Wednesday, 14 March 2012
Fairer Private Health Insurance Incentives Bill 2012, Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2012, Fairer Private Health Insurance Incentives (Medicare Levy Surcharge — Fringe Benefits) Bill 2012; Second Reading
The Orwellian named Fairer Private Health Insurance Incentives Bill 2012 is the exact opposite of fair. It is grossly unfair besides being destructive of our health system. It will see Australian families that are already struggling with cost-of-living issues—from mortgage payments to rates to power bills—having to face a substantial increase in their taxation and health insurance premiums, and that includes pensioners. The politics of envy this bill represents is what you would expect from the Greens and, of course, that is why we are dealing with it. It is Greens policy, and the hapless ALP are dancing to their tune. This bill, like the carbon tax, represents another broken promise initiated by the Australian Greens.
As I said earlier in another debate, I wonder who wrote to the Hobart Mercury and said:
I grow tired of saying this: Labor is committed to the 30 per cent private health insurance rebate.
Just in case people do not know who it was, it was the same person who promised that there would be no carbon tax in this country, none other than Ms Gillard. As former Labor Prime Minister Mr Rudd has said, the people of Australia no longer trust her. They do not trust her for very good reason. And nor should they trust her or the Australian Labor Party and the Greens, because they have betrayed them and betrayed them grossly.
Let us have a look at some of the implications of this legislation. But before we do so, let us also have a look at Labor's new bright light in this place, the one they got out of mothballs because they could not find somebody worthy of being the Minister for Foreign Affairs. They had to get him out of mothballs because he did such a great job in the state of New South Wales as the Premier. Talking about New South Wales, Mr Carr, then Premier and now Senator Bob Carr, closed 4,820 hospital beds in New South Wales between 1995 and June 2004, representing a 20 per cent cut in the number of available public hospital beds. But true to form, what did Mr Carr say? He promised that he and his health minister would resign if they had not halved hospital waiting lists within 12 months. In his 10 years as Premier, public hospital waiting lists increased by 45 per cent, while the average wait for surgery nearly doubled.
That is what makes him such an appropriate person for the Labor ministry. You say one thing and do the exact opposite. That is what you need to prove to get a position in the Australian Labor Party ministry today. As state Labor governments shrink the public hospital system, as Mr Bob Carr's did, in attacking health insurance you are also attacking the public hospital system—make no mistake. As people leave private health insurance there is a commensurate increase in the demands on the public health system. As a result, those that actually need the public health hospital system will have to wait even longer. That is the perverse outcome of this so-called fairer measure. The poor in our community will now have to wait longer because of this so-called fairer measure.
Let us have a look at what this policy will do. There are millions of low-income Australians who have private health insurance. There are 11.7 million privately insured Australians. There are 5.6 million who have an annual household income of less than $50,000 and, of those, 3.4 million have an annual household income of less than $35,000. Each one of those people, each one of those families will face huge premium increases thanks to the Greens-ALP alliance. That is being foisted upon them under the name of fairness. It is not fair, it is not reasonable and it will further undermine our public hospital system. It is estimated that 1.6 million customers will withdraw from their private hospital cover completely and 4.3 million Australians will downgrade to lower levels of cover, with 2.8 million consumers withdrawing from their general treatment cover completely. What we see is a huge decrease in private health insurance and self-reliance for health needs.
What will that do? The public hospital system around Australia would have to cope with more than 845,000 additional treatments over the next five years as people withdraw from private cover. I know in my home state of Tasmania the Royal Hobart Hospital, the Launceston General Hospital and the Burnie hospital are already struggling to keep up with demand. Their services are already overstretched. As I talk to my colleagues from all around Australia the story is the same in every single public hospital. And Labor, because of their manic ideology of envy, have decided to cut support for private health insurance and throw another 845,000 cases into the public hospital system. What a great manoeuvre. This is where extreme ideology overtakes common sense and rationality. That is why this is another Greens-Labor alliance initiative.
Labor argue that they are somehow going to generate a saving of $2.4 billion over three years from this measure. Chances are that is right, but why would you believe any of their forecasts or any of their modelling? But let us take that at face value, because there is no doubt that set on the other side of the ledger is the huge increase in the public hospital system that over the years will basically equalise it out. As a result, in the out years there will be no practical savings from this measure, but there will be an increase in demand for our public hospital system and a reduction in self-reliance. This is simply another broken promise to the low-income earners, the ones Labor once championed. Remember the working families of Australia? They have now been turned into the worrying families of Australia because of Labor's policies.
The basic objective of health policy is reasonably straightforward. A health system should be designed to keep people healthy. Then, when they get sick, it should give everyone access to health care at the lowest possible cost. Australia's health system goes some way to achieving this, but there is plenty of room for improvement. We continue to ignore straightforward public health measures such as effective food labelling and alcohol pricing. We do not spend enough of our healthcare budget on health promotion. There are serious problems with decent access to health care for rural and Indigenous Australians. There are still alarmingly high rates of infection and iatrogenic disease in our hospitals, and our primary care system is fragmented and poorly integrated. There is much more work to be done.
However, one of the greatest failings of our health system is the glaring inequity that results from the enormous subsidies directed at the private health insurance industry. These are subsidies that, on average, benefit the well-off and those living in urban centres at the expense of low-income Australians and people living in regional communities. These subsidies mean that, for the first time since the introduction of Medicare, we have a government funded, two-tiered, American-style health system that results in one level of care for those with private health cover and another for the many millions of Australians who cannot afford it.
This is not just a problem of fairness. These subsidies come at an enormous price to the nation because they raise the overall cost of health care. In short, the combination of private health insurance incentives fail the tests of both equity and economic efficiency. The Greens will support the Fairer Private Health Insurance Incentives Bill 2012 and the two related bills because they go some way to addressing this glaring problem in our health system, but in our view these changes do not go far enough. Despite what happens today in this chamber, Australia will continue to have an approach to health financing that is unfair and expensive.
Let me put these changes in their proper context. The purpose of Medibank—and later that of Medicare—when it was introduced in 1975 was that a single, national, tax funded health insurance scheme would reduce the need for private health insurance. It is no secret that former Prime Minister Howard was no fan of universal health insurance. After a few false starts he was finally able to put in place changes that would undermine the universality enshrined in Medicare. He did this by introducing a system of reforms to the private health insurance industry that, he claimed, would encourage many Australians to take out private health insurance and thereby relieve the pressure on the public hospital system. This was done as an article of faith rather than with any clear evaluation of its merits. The most basic of questions was never asked: what would these changes mean for both the cost and equity of health care in this country? It was not asked because this was a case of ideology before evidence from a Prime Minister who would combine his disdain for Medicare with his proclivity for middle-class welfare in order to implement changes that would take many years to unwind. I am pleased that today we are making a start.
Even if we were to accept the flawed premise that increasing the number of people in private health insurance is a desirable outcome—and that is something that the evidence now clearly rejects—the private health insurance rebate still made no sense. The evidence is pretty clear that Lifetime Health Cover, not the private health insurance rebate, was the responsible driver for the increase in private health insurance uptake. Private health insurance membership rose from about 30 per cent to about 45 per cent when lifetime rating was introduced. In essence, the rebate was just a little thank you present to those people who had already taken out private health insurance. I find it fascinating that the opposition—the party of free enterprise; the party of the market; the party of small government—is so keen to protect this enormous government subsidy. Surely they know that when the government provides such a massive subsidy to an industry it benefits that industry much more than it benefits the individual. Private health funds are doing very well thanks to the government's largess but consumers have not benefited from this windfall.
