Senate debates

Tuesday, 9 March 2010

Fairer Private Health Insurance Incentives Bill 2009 [No. 2]

Second Reading

Debate resumed.

5:02 pm

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

I rise to make my contribution in support of the Fairer Private Health Insurance Incentives Bill 2009 [No. 2]. The government provides in the order of $4 billion annually in private health insurance premium rebate subsidies. The latest figures published by the Australian Institute of Health and Welfare show that government outlays on private health insurance premium rebates unfortunately are rising rapidly year by year. For example, in 2007-08 the total value of the subsidy increased by 13 per cent, and in the five years to 2007-08 the total value of the subsidy increased by almost 40 per cent.

For approximately every $2.30 raised by private health funds by way of premiums, the government puts in a dollar. By any measure this is a very high taxpayer subsidy to support a private sector activity. Approximately 50 per cent of the total value of the government’s private health insurance premium rebate flows on to the private hospital sector, about 10 per cent flows on to private medical practitioners and another 10 per cent is used to subsidise health fund administrative costs. No-one should argue that the government does not have a duty and responsibility to make certain that the payment of this level of government financial subsidy support is fair and sustainable. However, as the Minister for Health and Ageing has stated, aspects of the present private health insurance premium rebate subsidy arrangements do not meet these objectives and need therefore to be changed.

A major pillar of social policy in Australia for over the past 30 years has been the Medicare scheme. We should all be aware that the coalition’s resistance to the measures contained in the proposed legislation is directly related to a long history of deep-seated antagonism within the Liberal and National parties to public universal health insurance and publicly funded health care. The coalition may feign support for Medicare, but whenever they are put to the test the true position of the coalition unfortunately stands out in lights. The coalition have an ideological hatred of the Medicare scheme, and that is why they will vote against this bill.

The position being taken by the coalition on this bill demonstrates the peril that Medicare faces whenever a coalition government is in power. Coalition governments, as they have demonstrated over the past 30 years, will, whenever they have the opportunity, continue to chip away at the foundations of the Medicare scheme.

Photo of David BushbyDavid Bushby (Tasmania, Liberal Party) Share this | | Hansard source

Senator Bushby interjecting

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

Through you, Madam Acting Deputy President, I cannot wait for Senator Bushby’s contribution to prove me wrong! In the context of the debate on this bill, it is relevant and timely to review some of the history of Medicare and its predecessor, Medibank.

The Medibank scheme was introduced by the Whitlam Labor government on 1 July 1975. At the time the Whitlam Labor government introduced the Medibank scheme, Australia’s health system, particularly its hospital system, was disintegrating. It was a mess—there is no argument about that—and this was clear to everyone. The Australian public knew that the health system bequeathed to them after more than 20 years of coalition government was a disaster. Nonetheless, when the then Labor government introduced the original Medibank legislation, the Health Insurance Bill 1973, into the Australian parliament in November 1973, that proposed legislation was fiercely opposed by the coalition opposition made up of the Liberal Party and the then Country Party, now the National Party. The coalition parties were backed up and egged on by the medical profession, the private health funds and the private hospitals, all of whom were vehement in their opposition to Medibank.

It should never be forgotten that it was a coalition controlled Senate almost 40 years ago that attempted to stand in the way of a public universal health insurance scheme that guaranteed all Australians would have access to affordable health services, including free public hospital services. The Medibank scheme guaranteed that no longer would individual Australians and Australian families have to worry about whether they could afford to pay for needed health care, particularly high-cost hospital care. As history shows, a coalition dominated Senate blocked the original Medibank legislation on three occasions. It therefore unfortunately required a double dissolution election and the subsequent joint sitting of both houses of the Australian parliament to pass the Medibank legislation.

Madam Acting Deputy President, I am conscious that we have a lot on our plate today. I would like to make a longer contribution to this debate but for the purposes of time and in fairness to my colleagues who are waiting for their turn I would seek leave to continue my remarks at a later date and I commend the bill to the House.

Photo of Judith TroethJudith Troeth (Victoria, Liberal Party) Share this | | Hansard source

Senator Sterle, I do not think you technically mean to seek leave. It will be possible, no doubt, for you to continue your remarks in another section of Senate business, but your part in the second reading debate will finish when you resume your seat.

