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Monday, 13 February 2012
Page: 888


Mr TUDGE (Aston) (17:33): I also rise to speak against the passage of the Fairer Private Health Insurance Incentives Bill 2011, which I believe will be a dagger through the heart of the private health insurance industry. I commend the member for Kooyong, who was just speaking, for his remarks, and I associate myself with his comments. There are three reasons I am against this bill before us. First, it is based on a broken promise. Second, it is bad policy that will cause premiums to go up for all Australians. And, third, it is bad economics; it will just lead to greater cost-shifting to the states and longer public hospital waiting lists.

Let me go to the first point—the broken promise. This bill is just another breach of faith from this Labor government. It is another broken promise. We had a firm commitment—in words, in writing—from this government that it would not be amending the private health insurance rebate scheme. The Labor Party made this very, very clear, and it did so time and time again. Perhaps nothing is more clear on this than the letter Mr Kevin Rudd, who at the time was the federal Labor leader, wrote to the chief executive of the Australian Health Insurance Association in late 2007. He wrote:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

There are many other occasions on which this very firm commitment not to amend the private health insurance rebate was made. But what do we have before us? We have a further breach of faith from this government against an explicit commitment it had made.

The second reason I am against this bill is that it is poor policy that will push premiums up for everyday Australians. Madam Deputy Speaker, as you may be aware, an estimated 12 million Australians now have private health insurance. That constitutes over half the Australian population, or 52.9 per cent. Of those, about 10.3 million have hospital treatment cover. The people who take out private health insurance are not, overall, just the wealthiest in Australian society—not by any stretch of the imagination. To give you a few figures to prove this point: 5.6 million people who have private health insurance have a household income of less than $50,000 per annum and 3.4 million have a household income of less than $35,000 per annum. This is not an individual's income; this is a collective household income. It is a broad cross-section of Australian society that is taking out private health insurance. This is a good thing. It is a good thing that a broad cross-section of society takes out private health insurance. It is a good thing that so many people take out private health insurance, because the more people who take out private health insurance the less pressure there is on the public system. As we know there are extensive waiting lists on the public system, there are stresses and there are pressures on it. The more we can take off the public health system the better it is for everybody.

It has not always been the case that we have had such a high proportion of people who take out private health insurance. Far from it. If you go back to the Hawke and Keating governments people were dropping out and the private health insurance system was at quite a critical point. From memory, I believe at that time the percentage of those with private health insurance was down to about 33 per cent of the population. When Howard and Costello came to government in 1996 they saw this problem and tried to rectify it. Indeed, they put in a number of steps over the course of their government to lift the proportion of people who took out private health insurance, and they had a remarkable effect. An estimated 75 per cent more people took out private health insurance as a result of the measures that the Howard-Costello government put in place. That high proportion has been maintained all the way through to this present time. But now we are again at a critical stage. We are at a moment where the tides may turn once again, and turn in a negative direction.

What will be the impact of the proposed changes contained within the bill before us? As we know, some 2.4 million people will be directly affected. They will face immediate increases in their premiums of 14 per cent, 29 per cent or 43 per cent, depending on their income tier. That is a huge percentage increase in their premiums. This is at a time when many people, even people who are relatively well off, with incomes of $100,000 or $150,000, still have mortgages to pay and when electricity bills, groceries, water bills, child care et cetera are all going up. But the increases will not be limited to those 2.4 million people who are on higher incomes. Rather, the impacts will be felt by everybody who has private health insurance—every single one of those 12 million people.

Deloitte, who have done some analysis of the bill before us, believe that, as a result of the changes proposed, premiums across the board will go up by 10 per cent above what they would ordinarily go up by. Ordinarily we see premiums go up five, six or seven per cent per annum. Here we are talking about potentially a 17 per cent increase in premiums. The government's own private health insurer, Medibank Private, predicts that 37,000 of their members will drop cover because of the increase in premiums. They predict that 95,000 of their members will downgrade their cover because of the increase in premiums that will come about as a result of this bill. That is just one insurance company. That does not include Bupa, Australian Unity or all the other private health insurance companies. That is just one private health insurance company, the government's own, which estimates that 37,000 people with drop out and 95,000 people will downgrade.

Deloitte believe that in the short term 175,000 people could withdraw from private hospital cover and over 500,000 people will downgrade. In the medium term, the five-year horizon, they estimate that 1.6 million people will drop out and 4.3 million people will downgrade. If these figures are anywhere close to being accurate, and I believe they will be, we will be seriously winding back the clock. People will be dropping out again in droves and premiums will skyrocket. This will just put more pressure on the public hospital system, which it does not need at present. More pressure on the public hospital system also means more pressure on taxpayers, who have to pay for the public hospital system.

On that particular point, we have some modelling suggesting that every dollar of funding provided to the private health insurance rebate saves $2 for the government. So, overall, the analysis based on the bill in front of us is that $3.8 billion extra will be required to fund the public hospital system as a result of these particular changes.

In my own electorate over 84,000 people have private health insurance. These are not wealthy people; they are everyday, middle-income Australians. They take out private health insurance not because they are particularly well-off but because they like the convenience, the choice and some of the peace of mind associated with it. Another significant reason for it in my electorate is that they want to have access to Knox Private Hospital, which is for most residents in my electorate the closest and most convenient hospital for them to attend. It is easy for them, and their family members, to get there. Under the changes proposed, many people may have to look further afield in order to access the hospital of their choice, because they may not be able to afford the premiums, should they go up as we expect they will.

Why are the Labor Party doing this, given that it is based on a broken promise and it is poor policy, which we know will put up costs for everyday Australians and cause thousands of people to drop out? We know it will cost the taxpayer potentially billions of extra dollars overall. Why are they Party doing it? There are two reasons. The first is ideological. The Labor Party have never liked private health insurance. They have always argued against the additional benefits that the Howard-Costello government put in place. Despite what they said publicly before election, we have always known that secretly they have wanted to reduce the number of people covered by it.

The second reason that they are doing it, though, is because the Labor Party—the Rudd-Gillard government—have blown the budget so systemically and so categorically that they are now looking for every single dollar that they can possibly find to create the elusive budget surplus come budget time this year. As I pointed out, overall the impact of these bills on the taxpayers will be a negative one, with them potentially paying billions of dollars extra as people shift back to the private health system.

But the accounting trick—and this is the only thing that the government are interested in—means that in the short term there could be savings, because it will shift costs from the Commonwealth across to the states. The states still have to find the money somewhere. They are raising taxes from the same constituents, whether they be in my electorate or any other electorate. But the federal government will be able to make a short-term cost saving, according to the Treasury figures. These bills are in front of us because they do not like private health insurance and never have and because they are desperate to find extra savings because the budget is in such poor shape. This provides them with a neat little accounting trick in the short term to get them through the grave difficulties that they have at the moment.

Let me summarise the position in relation to these bills. They are based on a broken promise—that is the first point. They implement poor policy that will see premiums increase across the board for everyday Australians on very modest incomes. It will see people fall out of private health insurance and put greater pressure on the public health system. That is the second point. Finally, my third point is that these bills are poor economics. They increase the pressure on the taxpayer overall and create additional financial pressure on state governments that the Commonwealth avoids in the short term. I am firmly against these bills. I believe that all sensible members of this parliament should also vote against these bills.