The private health insurance rebate has no support from health economists nor, indeed, from members of the public health community. It is a subsidy to an industry that comes at the expense of public health care rather than complementing it.
The arguments for why private health insurance subsidies increase the overall cost of health care are reasonably straightforward, and I commend the excellent report done for the Centre for Policy Development by John Menadue and Ian McAuley on this issue. Modelling shows that by removing the $4½ billion subsidy in private health insurance we would only need to increase expenditure on our public hospital network by about $1.38 billion, leaving over $3 billion that could be spent as a direct additional investment in our public hospital system.
It is fairly clear why health care delivered by subsidising private insurance is more expensive and inefficient than utilising a single national insurer like Medicare. Firstly, private health insurance results in an additional administrative burden of around 10 per cent when compared to a single insurer such as Medicare. These costs are largely unavoidable because they include costs associated with competition, such as advertising. There is also the public-good problem, which means that there is little incentive for individual companies to investment in activities such as health promotion and research. But the greatest cost, by far, associated with the subsidies given to the private health insurance, results from the inability of individual insurers to control healthcare provider costs. What this means in practice is that in some cases consultant fees within the private system are five times higher than those in the public system.
I recently had quite an animated discussion with some of my colleagues about this bill. They were a group of friends who happened to be medical specialists that I trained with several decades ago. Some of them work long hours in the private system, and I think it would be an understatement to say that they were not particularly happy with my position on this bill. It proved to me the truism in politics: whether it be an issue like the mining tax, poker machine reform or private health insurance, the most vocal opposition to reform always comes from those who have the most to lose.
Rather than taking pressure off the public system the huge subsidies directed towards private health insurance have in many respects made things worse. Private hospitals compete with the public system for nurses, doctors and other resources crucial to providing the best care to the general public. It is self-evident that workforce follows funding. Furthermore, Australia's public hospitals are experts at providing quality emergency care and treating complicating, chronic disease. Many private hospitals simply cannot match this service. This is why the myth of relieving pressure will never be a reality. A dollar spent on the rebate simply does not make the wait in an emergency room any shorter.
The private health insurance rebate is one of the most inequitable expenditures of public money ever conceived. It is no surprise that former Minister Jenny Macklin described it as 'the worst case of public policy ever seen in this parliament'. Every year, $4½ billion is spent subsidising the health care of those most able to pay at the expense of those least able to pay.
This inequality is particularly bad for people living in regional and rural areas, both because there are fewer private services in regional areas and because people from those communities, on average, have lower incomes. On this issue of the inequity within the system, I need to address something that Senator Abetz said previously. He seems to think that the only funding mechanism for the health sector is the Medicare levy. What Senator Abetz clearly does not understand is that the Medicare levy only contributes a very small proportion to healthcare costs. In fact, the greatest funder of health services is money coming from income tax. And it is true to say that people on low incomes who pay income tax—even if those people are not paying the Medicare levy—are very clearly subsidising those on higher incomes.
A glaring example of this inequality is dental care. Millions of Australians cannot afford to see a dentist. Many Australians languish on waiting lists that stretch into years. Most simply put off going to the dentist until problems land them in an emergency room. It is a national crisis. Denticare, the Greens plan for universal dental care, is designed to fix this problem. But it will require a major investment of public funds. At the moment we have $400 million of public funds every year directed toward the dental care of those with private health insurance. Surely our first priority should be to spend that $400 million of public money on dental services for those who cannot afford to see a dentist. Instead, we are left with the absurd situation where low-income earners with no teeth are paying for cosmetic dentistry for the wealthy. That is the reality of a two-tiered health system.
This bill is a small step to righting this inequity. It introduces a means test, so that high-income earners will no longer benefit from government largesse at the expense of those who cannot afford or do not want private insurance. Individuals who earn over $80,000 per annum will have their rebate reduced to 20 per cent. Those who earn over $93,000 will have it reduced to 10 per cent, and those earning over $124,000 will no longer receive a rebate. The same thresholds apply, doubled, for couples. These measures are forecast to save the budget $2.4 billion in the next three years. It is imperative that these funds are reinvested in the health system. I call on the government to commit these savings to the health sector. In particular, I would like to see these funds address the gaping need for better dental care. If these funds were reserved as the first step towards universal dental coverage, it would be a great step forward for the health of all Australians.
However, there is one component of this package that is difficult for me to support: the increase in the Medicare levy surcharge. The Medicare levy surcharge is an additional tax that is paid by those over the threshold who do not have private health insurance. If the rebate is the carrot, this is the stick. It is designed solely to create new customers for the health funds. This measure in the bills increases the penalty that those without insurance must pay to 1.25 per cent and 1.5 per cent in the two income tiers. I support it reluctantly for two reasons. Firstly, the Greens managed to secure $165 million for public dental care, which will go some way to addressing the huge unmet need in this area. Much more is needed, but it is a good start. I am proud that in our short time in this chamber we have managed to introduce such an important amount of funding for dental health. Secondly, we support this element of the package because, on balance, means-testing the rebate is a significant positive measure and we did not want to risk its defeat.
One would have thought that one of the first jobs of a new Labor government would have been to scrap all the incentives that have led to this expensive, two-tiered health system. Unfortunately, this Labor government has shown itself to be little different from its predecessor. The National Health and Hospitals Reform Commission, introduced with much fanfare by Prime Minister Rudd, ignored this issue completely despite the fact that health financing is one of the most critical elements of any health system. It is just another sign that the ideological differences between the two sides are becoming narrower and narrower. Yes, it is true that these changes make the system a little fairer, but the basic premise remains. The government continues to accept the flawed notion that the aim of health policy should be to increase the uptake of private health insurance. The only difference is that this government's focus is on the stick rather than on the carrot.
Recently I was shocked to hear the newly elected president of the Labor Party go so far as to describe Medicare as a safety net. Let's be very clear about this: Medicare is not a safety net. It is a universal system of health insurance that is paid for by everyone. The more you earn the more you pay. Nobody should be penalised or made to feel guilty for using our public hospitals. One of the great battlegrounds that once existed between the two old parties—that is, the notion of universal health care—has all but disappeared. It seems that the Greens are now the only party prepared to fight for it. The great tragedy is that both the old parties are prepared to spend billions in public money to drive people away from the health care they have paid for through their taxes. We do not penalise high-income earners who choose to send their child to a public school, because we accept that it is their right as taxpayers to do so and, indeed, they should feel welcome to do so. Health care is no different.
Health policy should be based on evidence, not on ideology. This is not a Left-Right question, and anyone who views this issue through that prism misunderstands it. People who choose to take out private health insurance should have the freedom to do so—we accept that—but the evidence is very clear. If we want to provide health care to the entire population in the most economically efficient and equitable way then a single national insurance scheme is the way to do it. That is not to say that the government should ignore the role of private healthcare providers. Private hospitals have an important role to play in Australia. Calling for an end to the inequitable rebate is not a call for the abolition of private hospitals—far from it. There are better and far more efficient ways of utilising the capacity of private providers than subsidising the health insurance sector. For example, direct contracting with private hospitals to perform services that would otherwise be done in public hospitals is one option worth exploring. There are tentative moves afoot in this direction in some places, such as in Queensland, where the Surgery Connect model shows some promise.
