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Tuesday, 18 August 2009
Page: 5180


Senator CORMANN (1:47 PM) —Today we are debating the second significant attack by the Rudd government on our health system through the Fairer Private Health Insurance Incentives Bill 2009 and related bills. It is an attack on our health system that will hurt millions of Australians who are privately insured, but it will also hurt those Australians who will have to compete with more people seeking access to our already overburdened public hospital system. It is another broken promise of the Rudd government. Despite the most emphatic pre-election commitments, despite the most solemn pledge by the Prime Minister and by the Minister for Health and Ageing, Nicola Roxon, before the last election, here we are debating a proposal to reduce or scrap altogether private health insurance rebates.

It is the government’s second strike in two budgets against the important private health component of our mixed public and private health system. We are quite concerned, as I am sure the 11 million privately insured Australians are concerned, about what we will be debating this time next year—if the Rudd Labor government is courageous enough to take us to a third Rudd government budget, that is.

Before the last election we were promised the world on health. Labor were going to fix public hospitals and, if there had not been enough progress made by the middle of 2009, a proposal would go to the Australian people that the Commonwealth take over the running of public hospitals. We were promised the world. The buck was going to stop with the Prime Minister. All we have had is a bad, old-fashioned Labor crusade against privately insured Australians—against Australians who do the right thing by our health system by putting additional, private resources into it. All we have had is a bad, old-fashioned Labor crusade against private health. All we have had on public hospitals is a review, a 20-month review into public hospitals—and now there is going to be a review of the review—and we have had a tax. That is all we have had on health from this government.

This government has been a failure on health; I have said it before. This minister has been a failure as health minister. There has been no progress made in terms of the running of our public hospitals since this government was elected. In fact, the situation is now worse. Measures like those contained in these bills, rather than putting less pressure on public hospitals, will put more pressure on public hospitals. I think that everybody understands that.

The overarching health policy objective ought to be that as policymakers we ensure that all Australians have affordable and timely access to quality hospital care. The best way to achieve that is through a well-balanced health system—one with a strong and well-funded public system and a strong and well-supported private system. Those on the other side know well that, after 13 years of Labor the last time they were in government, our health system was seriously out of balance. Private health insurance membership was plummeting. There were significant public hospital waiting times. There were significant pressures on public hospitals, but private hospitals were underutilised. There were serious issues in our health system when we came into government in 1996. Health insurance membership continued to plummet for a further two years after we got into government because of the flow-on consequences of bad health policy throughout 13 years of Labor.

It took two years before we were able to turn things around through very sensible health policy measures like the 30 per cent private health insurance rebate, the Medicare levy surcharge and Lifetime Health Cover. Since private health insurance bottomed out at 5.7 million in December 1998, it has increased by a staggering four million Australians, who are putting additional resources into our health system, taking it up to 9.7 million Australians.

We have had some discussion today about what is happening with private health insurance membership now. We have a government that is very good at spin but not so good at substance. We have a Minister for Health and Ageing who is very good at being a propaganda minister for Treasury but not quite as good at assessing the flow-on consequences of her actions and those of her government. So let us just have a look beyond the headlines and assess what is actually happening in terms of private health insurance membership across Australia today.

The first point to make is that, irrespective of the figures that are being quoted today and that the minister is waving around, the growth in private health insurance membership has already slowed down. If you look at membership trends in the last few years of the Howard government, we had increases of 400,000 additional privately insured Australians in the lead-up to June 2008, for example. This year it has gone down to 200,000. But, furthermore, the population has actually increased over that same period. If you look at the real target, the meaningful target, the proportion of the population who are privately insured, it has started to stagnate under this government at 44.6 per cent. It has already started to stagnate and of course we know that the Rudd government expects private health insurance membership to go down over the first term of its government. If you look at the budget papers, there is a figure there now indicating that 9.7 million Australians are expected to be privately insured throughout the term of this government, but of course in the context of population increases that means that the Rudd government themselves expect the proportion of the population with private health insurance to go down. It is something that they have hidden in the fine print of the budget papers by removing the reference that has been there for many, many years to the percentage rather than the absolute numbers of Australians with private health insurance.

