Senate debates

Thursday, 15 March 2012

Bills

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

3:46 pm

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

When question time interrupted my contribution on this, many Labor senators had come in to hear what I had to say about this particular bill. I see they have all left now and, for the record, there are two Labor people in the chamber. Clearly, they did not like what I was saying. I was reminding the people of Australia that our Prime Minister, Ms Gillard, the leader of the Labor Party, had said some time ago:

I grow tired of saying this: Labor is committed to the 30 per cent private health insurance rebate.

She may have been committed to it before an election, as she was committed to not introducing a carbon tax. Clearly, with Ms Gillard you cannot trust or take at face value anything at all that she promises. This bill that we are dealing with today is removing the private health insurance rebate of 30 per cent that Ms Gillard promised Labor was committed to. In a letter to a newspaper about a correspondent who had written about Labor and private health insurance Ms Gillard said:

Your correspondent … should have no concerns 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 on that on a number of occasions.

We have learnt that with Ms Gillard her iron-clad guarantees and her solemn promises to the Australian public before an election mean absolutely nothing. I say to the people of Australia: how can you ever believe anything Ms Gillard might say or promise at any time in the future? It does seem to be a Labor leader's disease.

In my own state of Queensland we had the Labor leader Ms Anna Bligh, the current Premier—or Premier for another week or so anyhow—promising before an election some time ago that the 8c subsidy which Queensland motorists enjoyed on their fuel would never be removed. Immediately she got into power, she did the Labor thing, completely rejected her promise and removed the 8c subsidy. She also promised time and time again that she would not sell public assets. For example, she would not sell Queensland Rail, but we all know the history of that now. Labor actually sold the state-run rail service in breach of a commitment.

The relevance of that to this debate on the removal of the health insurance rebate is this: everybody knows that, once you remove that incentive, people will not be able to afford, and therefore will leave, private health insurance. Where are they going to go to get their health services? They will go to the public hospitals. In Queensland the public hospitals are already grossly overextended. Whilst the nurses and doctors at the hospitals do a fantastic job, they are held back by understaffing, underpayment, underfunding, no beds and huge queues in the hallways and on the ramps because of state government mismanagement. The way public hospitals are run is a standing joke in Queensland. Ms Bligh said recently:

What is absolutely clear I think now beyond any doubt, … is that this organisation—

Queensland Health

in its current form has a culture that is so entrenched it won't be changed while it's kept in that form.

She went on to say that Queensland Health was in diabolical trouble. She forgot to mention, of course, that it was that way because Labor has been in power for 22 years in Queensland, bar a few months in the mid-90s. Ms Bligh also said that the Queensland Health corporate office had failed in areas like staff accommodation, information technology, financial controls and human resources. So, the Labor Party's answer to address these problems is to split up Queensland Health. Somehow, that is going to solve all the problems that have been created.

In a recent newspaper report Ms Bligh is quoted as defending what are arguably—and I do not think that even anyone from the Labor Party in Queensland would argue with me on this—the worst health ministers Queensland has seen, that is, Stephen Robertson, Paul Lucas and currently Geoff Wilson. Ms Bligh says that it is not their fault it has all gone bad, it is somebody else's fault. What happens with Queensland Health is never the government's fault and never the Labor Party's fault.

This legislation that we are debating today appears because the Greens and the Labor Party are one and the same these days—they are both part of the same organisation—and they both want to remove private health insurance. This means that more and more people in my state of Queensland will have to rely on Queensland Health for their health servicing. That fills me with fear and trepidation because I know how badly run Queensland Health is now under the Labor government, and it will get even worse when more and more people actually come into the system.

The litany of mismanagement in Queensland Health is breathtaking, although when you compare it with pink batts, dodgy school hall contracts, Green Loans that are then not Green Loans and solar panel rebates and subsidies that are cancelled ahead of time, perhaps it is not so surprising that Queensland Health is so mismanaged. The reason is quite clear, of course: you simply cannot trust Labor with money. Some of Labor are quite nice people but their experience in running business is usually that they went to university, they sat around the latte shops, they joined a union or they worked for another Labor politician, they had their seat bequeathed to them by a relative within the Labor Party and they came into parliament. Very few of them have ever had any real experience in real life. Certainly, you could count on one hand the number in this chamber—and I suggest on two hands the number in both chambers of this parliament—of those Labor Party people who have had any experience whatsoever in running a business and in financial management.

I suppose someone will say to me, 'Well, Senator Doug Cameron has been involved in business. He has been a director of one of those industry super funds.' I was not aware of this until I saw recently that the unions were actually suing some of the directors for the big fees that they get. Apparently it is a union thing that if you get money because you are appointed to boards because you are a union member that the money does not go in your pocket, it has to come back to the union. Some of the directors have not been—

Photo of Ian MacdonaldIan Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | | Hansard source

It is outrageous, Senator Edwards. Apparently, some of the directors have not been playing fair; they have been pocketing the very big money that they get and not giving it to the unions. So the unions have sued them. That is a court case that I really want to follow through. But I am still waiting for Senator Dougie Cameron, who I read has been a director of one of these industry super funds, to tell me what board fees he got from that position. It would be very interesting to hear that. No doubt, he might come and tell me in his contribution. But he might claim that running an industry super fund is his way of getting business experience. If it is—and I very much doubt it—I suspect that the business members on those boards are the ones that run them and the union members just go along for the ride.

However, I digress from my point in that the removal of this health insurance rebate will increase enormously the burden on hospitals right throughout Australia. But as a Queensland senator I am very concerned that they will impose heavily on the health system in Queensland, which is almost breaking under the strain and which creaks its way through. Because I do not want this to be misunderstood, I repeat that the men and women—the doctors and nurses, orderlies and support staff—who support those hospitals do a fantastic job in difficult circumstances. The Labor Party has administered health to the extent that for—what was it?—three or four weeks the nurses could not even get paid. This is the system. Some of them tell me that they still have not been paid their full entitlements from that time. But it is not the minister's fault; it is not the Premier's fault and it is not the Labor Party's fault. It is always someone else's fault.

So I am concerned with this bill before us. On that point alone—and there have been a lot of very good arguments raised in this debate so far on why this legislation should be defeated—I call on Queensland Labor senators to cross the floor and vote against this. They know that this legislation, when passed, will throw extra burden onto a health system in my state of Queensland which is already unable to deal with the tasks before it. It is essential, I think, that I do call upon Labor senators from Queensland in particular to join us in defeating this bill so that the already overworked system in Queensland will not be further burdened because of the removal of the health insurance rebate.

3:58 pm

Photo of Richard ColbeckRichard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Fisheries and Forestry) Share this | | Hansard source

I rise to make a contribution on the Fairer Private Health Insurance Incentives Bill 2012 and related bills. It is, I have to say, with a sense of deja vu. In the previous government, as shadow parliamentary secretary for health, I found myself debating exactly this topic only a very short period of time after the government had made a promise to the private health insurance industry that they were not looking to make any changes to this particular matter. In fact, I have kept a letter for posterity. I thought that we might have dealt with this issue. It was defeated a number of times during that period, but of course we know that the Greens and the Labor Party have a fundamental dislike of the private sector, particularly in health, so they would not be able to help themselves. They would have to revisit this again and again and again until they progressively dismantled what is recognised as a quality private health insurance system.

On 20 November 2007, when the then federal Labor leader, the member for Griffith, Kevin Rudd, wrote to Dr Michael Armitage, the chief executive of the Australian Health Insurance Commission, he said to him:

Thankyou for your letter of 29 October 2007 seeking clarification on Federal Labor's policy regarding private health insurance.

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—

you would think that that is a reasonable commitment that would allay the fears of the industry—

including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians. Federal Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge.

Labor will maintain the existing framework for regulating private health insurance, including the process for approval of premium increases. Zero per cent premium adjustment is not Labor policy … I trust this allays your concerns.

I think it might be safe to say that at that time it did, but it did not take long for the whole circumstance to change and for private health insurance to start to feel the heat of the Labor dislike for that part of the health system. If it were not for perhaps the greatest political lie, 'There will be no carbon tax under the government I lead,' this one would have to be up there.

I note the continued attempts by the Labor Party to continue to diminish the private health insurance system in the country. The absurdity of this is that effectively what they are doing is continuing to take money out of the health system. For every dollar in health rebate that they save, they take $3 out of the health system, because for every dollar that is contributed by the government there is $2 contributed by the private insurer. So they are actually diminishing the pool of funding available to health by $3 for every dollar that they take out, and that just does not make sense.

My colleague Senator Macdonald was just talking about the state of the health system in Queensland. He should consider himself lucky that he is not in Tasmania, where the state government is taking $100 million out of the public health system. It is not taking people out of the back door. It is not taking out bureaucrats but closing down front-line public health services. It has carved back the elective surgery waiting list. In my region they were doing about 12 elective surgeries a week. They have cut that back to one or two. So here you have the federal government pouring money, so they tell us, into the public hospital waiting list process to reduce public hospital waiting lists for elective surgery, and you have the state government ripping it out at the other side.

But think of the impact of that on somebody who is waiting for that elective surgery. Think of an individual who is on the waiting list. When this process started, if they were, say, No. 36 on the list and there were 12 elective surgeries being done a week then they would be three weeks away from their surgery. That is something that you can foresee. That is something that you can understand: 'In three weeks time I might be having my knee surgery,' or something of that nature. 'I've got three weeks to wait before I go into my elective surgery.' But when it goes back to one a week they are suddenly 36 weeks away. The whole dimension changes—the proximity and the expectation. They then have to carry that for that 36 weeks if they retain their position on the list. They might be lucky—they might have an urgent case and they might get lifted a bit—but if the list runs the way that things are going then they are 36 weeks away instead of three weeks away. It changes the whole aspect of the way they are dealing with it. Yet this comes on the back of a promise by the Labor Party that they were not going to mess around with private health insurance rebates. People could feel comfortable! It is almost as though the Labor Party are trying to use the fear of the public hospital system to keep people in the private health system. 'Will I get that place in three weeks time, or 36 weeks time? Do I have to wait that long? Do I have to make that decision to protect the health of my family? So I'll have to stay in.' It just does not stack up.

