Dr NELSON (3:33 PM) —Australia's health care system has evolved from very powerful egalitarian principles, the vehicle for which has been a strong health insurance ethic. Coupled with a deep mistrust of socialism, which dominated the political landscape domestically from the early 1930s till the end of the Vietnam War, it prevented the nationalisation of Australia's health care system.

When Medicare was introduced in 1983, 65.8 per cent of Australians held private health insurance. At the end of the September quarter this year, it had declined to 30.3 per cent. On average, 315 people left each day till the end of the September quarter, but during the 13 years of Labor governments—the Hawke and Keating governments—the loss was between 800 and 1,000 a day. As a result of the private health insurance incentives scheme implemented by the Howard government after the 1996 election there are between 250,000 and 300,000 Australians who have private health insurance today who would not have if it were not for the initiatives undertaken by the government.

There are two reasons why there has been a decline. The first was that, after 1983 till 1996, the Labor government withdrew all financial and all political support for private health insurance. In 1986, they withdrew the private hospital bed day subsidy, worth in 1996 dollars $235 million. In 1987, the following year, they forced the private funds to cover 25 per cent of the Medicare benefit schedule fee when a privately insured patient went into a private hospital. That added another $215 million to the cost of private insurance.

From the time the Labor government was elected in 1983 through to 1987 it systematically withdrew its contribution to the reinsurance pool, which covers the risk of insuring people over the age of 65. One of the inflationary pressures on the private funds has been the changing risk profile of those who have it. Clearly, older people who believe they are more likely to need private health insurance have held it, whilst younger people who are fitter and healthier have dropped it. That measure added another $220 million to the cost. Then in the late 1980s insurers were forced to put protheses and other devices on basic tables.

We just heard the member for Jagajaga talking about privately insured people leaving public hospitals and this allegedly saving some $250 a day. The previous Labor government forced privately insured patients out of public hospitals. In 1991, nine per cent of public hospital budgets were raised by treating privately insured patients. Today it is less than three per cent.

The Medicare agreements that were signed in haste by the health minister Brian Howe late in 1992 actually factored in a disincentive for public hospitals treating privately insured patients. So two things happened. The income derived by public hospitals for treating privately insured patients—people who had already paid their taxes, already paid their Medicare levy and then paid private health insurance—was systematically reduced. At the same time, the costs imposed on insurers were quite significantly increased as those privately insured patients went into private hospitals.

The total cost, according to Access Economics, of the withdrawal of financial assistance by Labor governments between 1983 and 1996 was $1.2 billion—in other words, the same dollar value as we are budgeting to put into a 30 per cent private health insurance rebate to those Australians who choose to look after themselves and their families, having made a commitment to public hospital provision through the Medicare levy and general revenue.

The second reason we have got to this position today is, as I said, the withdrawal of political support. Brian Howe was the health minister in the Hawke government. In April 1992, Mr Howe, the then Deputy Prime Minister and health minister, said:

Private health insurance makes an insignificant contribution to health care financing.

This is despite the fact that at the time it was raising $3 billion for health whereas the Medicare levy was raising $2.5 billion. This year, the Medicare levy will raise $3.6 billion. The privately insured include 700,000 people earning less than $20,000 per year—God knows how they do it—and two million people who earn less than $30,000, and 800,000 people over the age of 65. Those people are continuing to pay private health insurance despite the fact that they were more or less told by Mr Howe, as the then Labor health minister, that they should not be having it—their money in fact was making a greater contribution than the Medicare levy.

On 13 October 1992, Mr Howe, as the health representative of the Labor government, told me when I suggested to him that measures ought to be undertaken to support private health insurance, `Brendan, if you want to change anything that this government is doing, you'll have to change the government.' In other words, he was saying, `We aren't listening. The shutters have gone up. We're not the least bit interested in doing anything to support private health insurance.'

If you read the papers over the Christmas period in 1995, you would have found that four Labor luminaries of the Hawke, Keating, Wran and Whitlam genre were booked into one of the most prestigious private hospitals in Australia. I congratulate and admire them for doing it. However, what really gets in my craw is when those same people then go out and say to the rest of the country, `You don't need private insurance and we're not going to do a damned thing to help you buy it.' In the 1993 election in the second week of March, Paul Keating, the then Prime Minister, from the Royal Adelaide Hospital said to Australians, `You don't need private insurance. People are wasting their money. Medicare can cater for all your needs.' Yet at the time he was reported to be worth something like $5 million. I am still trying to work out how you make that sort of money here.

Graham Richardson, who is honest about quite a lot of things, said that the problem the Labor Party has involves ideology. That means that you are doing something which is irrational and insane because you have an ideological bent. On 20 November this year, on 2GB radio in Sydney, Richardson said:

I think part of the problem is that ideology gets in the road, and it does on issues that have anything to do with Medicare. The Labor Party sometimes doesn't act too sensibly. There is an ideological bent there.

That reminded me of the member for Jagajaga, who is the current health spokesperson for the Australian Labor Party in the federal parliament. She has derided what we are trying to do to support private health insurance. She was quoted in the book authored by Mr Bob Browning, Exploiting Health , in these terms:

A self-declared socialist, Macklin's career included having been coordinator of the socialist Left dominated government subsidised think tank, the Victorian Labour Resource Centre.