The truth is that Medicare occupies a very special place in the hearts of most Australians. They regard it as much more than a technical mechanism for funding health care. It is a reflection of our egalitarian traditions—the idea that we are all entitled to a decent level of health care regardless of who we are or where we come from. Fortunately, this is one area of public policy where the idea of a fair go coincides with our aim of economic efficiency. For several decades we have had a health system that has been the envy of the world. The time has come to start reinvesting in our public health system if we are to keep it that way.
We have had two contributions to this debate so far: one from Senator Abetz and one from Senator Di Natale. Senator Abetz's contribution was typical Senator Abetz. It was about ideology. It really was not about economics and it was not about the health system; it was simply about the ideology of the coalition and the coalition looking after those who can really afford to look after themselves—looking after those who can afford to pay private health insurance and not caring about the bulk of the Australian population who see the public health system as absolutely essential to their wellbeing in the future. Senator Di Natale has been here only a short period—I accept that—but it would be nice now and again for the Greens to recognise that the Labor Party actually introduced the universal health system in this country. It was the Labor Party who stood against the private health system dominating health in this country. It was the Labor Party who actually brought about the change that was required to build a decent society and a decent health system in this country. It would just be nice now and again to get some recognition—instead of the platitudes and the 'old party' and 'new party' rubbish that you hear from the Greens—that the Labor Party is a party that has set about to make the big changes in this country: the changes that make a difference on industrial relations, on health, on education and on the economy. It would just be nice now and again to get some recognition of that.
Let me get back to Senator Abetz. With great respect to your speech, Senator Di Natale, I found his speech more interesting. His speech is more interesting because it is pure ideological nonsense. It is the message out to the public that the Labor Party and Greens, who are trying to get some changes to the system and make it more fair and more equitable, are involved in class warfare. What did Senator Abetz say? He said, 'Let us make no mistake: this bill is not fair, conceived as it is in the time warp of class warfare and gestated in the womb of destructive envy.' Nice turn of phrase, but meaningless—a bit of nonsense. But that is where the coalition come from on this. They see this as class warfare. If it is class warfare to say that a boilermaker or a fitter or a rigger should not be subsidising Gina Rinehart, should not be subsidising the big end of town and should not be subsidising me in terms of paying my health insurance—if that is class warfare—I am guilty; I am in it, because I do not think it is fair or equitable that ordinary Australians should be paying more to subsidise those who can afford to pay for their own health insurance in this country. So I plead guilty to that. I will always plead guilty to looking after ordinary people in this country, and that is the way we should be doing it.
What this is about, and what was not mentioned by Senator Abetz, is that this is an economic argument as well as a social argument. Health is a hugely important social issue, because if we are going to build a decent society then we have got to have a decent health system. If someone is sick, they have got to have access to a decent health system. That is what Labor has always been about. The reason we are dealing with this bill at the moment is the economic profligacy of the coalition and the lack of economic reality from the coalition. You hear much from the coalition about what great economic managers they are and were under the Howard government. The longer I sit in this place and listen to the arguments put forward by the coalition, the more I realise that it is simply myth. The coalition were not good economic managers and the coalition will never be good economic managers. In fact, I have said on a number of occasions that probably the worst Treasurer we have had in recent times has been Peter Costello. Why? Because Peter Costello did not have the backbone or the courage to stand up to the giveaway mentality of John Howard, his leader. He did not do it. And John Howard was always on the lookout for some way to give money out to those he thought could do some good for the coalition. That was the giveaway mentality of the Howard government. Peter Costello never had the courage or the conviction to actually stand up against John Howard. On that basis, he was an absolute, abject failure. The bills we are debating are trying to deal with that giveaway mentality of the coalition: 'If somebody wants to raise their hand for more money, give it to them, because we might get a vote.' That was the approach of the coalition. They were economic incompetents and they are economic incompetents now.
A book was launched last week called The Australian Moment by George Megalogenis. He is, I think, one of the most widely respected economic commentators and writers in this country. On page 302 of The Australian Moment it says this:
Every voter that cried "cost of living" was given a wad of cash to quieten them down.
He is talking about the Howard government here. They were given a wad of cash. John Howard said, 'We've got a problem over here. Throw some money at it. Don't worry about setting up a sovereign wealth fund for the future of the country. Do not worry about making sure the public health system is okay. Don't worry about the public education system. We have got some of your mates up on the North Shore who are not too happy. Throw some money at them.' This is what George Megalogenis says. He goes on:
But the next voter wanted the same. The competition for handouts infected the government itself. Howard and Costello argued, repeatedly, over the quantity and the content of the largesse.
So this was not economic responsibility. This was largesse; this was bribes; this was pork-barrelling. This was the Howard government in full flight—economic incompetence, throwing money wherever there was a problem, without any worry about the consequences for the country. Megalogenis goes on to say:
But it was Howard's government—
that is John Howard's government—
not the Howard-Costello government: the prime minister always prevailed because the treasurer didn't want to take the fight to the public, even though, as Paul Keating demonstrated throughout the '80s, the deputy with the calculator can often pull rank on the leader with the chequebook.
What does that say about Peter Costello? I will tell you what it says to me: that he had no backbone, he had no courage, and he had no commitment to this country. All he wanted to do was think how he could quietly assume the prime ministership of this country without having the backbone to take John Howard on. That was the position and it has been exposed. And the exposition of this weakness of the Howard government's Treasurer is demonstrated in where we are now in a whole range of areas. Megalogenis goes on to say:
While Howard searched for the next payment to make to his target audience—
'Who is the next target we can make a payment to?'—
Costello tried to reinforce a sense of purity by cutting income taxes as well.
You hear the coalition all the time saying, 'We've got to cut income tax. We've got to cut taxes. We're the party of low taxes.' Well, let us see what this eminent economic analyst says about that:
The upshot was taxes were no longer being collected to provide public services, or to build buffers in good times to deploy in bad times, but to churn back to the electorate. The budget became a frequent-voter program, with rewards based on loyalty, not need.
If ever there was a very concise analysis of the lack of economic credibility of the Howard government, there it is, on page 302 of The Australian Moment, by George Megalogenis, and that just nails this argument about proper economic process under the Howard government. He goes on to say, on page 303:
The reform decades of the 1980s and 1990s had promised a more productive nation that could compete with the rest of the world. But the GST blotted the script—
so the great economic change from the Howard government, the GST, blotted the script—
by facilitating the rise of middle-class welfare in the twenty-first century.
This is not just middle-class welfare that we are trying to deal with in this bill; this is upper-class welfare. This is welfare to the super-rich, and we are determined to deal with it. Megalogenis goes on to say:
Subsidies that the Hawke and Keating governments had taught us to live without were being revived by Howard in an act of electoral appeasement.
Electoral appeasement: that is what the Howard government were about. He goes on to say:
But it was bad policy, because it reverted to the mentality of the 1970s, when every family was told it deserved to gorge on the magic pudding of government protection.