We have seen a bloating of the public sector in Tasmania. We have gone from something like 16 public servants per 1,000 people to 20, a huge bloating of the public service. We have seen nearly a 20 per cent increase in public servants in the last five years in Tasmania as the Tasmanian government has filled up the back rooms, and that is all occurring at the expense of front-line services. So we are seeing a cutback in services not only in health but also in policing and all the other critical front-line services, including closing down schools. Yet it is on the back of continued promises and assurances that these things would be maintained at a federal level in relation to changes to the private health insurance system. There was a letter from the then aspiring Prime Minister, Mr Rudd, stating, 'Labor will maintain the existing framework for regulating private health insurance,' and saying that they were 'committed to retaining the existing private health insurance rebates'. Now we see them clawing it back and taking with it significant funding out of the health system. The one thing it does do is to continue to confirm that the Australian people cannot trust the Labor Party. I have mentioned one of the greatest political lies of all time—the Prime Minister's assurance that 'There will be no carbon tax under a government I lead'—but this is also a fundamental issue. We all talk to our electorates on a regular basis. We all communicate and source what the key issues are in our electorates, because that is part of our role; we want to maintain contact and we want to understand what the issues are that concern our constituents. And health is always in the top two or three—it is always there—and people should be able to believe the assurances they are given by a leader when they say they will maintain the settings that exist around an issue as important as private health insurance. We do not want to go back to the circumstance of enormous pressure being placed on the public system because of an exodus of people from private health insurance. There is no way known that we want to see that circumstance occur. But people are being forced to exit private health insurance because they cannot afford it, because the government has taken away that bit of support at a time when our state governments are under so much financial pressure that they are cutting back on services. But then you place even more and inordinate pressure on the public health system because you are removing resources from the private health system. It just does not stack up.

They talk about egalitarianism and we talk about the wealthy making a contribution but we know that the wealthy already do make a contribution. Over a certain wage level, we all pay a Medicare levy. The more you earn, the more you pay. So, if you are earning more and paying more tax, you are making a significantly higher contribution. Then of course there is the Medicare surcharge, the additional surcharge of 1.5 per cent. So, to suggest that this is all about egalitarianism—those who can afford to pay paying a bit more—does not stack up when you actually look at the sums, because, if you earn more and pay more tax, that one per cent that you pay as your Medicare levy is more if you earn $100,000 than it is if you earn $30,000. It is simple mathematics. You are making a contribution.

So this tripe that gets run out by the government to suggest that we need to get those who are earning a bit more to make a bigger contribution does not stack up, because they are already doing that. What they are doing by taking out private health insurance is looking after their own families. They are making an investment in the assured health of their own families, but they are also making an investment in assisting the public health system. We know this, because colleagues around the chamber are talking about the stress on their state public health systems. Why would the Tasmanian government be taking $100 million out of the Tasmanian health system if it were not for the budget pressures and having beds put in storage away from the hospitals so the hospitals cannot use them if it were not for these pressures? And here we are debating in this place removing money from the health system. The government wants to save its contribution, the 30 per cent rebate. It wants to save that contribution but does not think about the other $2 it takes out of the health system for every dollar it saves. So they are taking out $3, in effect, for the $1 that gets saved by the removal of their contribution. It just does not stack up, and it penalises people who want to make a contribution themselves to look after their families and make sure they have prompt access to the health insurance system when they need it. They are already making a contribution to the public system through the Medicare levy. They are spared the surcharge if they are taking out private health insurance but they are actually making a contribution, and it just does not stack up after years of building a sound and solid private health insurance system that complements the public system. This is not a position of competition; this is about having a broad based health system that serves our community well.

It is not just highly-paid people who have health insurance; there are a lot of low-paid people who make the investment. They make a value judgment to invest in private health insurance. At least they retain support under this process, but you really have to question how long that will last. We know that, all along, the Labor Party have had in the back of their minds, they have had in the bottom drawer all along, plans to start to chip away at the private health insurance system, despite the assurances of Kevin Rudd before the 2007 election. Kevin Rudd put it in writing to Dr Michael Armitage, chief executive of the Australian Health Insurance Association, that 'Federal Labor is committed to retaining the existing private health insurance rebates'. He made that commitment. Yet in 2008, not long after taking government, we saw the process commence: chip away, chip away, chip away, trying to diminish the availability of the services of private health insurance but forgetting that, as they do that, for every dollar they save they take another two out of the system—the ratio of removal of funding.

Now the Greens say, 'We'll just take it out and put it all into the public health system.' That just does not make sense but then the Greens were never very strong on, or really concerned about, economics. It does not surprise me that the Greens have teamed up with the Labor Party and effectively flipped on this, as they usually do. They will get their bit of publicity. They will go out there and get in front of the cameras and pretend they are holding out for something, but you can guarantee that, at the end of the day, on pretty much everything they will just flip across and go with the Labor Party. It is a real tragedy that we see such pressure placed on our public health system through the attempts to pull down the private health sector and the private health insurance system. Again, I come back to the circumstance at home where, as I said before, you are No. 36 on the list. That list goes from 12 a week to one, and you are more than six months away from your operation. That just throws someone's whole life out of balance if they are trying to access the public health system.

The security that private health insurance provides is something that we ought to be encouraging. We should be encouraging people to take out private health insurance, not putting in artificial barriers or saying, 'If you earn more than $150,000 as a family we're going to start to punish you as a family.' A policeman and a schoolteacher are effectively in that range. They are not considering themselves to be rich or wealthy people. They are probably doing it pretty tough at the moment. They are wondering whether the power bill that the government promised would only go up by 10 per cent due to the GST is going to go up by 10 per cent only—I am hearing figures of 18 per cent from industry as I go around the countryside. Yet here we are with the government prepared to give them another hit, to take more from them and to discourage them from looking after their family and their family's health. It does not stack up.

Why take away all this funding from private health insurance, and therefore the private health sector, at a time when, as Senator Macdonald has just said, the Queensland health industry is in strife? Senator Williams has indicated on a number of occasions how bad things are in New South Wales. They have a new government there that is trying to clean up the mess of years and years of Labor neglect. We have heard some terrible tales of things that have occurred in the New South Wales health system, and the state government is trying to pick it up and bring it back. In Tasmania, $100 million has been taken out of the front line of the health system in a small state. Putting beds in storage so that the hospitals cannot use them just does not stack up. At the same time their federal Labor counterparts are taking money out of the private health system, which has the capacity, if sensibly managed, to take the pressure off the public health system and to allow people to get ready access to the services that they need.

When Kevin Rudd came to power after the 2007 election, one of his mantras was 'Let's use evidence based policy.' That has gone out the window. We are not seeing anything about that. We have gone back to the old Labor prejudices: 'Let's sting a bit from those who have worked hard to earn a bit more. Let's take a bit off those.' It is the old yarn: you can only take so much off the wealthy until they do not have any more, and then who are you going to get it from to give to the others? They talk about equity, they talk about all those values they say they have, but there is a whole heap of prejudice that sits behind that, one of which is their prejudice against the private health insurance system.

When you look at the fundamentals of what is being done here, as I have said a number of times, it really just does not stack up. They are taking away the capacity of people to look after their own families, to give them access to health services as they feel they need it, and they are thrusting them towards a state-level health system that is under real stress and having funding removed. As I have said, this does not make sense. It should not be supported. (Time expired)

4:18 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

This Fairer Private Health Insurance Incentives Bill 2012 and related legislation is Labor's latest attack against millions of Australians who take additional responsibility for their own healthcare needs by taking out private health insurance. Labor is anti private health, Labor has always been anti private health and chances are that Labor will always be anti private health in the future. Being anti private health—and I am sure you will agree with me on this, Mr Acting Deputy President Cameron—is part of Labor's DNA. This Labor government is doing what other Labor governments have done in the past—that is, attack those Australians who take additional responsibility for their own healthcare needs by taking out private health insurance.

Under Medicare, every single Australian is entitled to free access to universal public hospital care. There are more than 10 million Australians who are prepared to put more of their own resources into the health system, and by taking out private health insurance they help to take pressure off our public hospital system, making sure that those Australians who really cannot afford to take out private health insurance have a good opportunity to have timely access to high-quality public hospital care.

The truth is that we need a strong health system, with a strong and well-funded public system as well as a strong and well-supported private system. As we consider our health policy settings in Australia, it is important that we get that policy balance right. When it comes to getting the policy balance right in the health portfolio, Labor has a very bad track record. If you look at the track record of the Hawke and Keating governments, for example, you will see that private health insurance membership collapsed on Labor's last watch in government, and public hospital queues and public hospital waiting lists continued to increase as more and more people joined those queues and waiting lists. Even the then Labor Minister for Health, Graham Richardson, recognised that, after 10 years of Labor Party government policy, after the Hawke and Keating years, Labor had got it wrong and that things could not continue the way they had been. It was Senator Graham Richardson who commissioned a review into private health and came up with a series of recommendations on how the balance in our health system could be restored. But then Senator Richardson was not able to get his proposals past the Keating cabinet. When he put to the Keating cabinet proposals on how the balance in our health system could be restored and how we could make sure that all Australians would have timely and affordable access to high-quality health care by making sure that we had a strong and well-funded public system and a strong and well-supported private health system, the cabinet told him where to go, and those proposals went into the Labor-ACTU bin. It is quite humorous if you think about it in retrospect. After Senator Richardson, who was health minister in the Keating government, took proposals to the cabinet on how the balance in our health system could be restored, the then Prime Minister told him to go and consult with the Labor caucus and the ACTU working party. Of course, they buried what were a number of sensible proposals to restore balance to our health system.

