Karen Andrews (McPherson, Liberal Party) Share this | Link to this | Hansard source

Before the debate on the private health insurance legislation was interrupted, I was speaking about Labor's inconsistencies in its policy commitments and how we on this side of the House have stayed committed to our opposition to changes to the private health insurance rebate. I will support the right of the people in McPherson to choose private health insurance and I will continue to encourage those who currently do not have insurance to take out private health insurance cover.

I will represent the interests of the people in my electorate and fight to ensure they have a choice to cover their health needs with private health insurance should they so wish. This will help ensure our public health system does not continue to buckle under increasing pressures.

This government is out of touch and out of its depth and these proposed changes should not be allowed to pass.

Mrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | Link to this | Hansard source

In rising to address the private health insurance legislation, I think it is important to look at the context in which the government is trying to reimpose a tax obligation upon people who have taken out private health insurance. It is important to have an understanding of the way private health insurance works in order to understand just how unfair this government's move to penalise people who have taken out private health insurance is—and that means all people.

Firstly, we have a universal healthcare system called Medicare. It is universal. It has no means testing. It is simply available to all. Medicare cannot function at all unless it has a strong private health component. That means that it needs a large number of Australians to be covered by private health insurance and to use the private hospital system with that insurance in order for pressure to be taken off the public system and for the public system to have a chance of serving the needs of those who do not carry private health insurance.

Private health insurance itself is not truly insurance in that it does not take into account risk factors. It is community rated, which means that everybody pays the same premium, irrespective of their state of health, their age or other things that may be relevant to risk insurance. Community rating works because those people who take out private health insurance whilst they are young do not use it as much as those people who take it out when they are older and who use it more as they age. When the younger cohort ages it is replaced by a new younger cohort and so on, so that the system works. When you start to impose distortions on the system, those so-called healthier people who are non-users of the system drop-out, which means that the system becomes less workable to the extent that the burden is being borne by the fewer number of those contributing and while those who remain in the fund are those who utilise it more.

When we took office in 1996 the coalition realised that Labor had so downgraded private health insurance, particularly former health minister Carmen Lawrence who refused to take it out herself and who relied on self-insuring and on the tax deduction she could get, and had so badly treated private health insurance that the percentage of people covered by it was plummeting. It was worked out that if less than 22 per cent of the population was covered it would collapse. We in the coalition knew that we had to increase the number of people being covered by private health insurance. Therefore, it was necessary to make it more attractive. There are two ways of doing that: either by tax deductibility or by offering a tax rebate. It is a taxation measure. The coalition government decided that it would provide a rebate of 30 per cent for premiums paid to enter private health insurance. The rebate increased when people reach the ages of 60 and 75 to make it more attractive and more affordable for those people to remain in private health insurance.

There are now 10.3 million people covered by private health insurance, and last year forty per cent of operations and 2.5 million procedures were carried out in private hospitals. It is an important—indeed, vital—service for certain country areas. If members look at the statistics they will see that a member in a metropolitan area is likely to have 60 per cent of their electorate covered by private health insurance, that in a regional area there is more likely to be around 40 to 45 per cent coverage and that in a truly rural area there will be about 35 per cent coverage. It is private health insurance that enables regional and rural areas to have a private hospital, which then attracts specialists to their areas. If patronage drops off and the private hospital disappears, so to do the specialists in those areas. That is what is likely to happen with this pernicious legislation.

When asked about the rebate before the 2007 election, the promise was made that 'not one bit, not one iota' would Labor touch the Private Health Insurance Rebate. Yet one of the very first things it did in an early budget was to put in an item to impose means testing. That was defeated because there were Independents in the Senate who saw how unfair, pernicious and bad the policy was. The government tried it again, and once again it was defeated by the same Independents in the Senate. Now this legislation is back before the House. It remains the same pernicious, unfair and bad policy that it always was.

