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Tuesday, 29 October 1996
Page: 6025


Dr LAWRENCE(5.55 p.m.) —I might have cause to agree with some of what the member for Bradfield (Dr Nelson) had to say, except that, overall, we did not see any increase in funding in health care; we saw a very significant reduction. There was a cut of over $2 billion to health care, most of which was used to offset the introduction of a private health insurance rebate, which will have very little impact indeed on the quality or the amount of health care available to Australian citizens.

I want to address this National Health (Budget Measures) Amendment Bill in the context of those cuts because it is in that context that they assume their importance. Of course governments will make adjustments from time to time in the contribution that individuals make to their health care, aged care or education—whatever it may be—but they usually do so in the context of improving services and expanding the range and quality of what is available to citizens.

This budget, in my recent experience, is unique in that it does not do that. All of the cuts that we have seen to the health budget are basically designed to offset the very great expense of a single measure which I think most people—particularly health economists who have examined it—conclude will have almost no impact on the quality, let alone the extent, of services available in the health care system.

One of the principles that is in danger of being undermined in the current debate about health care and, indeed, by the approach that the government is taking in its budget and other measures bill is the principle of universal provision and universal access. It is the idea that we all subscribe to a quality health care system and pay according to our means so that those people who are not very well off pay little or nothing by way of contribution—whether through the general tax system or the Medicare levy—but they may at other times in their life, and this is typical, make a payment.

There is a view that people of low means stay that way forever. It might seem like that to some people at the moment, but it is certainly not true for the most part. People come and go from the work force. When they retire they have a lesser means, but during their lifetime they will have made a very substantial contribution not only via the work and effort that they have put in—whether it was well remunerated or not—but also through the tax system. So the principle of paying according to your means is a very important one.

Beside that is the principle of making sure that the system is embraced by all in society. In the area of health care, there has always been the view—I have heard it expressed by members of government, and it has been directed at me by way of criticism—that if you can afford it you should have private health insurance; you should look after yourself. That is a very serious misunderstanding of what I think is the contract between the government and the citizens in the areas of health care, education, transport and environmental protection, where the purchase of a collective good is much more important than the exercise of a single, individual choice.

So if I stay in the health care system or the education system as a relatively high income earner—indeed, by community standards, a high income earner—and I pay more tax in order to do that, it is benefiting in two ways those people in the community who do not have very much. Firstly, my tax is going to that purpose. I will not be pushing to have my tax dollar removed and given to some other purpose, like a private health insurance rebate.

The second is that members of the community, if they see that the well-heeled and well-off are absenting themselves from what is considered to be the universal provision because they believe that there is something better somewhere else—whether it is a private school or private hospital—will, of course, lose confidence in the system. So I have a very strong commitment to the idea of, firstly, collective purchase—that we can jointly purchase better services for everybody—and, secondly, a contribution according to our means.

In my health care—in the education of my son, in other areas of my life—I have remained strongly committed to, and have personally acted upon it when I was not so wealthy, the view that the universal system had a lot to offer me. Now that I am better off as a member of parliament, I want to make a contribution to that, rather than say, as John Kenneth Galbraith has said in the United States, `If it is not going to benefit me, I don't want to contribute'—the culture of contentment, if you like.

It is very obvious in the United States that you have this two-tiered system that says, `If I have private provision'—whatever it may be—`then I don't want other people using my taxes for quality hospital care or education' or whatever it may be. So it is in that context that I make these observations about the approach the government is taking, including the approach to pharmaceutical benefits.

What we have seen in this budget is a very substantial cut to hospital funding. I cannot see any reason to justify that on the grounds of improved quality or access. Indeed, everything I know about the hospital system and the health care system generally points to the fact that the last decade has seen already very substantial improvements in productivity and efficiency and most hospitals are at the point now where they cannot spread the dollar any thinner.

Indeed, at the state level, because there were very significant cuts, particularly in Victoria, in my home state of Western Australia and in South Australia, what the hospitals did, in a sense quite sensibly, to ensure their survival was to cost shift to the Commonwealth. I railed against that as a minister because it clearly is not desirable to have this dollar movement between the two levels of government without any improvement in the quality of care. But I understood why the hospitals were doing it. It was because the state governments were cutting off their funds.

In Victoria, they were explicitly encouraged wherever they could to, for instance, purchase pharmaceuticals via an outside system that would enable them to access the pharmaceutical benefits system rather than having to pay for the drugs in-house. It was a similar case with clinicians, physiotherapy and the like. All of it was being pushed out of the hospital campuses because they were not getting enough dollars from state governments.

