CUSTOMS TARIFF AMENDMENT BILL (NO. 3) 1999

The Customs Tariff Amendment Bill (No. 3) 1999, which is now before the chamber, contains a number of amendments to the Customs Tariff Act 1995. I will only outline the more important amendments.

The amendments contained in schedule 2 of this bill reinstate the five per cent rate of customs duty which applied prior to the first of September 1998 on certain goods classified in chapter 90 of the customs tariff.

The goods on which this action is being taken are:

. certain drawing, marking-out and mathematical calculating instruments;

. certain rules of wood or plastic;

. electrical test benches and certain machines for balancing mechanical parts;

. certain gas, electric and liquid meters; and

. steel tape measures.

These products were free of customs duty following the implementation of the recommendations of the Industry Commission in its review of the medical and scientific equipment industries.

The implementation of these recommendations removed the duty from a wide range of goods, some of which were not medical or scientific equipment. Some Australian manufacturers advised government that the tariff reductions on non-medical and non-scientific equipment had an adverse effect on their manufacturing profitability. In light of these representations, the five percent customs rate of duty was reinstated on the goods which I have previously listed. Reinstatement of duty has operated since the third of September 1999.

Schedule three of this bill commences on the first of October 1999 and removes the customs rates of duty on steel tinplate, and aluminium cansheet used in the manufacture of aluminium cans. This action was recommended by the 1996 Industry Commission report on packaging and labelling.

The removal of these customs tariffs should result in lower input costs for the food and beverage canning industry. This should improve the competitiveness of this industry, and lead to increased exports of these products. Steel tinplate is primarily used for food cans but also for other containers such as paint tins and aerosol cans.

In the case of aluminium cansheet, the removal of tariffs applies to three cansheet products - bodystock, endstock and tabstock used in the manufacture of aluminium cans.

The removal of these customs rates of duty is further proof of the government's commitment to lowering business costs and helping develop competitive Australian industries, while providing consumers with better priced products.

I commend the bill.

HEALTH LEGISLATION AMENDMENT (GAP COVER SCHEMES) BILL 2000

This bill amends two acts - the National Health Act 1953 and the Health Insurance Act 1973. This piece of legislation is important as it addresses one of the more challenging issues facing private health insurance, namely, the medical gap. The gap is the difference between fees charged by doctors for in-hospital medical services and the combined health insurance benefit and Medicare rebate.

We have made some significant advances in this area over the last 18 months. The number of people being covered by gap products and the number of hospital admissions being covered by gap products has gone up, I believe, around 25 per cent just since the December quarter of 1999. It really took off since we allowed changes whereby doctors could come to arrangements on hospital based gap cover, an amendment moved in 1997. It was from there that Melville Private was the first hospital in Australia to offer such arrangements.

There has, however, been a problem with the current arrangements in that the very significant part of the medical profession finds that this is completely unacceptable and the advances we have had to date have been over the bodies, so to speak, of the medical profession and they have opposed it at every single move.

The measures contained in this bill will enhance the attractiveness of the product of private health insurance by giving the health insurance industry an additional means by which it can offer known gap insurance policies. The bill provides for ministerial approval of gap cover schemes. The approval criteria will be contained in regulations. Those regulations are not yet available. I concede that they are important and will need to be properly examined by the opposition before they can give a final position.

The bill requires health insurance funds to demonstrate that the operation of any proposed gap cover scheme will not have an inflationary impact. This is not an absolute standard. In exercising powers of approval, I would ensure the gap cover schemes would not have an inflationary impact over and above those associated with gap product already developed under existing arrangements. But in doing this, I am trying to send a clear message that we simply will not allow any open-ended scheme and we will not allow a scheme that allows medical fee inflation. But we are sending something of an olive branch to the medical profession in saying, `It's now over to you to work with health funds to see if you can come up with products that are to the benefit of the consumers.' I believe this is possible.

The model that has been put to me is what is called a service delivery scheme - in effect, Medicare at a general practitioner level as a service delivery scheme whereby a person goes to a GP, the GP may choose to bulk bill or may alternatively choose to give the patient an account. Over time, most GPs have come to charge no gaps at all on their GP products but, then again, that is an individual GP's choice and a consultation by consultation choice.

This reform is an integral part of our government's desire to make private health insurance better value for consumers and part of a long-term process and long-term plan with health insurance. That includes lifetime health cover, a 30 per cent rebate, a change to prudential requirements and changes to prosthesis, one of the most rapidly growing areas of private health insurance expenditure. These measures therefore serve to enforce our commitment to a robust Medicare system complemented by a viable private health system.

Consumers have consistently demanded no or known gaps in return for their health insurance premiums. We have listened to those demands and this bill has delivered the framework within which this policy may be offered and our existing successes expanded. The bill is evidence of our commitment to ensuring that choice and freedom offered by the private health system remains viable to all.

As I mentioned, while the current legislation allows the gap to be covered in circumstances where a hospital or fund-based agreement exists with the practitioner providing the service, this bill will enable the gap to be covered without the need for formal contractual arrangements between practitioners and funds. Despite the rapidly increasing coverage of gap products, there is still very great friction in this area. I hope that this bill will allow time for the different parts of the industry to start working together, something that should have happened a very long time ago.

The measures contained in the bill are significant in the history of private health insurance. It is the first time health funds and doctors have been able to agree on strategies for dealing with gaps. In this sense it should be commended as an example of people working together.