Several people have done some serious research into the impact of this legislation. Booz and Co. published a report dated 9 February 2012 in which it challenges Treasury's figures. The Minister for Health and Ageing, Ms Plibersek, has said that if this means testing comes in—this pernicious move—the government will save $100 billion over the next 40 years. Booz and Co. has taken a good look at just where the rebate fits into the total cost of providing health care. It highlights that the rebate has remained at a constant 3.5 per cent of total public and private health expenditure over the last decade and that that is a small component of the healthcare spend. It has increased by only 0.2 per cent over the last 10 years. Booz and Co. said that nobody should rely on the government's modelling and that there are not the savings to be found in this measure that the government claims. None of that would surprise us, because some of the modelling that Treasury does these days shows that it is a highly politicised department.

Deloitte did some very serious work on it last year. It found that consumers who withdraw from private health insurance are less likely to have claimed healthcare benefits than those people who stay in. It says that over five years 1.6 million consumers will withdraw from private hospital cover and 4.3 million will downgrade. Downgrading is very important. Because the surcharge that is applied to the Medicare levy is to be increased, downgrading will become an important option. It means that less will be paid by people who are not users of the system at the present time rather than by users who are. Again, you get this distortion. As I said, this is a tax issue. It is a tax rebate that is received by people who can elect to notify their healthcare provider and the tax office that they wish the 30 per cent to be deducted at the front end, rather than waiting for it to be refunded when they submit their tax return. There may be people, I suppose, who have paid in advance, who may be asked to make a refund of their rebate; but that remains to be seen. Deloitte also point out that by 2016 premiums will be at least 10 per cent higher than they would have been from any normal increase in premiums over that period. So whatever the normal premium increases will be, there will be a 10 per cent impost on top of that.

ANOP did some very good research last year as well. They found that the importance of the rebate is tremendously well known to people. Something like 95 per cent of all people are aware of it and of their entitlements and a lower figure—somewhere around the low 60s—are aware of the penalty that is payable by way of the Medicare surcharge if they do not take out private health insurance when they are obliged to do so. So it is a very important issue. ANOP found that 13 per cent of people would drop hospital cover entirely and an additional 33 per cent would downgrade. So when we are discussing the impact of this legislation, we are in fact pointing out that we are going to penalise those people who can least afford it.

Minister Plibersek is pretty rich. There are a couple of good salaries coming into that family. She will not feel it. If she chooses to drop private health insurance, it will not matter much to her. But if she is in it and she is one who drops out, that will impact all the way down the chain. The fewer people paying premiums, the more premiums will rise. This will impact people on fixed incomes, which certainly includes Australian seniors. It includes pensioners. It includes superannuants. It includes part-superannuants and part-pensioners. It also includes people who value their private health insurance and who have an awareness of just how much they can afford to spend—which was another finding of ANOP. So when I call this legislation pernicious, I mean it. It is going to penalise the people who value private health insurance the most and who are very aware of how much they can afford. They are going to be pushed into a situation where they will be forced to withdraw from private health insurance and have to rely on the public sector.

The research has shown that between now and 2016 something like 845,000 new bed days will have to be found at a cost of $3.8 billion. As the state governments are responsible for the hospitals and provide over 50 per cent of the funding, they will bear the greatest burden of having to provide that funding—and that means infrastructure as well.

At every count, it is legislation which is ideologically driven. The Greens, the alliance partners of the Labor Party, certainly want to see private health insurance abolished. The Labor Party itself has a track history of wishing to see private health insurance downgraded, if not abolished. So we see an attack on and a misleading of the Australian people once again—on so many issues that it has become the Labor Party's natural way—that will see people who value their private health insurance penalised and greater stresses put on the public sector.

Mr Oakeshott, who once voted against this legislation and once voted for it, has more people over the age of 60 in his electorate than in any other electorate in the country: 29.1 per cent of his electorate is over the age of 60. These people need his support. They do not need him to penalise them. The Port Macquarie Private Hospital had 200 demonstrators outside it saying: 'Save our hospital. We need high private health insurance numbers to maintain the hospital and specialist care to that community.' If he will not listen to the sorts of arguments that we in the coalition are putting forward then perhaps he will listen to his own electors. They do not want this legislation passed. They want private health insurance to remain universal in character.

