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Tuesday, 3 December 2002
Page: 7007

Senator ALLISON (3:37 PM) —I move:

That the Senate take note of the answer given by the Minister for Health and Ageing (Senator Patterson) to a question without notice asked by Senator Allison today relating to private health insurance rebates.

The minister of course is defending the private health insurance rebate scheme despite the fact that by 2004-05 this will be costing taxpayers $2.5 billion. That is an enormous amount of money to pay for what the minister admitted was a 0.01 per cent reduction in pressure on the public health hospital system. I do not think the minister can justify that level of subsidy by ordinary taxpayers. Half of the population of this country who do not have private health insurance are effectively subsidising those who do, and subsidising a system which is a very expensive one compared with the public health and hospital system.

What started this off this week was the indication from the minister that benefits for things like gym shoes, golf clubs, tennis costs and classical music CDs should not be claimable under private health insurance under the ancillary benefits because this was obviously a very large cost to the fund and it could not be justified. But the minister said today that in fact that was a fairly small percentage of the $64 million that was spent on ancillary benefits. So the Democrats come back into this chamber and again say, `Isn't it time, given that that is not going to deliver any cost to the $2.5 billion, that we looked again at means testing private health insurance rebates?'

The minister was not able to provide any information that would suggest that the minister has seriously even looked at the question of what implications this might have for private health insurance. I would suggest to the minister that those on the highest incomes are unlikely to shift from private health insurance onto the public system just because we do not give them back their 30 per cent rebate. That may cost them an extra $600 or more a year, but the Democrats argue that this is fair to high-income earners and that there is no good reason why the public health system, particularly the hospital system, should be suffering because we are having to pay so much for private health insurance. As I said earlier, we all know that private hospital cover and private hospitals are much more expensive than the public hospital system, and there are really good reasons why that is the case—reasons we should take account of when we look at the whole system of health care in this country.

It is clear from surveys that high-income members of private health insurance schemes admit that the reason they have joined this scheme is for tax avoidance. They have done it on economic grounds. I imagine that one of the reasons they are taking advantage of the opportunity to buy gym shoes and fitness club membership is not only because they want to get tax benefits but also because they want to take advantage of the amount that they pay in fees to private health insurance. They are just making sure that they get their money's worth, as it were. We know that. We also know that people who have private health insurance very often—and we do not know how often, but very often—go to the public health hospital system and the minister has no way of knowing how many people are involved in this practice. I can guess what sorts of procedures they prefer to use the public hospital system for. I can guess it is the most serious and the most costly kinds of procedures that they are in the public system for. The minister seems not to care that this is not just putting pressure on the public hospital system but is going against what this whole scheme is supposed to be about.

In our view, the whole rebate scheme was a nonsense to begin with. It was an unfair measure and one which was never going to improve the situation for public hospitals in this country. There are bed shortages; there are serious problems associated with shortages in terms of funding for public hospitals. The rebate scheme was never going to solve that problem. It has been a very expensive solution to a problem. In fact, it has not been a solution at all. The figures, as the minister admitted today, show that only 0.01 per cent of hospital beds have been freed up by the private health insurance rebate scheme. So it is time to look at this question again. It is time, if we are not going to collapse the whole thing—and I can understand that the minister is not prepared to do that—to at least look at means testing it. We could save $1 billion, maybe $1½ billion, by means testing this system. (Time expired)

Question agreed to.