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

It was a good try!

5:07 pm

Photo of Guy BarnettGuy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | | Hansard source

I stand proudly today to oppose the Fairer Private Health Insurance Incentives Bill 2009 [No. 2]. I note some of the comments from Senator Sterle and his rebuttal, in part, of Senator Bushby. I know that Senator Bushby’s contribution to this debate has been clear and concise and forthright in standing up for the important balance between private health and the public health system.

In the last 24 hours—and I want to concentrate on this—we have seen the Prime Minister fly into Tasmania and go to the Labor Party’s election campaign launch for the state of Tasmania to support Premier Bartlett. You can understand why he would want to do that and why he would be down there. The fact is that his plans for public hospitals in Australia, and specifically in Tasmania, are simply a hoax. For example, Labor’s promise in Tasmania to buy back the hospital in Hobart has been shown up to be an election hoax with no substance after the government failed to provide any details of the plan upon questioning in the Senate today. It is just ridiculous that the Prime Minister would even consider making that announcement, or that the Premier David Bartlett would consider making that announcement yesterday.

Premier Bartlett’s announcement is based on a cruel hoax. We have three states—Queensland, New South Wales and Victoria—that are not supportive of, or at least have very serious questions about, these plans. The Prime Minister says he has to take it to COAG to get it through. You have already got some concerns, not to mention those of Western Australia. You have only the South Australian and Tasmanian Labor governments that are saying, ‘Yes, it sounds like a good idea’. The Premier announced yesterday a re-election pitch: a $565 million proposal to buy back the Hobart Private Hospital. That was his plan. We are talking big bucks for the Tasmanian government’s position and their plans for hospitals in Tasmania, and specifically in Hobart.

It would appear that there has been no discussion whatsoever with the Hobart Private Hospital and its owners, Healthscope. In fact, Healthscope’s chief medical officer Michael Coghlin was reported in today’s Mercury on the front page as saying that the company would not comment on how much it would cost to sever the contract. But he confirmed that the government would be expected to bear the entire cost of funding an alternative site, constructing a new building and even covering lost earnings during the transition.

We are open to those discussions but the bottom line for us, which is not negotiable, is that our future must not only be assured but be enhanced.

That is the response from Hobart Private Hospital. I understand the government is expecting that the cost to break that contract will be in the order of $80 million. That is a lot of money, but what did the former premier, Paul Lennon, say about the cost to break that contract. He is on the record. In fact, I have got here a government media advisory from Friday 10 March 2006 from Paul Lennon MHA, Premier. What does he say about the cost of breaking this contract with Healthscope? In the second paragraph Mr Lennon said the previously secret details of the 1998 contract confirmed that relocation of part or all of the Royal Hobart Hospital would require taxpayers to find a commercial buyer for the site or build and fit out a new hospital for Healthscope at an estimated cost of $150 million. It is amazing that that is on the public record and yet Premier Bartlett has not been able to come clean and advise the Tasmanian people exactly what plans he has and what cost those will incur for and on behalf of the Tasmanian people.

It is also interesting to see what else has been reported in today’s media about the Prime Minister’s announcement yesterday. He said that the Rudd government’s health reforms would result in fewer bureaucrats over the next decade. It is quoted that Labor guarantees the jobs of all Tasmania’s valued health public servants. That is what the Premier, Mr Bartlett, said. Yet, on the other hand, the Prime Minister said something completely different—in fact, the opposite. In Hobart yesterday, the Prime Minister was not prepared to make the same promise as Mr Bartlett—that is for sure—because he had made an opposite or totally contradictory promise in recent days on the mainland.

Mr Rudd said the detail in Tasmania still needed to be sorted out over time but ‘we make no apology for the fact that we want overall less health bureaucracy and more frontline services’. What is it to be? We do not know because the devil is always in the detail. The government mucked it up. They fluffed it with respect to the insulation program. They could not get the detail right. The whole program was faulty and botched from the start. How are they going to run and properly operate our public hospitals? It beggars belief.

