Mr JENKINS (1:24 PM) —I rise to speak to the Private Health Insurance Incentives Amendment Bill 2004. The purpose of this bill is to increase the private health insurance rebate from 30 per cent to 35 per cent for people aged 65 to 69; and to increase it to 40 per cent for people aged 70 years and over. This was a commitment made by the Prime Minister during the election period, and I think that is one aspect we really have to analyse: what was the purpose of making this commitment during the election period? I think that one could say that, at the end of the day, regrettably, this was just one part of a large swag of proposals put forward by the Prime Minister as a bid to buy votes. We have contradictory views about what really is the benefit of the bill. When interviewed on 3AW, the Minister for Health and Ageing said:

That was 23 August, the day after the Prime Minister launched this policy and said:

Was the Prime Minister being more honest and up front in admitting that this was about an additional payment or—if I can describe it as such—an additional bribe to older voters? Or is it in fact what the health minister would have us believe, and that is that it has some purpose in health policy—that it is a contribution to making our health system more efficient? I think, unfortunately, in this case, the Prime Minister would appear to be closer to the mark. And that is the tragedy of this legislation—a piece of legislation that has a cost of around $450 million a year.

One of the debates that we need to continue to have if we are going to spend these large amounts of money is whether the money can be directed more efficiently to get better outcomes for improving our health system. I think that we need greater contributions to the debate than the sorts of contributions that we have had here today that decry the opposition’s genuine attempt during the election campaign to put forward an alternative proposal, the Medicare Gold proposal, to extend and build on the success that has been Medicare and Medibank.

In the minister’s second reading speech, he indicated that the people who will benefit from this bill are a generation that believes in self-reliance. He said:

Thirty years ago, when Medibank was put in place—when there was no universal health cover—it did not take much self-reliance to understand that private provision through private health insurance was something that should be looked at. This is a generation that can remember an era before Medibank, when access to all aspects of the health system was dependent on a person’s ability to pay. We forget this sometimes. Perhaps one of the reasons that younger people are not enamoured with private health insurance is that they know that the universal provision gives them access to what is acknowledged to be a fine health system—a system that we can make better. But when you hear the stories of the people of the generation that this bill is attempting to benefit, people who remember when it was not only the journey to the general practitioner but also any subsequent admission to hospital that was dependent upon a person’s ability to pay, you see that it was a different era and a different mind-set that people had to have. Thank goodness we have moved on from when a patient could be in the ward and the hospital arbiter came along and negotiated a fee and decided to what extent a patient would be a charity case. Sometimes there really needs to be a recognition of what the health system was like a short time—30 years or a generation and a bit—ago.

The figures show that private health insurance take-up is directly inversely related to a person’s ability and household income. The member for Bowman neatly aggregated figures to one-thirds to try to make it appear that the percentages were not that far out of whack. But in households where the income is under $20,000 there are 23 per cent of people with private health insurance, and in households with incomes over $100,000 the percentage is 84 per cent—and the points in between form a curve that just goes up. That is a different statistical analysis to that given by those opposite in trying to justify that there is not much difference. It is clear that there is a great difference. It is even clearer if we look at the age of the people in those households. It is acknowledged that older Australians already have a higher percentage, no matter what their income is. And those who have had private health insurance will get the benefit of the increased rebate.

But if in fact it is as Minister Abbott suggests—that is, that this is an attempt, at a cost of $450 million a year or whatever the figure is, to increase the level of private health insurance in the age groups in question—let us look at the capacity and the ability to pay, just on the basis that, for those aged 65 to 69, there will be a five per cent differential or, for those over 70, a 10 per cent differential. Then, let us look deeper and take in other aspects of the policy, because, in different circumstances, the cost of private health insurance can be quite considerable and quite different for people in similar circumstances. That is because of the lifetime health cover penalty. For example, a 68-year-old person who wants to take out comprehensive cover might pay in the order of $1,400 a year after the 35 per cent rebate. If they had bought private health insurance before July 2000—and therefore were not subject to the lifetime health cover penalty—they would pay only $845. If we are really serious about tackling the problem that the government suggests that we have with providing health services to older Australians, let us go to things like that. So the incentive in this bill for people to take out cover really loses all impact.

