Ms MACKLIN —My question is to the Minister for Health and Aged Care. Can the minister explain to the House the assumptions behind the government's figuring of the cost of the private health insurance rebate in the tax package? Could the minister specifically address whether the costs of additional people taking up private health insurance as a result of the rebate are being factored in, and does it include a continuation of the eight to 10 per cent per annum increases that the minister yesterday conceded would continue from next year?

Dr WOOLDRIDGE (Health and Aged Care) —I thank the honourable member for her question. On the issue of the eight to 10 per cent increase, we have not factored in a number of that order because they are the figures that applied under the Labor Party. Of the increases that have happened over the last 10 years, nearly 40 per cent of those increases are due to specific changes the Labor Party made to make private health insurance less attractive, such as abolishing the bed-day subsidy and reducing the rebate for in-patient services from 85 per cent to 75 per cent.

So the increases have been much higher than in previous years as to what they would have been had you left the status quo in place. This has put a much greater burden on those people who have private health insurance. A large proportion of them are low income earners. The other point I would make is that we are not doing this to hit some sort of artificial level of people in private health insurance. This is a tax cut. We are making private health insurance tax deductable. That is what the public want, so that is what are going to give them.

Opposition members interjecting—

Mrs Crosio —Who is subsidising the tax cuts?

Mr Martin Ferguson interjecting—

Mr SPEAKER —Members on my left are denying the member for Wannon the call, and the member for Batman knows much better than he does.