Senator PATTERSON (Minister for Health and Ageing) (5:48 PM) —The Health Care (Appropriation) Amendment Bill 2003, which is the amendment to Health Care (Appropriation) Amendment Bill 2002, delivers $42 billion in funding over five years to the states and territories to assist them in running their public hospitals. The public hospital system is run by the states but the Commonwealth and the states contribute to it. This represents an extra $10 billion, a 17 per cent real increase, and we have been up front with the public and have made a substantial commitment to funding for public hospitals.

Normally, with health care agreements, the Commonwealth puts its money on the table five years in advance. The states have not been required to do that. The situation is we do not know what some states spent on public hospitals last year and we do not know what some of them spent on public hospitals the year before because they are behind time in reporting. We have asked the states, which are responsible for public hospitals, to show their hand, to tell us how much they are going to spend and to match the Commonwealth's growth in contribution. I believe it is only fair. The Commonwealth is required to put its money up front for five years and to indicate how much growth there is going to be. It is only fair that the states indicate how much they are going to spend next year and to match our growth to assure us that there is no black hole in hospital funding and also to make sure that hospitals in the public sector have some predictability in their financing.

I have been advised by some people on the boards of some hospitals in one state that they were not given their budget until February of this year for this financial year. How on earth can you run a large major metropolitan hospital or a small rural hospital when you do not know what the budget is? When you ring up and say, `How much money are we going to get?' they tell you, `Just spend the same as last year and we will let you know.' No other business would be required to operate like that. It must be incredibly frustrating for the CEOs of those hospitals.

The maximum contribution that the Commonwealth will make is contingent on certain conditions, including that the states commit to a new performance reporting framework and recommit to the principles of Medicare. The opposition has indicated that as funds are being taken out of the health care agreement the states will now be receiving less funding. That is absolutely untrue. The states are getting a 17 per cent increase over and above inflation—a $10 billion increase. The forward estimates in the previous Commonwealth budget papers were a forward extrapolation of growth under current agreements. When those current agreements were signed five years ago, the states agreed that as private health insurance went up by two per cent a certain amount would be withdrawn from the Commonwealth's contribution to public hospitals. So how they can turn around now and say that the increase in private health insurance does not take a load off the private hospitals beggars belief. We did not do that and the states got a $2.5 billion windfall in the last three years of the life of the agreement, which means that the agreement, as it is now at the end of this year, is coming off a much higher base. So we have a 17 per cent rise coming off a higher base which was achieved by a windfall that the states had of $2.5 billion over that last three years.

The opposition and the states never talk about the $2.5 billion windfall. They never mention the $2.5 billion that they would not have had in recognition of the load being taken off public hospitals by the increase in private health insurance membership. There is evidence that private health insurance membership has taken the load off public hospitals. The latest report by the Australian Institute of Health and Welfare, Australian hospital statistics 2000-01, shows that public hospital admissions in 2000-01 actually fell. For the first time in the history of Medicare, between 1999-2000 and 2000-01, public hospitals treated 15,000 fewer public patients. Private hospital admissions grew by 12 per cent; 245,000 more patients were treated. The private system's share of hospital admissions grew from 32.5 per cent to 37 per cent. More privately insured patients are choosing to be treated in private hospitals. As they do that, it frees up resources in public hospitals for public patients. The rise in the number of people with private health insurance entitled the federal government, as I mentioned before, to reduce state funding, but we chose not to. As I said, there has been a $2.5 billion windfall to the states.

Labor's opposition to private health care has put Medicare and our public hospital system under extreme and unsustainable pressure. Under the previous Labor government, private health insurance premiums grew by an average of 11.3 per cent a year. In one year I think it was something like 20 per cent. Under this government, premiums have increased by less than five per cent, on average, a year. Until the Labor Party commits to maintaining the 30 per cent rebate, Australians can expect the cost of premiums under Labor to increase immediately, on average by over $750. As I have said before, we are committed to keeping the 30 per cent rebate, making private health insurance affordable for almost nine million Australians. The nine million Australians with private health insurance will be very concerned that Labor intends to tamper with the private health insurance rebate to pay for its profligate promises.

The opposition claims that the government's health policies will increase the financial burden on individuals. This is not true. We have a package which is designed to increase access, to reduce the burden on public hospitals and to ensure that they are viable into the future. I have to say here that it concerns me greatly when I receive letters from people with private health insurance who say, `I was admitted to a public hospital as an emergency patient, treated as a public patient and the hospital rang me when I got home and said that to help with their funding could I please sign the papers to say that I had been admitted as a private patient.' That is not on. That sort of cost shifting to private insurance is not on and is not appropriate. Every single Australian is entitled to go to a public hospital as a public patient and not to be hounded when they get home to change their admission status to that of a private patient.

The legislation before us gives the states a 17 per cent increase over and above inflation if they sign up and tell the Australian public how much they are going to spend on their public hospitals—just as they expect us to tell the public what we are going to spend for the next five years. I commend the bill to the chamber.