Private health insurance membership collapsed under Labor. It went from about 65 per cent to below 30 per cent before a coalition government was able to turn things around. It was the Howard coalition government that was able to restore the necessary and important balance to our health system. It was the Howard government that introduced a series of policy measures to stop the decline in private health insurance membership, to reverse the trend, and to make sure that more Australians who were in a position to afford it were prepared to put their hands in their pockets and put additional private resources into our health system so that all Australians had a better chance to have timely and affordable access to quality hospital care.

The measures that the Howard government put in place, the very successful policy framework that the Howard government put in place, was made up of three principal pillars. There was the Medicare levy surcharge, whereby those Australians who were judged to be able to afford private health insurance but did not have it would incur a tax penalty. That was the stick and then there was the carrot. The carrot was the tax incentive, the 30 per cent private health insurance rebate, for those Australians who took out health insurance. The third pillar was Lifetime Health Cover, whereby any Australian who did not join private health insurance until after they had reached 30 years of age had to pay a higher premium for every year after the age of 30.

The Howard government's policy framework was highly successful. It restored balance to our health system, it ensured that the dramatic decline—or collapse—in private health insurance membership in Australia was arrested and it made sure that more Australians were prepared to take additional responsibility for their own healthcare needs by taking out private health insurance. Today more than 10 million Australians are covered by private health insurance. Every single Australian who takes out private health helps to take pressure off our public hospitals and helps to make sure that all Australians are able to get timely access to high-quality public hospital care.

Given Labor's track record, the coalition were always very suspicious about what an incoming Labor government would do in relation to private health insurance. We knew that Labor hates private health. We knew that Labor in government would be likely to try and dismantle the successful measures that had been introduced by the Howard government. We suggested that Labor in government would wind back the private health insurance rebate. Guess what? We were accused of lying to the Australian people. We were accused of misleading the Australian people. We were told, 'No, no, no, under no circumstances would Labor do any such thing.' Even after the election, as late as 24 February 2009, the hapless then Minister for Health and Ageing, Nicola Roxon, said:

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

It could not get any clearer than that. The day after that ,on 25 February 2009, the then Prime Minister Kevin Rudd said:

The private health insurance rebate policy remains unchanged and will remain unchanged.

This followed emphatic pre-election promises in the lead-up to the 2007 election, when then Leader of the Opposition Kevin Rudd said:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

That sounds pretty clear, but we wanted to make absolutely sure because it is known that the Labor Party is very good at tricky semantics, weasel words and trying to hide between the technical meanings of particular phraseology. We saw it from Senator Wong today in her answers about her involvement in the selection of the chair of the Future Fund. Labor is very good at trying to hide behind technical semantics and tricky language. It says things like, 'This isn't exactly what we meant,' or 'Saying we'd keep the rebate doesn't really mean we wouldn't means test it.' I go to another quote from then shadow minister for health, Nicola Roxon, when she was on Meet the Press on 23 September 2007. That was in the shadow of the 2007 election, about two months before the election. Steve Lewis said to Nicola Roxon:

Let's move to another integral part of the health system, the private health rebate, the 30% rebate. Labor has said "Yes, we will keep it," but you have not said whether you will keep it in total. Can you say now that Labor, if elected, will maintain all of the ancillary measures that encompass the private health rebate?

Nicola Roxon answered:

Yes, I can. 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 this 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.

I could not have put it better myself. And on she went:

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.

Very clear, very emphatic. Steve Lewis asked a follow-up question:

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?

Ms Roxon's answer was:

No, we won't.

You cannot get a more emphatic promise than that. The only more emphatic promise that I can remember in recent times is the promise by the Prime Minister of Australia, five days before the last election, that 'there will be no carbon tax under a government I lead'—and we know what happened to that. We know that that Prime Minister Gillard before the last election misled the Australian people, the same as Labor has misled the Australian people for years on end about their true intentions in relation to the private health insurance rebate.

The reason the coalition is opposed to this legislation is because we understand that this is bad public policy. Any policy that makes it harder for people to take additional responsibility for their own healthcare needs by taking out private health insurance is bad policy. Any policy that will push up the cost of private health insurance for millions of Australians is bad policy. Any policy that will see more Australians leave private health and join the public hospital system is bad public policy. Any policy that will see Australia re-enter the spiral that we experienced under the last Labor government, when private health insurance membership across Australia collapsed, is bad public policy.

Senator Colbeck in his remarks earlier was quite right: we should be doing more to encourage more Australians to take additional responsibility for their own healthcare needs. We should be doing more to encourage more Australians to take out private health insurance. We should not be making it harder for people to remain in private health. Let me just address here one of the myths being peddled by the Labor Party. The Labor Party wants us to believe that somehow private health is only for the rich. Nothing could be further from the truth. Hundreds of thousands of people earning less than $50,000 per annum have private health insurance. In fact I will just go to the figures: 5.6 million people with private health insurance have an annual household income of less than $50,000 per annum and 3.4 million people have an annual household income of less than $35,000 per annum.

The government will say: 'We aren't targeting those people. Those people won't be punished by having their rebate taken away. They'll still have the rebate.' The problem is that, with millions of Australians having their rebates scrapped altogether or dramatically reduced, health insurance for those that lose the rebate will go up automatically, without anything else, by 43 per cent, and every single one of the lower-risk people who perceives that health insurance has become too expensive for them to continue will put upward pressure on premiums for everyone else including those low- and middle-income Australians who every year struggle with the decision to put their money together to pay for their annual private health insurance.

This of course will hurt all Australians who are in desperate need of timely access to public hospital care, because they will have to now compete with the increasing number of Australians who in the past would have been covered by private health insurance. This is very bad public policy. It is policy that Labor has pursued in the past. The point I would make to the Labor Party is that, if you do not learn from history, you are forced to repeat it. Those are not my words—I have just borrowed them; I do not quite know who first said them—but it is something that the Labor Party should carefully reflect on.

The point is this: our policy objective in the health portfolio should be to come up with a policy framework that ensures all Australians can have timely access to high quality hospital care. In order to achieve that in a way that is affordable for the taxpayer, we have got to make sure that we have got a sensible balance between a strong and well-funded public system and a strong and well-supported private health system. We need to have a policy framework where those Australians who can afford to take out additional responsibility for their own healthcare needs have both the incentive to take it out and the disincentive not to take it out. That is where the Howard government's policy framework on private health insurance was so successful. Clearly, the Labor Party knew in the lead-up to the 2007 election that not only had it been very successful, it was also very popular. Why else would the Labor Party have bent over backwards again and again, making the most emphatic promise possible that they would not touch the private health insurance rebate, that they would retain the existing private health insurance rebate in its current form? Labor well understood that it was a policy that had worked and a policy that was popular with the Australian people.

I say to the Labor Party: stop making Australians who take additional responsibility for their own healthcare needs pay for your waste and mismanagement over the last four years. Australians know that the Labor Party in government always stuffs up our public finances. Australians know that after a period of Labor in government it is always incumbent on the coalition to come back and fix up the mess. But don't make Australians who are putting their own private money into our health system pay for your wasteful spending, for your waste and mismanagement. Just because Labor is not able to balance its books, just because Labor delivers deficit after deficit and has taken our debt position back up to $133 billion, do not pursue policy that will ultimately be counter-productive; do not pursue policy that will ultimately increase the costs of providing affordable health care to all Australians. This is a path that you have gone down before. It has ended in tears before. You should learn the lessons of the past. If I can give the new Minister for Health, Tanya Plibersek, some advice: she should sit down with former senator Graham Richardson, a former Minister for Health, who commissioned a comprehensive review into private health insurance back in 1993 at the end of 10 years of failed Labor Party health policy, and consult with him about the implications and consequences of Labor's failed approach to health policy so she can learn from Labor's mistakes of the past. She should reflect on how successful the Howard government's policy framework in support of those Australians taking out private health insurance has been and reconsider her approach.

My advice to the Senate is that this legislation should be rejected. We should vote against it. It is bad policy. It will see the cost of health insurance go up, it will see more people leave private health insurance and it will put more pressure on our public hospitals. It is not a good policy and the Senate should reject it. (Time expired)

4:38 pm

Photo of George BrandisGeorge Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | | Hansard source

The legislation that the Senate is considering to abolish the private health insurance rebate is but the latest instalment in the Australian Labor Party's assault on the Australian middle class. For as long as I have been a senator, I have listened wearily to Labor politicians like Senator Kim Carr over there claim that the Labor Party's purpose is to look after struggling disadvantaged people and I have heard Labor politicians mock my side of politics and say we look after the interests of the well-to-do. But, if you look at this piece of legislation, nothing could be further from the truth because we in the coalition stand with ordinary Australians, everyday Australian families, middle-class Australians, working-class Australians, Australian working families who want to be able to have affordable private health insurance, and the Labor Party stands resolutely against the interests of those people.

