be tied to the public system, tied to the government and controlled by big bureaucracy. Labor does not want to give people choice or the opportunity to take independent responsibility for their healthcare needs. I would be very interested to know the number of Labor senators, MPs and ministers who have private health insurance for themselves and their families. Private hospitals remove an enormous burden from the public system and people who are taking responsibility for their own health care are saving the taxpayer billions of dollars per year. The coalition has always recognised the importance of the private health industry and the benefits it brings to health services. The Howard government introduced the private health insurance rebate to enable and encourage more Australians to take out private health cover, to ease the burden on the public system and to enable Australians to access the choice and greater number of health services which private cover provides.

Private health insurance funds pay for 57 per cent of surgical procedures performed in Australia. This includes 55 per cent of major procedures for malignant breast conditions, 55 per cent of chemotherapy treatment, 63 per cent of major joint replacements and 70 per cent of same-day mental health procedures. According to the Royal Australasian College of Surgeons, which represents Australian surgeons:

Australian surgeons have warned of even longer elective surgery waiting times after the Rudd Government’s Budget included cuts to the rebate paid to many Australians with private health insurance.

The Vice President of the Royal Australasian College of Surgeons, Dr Ian Dickinson said the Budget measure will inevitably drive some Australians out of the private health system, placing even greater strain on Australia’s public hospitals.

Dr Dickinson said:

Notwithstanding the increase in the Medicare levy surcharge, the decision to reduce the rebate paid to many Australians with private health cover will drive at least some of these people back into the public system.  Moreover, the upward pressure this will place on insurance premiums could drive poorer and more vulnerable Australians back into the public system.

Something that really worries me is the problems associated with physiotherapy and all the associated auxiliary benefits that private health covers. For these people not to be in private health insurance, not to be able to be covered—or partially covered—as part of a rebate means that they will be going back to the public system, which will make it even harder to get an appointment in those ancillary areas.

Coming back to the actual policy, the private health insurance rebate is very successful. It has enabled millions of families to take out private cover, for many of whom it was previously financially difficult. There are now over 11.3 million Australians who are covered by private health insurance, and an additional 298,221 Australians joined private health insurance in the year ending June 2009. The rebate system has made private health cover affordable for all Australians. I will remind the Senate of the situation in four Labor electorates in my home state of Western Australia: 56 per cent of the electors of Hasluck, 67 per cent of the electors of Brand, 74 per cent of the electors of Fremantle and 64 per cent of the electors of Perth have private health insurance cover.

Taking the rebate away from one group of people will cause thousands of people to drop out, which will make private health insurance more expensive for the remainder of people who have cover. Private hospitals and health services draw on a finite pool of funds. If members pull out, health insurance premiums will become more expensive for those who remain. This will include millions of lower and middle income earners, retirees and pensioners. Over one million people with private hospital cover live in households with a total annual income of $40,000 or less. More than 1.6 million Australians with private hospital cover are aged between 20 and 35 years. The Australian Health Insurance Association has said:

The Rudd Government’s decision to dismantle the private health insurance rebate will place increased pressure on the public hospital system and force up premiums for those Australians who take responsibility for their own health care by taking out private health cover. Every single one of the more than 11 million Australians with Private Health Insurance—one million of whom live in households with an income of less than $26,000 per annum—will have to pay more for their private health insurance as a direct result of this policy.

And the Australian Medical Association has said:

Changes to the 30% Private Health Insurance Rebate mean many Australian singles and families will pay a lot more for health insurance, and if you don’t keep your private health insurance you’ll be slugged with an increased Medicare Levy surcharge. They get you both ways.

By making private health cover affordable through the rebates, millions more Australians are able to access the benefits of private health services. In fact, since the 30 per cent rebate was introduced in 1999 the total benefits paid by private health funds have increased by 162 per cent. This includes a 413 per cent increase in benefits paid for prostheses, a 389 per cent increase in specialist costs and a 166 per cent increase in total hospital benefits paid. During 2009 the benefits paid by private health funds increased by 11.7 per cent for public hospitals, 10 per cent for acute private hospitals, 12.2 per cent for day hospital facilities, 9.7 per cent for medical benefits, 12.5 per cent for listed prostheses and 10.3 per cent for total hospital benefits.

Private health is good for Australia and keeps our health system, despite misgivings, amongst the best in the world. Without private health it would go backwards very quickly and simply would not cope. The current rebate system gives everybody an incentive to be part of the private system and is fair and transparent. What might potentially have been a complex policy is easy to understand and manage. The Australian Private Hospitals Association has said:

The current system of rebates is simple, transparent and easy to understand. The new proposals introduce 10 different levels of entitlement or surcharge depending on income level and age. It will be difficult for people to work out their entitlement and will create a huge administrative burden both on Government and health funds.

