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Tuesday, 1 June 2010
Page: 4784

Mr TUCKEY (5:13 PM) —The Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2010 has been represented as a simple measure. It is a measure that has occurred in all years bar one. It proposes to address two issues related to the Medicare levy per se and the Medicare charges, which were altered during the years of the Howard government for good reason. Of course, that has been sustained by this government in its desperation to find any amount of money possible to fund its failed health policies. Quite properly, the levy and the thresholds involved do not call upon low-income earners to make a contribution to the health budget of Australia if they earn income below the level referred to in the legislation.

There may be a reason that the parliament deals each year with those amounts of money when it is openly admitted that they are adjusted to the consumer price index. The consumer price index is, of course, known. Often the adjusted amounts in this circumstance are increases in real terms. The parliament continues to make this adjustment and records it in the Hansard on an annual basis. As I said, there was no adjustment in only one year, and, of course, that was a year in which the CPI demonstrated a negative movement.

It is interesting to note in that regard, and as a consequence of that period under the Howard government when inflation, with all of its debilitating effects, was just about wiped out of the Australian economy, that it became apparent that pensioners, for instance, needed a new index, which became known as MTAWE, which is, as I recollect, a 25 per cent proportion of male total average weekly earnings. This is an arrangement that is of importance because it adjusted people’s pensions to a figure more commensurate with the huge increase that was occurring in real wages under that disgraceful scheme known as Work Choices—so blackguarded in this place. But the real increase in wages for workers, and of course their employment opportunities, were huge during that period and it was appropriate consequently to ensure that pensioners could better meet the cost of living that arose in those circumstances by being given a percentage of male total average weekly earnings.

This legislation deals firstly with the circumstances of pensioners, and, of course, even fully-fledged age pensioners have additional income from time to time. It sets out in the tables to be found in the explanatory memorandum the threshold after which persons must pay the Medicare levy at a rate of 10c in the dollar for every dollar they earn over and above the threshold until such time as they pay the full rates applicable.

Nevertheless, the surcharge is of much more interest to me inasmuch as it was an initiative of the Howard government which I had argued for in 1998 with a policy that, in the first instance, recognised the foolishness of the argument of community rating, where a young and healthy person was obliged, and is still obliged, to pay the same private health insurance premium as a more elderly person. Of course, when it comes to the business of health and the cost of delivering health services, age is a major contributing factor where the costs increase rapidly.

The first point was that it became patently obvious that people had worked out the system and the system was this: while you were young and healthy and unlikely to be affected, other than if you had a car crash or some sporting injury or fell under a bus, to use a common term, then in fact you had to pay the levy unless you were one of these people we are dealing with today whose income was lower than that. The threshold is quite low—an income that does not exceed $18,488 in the adjusted schedule for taxable income or family income. Until then the levy does not apply. But you paid it, as you had to, and you took the risk on ever having to get in the queue for a public hospital.

Usually the form of injuries that people suffered in their youth guaranteed them access to a public hospital, even if it were, for instance, a premature heart attack that might be visited upon someone in their 30s or 40s. Under that community rating principle, and at a time when you turn, say, 50 or 60 and your knees or hip joints were starting to give you some pain and suffering or you required other treatment, which was termed elective surgery, you went and joined a private health fund. Of course, the private health sector under the Hawke-Keating government was getting loaded up with people for whom they could not increase the premiums above the community rated premium, which was set by government, and the government faced massive payouts for people needing elective surgery.

And the Howard government, in recognising this, but not as I proposed in 1998 by having a three-tier insurance premium structure with an entirely different approach to support the people who could not afford it, said that if you had not entered into an agreement with the private health insurers at an age which I recollect was 30—it is not mentioned in the second reading speech or elsewhere—then in fact an additional one per cent would be added to your Medicare levy. Then there was a further surcharge that applied to people whose income exceeded another level, which meant they were high-income earners and, as such, they could and should pay more if they failed to purchase private health insurance. These measures deal with those matters, and they are the traditional arrangements that apply in setting these particular requirements.

Another measure the Howard government introduced, which had some relationship to my 1988 policy, was a rebate on all private health insurance policies. During the Hawke-Keating government, and I think quite deliberately so, there was huge pressure being put on the private health funds to service all of the high-risk sector in the health services industry. They were on the verge of collapse. It has to be remembered that the Australian Constitution forbids the commercial conscription of medical practitioners and dentists and people of that nature. I think that was put in in 1946—included in the referendum question that for the first time ever gave the Australian government the right to participate in health services. I could never understand why at one stage the Prime Minister was threatening the states with some form of referendum when such a referendum was conducted in 1946 and he has all the powers he needs if he wants to accommodate the cost.

