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Wednesday, 14 March 2012
Page: 1775


Senator THISTLETHWAITE (New South Wales) (17:25): One of the greatest challenges facing our nation at the moment is the ageing population. One of the issues that we face is the ever increasing health budget associated with the ageing of the population. That is why these bills are so important. They shall restore sustainability to our health system. They shall ensure that our health system remains effective and efficient in the treatment of patients in both the public and private systems.

I want to dispel one of the illusions of those opposite. Make no mistake: this government remains committed to supporting people taking out private health insurance in this country. In fact, the number of Australians taking out private cover continues to grow, and there are 10 million people with private health insurance in Australia at the moment, the highest number of people since 1982. These bills are about creating the right balance in the provision of health services in our country. The government's support of a mixed model means that our health system can remain sustainable into the future and making these changes will allow the system to restore and rebalance their overall welfare and allow a fairer distribution of benefits.

The vast majority of taxpayers who have the benefit of private health insurance will see no change to their premiums. This is a far cry from the doomsday rhetoric coming from the opposition. The package will see single people earning $84,000 or less and couples or families earning $168,000 or less receive the same rebate that they get now. Those opposite know that the system is currently unsustainable and unfair to those on lower incomes. If this unsustainability is allowed to continue, this rebate will begin to swallow up larger and larger proportions of the Medicare levy each year.

Single people who earn more than $84,000 get almost 28 per cent of total funds available under the private health insurance rebate scheme; at the same time, people earning this much make up just 14 per cent of those eligible from the rebate. Couples earning more than $168,000 get almost 21 per cent of total funds available under the private health insurance rebate scheme but, at the same time, those people earning this much make up just 12 per cent of those eligible for the rebate. We have a situation where around 26 per cent of people eligible for the private health rebate get almost 49 per cent of the total funding available under the scheme—a perfect way to highlight the unfairness and instability of this scheme. This is a scheme and a system that was implemented by the Howard government. That government gave Australia a system that benefits wealthier people at the expense of people that are less well off in our community. It is the view of this government, the Gillard government, that that situation is unsustainable.

These reforms are about redressing this imbalance and ensuring that our health system does not crumble under the weight of a scheme not designed with equity in mind, and this government has a plan to address that inequity. Under these bills, the 14 per cent of single taxpayers earning more than $84,000 a year who have private health insurance will get around 12 per cent of the total funds available under the private health insurance rebate scheme. Under these bills, the 12 per cent of couples earning more than $168,000 a year who have private health insurance will get around 12 per cent of the funds available under the rebate scheme

That is around a quarter of the people eligible to access the system getting around a quarter of the funds available. Clearly, it is a much fairer and more equitable distribution of the funds under the scheme. It also means that our health system is placed back on a sustainable path for the future.

The government's legislation is importantly supported, wholeheartedly, by the Australian Healthcare and Hospitals Association. The AHHA is an independent peak body, an advocate for the Australian healthcare system and a national voice for universally accessible high-quality health care. The AHHA says that means-testing the rebate will result in a fairer use of public health funding and will not impose an additional burden on public hospitals. The AHHA is correct to say that this, and Treasury modelling shows us that 99.7 per cent of people with private health insurance will keep their policy under these measures.

When talking about maintaining private health insurance in this country and promoting a change in behaviour to ensure that more people take out private health insurance, it is the additional Medicare levy which has been the most effective public policy tool in promoting and encouraging people into private health insurance, not the health rebate implemented under the Howard government. Under the current system the private health insurance rebate is expanding at a rapid rate. The projections tells us that if it is unchecked it will double over the next 40 years as a proportion of health expenditure.

The government's proposed changes contained in the bills will result in savings of $2.4 billion over the forward estimates. These bills were before the parliament in June 2009 and March 2010. On both occasions they were opposed by those opposite and defeated. The cost to the budget is already in the line of $890 million. It is now time for those opposite to recognise the damage that they are doing, particularly given that they claim to be fiscal conservatives interested in reducing debt and wastage and ensuring that our budget outlays, particularly in health, are not unsustainable and unfair. Those opposite must recognise that a fairer and more equitable private health rebate system is in our national interest and in the interest of long-term viability of a sustainable health system. The time has come to stop playing politics with our health system. Opposition for opposition's sake means that over the next 40 years the cumulative impact on the health budget will be almost $100 billion. With a budget black hole of $70 billion it is hard to see why those opposite would be opposed to this measure.

The bills will introduce a three-tier private health insurance incentive scheme. The first tier will apply to singles earning more than $84,000 per year and couples earning more than $168,000 per year. People in this bracket will receive a rebate of 20 per cent. Between the ages of 65 and 69 the rebate increases to 25 per cent and after the age of 70 the rebate increases to 30 per cent. There is no change in the Medicare surcharge for people in this bracket. Under the second tier of this scheme, applying to singles earning more than $97,000 per year and couples earning more than $194,000 per year, people in this bracket will receive a rebate of 10 per cent. Between the ages of 65 and 69 the rebate increases to 15 per cent and after the age of 70 the rebate increases again to 20 per cent. For those in this bracket, the Medicare surcharge will increase to 1.25 per cent of income. The third tier will apply to singles earning more than $130,000 per year and couples earning more than $260,000 per year. This third tier will receive no rebate. Taxpayers in this income bracket who do not hold private health insurance will pay a 1.5 per cent Medicare surcharge. It is this surcharge that has been effective as a public policy measure, in ensuring an increase in people moving to private health insurance.

All of these brackets will be indexed to the average weekly earnings. These bills ensure that the balance is kept in our healthcare system—particularly important given the ageing of our population. These bills represent a careful and well-thought-out approach to the mix of private and public health care in this country. They end the waste in our healthcare budget. They restore sustainability, something that is clearly lacking in the design of the system under the Howard government. It is for those reasons that these bills must pass the Senate. They must pass because they are vital to our health system and they are vital to our national interest and the long-term sustainability of the greatest area in our budget, our health budget. I commend these bills to the Senate.