John Howard was the chief architect of that magic pudding. He made the recipe, he baked the cake and the 'magic pudding' was that everybody had to get middle-class and upper-class welfare. That just demonstrates how inept and incompetent the Howard government were in terms of economic approaches for this country. They were prepared to put their electoral success before the economic success of this country.
My view is that all the arguments you hear from Senator Abetz, the arguments about class warfare, are all about trying to paper over what is becoming more and more clear—that the coalition government under John Howard were economically incompetent and were not—
They've sent in the cavalry! Imagine sending in the National Party to defend economic competence! Imagine sending Senator Nash from the National Party to try and lecture me about economic competence when the coalition's economic competence, driven by people like John Howard and the then leader of the National Party, was just to send money anywhere there was a problem: just send it out into the community and try and bribe your way back into office. Pork-barrel your way to government—that is the National Party approach. Senator Nash comes in here and starts trying to have a go at me about economic issues when she should actually have listened. I am sure somebody was listening and they said, 'You'd better get someone down there, because Senator Cameron is carving our economic credibility up.' It is not a big job, because there is not a lot of economic credibility there to carve up.
Senator Fierravanti-Wells interjecting—
Now they're all going! It would be microsurgery carving their economic credibility up—not a lot of it there!
Senator Abetz argues that it is about class envy and socialist dogma. The 'dogma of equal low-class service for all and the politics of envy'—that is how he describes trying to make sure that boilermakers, bus drivers and cleaners do not pay Senator Abetz's private health funds, that they do not subsidise me and that they do not subsidise Twiggy Forrest or Gina Rinehart. If it is Gina Rinehart or Twiggy Forrest or Clive Palmer against the general public, the coalition are on the side of the mining magnates every day. They want the ordinary workers—the boilermakers, the fitters, the bus drivers, the cleaners, the restaurant workers—to subsidise the health payments for these multibillionaires. I say that is not class warfare—it is class warfare from them on ordinary workers—I say it is the right thing to do. It is the economically responsible thing for this government to do, and I am pleased that we have actually tackled this issue and are going to deal with it.
The coalition argues that it is going to be the end of the public system. The argument was that this was some sort of Greens proposal. I draw your attention to the fact that this is a bill that goes back to 2008. This was a bill where in 2008 the Labor Party tried to get some fairness and rational approaches into private health insurance. Professor Deeble, who is recognised as the leading expert on the public health system said that there would not be a significant cost to the public health system by doing this. He also said that it would not send the private health system broke.
And why would it send the private health system broke? This is a private health system that gets more subsidy than the whole manufacturing industry in this country, that employs a million people. The private health industry gets a bigger subsidy than the whole of the manufacturing industry. Where is the economic rationale for that? Where is the economic logic in that? There is none! And it is simply about the coalition supporting that big end of town—the private health industry—that supports them with donations for the next election. So if it is about a donation to the coalition or the good of the country, the coalition go for the donation every time. They will stand up for the mining magnates and they will stand up for the private health industry, a private health industry whose profits before tax increased to $1.27 billion for the year ended 31 December 2011.
We get all these lectures about the market operating: I do not hear Senator Abetz giving us a lecture about how an industry that is making billions of dollars of profit should not have any public subsidies. I did not hear that argument come through. Where was that argument? They are absolutely hypocritical in their approach. These people, if there is a quid in it for their election campaign their principles and policies go out the door. They will simply be sycophants for whatever industry is prepared to put money in, even if it is the tobacco industry.
I will not take any lectures from the coalition about good economics and I will not take any lectures from the coalition about a decent health system. Look at their record when they were in power: their record on health was abysmal. The first thing they did was scrap the Commonwealth Dental Program. The ratio of federal funding for public hospitals dropped to just over 40 per cent by 2007. In 2003 alone the Howard government ripped a billion dollars out of public hospitals, so do not come here lecturing us about economics or lecturing us about health. Your record is abysmal and you just do not have a clue about what is in the national interest. You would put your electoral interests before the national interest every time. You should be condemned for that. You should be supporting this bill because it is the right thing to do and it is the right thing for all Australians.
Senator Doug Cameron has a go at Senator Abetz for so-called ideological rubbish but I have to tell him that it takes one to know one.
Senator Cameron interjecting—
What I meant by that, Senator Cameron, I will come to in a moment. First of all I want to talk about the ideological rubbish that you have just described which actually came out of Julia Gillard, then shadow Minister for Health. But I will come to that.
Senator Cameron, you are not staying here to listen or also to rebut, first off, the absolute lie that Senator Cameron just told about the Howard government ripping out a billion dollars. They keep coming into this chamber—
Senator Brown, if you were listening, I just did. I withdrew it twice, but obviously your mind is on other things.
First of all, can I just correct the wrong and misleading statements just made by Senator Cameron? According to the Australian Institute of Health and Welfare, Australian government expenditure on public hospitals increased every year from approximately $5.2 billion in 1995-96 to over $12 billion in 2007-2008. And from 1995-96, annual spending on health and aged care by the Australian government more than doubled from $19.5 billion in 1995 to $51.8 billion in 2007-08. Therefore, it is wrong and it is utterly and totally misleading for Senator Cameron and other senators on the other side to come into this place and continually peddle this lie about this so-called ripping $1 billion out. Clearly, they do not know that the facts are in the detail provided by the Australian Institute of Health and Welfare.
I now come to the 'ideological rubbish' that Senator Cameron was accusing Senator Abetz of. What Senator Abetz was doing was quoting from a letter to the editor of the Hobart Mercury on 2 September 2004 from Julia Gillard. Not content with that, Ms Gillard again wrote a letter to the editor of the Courier Mail on 23 September 2004:
Your correspondent Russell McGregor (Letters, Sept 15) should have no concern that Labor will "erode" or abolish the 30 per cent government rebate for private health insurance. Labor is committed to the maintenance of this rebate and I have given an iron-clad guarantee of that on a number of occasions.
Signed Julia Gillard. What a joke! So, Senator Cameron, is that ideological rubbish? There is another letter to the Weekend Australian on 15 October 2005 from Ms Gillard:
On Thursday, 13 October, the Minister for Health, Tony Abbott, asserted in parliament that prior to the last election, I had a secret plan to scrap the private health insurance rebate and he cited Mark Latham's diaries as proof of this proposition. Yesterday Matt Price reported this claim by the minister as if it were a fact (The Sketch 14/10). The claim by the minister is completely untrue and should not have been reported as if it were true. The truth is that I never had a secret plan to scrap the private health insurance rebate and, contrary to Mr Latham's diaries, do not support such a claim … For all Australians who wanted to have private health insurance, the private health insurance rebate would have remained under a Labor government. I gave an iron-clad guarantee of that during the election.
Is that not an absolutely useless piece of drivel, because we know that everything this woman says is a complete and utter misleading fabrication? Here is another example. The woman is a serial liar, and of course we have seen this time and again.
Government senators interjecting—
I will refer to the Prime Minister by her appropriate title and I withdraw my remark. She goes on:
I gave an iron-clad guarantee of that during the election. The difference between Tony "rock solid, iron-clad" Abbott and me is that when I make an "iron-clad commitment", I actually intend on keeping it.
What an absolute joke that is. This is the same Prime Minister Gillard that told the Australian public, 'There will be no carbon tax under the government I lead.'
