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Wednesday, 14 March 2012
Page: 1784


Senator BIRMINGHAM (South Australia) (18:06): I come to this debate with a fairly firm belief. It is a belief that private investment in activities like health care is something that should be encouraged. It is a belief that the systems that we support out of this place—that are society, that are government, that are laws—should encourage people to invest privately where they can in things like their health care and the education of their children. That of course is not to say that government should not have safety nets in place. We absolutely should—and, as a country, we should be proud of the types of safety nets we have in these areas. Medicare provides an outstanding safety net in terms of health care for Australians. Could it be better? Do we wish that we could provide even better health care for all Australians? Of course. It is, indeed, an area of never-ending demand, but we should be proud that we provide that. We should be proud that our education sector is a great education system. Could it be better? Absolutely. Does it need areas of revival? You bet. Does it, perhaps, even need a real revolution rather than a bricks and mortar revolution? I would argue that it does. Nonetheless, we have a great situation when it comes to the types of safety nets we provide. We should continue to do that, we should fight to preserve them and we should fight to make them better all the time. But we should not do those things at the expense of private investment in people's health or education.

I now come to this legislation, the so-called Fairer Private Health Insurance Incentives Bill 2012, with the concern that this legislation undermines the principle that people should be encouraged to invest in their own health care. People who can afford to do so should have support, encouragement and incentives from government to invest in supporting their health insurance and their health care. Why is that important? Why does private investment help in this regard? Because the more people who can afford to invest in their health care do so out of their own pocket, the more there is left for government to spend on making those safety nets better. That is the fundamental point, or it should be the fundamental point, of this debate. The more we get Australians to dig into their pockets where they can afford to do so, take out private health insurance and take some responsibility for their health care, the more there is left in the general revenue bucket of taxation for the Commonwealth to support state governments, the public health system and public hospitals and to provide the best possible level of safety net for those who cannot afford to take out private health insurance. Regrettably this legislation fails that test.

This legislation will see fewer Australians invest in private health insurance. It will see fewer Australians take responsibility for their own private health care. It will see less money spent by Australians on private health insurance and less money spent by Australians in the health sector. What does it mean when Australians spend less of their own money in the health sector? It means that governments will be left to spend more or that resources and services within the health sector will be stretched even further. They will be the end results. We will see governments having to prop up the public health system with more money, to raise taxes in other ways, to increase revenue from taxpayers in other ways and to fund public hospitals, the Medicare system and the public health system because there is an increase in demand—or, as my colleague Senator Cash said before, we will simply see an erosion of the services available in the public health system and we will see longer waiting lists, greater delays and more people suffering as a result.

These are the principles on which I oppose this legislation. These are the principles on which I opposed the legislation that went before this so-called Fairer Private Health Insurance Incentives Bill, legislation that this government brought before us previously to try to rip away the incentives for private health insurance and, in doing so, to destroy that incentive, that mechanism, through which Australians invest by looking after themselves and putting more money into the health system.

It is not just the principle of what is good public policy that makes me oppose this legislation, it is the continuing betrayal of the Australian people by this government. Senator Cash and others have highlighted this, and I also highlighted it in my previous contributions when the Senate rejected the predecessors to this bill. It is a betrayal because it is the opposite of what the Labor Party said they would do when they went to the people as an opposition seeking election to government. Many times over, different representatives of the Labor Party stood before the Australian people, hands on hearts, and said, 'We won't be stripping away the incentives for private health insurance.' It is quite reminiscent of other promises, the most famous of all being Ms Gillard's promise that there would be no carbon tax under a government she leads.

It is, as my colleague Senator Williams and I were discussing, a matter and a question of trust. It is the trust that Australians should be able to have in their politicians. We all know in this place that perhaps that trust is at too low a level in the public mind. We should all question why that is the case. You do not need to look terribly far when you see politicians—and in this case Labor politicians time and time again—staring down the barrel of the camera during election campaigns, saying one thing, promising one thing and then doing completely the opposite after the election.

Let us have a look at what some of Labor's leadership team, Labor's spokespeople, said before they came into government about the private health insurance rebate and their approach to it. Let us have a look at what the now Prime Minister, then shadow minister for health, Ms Gillard said in a letter to the editor in the Hobart Mercury on 2 September 2004:

I grow tired of saying this: Labor is committed to the 30 per cent private health insurance rebate.

Ms Gillard was growing tired of saying it. She took the voluntary step, on her own volition, of writing a letter to the editor of the Hobart Mercury to say that she grew tired of saying how committed Labor was to the 30 per cent private health insurance rebate. It is a shame that that commitment did not last when they went into government. It is a shame that that commitment was only about winning votes from opposition. Ms Roxon, now the Attorney-General and previously the health spokesperson and, of course, the health minister who introduced this legislation trying to dismantle the private health insurance rebate, in a media release on 26 September 2007, which we will assume she authored or approved of—and, like a letter to the editor, this was hardly a format in which she was verballed or taken out of context in any way—said:

On many occasions for many months, Federal Labor has made it crystal clear that we are committed to retaining all of the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

'On many occasions for many months', she said, so of course it was not just a one-off media release by Ms Roxon, trying to reassure voters running up to the 2007 election. No, it was on many occasions for many months that she and the rest of the Labor Party team made this solemn promise—over and over and time and again—that they were committed to the private health insurance rebate, a commitment that was actually only valid whilst they were in opposition.

Mr Rudd, by then the Prime Minister—so, indeed, the alleged commitment remained into the early years of government—said at a press conference on 25 February 2008:

The private health insurance rebate remains unchanged and will remain unchanged.

