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Monday, 20 October 1997
Page: 9189

Mr KELVIN THOMSON(1.25 p.m.) —Regrettably, the mover of this motion, the member for Stirling (Mr Eoin Cameron), came forward with absolutely nothing in the way of suggestions which would solve the kinds of problems that he was referring to. I and other members are happy to support any motion before the House which recognises the intrinsic value of the private health insurance system in Australia. Quite clearly, Australians want choice in health insurance. Labor governments have given them that choice—first through the establishment of Medibank under the Whitlam government and, a decade later, through Medicare under the Hawke government.

Choice means the capacity to realistically choose one of a number of alternatives. If people cannot afford private health insurance, then they do not have a real choice in private health insurance. Indeed, my recollection is that, when the Hawke government came to power, some two million Australians were without health insurance of any kind at all. They were uninsured. The choice was entirely meaningless so far as they were concerned.

That is one of the reasons why Medicare enjoys very widespread public support in Australia. It is something that political conservatives in Australia are not anxious to admit, but it is beyond dispute. It took them a long time in opposition to recognise it. After their 1993 election loss—their most serious election loss—opposition leaders were coming out and saying, `We have to recognise what people want. People do want Medicare, so we are no longer going to put up a policy of scrapping, dismantling and whittling away Medicare.'

It would seem from the rate at which people are departing the private health insurance system that Medicare's popularity continues to grow. Across the country, people, in particular young people, are deciding that the benefits that private health insurance companies deliver are simply not worth the premiums being charged.

It is absolutely wrong for the member to pretend that the previous policies were defective and failed. Government members should not try to rewrite the history of this now that they are in government. You opposed these things when you were in opposition, but after 1993 you were forced to change your policies and say, `No, we are going to support Medicare in government. We are not going to tinker with it; we understand that it has community support.'

The ongoing feature of people leaving the private health insurance system has created a substantial problem for the government and the Minister for Health and Family Services (Dr Wooldridge), who, by his comments last week, is starting to feel the political heat of what were opportunistic and ill-considered promises made prior to the last election.

The government committed itself to bolstering private health insurance rates by offering a rebate. It is a fact of history that the value of that rebate has vaporised in the space of just a few months. What we have seen is $1.7 billion of taxpayers' money being hosed up against the wall, disappearing in a stampede of premium rises. What is fascinating about all this is the new language of the minister for health. Until last week, the government was happy for the success of its health policy to be judged by its success in stopping the decline in private health membership.

The minister for health told the Sydney Morning Herald at the start of last year that, if the coalition's private health insurance policies were a flop, the voters in Chisholm would vote him out—shades of Amanda Vanstone. It is time for the minister to start packing his bags because the Herald-Sun of last Monday reports the minister conceding that the government's actions might not halt the continuing exodus of fund members. In other words, the whole basis of the coalition's health policy is now in tatters.

It is said in some quarters that the Labor Party is opposed to private health insurance. This is totally incorrect. Labor is absolutely comfortable with allowing Australians to choose their level and their type of health insurance.

What the Labor Party wants is more affordable private health insurance premiums, and affordability is affected by two things. First, and most obviously, it is a function of price. We have seen prices rise dramatically over the past year. I have had many approaches from constituents concerned at the premium prices. For example, at the end of last year I was approached by a distressed constituent who was having great difficulty affording a premium rise of 18 per cent. These premiums are set to increase again. I suspect that that constituent has joined the increasing ranks of former private health insurance members.

Affordability is not only a function of price, it is also a function of income. This is a point that I do not think has been sufficiently understood by the government. Recently, there was an article by Ted Waters, general manager of Mercantile Mutual Life Insurance, entitled `Aging and health care costs: who pays the piper?' I would recommend that article to all members. Over the next 50 years, health costs in this country are likely to double—mainly as a consequence of our ageing population and also as a consequence of advances in medical technology—from under nine per cent of GDP today to 17 per cent in the year 2041. Referring to the National Commission of Audit, Ted Waters contends:

Based on current projections health expenditure will rise from the current levels of 15% of the federal government budget to 30% by 2041.

There is an overwhelming probability that government thinking on health care will have to change dramatically before then because I do not think any member of this House would honestly believe that the federal budget could sustain 30 per cent outlays on health for any period of time. The increase in health services expenditure is closely related to the ageing of the Australian population. Waters wrote:

The weighted health service consumption rate of males are doubled for an 85 year old compared with a 70 year old and in turn the 70 year old consumes twice the health services of a 50 year old.

Currently, 13.5 per cent of health fund members are aged over 65 with a projected rise to 23 per cent by the year 2010. It goes without saying that older people, as the highest consumers of health services, are the group in Australia most interested in maintaining the coverage. At the same time, many in this group on fixed incomes are the least able to afford that cover.

I indicated earlier that private health insurance coverage is determined in part by affordability. Older people are encouraged, through a greater incidence of ill health, to take it out but discouraged to take it out because of their fixed incomes. The challenge for government is to look at ways of ensuring that retirement incomes are adequate to permit older Australians that choice of health insurance. So the issues of private health insurance and superannuation policy are inextricably linked.

This parliament makes decisions that will affect the retirement incomes of Australians well into the next century and no discussion on the future of health insurance can proceed without, at some point, having regard to the likely retirement incomes of Australians into the next century.

The country's concerns about the private health insurance system are predicated on a notion of static retirement incomes, but what we really need to do is boost retirement incomes. Private health insurance has to be more affordable in future. How affordable depends in part on the efforts made by the government to boost superannuation.

In Australia today we have direct payments by individuals accounting for 17 per cent of health services, which equates to $335 per man, woman and child in Australia. Waters postulates that this burden is going to rise dramatically in today's dollars in the years ahead. Where is this additional income going to come from?

Unfortunately, we see here not what the government can do, but what the government has chosen not to do. Last year, in a monumental backflip, the Howard government abandoned its election promise to match Labor's superannuation co-payment. Under Labor's scheme, employee contributions to superannuation are going to three per cent by 1999, a valuable addition to the nine per cent employer contribution being phased in. The government was committed to moving towards a 15 per cent superannuation payment rate by the year 2002. The Liberal Party, prior to the last election, endorsed Labor's plan for a government payment but, once in office, chose to scrap it and replace it with a mickey mouse rebate. Under the coalition plan, an employee who contributes $1,000 per annum to their own superannuation scheme receives a $150 rebate which they may or may not choose to put into the scheme. This means less being put aside for employees in their retirement. What we are going to have as a consequence is retirement incomes substantially lower when they need to be higher. (Time expired)