Older Australians are aware of what has happened since the private health insurance rebate came into existence. They are aware that it has not curtailed the way in which the premiums have increased. Again, this goes against what was suggested at the time that this policy was put in place. If in the past the Prime Minister and the ministers responsible have not been able to assess the impact properly, why should we believe that on this occasion they are going to do any better? Why should we believe that there will in any way be downward pressure because of these rebates? In fact, if we look at the different costs for treatment of different age groups, it is clear that there will be greater pressure if this bill is successful in increasing the numbers taking out private health insurance in the age groups that we are suggesting.

Some of the justification that is given for a measure like this that is targeted at older Australians is that the government has re-found its Intergenerational Report of 2002-03, which was put down in the 2002 budget. We have the Treasurer going around the countryside saying ‘demography is our destiny’—that is his catchcry—‘and these are the issues that we have to look at.’ But in an interview on the ABC on Thursday, 25 November, what did the Treasurer say about health costs by age group? He said:

That was the Treasurer setting out the facts.

During the election campaign, when Labor talked about Medicare Gold and indicated that, because private health insurance hospital cover would be taken over by Medicare Gold for older Australians, premiums should drop for younger Australians due to the differential between the amount of resources required, it was pooh-poohed. But that is what we are facing. We acknowledge that senior Australians will have this impact. I say to anybody who suggests that any of the proposals that are put forward are unaffordable: does that mean that we should give up?

The differential between the costs for older Australians and the costs for younger Australians will not change because of the way that the bills are paid. The differential will not change if they are paid direct from public coffers, if they are paid in a shandy between private and public provision or if they are paid directly by private provision. Basically, the core of those costs is about the treatment that is involved, its complexity and the way medical technology makes treatments available.

The challenge for Australia—having acknowledged that fact—is to be serious about the way the effort is shared. We have a system that has the complication that the public provision and public effort, under a federal system, is shared between the Commonwealth and the states—and that brings with it certain problems. It is also shared because we have private provision and public provision. To the extent that those opposite champion private provision and self-reliance, it is consistent that we have a piece of legislation like this because it is an attempt to encourage a shift across that divide.

But is it the most efficient way? It is not often acknowledged or mentioned now that the 30 per cent rebate was put in place because of the crisis we had with waiting lists for people to gain treatment in hospitals. The 30 per cent rebate now goes across the wide range of things that private health insurance provides, but at the time it was introduced it was an attempt to acknowledge that waiting lists in hospitals were a problem that needed to be tackled. All we hear about now is that it is about the magical limits and the percentage of the population that has private health insurance, without going into what that means. At best, the evidence is conflicting about the effect this has had on waiting lists. I believe it has had a negligible effect on waiting lists, on the basis of the stories and cases that come through my office. So until we get back to trying to set goals which are achievable, which we understand and which are not at the periphery, we are never going to tackle some of these issues properly. We are never going to tackle them properly unless we have the bigger debate.

We have a system that is based on the 30 per cent rebate, which is support of an industry sector—the health insurance industry—which indirectly leads to provision of health services, and we never understand what is lost by putting in these measures with the steps removed. When people suggest that perhaps it would have been better if the money had been directly given to the health system—that it would have been more efficient—again, people think that is nonsense. It is the aspect that is overlooked in the discussion on Medicare Gold, which was about creating efficiencies, avoiding the nonsense of duplication and avoiding the nonsense of competing interests between federal and state governments—which mean nothing to older Australians; they just want access to treatment. If there is a measure that can bring savings of $500 million to $600 million to the system, shouldn’t we be looking at that? But, no—in the argy-bargy after the election, we just throw it out; it is not worth continuing the debate. That is nonsense; it is worth continuing the debate.

The other aspect I want to go to relates to the comments the Treasurer has made about the response to the Intergenerational Report, which he has now picked up on again. In an interview on the ABC, in tackling the ‘demography is destiny’ question, he said:

If we are dealing with it in ‘small licks’, I would like to be assured that the small licks, when aggregated, are actually moving in the same direction. I am not sure that they are, and I do not think the Treasurer knows whether they are. I think this is piecemeal. When measures come out of the blue during an election campaign, I simply ask: what is going on? Where is the context for these measures? Has there been development of policies that this might be one part of? What is the next move from this government? Do they know? I do not believe they do. I say to the Treasurer: forget about the small licks. I agree with the ‘early on’ bit, but let us get the solution up front. If he has to put in partial measures, I am happy to do that—if the resources are not available—but do not have this nonsense that we are going to do it in small licks when the small licks do not relate to each other. That is the aspect that is destroying this debate about public policy: it should be in context. If the Australian public are to have a whole system that is effective, they deserve that we operate that way. (Time expired)