Senator Cormann quoted some figures, and forgive me for repeating some of the observations that he made but they cannot be said often enough. The fact is that Australians want private health insurance: 53 per cent of Australians, 12 million people, have private health insurance. They are not the wealthy. I am sure most wealthy people have private health insurance, but the proportion of the private health insurance holders in Australia who could be regarded as wealthy or well-to-do is miniscule. The vast majority of Australians who have private health insurance are middle-class people, working people, working families who do not want to be reliant on the state, who do not want to be reliant on a state system, who want to look after themselves, who want to look after their children and who are prepared to make the extra sacrifices, work the extra few hours a week of overtime, to make that possible. They are aspirational Australians, not the well-to-do, not the toffs that you, Mr Acting Deputy President Cameron, occasionally mock, but everyday people. This is an attack on them. It is an attack on their wellbeing, it is an attack on their standard of living, and it is unconscionable.

Not only do 53 per cent of Australians currently have private health insurance but 46 per cent of Australians, almost as many, have hospital treatment cover and, of the people who hold private health insurance, 5.6 million—almost half of them—have annual household incomes of less than $50,000. When almost half of the people who make the sacrifice to pay for private health insurance are earning less than $50,000, what clown—what socialist dreamer—could possibly say private health insurance is the preserve of the wealthy? The whole point of having a private health insurance rebate is to make it affordable to as many people as possible down the income scale. That is why almost half of the people who hold private health insurance earn less than $50,000 a year. It is because coalition governments in years gone by have made it affordable for them.

This Labor government, which was elected in 2007 on the claim that it represented the interests of Australian working families, will make it harder for those poorer Australians—those less well off Australians—to be able to afford private health insurance. So much for the pieties and the crocodile tears of the Australian Labor Party about the interests of less well off Australians. Not only do 5.6 million of the 12 million Australians who hold private health insurance have incomes of less than $50,000 but 3.4 million of them—between a quarter and a third—have an annual household income of less than $35,000. I am sure we all know people—members of our families, people in our neighbourhood, people we know through the workplace—who struggle to keep private health insurance going because they do not want to be dependent on a state system. What an insult to those people, particularly coming from a party that falsely claims to represent the less well-to-do. What an insult to those people to say: 'We will make it less affordable for you. We will force you to be dependent on the state system when you would wish to look after yourself by paying that extra little bit of money for private health insurance.' What an insult to the poor, Senator Kim Carr. What an insult to the strugglers. What an insult to working families of Australia. And yet you sit there complacently, pleased with yourself, thinking that somehow, in some perverse way, this will advance social justice. It does not advance social justice, Senator Carr, to make life harder for poorer people, and that is what this will do. It will make life harder for poorer people. What a disgrace.

Not only is this measure profoundly inequitable—the reverse of social justice—it is also, as Senator Cormann pointed out, bad policy. What it will do is not merely make private health insurance less affordable to poorer people by driving up the cost of premiums; it will force more people into the public system and drive up the cost burdens on the public system. How foolish can that be at a time when there are enormous cost burdens on the health and hospital systems of Australia? And those burdens are escalating with every passing year. We have a measure which will make self-sufficiency harder by making it more difficult for people to insure themselves and, therefore, drive them into the public system, therefore increasing the costs of the public system. So whatever budget savings it might be imagined would be clawed back by this meretricious, dishonest and foolish policy are going to be but a fraction of the additional cost burdens imposed upon the public system and imposed upon public hospitals. What a foolish piece of public policy that is. It is a lose-lose proposition. You make less-well-to-do and poorer people poorer still, you make them dependants upon the state when they wish to be self-sufficient and you impose greater cost burdens on the state system so the state system into which these people have been thrown against their own wishes can less easily cope with that additional burden. So the overall quality of health care in Australia deteriorates. What an extraordinarily inept piece of public policy.

Not only does this measure suffer from the vice of being unjust because it punishes the least well-off people in our country; not only does it suffer from the vice of being foolish public policy because the outcome that will result is the opposite of the objective the policy seeks to serve, which is making the health system more efficient; it is, of course—and this is such a familiar refrain from the Rudd and the Gillard governments—built on a lie. Let us remember who it was who said: 'There will be no carbon tax under the government I lead,' and then introduced the world's greatest carbon tax and congratulated herself on doing do, celebrating her blatant deception of the Australian people by high-fiving her ministers on the floor of the House of Representatives, in one of the most shameful episodes in the history of Australian democracy.

Photo of George BrandisGeorge Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | | Hansard source

Thank you, Senator Sinodinos. That was the current Prime Minister, Julia Gillard. Who was it who deceived Mr Andrew Wilkie over poker machine reform and the undertakings that she made to him about poker machine reform the moment she felt she did not need his vote on the floor of the House of Representatives because she had bought the vote of Mr Peter Slipper? The current Prime Minister, Ms Julia Gillard.

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

I think you should withdraw that. You are reflecting on a member of the other house. You should not do that.

Photo of George BrandisGeorge Brandis (Queensland, Liberal Party, Shadow Attorney-General) Share this | | Hansard source

I withdraw. Let me rephrase that: had by means about which we can only speculate secured the vote of Mr Peter Slipper. It was the current Prime Minister. And Mr Andrew Wilkie said that he realised that he had been deceived.

This Prime Minister, who lied to the public about the carbon tax, who deceived Mr Andrew Wilkie about poker machine reform, is at it again, because this measure is a flagrant violation of the most emphatic and unambiguous commitments given to the electorate. Senator Cormann read some of those commitments onto the record. Let me read them myself. This is what Ms Gillard wrote to the Australian newspaper in the last term of the coalition government. Referring to a letter by the then health minister, Mr Tony Abbott, which claimed that a Labor government had a secret plan to scrap the private health insurance rebate, she said:

The truth is that I never had a plan to scrap the private health insurance rebate … For all Australians who want 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. … when I make ironclad commitment I intend on keeping it.

That is what this Prime Minister's word is worth. She attacked Mr Abbott, then the health minister, for suggesting that she planned to do the very thing that she is now doing and, with mock outrage, she claimed that she was being misrepresented. We now know the truth.

This is what the then health minister, Ms Roxon, said in more recent times. On 24 February 2009, in the Age newspaper, she said: 'The government is firmly committed to retaining the existing private health insurance rebates.' In a media release issued by her office on 26 September 2007—just before the election of 2007, when the Labor Party came to power—she said:

On many occasions for many months, Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private Health Insurance rebates …

During the 2007 election campaign, when interviewed on Meet the Press, Ms Roxon was asked by journalist Steve Lewis whether she committed to retaining, on behalf of the Labor Party, the private health insurance rebate. She said:

Yes, I can. We've committed to it. We've committed to the 30 per cent, 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 our community to be able to get the services.

This is what the then leader of the Labor Party, Mr Kevin Rudd, said a week before the 2007 election:

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—

There are no weasel words here. There is no room for ambiguity or confusion. It was, as Ms Roxon said, 'crystal clear'. It was, as Ms Gillard said, 'iron-clad'. It was, as Mr Rudd said, a 'clear' commitment that the Labor Party would leave the private health insurance rebate alone.

And what are we doing this afternoon? We are debating legislation that was introduced by a government that is now presided over by Ms Julia Gillard, and in which Ms Nicola Roxon continues to sit at the cabinet table, to do the very thing they gave a crystal clear, ironclad commitment never to do. It does not get much more shameless than that. It is no wonder that, as measured by empirical data, opinion polls, anecdotal evidence or whatever, so few people respect this Prime Minister. The reason is that the Australian people know she has not only misled them but also serially misleads them. They know that misleading the people is part of the political practice, part of the modus operandi, part of the playbook of this Labor government. It is disgusting, it is dishonest and it is deceitful, but it is the way this government does business.

We in the Liberal Party will oppose this legislation tooth and nail because it is dishonest, because it is bad policy and because it is socially regressive. Why should the least well-off people in this country lose one of the benefits for which they are prepared to work those extra hours and which means so much to them, to their sense of wellbeing and to the security of their families? Why should this government be allowed to reverse a policy commitment that it gave in evident good faith, in unambiguous words and with its hand on its heart, only for the people to discover that they have been deceived? Why should Australians settle for an inferior healthcare system? Why should Australians settle for overburdened public hospitals? Why should less well-to-do Australians be put in a situation where they can no longer afford their private health insurance cover—cover that they want and that they sacrifice for—because the government lied to them? Why should they put up with that? They should not put up with that. I am sorry to say that this is—like the carbon tax and so many other things—the most recent episode of shameless, callous, cold-eyed, cold-blooded duplicity and falsehood which has been the modus operandi of this Labor government. (Time expired)

4:59 pm

Photo of Arthur SinodinosArthur Sinodinos (NSW, Liberal Party) Share this | | Hansard source

I rise to join the debate on the Fairer Private Health Insurance Incentives Bill 2012 and related legislation. I begin by taking up a point that was raised by my colleague Senator Cormann in his contribution. He referred to a report from 1993 commissioned by—I think he would have been the Minister for Health—Senator Graham Richardson that was about private health insurance. That report found that coverage in the community of private health insurance had fallen to very low levels. We are talking about participation rates in the low 30s from memory. At the time I thought it was remarkable that the Labor government had commissioned such a report, simply because there had been a history of Labor, with almost a malignant neglect, seeking to reduce the private health insurance sector in Australia to something of a rump. It was heartening that he did that because that encouraged a debate in the community about private health insurance and the coalition went to the 1996 election with promises around a private health insurance incentive. Over the next few years that became a private health insurance tax rebate, which essentially is the measure we are talking about today in this series of bills before the Senate.

The point to be made about that measure is that it was quite deliberate, quite calculated and had a policy rationale. It was not simply a handout to the big end of town, as some people are alleging. The whole purpose of the incentive was to encourage people to exercise greater choice and to facilitate that choice. Just as we sought to do that in the education system—that is, the split between public and private schools and the assistance governments give to independent schools—so it was in the case of health: we were seeking to provide an incentive which facilitated choice. This had a benefit to the health system as a whole—that is, to take pressure off the public hospital system. That was the rationale in part for the measure. It was to provide a form of tax relief in its own way, but it was also to provide a measure to encourage the greater use of the private hospital system and to reward people who put their own resources into private health insurance. It encouraged a greater pool of people into private health insurance and it restrained the growth in premia and the like. That was important because the bigger the insurance pool, the more you can restrain the growth in the costs of premia.

