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Monday, 15 September 2008
Page: 1


Senator STERLE (12:31 PM) —I rise to speak on the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Bill 2008. The passage of this bill is about ensuring equity and fairness in respect of Medicare, which is something that senators opposite have repeatedly demonstrated they know nothing about and, quite blatantly, do not give a damn about. On 13 May this year, the Treasurer announced as part of the 2008-09 budget that the Rudd government intended to increase the income thresholds for the Medicare levy surcharge. This announcement immediately sent the opposition into a ranting frenzy, backed up by guess who: none other than the Australian Medical Association—or the doctors union—and also the private health insurance interests and the private hospitals sector, none of which could be said to be warm supporters of the Medicare scheme.

The Medicare levy surcharge tax was introduced by the Howard government in 1997, within months of coming into office. It was evident from the start that the Howard government had been hatching a plan to undermine the Medicare scheme—not in one fell swoop but by a cold and calculated process of attrition. This process continued right up to the time the Howard government left office in November last year.

In the 10 years from the time the Medicare levy surcharge was put into place, the Howard government made no move to increase the surcharge’s income threshold. This was intentional and calculated. From the outset, the Howard government never had any intention of increasing the surcharge’s income threshold levels. To the Liberals, it was the perfect plan just to let things lie and allow more and more Australians to be caught by the surcharge if they chose not to take out private health insurance. Today we have reached the point where single people and couples earning average wages have been sucked into the previous Howard government’s Medicare surcharge trap. This bill will stop that. The bill is principally about setting the income thresholds from where the surcharge will apply to levels that are fair.

There is no justifiable reason why individual Australians and families on average incomes should be penalised for not taking out private health insurance on top of their Medicare coverage. Certainly, there can be no justification for the government to legislate to require average Australian families to subsidise the healthcare costs of the most well-off people in the community, which is what this surcharge amounts to. But, apparently, this is what the opposition wants; apparently, this is what the power brokers in the federal branch of the AMA want; apparently, this is what the Australian Health Insurance Association wants; and, apparently, this is what the Australian Private Hospitals Association wants. It is important that Australian families know this.

The opposition’s stance on this matter has nothing to do with fairness or equity. I ask again: why should average Australian families be required by legislation to subsidise the health costs of top income earners in this country? The fact is they should not, and they will not while there is a federal Labor government. There can be no justification for individual Australians and families on average incomes being slugged with what is, in effect, a punitive tax for not taking out private health insurance cover.

It needs to be pointed out that, under the current Medicare levy surcharge income thresholds, a couple earning average incomes and who have not taken out private health insurance coverage incur a Medicare surcharge bill of approximately $1,200. The opposition is apparently happy to slug average families and couples $1,200 a year, because they have decided that Medicare is the right choice for them as far as they and their families’ healthcare needs are concerned. Despite all the fearmongering engaged in by the opposition and their supporters, Medicare will always remain an excellent choice for Australian families while there is a Labor government in power.

For 11 years, the Howard government made a complete shambles of health policy and health funding in this country. From day one, its private health insurance premium subsidy scheme and related policies did not produce the benefits for the public hospital system that the Howard government promised. As the Australian Institute of Health and Welfare has revealed, the Howard government had been progressively reducing its share of public hospital funding for years prior to the November 2007 federal election. It did this while it played a game of vilifying state and territory governments’ management of their public hospital systems and, by implication, poured a bucket over the dedicated staff who work around the clock in Australia’s public hospitals. This is the sort of devious and destructive approach to healthcare policy and the Medicare scheme that the coalition parties have practised for years. The Liberal Party are serial offenders when it comes to stuffing up Australia’s health system. Every time the Liberal Party gets into power they wreck the health system—every time! And they wonder why they get kicked out of government.

We must not forget the reason that we have the Medicare scheme today and that before that we had the Medibank scheme is that prior to these schemes Australia’s health system, under conservative government management, was descending into chaos. It was fortunate that during the period of the Howard government we had Labor state and territory governments. It was these Labor governments that ensured that the country’s public hospital system was not permanently crippled by the lack of funding from the Howard government.

However, make no mistake, Australia’s public hospital system was badly damaged by the Howard government. That is why the Rudd Labor Government has already committed an additional $1 billion this year for hospitals. It is important that the Australian public is made fully aware of the extent of the damage that the Howard government has done to Australia’s public hospital system. The fact is that the Howard government’s private health insurance changes did not take the pressure off the public hospital system. There are a number of reasons for this. Firstly, Australian Institute of Health and Welfare statistics show that over the past five years there has been no reduction in the complexity of the patient load carried by the public hospital system. Simply put, the public hospital system continues to carry the major load with respect to patients who require the most expensive care and treatments, and this load is increasing, not decreasing. The Australian Institute of Health and Welfare statistics reinforce the impression that, rather than take on a greater share of the heavy lifting that is the daily work of the public hospital system, the private hospital system has found a comfortable niche in providing relatively low-cost, high-turnover, short-stay treatments. Obviously, patients that fall into this category are significantly more profitable than the longer stay and more medically complex patients that are predominately treated by the public hospital system.

