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Wednesday, 3 October 1984
Page: 1077


Senator Dame MARGARET GUILFOYLE(10.10) —The six Bills before the Senate represent an important part of the Budget of 1984-85. They represent a substantial collection of government revenue for the forthcoming year. The Budget, to which these Bills are addressed, has total outlays of almost $64 billion. That represents 31 per cent of the gross domestic product of Australia and is a 13 per cent increase over the previous year. It has to be noted at the time of dealing with these revenue-raising Bills that this is a new record. It is the first time in the last decade that the 30 per cent level of gross domestic product for government expenditure has been punctured. The figure that concerns us is a figure that has risen from 28.8 per cent in 1974-75 at the height of the Whitlam Government's spending. We were concerned about that figure and that concern was justified.

It is important to note that government expenditure this year represents over 31 per cent of gross domestic product. In line with that figure in the Budget, it is important to note that Budget receipts will represent almost 28 per cent of gross domestic product, at a figure of over $57 billion. That is almost an 18 per cent increase in Budget receipts. In this Budget, a record percentage of gross domestic product for government expenditure is established. There is also the substantial increase in Budget receipts as a percentage of gross domestic product. We could contrast the forthcoming year's percentage of almost 28 per cent with that in the Whitlam Budget of 24.7 per cent. It is a record proportion even taking into account those record figures that were established by the Whitlam Government. With this Budget the Government establishes control over a greater proportion of the nation's resources than even the Whitlam Government at its irresponsible peak a decade ago.

Among the chief measures announced in the Budget, most of which are the subject of the Bills before us, we find personal income tax cuts of about $7.60 a week for most of the middle and lower income earners. This represents only a partial reduction of or rebate for the estimated $22 a week increase in taxation since the Australian Labor Party came to office. Also proposed in these Bills is the new restructured five-step tax scale. Even with that new tax scale and the much announced tax cuts of about $7.60 a week there is to be an increase overall in income tax collected from individuals of 23 per cent. We note that sharp contrast between a very small reduction and a very large increase of 23 per cent in income tax collections when dealing with these Bills before the Senate.

In addition to the increases in personal taxes are the increases in sales tax of 10 per cent on wine and 20 per cent on very low alcohol beer. There is a decrease in assistance to export industries and many other matters which can be dealt with when debating other Bills. But when dealing with this collection of tax Bills it is important to note the figures that I have stressed.

With respect to personal income tax, it is worth quoting Mr Eric Risstrom of the Australian Taxpayers Association. On an Australian Broadcasting Corporation program in July 1984 he made the comment:

Over the last 12 months the tax for the typical family unit, husband, wife, two kids, who belong to a medical fund, buying a home, their tax has gone up 23 per cent.

The fact that the figure I mentioned earlier is substantiated by Mr Risstrom, the representative of taxpayers in that public sense of the Taxpayers Association, bears consideration if the Government, as I am sure it wishes, talks about tax cuts.

Other matters come to our attention when we deal with legislation of the type that is now before us. There is a need to look at the structure of the Budget and what it portends for the future. We need to look at Budget requirements of expenditure and then assess what can be done to relieve the tax burden on individuals, companies and businesses. It is fair to say that as part of their election platforms both the present Prime Minister (Mr Hawke) and the Leader of the Opposition (Mr Peacock) should be prepared to state what their proposals are for government expenditure targets over the next three years. When looking at the amount of tax to be raised we cannot ignore what will be the requirements of government as a percentage of GDP or in line with its Budget targets. If we are seriously ever to offer tax reduction in this country expenditure targets are the first thing that need to be addressed. A government which addresses government expenditure seriously and shows any willingness to reduce the burden of tax and cut the deficit at the same time is able to offer something credible.

Some indication was given by the present Government that figures showing expenditure targets and even revenue projections would be made public. However, there seems to be some backing away from that. But that does not mean that there cannot be a commitment by government to look at expenditure and to have the objective of controlling the growth of government expenditure if we are to address properly the tax burden. The overall tax and borrowing requirements of government depend ultimately on total expenditure and it is that figure that I think is of prime importance if we are seriously to address tax reform.