We have a situation today where the government has decided, allegedly on budgetary grounds, that it must do something about this particular measure. I dispute that the government is doing this simply on budgetary grounds. I believe there is a history of Labor wishing, if not to negate this measure entirely, then at least to substantially cripple it. If we go back to when Labor went into opposition in 1996, there was a history of them attacking our initiatives around private health insurance. I believe that was driven by ideological considerations around their concern or their support for the public hospital system. We all support a strong and viable public hospital system, but we need to have other strong pillars to the health system and having a viable and strong private health system is one of them. So Labor for a long time opposed what we had done in government on private health insurance, but, as my colleagues have read onto the record, Labor increasingly came to the view that it was not politically sustainable to keep attacking this private health insurance incentive. From the 2004 election onwards, after the ill-fated experiment with one Mark Latham, Labor realised that having a hit list of independent schools was not a good way to show that it was for the community as a whole rather than sections of the community. It is important to put some ideological context around this: that there has for a long time been a view within Labor that the private health insurance system should be gutted or crippled.

Finally, there is a mechanism here in these bills which seeks in part to achieve Labor's objective. I do not believe it will end private health insurance as a whole, but it will significantly dent it and it will dent it by making cover ultimately more expensive and reducing the pool of people who are covered or who downgrade their cover. That will be to the cost of not only those people who, as Senator Brandis said, have been saving their money in order to afford such health insurance, but it will also be at a cost to the public hospital system, which will be under greater pressure. This is an important point because the health reforms that the Labor government introduced under the rubric of the Council of Australian Governments in recent years do not in any way have a structural reform component to them. I do not believe they will lead to better health outcomes. We have a situation where the pressure on the public hospital system as a result of Labor's health reforms will not abate and we are adding to that pressure by taking this incentive away.

This is one of a series of measures which this government has taken to means test various benefits. There is a rationale for means testing. We cannot offer everything to everybody and means testing has its place within the social security system and the like. The fact of the matter is we do not want millionaires to get pensions and the rest. However, this increasing trend toward means testing is starting to butt up against another objective of all governments which is: how do we reduce effective marginal tax rates? What is happening with more and more means testing as we go up the income scale is that we are adding more and more of these poverty traps into the system. There was a very good article written recently by Judith Sloan in the Australian, which went through the impact this sort of means testing on effective marginal tax rates. In brief, it means that, when we are means testing on family income as a whole, there is often then a disincentive if we increase the means testing for the secondary income earner—often the woman in the household—to cut back their hours of work because the family as a whole find that they lose income if they undertake more work. They start to lose income that comes through government benefits and the like, including incentives of this sort.

We have to look at this issue of private health insurance not only in the context of the merits of the debate around the contribution that governments make to the health system, but also in the context of the macro implications for the tax and transfer system. I believe that the Treasurer, Wayne Swan—someone who in the past has professed great support for tackling these sorts of poverty traps and high effective marginal tax rates—is undermining one of his own objectives by measures of this kind. My view has always been that if you want to tackle what you broadly describe as allegedly middle-class welfare by taking benefits away, means testing and all the rest of it, you should be compensating those people by at least reducing tax rates so that you improve incentives to work and save. That would be a much more balanced system, but that is not what we are doing here. This is essentially an ideological measure dressed up as a budgetary measure. Part of the sleight of hand in this process has been to prevent the cost of the private health insurance incentive, if it were allowed to keep on going over the next 30, 40 or 50 years. Of course, I could sit here and go through every element of the budget and do a similar analysis of the cumulative cost, whether it is the age pension, assistance to the automotive industry, assistance to other sections of the community—

Photo of Brett MasonBrett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | | Hansard source

Higher education.

Photo of Arthur SinodinosArthur Sinodinos (NSW, Liberal Party) Share this | | Hansard source

Higher education. You could come up with a humungous number. On the other side of the ledger, I could go through tax revenue and accumulate that over a period and come up with a humongous number.

Yes, there are budgetary pressures that come over time from growth in all sorts of budgetary outlays, but that of itself is not an argument for choosing to cut back one outlay rather than another. There has to be a policy rationale for what you do, and what I am arguing here is that the rationale is more ideological than it is essentially budgetary. Why ideological? I mentioned earlier the longstanding antipathy to these sorts of measures which promote greater choice between public and private sectors, but there is another element to this, and that element has been added by none other than your distinguished colleague, Mr Acting Deputy President Cameron, the Treasurer—it is his Monthly essay, his vituperative attack on three Australians who are risk takers and entrepreneurs out there earning their keep and providing jobs for their fellow Australians.

What I found remarkable about that contribution is that it was a deliberate attempt to set one Australian against another. It was a deliberate attempt to set allegedly working-class Australians and middle-class Australians against other Australians. I thought it was deplorable for that reason, because what unites most Australians today is a set of aspirations. We all want to do better. We do not want to be penalised for having a go. Having a go is as important to us as a fair go, and I thought that essay highlighted that the Treasurer was interested merely in seeking to stoke the politics of envy for reasons perhaps related to trying to get the public debate off the leadership crisis in the Labor Party and onto more fertile territory.

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

Senator Sinodinos, can I draw your attention to standing order 193. You are getting very close to an imputation of improper motives against the Treasurer, so I just draw your attention to that.

Photo of Arthur SinodinosArthur Sinodinos (NSW, Liberal Party) Share this | | Hansard source

I appreciate that, Mr Acting Deputy President. I would never want to impute impure motives to such a pure individual as the Treasurer. But may I say that this particular measure does smack, in part, of the politics of envy. The point I was making is that it seemed to be part of a suite of measures and seemed to be in part authored by a Treasurer who seems to be very keen on the politics of envy.

The coalition has always believed that choice is important, in both health and education, and I believe this measure is one that appeals across the various income groups in the community. My colleague Senator Brandis spoke about the number of low-income Australians who use the private health insurance incentive or have private health insurance cover. Indeed, to go through some electorates close to my own heart, let me start with the electorate of Dobell. In Dobell, 46.1 per cent of voters have private health insurance—not 20 per cent, not 25 per cent, but 46.1. The number of persons covered by private health insurance in that electorate is almost 60,000 people. In Robertson, another fine upstanding electorate, 55.5 per cent of voters have private health insurance. The total of persons covered with private health insurance in the electorate is 73,869. That is a lot of Australians in Robertson who are covered by this measure.

If I go to a safer Labor seat, Blaxland, once occupied by the Hon. Paul Keating, 42.7 per cent of voters have private health insurance. The total of persons covered by private health insurance in the electorate is 60,516. In the seat of Grayndler, the cradle of Anthony Albanese, 60.1 per cent of voters have private health insurance. It is even higher than those seats on the Central Coast. The total of persons covered by private health insurance in the electorate of Grayndler is 77,898. They are the people who the Hon. Anthony Albanese is going to be harming through this particular measure. If we go to Hunter, a safe seat in the Hunter Valley, 51 per cent of voters have private health insurance. The total of persons covered by private health insurance in the electorate is 66,346. In the seat of Newcastle—a good working-class seat; I was born in Newcastle—55.2 per cent of voters have private health insurance. The total of persons covered by private health insurance in the electorate is 69,726. In the seat of Shortland, next door, just to round it off, 50.8 per cent of voters have private health insurance. The total of persons covered with private health insurance in the electorate is 65,971.

People scrimp and save to have the peace of mind of private health insurance. And what we are talking about here is not some select group people in Vaucluse, Toorak or the relevant parts of Adelaide or Perth—Peppermint Grove or wherever. We are talking about a swathe of people in a swathe of electorates who would be disadvantaged by this particular measure going through. So I stand up here disillusioned with the promises Labor made that it would retain the private health insurance incentive. I am very disillusioned and concerned about the deterioration of the risk pool and the impact that that will have on upward pressure on premiums for all 12 million Australians with private health insurance, with more people forced to utilise overstretched public hospitals.

After years of waste and mismanagement Labor is hiking prices for working Australians to pay for their own budgetary and other shortcomings. My concern here is that, at a time when the cost of living is without a doubt the No. 1 issue in federal and state politics across the country, here we have a government adding to the cost of living. We have already had initiatives around the carbon tax, which will add to the cost of living—and may I say that the evidence mounts every day that those costs are going to be higher than the government has estimated. Already we have received information around increases in landlord leases and the like, reflecting an increase in the carbon tax going through their books. What we have is a tax that will cascade through the stages of production. It is not a GST, where there is only a price effect on the final consumer; it will cascade through the various stages of production. The cost of living is being exacerbated and then we have other measures like the private health insurance incentive means testing that we are talking about here today, which will add to that as well.

I come back to a point I made earlier: the government is in danger of creating even further poverty traps and even further entrenching effective marginal tax rates up the system. The main impact of that would be on secondary income earners in families. I do not believe this was a tough decision for Labor to take. We get a lot of breast-beating and braggadocio about tough reforms and tough fiscal decisions. This was not a tough decision for Labor to make, given its history of promises to remove the private health insurance incentive in the past. It backflipped on that promise and then said, hand on heart, that it would keep it. Sadly, that promise as well has not been kept. It is one of a number of promises that have not been kept.

