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Wednesday, 1 December 1976
Page: 3028


Mr SPEAKER -I have received a letter from the honourable member for Oxley (Mr Hayden) proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The undesirable economic consequences of the Government's Health Insurance arrangements.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the Standing Orders having risen in their places-

MiHAYDEN (Oxley) (3.13)-The Government's health insurance arrangements are responsible for undesirable economic consequences. They are responsible for those undesirable economic consequences at a time of considerable difficulty in managing the economic affairs of the nation. They have added greatly to the problems of economic management. They are ill-advised. There are 3 main thrusts to this argument Firstly, at a time when consumer demand ought to be stimulated and not cut back, least of all cut back severely, the proposals for the imposition of compulsory charges for all wage-earners- with few relatively minor exceptionsresult in a reduction in spending power in the community and, accordingly, a reduction in consumer demand. Secondly, the imposition of charges, whether they be the Medibank levy or compulsory subscriptions to private health insurance funds, results in a reduction in personal incomes and in living standards. Thirdly, as as result of these combined factors the arrangements will result in industrial unrest which in turn will lead to costs which will have to be borne by the community at a time when this sort of unrest ought to be avoided as much as. possible.

I will deal with the first of these points, the proposition that the arrangements have been responsible for a substantial reduction in the capacity of consumers to demand goods and services in the market place. In the course of a full year the cost of the Government's proposals, in terms of charges that have to be met by the community, reaches something like $900m. The community will not receive for that additional outlay anything more than it was receiving before. That is to say, the new Medibank arrangements do not provide more medical services or more hospital services and they do not provide more money for the States for their public hospital services than would have been the case under the original Medibank arrangements. So the community is paying near enough to $900m more for something which it was receiving already. Accordingly, its capacity to demand goods and services in the community is reduced by that amount, and the cost of living will rise as a result of this action.

Incidentally, it is not without its irony that a government declaiming its opposition to compulsion in the community should be responsible, by its stated intention, for conscripting half of the community into private health insurance funds, into commercial organisations, just as it conscripted youth into Vietnam. I always find it remarkable that the conservative coalition parties can always declaim that they are opposed to compulsion and that they want freedom of choice in the community; yet they resort so frequently to the imposition of compulsion. I find it even more remarkable that the media scarcely find it worth commenting on.

Let us look at the effects of a reduction of $900m in consumer spending in the course of a full year. It is the equivalent of something like 24 000 houses costing $35,000 each. That represents between 40 per cent and 50 per cent of the worth of new houses in a year. That is the sort of cutback that is imposed on the economy as a result of this decision. It is the equivalent of about 170 000 motor cars valued at about $5,000 each. That is about half a year's production in this country. It is the equivalent of about 1 700 000 refrigerators costing $500 each. The production in this country in a year is about 300 000 refrigerators. It is the equivalent of about 17 million women's frocks costing $50 each. Clearly I am not suggesting that any one of those in the totality I have quoted will be the sort of reduction suffered in that particular industry. I have given those comparisons to illustrate the severe cutback on consumer demand which will arise as a result of a reduction in consumer spending by the private health insurance arrangements of the Government.

It might be suggested that this decision reduces the deficit. The situation with which we have been confronted is that there has been too much ill-informed preoccupation with the deficit. The Government, which claimed that its first objective was to get a recovery under way in the economy, proceeded to implement economic policies which would be directly responsible for a further accentuation of the recession in the country and which would be responsible for a cutback in activity in the business sector, the private sector. We hear so much about the private sector that it has become almost part of the mythology of our community, almost a spiritual incantation, as though it is quite improper to criticise anything about the private sector where the conservative coalition Government is concerned. If that is so, why has the Government decided to cut back consumer spending by nearly $900m a year? That really erodes the position of the private sector of the economy and activity generally within the community. We need consumer spending now, if there is any genuineness, any grain of sincerity, in the Government's claims that it wants to support the private sector and to stimulate a recovery.

Let me take up the second point that I mentioned, namely, the undesirable consequences which will arise from these health insurance arrangements and the effects on personal living standards and on incomes of people. Let me take the case of a person on average weekly earnings. The compulsory subscription to Medibank will be about $4.50 a week. That represents a 17.6 per cent increase on tax to be paid this year. Just imagine if the Government bad been honest for a change, if the Government had been faithful to its objectives contained in its statements about its purpose at the last election, if it had said that it was its intention to increase taxes by 17.6 per cent instead of claiming to reduce taxes, or if it had said that it was its intention to dismantle Medibank on a massive scale instead of pledging to retain the integrity of the Medibank program.

