Mr LEE (9:07 PM) —I might pick up on a few comments made by the member for Kooyong tonight. He basically claims that this legislation is good public policy. The reason why his argument is flawed is that he has not understood that, whether or not people have private health insurance, when they are really sick they turn up at their local public hospital or they are taken to their local public hospital by an ambulance. Two-thirds of Australians rely completely on the public hospital system and the one-third of Australians who have private health insurance also rely on the public system if they are really sick. That is what you have never understood.

Where tonight is the real crisis in the Australian health care system? The real crisis in the Australian health care system is in public hospitals—it is in public hospitals where this government has implemented federal funding cuts which have meant that waiting times have increased.

Mr Truss —Rubbish!

Mr LEE —The member opposite interjects and says `rubbish'. You go to public hospitals in New South Wales that have been hit by this federal government's arbitrary cuts in federal funding for that state's public hospitals. Just go back and read what Health Minister Horan of the Queensland National Party government had to say about this federal government's inadequate Medicare offer. Just go back and look at what Victorian Premier Kennett said about the federal government's offer. Ask Dean Brown, the South Australian Minister for Health, who said that he was forced to sign the health care agreement but that it was still inadequate to meet South Australia's needs for funding that state's public health system—Dean Brown, the same state Minister for Health who said that they were suffering Third World conditions in the South Australian public hospital system because the Howard Liberal government was not prepared to put the funding needed into the public hospital system.

So, at a time when the public hospital system is in dire need, we have this government rolling up legislation into this parliament to spend an extra $1.2 billion or more a year on private health insurance subsidies. And, even if we accept the government's arguments, we are entitled to ask: what is the likelihood that this $1.2 billion additional subsidy for private health insurance will work?

It is usually pretty popular to give money away to people; I accept that point. But the point that those opposite have to sustain is that it is good policy. The Minister for Health and Aged Care let the cat out of the bag yesterday when, in response to a question from the member for Jagajaga, he made this remark:

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.

That is what this is all about; this is a tax cut, a handout to people whom this government wants to target. It is all about tax cuts. It is not about fixing up the crisis in health. It is not about fixing up the crisis in public hospitals. It is a handout to people living in a number of electorates, including the constituents of the member for Kooyong.

Mr Georgiou —It's not true.

Mr LEE —This is a rebate that, basically, is being offered to battlers; it is giving battlers something that you know they cannot afford.

Government members interjecting—

Mr DEPUTY SPEAKER (Mr Mossfield) —Order! I ask members on both sides to direct their remarks through the chair.

Mr LEE —Mr Deputy Speaker, the claim is being made that this rebate is being offered to everyone. But you know as well as I do that this is a rebate being offered to battlers for something they cannot afford; and it is a handout to wealthy people for something they already have.

If you look at the member for Kooyong's figures, more than 70 per cent of people on more than $70,000 a year in your electorate already have private health insurance. Giving those people an extra $600 a year in a tax break does not actually increase dramatically the number of wealthy people who have private health insurance in your electorate; you are giving them a handout for something they already have. Yet, for the battlers who live in my electorate and that of the member for Banks, those families cannot afford $2,000 a year to insure their members.

Mr Truss —They voted for it.

Mr LEE —They voted 49 per cent or less for your proposal; and voted 51 per cent or more for Labor's plan to put public hospitals as our first priority.

Government members interjecting—

Mr DEPUTY SPEAKER (Mr Mossfield) —Order! The House will come to order.

Mr LEE —They voted 51 per cent two-party preferred for an increase in the Medicare levy on high income earners to raise the extra money to fix up the crisis in public hospitals.

But anyway, Mr Deputy Speaker, let us just accept their argument that in some way we can fix the crisis in public hospitals by increasing the level of private health insurance; for the sake of argument, let us just assume that bogus argument. The problem they have is that we have tried this experiment. In the last parliament, two years ago, we were here saying that, if only we spent $500 million a year in health insurance tax rebates, we would increase the level of private health insurance and that would take the pressure off public hospitals. That is what those opposite said. With $500 million a year, they promised us lower premiums and increased membership, and that it would take the pressure off public hospitals.

What did we see? Health insurance premiums did not go down; they went through the roof. Health fund membership did not increase by 3.7 per cent, as promised by the minister for health in the documents that he signed and lodged with the parliament with the 1996 budget papers—it did not go up by 3.7 per cent. We are now at a record low of 30.3 per cent of Australians having private health insurance; and the pressure on public hospitals has increased. So all three promises—lower premiums, an increase in fund membership and pressure being taken off public hospitals—were broken with the experiment of spending $500 million a year on health fund rebates.

So, having failed with their $500 million rebate, what is their answer? An election approaches and they are desperate to put forward some policy, any policy, on health insurance—`What can we do? Well, the $500 million didn't work; let's multiply it by three; let's increase it to $1,500 million a year in health fund rebates.' This is what Prime Minister Howard says: `We guarantee that it will reduce your premiums, it will increase fund membership and it will take the pressure off public hospitals.'

