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Fairer Private Health Insurance Incentives Bill 2012, Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2012, Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2012
- Parl No.
Collins, Sen Jacinta
- Question No.
Back, Sen Chris
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- Start of Business
- Rural and Regional Affairs and Transport Legislation Committee
- Legal and Constitutional Affairs Legislation Committee
- Foreign Affairs, Defence and Trade Joint Committee
- Australian Commission for Law Enforcement Integrity Committee
- Fairer Private Health Insurance Incentives Bill 2012, Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2012, Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2012
- DISTINGUISHED VISITORS
QUESTIONS WITHOUT NOTICE
- Grants Allocation
(Sherry, Sen Nick, Evans, Sen Christopher)
(Cormann, Sen Mathias, Wong, Sen Penny)
National Disability Insurance Scheme
(Siewert, Sen Rachel, Evans, Sen Christopher)
(Ryan, Sen Scott, Lundy, Sen Kate)
(Marshall, Sen Gavin, Carr, Sen Kim)
(Macdonald, Sen Ian, Ludwig, Sen Joe)
Small Business: Enterprise Connect
(Madigan, Sen John, Lundy, Sen Kate)
Rural and Regional Health Services
(Williams, Sen John, Wong, Sen Penny)
- QUESTIONS WITHOUT NOTICE: TAKE NOTE OF ANSWERS
- Minerals Resource Rent Tax Bill 2011, Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Bill 2011, Minerals Resource Rent Tax (Imposition—General) Bill 2011, Minerals Resource Rent Tax (Imposition—Customs) Bill 2011, Minerals Resource Rent Tax (Imposition—Excise) Bill 2011, Petroleum Resource Rent Tax Assessment Amendment Bill 2011, Petroleum Resource Rent Tax (Imposition—General) Bill 2011, Petroleum Resource Rent Tax (Imposition—Customs) Bill 2011, Petroleum Resource Rent Tax (Imposition—Excise) Bill 2011, Tax Laws Amendment (Stronger, Fairer, Simpler and Other Measures) Bill 2011, Superannuation Guarantee (Administration) Amendment Bill 2011
Thursday, 15 March 2012
Senator BACK (Western Australia) (12:18): We now have the third of the three Gs: we have had the GST under the Howard government, we have had the GFC and of course now we have the GBP, the government of broken promises. You will recall, Madam Acting Deputy President, that this is the government that came in on the promise of honesty, transparency and, as Senator Collins knows, accountability. Do you remember Prime Minister Gillard saying, 'Let the sun shine in'? Well, it is the fact that it has been a very short summer here on the east coast and a very short summer of honesty, transparency and accountability. This is the government about whom the former Prime Minister, then Minister for Foreign Affairs and now backbencher, Kevin Rudd, said recently:
… Julia has lost the trust of the Australian people and … if we don't change, the Labor Party is going to end up in Opposition.
This is also the government about whom the former Attorney-General Robert McClelland only recently said:
I don't think we have captured the attention or the support of the broader Australian community, and obviously if we want to win an election, they have to listen to us, they have to trust us, they have to have empathy with us …
This is not my side of the chamber saying this; this is the government side. Only last week I was at the Wagin Woolorama in the Great Southern region of WA. I overheard a mother scolding her daughter for telling porkies, and the little girl looked up and said, 'Why can't I? The Prime Minister can and the Prime Minister does.' She looked at me and I had no answer, of course.
But what day is it today? Is it carbon tax day? Of course, no; that was last week. But I will remind you of the words of this Prime Minister: 'There will be no carbon tax under the government I lead.' Her Treasurer and Deputy Prime Minister said at the same time—amazingly enough, just before an election in 2010:
Well, certainly what we rejected is this hysterical allegation somehow that we are moving towards a carbon tax from the Liberals and their advertising. We certainly reject that.
So it is not carbon tax day. Is it audit compliance day? No, that was Wednesday. That was the day, if you remember, when we had the Australian National Audit Office undertaking an audit of none other than Ms Gillard as Minister for Education and reporting to the parliament that on more than three occasions Ms Gillard approved grants to schools in defiance of the recommendations of her department and also failed to undertake the requirement of the then Prime Minister to report her decision to the then Minister for Finance and Deregulation. What a great group of four it must have been. How wonderful to have sat around the table and listened to them agreeing with each other. But it does not stop with the Prime Minister, as is often the case, because most organisations learn from the top. News filters downhill more quickly than it does uphill. In that same audit report from the ANAO we learnt that there were no less than 33 cases where ministers failed to alert the finance minister to the fact that they had made grants in their own electorates—11 of those 33 instances against the advice of their own department.