People's living standards will be reduced as a result of the compulsory charges that have to be met. It is true that we proposed that there be charges to fund the original Medibank proposals. That was opposed by the conservative coalition when in Opposition. The opposition was based on a matter of great principle, as articulated by members of the then Opposition: They were opposed to the compulsory contributions implicit in that scheme. The situation in which the present Government introduced the

Medibank levy and imposed the compulsory membership of private health insurance funds on those who decided not to belong to the basic Medibank scheme represented a totally different set of economic circumstances from those which applied when we were in government. It was quite inappropriate for the Government in the situation in the course of this year to introduce those charges because, as I repeat, all they serve to do is to reduce, in the course of this year and next year when economic circumstances will be quite difficult, the capacity of people to demand goods and services in the community. That must be one of the most important objectives if the Government is sincere when it says that it wants to see a recovery in the economy.

It is remarkable, and it ought to go on record, that this Government, which campaigned on the promise to reduce taxes and which asserted its opposition to high taxes, is in fact the highest taxing government in the history of this country. The Government has been responsible for a record increase in taxation this year- a 25 per cent increase in personal income tax, an increase of $ 1,755m, a record increase to a record level of $8, 775m. Of course, in the case of the Medibank levy it is seeking to bypass its responsibilities to the community in the form of tax indexation. By introducing a special earmarked charge- the Medibank levy- the Government has sought to increase its total tax take to considerably above what would have been justified with the introduction of tax indexation, except if the Government cared to come clean, which obviously it does not, and state to the public that it is a high tax government and that in its recent Budget its purpose was to increase taxes substantially. It increased taxes by a far greater proportion than they have ever been increased. It increased personal taxes in the community to a level unparalleled in the history of the nation. Those are the hard facts.

The unfortunate consequence of this direct assault on people 's personal pay packets is that it will provoke union demands for offsetting wage increases or offsetting benefits to cover the costs which workers now have to meet, as a result of the charges which the Government has implemented. This is turn will lead to industrial disruption of one form or another. That again will contribute in its own way to inflation and to the cost of maintaining the Australian economy. It is all so unnecessary, because it is quite undesirable for the Government to adopt those policies in the given economic circumstances with which the nation is confronted at the moment. I put it to the Government that it has been quite dishonest in its dealings with the trade union movement in Australia on the issue of the costs of Medibank and how they will be treated when they feed into the consumer price index. The President of the Australian Council of Trade Unions, Mr Hawke, went away from Canberra several months ago after consultation with the Prime Minister (Mr Malcolm Fraser) on the issue- I rely on my recollection of newspaper reports at the time- convinced that the Government would ensure that the increases in the cost of living arising from the Medibank levy and from compulsory private health insurance would be fed into the consumer price index and would be fully applied in the wage indexation process before the Conciliation and Arbitration Commission.

What has become increasingly clear is that the Government, by devious measures, has sought to avoid all of that increase going into the consumer price index. It is quite clear from figures which were submitted to the Commission- projections of quarterly movements in the consumer price index for all of this financial year- that the level of the consumer price index anticipated by the Government for the December quarter of about 4V4 per cent is well below the level which one would reasonably expect, on an informed basis, in that quarter following the full effects of the changes to the health insurance arrangements. Informed economists were predicting rates between 6 and 7 per cent and some suggested rates even higher than that. Of course, what has happened is- it dawned on me only a fortnight ago when I was again going through the Budget papers on revenue sources- that the Government will treat the Medibank levy, the compulsory levy, as a tax. As a personal income tax it will not feed into the consumer price index.

The Government deceitfully has done this and, in doing so, has not come clean with the trade union movement. It has led the trade union movement to believe that the full effects of the Medibank charges will feed into the consumer price index when only about half will feed into the consumer price index. This is quite dishonest and incompatible with past practices and practices which are pursued today. It is unusual for charges by government instrumentalities to be treated as taxes. We do not treat the charges of Trans-Australia Airlines, the Commonwealth Railways, public hospitals or government departments for services rendered to the public as increases in personal taxes. The only reason the Government has done so on this occasion is to try to whittle down the rate of increases in wages through the wage indexation system which would otherwise have applied, and justifiably applied, if the Government were to honour its obligations and the commitments that it had given to the trade unions.







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