The problem is that that ignores the experience that Australia has had over the last two years. When you introduced your last rebate, Jeff Kennett gave it a year and he saw that it had no effect whatsoever; Jeff Kennett said that your last rebate was `money down the drain'. Richard Court, Premier of Western Australia—no friend of the Labor Party—said that it was a dud. The AMA said that the money should have been spent directly on patient care rather than in rebates. Even your own Productivity Commission inquiry did an analysis on your plan.

Mr Georgiou interjecting—

Mr LEE —Yes, you were quoting the Productivity Commission; you should have looked at page 88. Page 88 explains that, even if the government had been successful in raising the level of private health insurance by 3.7 per cent—which is what the minister for health promised in those documents that he signed in the 1996 budget papers—the Productivity Commission found that the total annual savings for the public health system was $240 million but that you would have to spend $560 million. So you would have to spend $560 million to get a $240 million saving or, in other words, you would lose more than $320 million. So the Productivity Commission found that it was an inefficient way to increase private health insurance, assuming you got an increase of 3.7 per cent—and we did not get an increase. We had a straight line decline. Sure it was declining under Labor—and it declined under you.

The big difference is that under Labor we were not wasting $500 million a year on a rebate that flopped. It is a straight line under us. It is a straight line under you, but the difference is that you have wasted $500 million a year. Your solution is to triple that. Let us get the straight line going even lower, with a tripling of the amount of money we are wasting on that rebate. You would think that after using this amount of money on these rebates and their having failed to take the pressure off public hospitals they would have learnt. Spend the money directly on patient care. Spend the money directly on public hospitals to reduce waiting times, to help people get the care they need in the public system. Even if you had spent the money on public and private hospital treatment you could have made a difference, instead of wasting this money giving tax concessions to people who already have private health insurance.

If they had spent the same amount of money, this extra $1.2 billion, in picking a million Australians at random and giving them free private health insurance, at least there would have been an increase in the coverage of private health insurance. That is the problem that this government have. They have so little confidence in this proposal that they are not prepared to tell us what increase in private health insurance membership this will generate. In the last parliament at least they predicted that, if they spent $500 million a year, they would get an increase of 3.7 per cent. But they have had their fingers burnt on that one. It was not a 3.7 per cent increase; it was almost a 3.7 per cent decrease.

Having been burnt in the last parliament, we have the health funds running around saying, `We might get an increase of up to 40 per cent.' We have the Prime Minister saying, `I'm pretty confident there will be an increase of some sort.' But the health minister, who was the one burnt in the last parliament, is saying, `I am pretty confident we can stem the rate of decline in private health insurance.' We are going to spend $1.5 billion a year to try to stem the decline in private health insurance. If we had used the same amount of money, we could have made such a difference. We could have paid for so many operations in both public and private hospitals. We could have done something about the crisis in the Australian health care system—those excessive waiting lists throughout the health care system.

The point we want to make is that this rebate is unfair in the way it is structured. The reason it is unfair in the way it is structured is that there are a lot of battlers out there who are now getting $450 a year as their private health insurance rebate. Those people get only an extra $150 because of the new scheme. Let me give an example. A family living in Berkeley Vale in my electorate paying $2,000 a year for private health insurance now get $450 as a tax rebate. Under your new scheme, under the new proposal which the member for Kooyong describes as good policy, that family will get an extra $150. They will go from the current $450 to $600.

Mr Georgiou —And you're sneering at that!

Mr LEE —What I am saying is that they get only $150. If you have private health insurance—and I do have private health insurance—we will go from zero, because under the current means test we are not entitled to the rebate, to $600. You and I will get a benefit of $600, whereas the battlers in Berkeley Vale will get only an extra $150. The lower your income, the less benefit you get from this measure. If you are on the Prime Minister's salary, you will get the full whack, the full $600 or $750 depending on how expensive your private health insurance is.

That is what we say is essentially unfair in this measure. People who are on high incomes get the biggest benefit under this proposal. The member for Kooyong was trying to justify that by saying that, during the years when private health insurance was declining, the high income earners were the people who left. His argument therefore flows that we have to give the biggest benefit to the high income earners, which is exactly what this proposal is designed to do. It will give $150 to the battlers in Berkeley Vale and $600 to the people who are not battling in Kooyong. That is the first point to make.

On the 7.30 Report tonight I heard the Minister for Health and Aged Care claiming—and I thought I had heard a lot—that people who are richer are actually healthier. So it is better to have a scheme that gives bigger rebates to rich people to get them back into private health insurance because they are healthier. Bad luck if you are a battler. They do not actually want you joining health insurance because you might be sick. Health insurance is not about helping sick people; it is about helping healthy rich people get a tax rebate under this mob. That is the point to make.