Secondly, Australian Institute of Health and Welfare statistics show that the number of private hospital available licensed beds in Australia declined over the past five years. In comparison, over the same period, the number of public hospital available licensed beds increased by approximately 4½ thousand or almost nine per cent. I would like someone to explain to the Australian community how, with a growing and ageing population, reducing the number of private hospital licensed beds will result in increased pressure on public hospital beds. A major problem that affected the public hospital system over the period of the Howard government was the relentless growth in the demand for public hospital emergency department services. The former Howard government’s health policies did nothing to stem or redirect the flow of patients into public hospital beds via public hospital emergency departments. This flow increased substantially during the period of the Howard government—at the same time as the Howard government was reducing its share of public hospital funding.

We need to remember that many of these emergency department attendances require the person concerned to be admitted to hospital for emergency treatment, often for very complex and costly medical conditions and injuries. In 2006-07 there were 6.7 million attendances at public hospital emergency departments. That figure represents almost a million more attendances than five years ago. By comparison, the number of private hospital emergency department attendances over the past five years fell by 11 per cent. As far as hospital services are concerned, the Howard government effectively left the public hospitals and the state governments to do all the heavy lifting. What do these figures tell us? What they do say is that the Howard government’s health and hospital policies in no way took the pressure off the public hospital system. In fact the opposite occurred. The Howard government policies increased the pressure on the public hospital system.

Thirdly, as well as having to deal with substantially increased demand pressure as a result of the Howard government’s health policies, the public hospital system has had to deal with severe financial pressures because of the former Howard government’s policies. One of the justifications used by the Howard government for its private insurance changes was that the changes would bring about a much higher funding contribution to Australia’s hospital service from the private sector. Sadly, this did not occur. By 2006-07, non-government contribution to the cost of hospital services in this country had fallen from 26 per cent in 1995-96 to approximately 18 per cent. In other words, the Howard government’s changes to private health insurance, including the Medicare levy surcharge, have resulted in an increase in government’s share of hospital services costs. This is crazy. Wasn’t the idea of subsiding private health insurance premiums to encourage more private money into hospitals, not less private money? Unfortunately, this is a very sad joke. I will go one step further and say that it is a complete stuff-up. And here we are having to put up with the farcical spectacle of those opposite trying to make out that they know something about health policy. They know nothing and they have learnt nothing.

Labor has repeatedly acknowledged that the private health insurance industry and the private hospital sector have the potential to play a useful role in meeting the needs of people who prefer to have access to private hospital and private in-patient medical care. If done efficiently and effectively, there is no doubt that the private health sector can play a constructive and complementary role in ensuring that Australia has an equitable, high-quality, efficient and sustainable healthcare system. However, as a result of policies of the previous Howard government, the private health fund industry is now one the most government subsidised industries in Australia. Over 30 per cent of its revenue now comes from the Australian taxpayer, including hundreds of millions of dollars which go into subsidising the high level of administrative costs incurred which are a feature of the private health insurance industry.

Where is the accountability expenditure of this level of taxpayers’ money by the private health insurance funds? Under arrangements set up by the Howard government, there is virtually none. There are no performance agreements between individual health funds and the government with respect to this funding. There are no performance requirements about the effectiveness of the health services that the funds buy for their members when they use this enormous level of government funding. There are no efficiency measures in regard to the services that are in effect purchased by this government funding. Unlike the public hospital system, there is no real accountability or public scrutiny of the return the taxpayer gets from subsidising private health insurance premiums.

To make matters worse, the private health funds freely admit that they have no control over what they pay for hospital and medical services for their members. If that is the case, what exactly is the point in having a whole lot of organisations that do nothing more than move money from point A to point B and, unfortunately, take a 10 per cent cut on the way through? By any definition, this is not a long-term economically sustainable situation. This is not an argument against private health insurance. It is a signal that the private health insurance funds need to get on with the job of looking after the long-term interests of their members, which make up well over 40 per cent of Australia’s population. It is not going to work if the private health insurance industry continue to be price takers whose only strategy is to rely on the taxpayer to shore up the industry with massive government subsidies.

Unfortunately, not far behind the health funds are the private hospitals that apparently now appear to believe that they have a permanent right to taxpayer funding to shore up their bottom lines. When the Rudd Labor government recently announced that it intended to establish a $10 billion Health and Hospitals Fund to invest in health infrastructure, the Australian Private Hospitals Association immediately put in its bid for a dip in this pool of taxpayer money. If my state of Western Australia is any indication, the building work that has been undertaken by private hospitals in recent times shows there is no real shortage of funds for capital works. Again, there is no formal performance agreement between the government and the private hospitals for the funding support they get indirectly from government.

Another strong supporter of penalizing Australian families on average incomes is—guess who—the  AMA. Perhaps the AMA’s position in regard to the Medicare levy surcharge has something to do with the fact that the Howard government’s private health insurance policies have turned out to be an absolute financial bonanza for the AMA and its members. In the past five years the value of medical benefit payments paid to private medical specialists has increased by no less than 75 per cent. In 2007 these payments grew by almost 15 per cent compared to the previous year. In 2007 private health funds paid out over $1.1 billion in medical benefit payments, a third of which was picked up by the taxpayer. Private medical specialists and the AMA know they have struck gold. No wonder they are vehemently opposed to anything that might slow the flow of money.

It is Medicare that ensures that all Australians have access to medical and hospital care when they need it. It is not the private health funds. It is not the AMA. It is not the private hospital sector. It is Medicare that continues to ensure that Australia has an equitable and affordable healthcare system. In summary, this bill protects the integrity of the Medicare scheme. I commend the bill to the Senate.