But I suppose that is Labor at its best: take assistance away from hardworking, aspirational Australians and bring in a complex, unfair system that needs a big bureaucracy to manage it.

As I have previously noted, many people and families in rural and regional areas will be particularly hit by this legislation. Private health insurance is extremely important for many families living long distances from cities and full health services. It is quite common for couples working in the mining industry to be earning in excess of $150,000 per year. Under the legislation, these people will lose their rebate, and that is really not fair. They are doing their best, working in difficult conditions, to make a go of their livelihood, to be able to afford land or houses and to give their families a much better start than they would have without this opportunity. Private health insurance is a priority for a lot of families living in the remote centres of the resources sector. Many families in northern and central western Australia will be particularly hit.

I have also previously mentioned the importance of private health cover to farming families. Many farming couples draw an income of over $150,000 to compensate for the increased distance and expenses of living in rural areas. They perhaps have to pay boarding fees, higher grocery bills for transport and extra power bills, and they often have big problems with telecommunications in order to meet their financial commitments. Farms can also be particularly dangerous places, especially for children, and private health insurance is considered essential by most farming families. This legislation will hit farmers hard and it is not fair that they should not be entitled to the rebate by virtue of distance and the increased living expenses that come with living in rural areas. As with all other Australians who are earning over $75,000 as a single or $150,000 as a couple, farmers and the resource sector families are going to be hit hundreds of dollars per year because Labor has broken a core promise.

Labor assured the Australian community that it would not tamper with the private health framework and take away the private insurance rebate from families, but that is exactly what it is now trying to do. How can Australians trust this Labor government when it breaks such a black-and-white core promise as that? Prime Minister Rudd and the Minister for Health and Ageing, Ms Roxon, looked the Australian people squarely in the eye during the election campaign and said, ‘We will not take away the private health insurance rebate.’ We are dealing now with the moral issue of a significant broken promise.

It is almost laughable that the Prime Minister proclaimed that the ‘greatest moral issue of our time’ was to pass his government’s job-destroying, flawed and increasingly despised emissions trading scheme. All of a sudden it is no longer the greatest moral issue of our time. It has been outdone by the government trying to legislate a broken promise instead. The Prime Minister must be taking Australians for granted if he thinks they cannot see through all this spin, without any substance to back it up. He is trying to suffocate his no longer popular ETS through means of other pieces of bad legislation such as this.

In support of thousands of hardworking, aspirational Australian families who are going to be hit hard by this broken promise, I, along with my coalition colleagues, will not be supporting this bill. It is an attack on the private health system whose benefits far outweigh the numbers the government proposes will be saved by this bad policy. Labor has always detested private health and did its best to destroy it in the 1980s. It still does not like it and this is why we are here now debating its broken promise. What is breathtaking, however, is the Prime Minister’s acknowledgement of falling back on the private health sector in his recent address to the National Press Club. The Prime Minister said:

The new National Health and Hospital Network aims to deliver a set of national standards, including access to elective surgery. This means both would get their operations done within a similar timeframe. If one of them can’t get it at their local hospital then the Local Hospital Network will find that person a bed at another hospital within the Network—or with a private hospital if one can’t easily be found.

This is just another con. I am sure there will be many cases when a local public hospital bed cannot be easily found, but I suggest Mr Rudd speaks with the private health sector before he refers people to private hospitals as the answer. St John of God Hospital in Subiaco and St John of God Hospital in Murdoch in Western Australia stated in the West Australian two days ago that they have no spare capacity to take on public patients. Bethesda Private Hospital in Perth has some spare capacity but would have trouble finding surgeons and anaesthetists to do the work.

If private hospitals do take on public patients on behalf of the government, the Australian Medical Association in Western Australia has warned that more people could cancel their private health insurance and go onto the queue to be treated in the public system. The Rudd government’s tampering with the private health system and removing the insurance rebate will result in millions of people having to dig deeper into their own pockets in order to maintain responsibility and choice for their healthcare needs. Thousands of people will choose to drop out of the private health system, which will result in longer surgery waiting times and longer queues at hospitals, causing a greater strain on an already overburdened public health system.

Labor’s locked-in-the-past, ideological class warfare attitude does nothing for the good of hardworking Australian families or the future prospects of our health system. People in rural and regional areas are livid at what the government is doing because this broken promise is going to significantly force up costs and take away choice for many of them. The Rudd Labor government stands condemned for yet another broken promise it has made to the Australian people. To conclude, the coalition senators’ dissenting report on this bill states that this measure is bad public policy.

Debate interrupted.