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Thursday, 25 November 1999
Page: 12713

Dr SOUTHCOTT (4:03 PM) —In responding to this matter of public importance motion, I say there are really two assertions that have been made. The first is that the hospitals are not being adequately resourced by the Commonwealth government and the second is that the administrative costs of the GST will be significant to hospitals. I want to repudiate both of those claims made by the shadow minister for health, the member for Jagajaga. She referred to a report that was commissioned by the Australian Catholic Health Care Association, and what we can say about that report is that the first draft of it was wrong in several respects, they had a revised report which included several faulty assumptions and you can come to the conclusion that this was a report designed to come up with an outcome.

This report underestimated the savings from going to a new tax system and overestimated the costs. We have a letter to the government from the association in which Frances Sullivan admits that, compared with the previous report, significant changes have been made to estimated cost savings from abolition of the wholesale sales tax and other indirect taxes. It says:

The changes also have some flow-on effects to other areas, notably motor vehicles, as set out below. In general, the abolition of indirect taxes will result in cost reductions for the Catholic health and aged care sector.

It goes on to say:

The ongoing sector compliance costs have been significantly revised downwards for the sector as a whole. It is clearly difficult to present a highly accurate estimate of the likely costs to the sector in this particular area due to the great diversity in the scale and nature of operations of the individual organisations.

This is a poor report, and at one part they include savings as costs. The shadow minister seemed to be coming up with calculations—almost of figures on the back of an envelope—to assert that this will involve hundreds of millions of dollars in compliance costs to hospitals. That is not true. That is actually a lie. There are bizarre assertions that there will be GST credit leakage. Why would you not claim all GST credits? They make unrealistic assumptions based on the cost savings and we reject that—and it is notable that this report was savaged by a Senate committee.

I do not think the shadow minister understands how hospitals work—I use to work in a public hospital. Hospitals will provide food but, if people visiting patients and staff want to get food, they will actually buy that themselves. That would be subject to GST and I do not think there is any confusion about that. I do not think she understands how the current tax system works. To assert that currently hospitals do not pay wholesale sales tax is true but there are still very significant savings from removing the embedded costs of indirect taxes.

The experience in New Zealand was that, after a transition period, this was very smoothly administered. I would really like to know what is the Labor Party's solution. Do they seriously want to repeal the GST and reintroduce a wholesale sales tax? Because that is not the position of the Socialist International and that is not the position of the Socialist parties in France, Germany or Britain. It does seem strange to be using the language and the rhetoric of the Cold War in 1999; after all, it is a long time since that was over. But I think we really do need to know where the Labor Party spokesperson is coming from. She made some comments in April 1983 at the Marx Centenary conference. Some of these were:

The vanguard, economism, the inevitable decline of capitalism, have all been knocked on the head.

Another was:

We have obviously been wedded too long to the idea that the industrial proletariat constitute the subject for social change.

And my personal favourite:

What does the dismantling of capitalism and the building of socialism involve? It is all too clear that spontaneous uprising is not around the corner. Planned insurrection is also only a dream in some people's heads.

Mr Hardgrave —Who said that?

Dr SOUTHCOTT —The member for Jagajaga, the shadow spokesperson for health for the Labor Party, said that. In July 1984 at Unity Hall there was a meeting and, later, a committee of 10 was formed. They sent out a letter signed `Yours fraternally', and the 10 members are listed and they include four members of the Communist Party of Australia, including Max Ogden. You might say, `That was a long time ago, we could put that down to youthful exuberance.' But there is an important implication here—that is, that health is either the number one or the number two issue in people's minds when they vote. We do know one thing: the Australian voters do not like an idealogue in charge of their health system. I have sometimes raised this with members of the Labor Party and I have asked them whether they have thought that it might be an idea to have someone who is, perhaps, a bit more pragmatic in health, not someone with a background of being heavily involved in socialist movements.

What we really have in the member of Jagajaga is one of the last vestiges of the Victorian socialist left. I do not know whether she is a Maoist, a Leninist, a Marxist or a Trotskyite; I do not know whether she sees the member for Werriwa as a counter-revolutionary. Back in 1983 and 1984 people like the member for Jagajaga were telling us how wonderful China, Vietnam and the Soviet Union were while they were killing their own people. This is someone who, if the Labor Party win the next election, will be in charge of the hospitals and the health system.

The member for Dobell has just arrived; he is a much more pragmatic opposition health spokesperson. But, sadly, he is relegated to education, which he was not very happy about. But I reject the allegations regarding the funding of public hospitals. There is a real increase of 20 per cent over the life of the Australian health care agreements, and we are also avoiding the previous problems which gave state governments an incentive to pull money out in the early years.

Who does the member for Jagajaga think gets the GST revenue? It goes to the states, with guarantees for the first four years that no state will be worse off. They all signed up, including the shadow Treasurer's brother. He could not be quick enough to sign up to getting a share of the GST revenue. We have heard only obfuscation from the Labor Party on the GST situation. This is the situation: a hospital will be able to claim input tax credits for GST paid, and health care provided in hospitals will be GST free. Treasury estimates that the costs in health care are expected to decline by about two per cent due to the removal of embedded indirect taxes. It has been guaranteed that no state or territory budget will be worse off as a result of tax reform, and we have also agreed to provide an extra $800 million to offset costs to the state and territory budgets associated with the introduction of the government's tax reform. This was a lame, lightweight MPI which was not based on fact at all.

In relation to health treatment under the GST, the following types of health related goods and services will be GST free: medical services; other health services; hospital treatment; residential care; extra services; community care; flexible care; specialist disability services; medical aids and appliances; drug and medicinal preparations; and private health insurance. Things that are GST free will include: Aboriginal and Torres Strait Islander health; acupuncture; audiology; chiropody; dental; dietary; nursing; OT; optical; pharmacy; physiotherapy; speech pathology; speech therapy; and social work.

As I said, I used to work at the Royal Adelaide Hospital, at the Flinders Medical Centre and at the Daw Park Repatriation Hospital in my own electorate. I am very proud of that. We have the curriculum vitae of the Labor spokeswoman for health, and what we do know is that before she was in parliament she was the ministerial adviser to David White, the minister for health in Victoria at that time. What she put down as one of her key achievements in this position was the smooth closure of Prince Henry Hospital. So I used to work in hospitals; she used to close them. And this is the person the Labor Party want to have administering the health system.

Turning to the compliance costs, because that is the substantive issue, as I have said, the report we heard was wrong. You should not stand by that; it was a faulty report. There will be cost savings from removing the embedded costs. The systems compliance costs will be much lower than estimated and the recurrent compliance costs will be negligible within a hospital budget. I repudiate completely the assertions made by the Labor Party's spokeswoman for health, and I think members of the Labor Party should too.

Mr DEPUTY SPEAKER (Mr Nehl) —Order! The discussion is now concluded. I regret to inform the member for Perth that even though he is in the adviser's boxes, he is not exempt from the practises of the House. I would be obliged if he would leave the chamber.