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Thursday, 15 June 1989
Page: 4159

Senator COULTER(8.15) —I understood that, but the point still remains that the money is not going to meet the actual claims which come out of the fund but, rather, will go to companies which are most affected, given that the rules have changed to include the over-65s as well as the 35-day rule. It is important to get on the record just where that money is going and how it is to be used.

The other matter that I think is important at this stage is the amendment to include proposed new clause 38a. I have been very concerned that since we adjourned on this matter, there has been an intense lobbying campaign. I can only think that a lot of it was generated by the Minister for Resources himself. Quite a bit of the lobbying has been from people who have been misled as to the nature of this sunset clause. The impression has certainly been given to some people that the effect of the sunset clause is to sunset the whole of the reinsurance scheme. I want to put on the record what this sunset clause does. Its purpose is simply to sunset the new arrangements. The application of the sunset clause will mean that the arrangements will revert to those which obtain as of today, so it is only sunsetting the new part of the arrangements and not the whole of the reinsurance pattern.

It has also been claimed-quite wrongly, I believe-that the application of a sunset clause introduces a high degree of instability into the insurance system. The one thing that the insurance companies desperately need is a much higher degree of stability so that they can plan their premiums and know exactly where they are going. The Government itself has introduced the high degree of instability into the insurance system because it has progressively run the reinsurance pool down over the years and has changed the rules in various ways and it will change the rules by this Bill, as the Minister has said, from the 35-day rule to include also all those over the age of 65. So historically the instability has been introduced by the Government. But there is more than that. This Senate has set up a select committee to inquire into this matter. Clearly, the creation of that committee itself, if it is to do useful work, will result in recommendations for modification to the terms and conditions of private health insurance and, hopefully, somewhat more broadly than that, the whole area of health insurance, including both public and private. Out of that will come recommendations for change so that further down the track there will be change. That is anticipated by the very creation of the committee.

The instability in the insurance industry is created not by the sunset clause but by the fact that the conditions in the industry are themselves unsatisfactory, calling into need the creation of a Senate committee, which, hopefully, will bring into existence a report which will recommend changes which will lead to a much greater degree of stability and a much more satisfactory arrangement in the whole area of health insurance, both public and private. The effect of the sunset clause is merely to say to the Government, `You will have three months after that committee reports on 1 March, and in that three-month period you will be on notice either to relegislate the clauses which will be deleted by this sunset clause or, hopefully, to take note of the Senate committee's report and bring into place something better which will introduce longer term stability in the industry'.

I think everybody agrees-even those most rednecked private insurance companies that are after risk insurance-that they want some level of understanding as to where the Government wants to take the whole area of health insurance over the next five or six years so that they can properly plan their premiums and what sorts of services they provide. Members of the public by the same mechanisms can have some assurance that when they join one or other of these insurance schemes that scheme will remain in place for some reasonable period into the future.

Senator Walters —How is the sunset clause going to go?

Senator COULTER —The sunset clause itself does not introduce the instability. The instability is in the system. The instability will be solved by the report from this committee if the Government chooses to take up the results of that report and relegislate at the end of this year. That, of course, is an inherent part of the Senate committee process. If one were to assume that the deletion of this sunset clause would produce stability one would have to presume that the Senate committee would come up with no recommendations for change or recommendations for change which were not going to be accepted by the Government. The reason for the sunset clause is to say to the Government, `Look, you are on notice, you have to take note of that report when it is available and you will hopefully legislate on such with greater long term stability and a better arrangement will come into existence'.