That must have been one of the most pithy, short and succinct quotes that Mr Rudd ever gave. His time as Prime Minister was renowned for convoluted language and long, hard-to-decipher and incomprehensible words that he would throw in to mask whatever his true intent was. But on this occasion there was no doubting his true intent. The true intent of the then Labor Prime Minister was that the private health insurance rebate would remain unchanged. He was, of course, just saying what they had said in opposition.

On 24 February 2009—by then 18 months into government—Ms Roxon said to the Age newspaper:

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

So firmly committed were they to retaining the existing private health insurance rebates that the commitment could not even last for the rest of 2009. They could not even last the year out before the commitment evaporated and then we saw the government attempting to unwind the existing private health insurance rebates. We have seen them try it several times throughout this parliament, and thankfully this chamber, the Senate, has stood in the government's way. It has stopped the government from breaking its promise—a promise that would see an undermining of private health insurance and private investment into health care in this country and, as a result of that, a higher cost for the public health sector and for taxpayers in this country.

The Senate has blocked this legislation before. I know, as I stand here and reflect on the contributions of other senators, that the chances of it doing so again look somewhat slim. But I implore my colleagues to reconsider their positions on this bill. I implore those opposite—the government and their governing partners, the Greens—to reconsider where they stand on this legislation and to think about whether they should in fact honour the words of Ms Roxon, of Mr Rudd, of Ms Gillard and of many other Labor spokespeople who promised, time and time again, not to do exactly what it is that they are asking this Senate to approve of them doing today.

Of course, we know that Labor desperately need to prop up their budget. With all of the waste, all of the mismanagement and all of the billions of dollars of debt that no doubt we will see in the not too distant future, the government will come back to this chamber and say, 'Oh, you know that increased $250 billion debt ceiling we got the parliament to approve recently? Well, that is not enough. We're going to need more.' I am sure we will see that bill and will have that debate in this place during the course of this year. With such massive debt piled up during the reign of the Rudd and Gillard governments, it is obvious they are desperate to clutch dollars from wherever they can get them. In this case, they are of course targeting those who seek to make that investment in private health insurance.

So who are the types of people who invest in private health insurance? Are they all the rich silvertails that we get the impression of? Indeed, the new health minister, Ms Plibersek, stands there at the dispatch box in the House of Representatives and talks about the Parliament House cleaner subsidising the health insurance of the health minister or other members of this place. Is that the situation we have? Well, no; patently, it is not. The statistics indicate that there are 5.6 million Australians who have private health insurance who have annual household incomes of less than $50,000 and 3.4 million who are on an income of less than $35,000. So many people struggle to be able to afford their health care, to be able to make that investment.

I know what those opposite will say in response to that. They will say, 'These are not the people targeted by these changes. Because there is means-testing, these people will still get the rebate.' But that ignores, as this government so often does, the fundamentals of how something like the private health insurance market works. Something like the private health insurance market, and any insurance market in general, relies upon having the broadest possible coverage, relies upon having the greatest number of people and, in particular, relies upon having the greatest number of healthy people in it to underwrite the finances of the system.

What we see, and what all of the evidence points to as a result of this legislation, is that fewer people will have private health insurance going forward. More Australians will look at the fact that the government is stripping away the incentive for them to take out private health insurance and decide that it is just not worth continuing to pay it. They will not make that investment themselves anymore, and that means fewer dollars going into the overall pool of the private health insurance fund. It means fewer people there, and the result of that will be that we will see higher premiums in the future. The Deloitte report that looked at this estimated that in the first year alone 175,000 Australians will withdraw from private hospital cover and 583,000 will downgrade their cover. It estimated that over the next five years 1.6 million Australians will withdraw their private hospital cover should these changes be implemented and 4.3 million Australians will downgrade their cover. It is important to remember and reflect on both of those statistics: those who totally opt out and those who downgrade. In either event they are reducing the extent of private investment into their health care and the size of that private insurance pool and, as a result, the private health insurance industry will need to put their premiums up. In fact, the same Deloitte report predicted that we would see a 10 per cent rise in premiums above what would otherwise have been expected as a result of this legislation. It becomes this vicious spiral where the higher costs mean that more people drop out, and the more people drop out the higher the costs. That is the spiral—a death spiral of sorts—that this government will plunge the private health insurance industry into as a result of their changes.

What will that mean? What are the flow-on effects of that for the public system? The Deloitte report found that another 845,000 admissions to public hospitals will be required over the next five year. To put that in dollar terms, so far as it can be estimated, there will be an additional $3.8 billion in recurrent costs for the public hospital system as a result of these types of changes. These are massive costs that no government in this country is currently well placed to meet. State and federal governments alike are all grappling with deficit budgets and significant debts with only one or two exceptions to that. So we have a situation where either the debt and deficit will go up, the rate of tax will have to go up or, of course, the service delivery will be reduced and more people will be left to languish on the waiting lists.

Some people listening will have thought the numbers of people involved in the insurance industry who do make that personal investment of their own accord are quite remarkable, and they are remarkable. In South Australia, in the electorate of Hindmarsh, 69 per cent of voters were estimated to have private health insurance when I last spoke on this matter. That is more than 89,000 Hindmarsh inhabitants covered, or 68,000 voters covered by private health insurance. These people will be the ones who suffer, as they will in every electorate right across the country. Members like Mr Georganas and others should answer why they think the government deserve to break the promises made on countless occasions to keep this and why it is that they are hell-bent on destroying private investment in the health insurance industry rather than encouraging people to add to the pool and to grow the size of money available for the health care of all Australians into the future.