I repeat my opening remarks: Medicare is universal in nature. It needs the universality of the private sector in order for it to survive. They are mutually bound to one another. To attack the private sector is to attack the public sector, because it will put the waiting lists way out for people who are using the public sector. This legislation will be for no good purpose except to try and meet the government's ideological aims, which is to see the end of private health insurance.

Paul Neville (Hinkler, National Party) Share this | Link to this | Hansard source

As someone who supports a sustainable, balanced and functional private health insurance regime, it will come as no surprise to honourable members that I oppose the Fairer Private Health Insurance Incentives Bill 2011 and related bills.

Time after time, the government has tried to get these bills through the parliament and it has been thwarted on each occasion. There is one resounding reason why these dogs of bills should not pass, and that is that it will jeopardise the health of Australians by weakening the private health sector and ramping up the pressure on the public system.

These amendment bills will proportionately lower the private health insurance rebate for those on higher income tiers and increase the Medicare levy surcharge for those on higher incomes who do not hold private health insurance. In effect, the amendments are attacking the viability of the private health insurance sector by making it a far more expensive option for the ordinary Australian and his family. The amendments will place further stress and strain on our public health system by driving people from the private health sector to the public sector. They will take choice away from citizens—and I have always believed that choice is paramount in this matter—and this will be to the detriment of Australia's health profile overall.

This is not the first time that the government has tried to phase out the 30 per cent private health insurance rebate or jack up the Medicare levy surcharge. As I said, this is the third time that the parliament has considered this legislation, despite the former health minister, at the 2007 election, making the explicit promise:

Federal Labor has made it crystal clear—

note 'crystal clear'—

that we are committed to retaining all existing private health insurance rebates.

That was a media release on 26 September 2007. There are 10.2 million people, or more than 45 per cent of Australians, who have private health insurance. Around 2.4 million of these will be directly impacted by the proposed changes because they will see their premiums increase overnight due to the government's plan to bring three new index tiers into line as the assessable measures for health insurance. For singles, the proposed tier 1 is over $70,000, the proposed tier 2 is over $90,000 and proposed tier 3 is over $120,000. People earning over those amounts will see the amount of their rebate reduced. These people will face immediate increases in premiums of 24, 29 and 34 per cent respectively. For families the bill proposes that each of these thresholds be doubled and in the case of each additional dependant the income tier threshold would increase by $1,500 for each dependant.

The former health minister tried to dismiss the impact of the changes by saying that only 27,000 people were expected to drop their private health insurance cover because of these increased premiums. This is complete poppycock. When families and older Australians in particular are already struggling to cope with the cost of living they will obviously be forced to reconsider staying in private health insurance; if they do not, they are going to cop double-digit increases in their premiums. The government's rubbery figures have been exposed by its own private health insurer, Medibank Private, which predicted that at least 37,000 of its members would drop their cover entirely and 92,500 would downgrade their cover. A further analysis by Deloittes shows that in the first year alone following the proposed changes 175,000 Australians are expected to withdraw and a further 583,000 people to downgrade their coverage.

But, more frighteningly, the Deloittes study found that the situation would worsen over time and within a five-year time frame following these proposed changes 4.3 million people would downgrade their coverage and up to 1.6 million people would drop out entirely. That is out of the current total of 10.2 million. That is a significant impact by any standards. It means that 1.6 million people over five years will rely on the public system to cope, and we know what the public system is like right now. In Hervey Bay in my electorate the hospital operates with an occupancy of over 100 because people come in and out on the same day and use beds on the same day. What happens sometimes is that you have three or four—and I have heard that on one occasion there were five—ambulances lined up with the stretchers and the ambulances being used as temporary accommodation until the people can be taken into the hospital. This queuing of ambulances has simply got to stop. What chance have they got with another 1.6 million people coming into the system?