I consider—and the Leader of the Opposition has said so—that this is simply a health hoax. This is a political fix rather than a hospital fix around the country. There is no detail in the Prime Minister’s announcement yesterday about our health system and our public hospitals. We have a lot of questions that need to be answered. I notice that Brett Whiteley has been asking these questions in Tasmania and some of them flow from the comments I have made about the contract with Healthscope. In that regard, how much compensation will the government pay Healthscope? That is a key question.

In terms of the announcement yesterday about hospitals and health care in Tasmania, how many new net beds will it add? Mr Bartlett stands up there, makes an announcement in a very grandiose and colourful manner and gets plenty of media attention as a result, but he cannot guarantee to deliver on his promise. That is his problem.

Photo of David BushbyDavid Bushby (Tasmania, Liberal Party) Share this | | Hansard source

Senator Bushby interjecting

Photo of Guy BarnettGuy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | | Hansard source

That is right, Senator Bushby: he simply cannot do it. He has not promised any new net beds, new doctors or new nurses. It is simply a new process, a political fix for a political problem. It is not a solution to the problems in health and the hospital system in Tasmania.

I notice that Brett Whiteley MP, shadow minister for health in Tasmania, has today asked how much of the $126 million spend is in the forward estimates and whether Kevin Rudd has promised to fund the remaining $339 million. The total announced was $565 million and, of course, the feds were kicking in 60 per cent of that. How is that going to add up? Has Kevin Rudd promised to fund the remaining $339 million? In that regard I asked that question in the Senate today of the Leader of the Government in the Senate, who was representing the minister for health. He simply said, ‘Sorry, Senator, I do not have a brief on the Royal Hobart Hospital and I do not have a brief on the Hobart Private Hospital.’ Clearly, he was not up to date, notwithstanding that the Prime Minister went to Hobart yesterday to make a major health announcement—$560 million—to support the state Labor government in Tasmania at the launch. Senator Evans stood here in the Senate today and said, ‘No, I do not have the brief. I am not able to answer that question.’

Surely, that is simply not good enough. This is typical Labor—policy on the run, backflips and hospital hoaxes. And it has been exposed. Senator Evans was asked to provide details relating to that $565 million announcement made yesterday by Premier Bartlett, with the Prime Minister Kevin Rudd standing by in approval and in support. But the government had no answers. The Leader of the Government in the Senate, representing the minister for health, was left red-faced and he could only apologise for not having any information at hand. He indicated to me through the President that he did not have a brief on that issue.

So the announcement yesterday was simply another empty headline destined to become yet another Labor broken promise. It has been reported that the contract for the current Healthscope hospital can be terminated for $80 million, but as recently as 2006 Labor Premier Paul Lennon indicated that it would cost in the order of $150 million. So how much is it? What kind of blowout can we expect on this hoax of a policy if it is ever implemented? I hope that it is not implemented, because on 20 March, in less than two weeks time, Tasmanians have an opportunity for real change and, under the leadership of Will Hodgman, the Liberals can deliver that real change for the sake of Tasmania.

What we have had to put up with in Tasmania under the Lennon Labor government and the Bartlett Labor government has been an embarrassment. It is the same old Labor—special deals for special mates, special arrangements for mates and the rolling of the Deputy Premier by different ways and means, and it has been a great disappointment to the people of Tasmania. We deserve better. The people of Tasmania are absolutely fed up to the back teeth.

In terms of health services and what has been delivered, Labor simply has not delivered. We have seen longer waiting lists and longer waiting times in Tasmania—I think in the order of a 38 per cent increase since it came to office. It is a huge increase in waiting lists and waiting times. It is simply not good enough.

We know that a Will Hodgman Liberal government would have a fully-funded plan for the Royal Hobart Hospital. Their plan is fully funded; Labor’s plan is a hoax. It is pie in the sky. It is like flying a kite. It is based on hot air. We know that the Hodgman Liberal plan for health is fully funded to build a new-generation Royal Hobart Hospital on the existing site. That applies, regardless of what happens at COAG in April or at any subsequent referendum—and referendum is exactly what Mr Rudd wants; he is spoiling for a fight. He has a political fix and he thinks that this is going to help him win the election. It has nothing to do with his efforts to try to improve health and hospital services around Australia. That is the sad thing. You can see it in his eyes. You can see it in his approach and his demeanour that it is a political fix; it is not genuine. He does not want to actually fix our public hospital system. That is the sad thing about this whole fiasco.

