Mr TANNER —My question is to the Minister for Finance and Administration. Do you recall the Prime Minister's confirmation that he expects the proposed private health insurance rebate to lift fund memberships by 2.7 per cent? Do you recall the health minister's claim that, without the rebate, membership levels would fall to 20 per cent over the next five years? Could the minister explain to the House what measure of the price elasticity of demand for health insurance was used in these calculations and in the costings of the proposed rebate?

Government members interjecting—

Mr TANNER —Perhaps you could explain to them what `elasticity' means while you are at it.

Mr FAHEY (Finance and Administration) —That is a ridiculous question. What the Labor Party refuses to recognise—because it suits its purposes to refuse to recognise—is that the benchmark that all Australians must work from in respect of private health insurance is the trend terms of recent years. There has been a reduction in private health cover which, if it were not arrested, would clearly see those numbers go down from the current level of 30.3 per cent to about 20 per cent. With the level of private health insurance cover at some 20 per cent, the taxpayers of Australia would be required to contribute $2.5 billion under the current Commonwealth-state health agreement. That is something this government is not prepared to stand by and let happen.

This government recognises that a dual system is vitally important for the best health cover for all Australians and that is why we made the decision, which was clearly announced to the Australian people before the last election, to provide the 30 per cent rebate. We have indicated in this House what the assumptions led to in terms of the arrest of that decline and the fact that that will contribute to the dual system, which is vitally important and in the interests of all Australians in terms of health delivery.