More than 40,000 adults living in my electorate have private health insurance, with almost 53,000 people, including children, covered by their policies. Hinkler is not a wealthy electorate. We have one of the largest over-65 demographic profiles in the country and we face challenges in terms of unemployment, with average household income amongst the lowest in Australia. That profile is quite common amongst Australian households with health insurance. There are 5.6 million Australians with health cover who earn less than $50,000 a year and around one million of those have incomes of less than $24,000. You might say: 'Why are you mentioning that? These people are not caught by this reduction in the rebate.' But, yes, they are. If we go back to Deloittes findings we will see that they predict that there will be a 10 per cent increase in premiums. The reason for that is simple: as the 1.6 million people drop out, we are going to get to a situation where the pool will be smaller for private health insurance and therefore the premiums are going to have to rise. So everyone, not just the ones in the higher categories, will be caught up in this. Every single one of my constituents who holds private health insurance is trying to do the right thing by taking care of their own health needs, by spending their own money on health insurance. Just why this government wants to push them even further is beyond my comprehension.

This brings me to another point, and that is the blatant cost-shifting between the federal and state systems which will occur if these bills are passed. The realities of life are that if you hit millions of Australians with increased premiums many of them will drop their insurance entirely, leaving, as I said before, the remaining policyholders with higher premiums. As I also said before, Deloittes have told us that this will increase premiums by as much as 10 per cent. In a double-whammy, those people who have left private health will turn to the public system, adding further to the pressures that exist there.

I want also to bring to your attention, Mr Deputy Speaker, another factor that is not talked about a lot. In country areas, larger provincial cities and some of the larger country towns, we have private hospitals. In my own case, in Bundaberg we have two private hospitals and Hervey Bay will shortly have two. When you have three hospitals in the town you have a much greater ability to attract specialists. The specialists come to those sorts of towns because they can do sessional terms at their public hospital and then can work perhaps at their surgeries at the private hospital or out in the community and operate at both the private hospitals. They find that very attractive, a good lifestyle, and they are not captive of the public system entirely. That brings specialists to the country. If you weaken the profile of the private hospitals in the country, you are not going to get those specialists and everyone will suffer—not just the people who have private health insurance, but everyone. Even those people in the public hospitals may miss out on having a sessional specialist available. So it is a very serious matter.

There is one hospital in the Wide Bay area—it is not in my electorate but it is close to my electorate—and I know that this cutback in private health insurance will affect that hospital dramatically. We just cannot afford to have that happen.

Last year, the Queensland AMA spoke out about a patient who had been refused access to a specialist at a Gold Coast public hospital. They condemned this 'new low in service provision by Queensland Health'. The AMAQ received a copy of a letter, from the hospital's executive director of medical services to the GP, advising that regrettably the waiting list was lengthy and that his or her patient would not be seen in a reasonable time frame. The letter said:

… we are therefore returning this referral to you and ask that you consider other options—

which, the letter said, could include—

… referral to a private practitioner or another appropriate hospital within the southern area.

That is the sort of thing which is likely to happen and happen on an even greater scale.

In a press release issued by the then president of the AMAQ, he said the letter was an admission of monumental failure by Queensland Health in meeting the needs of patients forced to rely on the public system for their healthcare needs. He said:

Never before has a public patient been so abandoned by our health system.

If it is that bad now, what is it going to be like when there is a shift of up to 10 per cent from the private system to the public system? The impact of that is going to be quite dramatic. For all sorts of reasons, then, it is a frightening prospect that, of the 10.2 million people currently in private health insurance, 1. 6 million might drop out over the next five years and another 4 million or 5 million might downgrade their coverage.