As for the state Liberals and what they have planned for health and hospital services in Tasmania, they will invest $10 million to cut the waiting lists at no extra cost to patients. They plan to build a new-generation Royal Hobart Hospital on the current site. They will build a new cancer clinic at Burnie on the north-west coast and invest $155 million in the state’s north to provide more doctors and nurses. These are people on the ground making a difference.

Labor can talk all they like, but we know it is all talk and no action. That applies at the state level and it applies at the federal level. We know that once the Liberals get in, they will deliver. They will invest $155 million in the state’s north providing more doctors and more nurses—on-the-ground, upfront health care just where we need it. As somebody who resides in the north, I am very proud of Will Hodgman, Brett Whiteley and the team in terms of delivering excellent healthcare services, securing the future of the Royal Flying Doctor Service and introducing flying clinics across the state. Labor just pooh-poohed this idea. Labor provided no support and no encouragement for the Liberals’ plan for the Royal Flying Doctor Service until they were forced to as a result of public pressure. They should adopt, 100 per cent, the Liberals’ plan to secure the future of the Royal Flying Doctor Service in Tasmania. But Labor have got it wrong. It is a hospital hoax.

Premier Bartlett, in his announcement yesterday, got publicity and so on, but people will find out over the coming days and in the lead-up to 20 March that his redevelopment plan announced yesterday is on the never-never. It is like flying a kite—it is a lot of hot air—and it relies upon $339 million of federal money, which is 60 per cent of Labor’s proposed $565 million spend. When I asked about it in the chamber today, what did Senator Evans say? He said he does not have a brief on it so he does not know. Yet the Prime Minister was there supporting that announcement and saying, ‘Yes, I am standing with you shoulder-to-shoulder, Premier Bartlett.’ It is a joke. I do not think Tasmanians will fall for it, because the money is not there. It is all based on a positive outcome at COAG. We know there are concerns at state and territory levels and the issue of whether we will have to have a referendum, when something might come together in the years to come.

I noticed Mr Bartlett said yesterday, ‘We have reformed the health system as far as we can take it.’ That is code for, ‘I have given up; it’s all too hard.’ He does not want to do any more. He needs help from outside. He has given up on health. We know that happened with the Minister for Health in Tasmania, Ms Lara Giddings. She does not like her job. She does not want that portfolio anymore and she made it public last year. Now the Premier, David Bartlett, says that he has taken it as far as he can.

As far as Tasmanians go, they are fed up to the back teeth with the lack of good health care and hospital services in Tasmania. They want better and they deserve better. I am sure and I know that real change is in the offing on 20 March this year, whether it be the new generation Royal Hobart Hospital or whether it be no more endless waiting lists or waiting times for Tasmanians who are suffering unfairly and unduly. What we do know is that, should the Liberals win government, there will be better access to care for cancer patients on the north-west coast and there will be great initiatives for Tasmanians in Northern Tasmania.

In summary, what we do know is that Labor has a pathological hatred for private health care. This bill is what that is all about. They are trying to destroy it. Eleven million Australians cannot be wrong, because they have signed up for and support private health care. All power to them—they deserve a better go than what they have been delivered under the Rudd Labor government.

In conclusion, I ask Mr Bartlett and to Mr Rudd to come clean, to answer the questions and to provide the detail with respect to their hospital ‘fix’, as they call it—I call it a hospital hoax that has now been exposed. It has only taken 24 hours and it has been exposed for what it is. It is an absolute hoax. There is no detail. They should come clean and provide the detail, in particular exactly how much compensation they are going to be paying to Healthscope at the Hobart Private Hospital for that facility. That is compensation for taking it over, but they say nothing about new beds, new doctors or new nurses. Really, they have a problem and they need to come clean. They must make public precise answers to the questions that have been put here in the Senate and that have been put by Brett Whiteley and Will Hodgman in Tasmania. They must come clean. Otherwise what we do know is that their plan for hospitals in Tasmania is simply a hospital hoax.

