Senator LEES —My question is to Senator Herron, the Minister representing the Minister for Health. Minister, do you agree with the statement made by your colleague Dean Brown, South Australian Liberal Minister for Health, that the federal government has:

. . . failed to understand the needs and the growing demand of Australians for health care and is ignoring the reality of what is occurring in public hospitals.

Isn't it true, Minister, that this government does not particularly want to understand what is going on in the public system and that you do not care, because what you are planning to do, and indeed what you are doing, is deliberately starving Medicare to death in the hope that people will shift over into the private system? How else can you explain the massive cuts, now in the billions of dollars, that your government has made to the public health system?

Senator HERRON (Aboriginal and Torres Strait Islander Affairs) —I thank Senator Lees for the question. No, I do not agree with Dean Brown's statements because, as you know, Senator Lees, you and I were both around when the previous government was in office when the same charade went on with the states over the Medicare agreements. It is standard practice for the states to come along and demand more money.

Senator Patterson —And posture.

Senator HERRON —And posture. Thank you, Senator Patterson. This goes on every time. It is a natural progression that occurs, where the states come along and cry that they are poor when in fact in many cases—and I refer to one state—they have boasted how they had cut the amount of funding that went to the public hospitals because of the money that had come from the federal Medicare agreement at the time. You will recall the deals that were done, because you were on the community affairs estimates committee when we considered the previous Medicare agreement.

To answer the second part of your question, I would like to read from a statement made by a previous health minister:

As every person pulls out of private health insurance, the profile worsens for those left in. The sick obviously are going to stay in and so the premiums go up. More and more people get pushed out. As they get pushed out, the premiums go up more. It just feeds on itself the whole time, and it is going to come to a crunch point because as they leave private health insurance they are dependent on the public hospital system.

No more, no less than Senator Richardson when he was health minister. I think that if you do not accept my explanation, you will accept his explanation.

Of course there are increased pressures on the public hospital systems of this country. The reason that it occurred is that those opposite left it in tatters and forced people out of private health insurance. As I started to say yesterday, but Senator Forshaw would not let me, 61 per cent were in private health insurance when the Labor Party came into power and by the time they left it was down to about 35 per cent.

Those opposite are responsible for the effects on the public hospital system which were brought about by their de-funding the private health system by removing the bed day subsidy. They gloated about that at the time, how it was going to socialise medicine in Australia because that was the ideal—to have everybody in the public hospital system. But, allied with that, there is something that is not their fault—it is to the credit of the medical profession, as much as anything else in this country—the increasing longevity of people, where two-thirds of the health care expenditure goes on people over the age of 65.

The fact of the matter is that we have got a rapidly ageing population which is causing increased pressures on the public hospital system of this country. We recognise that as a government. In fact, the offer to the states is three per cent over what they had last time, and there is an increase in recognising the difficulties there.

But the reality is that the states have to put money into the public hospital system because it is their responsibility to do so. A fair offer has been made by the federal government to them which they have not accepted—as you know, the previous government went through the same episode before. This happens on every occasion. The states come along crying poor. They come to the federal government, demand funds and say it is the Commonwealth's responsibility, but the reality is that the states have a responsibility in this regard and they have got to devote resources to the public hospitals.

I am delighted to say that in Queensland they are. There is a major rebuilding program going on under the present state government, which is to their great credit. There are new hospitals being built right throughout the state. When the Labor Party was in control, they were deliberately run down and capital expenditure decreased to less than three per cent. (Time expired)

Senator LEES —Madam President, I ask a supplementary question. Minister, you may accuse the states of posturing, but isn't it the case that you have cut some $700 million out of state grants, $400 million from the public dental health system and $700 million from the PBS—and so it goes on? Isn't it really the case, Minister, that the basic health policy of your government is to starve the public system and to push people into the private and then, if that does not work, to blame the private health insurance system failures?

Senator HERRON (Aboriginal and Torres Strait Islander Affairs) —That is almost a laughable supplementary question. I would have thought that Senator Lees would have a better understanding of the situation. The public hospital systems and the private hospital systems of this country worked when there was equilibrium—about 50 per cent in either system in my own state. Anybody who was around 20 years ago knew that the system worked very well. Then the Labor Party ran it down by removing bed day subsidies.

The Commonwealth government has offered $30 billion, compared with $23 billion paid over the last five years, and $27 billion in the current forward estimates. So it is ridiculous to say that there is less money being offered. There is not less money being offered. We believe, on the other hand, there needs to be a reversal to that equilibrium that occurred before. Anybody who is listening to this broadcast would know that, 20 years ago, there were not the problems that exist today, because the private and the public hospital systems were in equilibrium, and our subsidy was designed to keep people in, to raise the number of people in private health insurance so that they could afford the private hospitals.