But it is not carbon tax day; it is not audit compliance day; it is Thursday—it must be private health insurance broken promise day. Let me go back to then shadow minister Ms Julia Gillard writing in the Courier Mail:
YOUR correspondent Russell McGregor … should have no concern that Labor will "erode" or abolish the 30 per cent government rebate for private health insurance. Labor is committed—
said Ms Gillard—
to the maintenance of this rebate and I have given an ironclad guarantee of that on a number of occasions.
Is it any wonder that the little girl in Wagin, reflecting the rest of Australia, has lost all patience with this government and its credibility? Again, Ms Gillard, complaining in a newspaper, the Weekend Australian, in October 2005:
The truth is—
that I never had a secret plan to scrap the private health insurance rebate, and contrary … do not support such a claim.
We go from Ms Gillard to then shadow health minister Roxon—again, prior to an election—in 2007. This is what she said at the annual conference of the Australian Health Insurance Association: 'This is why we have committed to the current system of private health insurance incentives,' she said, 'including the package of rebates, the lifetime health cover, the surcharge. Labor understands that people with private health insurance, now around nine million Australians, have factored the rebate into their budgets, and we will not support taking it away.' She went further in September: 'We have committed to it. We have committed to the 30 per cent.' The journalist must have had some understanding of the future because she was asked again, 'So you will not wind back the 30 per cent private health rebate, despite the fact,' the journalist asked, 'that Labor has been ideologically opposed to it in the past?' And guess what her answer was? 'No we won't.' She went on to say: 'For many occasions for many months we have made it crystal clear we are committed to retaining all of the private existing health insurance rebates.' She went on to say: 'The Liberals continue to scare people'—doesn't this remind you of Mr Wayne Swan's comments about the carbon tax?—'into thinking that Labor will take away the rebates.' This, according to Ms Roxon, is absolutely untrue.
We then go to the leader of the then opposition, Mr Rudd, speaking to the same organisation, the Health Insurance Association, prior to the 2007 election. This is what he 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.' And in February 2008, after becoming Prime Minister, he said:
The Private Health Insurance Rebate policy remains unchanged and—
by way of emphasis—
will remain unchanged.
How much longer do we have to listen to these statements which we now know to have never been the intention of the government?
Just yesterday, we had the gross misfortune of listening to a tirade by Labor Senator Cameron, trying to vilify the then coalition government in terms of its expenditure and its commitment to health. Let me place these figures on record. It is an area, of course, in which you, Madam Acting Deputy President Moore, have a particular and keen interest. Health and aged care spending: 1995-96, $19½ billion dollars spent by the Commonwealth government, increasing to $52 billion by 2007-08. Public hospital spending: 1995-96, $5.2 billion; 2007-08, more than double, to $12 billion. Funding to the states to support their health initiatives: 1993 to 1998, $23 billion; 1998 to 2003, a leap to $31 billion, and, in 2003 to 2008, $42 billion. And we continue to hear stupidity and nonsense from intelligent and otherwise honourable senators of the other side talking about the apparent billion dollars of Mr Tony Abbott when he was health minister. There never was $1 billion taken out of the health budget. It simply was a forward estimate in the forward papers of that era. There never was a $1 billion black hole by Mr Abbott.
Senator Jacinta Collins interjecting—
Senator BACK: There never was, Senator Collins.
Senator Jacinta Collins: Well, he was planning—
Senator BACK: Let us go forward. Do not speak about—through you, Madam Acting Deputy President—what people might have been planning to do; listen to the quotes I gave in the last few minutes from Ms Gillard, Ms Roxon and Mr Rudd. What were they planning to do? Heavens above!
We then learn that, under this government, in June 2010, the highly respected Professor John Mendoza resigned as chairman of the National Advisory Council on Mental Health. Why? Because of the lack of action of this government in the area of mental health. So it begs the question: why has Labor changed this policy?
There are several reasons. One is on the corner to my left: because it is driven by the Greens political party who want to see the destruction of private health. Another is: because of the massive budget blowouts of this government, because of the incredibly high levels of debt, because they know they are facing another deficit this year, as they will be next year. Let me just remind you: the last time Labor was in government in the Hawke-Keating era the coalition was left to repay a debt of $96 billion a year, then costing some $6 billion—thousand million—a year in interest alone. We know now that that figure is $230 billion, racing towards $250 billion. And this government continues to borrow $100 million a day, every day of the week—not the working week, the entire week. So if you want to start to try to ramp back, who do you attack? You attack hardworking, middle-class Australians.