We have one of the best hospital systems in the world. As part of the last coalition government, I take some pride in the fact that we not only introduced the 30 per cent rebate but acted to assist older people—and there are lots of pensioners and lots of self-funded retirees on low incomes who rely very heavily on private health insurance. We introduced increased coverage of 35 per cent at 65 years of age and 40 per cent at age 70. In fact I urged John Howard to go to 45 per cent, but that was not possible.

It is a pity that, in the face of this marvellous increase in people looking after their own health care—going up as a percentage of the population from the low 30s to the mid 40s—this government, for base philosophical reasons, has just turned on private health insurance. I very much urge the Independents to support us on this. Some of those Independents represent cities like Armidale, Port Macquarie, Taree and Tamworth, and those are the sorts of cities I was talking about which need specialists. They need specialists to have effectively operating private hospitals. Without those private hospitals, and without those private hospitals having throughput of private patients, in many of those towns the number of specialists will reduce and the quality of health care will drop. For that reason alone we should be very careful about this whole matter.

As I said at the beginning, it should come as no surprise to the House that I oppose these bills. I know my colleagues in the coalition also oppose them and I urge those on the crossbenches who really care for regional Australia to do likewise.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

I thank the House for this attention and I also thank my friend and colleague the member for Hinkler for getting this crowd together to listen to my remarks. I am determined to expose the flaws in the Fairer Private Health Insurance Incentives Bill 2011 and the associated bills. But I also foreshadow that, at the conclusion of this contribution, I will be moving an amendment that the legislation in question be laid on the table for the duration of this parliament.

I will be doing that because we do need an election. Minority government in this country is an experiment which has failed. Minority government has given us an administration which is incompetent and dishonest and it has given us a Prime Minister who is incompetent and untrustworthy.

This is a Prime Minister who is guilty of serial betrayals. She betrayed her former leader over the prime ministership, she betrayed the Australian people over the carbon tax, she betrayed the member for Denison over poker machine reform and now, in this legislation before the House, she is betraying the 12 million Australians with private health insurance. In particular, this Prime Minister is betraying the 2½ million Australians who will face massive increases in their private health insurance premium because of her broken promise.

Let us be very clear that the legislation before the chamber today is a betrayal. It is a betrayal of the clear commitments made up hill and down dale by members of the Labor Party. Before the 2007 election, the then Leader of the Labor Party, the member for Griffith, said:

… Federal Labor is committed to retaining the existing private health insurance rebates …

No ifs, no buts, no qualifications—an absolutely categorical statement. The then shadow minister for health, now the Attorney-General, said again in writing before the 2007 election:

…We are committed to retaining all of the existing private health insurance rebates.

Again, no ifs, no buts, no qualifications, no fine print. That is what the shadow minister said. Finally, the words of the now Prime Minister, at the time the shadow minister for health:

People should have no concern that Labor will erode or abolish the 30 per cent rebate for private health insurance.

No 'concern'—mark this word—that Labor will erode the private health insurance rebate. What is a means test attacking 2½ million Australians if it is not a clear erosion of this rebate? It is an absolute betrayal by this Prime Minister of a solemn commitment that she has made. She said, 'I grow tired of saying this.' Poor, poor Julia Gillard! Poor, poor member for Lalor! She grew tired of saying it. I tell you what: I know why she grew tired of saying it. She knew it was false.

Time after time in this parliament before the 2007 election I would stand up and say, 'As sure as night follows day, if there is a change of government they will rip the guts out of private health insurance because Labor hates private health insurance.' Day after day, the now Prime Minister would stand up and come to the despatch box and say, 'Well, that was a lie.' Well, wrong. It was the truth, and the truth is that this Prime Minister never tells the truth. This Prime Minister is always guilty of falsehoods, of bluster and of deception.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

Order! The Leader of the Opposition has used—

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Strong language, Mr Speaker, and I do not apologise for using strong language, but I will tone it down out of respect for you.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

The leader has cast a reflection on the Prime Minister and he will withdraw it.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

I withdraw out of respect for you, Mr Speaker, not out of respect for this Prime Minister.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

No, the leader will withdraw unconditionally.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

I withdraw unconditionally out of respect for you, but not out of respect for this Prime Minister. I grow tired of listening to the bluster and the blather and the deception from the Prime Minister.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

Order! The leader will resume his seat.

