Tuesday, 26 August 2014
Community Affairs References Committee; Report
By leave—I move:
That the Senate take note of the report.
The out-of-pocket costs in Australian health care inquiry report makes for some interesting reading. This was an issue that I referred to the Community Affairs References Committee prior to the handing down of the budget. There was recognition that one of the great challenges in health care is the significant out-of-pocket costs for ordinary consumers and the impact they are having on access to health care.
Firstly, it is important to define the nature of the problem and to understand what sort of health expenditure is included when we are talking about out-of-pocket costs—that is, the costs borne by the consumer, not by any insurance or government funding. We learnt that in Australia we spend a lot on non-pharmaceutical, non-PBS medications. It is one of the largest areas for out-of-pocket healthcare costs. But we also know that dental care is a huge source of out-of-pocket costs and that is because we have very little in the way of state or federal support for the provision of dental services. In fact, 20 per cent of what people report as out-of-pocket expenditure was a result of dental services being provided.
We learnt about medical services that effectively relate in large part to things like the out-of-pocket costs associated with going to see a GP who does not bulk bill. Aids and appliances is another interesting area where there is very little support in the way of government expenditure. We note that 10 per cent of all out-of-pocket expenditure was in the area of aids and appliances. PBS medicines also make up a large part of the expenditure.
We have always had out-of-pocket costs. They have always been a feature of the healthcare system even though we do have the PBS to provide subsidised medicines and we do have health care funded by a universal insurer—that is, Medicare.
The question is: is this a feature of the system that is getting worse and is that impacting on accessibility to the system? One of the great concerns is that we have seen a very real increase in out-of-pocket expenditure as a proportion of household expenditure. Consumers previously spent 2.7 per cent of their household final consumption budget 10 years ago. We are now spending 3.2 per cent so it is a problem that was significant a decade ago and is now getting worse. The question then is: what impact is that having on access to health care? We heard from a number of witnesses that in fact the out-of-pocket costs associated with things like dental care and medicines are impacting on people's ability to get health care to such an extent that in many cases people are foregoing what is really important necessary medical care and imposing huge costs on the system down the track.
The issue of co-payments was raised through the inquiry. It became a significant issue during the budget and we addressed that concern. The committee made it very clear that co-payments do have an impact on people's ability to pay for medical care. It is a very blunt tool. It impacts on those people who are least able to afford it. And those people who are least able to afford it are often people who have higher rates of chronic disease, so there is a double whammy for people on low incomes. They are more sensitive to co-payments and they are more likely to have an increased burden of chronic disease so they are going to be higher users of the system.
Moving beyond the issue of co-payments—and of course that issue will continue to get ventilated through the Senate as those budget measures continue to be debated—one of the other things that was recognised through the inquiry was the issue of safety nets. We have two significant safety nets in the Australian healthcare system, the Medicare safety net and the PBS safety net. We learnt that one of the big problems is that they do not provide people with the upfront assistance they need. People who do not have the disposable income to be able to afford large out-of-pocket costs do not get the benefit from the safety nets that they need. In fact, some people will achieve the threshold for one safety net but not benefit from the other safety net. One of the clear recommendations was that we need a single safety net for out-of-pocket healthcare expenses that covers medical services, medicines and other healthcare expenditure. A recommendation to government was that they get on to implement such a significant reform.
We heard about private health insurance. One of the great ironies of private health insurance is that people take out private health insurance with a view to insuring themselves against significant out-of-pocket costs and they are precisely the sorts of people who often face the largest out-of-pocket costs, particularly when they have a surgical procedure performed. They are the people most likely to be faced with significant medical bills. One of the great concerns there is the degree to which people are aware of these costs from the outset and are able to make decisions to access health care outside of that delivered through private hospitals. We have a real problem with informed financial consent in the health system. Again, the report made it very clear that what we need to do is implement a much more transparent system to achieve informed financial consent.