This is a bad public policy because it will put more pressure on public hospitals. It will result in an immediate increase in the cost of private health insurance for those in those income brackets that are being targeted by the government and it will result in fewer people with private health insurance. There is no argument between the opposition and the government that that will be the outcome. The government agrees that this will lead to more pressure on public hospitals. The government agrees that this will result in an immediate increase in the cost of private health insurance and the government agrees that it will result in fewer people with private health insurance. The argument between the government and the opposition, and indeed between the government and stakeholders, is about how much more pressure, how much additional cost, and how many people will end up leaving private health insurance.

Just talking again, very quickly, about the number of people expected to leave the private health system, this is of course the second strike against private health under this government. Last year we had the Medicare levy surcharge change, which the government said would result in 492,000 fewer Australians in private health insurance as a result of that measure. I put it to you that Treasury got it right: 492,000 fewer Australians will have private health insurance as a result of that measure. That does not mean a drop of 492,000 compared to the number of privately insured at that time; it means that 492,000 fewer Australians have private health insurance than would otherwise have been the case. When we were investigating and inquiring into this measure during Senate estimates and the inquiry, both the health department and the Treasury confirmed that they stand by those figures. The government’s budget savings are based on nearly half a million fewer Australians being in private health insurance than would otherwise be the case. And that is of course very relevant when we assess the flow-on implications. The reality is that the more people who take out private health insurance over the long term, the more affordable it is for everyone and the more private resources are of course channelled into our health system.

Labor has form on this, of course. We saw during the Hawke-Keating years that private health insurance membership plummeted from 63 per cent down to about 30 per cent before the Howard government was able to turn things around. But before the last election Labor said: ‘We have learned. We are not going to make that mistake again. We have learned our lesson. We now support private health insurance and we will not make any changes to the private health insurance framework.’ As Senator Cory Bernardi said, the Australian people have been deceived by this government. In fact the Prime Minister, as the then Leader of the Opposition, wrote to the Australian Health Insurance Association on 20 November, a couple of days before the election—and no doubt because he thought that it was politically important for him to do so—and said:

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 rebates for older Australians.

Et cetera, et cetera. Now, after the election—and this just shows how dishonest this government is with the Australian people—on 24 February this year the health minister was confronted with some media inquiries by the Age, asking: ‘What are you doing? Are there some plans afoot within government about changing the private health insurance rebate?’ And this is what the Minister for Health and Ageing said on 24 February:

The government is firmly committed to retaining the existing private health insurance rebates.

So everybody out there was reassured.

What do we find out in estimates a couple of months later? That on 12 January 2009 the Minister for Health and Ageing was getting advice from her department on how to reduce or scrap the rebates and she was out there a month and a half later telling the Australian people that all was fine, that the government remained committed, that there was not going to be any change. This is how this government treats the Australian people. They are pursuing bad policy. They are doing it behind closed doors. They were making commitments before the election and they were reaffirming them after the election, while all the while they were making disastrous policy changes to our health system behind closed doors. Mr President, I might continue after question time.


The PRESIDENT —It’s all right. Senator Cormann, you can keep going.


Senator CORMANN —I can see that people on the other side are really interested in my contribution to this debate so I will keep on going.


Senator Chris Evans —We want more!


Senator CORMANN —Senator Evans may like to hear that as a direct result of this broken promise, the cost of private health insurance will go up by up to 66.7 per cent immediately. Why is that good public policy on health—that is the question I would ask. The government says that about 40,000 people will leave private health insurance as a result of this measure. There is debate on this, but let us just take their word for it. Let us say that it is 40,000 people that will leave private health insurance as a result of this measure. What does this mean for our public hospitals? It means that there are more people who will present at public hospitals that are already under pressure.

And of course we still have the flow-on consequences of last year’s measure. I asked some questions during the inquiry about how this figure was arrived at, which the minister has mentioned, of 8,000 additional public hospital episodes. I was told that 35 per cent of the 25,000 people will drop private hospital insurance—that is 8,750 additional admissions, presumably. The minister is not very good at her maths. She will not ever make it to be the Treasurer. She might be propaganda minister for Treasury but she will never make it to be the Treasurer.

Debate interrupted.