Senator CHRIS EVANS (3:50 PM) —I think the issue that I have raised before the Senate today is a matter of great public importance. Just the other day we received the first report card on the government's health insurance rebate scheme. That report card came in the form of the statistics for the March quarter, indicating what effect the rebate had had on membership. By any measure, the result did not live up to the expectations of the government, nor justify the massive amount of government funds spent on this policy.

It is interesting that a few weeks ago Russell Schneider, the executive director of the health insurance industry association, made this prediction about the impact of the rebate:

The March quarter result is going to completely validate the government's decision to introduce the rebate. The jump is certainly going to be more than 100,000, and that is just based on the preliminary sampling.

Russell Schneider was out there talking up the success of the scheme. It just so happened, for the interest of those journalists who ran the story, that it coincided with the lodgement of the industry's application for what I understand to be a six per cent increase in premiums. I am not sure whether those two events are connected, but it was interesting that while Mr Schneider was out there talking up the prospective success of the scheme, the funds were in there for their chop, for another six per cent increase in premiums, which I understand the minister will approve effective from next month.

The minister's view at this time was to say that we would have to wait until the official figures came out next month before making any comment. He was very keen that we not have this debate until those first quarter figures were released.

Those figures have been released. We now have a proper analytical assessment of the success or otherwise of the government's private health insurance rebate scheme. The figures show that only 57,000 extra people were covered by private health insurance in that three-month period. To put that in perspective, the number of people covered by private health insurance has risen from 5.68 million to 5.73 million—a 0.2 per cent increase. To meet the government's modest membership target of 33 per cent participation, set by the Prime Minister, a further 510,000 people would have to have joined. The rebate has barely reached 10 per cent of the government's own modest target set for the scheme in the first three months.

We have proof positive that the scheme is failing to achieve its objectives. I know the government will say we have got to wait longer, but their message up until now has been: `Let's have a look at the March figures.' Industry funds were out there saying, `One hundred thousand plus. It's a great success.' But when the hard data came out we found there were 57,000 new members. That is to be welcomed—no-one is saying that we do not welcome that participation in private health insurance. But we have to make an assessment about whether this is good public policy, about whether the investment of $1.7 billion of taxpayers' money in order to gain that result is a good use of that taxpayers' money. We have got to assess whether we have a strategic policy, well thought out and well implemented by this government, or whether we have a series of ad hoc measures, throwing money at a problem in the hope that something will work.

It is quite clear, I think, from these figures that the government is vainly throwing money at the problem. It is also worth noting that the March quarter is likely to be the best quarter for membership increases, given that the government spent $7.5 million of our money advertising the rebate in the lead-up to its introduction, and that people were more likely to respond in that initial advertising stage and while it was receiving a lot of free publicity through debate within the community. But we have had a very disappointing result.

The government have since been trying to talk down the result; trying to put a different spin on things, trying to steer us away from examining those hard numbers. But the Prime Minister said when pushed that a 33 per cent participation rate would be the result of this measure—that is, 550,000 new members would be achieved. What we have got is 57,000. We have a very minor improvement in membership as a result of one of the largest financial incentives ever given to private industry in this country. As I say, the minister is now trying to change his tune by saying, `Oh, well, we'll need to wait a bit more time. We'll have to wait maybe 12 months until we can see the full picture.' In a sense that is right, I suppose—we will get a fuller picture. But the early indications really do give a fair indication of what will be achieved by this measure.

The government know the rebate has failed. They are out there making even more new policy announcements about private health, trying to distract attention from a proper assessment of this particular measure. The minister has announced the introduction of no-gap policies and lifetime health cover, and the government is now indicating that the rebate was only ever intended to halt the fall in health fund membership.

So we have gone from the private hospitals talking up 45 per cent participation rates, Mr Schneider talking about over 100,000 new members in the first quarter and the government talking about increasing private health insurance by a minimum of 33 per cent, to now being led to believe that all they were really trying to do was halt the fall in membership, halt the decline. They were not actually trying to improve the percentage; they were spending that $1.7 billion of taxpayers' money just to halt the decline. I do not think the Australian public are that gullible. They know what claims were made for the scheme. They know what the government said it would deliver. They will make an assessment about whether it is good public policy on what it does deliver. It is clear from the first quarter figures that the rebate is not delivering the sort of outcome required to justify the massive expense of public funds pumped in to prop up private health insurance in this country.

The minister now describes the rebate as a `stopgap measure'—$1.7 billion as a stopgap measure. That is not $1.7 billion once; it is $1.7 billion every year to prop up private health insurance. Every year we are going to spend $1.7 billion that could otherwise have been spent on the health budget, that would almost have eliminated waiting lists in public hospitals in this country, on propping up private health insurance. What have we got to show for it? Fifty-seven thousand more people have joined private health insurance. Often they do not take out full cover when trying to escape the tax impost. A lot of them have taken out cheap and nasty cover, and they will still access the public hospitals. But we do have 57,000 more people with private health insurance.