5:25 pm

Photo of Steve FieldingSteve Fielding (Victoria, Family First Party) Share this | | Hansard source

The Prime Minister, back in 2007, when he was still the Leader of the Opposition, looked the Australian people in the eye and said that a Labor government would not cut the private health insurance rebate. His words could not have been clearer. When he was asked if he planned to cut the health rebate, his answer was, ‘Absolutely not.’ Surely that is about as clear as you can get. But the Prime Minister went one step further than that. He wrote to the Australian Health Insurance Association telling them:

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 35 and 40 per cent rebates for older Australians.

That is pretty clear. The bill we are debating today, the Fairer Private Health Insurance Incentives Bill 2009 [No. 2], does the exact opposite of everything the Prime Minister said. In short, the Prime Minister has gone back on his word, and I predict the PM will be duly punished for it at the ballot box.

Clearly, this bill does cut the health insurance rebate and it affects hundreds of thousands of Australians by putting them hundreds of dollars out of pocket. The Prime Minister has broken his promise to the Australian people. Once again, the PM has over-promised and under-delivered on health. The Australian people have the right to feel betrayed because they have been misled. The Australian people have been betrayed by the Rudd government and the Rudd government has started to lose the trust of the Australian people.

In November 2007 the Australian people thought they were voting for Labor to keep the health rebate. Instead, they have had the wool pulled over their eyes. But that is not the only issue in health where the Prime Minister has broken a promise. Before the election in 2007, the Prime Minister promised he would fix the health system and take it over by the middle of last year if it was still in disarray. Yet when the time for action came, he shirked his responsibility, coming up with some half baked hybrid idea.

I cannot see how the government’s health reforms are going to do anything to reduce the ridiculous waiting times for patients. Instead of following through on his promise, the Prime Minister has come up well short and proposed a 60 per cent to 40 per cent funding split with the states. It is time the Labor Party woke up because a 60 per cent to 40 per cent funding split with the states is not a takeover; it is just rearranging the deck chairs. As commentators such as Wolfgang Kasper and Jeremy Sammut pointed out in today’s Financial Review, the government’s health plan:

… does not restore genuine community control over local hospitals. It simply rebrands the state health bureaucracies and adds another layer of bureaucracy.

Tony Harris, a former senior Commonwealth officer and New South Wales Auditor General, called the Rudd government’s health reforms ‘a muddle that will create acrimony with no great benefit’.

There is not a dollar more of funding being put into our hospital system, and the government has not actually addressed the key issue for most people and told us what the new waiting list times are going to be for elective surgery. It is the same old story: overpromising and underdelivering. Now, with the cuts to the health rebate, the government wants to slug Australian families again. In September last year I voted against cutting the health rebate, and my position today is the same. I will not be voting in favour of this bill unless more is done to help families, rather than undermine them. These are the same working families that the PM reminds us of all the time.

Family First believes that we need a strong public health system and a strong private health system. The government is at risk of undermining both the public and the private system by cutting back the health insurance rebate. The decision by the Rudd government to means-test the health rebate, however, is likely to wreck the delicate balance between public and private health care. Under the Rudd government’s proposal, private health insurance will become an expense many families simply cannot afford.

The government has claimed that, even with the increases, more than 99 per cent of people will stay in the private system. These numbers look more like they have been taken from the back of a Weeties packet than born from proper, rigorous analysis. They are based on the false assumption that private health insurance is relatively inelastic and that, therefore, the price of health insurance is not likely to drive consumer behaviour. During the Senate committee inquiry last year, we heard that over 200,000 people are expected to drop out of the private system under the proposed means-testing provisions. We also heard that, as a consequence of the government’s policy, 730,000 Australians are likely to downgrade their private hospital cover and an additional 775,000 Australians will exit their general treatment cover for matters such as dentistry. How will our overburdened public hospitals possibly cope with those Australians who exit the private system? Clearly, this will put more pressure on the Prime Minister’s working families. It is a further example of the Rudd government’s short-sightedness and its inability to implement anything properly. It is willing to save money now even if that means spending more money later on.

