Senator FORSHAW (10:56 AM) —The issue before us today is a choice between playing politics or good health policy. Good health policy demands that the government devote adequate resources to the public health system. It also requires that we endeavour to strike the appropriate balance between the public hospital system, Medicare and the private health insurance industry. The government seems hell-bent on diverting substantial sums of taxpayer funds from the public health system, from public hospitals, from the states—who have the responsibility for managing those hospitals—ultimately into subsidising private health insurance funds.

It has been a disturbing trend of coalition conservative governments over many years that, in their ideological objection to Medicare, they have followed this path. It must be remembered that it was a Labor government back in the 1970s that introduced Medicare—then known as Medibank. It was Malcolm Fraser, when he was Prime Minister and John Howard was his Treasurer, who abolished Medibank. Whilst the government stands up and talks about the levels of private health insurance membership today and how they may have fallen, what they do not say is that, when they were in office between 1975 and 1983, they left 30 per cent of the Australian population totally uninsured. There was no universal health coverage system. There was no Medibank, because they abolished it. So many hundreds of thousands and, indeed, millions of Australians had no health cover at all.

It was only when the Hawke government came into power in 1983 and Medicare was introduced that once again we had a universal health coverage system, a system whereby all Australians could have access to decent, quality health care, particularly when they most desperately needed it, when illness or accident suddenly struck. It is in those circumstances that you need a decent, high quality, affordable, accessible public health system. Australia today stands, and has done for many years since the introduction of Medicare, as a world leader in providing the best of public health coverage.

This government, however, in its short 2½ years stripped some $2.6 billion out of funds available for the health system in this country. It took around $800 million out of public hospital funding in its first budget by slashing funds to the states—and the states were forced to find the money to make up that shortfall. It abolished the dental scheme, a scheme worth around $400 million which provided urgent dental care for persons who were unable to afford it. It took an incredible $1.4 billion out of the Pharmaceutical Benefits Scheme, making many necessary drugs and treatments far more expensive.

On top of that, they introduced the health incentive scheme, a scheme, they said, designed to encourage people back into private health insurance. They claimed that it would increase the rate that was declining. In reality, private health insurance membership did not increase at all—despite the $1.6 billion or approximately $650 million a year that was earmarked to be provided for that incentive scheme—but fell even further to its now lowest level ever of just over 30 per cent. That scheme was a failure, which was acknowledged by everybody, whether a Labor supporter or a conservative Premier. Indeed, many experts in the health industry recognise that it was a failure.

When the last round of Medicare agreements were being negotiated, what were the states unanimously calling for? Whether they were conservative or Labor governments, they were calling for greater funds to be directed into the public health system because needs were not being met through increasing waiting lists as a result of this federal government's failure to provide adequate funds.

This current proposal would provide a 30 per cent rebate with no means test to persons with private health insurance. So those people who have had to drop out of private health insurance because they were unable to afford the ever increasing premiums or were unable to afford the huge gaps that exist between the level charged by doctors and the amount refunded through private health insurance will suffer even further. This is a scheme which will reward all of those people who can afford to have private health insurance. The high income earners, and many of us in this parliament who are in private health insurance and who have stayed in it, will be rewarded whilst those who cannot afford it will not be in any greater position in terms of being able to access private health insurance. There is no means test and, furthermore, there is no discrimination at all between the types of coverage for which the rebate will be paid.

Coalition ministers such as Senator Herron have talked about how they believe the previous scheme reached a position where health insurance membership had plateaued and was on the increase. That is what we were constantly being told by Senator Herron, representing the Minister for Health and Aged Care in this chamber. Yet, at the Senate Community Affairs Legislation Committee's hearing on 4 December, the evidence of Mr Schneider, representing the Australian Health Insurance Association, was that it was declining and was continuing to decline irrespective of the government's measures.

So one has to ask the logical question: why should throwing more money at this system work? Of course the answer is that it will not. Until we are able to address the fundamental problem of private health insurance in this country—that is, the issue of the gap—these sorts of schemes will simply not work. Whilst it might be very attractive and it might be seen as good politics to pay substantial amounts of money by way of a rebate to the 30-odd per cent of people who have private health insurance, it is certainly not good health policy.

Everyone knows that the major problem with private health insurance is that you pay your $2,000-odd a year for your family cover and you get your doctor of choice but, after you have had elective surgery in a private hospital, you often find that, whilst your hospital costs may have been met, your medical costs have not been met because the surgeon has charged well in excess of the schedule fee. The private health companies pay a refund of only 25 per cent of the schedule fee. Further, they do not cover the gap between the doctors' fees and the schedule fee. It should be remembered that private hospitals have the benefit of the fact that, for all the medical procedures that are undertaken in private hospitals, 75 per cent of the schedule fee—that is, the costs of the surgeon, the anaesthetist or whomever—are met out of Medicare, they are met out of public funds. So we are already providing substantial support to private hospitals.

I just want to finish on two other points. Everyone knows that, whilst we do need, and we on this side support, a strong private hospital system that complements the public hospital system, first and foremost the objective of government is to support the public health system. I hear time and time again of situations where after people have gone into a private hospital for an operation, something serious has developed following that procedure and they have been very quickly transferred, in some cases just across the road, to the public hospital.

It is a fact that many private hospitals do not provide all of the facilities that can be obtained in a public hospital, whether they be crash carts or the sorts of intensive care units that patients in a critical condition may need. Essentially, we are providing huge amounts of money to support private hospitals, profit making enterprises, dealing largely in providing elective surgery at the expense of much needed funds that should be in the public hospital system.

The final point I wish to make is this: I obtained some information about where in New South Wales private hospitals are located. It is very interesting to note that, of the 85 private hospital licensed establishments in New South Wales, 23 are in the northern Sydney area, eight are in the central Sydney area and 15 are in the south-eastern Sydney area. That is, over 50 per cent of private hospitals in New South Wales are located in areas which are in northern, eastern or central Sydney.

It is no wonder that people in rural and regional areas, in western Sydney where they only have five private hospitals, in south-western Sydney, or in the far west where there are none, according to this table, are screaming out, saying that they want decent hospital systems in their regions rather than huge amounts of funds being diverted into private hospitals which ultimately will be accessed more by the higher income earners of this country than by the general public.