Expenditure targets can be practicable and can greatly improve the rationality of the budgetary process. I know only too well how locked in a government can be to expenditure requirements that relate to entitlements under various Acts, projects that have a life of some years or arrangements with the States for distribution of revenue. But this does not mean that governments cannot look at expenditure targets and seriously address the problem. The three Budgets introduced by the Whitlam Government between 1973 and 1975 showed an average increase of almost 10 per cent per annum. The Fraser Government's seven Budgets showed an average increase of 2.2 per cent and the Hawke Government's two Budgets showed an average increase of 6.9 per cent in public expenditure. I want to raise this issue when dealing with these tax Bills that seek to raise revenue for the forthcoming year. It is also timely to requote some of the statements which have been made by Ministers of the present Government with regard to taxation review. The comments of the Minister for Finance (Mr Dawkins) are reported in the Sydney Morning Herald of 16 July 1984. The article states:

. . . the question of existing taxes on capital was 'firmly part of that review '-

That is the review that was being undertaken by the Government-

and the Government had to ensure that 'where there are taxes on capital they are effective and they are fair'.

When speaking on a television show at around about the same time he said:

One question is absolutely clear, that one of the reasons for the great explosion in tax avoidance was partly due to the fact that we don't have effective taxes on capital in this country.

That, of course, is another means of collecting revenue by governments. It is another part of the tax mix that we will have. The present Government certainly will have to look at an effective and fair capital gains taxes in any review that it undertakes. It would be of interest to know what comment it would now make with regard to the introduction of a capital gains tax or any other form of new tax that presently does not apply. I quote again from a Minister of the present Government, the Minister for Science and Technology, Mr Barry Jones, who , after the introduction of this year's Budget, said:

What I say, if you are talking about a three year Parliament, without any possibility of an early election, it means that in that three year Parliament you can spend money, you can raise money perhaps by increasing taxation, or funding new sources of taxation to do things that are expensive that you would not be game to do, you would not be keen to do, three or four months before an election.

He was then asked this question:

So, I take it, you are talking about increasing taxation in perhaps next year's Budget to improve the science and technology cake.

He said in answer:

Well, we have clearly got to look for alternative sources of revenue. That is common ground. Not decided what they will be. But a number of Ministers have said we have got to face up to the fact that we need more revenue. As Senator Robert Ray often says, we have got a Party policy that has got 195 pages on spending money and only about 5 pages on raising it. That is one of the issues that we have got to look at absolutely urgently.

This observation is then made to him:

It seems to me that a very tough Budget next year is on the cards.

He said:

Well, it is just possible.

Those matters are pertinent to the Bills before us because of comments from other members of the Australian Labor Party, such as those of Mr Gerry Hand as reported in the National Times on 24 August. On 30 August the Prime Minister said:

We do not believe that taxation reform will be to Australia's advantage if it involves overall increases in taxation as distinct from greater efficiency and equity in the system. The Labor Government does not believe that higher overall levels of taxation are necessary for substantial reductions in the deficit for improved equity or for enhanced efficiency of our economic system.

That comment from the Prime Minister gives no indication that there are to be reductions in overall tax collection. It gives no impression that there is any serious addressing of government expenditure targets. One can only believe that there is to be a rearrangement of taxes with the introduction of some new taxes. One has the feeling that ahead of Australians lie the record figures of tax collections that we see in this year's Budget.

Some of the other matters I want to raise in this debate today relate to the Medicare Levy Bill which is also before us. We cannot look at personal income tax without looking at the implications of the Medicare Levy Bill because it provides for a very direct and inescapable personal tax introduced by this Government. It has been stated that the Bill provides for a one per cent Medicare levy. It has been stated often enough by the Government that the Medicare levy is one per cent of taxable income, and that is supposed to represent in some way a Medicare insurance for the people. It is nothing of the kind. It is an identified contribution of one per cent towards health care costs . In no way is it a levy that provides health insurance or the health care that people would expect to find in this country in the forthcoming years. Indeed, the Budget Papers show that the Government is taking more like 1.7 per cent of taxable income to cover the additional costs of the Medicare program. One per cent of this amount comes from the official Medicare levy and another 0.7 per cent comes from a hidden tax increase which is not identified but nevertheless is paid for by the people, as evidenced by the figures contained in the Budget Papers. The Budget Papers show that the additional cost of Medicare is $2,021m this year. The official Medicare levy of one per cent is estimated to bring in revenue of $1,191m and that leaves a shortfall of about $830m. If we apply that calculation to the figures that are used for the calculation of the one per cent levy, we find that an additional 0.7 per cent of personal income tax must be directly required to fund the Medicare costs in this year. These figures come from the Budget Papers.