In December the Productivity Commission released the report of its inquiry into public and private hospitals. It found that treating a patient in a private hospital costs, on average nationally, $105 less than it does in a public hospital. Now the Rudd government wants to implement a policy that will drive more people to a more expensive system. How does that possibly make good policy sense? It does not. In 2009, national waiting times for elective surgery rose. What do you think is going to happen if more people are forced from the private system into the public system? That is right: the waiting times for elective surgery are going to increase even more. We already have a health system that cannot cope with all of the demands placed on it, and the government is now looking to make things even worse.

Family First are mindful of the current economic situation Australia finds itself in. Accordingly, we do accept the idea that those who can afford it should shoulder some of the burden to make life easier for everyone else. However, the government’s thresholds for means-testing the health rebate that are proposed in this bill are not fair. The thresholds are unfair because they focus too much on household or individual income and do not take into account how many kids there are in the household. As any parent knows only too well, the cost to families can increase significantly depending on the number of children to be cared for. But, clearly, the government do not get this, and it shows they have lost touch with many in middle Australia. Under the government’s proposal, the thresholds will only increase by a very stingy $1,500 per child in a household—and this does not even apply for the first child. What a joke! That means that a couple with three children will be allowed to earn just $3,000 more between the two of them each year before they start to lose part of the 30 per cent government rebate.

Are the Rudd government living in fantasy land? Do Labor really know how much it costs to raise a kid? If the Rudd government did know, they would not be proposing such a stingy amount. Clearly, the Rudd government do not know how much it costs to raise a kid because they have not addressed this issue. There is no way you can add up all the 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, but it costs a lot of money and the government need more recognition of that in this bill. There is a huge list of expenses which families with children face every day, and it only grows longer the more children you have. Family First have been pressuring the government to increase the thresholds, but the government have not been willing to budge. Therefore, Family First will be voting against this bill in order to get the government to the negotiating table so that we can get a fairer outcome for Australian families.

5:35 pm

Photo of Kim CarrKim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | | Hansard source

I would like to thank senators who have contributed to the consideration of the Fairer Private Health Insurance Incentives Bill 2009 [No. 2]. I would like to take the opportunity, in summing up, to respond to some of the matters that have been raised in the debate. This is not the first time that we have considered this legislation, and it was clear that senators felt the need to range widely across the whole area of health and health policy. It is important to set in context the government’s reform agenda. I think it is appropriate that we restate that, to perhaps correct some of the claims that have been made. So, in my summing up, I want to address some of the issues that have been presented.

Senator Barnett made some points about the situation in Tasmania. The Tasmanian government has strongly supported the reform agenda of the Commonwealth, and the national approach that has been adopted by the Tasmanian government will serve the people of Tasmania extremely well. As far as the Commonwealth is concerned, the government have been elected with a clear mandate to prepare this country for the challenges of the 21st century. One of our great challenges is to ensure that future generations in this country are able to enjoy world-class, universally accessible health care. We want to maintain into the future the quality and standards of service delivery that Australians have traditionally enjoyed. In fact, we have the third longest life expectancy anywhere in the world. I think that is a measure of the successes that have been enjoyed by the healthcare system in this country traditionally.

The truth of the matter, however, is that we cannot continue on the basis of the status quo because, without major changes, rising health costs will outstrip revenue growth and state budgets will essentially be overwhelmed by changing demands. If Australians are to enjoy access to world-class health care then there has to be major reform of our health and hospital systems and it has to occur now. That is why this government has advanced the National Health Reform Plan—and we trust we will be able to reach agreement with the states at the next Council of Australian Governments meeting. It is our intention to deliver the most significant reform to health and hospitals since the introduction of Medicare. We will deliver one of the biggest reforms this country has ever seen, and it will provide much better health and hospitals for all Australians. The government is seeking to become the major funder of hospitals to place the Australian healthcare system on a sustainable footing and to ensure a self-improving footing which lasts for future generations. We will create a nationally united and locally controlled national health and hospital network. With that in mind, this new network will build on the major health reforms the government has already introduced, which have seen the delivery of record funding for public hospitals, an increase in the number of elective surgery procedures, enormous pressure being taken off emergency departments, a record investment in the training of doctors and nurses and a dramatic improvement in the level of support for medical research.