Sid Sidebottom (Braddon, Australian Labor Party, Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

Mr Speaker, on a point of order, you asked the Leader of the Opposition to withdraw without qualification. He did not. He continued to qualify and I ask him to withdraw without qualification.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

The parliamentary secretary will resume his seat. Initially, he did not. I then drew his attention to the matter and he did. The leader has the call.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

This is a Prime Minister who is incapable of honestly explaining her actions, a Prime Minister who is chronically incapable of giving truthful answers.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

Order! The leader will withdraw that imputation and reflection.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

I withdraw. The Prime Minister came into the parliament today and the day before and said, 'What I said before the 2007 election doesn't count because there was an election intervening.' Well, let me remind her, she tried to do this immediately after the 2007 election. It is not like she said, 'Oh, I have changed my mind and I am going to take it to the 2010 election.' She tried to break her commitment prior to the 2010 election, and what did the 2010 election give her? Did it give her a mandate? No, because it did not give her a victory.

This was an election that gave her no mandate for anything because this is a Prime Minister who was selected, not elected. This was a Prime Minister who had not won an election. This is a Prime Minister who has won a negotiation, and we all know how she did it. She did it by telling people what they wanted to hear and making commitments that she knew full well that she was never, ever going to be able to deliver.

Let's keep focusing on this because she came into this chamber yesterday and said, 'But there was the 2010 election.' I invite members of this parliament to carefully peruse Labor's health policy at the 2010 election and they will find not a single mention—not one—of Labor's determination to renew this attack on private health insurance. So this is a Prime Minister who has demonstrated again and again and again that she will say or do anything to save her own skin. She said no to the carbon tax to try to win an election and then she said yes to the carbon tax to stay in the Lodge.

Mr Baldwin interjecting—

Peter Slipper (Speaker) Share this | Link to this | Hansard source

Order! I do not need any assistance from the honourable member for Paterson. The parliamentary secretary has a point of order.

Sid Sidebottom (Braddon, Australian Labor Party, Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

Mr Speaker, my point of order is on relevance to the question. He has not discussed this question as of his first sentence. Thereafter, it has been an attack on the person of the Prime Minister.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

The parliamentary secretary will resume his seat immediately. The leader has the call.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

She said yes to mandatory precommitment to stay in the Lodge and then she said no. The Prime Minister said no when she was threatened with a revolt by the New South Wales right. She goes on to Four Corners last night and she says, 'Look, I'm always prepared to answer questions,' and we have seen in this parliament day after day a total failure of the Prime Minister to answer questions. Now, we have the private health insurance rebate betrayal. It is no wonder that there is a leadership challenge brewing. Whose side are you on? I say to the parliamentary secretary: whose side are you on

Sid Sidebottom (Braddon, Australian Labor Party, Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. The Leader of the Opposition is reflecting on the chair and asking you questions directly. That is unparliamentary and I ask you to bring him back to the question.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

While I do have, shall we say, broad shoulders, the leader has been here quite a long time and he knows he is supposed to direct his remarks through the chair. I did not take what he said personally but the leader will observe the standing orders.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Thank you, Mr Speaker. Mr Speaker, we know what side you are on and we know what side the member for Dobell is on and I know what side the parliamentary secretary is on—

Peter Slipper (Speaker) Share this | Link to this | Hansard source

Order! I believe I understood the leader to say that 'we know what side you are on', referring to me. As the occupant of the chair, I do not have a side so I would hope that the leader is not reflecting on the chair. I would counsel him against such a course of action.

Tony Abbott (Warringah, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

I would never show disrespect for the chair. As members on this side of the parliament know well, the truth is that you cannot have a strong public health system without a strong private health system. The private health system of this country is necessary if the public health system is to flourish. The problem with the legislation before the House is that it will ultimately impact on every single person with private health insurance, to the damage of the private health system and to the detriment of the public health system. Under this legislation 2½ million Australians will face premium increases—of over $1,000 a year in some cases.