The whole purpose of the rebate was to give 30 per cent of the premium cost by way of a rebate to all persons who participated in private health, and to increase that to 35 per cent and 40 per cent as people passed age thresholds, which I think were 70 and 75—though it might have been 65 and 70. That has seen a massive escalation in private health insurance participation. On the one hand there is a stick that says you will pay additional surcharges, as mentioned in this legislation, if you do not join a private health fund at a certain age and/or when your income exceeds a fairly substantial amount of money—around $130,000, as I recollect—and, on the other hand there is a carrot whereby if you join voluntarily not only are you protected from those surcharges but also the government gives you a rebate. At the last election, the Rudd opposition promised faithfully, one of these cross your heart promises, that they would never revisit that rebate and attempt to alter it. But, surprise surprise, we have been through that exercise in this House—another broken promise; they attempted to means test it.

You can raise all sorts of socialist philosophy about when a rebate of that nature should be paid, but if you consider the commercial arrangements the government is getting a very good deal by convincing people they should pay two-thirds of their own hospital costs through a private health insurance scheme. That is what it does—it is no gift to those people any more than some government contribution to private schools is a gift to the parents. They pick up the other probably 80 per cent of the cost of educating their children in a private school. If all those schools were to close down—and the private health system was on the threshold of that at the end of the Hawke-Keating government—one would wonder where the state and federal governments would find the money to educate all those kids. I think attendance now at private secondary schools for years 11 and 12 is over 50 per cent—and it could be higher than that.

The reality is that we are still dealing here with a system that in these circumstances, outside of the stick, gives no incentive for more people to participate in the private health industry. Yet, were everybody to be in the private health industry, and were people subsidised up to 100 per cent of the relevant premium cost, the cost to the Australian taxpayer would be less. A very generous premium rebate/subsidy scheme up to 100 per cent could be provided and it would cost less than the present system. But, oh no, we are now being managed by a government that believes it knows best. It believes it can manage the corner store much better than can a small business couple; it can manage public hospitals better than a state administration, and the federal Minister for Health and Ageing will be more available to 21 million Australians seeking health services than a state minister for health—or for that matter a local shire president or mayor in smaller communities where the administration of local hospitals should reside. It would be less expensive and they would have the responsibility of appointing a director of nursing who would have the qualifications to run the hospital, just as they appoint an engineer to design and oversee the construction of their roads or a chief executive to manage the financial affairs of their council. It could be done quite easily and would be less expensive than even these regional boards that are now proposed for a health scheme that nobody seems to understand.

The other fact of life is that when this money is collected and these particular rates and surcharges are collected it will not all go within a bull’s roar, to use an old saying, of the cost of running public health services—exactly the same as we see with the Building the Education Revolution costs. In fact you get a situation that you can see advertised in last week’s Sunday Times in Perth. You can get an air-conditioned, four-bedroom, brick and tile house with a home theatre, an office, two bathrooms and all the trimmings which can be built for $160,000 as advertised. Yet this government, as it manages to shop with its $16 billion expenditure for adding buildings to schools around Australia, needs nearly $1 million to build a tuckshop or, for instance, a covered assembly area which a typical farmer would buy for $50,000 or $60,000 and put all of his expensive and very large plant under. So we have this issue that we should be raising taxes from the Australian people for the purpose of empowering governments and member of parliaments who pride themselves on their ability to run a business, yet they cannot get within 400 per cent of the cost of construction of a building when compared to the private sector—and day after day after day the private education people are demonstrating what happens when people make these decisions at the grassroots. So it is a much bigger deal than the matters we deal with today.

As the financial impact documentation relevant to these measures points out and advises, if we do nothing then, based on that, in 2010-11 government revenues will drop by $90 million, in 2011-12 by $45 million, in 2012-13 by $45 million and in 2013-14 by $45 million. But considering we are going to change those figures each year I think those forecasts might be as good as some of the other forecasts that we have been hearing in recent times. The reality is that this an additional tax system that still applies, but it will be reduced somewhat by relieving certain people on very low incomes—and $18,000 in this day and age is a very low income—from the levy and it will also adjust the surcharge entry point to $31,000 or $36,000 depending on whether it is family income or personal income. That will provide some relief to people, but in fact they should be taking out private health insurance. They should accept their responsibility to do so and they should make sure, by so doing, that they do not crowd out the very needy and deserving who are dependent on—(Time expired)