Then the cudgels were taken up by the then Minister for Health and Ageing, Nicola Roxon, who gave a speech to the annual conference of Australian Health Insurance Association in 2007, prior to the election. She rabbited on:
This is why we have committed to the current system of private health insurance incentives—including the package of rebates, the Lifetime Health Cover and the surcharge. Labor understands that people with private health insurance—now around 9 million Australians—have factored the rebate into their budgets and we won't take this support away.
There you go—Minister Roxon. Then she reiterates this on 23 September 2007 with Steve Lewis. She is asked a direct question about the rebate and she responds:
We've committed to it. We've committed to the 30%. We've committed to the 35% and 40% for older Australians. It's similar to the safety net. We know that many people rely heavily on the assistance that is now provided and would not be able to have private health insurance if that rebate wasn't paid. And lifetime health cover and others that go with it, we are committed to those. We understand that Australia now has a mixed health system, both private and public, and we need them both to be strong in order for the community to be able to get the services.
She is asked again:
So you will not wind back that 30% private health rebate, despite the fact that Labor has been ideologically opposed to it in the past?
Nicola Roxon responds:
No, we won't.
If that is not a lie, what is? It reminds me of the biblical reference that before the cock crows there will be three denials. Then we have Minister Roxon again on 26 September:
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 …
The Liberals continue to try to scare people into thinking that Labor will take away the rebates. This is absolutely untrue.
Yet again, another lie. That is exactly what they have done. They are now taking it away. For a third time they are trying to take it away. Then you have Kevin Rudd buying in in a letter, which really was not worth the paper it was written on, to the AHIA on 20 November 2007:
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 …
Again, in a press conference on 25 February 2008, Kevin Rudd said:
The private health insurance rebate policy remains unchanged and will remain unchanged.
Absolutely, Senator Williams, you cannot trust them—do anything, say anything. Nicola Roxon, Macquarie Radio, May 2008:
We continue to support the 30 per cent, 35 per cent and 40 per cent rebate for those Australians who chose to take out private health insurance.
In a speech to the Australian Health Insurance Association Conference in October 2008, Nicola 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 will remain in place.
Again, in the Age on 24 February 2009, she said:
The Government is firmly committed to retaining the existing private health insurance rebates.
But, as we know with Minister Roxon, it is say one thing and do another.
During Senate estimates it was revealed that, whilst Minister Roxon was busily giving these public assurances, behind closed doors she and other senior members of the Labor government were seeking advice on how to progress changes to the private health insurance rebates. Whilst they were publicly firmly committed to retaining the existing rebates, secretly they were working on plans to reduce and to 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. 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 Prime Minister's department did so on 23 February.
So there they were publicly, hand on heart, saying one thing but then busily behind the scenes doing something different. But what does one expect from this government? They have taken from their mentor, Graham Richardson—whatever it takes; whatever it takes. And on this occasion in relation to private health insurance, yes, it was good to go out and say one thing and convince people and then, when you get into government, do the complete opposite.
Let us look at what happened at the last federal election. I want to examine some of my duty seat areas. Let us look at Mr Melham's seat of Banks. Mr Melham has almost 63,000 voters in his electorate with private health insurance. The margin of people that would have made the difference in that seat—it is a 1.5 per cent margin—was 1,438 people. Did he go out and tell those people that this government was on the one hand promising that it was not going to touch private health insurance but that, on the other hand, 'We are secretly going to change this; we are going to break this promise'? No, he did not. If he had, one wonders what may have happened in that seat. No, he does not have a mandate, because the promise that was made before the last federal election was that the rebates would be left in place.
In Mr Murphy's seat of Reid there was the same situation. There are almost 64,000 people, voters, in his electorate who have private health insurance. Did he tell the 2,593 people that represent the margin with which he won the seat that he was going to do something different, that he was going to affect their cost of living, that he was going vote to do the direct opposite of what he and Ms Gillard and others had been promising? No, he did not. He did not go out and tell his constituents the truth. And with Mr McClelland in Barton it was the same thing. In Werriwa, with Mr Ferguson, it was the same thing.
Let me go to my own area in the Illawarra. In the Illawarra, there is Mr Stephen Jones, who seems to be more worried about same-sex marriage than the thousands of jobs that have been lost in the Illawarra as a consequence of the government's carbon tax. But of course that just goes to show where his priorities are. Before the last federal election, I did not hear him telling his almost 47,000 constituents in his seat of Throsby who have private health insurance that he was going to vote against it. Ms Sharon Bird has almost 60,000 people in her electorate of Cunningham who have private health insurance. But, of course, she did not tell them the truth. You can go through any other federal seat and you will find it is the same story all around.
What we see with these bills is another betrayal of the Australian people by the Australian Labor Party. You on that side do not have a mandate to pass this legislation. For many years all of you on that side—whether it be Julia Gillard, Minister Roxon or Kevin Rudd—have been spouting on about private health insurance and how you are going to protect it. Over many, many years, hand on heart, you have been telling everybody that you were not going to change it. This is only a very, very small example of some of the things that you have repeatedly told the Australian public. And what is the common feature of what you have told the Australian public? It has all been a pack of blatant lies. You have repeatedly ruled out any changes—
Mr Acting Deputy President, I rise on a number of points of order. I think we have indicated to the speaker a number of times that her references are inappropriate, they are outside of the standing orders and they are unparliamentary. I respectfully request that the senator be asked to refer to people in the other place by their proper title, as is the longstanding convention of this Senate. It does her and, more importantly, it does the Senate no good for us to be continually pulling apart conventions that have stood in this place for a long time. I also respectfully request that the senator be very careful in using language that would indicate an improper motivation of someone either in this place or the other place. And I respectfully and finally request that the senator take notice of the standing order.
With respect to addressing people in this place and the other place by their correct title, Senator McLucas, you are right and I draw your attention to that, Senator Fierravanti-Wells. With respect to improper motives, unless they are actually attributed to an individual, it is not disorderly. But I will ask Senator Fierravanti-Wells to consider her language.
Thank you, Mr Acting Deputy President. If anybody in the other place or in this place takes issue with any of my comments then I am sure, Senator McLucas, that after your lecture they will have appropriate recourse through the standing orders. As I was saying, Prime Minister Gillard and other members of the Australian Labor Party have over many years repeatedly ruled out any changes to the private health insurance rebates. We are seeing now the breaking of that article of faith and the breaking of promises that they made to the Australian public on many, many, many occasions. Why should we be surprised at this from a government led by a Prime Minister that blatantly told the Australian public, 'There will be no carbon tax under a government I lead'? Now we have a carbon tax.
There is an old Mafia saying that the fish smells from the head. I have to tell you that I think this government smells and reeks from the head. You have a Prime Minister that is prepared to say one thing to the Australian public and then do the complete opposite. Doing so taints every member and every person who contested the election for the Australian Labor Party, and the last election is tainted with the same stain, the same lie that is attributed to the government. What they said they now have to live with. I look forward to the next federal election, when those opposite and their Greens alliance partners will have to give account to the Australian public for every policy, for every misrepresentation and for every misleading statement. Yes, for every lie that they have told to the Australian public they will have to pay at the next federal election.