The Deloittes study has estimated that about six million Australians will downgrade or abandon their private health insurance as a result of this means test. As better paid people, normally younger and fitter people, leave there will be a 10 per cent rise in premiums on top of everything else. This does not just affect the rich. There are 3½ million people with private health insurance who earn less than $35,000 a year, and these are the people facing a 10 per cent rise in their premiums as a result of this measure. It is estimated by Deloittes that, as a result of this measure and people leaving private health insurance, 845,000 more procedures a year will be needed in the public hospital system—a system which is already under great pressure—at a cost of $3.8 billion, which will have to be met by the states.

This chamber needs to be reminded that there will not be a single extra dollar for the public health system as a result of this legislation. The government are ripping $2.4 billion out of the private system; they are not putting, as a result of this legislation, a single extra dollar into public hospitals. There will be no more dollars for public hospitals if this legislation passes than there will be if it fails—which is why members on the cross benches should, even at this late stage, reconsider their position. I know that members on the cross benches have been a little impressed by the claims of government ministers that we should not have poor people paying for the private health insurance rebates of rich people. Let me tell them about the logic there. We have poor people paying for the Medicare rebates of rich people. If it is right for this government to attack the universality of the private health insurance rebate, it would be right for this government to attack the universality of Medicare. By attacking the universality of private health, they call into question the universality of Medicare.

This is a very bad piece of legislation. This is a monumentally bad piece of legislation. It is bad policy based on a lie. I move:

That all words after “That” be omitted with a view to substituting the following words: “this bill, and the related bills, not be proceeded with until after the Parliament has met in the 44th Parliament.”

(Time expired)

Peter Slipper (Speaker) Share this | Link to this | Hansard source

Is the amendment seconded?

Andrew Laming (Bowman, Liberal Party, Shadow Parliamentary Secretary for Regional Health Services and Indigenous Health) Share this | Link to this | Hansard source

I second the amendment. This fairer private health insurance legislation is a direct attack on Australia—it is not just an attack on those who have PHI; it is an attack on the dual health system that Australia is so proud of. The Labor government perennially hate people who have private health, and now they are having their third attempt to make it even tougher to keep private health insurance. Families that have PHI at the moment—and the average person with PHI in this country earns around $47,000—are within a few hundred dollars of Australians who do not hold private health insurance. That comes from an ATO one per cent sample that we have been able to analyse. The net income difference between those who hold insurance and those who do not is about $12 a week. Those who have insurance actually pay out of their own pockets $1,300 for their private health insurance, so we should never forget that these people make themselves poorer by paying today for the hospitals we need in the future. Older Australians who may be joining private health late in life need to know there will be services available when they need them.

We should never fool ourselves that any money ripped out of the private health system, or any money that is clawed out of this rebate, will ever trickle its way back to public hospitals run by the state governments. There is no better example of that than the stimulus package of 2008-09. I ask this chamber to remember how much of that money was spent on health care when it really mattered. We had a Prime Minister promising us that the buck stopped with him, but how much of the stimulus money was directed into health infrastructure? Not a cent of that money went into health infrastructure. So why should Australia believe today that any of these savings will trickle back to hospitals?

It is quite clear that the second great proposition put by this government is that millionaires do not need their PHI paid for by the rest of Australia. But, as was just articulately put, Australians at all levels pay for the Medicare rebates of people of all incomes, for the PBS services of all Australians, for the childcare rebates of all Australians and for Australians, rich or poor, to go to public schools. We do not charge high-income earners more to send their children to university. No, we are a nation proud of our universal health and education system. We are a nation that is proud that we do not attack people because of their income when they need to access social services.