Finally we heard about the evidence for implementing measures such as co-payments and for looking at addressing some of the out-of-pocket costs that currently exist in the system. We looked at many of the market drivers and the sustainability of the health system Something that we once heard from a number of witnesses, who presented to the inquiry, was—they believed and made it very clear—that the evidence supports the view that our health system is sustainable and that healthcare spending, as a proportion of the GDP, has been stable and Commonwealth health spending, as a proportion of the GDP, has, if anything, decreased.
The important measure here is not the absolute numbers but what we are spending on healthcare as a proportion of GDP, and those numbers are stable. The notion that our healthcare system is not sustainable and the drastic measures that target the accessibility of the system was dismissed by witnesses such as the AMA. It was dismissed by witnesses, such as the Consumers Health Forum of Australia whose submission made it very clear that did not support many of the changes that make accessibility worse. They made it very clear that they do not support the proposition that the drastic changes are necessary in order to improve sustainability of the health system.
In summary, we have got a document that highlights the fact that we already have a big problem in this country with people being able to access health care. For many Australians healthcare is already out of reach. If they have a medical illness that is not supported through a government program—for example, needing a medical device or an appliance, something like a pacemaker, or other cardiac procedures that are sometimes done—there is no cover at all. We heard that people particularly in rural and regional communities, where patient travel is a big factor and where bulk-billing rates are lower, often face even greater challenges. The message that came through loud and clear was the last thing that we want to be doing is to make a bad problem worse. That is what we are poised to do by increasing co-payments and by increasing the proportion that individual consumers need to spend out of their own pocket on health care. So we are at a fundamental point in healthcare reform in this country. A debate is required to answer this question. Do we believe that people's ability to pay for health care determines their access to it? This report makes it very clear that, rather than exacerbating the current problem, we should look at addressing the issue through reforms such as those recommended in the report. I seek leave to continue my remarks.
I seek leave to take note of the report of the Australian Workforce and Productivity Agency.
I would like to make some comments about the Productivity Commission's report concerning the Australian automotive industry. This is a very poor report; this is a very bad report. It demonstrates yet again that the Productivity Commissioner's fundamental failure to understand the significance of automotive manufacturing to this country. This is a classic and a perverse position that the report has taken, whereby it appears that the productivity commissioners are taking on the role of a coroner, in which the coroner regards the death of the subject with glee. The motor vehicle industry's announcement that they will cease their manufacturing operation by 2017 has created a mood of inevitability in some commentary amongst some of the more conservative elements of this country. This is an assumption that this industry will die. They go on to take this view, which we have heard recently by incredibly well-paid bankers, who are receiving $19 million a year—I am thinking of Mr Smith from the ANZ bank, who said that it was inevitable and that nothing could be done to prevent it. This is an assumption with which I fundamentally disagree. This is an assumption which is flawed.
Nothing is inevitable. While there are still assembly lines capable of moving and while firms of the supply chain remain capable of producing components, Australia's automotive industry is able to look to a renaissance. This is exactly the same position the British automotive industry was in after the fiasco of the Thatcher government. It is exactly the same position the English faced when they had to deal with the catastrophe of Margaret Thatcher. The British industry, too, was expected to die, and that just did not happen. The prophets of doom were confounded because the scorched-earth industry policy of the Thatcher era were abandoned. Successive British governments came to understand that new policies aimed at attracting different forms of investment in automotive manufacturing could succeed. Instead of high-volume production aimed at mass markets, investment that was directed towards advanced manufacturing for niche markets could be successful. The industry developed lines of specialisation, such as engine production, and it was able to attract new international investment. Today, the United Kingdom automotive industry is thriving and no-one questions its viability. In England, the Conservative Party understands the importance of co-investment. Of course, the doom sayers are not to be found there apart from the right-wing think tanks, who always work on the assumption that manufacturing workers jobs and manufacturing families' lives are not worth defending.