But this is bad policy. Why is it bad policy? Let me give you the analogy of a pool—a pool of money—into which the government puts 30c of each dollar, that being the private health rebate. But on the other side of the coin, the person taking out that insurance puts in the other 70c. How smart is it to remove that 30c, or a proportion of it, only to have the private health insurer taking out either their 70c or a significant proportion of it by reducing their level of cover? Where is the validity of such a decision? We all know what happens to the pool of money—the pool dries up—and we know that it drives people back to an already overstretched public health system.
These are the facts. The private hospital system in this country currently treats 40 per cent of all patients, being more than three million a year, and, more importantly, performs over 60 per cent of surgeries. Six out of every 10 surgeries in this country are performed in the private hospital system. The Productivity Commission found that the private hospital network treats patients more cheaply and at least as safely as public hospitals, if not more safely. In 2007-08 the government spent $31 billion on the public health system and, in contrast, only $1.7 billion on private hospitals through the private health levies.
We are all acutely aware that we have a rapidly ageing population in this country. Why would we place at risk the medical and hospital care of an ageing population by removing the 30 per cent rebate? The very group that we will be driving out of private health are the young people of this community—the ones who draw least on the health system, be it private or public.
Let me give you some examples. We have heard from the current Minister for Health, Ms Plibersek, who has decided to demonise high-income earners and even middle-income earners who, she says, should not receive subsidies from the lower income areas of this community to support their private health insurance. The minister should be reminded that, as she well knows, there is already a 1.5 per cent Medicare levy on taxable income to support the public health system. Furthermore, if high-income earners fail to have public health cover they can add a one per cent Medicare levy surcharge to their payments to the community. There is the subsidy from higher income earners. Quick calculations: somebody earning $80,000 a year together with superannuation and fringe benefits who does not take out private health cover will be paying $2,000 per annum towards supporting Medicare. There is the support from higher income earners. Even if that person takes out private health, at 1½ per cent on their $80,000, they will be paying $1,200 in Medicare levy a year. As I was reminded recently, that taxable income includes overtime and zone allowances. What we are really doing is saying, 'The harder you work, the more overtime you work and the more you earn, the more you will be imposed with a levy.' This, apparently, is what this government wants to move towards.
Why is it so dangerous? Why is it such bad policy? As we know, older people in the community have the greatest demand and the greatest draw on the health system, and that is getting even greater. My understanding is that these figures are accurate: people under the age of 19 years would exercise about 15 per cent of the national health budget; from 20 up to 65 it is about a quarter, about 23 per cent; and from 65 onwards, 60 per cent of the nation's health budget is spent on that age demographic. The more we keep young people in private health, where they are not drawing on the need for health and hospital cover, the better it will be for older members of the community. The Labor government might say, 'Yes, but of course the reduction of the rebate is limited and therefore lower income people will be less disadvantaged.' The simple fact of the matter is that, as the pool of private health funding reduces, the inevitable outcome must be that premiums will go up and people will start to take a reduced level of cover, if they take out cover at all. These are the sorts of areas that we need to be addressing and that this legislation will strike right at the heart of.
We hear from Minister Plibersek that this is only a tax on wealthier people. It is an interesting statistic in Australia that one million-plus households earning less than $26,000 per annum take out private health cover. Private health is not something for wealthier Australians—it is across the board. It is something that young families, middle-aged families and families with younger children and teenagers engage in, and it is an area that older Australians value very deeply. Why does this government want to attack the very surcharge levy that it said it would never touch?
I come to the reaction from people in my own community of Western Australia regarding the feedback from the Hospital Benefit Fund, which is a not-for-profit fund. This is not a fund that is trying to extract vast sums of money from its members, it is one that pours its funds straight back into members' conditions. Already, HBF estimates that 25 per cent of its members will see a big hike in their premiums, and this will increase to 43 per cent. That is an increase in premiums for those who will be hardest hit. We know already that the funds are battling to keep their premium increases to a minimum. The Minister for Health, Ms Plibersek, has only recently approved an average increase of 5.06 per cent. Many members are already anxious about the implications of the removal of the rebate of up to 30 per cent.
Another point made to me by this organisation is the sheer complexity of the processes as they are now being presented to the parliament. The legislation, which applies a means test to the rebate and further complicates the Medicare levy surcharge, will only serve to compound this complexity. It will only serve to discourage those who are already planning to come into private health. It may also accelerate the move of those who now believe they cannot afford it or they must reduce their premium levels. These are great concerns.
We have a wonderful health system in this country. We have a combination of public and private health care. There are all sorts of models. Models that would be best in this country have been put to me. These models suggest we move everybody into private health cover and then provide premium relief or payments for those unable to afford those premiums. We must continue to have competition to drive prices down, to keep quality up and, above all, we must do what we can to preserve and protect both the private health and the public health systems. This legislation is simply a grab for money. It is not about health policy. It should not be supported.