Mrs CROSIO (11:20 AM) —I opened my Saturday paper a few weekends ago and was greeted with the sight of the Minister for Health and Aged Care smiling away, red-nosed in his dank wine cellar with a glass of red wine in his hand, as if all was right with the world and with his place in it. I will not venture my views on the unpleasantness of seeing him in that Saturday morning paper, but I can tell you I did not enjoy my breakfast.

Despite the minister for health's seemingly relaxed attitude to life and his portfolio, all is not right with the health system in this country. The minister might be satisfied with presiding over a health system in crisis. He might like to toast himself on his achieve ments at the end of the day with a very nice pinot noir, but the people who depend on the public health system in Australia and those who work inside that sector certainly do not share the minister's confidence.

They know that over the last three years this minister has presided over three dramatic changes to the private health insurance industry that have been nothing but unmitigated failures. And now we have before us today, in debating the National Health Amendment (Lifetime Health Cover) Bill 1999 , the fourth reform. All the while, the public health system has slid further and further into crisis. The minister, in his desperation, has even ploughed $1.7 billion of public money into the private health insurance industry, and yet all the while he has ignored the one thing he should have done in the first place: concentrate the government's resources into making public hospitals and Medicare stronger. As I said, this is now his fourth major change in less than four years. You would forgive our side of the House if we were not too confident in its outcome, knowing what has gone on over the past three years.

It all started, Mr Deputy Speaker, as you are well aware, in 1996 when the minister brought in the means-tested rebate for private health insurance, promising that it would fix the industry's problems. We all remember that. After 13 years in opposition telling us how they were `gunna do this' and `gunna do that'—they were great `gunnas'—to fix private health insurance, we on this side of the House expected at least to see some results. We saw some results all right—of the negative kind. The rebate failed miserably to arrest the decline of the private health insurance industry. It was egg on face time for the minister, and the first of many he was going to experience. The Prime Minister had promised an extra 1.8 million private health insurance members through this policy, an increase of 40 per cent. What he got was a good deal less. Only an extra 35,000 people took out private insurance, and that was for only one quarter.

The private health insurance industry has pulled the rug out from under the minister within weeks of his introducing the policy by dramatically increasing their premiums and basically making that rebate worthless. Indeed, the private health industry has been its own worst enemy during this whole health debate, increasing premiums by an average of 4.9 per cent, two to three times higher than the rate of inflation, and making the public wary of its intentions and the services that it offers.

Next the minister devised the one per cent Medicare levy surcharge, with the idea that it would force people on higher incomes to take out private health insurance. However, it was not too long before the minister realised that this idea was not up to scratch either. Soon after he had launched that policy, a secret minute from the minister's own department made it clear that the government was considering reducing the threshold at which the Medicare levy surcharge cut in—an admission, in anyone's language, that the original plan had failed and that more people had to be brought into the net. The one per cent Medicare surcharge failed because it did nothing to improve people's perceptions of the services offered by private health insurance. It merely attempted to herd people towards taking it up by introducing scare tactics and carrying a big stick in the shape of a tax penalty.

Finally, perhaps in desperation, the minister unveiled his biggest plan, and his most embarrassing and costly failure to date, the 30 per cent rebate scheme. The minister introduced the 30 per cent rebate scheme secretly hoping that it would bring an extra 550,000 people into private health insurance membership at a cost of $1.7 billion a year. Indeed, the private health industry itself was saying that 2.5 million new enrollees would result from this wonderful measure, lifting coverage to 45 per cent. It has, of course, not come close to achieving either of these objectives, that is, the 550,000 as indicated by the minister or the 2.5 million as indicated by the private health industry.

As the shadow minister for health said before, this has got to be the worst piece of public health policy in Australia's history. It is surely the worst targeted and most ill-considered policy to date as well. Of the $1.7 billion spent so far, $1.68 billion has gone to people already holding private health insurance—$1.68 billion paid for people already holding private health insurance. This means that over 99 per cent of the total cost of this rebate has gone to them. It is $1.68 billion just thrown down the drain. As the editorial in the Australian Financial Review recently stated:

The non-means tested $1 billion-plus rebate was really a very inefficient way of supporting private insurance because it went largely to people who were already insured for a wide range of reasons.