They can say that they were mugged by reality on the first day of coming to government. We are not talking about that; we are talking about attempts to do this some years after coming to government. The only other explanation I can think of is that, apart from the ideological intent behind this measure, budgetary pressures forced the government into taking these measures. All I can say is: if only the government had listened to the coalition at the time of the global financial crisis! We supported the first round of stimulus but we were prudent, we wanted to wait, because it was clear Australia was not going to be affected in the same way as other countries. We were prudent then and we have been proven right by history in that regard. Unfortunately, Labor put into the system a whole series of programs. For example, with Building the Education Revolution, there are still schools around the country receiving grants. Once the program was implemented it was very hard to stop. We all acknowledge that, but the point is that it can no longer be presented as a fiscal stimulus program, continuing as it does at a time when the economy has been in more than recovery mode.

Sadly, we were saddled with a much bigger debt and deficits coming out of the global financial crisis than were necessary, and that has necessitated the government taking all sorts of measures. Yet, disappointingly, last year when there was a window of opportunity for the government to take more stringent budgetary measures, they squibbed the opportunity to do so. There were $22 billion worth of savings in last year's budget but $19 billion worth of new spending, so the net bottom line contribution over the forward estimates was $3 billion.

People say, 'Okay, what's the coalition committed to doing?' The coalition is committed to restoring this sort of measure as soon as it is affordable. We see it as having a policy rationale that is robust. We want to maintain a strong private pillar in the health system and we believe that is going to benefit the health system as a whole. We believe that, if we can come to power within 18 months, there is sufficient time to reverse this measure and some of the damage that will be done in the meantime to the health system as a whole.

I call on the government, if they are serious about health reform, to also review the COAG health reforms that they have put into the system. I do not believe, as I said earlier, that these reforms will necessarily lead to structural change in the system in the way that we want. They will not restrain the growth in health costs or improve health outcomes. I call on the government to take a more comprehensive approach. It is a pity that the government did not respond to our calls for a committee to further review this legislation and perhaps have a broader overview of what can be done to promote a better, more affordable and sustainable health policy going forward.

Finally, Mr Acting Deputy President Cameron, I did not have the opportunity to check out what the private health insurance statistics may be around places like Springwood in the seat of Macquarie. I am certainly going to make it my business to do so and to remind people in that electorate that it is very important for them to maintain their private health insurance and the impact that this measure will have on their capacity to do so.

5:19 pm

Photo of Bridget McKenzieBridget McKenzie (Victoria, National Party) Share this | | Hansard source

I too rise to speak on the Fairer Private Health Insurance Incentives Bill 2012 and related bills. I note and share Senator Sinodinis's disillusionment, and I am sure all coalition senators have shared it as we have debated these bills in the Senate over the last couple of days. The minister, when introducing these bills in the House of Representatives, said that this was going to lead to a fairer and more sustainable health system. That is just a misnomer. There is nothing fair, or equitable or sustainable for the health system and for those using it in this nation. Our health system is the envy of the world. Everything that we need to be doing in this place and in our states is to focus on ensuring that that stays the case.

The government is planning to means test the private health insurance rebates and, at the same time, approve a premium rise. Families are already doing it tough in these hard economic times. These are families who, in a few short months, will be facing the effects of a carbon tax which will be, as Senator Sinodinos said, cascading right through our economy—from our primary producers producing our milk, to the tankers picking it up and delivering it to the milk processors in the regions, right the way through to the refrigerators that are refrigerating it on its way to the nearest supermarket in our capital cities. All the way through, that supply chain will be bearing an extra cost.

It is not fair at all that hardworking families in regional areas and right across our nation who have taken the tough decision to take out healthcare cover are now going to be slugged for the privilege. In 2009 the then health minister, Minister Roxon, said that the government is firmly committed to retaining the existing private health insurance rebates. We are not at all surprised that there has been another backflip by a minister from this government, another betrayal of the Australian people by Labor. People who have sat down around the kitchen table and worked out their family budget—'Will we go overseas on that holiday, will we go to Queensland or will we go camping down the coast and keep our private health insurance?'—have had the conversation and kept the insurance only to find that they are not going to be supported in that decision. It is yet another example of the Labor government doing something in haste without considering the impact and without thorough investigation. The government is obviously having a bet both ways.

The means testing of rebates will be effective on 1 July, and as a result the average middle-class family will see a reduction in the taxpayer refund against the cost of their private health cover. The more they earn, obviously, the more they will pay. Fifty-two percent of Australians hold private health insurance, including about 40 per cent of Australians in regional areas. Sixty-five per cent of those living in the electorate of Mallee in Victoria hold private health insurance. It might seem counterintuitive—there are not a lot of private hospitals out there in the regions. Why would the vast majority of regional Australians, particularly those in Mallee, hold private health insurance? It is because it supports the public system, and regional Australians understand that. They understand that to keep their specialists heading out our way they need to be able to charge private rates. They are only going to be able to charge those if people out there in the regions hold private health insurance. Describing these hard-working Australians as 'millionaires'—like it is a dirty word—shows how out of touch this government is with the day-to-day struggles of working Australians. Penalising people for taking responsibility for their own health care makes no sense. This is in addition to taxation they are already paying with the Medicare levy. Once again, as they earn more, they pay more.

The health system is multilayered, and funding it is a complex issue. But there is a simple logic to the statement that, if you drive people out of private health insurance and they end up in the public system, it simply puts more pressure on that system and on our already overstretched public hospitals. If you drive healthy young people out of private health insurance—if those under 30 are making decisions about whether they are going to take it up or not—everyone's premiums will go up.

Why do regional Australians bother taking out private hospital cover if there are fewer hospitals? They are insuring against catastrophe, like anyone else who takes out insurance. They want to ensure that they can access a variety of health services—obviously, at their own public hospital in their own regional centre but, if something goes wrong, they want to be able to ensure that they and their loved ones can access the specialist care that they need. That may be 200 kilometres down the road or it might be 1,000 kilometres down the road. Regional people understand that it means going to either a regional centre or a capital city for treatment. They still want the peace of mind of their choice of doctor and no waiting list.

Many people also have a sense of obligation. Many believe that if they can afford private health insurance that they should, wherever possible, leave those beds for public patients. It is well known out in the regions that private health insurance is what keeps our public hospitals going. Typically, private hospitals in regional centres have lower occupancy rates—meaning that they operate on wafer-thin margins. Any erosion in those rates will be magnified in regional hospitals and will be likely to force cuts to services or potentially cause some private hospitals to close their doors entirely. Those people using the private services in regional areas are relying on them for repeat admissions over a course of treatment and for ongoing health conditions. Those families can ill afford to lose the benefits they have accessed for over a decade, and will be devastated to see them pared back.

Another issue is that of the visiting specialists who visit regional private hospitals. Any tinkering with the rebate that causes a cutback in demand in regional private hospitals will flow directly to the specialists, who will retreat to the cities, denying regional patients local access to the expertise and services they need and forcing those patients to travel further and at greater cost for consultations and treatment.

Another issue that I would like to briefly touch on is something that people have mentioned consistently, and that is just what a poor public policy response this government has. We on the coalition side are not surprised that this government is just pursuing middle-class Australia and whacking those who can least afford it, because they see it as a cheap and easy way to make up for Swannie's surplus misadventures. I just think it is—

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

Order! Senator, you should use the proper title. You should not use that type of language.

Photo of Bridget McKenzieBridget McKenzie (Victoria, National Party) Share this | | Hansard source

Sorry. I apologise, Mr Acting Deputy President. The Treasurer's surplus misadventures. It is poor policy, as many of my coalition colleagues have outlined. We will not be voting for it. The continual disrespect that this government has for regional Australians beggars belief.

5:28 pm

Photo of Gary HumphriesGary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | | Hansard source

When I was young, I recall playing a game that my parents bought me one Christmas. I forget what the game was called, but there was a vertical column and there were marbles in the top of this column. There were sticks that went horizontally into this column and the idea was that each player in turn withdrew a stick from the column and hoped that they were not the one that released all the marbles into the bottom of the column. The name will come to me at some point—probably later in the speech, so I will leave members in suspense until I can think of it. Obviously, nobody else in the Senate at the moment played that game and they cannot refresh my memory.

Photo of Doug CameronDoug Cameron (NSW, Australian Labor Party) Share this | | Hansard source

( ): Senator Humphries, I have been advised that it was called Ker Plunk!

Photo of Gary HumphriesGary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | | Hansard source

Thank you very much Mr Acting Deputy President. You obviously were not playing it yourself—it was not a popular game in Scotland, no doubt. Or you were too young—or possibly too old? I would not venture which that might be—but thank you. The game springs to mind in the course of this debate because it rather seems to me that the federal Labor government is playing a game of pulling out a stick from this structure of public and private hospital and health infrastructure in Australia—a stick worth $2.8 billion over the forward estimates. It is hoping—it is not necessarily very sure, but it is hoping—as it pulls this stick out that somehow the marbles do not fall and that the people in the private health system who have private health insurance and who are taking a load off the public hospital system at the bottom of the column do not cascade down into the bottom of that column. That gamble is—

Photo of Helen PolleyHelen Polley (Tasmania, Australian Labor Party) Share this | | Hansard source

What about the effect of the $1 billion Tony Abbott ripped out of health?

Photo of Gary HumphriesGary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | | Hansard source

I am happy to defend against that fallacious argument. There was no $1 billion ever taken out of the public hospital system or the public health system of Australia by Mr Abbott or anybody else in the coalition government. But, to stay with my point, we have a situation where the federal government have determined that they can withdraw that amount of money and they are hoping that it will not have serious consequences for the quality of the public hospital system in our country.

