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Tuesday, 10 September 1996
Page: 3841


Dr WOOLDRIDGE (Minister for Health and Family Services)(3.54 p.m.) —I am delighted to be able to reply to this. I will say categorically: I have not misled the public; and I will say categorically: I have not misled my leader. It may take you on the other side a while to get used to this but, unlike my immediate predecessor in the health portfolio, I do not tell fibs. The fact is this is a monumental beat-up. It is unbelievable that you have been able to take this as far as you have. But I am very happy for you to do so because every day you draw attention to private health insurance rebates, every day you show your irrelevance and the reason why you are in opposition.

Let me just go through the chronology of this so that I can make the situation utterly clear. When we came into government we kept going a procedure that had been in place at least since Neal Blewett issued a delegation in 1984 but probably for 20 years. We kept in place your system. It is true that since then there have been 23 increases from Australian health funds and these ones were in the pipeline anyway. They would have happened whether the Labor Party had been returned to government or whether the coalition was in government. These have nothing to do with the health insurance rebates we are offering but everything to do with your mismanagement of private health insurance because of your ideological blinkers.


Mr Bevis —It was just a terrible coincidence!


Dr WOOLDRIDGE —It is hardly a coincidence that funds put their fees up. It has been happening for 12 years, and the rate of increase is no different from anything that you had during the past 12 years. So you cannot put a case at all. If anything, the rate of increase has been less than what you managed during the last four years.


Mr Leo McLeay —Look! She could only get one!


Opposition members —Ha, ha!


Dr WOOLDRIDGE —You can stay over there, happy and laughing, as long as you like. What was followed in my department is what has been followed, as I said, for a decade, and that is these increases are applied for and approved by the department.

I was not informed by my department that these were in the pipeline. So, when my parliamentary secretary, Senator Woods, said that I did not know about the fee increase in the pipeline, he was absolutely correct. I did not know that the fees were coming through because I was not informed until after the event.


Mr Leo McLeay —You're pretty hopeless, then, aren't you.


Dr WOOLDRIDGE —No, I am merely doing what you instituted. It is your system. You cannot seem to get that through your thick skull. It is your system.


Mr Leo McLeay —You let the budget get compromised.


Mr DEPUTY SPEAKER (Mr Jenkins) —Order! The honourable member for Watson will cease interjecting.


Dr WOOLDRIDGE —If we made a mistake, it was that we allowed the system that you had been going under for 12 years to continue. Secondly, when Senator Newman said the minister's office received correspondence—

Opposition member interjecting


Dr WOOLDRIDGE —It is in no way different from what I said. The fact is that Senator Newman said I did not know before the increases were approved.

Opposition members interjecting


Mr DEPUTY SPEAKER —Order! Those on my left will cease interjecting.


Mr Leo McLeay —We are trying to help.


Mr DEPUTY SPEAKER —No. The honourable member for Watson knows that he should not be interjecting. He is not in his place.


Dr WOOLDRIDGE —Nothing that Senator Woods has said as my parliamentary secretary and nothing that Senator Newman has said as my representative in the other place is in any way out of keeping with the fact that I did not know about any of these approvals before they were made by the department.

What the Prime Minister (Mr Howard) said while I was overseas was that I was informed as a matter of courtesy after the event happened, and that is true. I have said that I was informed as a matter of courtesy by National Mutual—the letter is date stamped 26 July—and I was informed by Australian Unity in a letter after the budget, on 22 August. These were both after the department made the decision.

Mr Kerr interjecting


Mr DEPUTY SPEAKER —Order! The honourable member for Denison has made a considerable contribution to this debate, but he will cease from doing so.


Dr WOOLDRIDGE —As for the budget and the other allegations that are made about the full benefit, you have to look at the context in which that was made. The Leader of the Opposition (Mr Beazley) was quoted as saying prior to the budget, on 8 August, on the ABC, `The health funds will simply increase their premiums to absorb the rebate.' He is trying to scare people that the premiums will go up because of the rebate. It was because of that that on budget night we made the funds report to PHIAC as to their reserves, and we would make sure that we would not do anything other than what was necessary for the prudential management of the funds.

Quite simply there are two separate issues here that you cannot seem to grasp. One is the ongoing problem of health fund increases and the second is the benefit that might come from the rebates. Let me tell you first about the problem that health funds are facing, because that was what the honourable member interjected about.

The crisis in private health is quite simple. In government, you whacked costs onto the private health insurance industry that were equal to a 39 per cent increase in premiums. That made younger, fitter people and families drop out and older people stay in the funds. So the age group is being increasingly skewed towards older people and you have a spiral where older people stay in and fit, young people drop out.

The difficulty with this is that when you were in government you effectively destroyed community rating. You would talk about it. But in relation to all your actions—the actions that were underpinning Medicare when it was designed—you needed to have a viable private sector to complement a viable public sector. So we designed our private health insurance incentives very specifically to try to bring back in the people who were dropping out, such as families, and that is why they got the added benefit.