The government really should be looking at scrapping the rebate, which was born more as an election initiative than a reform.

If this money had gone into public hospitals, where it could have done some good, it would have helped an estimated 275,000 extra patients. Instead it has gone into the pockets of a select few people with private health cover.

It would not be fair of me if I did not admit that the $1.7 billion has indeed managed to add a few new people to the private health fund membership lists, `a few' being the operative phrase. It actually added a paltry 57,000 people to those lists. That is 57,000 people, when the government and the minister had hoped for 550,000. Fifty-seven thousand people stands for just a 0.2 per cent increase in the proportion of the population covered by private health insurance. That is how well targeted this government's spending of $1.7 billion has been. The $1.7 billion is spent, and all the government gets is that 0.2 per cent increase in the number of Australians with private health insurance. And the minister vainly tries to convince both himself and the rest of the country that this equals a surge—in his own words, a surge—in the sector's membership. This is also after trying to convince us that the $1.7 billion was not meant to increase membership after all; it was simply meant to arrest the decline in private health numbers. What a load of rot. Even if that was the case, does the minister genuinely think we should applaud the spending of $1.7 billion a year to simply tread water, to maintain the status quo in private health insurance numbers?

To paint a better picture of just how grotesque this waste of money has been, we should remember that the Productivity Commission's review last year of assistance offered by the Commonwealth to various sectors around the country found that total budget support for the primary production sector came to $823 million, while assistance to manufacturing was $1.4 billion. In other words, the government has thrown more money away—$1.7 billion—on a failed private health scheme, a scheme that has brought no benefits to the health system in this country, than it has given in assistance to either primary producers or the manufacturing sector.

There will be a future for the private health insurance sector in this country only when it recognises the need to convince Australians why private cover is such a good idea in the first place. If, as it stands at the moment, the products private health funds offer are regarded by the public to be poor value, the funds need to improve those services and products. Once these improvements have taken place, the government's role, if there is a role for it to play, could be helping the private health insurance industry get their message across—not trying to coerce people into investing money in a product that offers bad returns and bad results.

The wrong way to go about improving private health insurance numbers is using scare tactics or penalties in order to push people into private cover. This has been the minister's preference so far, and unfortunately this bill before the House seems to now continue that trend. The minister and the government continue to ignore the one basic truth about private health cover: you cannot coerce people into taking it up. This bill seeks to introduce lifetime community rating for private health cover and, as I said earlier, signals the fourth major change that this government has made to its private health policy in just over three years. Indeed, as our shadow minister for health noted in her speech last night, this government is very close to bettering Malcolm Fraser's feat of five health plans in five years. Given time, they will catch up and pass him.

Like the government's previous attempts at propping up the private health industry, the bill before us today features more of the same unfortunate trademarks. It has been poorly designed, it is based on penalties and punishment to push people into private cover and it is unlikely to meet the minister's or the government's targets. By offering an initial holiday period, the government is turning up the notch on the scare factor. `Join by this date and we won't penalise you; join after that and you'll be sorry,' is the stick they are wielding. It is attempting to scare people into buying a product that they often do not need and that some just cannot afford. It is also asking people, particularly our young people, to take a tremendous leap of faith that health insurance policies will remain the same and that they will be the beneficiaries in 40 years time.

That is not just the opinion of the opposition. Health academics and professionals and political commentators alike support that particular view. The architect of Medicare, Professor John Deeble, has said that he does not believe the scheme will encourage people into private sector cover at all. Indeed, he believes it will lock people out because they will be put off by the penalties that increase every year that coverage is not taken up. Brian Johnstone, spokesperson for the Australian Healthcare Association, says the government's plan `still does not escape the reality that the suites of products'—meaning private insurance and hospitals—`they are selling are not very attractive.'

Health policy expert from the Australian National University, Dr Gwen Gray, has criticised the targeting of the Lifetime Health Cover scheme by saying that it was just as likely to attract people who were unwell and used a lot of health care, when the minister's objective was to bring young, healthy people on board and subsequently reduce costs to the private insurers. Then there is Ross Gittins from the Sydney Morning Herald, who said:

There's so much potential for the scheme to backfire. Faced with an ever-rising cost of insurance the longer they delay, people may become less motivated to `take their medicine', not more.