I refer to a 'Health Budget 1984' corrected news release from the Minister for Health (Dr Blewett) on 22 August. He shows the 1984-85 costing of Medicare. Under the heading of additional expenditure is $1,011m in medical benefits, $ 854m in hospital payments to the States, $54m in increased payment to private hospitals, $20m in community health and $114m in administration. That latter figure is taken from the Health Insurance Commission's gross management expenses for administering Medicare. In the same statement from the Minister are figures showing that the one per cent levy will raise $1,191m, the health insurance rebate $630m and the reinsurance pool $80m-a total of $1,901m and a net outlay of $152m. He substantiates the figure of what will be raised by the one per cent levy but it is shown that that is of course a token contribution. I do not wish to use the figures in any precise way in looking at that contribution as a total percentage of health care costs because we would find they are even more of a token. It does not relate to the cost of health care in this country. It is simply an identified contribution.

The health care system is of increasing importance. If, as I do, one comes from the State of Victoria and looks at this morning's Press one finds two-page advertisements advising people of the essential requirements for private health cover. In saying that the one per cent levy and the 0.7 per cent additional personal tax that directly relates to Medicare are costs to the individual one needs also to look at the fact that people have to have private insurance in order to have access to the health care that they require.

Let us look at the finances of a family which has maintained its private hospital cover after the introduction of Medicare. We can take the case of a man on average weekly male earnings in, say, New South Wales of $384 a week with a dependent spouse or we can take a double income family, or any combination of incomes adding up to $384 a week. The average weekly cost of health insurance on the most commonly used private table of three major funds in New South Wales, after the deduction of the 30c in the dollar tax rebate applying before Medicare and allowing for the consumer price index adjustments to insurance rates to bring them up to an assumed May 1984 level, is $11.64 a week for such a family. After Medicare the average weekly cost of the three funds for the same level of private cover, excluding medical cover which is now covered by the levy, is $8. 77. Of course, there is no tax rebate. We need to add to this the one per cent Medicare levy of $3.84 a week plus the additional levy of increased personal tax of 0.7 per cent, which is $2.69, and we therefore get a weekly outlay in total of $15.30 as against the original $11.56 which that family would have been required to pay. So for that family there is an additional cost of $3.74 a week. In those figures I have not taken into account the likely additional cost of meeting the uninsurable gap between the schedule fee and the Medicare rebate for medical services which could add quite substantially to the extra costs if there was chronic illness in such a family.

Again and again we hear of concern about the availability of or access to hospitals in some States being worse than in others. In Victoria it is of extreme concern. In that State about one-third of the hospital beds are in the private sector so it is essential for people who require access to hospital to have private cover. It is pointless for the Government to look at a one per cent levy, talk about that as the cost of Medicare, and say that it has fulfilled a promise given that health care will be cheaper for Australian families. It is a claim that was made but which has not been substantiated, and the people know it . The claim that nine out of 10 Australians will pay less for the same cover was always misleading. The Government had no capacity to deliver on that promise and it should not have made it. It is certainly no pleasure to point out that Australians have been deluded by the Government and that they have serious concern about their health costs, their health cover and their access to the health services that they require. The claim in the Medicare leaflet states:

Medicare will be paid for by a one per cent levy on your taxable income.

To state that baldly without saying that there will be an added increase to personal taxes to cover it, that there is a gap between what that one per cent will provide and the Minister's own figures on the additional expenditure for Medicare, shows that that token one per cent is not something that can be substantiated as being important.

The Budget Papers tell us that medical and hospital benefits have risen by over $2,000m compared with the old scheme. The levy that brings in the $1,191m does leave that shortfall that I mentioned. I think that the Government's future proposals with regard to the funding of the Medicare program are very important in terms of personal taxes that are required from the Australian people. The Minister's commitment to maintain the levy at one per cent is quite meaningless because the one per cent is paid as an identified contribution to it but that in no way meets the requirements of the additional cost. At the same time we find that people have to pay additional personal taxes that are directed towards Medicare, as well as the additional cost of their private health insurance. We could raise the point at this stage as to why we need to stress the cover that people will require for private hospital insurance when the Medicare leaflet tells us:

If you go to a public hospital, Medicare will provide free accommodation and treatment by doctors appointed by the hospital.

It has been obvious throughout the whole of the health debate over the last decade that one reason why people want to maintain private cover is that they wish to choose their own doctor or to change their doctor if they were dissatisfied. Anyone who has gone through a period of serious illness and has not been totally satisfied with the attention that he or she has received will understand why so many people consider that being able to choose their doctor is worth the extra insurance cost. However, those who have met the cost rightly become infuriated when they find that a person on equal or greater income, who has not insured privately, is charged nothing for a public hospital bed, while the insured person, through his or her insurance fund, is charged $80 a day by the same public hospital for the same kind of bed. That is one of the real questions that need to be addressed in the way in which the structure of the Medicare program has been developed by the present Government and the objectives of the Government in structuring it in that way.

