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Monday, 1 June 1987
Page: 3671


Mr FITZGIBBON —Can the Treasurer inform the House of the impact on the Budget deficit of cuts to health payments to the States by $1,700m, forcing families to opt out of Medicare, and the offering of a 30 per cent tax rebate for medical insurance expenses?


Mr KEATING —There would be no saving to the deficit from such a proposal and, therefore, no free money for any party which wished to offer tax cuts with those proceeds. Such a proposal, saving payments to the States of $1.7 billion, would force the States to recover the added costs of health insurance by lifting insurance premiums through the funds. Opting out of Medicare for medical payments would cost the average family about $27 a week. The so-called savings of $1.7 billion in Commonwealth payments to the States would be offset by the Commonwealth needing to offer a rebate costing $1.4 billion. Against that, the savings from people opting out of Medicare would be about $1.3 billion, but the loss in Medicare levy receipts would be $1.6 billion. The sums on both sides of the ledger show savings of $1.3 billion in lower Medicare medical costs and of $1.7 billion in State health payments, giving a total of supposed savings of $3 billion, but the loss in Medicare levy revenue would be $1.6 billion and the rebate on medical health insurance costs would be $1.4 billion, also giving a total of $3 billion. In other words there is no net saving.

The idea that $3 billion can be cut out of the health pudding, with that magic pudding somehow being left intact, and that that $3 billion could then be given in tax cuts to the wealthy, is absolute nonsense. Such a proposal, which has been touted by the Opposition, among others, would lift the costs of health insurance for a family with a current income of $18,500 a year from the existing Medicare levy of $4.38 a week to $27-an increase of $22.62 a week. For someone on average weekly earnings, the current levy of $5.63 would rise to $27 a week if people were forced to obtain private health and medical protection cover.

It is simply a ruse to suggest that, somehow, excess money is lying around the health insurance system, so that $3 billion can be carved out and given to taxpayers at the top of the earning scale, and made up by increased medical costs for low and middle income families. It is the usual Liberal proposal-give the benefits to the rich and belt the poor. That is the gist of the supposed tax policy of the Opposition. As my colleague the Minister for Health has already mentioned, after 18 months of leadership by the honourable member for Bennelong, we still know nothing about his tax policy-only what we could glean from the John Laws program today. Mr Laws said:

Obviously that means personal tax cuts.

The Leader of the Opposition said:

Personal tax cuts will be lower. It will be financed overwhelmingly by reductions in government spending.

Mr Laws asked:

Where are those reductions coming from?

The Leader of the Opposition replied:

They will be very major reductions in health. The Medicare system is a total disaster. We will be proposing changes to Medicare that will amount to its de facto dismantling.

Mr Laws asked:

So you will pull it right apart?

The Leader of the Opposition replied:

Yes, we will pull it right apart.

Opposition members-Hear hear!


Mr KEATING —Opposition members are shouting: `Hear, hear'. They want to break and smash a progressive system, with a flat rate levy whereby the healthy and wealthy subsidise the sick, pensioners and low income families. They will scrap that and move to a regressive system whereby a sick person on a low income with a number of kids will pay through the nose. Those on a high income will find their health costs reduced because the 1.25 per cent Medicare levy will be wiped out. That is Liberal equity 1987 style-as it was Liberal equity 1977 style, 1927 style and all the other styles, right back to when it all began.

Honourable members opposite have always been about the same thing. They have always looked after the rich-as if they are not making enough now on the stock market, and as if they are not getting a decent tax cut by way of the 49 per cent rate. Honourable members opposite would break one of the social reforms of the Government by smashing the progressive health insurance system. Worse than that, they kid the nation that there is some sort of magic pudding of $3 billion to fund tax cuts. I have never seen such irresponsible behaviour from a major party in this Parliament.

Good old fashioned fist-in-the-hand Howard wants to buy votes CIF-cash-in-fist-as he did in 1977. Do honourable members remember the 1977 tax cuts when people were told to ring up and find out what their tax cuts would be? Five months later he took them away. What about the 1982 tax cuts? He gave them, threw money around and then left this Government with a $10 billion Budget deficit which we have taken four years to control. Now, in the highest traditions of Ash Street, Sir Robert Askin's group, and in the highest traditions of his mentor, Senator Sir John Carrick-the downward thrust of China, the state aid debate, F111s, Petrov royal commissions-we see another fistful of dollars for the public.

I think that the public of this country understands that Medicare is a fair and progressive system. It cares for the two million people who had no health insurance. It cares for low and middle income families who have children who often get sick, and who would otherwise be facing astronomical health bills. It is a piece of progressive social policy and it is not there to be smashed or torn asunder in order to give tax cuts to the burghers of Toorak and Vaucluse, as proposed by the honourable member for Bennelong.