They have conceded, I suppose, that at least one marble will fall. The government say as a result of their own modelling that 27,000 people will drop their cover as a result of this measure. Let us call that one marble dropping to the bottom of the column. If that were the case, the gamble might have paid off at least partly. But we have among the range of estimates of what will happen if the federal government withdraw that $2.8 billion other much less rosy scenarios or predictions of what will happen. I note that the government's own medical insurer, Medibank Private, estimates that 37,000 of its members alone are likely to drop their cover and a further 92,500 will downgrade their health coverage, most likely by dropping out of hospital cover. Deloitte have done their own work. Their estimate is very sobering. They estimate that in the first year alone of this new scheme 175,000 people would be expected to withdraw from private hospital cover and a further 583,000 will downgrade their cover. Over five years, Deloitte estimate that 1.6 million people will drop cover and 4.3 million will downgrade. As a result, they estimate that private health insurance premiums will rise by 10 per cent above what they would otherwise have risen by. If that turns out to be the case, a lot of marbles are dropping and a lot of serious consequences are flowing down to the public hospital system and the public health system of Australia.

Photo of Brett MasonBrett Mason (Queensland, Liberal Party, Shadow Minister for Universities and Research) Share this | | Hansard source

Labor's lost their marbles!

Photo of Gary HumphriesGary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | | Hansard source

You could say they have lost their marbles, Senator Mason. I think that it is clear, however, that the government just do not know what is going to happen with this measure. We have a national economy which is good in parts, like the curate's egg, but which leaves a large number of Australians who are struggling and where living standards generally across Australia are falling. Yet the government believe that when people face these sorts of cost pressures—higher cost of government charges, higher taxes, higher cost of local services, higher cost of petrol and these other cost of living pressures—somehow in the midst of all of that pressure they will not drop their private health insurance. It is a big gamble.

We have a situation where clearly our public hospital systems are struggling to cope with the level of demand on them, and that level of demand is likely to increase significantly as a result of people dropping their private health insurance, particularly with respect to hospital coverage, as people decide that they simply cannot afford to sustain that coverage and they can go to a public hospital system. They probably factor in a certain loss of quality as a result of that, but nonetheless in tough economic times they may well decide that that is a rational decision to make to help sustain their family's standard of living.

Twelve million Australians—over half of the population—have private health insurance, and 10.4 million of them have hospital treatment cover. It is very hard to imagine that Australians will sustain that level of investment in their own health when they have such enormous pressures on them overall and when the government is signalling that it no longer wishes to support them in the choice to sustain a proportion of the cost of their health care—because that is what this step is doing. It is saying to people, 'Don't worry about providing for your own coverage and covering the cost of your health care by taking out private measures; our government system will cover you.' Indeed, it might, but at what cost to the public purse and at what cost in loss of quality in the process?

This measure, I think, will lead to a very large number of Australian families deciding not to continue with coverage, at least to the same extent that they have today. I imagine that would be a decision made by a large number of people in my own community, the Australian Capital Territory, where at this stage we have, and have had for some time, the highest level of private health insurance in the country—56.4 per cent of people in the ACT are insured. That is over 200,000 people. Clearly it is citizens of the ACT who will lose very significantly out of these arrangements, because the government has classed people earning more than $83,000 as—to use a phrase employed in debate earlier today—'super-rich' or 'super-wealthy'. I think that greatly mischaracterises the sorts of people who are noticing a loss of living standards and who are struggling to make ends meet. The fact is that this change will affect many people at many levels, because if people who can afford at the moment to take out private health insurance withdraw in significant numbers it must have implications in a number of areas. It must lead to higher premiums, not just for people on higher incomes but across the board. So those millions of Australians on low incomes, those 3.4 million people with a household income of less than $35,000 per year, who presently have private health insurance will have to consider their position as their insurance premiums rise. It will also affect the suppliers of private health services. I am thinking particularly of smaller private hospitals in regional Australia which may not be a vastly profitable proposition at the present time but who will find that as a significant proportion of their communities withdraws from private health insurance the viability of their enterprises will diminish. When we see a few of those sorts of hospitals or health centres close—and bear in mind that most elective surgery in Australia today is done in private hospital settings or private clinical settings—in many communities the withdrawal of that kind of service will drive more people into already very pressured public hospital systems.

All of that adds up to a loss of quality and capacity in Australia's healthcare system. Where does the $2.8 billion come from? It comes directly from the pockets of Australians that the government chooses to characterise as super-wealthy or super-rich. I do not think that that characterisation is fair. I think that, in recent years, we have seen tremendous pressure on Australians at all levels. Some of the safety net for those people has been enhanced in some ways with compensation arrangements, particularly for lower incomes, but it is very much middle Australia that this measure is targeted at. I make no apologies for advocating for middle Australia in this place, because I do not think we need to be picking off sections of the community and saying that they can afford a hit here, that they can afford to have their standard of living sliced on the edge because they are wealthy enough to sustain that sort of decision.

We are still a wealthy country, and if it were not for the profligate decisions made by this government with respect to the way it has spent the taxpayer's dollar in recent years we would not need to make these sorts of decisions. We have to take $2.8 billion out of the pockets of Australians in order to sustain the government's vision of a surplus budget into the future. We need not be in this position and we on this side of the chamber reject the idea that we have to create this kind of paradigm: to cut the living standards of Australians in order to meet the government's budgetary requirements.

I fear for the effectiveness of Australia's public hospital system. As a former health minister in the ACT, I know that, as people come through the reception areas of in-patient departments, the system is incredibly sensitive to the number of decisions about where people will go. Will they go to a private bed or to a public bed? When more people take the turn on the left side to go to the public beds, it puts huge pressure on the rest of the system. We can expect more of that because of this government's somewhat perverse vision of how to improve health care in Australia.

I remind members of this chamber, as others have done, that the decision to remove that stick worth $2.8 billion was a broken promise. I recall very well the words used by the then shadow minister for health before the 2007 election that this was Liberal hysteria—that the Liberals were being hysterical in suggesting that there would be any tampering with the private health insurance rebate. It is interesting because the other time in Australian politics that I recall the phrase 'Liberal hysteria' being used was with respect to claims made by the opposition in 2010 that the Gillard government was going to impose a carbon tax. According to Treasurer Swan that was Liberal hysteria as well. I suspect that we should be very sensitive to the words 'Liberal hysteria' in the future and assume that, when we hear that phrase, it means that they are on to us, that we have been caught out, that they know what we are up to.

I simply indicate that I think Australians will be poorer and the health system will be weaker as a result of the measures which the Senate is being asked to approve today. The Greens have long advocated for pulling out of this particular measure. In fact, they say the whole of the private health insurance rebate should go. They have no compunction about imagining that they can find the extra dollars necessary to sustain a hospital system where nobody uses private health insurance or private hospitals. But that is the bizarre world of the Greens. I for one will not stand by and support a situation where—

Senator Di Natale interjecting

A lot fewer people were using private hospitals and private health before the rebate, and today we have a strong private health and hospital system in this country because the Howard government had the vision to sustain people's decisions to take out private health insurance and invest in their own health care. That is the way the system was improved. Enormous pressure was taken off the shoulders of public hospitals in this country by virtue of that decision, and you guys are going to put that pressure right back there when you support this measure today. I urge the Senate to reject this legislation. It amounts to a cut in the quality of health care in this country and a reduction in the living standards of millions of Australians.

5:44 pm

Photo of David FawcettDavid Fawcett (SA, Liberal Party) Share this | | Hansard source

I rise to address briefly the issue of the Fairer Private Health Insurance Incentives Bill 2012 and related bills. Because of the guillotine the government is going to apply the opposition does not have time to address it in the detail we would like, but I have a few key points to make.

It is important as we look at this issue of means testing the private health rebate that we look at the big picture of our health system, and that we take a longer term view. Our health system delivers some of the best health outcomes in the world and Australians are enjoying an increasingly excellent life expectancy. That is partly because of the fact that we have this dual health system, where public hospitals treating the insured can bill insurance companies but can also purchase high-volume private surgery when the waiting lists blow out. The Productivity Commission report of last year indicates that the private system is very competitive, if not far more efficient than the public system. The sustainability of that system in the long term is really important.

It is clear that taxpayers alone cannot carry the load of the future financing of health care in Australia. The budget pressures will increase substantially. Population projections point to a doubling in the proportion of the population aged 65 and over by 2050, and a quadrupling in the proportion of the population aged 85 and over in the same period. What we are seeing there is a huge increase in costs. The second Intergenerational report forecast that expenditures on health will grow from 3.8 per cent of GDP back in 2006-07 to 7.3 per cent of GDP by 2046-47. That means that, more and more, we are going to need to balance the health system between a reliance on the public purse and on individuals playing their part in financing it. That means that the private insurance system must be sustainable, and it will not be sustainable if this government takes measures that mean we reduce the size of the pool of people who are paying into that across their lifetimes.

I turn to touch quickly on the politics of this. The government's approach to this has been divisive at best, and its accusations, for example, that it does not want to see the cleaners in this place pay for the health care of the rich, are crass at worst. The government does not take into account the fact that people on low incomes are not paying for anyone's rebates, because people on low incomes do not pay net tax. Anyone earning less than $820 weekly, or below $900 for families, get more from the government than they pay in tax. The Treasury calls that the net tax threshold. It is also important to realise that this is not the domain of the wealthy. One-third of people who have private health insurance earn less than $32,000, and the median income of people who have private health insurance is only $47,000—hardly the domain of the rich.