The area that this government has not been prepared to address is gaps. Despite the claims of the minister for health that gaps are not a big issue for members of private health insurance funds, let me tell you that gaps are as big an issue as health fund premiums. Until the medical profession and the health funds are prepared to sit down and negotiate contracts for more hospitals and more doctors, people will continue to leave private health insurance. That straight line will continue until the medical profession and the health insurance funds are prepared to grasp the nettle and solve that problem.

The Lawrence legislation has allowed that for a number of years. The AMA has been conducting a campaign I think since the member of the Bradfield was the head of the AMA. The member for Bradfield is the next person to speak in this debate. I would encourage him to tell us whether he agrees with the Minister for Health and Aged Care that the AMA should be encouraged to sign more contracts with their health funds or whether he subscribes to AMA official policy that this is American style health management. We would like him to declare where he stands on this issue. One of the few areas where I have agreed with the current Minister for Health and Aged Care is that of welcoming the contracts that have been signed at a number of hospitals in Melbourne and, most recently, at Brisbane Waters Private Hospital in the neighbouring electorate of Robertson.

The great problem is that the AMA has fought a rearguard action to discourage and pressure doctors not to sign these contracts with health funds. Frankly, I think the health funds have not been prepared to sit down and talk turkey with the doctors to work out a way to have zero gaps. At the end of the day, if the medical profession is not prepared to work out a sensible working arrangement to set reasonable fees for their medical services and private hospitals, private health insurance will keep declining. If they do not solve this problem, the biggest losers will probably be the doctors because patients will vote with their feet. They might have been members of a health fund for decades but, when they finally go into a private hospital or a public hospital and use their private health insurance and are treated as private patients and receive all those bills, they make the decision—often very reluctantly—to leave their private health insurance fund because of the gaps. The gaps are a big issue. We need to apply some shock therapy to the health funds and the AMA to get them to wake up to themselves and work out these contracts, because the gaps are as big an issue as the health fund premiums.

In the months leading up to the election campaign, we had all these leaks that the government was actually going to do something about gaps. Remember all those stories? I am sure the member for Bradfield was not the source of the leaks to the Sydney Morning Herald day after day which said, `Stay tuned; there is a big initiative coming to fix up the gaps' or the leak to the Australian saying that the gap package would be released any day—it was all set to go; all they had to do was dot the i's and cross the t's. We kept waiting for this new initiative on gaps to arrive. It was too hard. This package that was all set to go was scrapped. We do not know whether it was scrapped due to the influence of the member for Bradfield—who we know is a very influential member in the government backbenches—or whether it was a result of the Prime Minister pulling the pin on the minister for health's package. We know that the Prime Minister is the one who loves these tax rebates on health insurance; that was his policy. So, if the health minister put together the package on gaps, maybe that was the reason the Prime Minister pulled the rug out from under the health minister's gap package. But, whoever pulled the rug out, we never saw the package on gaps.

If we had seen the package on gaps, my bet is that it was not going to force the doctors and the health funds to face up to their responsibilities and save patients those massive out-of-pocket gap payments. It was going to be up to the ordinary battlers—the ordinary taxpayers—to reach into their pockets and give more money to surgeons who are on very high incomes. That is how the government proposed to fix up the gaps—not to force the funds and the doctors to sign contracts and reach agreement on a fair remuneration for a service provided in a private hospital.

I would like to challenge the member for Bradfield to declare where he stands on contracts. I would like to challenge him to write a letter to Australian Medicine and Australian Doctor and tell doctors that they should wake up to themselves and sign contracts with all those health funds. That is the way to guarantee that private health insurance again becomes attractive to people who have left over the years. And that does not require a massive taxpayer subsidy at a time when public hospitals are in crisis. It requires doctors and health insurance funds to face up to their responsibilities instead of expecting Australian taxpayers to fork out another billion dollars a year in subsidies for private health insurance.

Taxpayers are expected to fork out another billion dollars a year at a time when this government says it cannot afford $100 million to restore the Commonwealth Dental Health Program. There are pensioners out there who cannot chew meat and have to eat mince and drink soups because they have to wait more than a year for basic preventive dental care. The government and the minister for health say they cannot find $100 million a year to put back into dental care, yet they are prepared to put 10 times that amount into subsidies for private health insurance. They are prepared to give the Prime Minister and other people on high incomes $700 a year but they are not prepared to put a measly $100 million a year into restoring the Commonwealth Dental Health Program.

We say that is not good enough. It does not recognise the fact that two-thirds of Australians rely completely on the public hospital system. Even the one-third of Australians who have private health insurance rely on the public hospital system when they are really sick. The public hospital system should have the first call on any spare dollars in health today. That is where the crisis is and that is where the money should go: directly into patient care rather than into more failed subsidies for a scheme which you all know is bound to fail.