As I say, we in the opposition accept the need to try to encourage some participation in private health insurance. But we have said all along that the government have not had a strategy for this. They have not got a well thought out, coordinated approach to encourage private health insurance membership. They have got a series of ad hoc measures of throwing money at the problem, hoping that something will work. This measure is badly targeted and is clearly not working.

The government have got form on this issue. They should have learnt from their last failure. Who could forget that their last insurance incentive scheme, the PHIIS, was also a complete failure. They introduced the previous scheme at a cost of $450 million a year, predicting that it would increase membership from the then 32 per cent participation to 35 per cent participation. It was an understatement when the department admitted that they had got it wrong when assessing the effectiveness of the previous scheme. The reality is that membership continued to fall from 32 per cent to 30 per cent. They spent $450 million a year and membership continued to fall by about 330,000.

At the Senate inquiry into this rebate the department could not offer any reassurance that they would be any more accurate in predicting the impact of this rebate. They just do not know. They spent $1.7 billion of taxpayers' money on the basis of no research, no modelling, no analysis. They just hoped that, where $450 million had not worked, $1.7 billion might: `You keep throwing money at it and something might work eventually.' That is not a policy, that is not a strategy; it is a desperate attempt to prop up one's own ideological convictions.

On both sides of this debate we argue that the other side is ideologically driven, but let us look at the facts. Let us take that sort of heat out of it and look at exactly what is happening. We are going to spend $1.7 billion and we have 57,000 new members. The government, when forced to name a target, went for an increased membership of 550,000. That is a very modest target. I would have argued that $1.7 billion for only 550,000 new members is not a satisfactory result, that it is not a good policy outcome, that we are not getting a bang for our buck. To get 57,000 members for $1.7 billion is a joke. It clearly is not working.

The government need to have a proper strategy, a proper thought-out policy, and not just keep throwing money at the problem, announcing new initiatives by the day and pretending that they have a strategy. How many more announcements are we going to have that they are going to solve this? How many more times can the minister make an announcement about how he has another idea or proposes another bill to come before the Senate? There is evidence of the failure of the previous scheme. There is now evidence that this scheme is not going to meet even the most modest targets set for it by the government.

The private hospital industry claimed that the rebate would increase membership by 45 per cent. I do not think anybody seriously maintains that claim any longer. The Prime Minister went for a very cautious estimate, as he described it, of 33 per cent. The reality is that both these estimates and predictions were plucked from thin air. When the department has been asked about any detailed work being done to evaluate the likely impact of the rebate, the answer has been there is none. They do not know. The government have not got a plan or any modelling. They do not know. They are going to casually throw $1.7 billion at the problem and hope that something happens to somehow fix the problem.

There is a range of reasons why it is not working. One of them will rear its ugly head again in June: the health funds will be increasing their premiums. That will again eat into the rebate discouraging new members while encouraging existing members to leave. So any net increase in the subsequent quarter is likely to be small. The whole idea of the rebate was to make it more attractive for people struggling to pay the premiums. If you are going to pay a rebate and then take it back by increasing the cost of the premium, clearly you are not going to get the result you were seeking to achieve. We are seeing again the same cycle of increasing premiums driving out members, which leads to further premium increases because the rebate does not address the fundamental problems with private health insurance.

We also have to remember that every new initiative the government announces—no-gap policies, lifetime cover, et cetera—will lead to higher premiums and therefore increase the cost of the rebate. They built in this flaw where we pay 30 per cent of whatever the funds charge. So for every new idea that comes on stream and every new cost built into the system we are going to pick up 30 per cent of it. It is like a blank cheque, with no results required from the industry. The government just shrug their shoulders and say, `Oh well, we've only got 57,000 new members. We were a bit more hopeful of a better result, but it's too bad. We'll just keep pouring the money in'—pouring it into a bucket with holes in the bottom. This is not public policy; this is not a strategy for health insurance or health care in this country.

We could do much better with that money. If this is all we are going to get for $1.7 billion—a mere 57,000 extra members—then clearly we could use that money much more effectively. Some of us argued that we could have used it more effectively at the start. The government now has the evidence that this is a waste of taxpayers' money, that it is not achieving even the most modest of targets and that we are going to continue to waste huge amounts of taxpayers' money which is sorely needed in other areas.

Senator Crowley, I and others met with the disability sector today. They are crying out for some assistance to meet unmet demand, to help families who cannot cope with their disabled children and cannot get services for their disabled children or respite care. There was not one cent in the budget to assist them.

Senator Patterson —Wrong; absolutely wrong!

Senator CHRIS EVANS —Sorry Senator: $20 million over four years. The government's own report said they needed $300 million per year. They just did not come up with any leadership or any answers, because they had spent all the money on propping up private health insurance. So every disabled child out there and every other person needing access to the public health system or who is on a public hospital waiting list knows that the government have spent this money propping up private health insurance. It was money that could have gone into the public health system, it could have gone to people with disabilities, it could have gone to proper public policy outcomes.

As it is, we have 57,000 people encouraged to join the health funds at a cost of $30,000 each. This is a public policy failure. The government must immediately reassess its objectives and reassess the proposal to see whether it can come up with a proper strategy for health insurance in this country, not just throw more money at the problem, announce another new scheme and another new policy. (Time expired)