The Minister for Health and Family Services (Dr Wooldridge) now tells us that that cost shifting, which he estimates as being worth nearly $313 million, since that is what he is taking out of the budget over four years, will be remedied by simply taking the money from the hospitals. All that will do is ensure that the hospitals have no capacity to continue to deliver quality of service to the range of services that has previously been the case. That $313 million that is taken out of hospitals will produce these effects—longer waiting lists in the case of elective surgery, a very serious threat to the quality of care in the case of emergency and other medical requirements in the hospital, and it will also mean that individuals pay more, because a lot of the services which the hospitals have just managed to continue to provide—physiotherapy, occupational therapy, social work and so on—will now have to be purchased by the individual consumer outside the hospital.

For some people, about 30-plus per cent of the population, their private health insurance will help to cover them for that. But for the majority, it will not. They will simply have to pick up the tab. It is still an economically rational decision, I might say, not to have private health insurance, even with the government's tax rebate system. I will return to that in a moment.

The cost shifting reduction undertaken by the government will have an impact on hospital care. I had the pleasure recently of visiting the base hospital in Geelong. They made it very clear to me, `We have done everything we can. We have broken down the demarcation problems that we faced in the hospital between people who did the cooking and the cleaning and people who provided orderly services. We are all capable now of doing anything that is required of us.' The hospital's work force has been very substantially reduced. The costs of operation have been very significantly cut under the Victorian government's removal of $270 million from that system. But they said, `We cannot cut any further without having a very major impact on the quality of the care that we deliver.' They said it was spread so thin that some of it was skeletal.

On top of the cuts for so-called cost shifting problems—they are real, but this is not the solution to them; it is to get agreements with the states—there are cuts, of course, to states grants under the FAG system of $450 million. So the cumulative impact of those two sets of cuts is to remove $800 million from the public hospital system over four years.

That is already leading to substantial further cuts by the states. They are not going to make up the difference. They do not have a capacity to do so. In some cases they do not have the will to do so, because part of their agenda—particularly the conservative governments—is to move as many people as they can out of the public system and into the private system, because they do not pay for that. Private health insurance does, the government does now, with this huge rebate, and Medicare does to a certain extent when it comes to the medical services. So that is undermining that very important principle that I outlined earlier—a quality public system; not denying the right to choice in the private system, but not having that as an alternative, as a substitute, for decent universal provision.

There has been discussion today—I will not dwell on it—of the very significant cuts to the dental program. This is a program that was targeted to low income earners. It has never been a universal provision, but it did assist those low income earners and health care cardholders to get decent dental care in a timely fashion. We have seen $400 million cut from that program, with the inevitable result that there will be longer waiting times, fewer procedures will be able to be undertaken and access will be reduced.

A lot of the dental clinics that have been funded by the joint application of Commonwealth and state funds will be closed. They simply will not be able to maintain the operation of those clinics. So it is not just that people will have to wait longer, but the clinic in their area may not be available at all. The local private dentist who was providing some of the services under the Commonwealth dental program will also not be available.


Mr Slipper —Mr Deputy Speaker, I raise a point of order. The shadow minister may have overlooked the fact that we are debating the National Health (Budget Measures) Amendment Bill 1996. This is not a general, wide ranging debate on the area of health; it deals with a very specific budget measure which varies the co-payment with respect to the pharmaceutical benefits scheme. I ask that you request the shadow minister to become relevant to the bill or to resume her seat.


Mr DEPUTY SPEAKER (Mr Mossfield) —I do not think there is a point of order. I think the honourable member is generally speaking to the bill and I think it is in order that she do so. I ask her to continue.


Dr LAWRENCE —Thank you, Mr Deputy Speaker. I think it is important for the member who has just spoken to recognise that these cuts are in the context, as I pointed out, of very substantial cuts to other areas of programs. So they add insult to injury.

The point of the observations I am making is that you have these very substantial cuts, over $2 billion, while simultaneously having the introduction of a private health insurance rebate. The government was warned before the election by health economists and others that this would simply be money that would purchase no additional service and it would inevitably result in the increased cost either of health insurance premiums or of some of the co-payments required by doctors and, in some cases, hospitals. If you put that much extra money into the system with no caps, with no restriction on what either the health insurance funds can charge for their premiums or the hospitals and doctors can charge for the private services that they provide, there will inevitably be an escalation.

Any first year high school economist, let alone university economist, will tell you that. Indeed, a lot of work was done on this; it is not as though it came out of nowhere and no-one understood what the effects would be. So all of us, whether we have private health insurance or not, are contributing to something that is enjoyed by a minority—some 35 per cent to 40 per cent depending on the state; $1.7 billion is taken out of the public system provided by the 70-odd per cent who have no other form of cover and provided to the 30 per cent who have private health insurance. And in such a way, as the Prime Minister (Mr Howard) discovered, that you have no control over the cost. So there is an immediate escalation in the price of private health insurance, driven in part by the expectation of higher costs from doctors and hospitals. The Prime Minister panics because he realises there is nothing he can do about that and says, `In future, these increases will have to be the subject of prime ministerial and Treasury consideration, along with the health minister.'