The real question to be asked is: Will a bed be provided if a patient is uninsured, as promised by Medicare? The answer, of course, must be that the bed may be free but it is available only at the end of the queue. In Victoria at the moment there are something like 8,000 patients on waiting lists for public hospitals. I think I heard my colleague Senator Reid this morning introducing a matter that is of concern to her with regard to elective surgery in the Australian Capital Territory. There are two-year waiting lists for orthopaedic work in public hospitals in Victoria, and this is quite reminiscent of what happened in the British national health scheme. It provides free health at the end of a queue for the poor and the inarticulate. The organised and the articulate will manipulate the system to get ahead of the queue. There can be the use of influence, and influence is being used every day already in Australia to get around the Medicare rules. This is not the kind of health system that there should be in this country. Those who can afford private health insurance are occupying the beds that the poor and the inarticulate cannot obtain, and those who are most in need are left out in the cold, because those who are in need and who are subject to the levy in some cases are unable to find the extra funds that are required for private health insurance.

The Health Minister, in his letter to those compulsorily enrolled, congratulated them on becoming members of this compulsory health scheme and said : 'You are now enrolled with Medicare, the simplest and fairest health insurance scheme Australia has ever had'. There are several matters that could be questioned in that statement by the Minister. The first one is: Is it simple? Previously Australians could get all their health insurance in the one place, at the one shop. It they now wish to continue with private health cover they have two-stop shopping. They have to go to the private health insurance office and also to a Medicare office. Medicare offices are few and far between in some locations.

The second question is this: Is Medicare fair? The chronically ill cannot insure for the gap and they find it difficult to pay for the gap. There is a $ 150 limit, but that applies only to individual patients. If there are a number of children in the family it is necessary for each one to get to the limit before claiming the 100 per cent rebate. In addition, it is administratively complicated to deal with this system because unless one pays the full bill and receives a receipt before going to the Medicare office, it is complicated to get that gap recorded in the computer and if it is not recorded it does not apply.

One must also ask: Is it fair when the elderly and chronically ill, after years of membership of funds, find that because of the reduction in the Government reinsurance subsidy of $80m they are denied the private cover they expected? When they are most in need they find that there are limits to the number of days that they are privately covered, even though they have paid into funds for years . That raises the question whether it is fair when the long term sick, many of them elderly, are forced out of public or private hospitals under the 35-day rule or have to pay a great deal out of their own pockets for additional insurance.

There are many other matters that could be raised about the fairness of the scheme that has been introduced by the Government, but those are matters that can be raised at another time and perhaps in another debate. But in dealing with the Medicare Levy Bill before us, I think it is important to say that Medicare can damage the whole system of health care delivery, built up to a very high standard over the last century. It is destroying the motivation of those working in the system to provide good service and to achieve excellence. Public hospital budgets have been squeezed to the point of inefficiency, poor patient service and loss of staff morale. Private medical practitioners whose contribution to health care is a vital ingredient of the quality of the Australian system have been attacked professionally and financially and are subjected to unwarranted abuse by the Prime Minister (Mr Hawke), who compared them with members of the Builders Labourers' Federation, by the Federal Health Minister and Labor State Ministers. It is fair to say that in all States there is concern by State Ministers and Premiers about the provision of hospital services. There are instances of difficulties with staff, whether they be nursing staff or other staff. There have been disruptions in hospital service to individuals, particularly in Victoria, where it has been of continuing concern and remains so .

The claim that Medicare has provided a simple system and that nine out of 10 people are having a cheaper health cover is something that could be refuted on almost every count. Medicare-the whole program and the cost to the individual-is not something to make us rejoice as we deal with these Bills.

The other Bills that are before us relate to companies' superannuation funds, bank debits, tax and other matters in the cognate debate and I address no remarks to them, other than to say that they are revenue-raising matters of the Government's Budget. Because these Bills represent such a substantial increase in taxes and are such an important part of the Budget, we do not oppose them. We point to the difficulties that individuals will have in meeting the increases in taxes and we point to the anomalies that there are in the introduction of the Medicare system which we believe will be a lasting problem unless some of the matters which have become self-evident to the Minister, I am sure, are addressed in the near future. With these comments, I say that these Bills are not opposed by the Opposition.