He went on to say that Macklin was one of a collective of 10 that in 1984 organised meetings to establish a new broad Left coalition committed to helping develop effective strategies for socialists in Australia. As a speaker at the 1983 Marx centenary conference, Macklin declared:

What does the dismantling of capitalism and the building of socialism involve? It is all too clear that spontaneous uprising is not around the corner. Planned insurrection is only a dream in some people's heads. We are talking about transformation, and the essence of this is that it is a strategy for a war of position, where we can gradually make incisive interventions into the sovereignty of capital.

Mr Ronaldson —Who said that?

Dr NELSON —This is the shadow minister for health, today the member for Jagajaga, in 1983 speaking at the Marx centenary conference.

In 1985, Macklin left the Labour Resource Centre to become ministerial adviser to the then Victorian state minister for health, Mr David White. The Labour Resource Centre congratulated her on her new appointment, saying:

Over the last four years, Jenny has been instrumental in establishing the LRC's program, which involved attempting to make socialist ideas and principles work on the ground.

That is what Graham Richardson is referring to when he talks about ideology.

Private hospitals will continue to flourish whether private health insurance survives or not. The ones in regional and rural areas will certainly collapse. The large ones that have a much better casemix in large cities will not only survive but flourish. But the people who will be using them will not be 70-year-old pensioners who, through no choice of their own, spent 40 years living in a public housing flat. They will be people who can afford to pay cash to go in there and those people with wealth who can continue to maintain private health insurance coverage.

As private hospital operators are only too aware, we are sitting on the edge of a $US250 billion per year health economy in East Asia estimated to increase by 70 per cent over the next three years. If private health insurance coverage in Australia collapses, there is a ready market very close to our doorstep.

I also have to wonder about the motives of some of the people who are voting against this in the Australian Labor Party. I would not like to be the member for Kingston. He has a margin of 382 votes, yet 38,580 people in his electorate are privately insured. He will have to go back to them and say, `I voted against you getting 30 per cent of your private health insurance premium back.' I would not like to be the member for Bruce, who has never worried anybody and I do not think ever will. His margin is just over 5,000, yet he has 34,733 people in his electorate who are privately insured.

In terms of the costings, the member for Jagajaga—a confirmed socialist, we understand—believes that an estimate of 33 per cent of people with private health insurance, if the rebate is introduced, would be a terrible thing. When she was chairing the national health strategy, she argued, amongst other things, for a single national insurer. In other words, there would be no role for any insurer in Australia other than a government monopoly one. The target for private health insurance of the ALP is zero.

I worked as a medical practitioner servicing the second poorest socioeconomic area in the country for nine years, where there is 13 per cent employment and three generations of welfare dependency. Many of those people, who are Labor voters, desperately struggle to hang on to their private health insurance. They do so not because they want to get their hip replacement done when they think it is convenient or to get their veins done over Christmas. They do so because when they have a stroke, get acute back pain or get serious problems—at least in their terms—with limited social support, they can get a hospital bed when they need it. They are not going to spend 10 hours down at the public teaching hospital, which is already on bypass for ambulances because it is overloaded, knowing that they will be sent home seven or eight hours later.

That is why they buy their private health insurance. That is why, on the day Mr Keating said that you did not need private health insurance because Medicare could look after all your needs, a woman who was a part-time cleaner in the office of a then Labor minister said to me, `I go without food to pay for it. It is so important to me to have private health insurance that I go without food to pay for it.' The secretary of the Tasmanian Pensioners Union confirmed with me at the time that it was not an isolated case.

The costings of the rebate are $1.2 billion. Personally, I hope it will cost more because, if it does, it would mean that considerably more people have taken out private health insurance. If we allow private health insurance to drop to 20 per cent coverage, which means a further 1.9 million people dropping out, it would cost us $2½ billion extra over the life of the next Medicare agreement. That means that the minister who is sitting down in 2002 to negotiate the hospital financing agreements for 2003 through to 2005 is going to have to add a minimum of $5 billion to the base before they even start negotiating with the states. The costings are based on a one per cent population growth and an annual premium increase of around four per cent—which is considerably less, I might add, than what occurred under those Labor years when, as I said, everything was done to actively discourage people from having private insurance.

But this is not the only thing that we are doing. We put a Medicare surcharge on high income people that do not take out private insurance. If you do not take out private insurance and you earn a decent income, you can kick the Medicare tin a bit harder. That is a good thing. We have facilitated the negotiation and development of contracts between doctors and hospitals. We are now piloting 20 programs across the country of no gaps and simplified billing. We are now allowing the funds to offer loyalty bonuses.

In the end, I think the Labor Party needs to understand that Medicare is in no way threatened by reducing the length of the queues. Medicare would be threatened if we allowed people not to make a contribution to Medicare. The Labor Party, like an arsonist returning to the scene of the crime, is here to sabotage the fireman's hose in the form of a 30 per cent relief on premiums for many, many low income battling Australians. (Time expired)