At no stage did I ever say that health funds would stop increasing their premiums. It is patently absurd to think that all of a sudden health funds are going to be able to say, `We have put our premiums up once a year because costs keep going up. All of a sudden we are going to stop doing it.'

There have been rumours of nine funds putting up their premiums. I cannot find which nine funds these rumours are supposed to refer to, but there is a document from the Private Health Insurance Advisory Council that lists 10 funds so I think this must be the one that is being mentioned. The majority of those funds that have put up their premiums in recent times have done so because they have dropped below the statutory reserves. What you said in your debate before was that somehow I should have said, `No, wait until 1 July next year.' That is patently ridiculous. The result of that would be for me to cause the collapse of health funds. That is what you are suggesting by saying that somehow I shouldn't have approved these.

Of two other funds that increased their premiums, one did so because it had not increased premiums for four years and the other did so because it had not increased premiums for 2½ years. Two other funds that increased their premiums did so to try to cope with the 100 per cent cover that you intro duced last year. The direct result of your policy last year was to make two funds put up their premiums—two others increased premiums because they had not done so for up to four years and all the rest did so to meet statutory obligations. So what on earth are you suggesting I do—say to funds, `You cannot stay under statutory requirements'? That is clearly absurd.

There is also this suggestion going around that I knew about something and that I should have said it. The fact is that I did. You can look at anything I have said publicly, and I gave two examples in question time, or you can look to what I said at a briefing of journalists after the budget. I have been open, honest and frank about the problems in the private health insurance industry. I have said quite specifically that there have been premium rises coming through and I have never walked away from that.

You have tried to pretend that somehow what is happening will gobble up the benefit. I have news for you: even with the premium increases taken into account, the average benefit to families in Australia will be a 20 per cent reduction in health insurance premiums, and many will be up to 30 per cent. So this will still be of enormous benefit to Australian families.

The shadow minister, the member for Dobell (Mr Lee), is prattling on, `What about Manchester Unity?' Again, this is indicative of the selective understanding he has of the problem. What he has chosen to do is to try to portray the top increase of every fund as the increase applying across all funds. Manchester Unity's increase was substantial on its top table and not substantial on its basic table. As far as I can see, they got the top table wrong because they mis-priced your promise of 100 per cent cover.

A lot of the problems of the very large increases—there have been some, and we would have much preferred them not to have happened—relate to the promises and expectations raised by the previous health minister, Dr Lawrence, when she introduced her so-called 100 per cent cover in 1995. The fact is that many funds did get it wrong and did have to reprice it. This is interesting, because the previous health minister was saying, `This 100 per cent cover is actually going to lead to a drop in premiums.' Wrong; it has led to up to a 20 per cent increase in some premiums. But, across the whole range of premiums, the rate of increase is less than when you lot were in government. So it is hard to see, quite frankly, what you are on about.

Again, there is the notion that the Australian public is not getting the full benefit of the private health insurance rebates. The fact is that on 1 July next year they will drop by $450 at least for a family with an income under $70,000. They will get the full benefit. What will happen between now and then is that some more people will drop out of private health insurance, and that was patently clear in our budget documents.

The second thing that will happen is that premiums will go up, and we have always been quite open about it. But to say that $450 has virtually been stolen away, when you pick the worst possible example and try to pretend that applies across the board, is simply untrue, because the average premium increase of the 23 funds that have increased their premium is 6.1 per cent. That is not 6.1 per cent across 48 funds; that is 6.1 per cent across 23 funds.


Mr Lee —Which table?


Dr WOOLDRIDGE —That is 6.1 per cent on the basic table, across the lot.


Mr Lee —What about the top table?


Dr WOOLDRIDGE —Top table is about nine per cent. The top table you can take directly back to your introduction of 100 per cent cover. If you increase it across the whole of the health funds, it is still quite a deal less than what you did.

The only massive increase in premiums that has occurred in recent years was in 1991-92. When you were in government, there was a 17 per cent increase in premiums in one year. You cannot get away from that. You have said to me that somehow I knew all along that this was happening and that I should have stopped it. I did not know all along that funds were applying for increases. I knew all along that there was pressure because of longstanding problems that you had introduced, but I did not know the scope, the size or the details of any of the increases until after they had happened.

So to say that I am somehow to blame for increases in private health fund premiums is ridiculous. If anyone is to blame, it is the previous Labor Party, which whacked an extra 39 per cent in costs onto the health funds. To say that I took no action is only to say that I was following a procedure that had been in place certainly for 12 years and probably for 20 years. To say that I misled the public is quite incorrect. I have been open and frank with the public, as demonstrated by the fact that I have been prepared to acknowledge that there were pressures in the system. To say that I misled the leader is completely incorrect because the leader's comments have been exactly spot on. The leader's comments were that at the time I did not know of the increases and I was not informed until after the event.

The simple fact is that you are showing that you do not understand why you lost government. You can knock, you can come up with no alternative and you can nitpick, but in the end this is an issue that is relevant to mainstream Australia and we will introduce these premiums with pride. They will be of substantial assistance to families who need help and who would get nothing under you. (Time expired)