In the various debates that we have had in relation to private health insurance—even yesterday when we were seeking to refer this matter to the economics committee for proper examination—where is the Treasury modelling that goes with this legislation? This government has made a series of assertions in relation to the effect of private health insurance. It claims that only 27,000 people will drop cover as a result of this measure. But we know from the Deloitte's analysis that in the first year 175,000 people will be expected to withdraw from private hospital cover and a further 583,000 people will downgrade their cover. Over five years 1.6 million people will drop their cover and 4.3 million people will downgrade their coverage. All of this will have an effect on the public hospital system. That is the reality. This government has not fixed the public hospital system and this legislation will only compound the problem.
Thank you, Mr Acting Deputy President. I am sorry; I did not quite hear your call initially, because there has been so much screeching and yelling from the other side. I think the previous speaker may well have lost some self-control, and I do not think it augurs well for how people see the Senate working to have to listen to that. If I may, I will ask you, Mr Acting Deputy President, to speak up if you need to speak to me during my speech today.
Today we are debating a package of three bills, and I will get to the detail of them later. I will preface my remarks by speaking a bit about the purpose of the private health insurance rebate, because it is relevant to explaining why this government has chosen to means-test the rebate. The private health insurance rebate was introduced by the previous coalition government along with the Medicare levy surcharge as part of a suite of measures intended as a carrot and stick approach to get people to take up private health insurance. By subsidising the cost of private health insurance the option was made more attractive for potential private health insurance customers, and the Medicare levy surcharge provided a strong disincentive to remain uninsured and to rely entirely on the public system. In fact, many people are better off financially by taking out private health insurance rather than paying the surcharge. A strong private health insurance industry is important because it helps to take significant pressure off our public health system. However, the private health insurance rebate is an expensive policy and one that is rapidly growing in cost. So it is time to re-evaluate the private health insurance rebate and consider whether its current design is providing the best value for money.
The bills currently before the Senate include the Fairer Private Health Insurance Incentives Bill 2012, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2012 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2012. The bills will introduce three tiers of income thresholds for singles and families at which the private health insurance rebate will decrease from its present level. For the 2012-13 year those with incomes under $84,000 per year for singles and $168,000 per year for families will not be affected by the changes and will continue to receive the full rebate, including the 35 per cent rebate for people aged 65 to 69 and the 40 per cent rebate for those over 70. A single person earning over $84,000 per year will move to the next income tier; the next tier is if they earn over $97,000 per year, and the next one is at over $130,000 per year. A person with private health insurance will receive a reduced rebate depending on their age and income. For example, if a single person under the age of 65 earns over $84,000 per year, their rebate is reduced to 20 per cent, 10 per cent or zero, depending on which income range they are in. Regardless of their age group, people in the top income tier will receive no rebate at all. The income threshold for families is worked out by doubling the threshold for singles. The threshold is also increased by $1,500 for each dependent child after the first. The Medicare levy surcharge for those who do not take out private health insurance will increase for some taxpayers, from one per cent to 1.25 or 1.5 per cent, depending on which income range they are in.
To illustrate how these reforms make the private health insurance rebate fairer, roughly 14 per cent of single taxpayers earn over $84,000 per year, yet they receive about 28 per cent of the rebate paid to individuals. In other words, one-seventh of singles receive almost one-third of the benefit. Under these reforms they will receive about 12 per cent of the total rebate paid to singles. For couples, 12 per cent have incomes above $168,000, yet they receive about 21 per cent of the rebate paid to couples. Under these reforms they will receive approximately nine per cent of the rebate paid to couples.
The thresholds at which the rebate will cut out completely in 2012-13 are $130,001 a year for singles and $260,001 a year for couples. This measure is expected to deliver savings of around $2.9 billion over the forward estimates and $100 billion over the next 40 years. This measure is important if we are going to have ongoing sustainable funding of our health system into the future.
The Intergenerational report 2010, published in February 2010, states:
The private health insurance rebate is the fastest growing component of Australian government health expenditure.
Expenditure on the rebate is expected to increase by over 50 per cent per person in real terms over the next 10 years. So if we are going to tackle the challenges of health cost inflation then it is important that we fund our healthcare system on a sustainable basis.
Unfortunately, there has been a lot of hysteria surrounding what will happen to participation in private health insurance once these measures are enacted. In fact, I have just sat here and listened to 20 minutes of that hysteria. Might I say, it all sounds very familiar. The attitude of the private health insurance industry when it comes to these changes is like the boy who cried wolf. Remember in 2008, when we changed the income thresholds for the Medicare levy surcharge? The private health insurance industry, backed up by the federal opposition, said that one million people would drop out of private health insurance. Of course, those opposite hate being reminded of this claim because, in fact, the reverse happened—the industry gained 800,000 new customers who took out private health insurance policies. Treasury modelling estimates that, as a result of the proposal currently before the Senate, around 27,000 people will drop their health insurance policies. This means that 99.7 per cent of private health insurance customers are expected to remain in private health insurance. This is against a backdrop of strong growth in private health insurance, with 45,000 people taking up a policy last quarter. These reforms will only result in reduced rebates for about 1.7 million adults—around 670,000 singles and 520,000 families—whereas the vast bulk of private health insurance customers, about 7.75 million Australians, will not be affected. Only 130,000 adults will be expected to pay an increased Medicare levy surcharge.
The Leader of the Opposition, Mr Abbott, has said that he will scrap this measure if the coalition win government. He describes this policy as an 'article of faith' for the coalition. However, he has refused to commit to a timeline. But that does not surprise any of us on this side. Of course Mr Abbott will not commit to a timeline, because doing so would add to the coalition's ever growing budget black hole. Already having a $70 billion black hole, Mr Abbott is reluctant to add another $2.9 billion to the ledger. So, instead of making an explicit promise about when he will overturn this measure, he tries to have his cake and to eat it too. This is such an 'article of faith' for the coalition that they propose to do it not as soon as they get into government, not in their first budget, not even three years down the track—but at some vague, indeterminate time in the future.
Mr Abbott's failure to commit to a time frame highlights a worrying trend in the fiscal approach of those opposite—and that is simply the fact that they do not have one. They have a leader, a shadow Treasurer and a shadow finance minister who cannot seem to agree on anything. They refuse to commit to a surplus in their first term of government, and I read earlier today that the opposition have now said that all their policies have been costed, so we look forward to seeing the results of those costings. It will be interesting to see how long they actually take to be made public.
What is evident from the Leader of the Opposition's proclamation that he will scrap this measure but does not know when is that the opposition have no idea at all when they will be dig themselves out of the $70 billion black hole they have created for themselves. They will not commit to a surplus, they will not explain how they will find $70 billion in savings to fund their commitments, and they will not commit to a clear timetable on something that Mr Abbott describes as an 'article of faith'. In addition to their lack of any fiscal credibility, what the opposition's policy reveals is who they really represent. It is not low-income or middle-income Australians but the wealthiest in our nation. This was exposed last week when the Treasurer, Wayne Swan, astutely observed that, while Mr Robb and Mr Hockey would not defend better superannuation for Australian workers or tax breaks for small businesses, they were quick to jump to the defence of the likes of Gina Rinehart, Clive Palmer and Twiggy Forrest. In fact, I think the defence of Australia's mining magnates is the only thing that is uniting the coalition's economic team. But let us go back to the private health insurance rebate.