And what about Russell Schneider, the chief executive of the Australian Health Insurance Association? Mr Schneider is someone the government would have depended on for his support of the scheme. His comments must have been a very severe body blow to the minister. Mr Schneider said that the scheme would not fulfil its objective of increasing private health cover membership among young, healthy people. He said, `Most young people under 30 can't afford it'—private health cover—`and most don't want health insurance anyway.' So why is the government chasing them?

What all these commentators seem to agree on is that whatever penalty the government imposes—which in this case is an additional 2 per cent charge per year for anyone over the age of 30 who joins a private health fund, increasing to a maximum 70 per cent for people joining at age 65 or older—people will not apply for private cover if they do not think it represents good value. To be frank, at the moment the majority of people do not believe it represents good value. A recent survey conducted in Melbourne's Herald Sun newspaper showed that 86.6 per cent of respondents thought private health cover was a waste of money. The Australian Bureau of Statistics tells us that there are 1.3 million Australians between the ages of 20 and 24, and yet only 8,609 took out private health insurance in the last quarter. That equates to just 0.6 per cent of all Australians of that age.

If people thought private cover offered them the health services they needed at a value for money price, they would quite simply join a health fund. The fact that they do not means the private health insurance industry needs to evolve to a position where it provides a product that is priced according to the benefits it offers. At the moment, many people, particularly the young and the healthy—those the government want to attract to private cover—consider that it is priced way above the benefits it represents. Private health cover's proper role in Australia should be to complement Medicare, not compete with it. Private health cover is there to play an auxiliary role to a strong public health care system. The private health insurance industry and the government should stop chasing after people who are not interested in private cover, and they should tailor the industry to become more attractive to those who might consider it necessary.

As the shadow minister for health has already explained, the opposition does not oppose the principle of lifetime health cover, and we will not be voting against the bill in this House. However, the bill certainly falls short of the minister's so-called `last great reform' of the private health insurance industry, and we will give it our detailed consideration in the Senate. One aspect in particular that concerns our opposition is the current clawback provision which exists under the Australian Health Care Agreement, especially if the government intends to use it to withdraw more funds from the public health system and redirect them towards the private system. The clawback provision in the AHCA is a critical clause that states that, where private health insurance exceeds a particular trigger level of 34.3 per cent nationally, the states start to lose Commonwealth funding for public hospitals. If the participation rate gets to 36 per cent, the states stand to lose $200 million or more if the rate moves higher. While such an arrangement may save the government money, it may prove disastrous for an already financially strapped public health system.

Increasing levels of private health insurance cover do not necessarily suggest that less people are using public hospitals and can therefore operate on reduced Commonwealth funding—the department of health has admitted as such—and this is the case for two reasons. Firstly, the young people that the government hopes to encourage to take up private cover rarely use hospitals. In other words, young people who may take out private insurance are not opting out of using public hospitals for private ones. They do not usually need any hospital at all—period. Secondly, lower cost policies with a high patient contribution have been marketed to attract people who would otherwise pay the Medicare levy surcharge but in most cases still intend to use public hospitals should they get sick. Take further funding away from the public health system as private cover numbers rise, and you place the system under even greater strain.

This bill is introduced into the parliament during a climate of concern and crisis in the health system in this country. Public hospitals and Medicare are under strain like never before. We have seen the government throw away $1.7 billion on a failed private health initiative—a scandal for which this Lifetime Health Cover scheme is designed in no small way to cover up—and now we hear whispers concerning the sale of Medibank Private and even more ominous sounds from the government's friends concerning means tests for entry into public hospitals. Medicare and an adequate and accessible public health system should be the health priorities of this government, and we in the opposition will not let the government run away from this responsibility.

Private health cover should exist for Australians who want it, who need it and who can afford it. The two, as I said earlier, should complement each other, not compete—and certainly not compete for Commonwealth funding. There should be only one priority in this regard—public health. Above all, we, as the opposition, will not allow the government's changes to the private health insurance contained in this bill—and whatever it plans for the future—to reduce the public health system to a shell of its former self. We will be watching very carefully and putting forward amendments in the Senate to make sure that, if this is the government's agenda, it will not succeed.