Without the reforms the Rudd Labor government is proposing, the challenges the country is currently facing will effectively see the state governments around the country, which are under increasing fiscal pressure, being unable to respond to the needs of our people. We are noticing already the increasing workloads of overstretched staff and the increasing pressures in terms of hospitals’ capacity to actually deliver to patients. We run a real risk that state governments will not be able to meet their health spending obligations as a result of the rapidly rising costs, and we will see enormous pressure on our health system as a result. What we are trying to do is to get ahead of that. By implementing these reforms, the Commonwealth government recognises the importance of the continuing role of private hospitals and private healthcare providers in delivering strong health outcomes. This is especially important in terms of the challenges this country faces with the ageing of our population. We are seeing dramatic growth in the number of aged people in this country, a significant burden in terms of chronic disease and a significant cost expansion.

The Fairer Private Health Insurance Incentives Bill 2009 [No. 2] therefore has to be seen as part of a package of measures this government is seeking to pursue as part of the measures under 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. This bill was defeated by the Senate at its second reading on 9 September 2009. The Senate has already rejected for a second time the other bills that were part of the package. These bills, I repeat, are intended to amend various acts to give effect to our 2009-10 budget measures and introduce three private health insurance incentive tiers. We believe these reforms are essential to make the rebate fairer and more sustainable for the future. The rationale for this bill and the two associated bills is crystal clear: with the demand for health services increasing, and with limited resources, the government has a responsibility to ensure the sustainability of government support in both the public and private spheres.

The government provides extensive support for public health services but also provides very significant funding for the private sector through Medicare, through the PBS, through aged care, through veterans health and through private health insurance rebates. The cost of the rebate has ballooned over the past decade from about $1.5 billion in 1999-2000 to $4 billion last year. It is the government’s view that such an increase is unsustainable. When the government introduced the 2008 budgetary Medicare levy surcharge threshold measure, the opposition claimed Australians would leave private health insurance in droves—and we have heard similar statements in this chamber today. The shadow minister at the time claimed that up to one million people would leave private health insurance. In fact, the reverse has happened: almost 475,000 extra people have taken out private health cover since the government was elected. The opposition’s predictions in respect of the fairer health insurance measures have been similarly dire. However, Treasury modelling has estimated that only 25,000 people would drop their private health insurance. This has been supported by an independent survey, conducted by Ipsos, which found that only 15,900 people would drop out of hospital cover when aware of the whole package that is actually on offer.

So there is a small reduction in hospital coverage which is expected to result in some 8,000 extra admissions to the public hospitals over two years. This represents an increase of just 0.1 per cent of the nine million presentations at public health over the same period. By any measure this is a minuscule increase and it needs to be seen in the context of the government’s 50 per cent increase in hospital funding to state governments that has occurred in a little over two years. Neither of the peak public hospital bodies, the Australian Health and Hospitals Association or the AMA, expect large numbers of Australians to drop their cover with the introduction of these measures.

Whilst sustainability is vital, the government also puts a high priority on fairness, and currently there is an imbalance with the distribution of funding under the rebate. Approximately 12 per cent of couple taxpayers who have incomes of over $150,000 currently receive approximately 21 per cent of the total rebate paid to couples. Under the government’s reforms, this would fall to a more reasonable nine per cent of the total rebate. The government’s support for private health insurance needs to be directed to the hard-working Australians who need the most assistance, not to the high-income earners who do not. This government is charged with using taxpayers’ money wisely. We believe that those that can afford to pay should pay more. We believe it is the right decision for Australia’s long-term financial future.

In summary, these measures are there, with this bill and the accompanying two bills, to make private health fairer, more balanced and more sustainable in the long term. This is a positive step for Australia’s economic future and it will help this country maintain the mixed public-private health system that we value. So I call upon the opposition not to threaten the sustainability of the private health insurance rebate and the budget in terms of its contribution.

Photo of David BushbyDavid Bushby (Tasmania, Liberal Party) Share this | | Hansard source

Senator Bushby interjecting

Photo of Kim CarrKim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | | Hansard source

I trust you will be supporting these measures, given the reasonableness of the propositions I have put to you today. I thank all the speakers in this debate and I commend the bill to the Senate.

Question put:

That the motion (Senator Ludwig’s) be agreed to.