There are consequences of the decision that the government is making. Many of my colleagues have talked about the decline that modelling shows will occur. Government figures show that currently some 5.6 million Australians are privately insured. The Deloitte report indicates that some 1.6 million will withdraw from their private hospital cover over a five-year period and 4.3 million will downgrade to lower levels of cover. The most important thing to look at, though, is what is going to happen in the area of allied health, or the extras cover. The Australian Physiotherapy Association said in one of their submissions that they were alarmed at the lack of consideration of ancillary cover in the Treasurer's analysis. They are alarmed for very good reason. For those with extras cover the impact is expected to be greater—nearly one in five, or 18 per cent, will drop their extras altogether, with a further one in three, or 34 per cent, likely to downgrade. Putting the two groups together—those who drop the cover altogether and those who downgrade the extras—shows some 52 per cent will potentially cut back on extras cover, things like dental, optical, physiotherapy, podiatry et cetera.

There are two real impacts from this that this place should be aware of, and that the government should be ashamed that they have not taken into account. I have recently run a number of rural health forums around regional South Australia, and one of the consistent bits of feedback was that the delivery of health services into regional areas, both from GPs and allied health professionals, relies heavily on people being privately insured. Allied health professionals told us that the viability of their businesses depends on people who come to them with private health insurance, and once the businesses cut back—whether that be allied health professionals or private hospitals or the ability to encourage surgeons and other specialists to visit regional areas—we will see a collapse of services in parts of that market. Many people who are there in a private capacity also lend their services to the public system. If the floor on which they base their private practice is removed then we will see those services become unavailable to the public system because the state governments are not funding those services adequately through their hospitals.

There is another area in which this is particularly important. Allied health, which is what extras cover provides, is an important part of preventative health strategy. I met recently with the Podiatry Association, which indicated that Australia has the worst diabetes amputation rate in the industrialised world with 85 Australians losing a foot every week because of diabetes—about one every two hours. Countries that have mainstreamed podiatry and multidisciplinary foot teams have amputation rates 40 to 65 per cent less than Australia's. Guidelines indicate that the 206,000 Australians with diabetes should have an average of four to eight consultations with a podiatrist each year as a preventative measure. Currently, Medicare only funds a total of five allied health consults, which means that many people will only get a Medicare funded podiatry consultation once or twice a year. At the moment, the gap for many people is made up with private health insurance.

The Podiatry Association had a proposal to see the number of Medicare places increased. Given that each amputation costs the health system $100,000 over the life of a patient, they highlighted that by increasing the number of Medicare funded places they would save 167,000 hospital bed days, 3,500 amputations and $400 million each year. If people drop their extras cover, it will reduce their access to podiatrists—and you could probably extend this across other allied health areas,. That means we will not be seeing the same level of preventive health care. The unintended consequence will be that more high cost health care is required in hospitals.

For purely ideological reasons this government is seeking to wind back private health insurance. This will have a flow-on effect not just through pressures on the public hospital system but particularly on regional communities because it undermines the viability of private practice. Perversely, it will increase costs for the government by decreasing people's access to preventive health care. There is much more I could say but, in deference to my colleague who wishes to speak before the government applies the guillotine, I will end by saying I do not support this bill.

5:52 pm

Photo of Michael RonaldsonMichael Ronaldson (Victoria, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | | Hansard source

I am deeply indebted to my colleague for giving me the chance to speak on this legislation. What we are seeing today is the Australian Labor Party dropping Australian families for a grubby deal with their fellow class-warfare combatants the Australian Greens. The losers from this will be the Australian people.

I know colleagues have referred to the Deloitte report, as I do to put my comments in context. Deloitte says 175,000 people would be expected to withdraw from private hospital cover in the first year and a further 580,000 would be expected to downgrade. Over five years 1.6 million would drop cover and 4.3 million would downgrade. Also private health insurance premiums would rise 10 per cent above what they would otherwise be. Deloitte says there would be an additional $3.8 billion in recurrent costs for the public hospital system, 2.8 million people with general treatment cover would withdraw and 5.7 million would downgrade. The government says Deloitte is wrong, but the government has not had Treasury do its own modelling in relation to this matter. We have Deloitte saying one thing, while the government and the Australian Greens refuse to do anything about it. I will go with Deloitte. I also refer to a company called GMHBA, proudly based in Geelong and Colac. GMHBA are actively involved in the Colac community. Last year they had a healthy breakfast program where they got together with a whole lot of other bodies to assist the kids in Colac.

Some members in the other place—the members for Bendigo, Ballarat, Corio and Corangamite—who have been remarkably quiet in relation to this debate. Remarkably, between them they represent a quarter of a million Australians who are covered by health insurance, yet there was hardly a peep from these people. In fact, the Parliamentary Secretary for Health and member for Ballarat, Catherine King, has said nothing, which is remarkable. I will go through the figures: in the member for Corangamite's case, 84,442 people in his electorate are covered by private health insurance. The member for Corio represents 69,946 people with private health insurance. The members of Ballarat and Bendigo represent 64,203 and 56,375 people respectively with private health insurance. More than 100,000 people with private health insurance are not being properly represented.

The member for Corangamite has been remarkably quiet since his very foolish intervention in the leadership battle. He claimed:

In my community in Geelong people do not believe that it is appropriate for people earning hundreds of thousands of dollars a year to get middle class welfare from the Commonwealth to help support them in having private health insurance.

We are not talking about people earning hundreds of thousands of dollars. We are potentially talking about mums and dads, a schoolteacher and a police officer raising three kids in Ocean Grove, in Mount Helen, in Golden Point or in Belmont—that is who we are talking about. Mr Cheeseman, the member for Corangamite, had clearly just picked up some notes and had not bothered to look at the Deloitte report when he said:

They are reforms that will make our healthcare system more sustainable, recognising that as we live longer our health needs become greater and we need additional money in the system to support people.

Deloitte says it is the exact opposite of that. He also told the House of Representatives:

… these bills are fair. They are appropriate. It has been a consistent position that we have held for a long time.

Let us talk about the consistent position of the Labor Party as told to us by the man who was supported by the member for Corangamite—the failed member for Corangamite—in relation to the leadership battle and everything else he touches. Before the 2007 election, what did former Labor leader Kevin Rudd tell the Australian Health Insurance Association? The shadow health minister, who is sitting beside me, knows that he said:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

Nicola Roxon is now Attorney-General. I wonder why she was moved out as this was coming up. We will never know, will we? She said on 24 February:

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

Mr Cheeseman was clearly wrong with when he said, 'It's been a consistent position that we've held for a long time.' That is simply not right. That is simply incorrect. That is another example of a broken promise. We have the Prime Minister's great political lie that 'there will be no carbon tax under the government I lead'. We now have broken promises in relation to private health insurance. We have the members for Bendigo, Ballarat, Corio and Corangamite refusing to say anything about this matter. The only one who did say anything got it absolutely wrong when he said that the Labor Party's position in relation to this matter has been consistent. It has not been consistent with the ironclad guarantees given by Mr Rudd before the 2007 election.

A lot of Australians have voted on the back of their understanding of the Australian Labor Party's policy in relation to this matter. A lot of people have gone to ballot boxes on the basis that the Labor Party would never ever interfere with these private health insurance rebates. They have been absolutely let down by a government which refuses to keep its promises, and we will come in here day after day after day and demand that the Australian Labor Party keeps its election promises. They have failed to do so at the moment, they have failed to do so in the past and we will make absolutely sure that they do so in the future.

Photo of Mark BishopMark Bishop (WA, Australian Labor Party) Share this | | Hansard source

The time allotted for consideration of these bills has now expired. The question is that these bills be now read a second time.

Bills read a second time.

6:08 pm

Photo of John HoggJohn Hogg (President) Share this | | Hansard source

In respect of the Fairer Private Health Insurance Incen­tives Bill 2012, the question is amendments (1) and (2) on sheet 7204, circulated by Senator Xenophon, be agreed to:

(1)   Schedule 1, page 16 (after line 11), after item 17, insert:

17A Section 169-5 (heading)

Repeal the heading, substitute:

169-5 Information to be given annually to the Council and the Productivity Commission

17B After subsection 169-5(1)

Insert:

(1A)   A private health insurer must, within 3 months after the end of each financial year, or within such further time as the Productivity Commission allows, give to the Productivity Commission such information (including financial accounts and statements) in respect of that year as the Productivity Commission requires to be given for use in preparing the report referred to in section 333-1A.

17C Subsection 169-5(2)

Omit "such accounts or statements", substitute "accounts or statements referred to in subsection (1) or (1A)".

(2)   Schedule 1, page 20 (after line 9), after item 21, insert:

21A Before section 333-1

Insert:

333-1A Annual report by Productivity Commission

(1)   The Productivity Commission must, as soon as practicable after 30 September in each year, give the Minister a report, for presentation to the Parliament, relating to changes in the composition of the persons insured under insurance policies issued by each private health insurer during the financial year ending on 30 June in that year.

Note:   See also section 34C of the Acts Interpretation Act 1901, which contains extra rules about periodic reports.

(2)   The report must include:

  (a)   information about the number of persons who have ceased to be insured, and the number of persons who have downgraded their level of insurance, under insurance policies that *cover *hospital treatment during that financial year; and

  (b)   information about the number of persons who have ceased to be insured, and the number of persons who have downgraded their level of insurance, under insurance policies that cover *general treatment during that financial year; and

  (c)   information about the age and income tax bracket of those persons who have ceased to be insured, or who have downgraded their level of insurance, under insurance policies that cover hospital treatment or general treatment during that financial year; and

  (d)   any recommendations from the Productivity Commission for addressing:

     (i)   reductions in the number of persons insured under insurance policies that cover hospital treatment or general treatment; and

     (ii)   people electing to downgrade their level of insurance under insurance policies that cover hospital treatment or general treatment.

(3)   However, the report must not include any information that would enable an individual to be identified.

(4)   The Minister must publish on the Department's website the report, and a written response to the report, within 60 days after the first day on which the report is laid before a House of the Parliament in accordance with section 34C of the Acts Interpretation Act 1901.