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Wednesday, 14 March 2012
Page: 1788


Senator SINGH (Tasmania) (18:26): I rise to speak to the Fairer Private Health Insurance Incentives Bill 2012 and related bills, a package introduced by the Gillard Labor Government. At the core of Australia's progressive income tax system, supported broadly by both major parties over a long period of time, is the basic observation that some in our community do not have the earning power of others and that taxing those people at the highest rate would be unjust. It is based on the observation that those who reap the prosperity of a strong and stable economy should give back to the society that has created the conditions for their success. It is also based on the understanding that those who earn more are able to satisfy their fundamental needs and have the opportunity to use their additional income to make choices about their lifestyle and their priorities. These choices are less often available to those on lower incomes, where a higher proportion of money earned goes on the basics and the essentials.

In this country we have a robust public health system. All Australians are entitled to primary health care and to hospital cover through the Pharmaceutical Benefits Scheme and our universal Medicare system. Labor has always been committed to the universality of healthcare because we have always been committed to equal access to the fundamental determinants of a quality of life. But Labor's approach to public policy—and the approach reflected profoundly in the Australian character—is one of fairness. That so many people should have the opportunity to use their prosperity to expand their life choices is something about which Australian society should be proud and Labor certainly is. But it is the goal of our party to extend those choices and that freedom to all Australians. The options available to the few should never be at the expense of the rest of society.

Throughout the tenure of the Howard government, that is exactly what happened. The coalition pursued an agenda that was not about good, sound public policy and economic management. Instead the coalition dedicated itself to strengthening its support amongst higher income Australians, establishing a number of vast spending programmes that directed money not where it was needed but instead where it was politically advantageous for them. While there are a number of examples of this policy—from youth services to tax cuts to education—there is no clearer example than the subject of today's bills: the private health insurance rebate.

This scheme was ostensibly designed to encourage Australians into private health insurance and take the pressure off the public system—a euphemism constantly employed by the coalition for ripping money out of basic health services. This scheme, in its universality, was based on the notion that the private health insurance market, in and of itself, does not provide adequate incentives for Australians to subscribe to it, quite contrary to the market fundamentalism usually espoused by the coalition. Under the Howard scheme, approximately 14 per cent of single taxpayers who have incomes above $80,000 per year received about 28 per cent of the total private health insurance rebate paid to singles based on their average premium. Approximately 12 per cent of couple taxpayers who have incomes above $160,000 per year receive about 21 per cent of the total private health insurance rebate paid to couples based on an average premium. These figures represent a significant overrepresentation in expenditure towards these population groups—the population groups that are far less likely to require a rebate in order to have access to private health insurance. In fact, were their rebate levels to be reduced in the manner proposed by these bills, it is predicted that 99.7 per cent of private health insurance policyholders would choose to retain their cover.

This means that Australian taxpayers on low and middle incomes are subsidising Australians on very high incomes on the basis that those on higher incomes deserve an incentive to opt for private health. It is incomprehensible to me that fairness could mean that those who work in aged and community care or as cleaners or childcare workers should subsidise the very well off. Ignoring the fact that this rebate could not achieve its function of providing a genuine expansion of choice or incentive into the private health system, the Howard govern­ment chose to introduce this policy which has now become the fastest growing area of health expenditure. This is typical of the fiscal management of the coalition which has always chosen to redirect precious public money to an area of political, rather than social, gain at the expense of the broader health system.

The bills before the chamber right now represent an effort by this Labor government not only to build fairness back into the system of private health insurance incentive system but also to restore fiscal and budgetary responsibility into the manage­ment of our health system. In the 2009-10 budget, the government announced that it would introduce means testing for the private health insurance rebate and increase the Medicare levy surcharge for people on higher incomes who do not hold private hospital cover. Means testing for the rebate will be implemented over a number of private health insurance incentive tiers. The tiers will establish four income categories, the first of which—singles earning $84,000 a year or less and families earning $168,000 a year or less—will continue to receive the full rebate. These are the people who do not necessarily have access to the suite of options for discretionary spending, like private health cover. These are the people who will benefit from some assistance—assistance that just might determine whether they are able to access private health.

Despite nine out of 10 Australians not being affected by these changes, these reforms will result in savings to the public balance sheet of more than $2.4 billion over three years, which will be reinvested by this Labor government into services that all Australians need. As the Minister for Health said when she spoke on these bills in another place, it is next to impossible to find another item from the health budget like this one which can be cut without an appreciable effect on the services that Australian taxpayers enjoy. There could hardly be a clearer indication that the scheme was poor public policy to begin with. Only 10 per cent of Australians will be affected by this change and, contrary to the opposition's assertions, only 0.3 per cent of Australians are predicted to alter their cover as a result.

The coalition asserts that, as a result of changes in the private health insurance rebate, premiums will rise, putting pressure on lower-income policyholders. Of course, it does not take an economist to notice that premiums for private health insurance—indeed, the cost of health care generally—go up each year. When the Leader of the Opposition was the Minister for Health and Ageing, rises in private health insurance premiums were as high as seven per cent per year. Premium rises are averaging around five per cent a year now, thanks in part to the strong and stable private health sector which this government has fostered. But the point is that the Labor government supports industry and the health sector with fairness and, in order to make access to private health both fair and responsible public policy, serious reform of this type is needed.

Where the coalition designed policy for the wealthy minority, the Labor Party will always dedicate itself to designing fair policy for a strong society, the settings for an economy in which all people have the chance to succeed. While I have no doubt that the private health insurance rebate is appreciated by those who received it under the Howard government, it is not and should not be the priority of government spending when those in genuine need of assistance still struggle. There is a clear correlation between household earnings, socioeconomic status and health outcome.

In my home state of Tasmania, we are fortunate to enjoy a unique quality of life. Sadly, many do not have the health to enjoy it. In fact, health inequality is one of the biggest challenges now facing Tasmania, the state with the second highest burden of disease and injury of all states and territories. The average Tasmanian adult working full time earns less than $1,200 per week, making the average income less than $70,000 per year. The high levels of cardiovascular disease, cancer, diabetes, asthma, lung disease, kidney disease, arthritis and depression that Tasmanians experience disproportionately affect those with lower incomes. These are the people who need government assistance. These are the people to whom welfare must be directed, those in genuine need of the compassion which binds together Australian society. These are the people for whom Labor is dedicated to directing its support, those who do not have the freedom about which this opposition mouths platitudes but denies in practice.

This bill is not about undermining the private health insurance sector, a sector that has grown by 960,000 more Australians holding policies than when this government took office and a sector that continues to grow. It is about recognising that if we are genuine about providing health solutions to people then we must direct government funding to the areas in which there is genuine need. It is about recognising that if we are to provide choice and fairness we must make sure that where government subsidies are used to encourage participation they are a true and useful incentive. And most of all these bills are about recognising that good public policy must reflect the character of this nation and be imbued with the sense of fairness that is at the core of being an Australian.