Dr WOOLDRIDGE (Health and Aged Care) (12:34 PM) —in reply—I thank honourable members for their contributions in this debate. The National Health Amendment (Lifetime Health Cover) Bill 1999 introduces an important structural reform to ensure the continuing stability of both public and private health sectors. It is a policy with long-term rewards for Australians and the system will benefit the whole country. This is not a quick fix or a bandaid solution; it is based on a recommendation that came out of the Industry Commission inquiry into private health insurance in 1997. We have developed and refined the scheme through comprehensive actuarial modelling and extensive consultation with consumer and industry groups since 1997.

Lifetime Health Cover is a carefully considered part of an overall plan to improve the performance of the private health insurance industry in the medium to longer term for the benefit of all Australians, whether or not they choose to take out private health insurance. Both the public and private health sectors in Australia are under pressure. When Medicare commenced in 1984, its long-term viability was predicated on a viable private health insurance sector. Neglect of this sector over many years has created unsustainable pressure on the health system as a whole. By seeking to stabilise numbers in private health insurance and improve the risk profile of people with private hospital cover, Lifetime Health Cover will improve the stability of the private health insurance industry and ease the pressure on the public hospital system.

I note in some of the comments that have been made throughout the debate that there have been certain allegations made. I will comment very briefly on some of those. My first comment concerns the motives of the government in doing this. We saw from the Industry Commission's report in 1997, now the Productivity Commission, that one of the big difficulties that private health had was adverse selection, that is, people who are older and sicker tend to—the honourable member should stay for a moment—be the ones who stay in and this leads to a bad risk profile. If we can improve this, it will have two effects. The first effect is that it will slow premium increases. This does not mean that it is going to happen overnight. The Trowbridge report suggests that it will happen over a decade, but it also suggests that premiums will be roughly 10 to 15 per cent less than they would have been if nothing had been done.

The second reason for doing this is to stabilise health fund membership. This has proved particularly difficult, although we have certainly had some success in reducing the number of people who have dropped out of private health insurance. I notice that the Labor Party was very happy to dance with glee after one quarter's results—to pronounce what we had done as a failure. Things take much longer than that, and with Lifetime Health Cover it will be three to five years before we get the full effects, but we do believe it will slow the drop-out rate and we have very good evidence that this will help stabilise health fund membership.

The member for Rankin made certain comments about a speech which the Prime Minister made in 1987. The Prime Minister certainly does not walk away from this speech, made 12 years ago. As someone who has been his health minister for over three years, I can say his views now are very different. We have no plan now or at any time in the future to dismantle Medicare and for the member for Rankin to suggest any further measures to dismantle Medicare is quite misleading.

The only thing that has put Medicare under pressure is the neglect that happened with Medicare over many years by allowing costs to blow out in an unsustainable manner, so that when we came into government we had the PBS going out at 6½ per cent per year compound.

Ms Kernot interjecting—

Dr WOOLDRIDGE —Yes, we have been stunningly successful, more successful than any other OECD country. We now have the long-term rate of growth of health under GDP—something you could only ever dream about.

Finally, the member for Rankin mentioned ensuring that the health system is adequately funded. Certainly, the system does need to be well funded. The Health and Aged Care portfolio is a large amount of money, about 15 per cent larger than the budget for the state of Victoria. We have been able to put substantial amounts of new money into areas of importance. One is the public hospital system where, over the five years from 1998 to 2003, there will be a 17 to 19 per cent real increase in funding over the previous five years, 1993 to 1998.

This is the reason why, at a state level, health is not as much of a contentious issue as it was in the first half of 1998. This agreement is in place, substantial new money is flowing into public hospitals and states are finding that they now have resources to do things they were never able to do under the previous agreement with the Labor Party. Quite frankly, the Labor Party had conned the states.

This bill is a substantial reform. We have thought it out carefully. I think we have all bases covered. There is provision for hardship. There is provision for different groups like the Defence Force, people who may be overseas and people who leave the country for various lengths of time. We believe it is a fair and equitable system and commend the bill to the House.

Question resolved in the affirmative.

Bill read a second time.