According to Australian Bureau of Statistics data for 2009-10, households in the top 20 per cent income range spend almost four times as much on private health insurance as the bottom 20 per cent. I am not going to get into this phoney argument about whether a family on $260,000 a year income is rich. That whole argument, and the labelling of the government's proposal as 'class warfare', as we know, are nothing but red herrings. This is an article of faith for us: someone on the salary of the Prime Minister or the Leader of the Opposition does not need any more incentive to take up private health insurance than the Medicare levy surcharge. They certainly do not need the private health insurance subsidised by ordinary working Australians. This is what the debate simply boils down to. I think $130,000 for an individual or $260,000 for a family may not mean being rich, but ordinary Australians would agree that it is enough income to be able to comfortably afford private health insurance. If the opposition want to maintain the cry of class warfare, they are the ones engaging in class warfare when they suggest that CEOs and corporate lawyers should have their private health insurance subsidised by teachers, nurses and hairdressers. Not only are they engaging in class warfare but they have chosen to side against middle Australia. If the opposition want to be honest about the ideological drive behind their policy of opposing means testing of private health insurance rebates, they should stop engaging in disingenuous drivel about class warfare.
The opposition should look ordinary working Australians in the eye—people on $40,000, $50,000 or $60,000 a year—and say to them, 'We think your taxes should be subsidising the health insurance of people on double, triple or even a hundred times your income.' I do not think any on that side have ever done that. That is what we are really talking about—that is who the coalition represent. It is who they represented with their opposition to means testing the baby bonus and their opposition to our changes to the Medicare levy surcharge thresholds and the luxury car tax. It is who they represented with the introduction of Work Choices and their opposition to the minerals resource rent tax and consequently their opposition to a tax break for small business and better superannuation for ordinary working Australians.
The same goes for the position of those opposite on a carbon price. They would rather subsidise polluters than make them pay for the pollution. Millions of low- to middle-income households would be better off under the household assistance component of our clean energy future plan, but Mr Abbott and his colleagues would rather see pension increases and tax cuts reversed, ripping money out of the pockets of ordinary hardworking Australians. It just goes to show that the debate on these bills is a microcosm of a broader issue. This issue is one of the great ideological divides that separates Labor and the coalition and it is the divide of basic fairness.
I remember back in 2008, during the debate about our changes to the Medicare levy surcharge, that I referred to the coalition as the sheriffs of Nottingham. I think that label still suits them today. The same toxic ideology continues to evade the coalition, that the well-off should be looked after at the expense of the needy. Our fundamental belief is that government, in providing assistance to families and households, should give priority to those who need it the most. Contrast this with the Liberal-National coalition who seem to take the view that the job of the government is to give priority to looking after the top income earners in the country.
What this debate boils down to simply is that $130,000 for an individual or $260,000 for a family may not be rich but that ordinary Australians agree it is enough income to comfortably afford private health insurance. If the opposition want to maintain the cry of class warfare, let us be clear that it is not coming from this side but coming from those opposite. When they suggest that corporate lawyers and CEOs should have their private health insurance subsidised by hardworking teachers, nurses, hairdressers and garbagemen, then we know where the class warfare really is.
If the opposition want to be honest about the ideological drive behind their policy of opposing means testing, then they should stop engaging in this tirade of screeching and carrying on that all of us in here and those listening just had to listen to. Mr Acting Deputy President, I think they think that if they screech the loudest that somehow makes them more morally correct and right, but let me assure you that is not the case. Those on the other side should take a good hard look at themselves. They should take some chill pills and settle down a bit because all we hear from that side is yelling and screaming and the tirade that I used to witness from two- and three-year-olds when I was a childcare worker. I did spend a number of years in the childcare industry and most of the children I cared for then were much better behaved than those on the other side. In fact, if they were children I was caring for, I would certainly give them the 'ignore them' treatment, because that is all they deserve. I think that the people out there listening to any of this debate would certainly think the same.
Those opposite should go out to ordinary working Australians and look them in the eye—the people on $40,000, $50,000 or $60,000 a year—and say to them, 'We think your taxes should be subsidising the health insurance of people on double, triple or even a hundred times your income,' because that is what they are purporting. That is what we are really talking about. The coalition do not represent ordinary working people. They opposed the means testing of the baby bonus, they opposed the changes to the Medicare levy surcharge threshold and they opposed the luxury car tax. It is who they represented with the introduction of Work Choices and their opposition to the minerals resource rent tax. They want to deny ordinary working Australians better superannuation because, as far as they are concerned, as long as their rich mates are looked after, life is fine and rosy.
On this side we believe in a fair go for all and we believe in making sure that that fair go can be accessed by all. The debate on these bills is a tiny sample of the broader issue and the way those on the other side think. Our fundamental belief is that government should provide assistance to families and households and that priority should be given to those who need it. Contrast this, as I have said, with the Liberal-National coalition who take the view that the job of the government is to give priority to those on the top incomes in this country. I think that is atrocious. They really need to think about what they are doing. It is just more of their negativity that has been constant over the past few months and years. On that final note, I commend the bill to the Senate.
It is interesting to follow that rambling and rather disjointed contribution from Senator Bilyk in which she addressed the issues of subsidies on incomes.
Government senators interjecting—
I heard the bleating and am glad you called them to order, Mr Acting Deputy President, because obviously they do not like a few truths. I would like to point out, in response to what Senator Bilyk said about the income of the wealthy being supplemented by the hardworking hairdresser or plumber, that she made no mention of how union bosses have been supplementing their incomes. There are allegations of credit cards being given to union bosses and kickbacks for contracts, how they have been indulging in personal pastimes at the union members' expense to the tune of hundreds of thousands of dollars. These are allegations that you conveniently ignore, Senator Bilyk. But if you want to know anyone who is taking advantage of the humble working man and woman, it is the union movement. You have been exposed for all of that and yet you still live in blissful ignorance of some of the corrupt and shonky practices that have been taking place in the movement that you are very proud to have been a member of.
It is a further indictment of Senator Bilyk and members of the side opposite, members of the government, that the focus of their support of this bill is somehow attacking Mr Abbott. The problem with Mr Abbott is that he is effective. He is effective in highlighting the spendthrift ways of this government, the folly of its ridiculous policies. He is highlighting how disingenuous and false are the words of the Prime Minister and members of this government. There is no further point that we need to remember than the Prime Minister's assurance, 'There will be no carbon tax under a government I lead.' I have raised that because Senator Bilyk also raised the carbon tax in her contribution.
The Prime Minister said, 'There will be no carbon tax under a government I lead,' and yet that is exactly what the government have introduced with their coalition partners, the Greens. Why do I mention a broken promise? Because this bill is another in a long list of broken promises from this government, betraying the Australian people in the process. Might I remind the Australian people that at the last election there was a cash-for-clunkers scheme. It did not even see the light of day after the election. There was also going to be something called a citizens assembly which Senator Wong and the Prime Minister announced. Of course, they were laughed at at the time, but they steadfastly clung to it until after they had been elected. This is an appalling indictment, and this bill is once again another broken promise. I hark back to what Minister Roxon said when she was Minister for Health and Ageing:
Federal Labor has made it crystal clear that we are committed to retaining all the existing private health insurance rebates.
Clearly that was not true. It is demonstrably not true because this bill is before us today. That is an extraordinary thing for this government to be pursuing under the guise of fairness. What a joke even the title of this bill is: Fairer Private Health Insurance Incentives Bill. Firstly, there is nothing 'fairer' about it. This is about undermining the private health insurance system in this country, because the government do not like it and have never liked it. The Labor Party have never liked private health insurance, because it weans people off the teat of government.