This all happened when the health minister was away. I am sure had he been here it would never have occurred because he knows—and the Prime Minister has now figured it out too—that the last thing you want is political interference on an ad hoc basis on the price charged for private health insurance premiums as there are statutory requirements for those funds to hold certain reserves and their payments are based on the costs to them of paying the doctors and hospitals who are making claims. So it is not the private health insurance funds who are driving this, it is the hospitals and doctors in the private system.

The farce of the involvement of the Prime Minister and Treasurer (Mr Costello) has been revealed. By having said they wanted to control these private health insurance costs, they have now had to agree that they have no control over them whatever. The only way you can control these matters is by having some form of legislation in place to effectively change the way that that $1.7 billion is applied rather than having it simply slip into the system apparently unnoticed but with huge costs.

The benefit to the consumer of this rebate has disappeared already. We are only six months in and it has not even been applied. Before they get the benefit of the rebate the health insurance costs will have risen to totally absorb the costs of the rebate. This is a political decision, and the Productivity Commission is not the body to examine private health insurance. I doubt that they have the skills and, judging from some of their former considerations, certainly not the right attitude either.

I want to talk too about the pharmaceutical benefits because they are an insult added to injury, particularly the co-payments for pensioners. In the past, whenever co-payments were increased, we were very clear that there had to be a corresponding increase in the pension; they could not be absorbed by people on such low incomes and it was important to be fair and reasonable about this. These people have so little disposable income that, with the best will in the world, if you simply increase the co-payment without any corresponding change in their pension, even if they are only part-pensioners, then you significantly handicap their ability to purchase other services and goods that they need just to survive from day to day. Even with the safety net provisions, a considerable hardship will be placed on those older people, those on concessions who are not necessarily the ones using most of the service. In other words, they do not even get to the safety net level. Nonetheless, it will have a very significant impact on them.

The general increase has many of the same characteristics. It hits the people least able to afford it because it is effectively a flat tax. It effectively hits everybody in the same way regardless of their means. That is bad enough. But along with that change, which is very significant—you are talking about $323 million being saved by the co-payment for pensioners, the general increase contributing $179 million—is this mean little measure of the rounding provisions. I could not believe my ears when this came through in the bill. I quote the minister's second reading speech because it is entertaining to say the least. I do not know who wrote this but they should get a bit of a whack. If they are here in the House, I apologise to them. He says:

It has been of concern for some time that the previous rounding process worked against the interests of the taxpayer—

I could not believe that phrase—

and these changes are considered to be a fairer method of sharing the rises—

Fairer to whom? These people have so little in the way of resources at the moment that the taxpayers, generally speaking, would be more than happy to assist them in purchasing the medicines necessary for their health.

Listening to the member for Bradfield about why we have such overprescription and the importance of education, I agree with him about the remedies. We need to educate doctors, pharmacists and the general community about the dangers of inappropriate and excessive prescribing. But I always choke on the observation that you blame the patient first; that it is these dreadful patients who come up to you and say, `Doctor, I want a prescription for my viral illness'—a cold or whatever it happens to be—`and if you don't give it to me, I'll go to another doctor' and the doctor says, `Yes, Sir' or `Madam' as if they had no clinical judgment at all.

A doctor is in a position of authority and power and the patient will listen to them. To say, `I have to give the prescription otherwise the doctor down the road will' shows the morals of an alley cat. Most of the doctors I know will not do that. They say, `No, I will not provide you with a prescription. I'll explain to you why it would not be a helpful thing to do. I'll explain to you how you can manage the symptoms of your illness and together we will make sure that you recover as quickly as possible.'

To say that doctors are really the victims of the patients when it comes to overprescribing is to severely undermine the medical profession because it shows them as incapable of making sound judgments in the interests of the patients and, frankly, I do not believe it. It is just a way of shifting the blame because a lot of doctors are not as careful as they might be about prescribing—not because the patients are these horrible dragons who otherwise would take away their livelihood. The other changes that have occurred in the past in improving medical education, particularly about pharmaceuticals, need to be continued and expanded.

Just a couple of other elements, given the context of this change, that deserve some attention from the community at large. Firstly, the changes to the medical work force: there will be an opportunity to debate this further but the minister has been all over the shop on this; he does not really know where he wants to go. First of all, he wants to cut the access of medical students to provider numbers. When there is a huge outcry about that he says, `Hang on, we'll do that but not many of you will be affected because we'll cut off medical migration.'

I am very committed to the idea of reducing the number of people who migrate to Australia and then expect to practise medicine here. We increased the penalty for medical migration and made changes that ensured that the New Zealanders were not simply able to walk in here and take up a medical provider number.

Today the minister would appear to be saying that at the same time he is going to allow temporary resident doctors—I will have to check this—to sit the medical exams and add to the number of overseas trained doctors in the community. He has no way, as far as I know, of insisting that they stay in the country, where there is a serious undersupply of doctors.

I object very severely to these changes, not least because they come on top of some unhelpful and very callous cuts which undermine the very important principle of universal provision of quality health care.