I do not suggest the British experience will be replicated in every respect in this country, but I do not take the view that the shutdown of the automotive industry was inevitable. We have to acknowledge the change in investment polities could begin the transformation of the industry in this country. What the Productivity Commission has done is to actually state the view that the wider vehicle producers were unable to survive in a highly-competitive, global and domestic market. Of course, they cannot if the government of the day seeks to drive them out of the country.
It was a simple proposition, so this government hounded the automotive industry out of this country because of the neoliberal views of extremist elements of the Liberal Party that had their heyday with Joe Hockey, the North Shore merchant banker who was able to succeed in destroying so much of the investment, so much of the capability, that had been built up in this nation over generations because of his ideological fetish for turning his back on the auto industry. He was to strip out some $2½ billion of industry support from the department of industry, and of course he has made the pledge to take $900 million out of the Australian automotive industry programs that were developed under the Labor government. The ACIS cuts especially imperil the livelihoods of hundreds of thousands of Australians. This Productivity Commission report fails to acknowledge the consequences. Innes Willox, of the Australian Industry Group, has put out a statement tonight which bells the cat. He is well known as a person who is not unsympathetic to the political aspirations of this government, but he makes this point:
The Productivity Commission's final report … released today seriously underplays the impact of the end to car making in Australia and should be treated with caution.
Mr Willox says:
The report fails to acknowledge that the situation facing the auto sector is not just another minor 'adjustment' in the economy; it represents the virtual closure of an entire industry. This will happen within a relatively short span of time and it will affect a large number of businesses, employees and communities.
In this context, the PC Report displays a disappointing and disturbing absence of practical recommendations to help facilitate an orderly transition of businesses and people seeking to move out of the local auto supply chains, beyond the existing set policies that were devised well before the current situation emerged. This absence of practical policy advice or new recommendations seriously undermines the value of the report. As a result, the report misses the opportunity for Australia to make the most of the considerable capabilities, skills and experiences in Australia's auto supply chains and to avoid the wasteful destruction of those capabilities.
We found none of those sentiments in this report from these vandals of Australian automotive manufacturing. What we know is that the Productivity Commission's report has fundamentally missed the point. The bulk of the evidence presented through the inquiries and submissions demonstrated support for ensuring that investment is created, that jobs are created and that industrial capabilities are developed so that we can build upon those capabilities through so many industries.
We have here a case of blind faith being exhibited by the neoliberals and free marketeers in this government that shutting down the automotive industry will somehow or another create new economic opportunities. We know the reality. Some suburbs, particularly to the north of Melbourne and the west of Melbourne and in the south-east corridor in Melbourne, and to the north of Adelaide, are going to be savagely affected. Given the rising levels of unemployment in this country, you would have thought that the commission's glib prediction that 40,000 people will lose their jobs was fundamentally underestimating the social distress that is being created as a result of this government's blind vandalism when it comes to manufacturing in this country.
The report goes on further to suggest that we should open up the prospect of importing second-hand cars from overseas. These people know no limits. Some 230 dealers and service centres oppose the recommendation to open up the Australian automotive market to grey imports of second-hand vehicles. It is put to me by the automotive industry that grey imports of second-hand vehicles from other countries will open up Australian drivers to consumer risk and will also have a significant impact on jobs in dealerships across the country. It could halve the new vehicle market, I am told, meaning that fewer people will be employed in dealerships across the country. Dealerships of all new car brands are respected and leading businesses and community sponsors, particularly in country areas. The information provided to me goes on further to say that, for consumers, grey imports will decrease the residual value of the cars that people currently own and this will make it more expensive to trade in on a new vehicle, and for people salary sacrificing this will cause lease rates to increase. In this context Labor simply will not support changes to the Motor Vehicle Standards Act that would allow for a flood of substandard second-hand vehicles that would undermine the warranty and other safety provisions that Australians rightly expect.
This report, like so many of the Productivity Commission's attitudes on the automotive industry, should be confined to the dustbin of history. It is a tragedy that the Australian automotive industry has not had a friend within this government, despite the promises that this government made prior to the last election. I seek leave to continue my remarks later.
Leave granted; debate adjourned.