The other misnomer in the title of these bills is the 'incentives'. There are no incentives in these bills. It is a complete joke to suggest there are. These bills do the exact opposite of providing an incentive to the Australian people. These changes will force people to drop private health insurance cover or to choose cheaper cover with a number of procedures excluded, because it will simply become unaffordable. It will cause upward pressure on insurance premiums as more people drop out of the system and it will increase the pressure on an already overstretched public hospital system.
I remind the Australian people that not only did Minister Roxon mislead the Australian people when she said Labor were committed to retaining all the existing private health insurance rebates, but the man that Labor loves to loathe, former Prime Minister Mr Kevin Rudd, also said federal Labor was committed to retaining the existing private health insurance rebates. I would suggest to the members opposite that if they knifed, got rid of and brutally politically crucified Mr Rudd on the basis that he was preparing to break a promise in this respect, that would be a reasonable thing. But it seems that Mr Rudd was committed to upholding his promise. Perhaps that is one of the reasons that they so brutally dispatched him and sent him into political purgatory.
I come back to this: the Australian people are simply sick and tired of Labor making promises just before an election and then somehow obfuscating or using some sophistry or expert who has been plucked from one of their chosen political mouthpieces to justify breaking those promises when they get into government. We have talked about some of them: the carbon tax, the cash-for-clunkers scheme, the citizens assembly—and we can go on and on and on. And that is on top of the promises that they kept, which turned out to be abject failures as well, because the information they have provided to the parliament or to the Australian people to justify these promises has turned out to be false, misleading or somehow not researched. We have a $56 billion public money spend in this country on the National Broadband Network that has not even seen the light of day of a cost-benefit analysis. There is no justification from the government other than the fact that their previous broadband plan did not receive enough tenders. It did not receive enough tenders, so Mr Rudd, the then Prime Minister who was brutally knifed for the second time recently, and Minister Conroy cooked up on the back of an envelope on a plane a $56 billion public spend. That is the sort of policy approach that we have from this government.
I could also remind the good people of Australia that this was the government that spent $1 billion giving people pink batts for their homes. That resulted in a number of homes being burnt to the ground and a number of lives lost. We are still waiting for an apology from the minister responsible, or any accountability. That minister still sits quite proudly around the cabinet table. The government is too scared to get rid of him. He must know where a few of the government bodies are buried, so to speak. The government spent $2 billion taking out the pink batts, plus conducting a range of other inquiries and things, because it did not think through its plans. That is exactly the same circumstance with which we are faced here.
It might be convenient for the government to play the class warfare card by saying that people earning over a certain amount of money are being subsidised by those who earn lesser amounts of money. I guess it depends on your mindset: either you can look for nasty class warfare issues or you can look at what is really happening in our country today. A person earning $50,000, for example, effectively pays very little tax whereas, I am advised, someone who earns $150,000 pays somewhere in the region of 16 times that amount of tax. Whether that person is wealthy or not does not matter: they are making a contribution to society. We have to recognise that private health insurance also plays a meaningful part in our health system functioning effectively and efficiently. People who take responsibility for their health needs by taking out private health insurance reduce the need for the public hospital system to provide services for them, they reduce the waiting lists for some services that are noncritical but which are very important to the people who need them and they also keep the general cost of health insurance premiums down, which is very important. More importantly, they allow individual Australians to exercise choice.
The simple fact that the government may, in one way, shape or form, be making it more affordable for people to undertake private health insurance is a net good. It is encouraging people to do the right thing by making it affordable. Of course, affordability is something that this government really does not seem to care about. It does not seem to care about how families are already struggling in many instances to balance the budget. It does not seem to care about the fact that utility costs in this country are already rising at a rapid rate and are set to rise even further as the Australian people are afflicted with the world's biggest carbon tax—a tax which we were promised would never see the light of day under a government led by Julia Gillard.
These things naturally concern us on this side of the chamber because we are committed. The central cause of the Liberal Party is to foster personal responsibility, to see stronger families and to enable people to make decisions that will empower them and get government out of their lives. Senator Bilyk, in her contribution, put paid to the lie that Labor cares about families and about people. If it really did care, it would not be putting this additional penalty on those who want to take responsibility for their own health insurance at a time when they are already struggling with rising bills for utilities, food, rent, mortgages, rates and taxes. Quite frankly, the government has a role to play in all of these things not only because of its borrowing and the inflation that goes with it but also because of its imposition of new taxes. This is a characteristic that the government has continued to pursue for the last four years.
This government has increased taxes on all sorts of spurious grounds. It has done so under the guise of health measures which were once again proved to be false. It has done so under the guise of needing to spend more money in the community. It is still rolling out stimulus spending with respect to the GFC, a crisis which apparently stopped a couple of years ago in 2008. It is still rolling out the spending, notwithstanding the inflationary pressures and the other challenges, particularly the budgetary challenges, of this government. The product of all this spending and waste and the injection of borrowed money into the economy is putting up prices, fuelling inflation and making things more expensive for Australian people. That is why a budget measure to reduce the affordability of health insurance, as proposed by this bill, is very poor. The coalition believes all Australians should have access to affordable health care and real choice in managing their healthcare needs.
As a result of the introduction under the previous coalition government of the private health insurance rebates, the Medicare levy surcharge and Lifetime Health Cover, private health insurance coverage increased significantly from 34 per cent in 1996 to over 44 per cent by 2007. You would have to be particularly bloody-minded and stubborn not to recognise that as a net benefit for this country. It makes health care more affordable and more accessible for every single Australian, not just those with private health insurance.
In that respect, 52.9 per cent of Australians have private health insurance—that is 12 million of us—and 10.3 million have hospital treatment cover. Every single dollar of funding provided for the private health insurance rebate saves $2 of costs that are then paid by private health insurers. That is from the Econtech Pty Ltd and Harper Associates and Hagan report of 2004. A 2012 Ipsos survey found that 64 per cent of the population believe that the $4.5 billion a year the government spent on the rebate was a good use of taxpayer money. These are not only the people who can afford the private health insurance as a result of the rebate but also those people who rely on the public hospital system and who benefit from greater accessibility and shorter waiting times.
Private hospitals treat 40 per cent of all patients in Australia. Imagine if those private hospitals were no longer accessible or affordable because private health insurance had disappeared, as much of the Labor Party wants. That 40 per cent of Australians would then need to use the public hospital system, which is already under increasing stress and pressure. In 2009-10, private hospitals treated roughly 3.5 million patients, and these people may then be forced into the public hospital system. Imagine the bottlenecks then. What would we see? We would see the hospitals like the Keith and District Hospital, which the South Australian Labor government refuses to give $300,000 a year to in order to keep it open. Imagine the pressure on the public hospital system when a state government cannot even afford to keep an integral part of regional health and hospitalisation open for a measly $300,000.
We have to acknowledge that private hospitals play a very important role. They perform the majority of elective surgery in Australia—64 per cent—because they are efficient, effective and accessible. As for the direct impact of this bill, I know we will have competing numbers and figures, but let me say for the benefit of the Australian people that, if you are going to rely on some figures put forward in this debate, you have to ask yourself how you can in good conscience rely—