If one truly hates high-income earners then attack them through the tax system. That is the way to beat down high-income earners—attack them through the tax system, if one wants to be that courageous. But, no, we cannot do that. Instead, we are going to attack them through their access to the two great pillars of our social services that we are so proud of: health and education. We were once a proud nation that made health services available to everyone, but that will no longer be the case with this legislation.

Everyone can quote studies from all sorts of different sources about who will pull out and who will downgrade. But we know one thing: with elasticity of demand, when you make something more expensive people are more likely to pull out. We know when the cost of living is as high as it is today that that effect will be acute. I do not care which study is quoted, whether it is one by Deloitte, Booz & Co. or any other provider of this information, this is a government that downgrades. The Australian people aspire to upgrade, to save hard and pay for the future and pay for health care. This government are making it harder and harder to do that.

The figure around for the number of Australians who will be directly affected by these changes is 1.5 million. What would a rational actor do? They will sit around a table and, faced with skyrocketing costs of living, say, 'If we can downgrade just a little, we can actually get ourselves a 10 per cent saving and make up for the 10 per cent increase in our rebate.' That is utterly rational. Let me take that to the next level. What would families in rural and remote Australia do, where the value proposition for private health is probably the lowest because there are fewer private providers out there? They will say: 'Let's drop 10 per cent of our cover. Let's make an exclusion and save ourselves the 10 per cent that Julia Gillard is laying on to our cost of living.'

Peter Slipper (Speaker) Share this | Link to this | Hansard source

I think the member for Bowman is referring to the Prime Minster.

Andrew Laming (Bowman, Liberal Party, Shadow Parliamentary Secretary for Regional Health Services and Indigenous Health) Share this | Link to this | Hansard source

Mr Speaker, I am talking about the entire Labor government. I do not want to name every single member.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

But when the member mentions Julia Gillard, he is aware that that is disorderly. He should refer to her by her position.

Andrew Laming (Bowman, Liberal Party, Shadow Parliamentary Secretary for Regional Health Services and Indigenous Health) Share this | Link to this | Hansard source

She is just as guilty as her entire government. The entire government is responsible.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

Order! The member for Bowman is stretching the tolerance of the chair.

Andrew Laming (Bowman, Liberal Party, Shadow Parliamentary Secretary for Regional Health Services and Indigenous Health) Share this | Link to this | Hansard source

I am referring to the Prime Minister.

Peter Slipper (Speaker) Share this | Link to this | Hansard source

The member will also withdraw the imputation on the Prime Minister.

Andrew Laming (Bowman, Liberal Party, Shadow Parliamentary Secretary for Regional Health Services and Indigenous Health) Share this | Link to this | Hansard source

I withdraw the imputation on the Prime Minister. The value proposition of private health in regional Australia is most tenuous where there are fewer private providers. But, suddenly, when there are no private doctors, social workers, physiotherapists and psychologists then of course we are undermining general practice in regional Australia. Eight million Australians live in regional Australia, and I know that is often forgotten by this government, and they rely on the private system to draw health practitioners out there. What happens when they pull back? The first thing that will happen is that they will not treat the public outpatients. There will be no VMOs. They will not do the after-hours on call. And we get appalling situations like in Gladstone, and the member for Flynn knows this, where that fine city is completely bypassed for weeks on end by surgical cover in the absence of a surgeon. As a result of decisions like this, the people of Gladstone will be faced with appalling transfers and expensive locum surgeons and no-one will want to stay in the bush and provide continuity of care, because the private delivery of services that support public hospitals has been undermined.

I do not need to explain how the private health system works to you, Mr Speaker, or to anyone else on this side of the chamber, but for those on the other side who always forget: never, ever airbrush away the fact that it is private providers who are called in to fix public hospital waiting lists when they blow out. When a private patient steps in to a public hospital, it is the health service that bills the private health insurer for profit. This is an entwined, dual health system. You cannot poke one side of the health system without a counterintuitive reaction on the other side of the health system. It is exquisitely balanced. It has been so for 15 years. It was the health minister before this one and the one before that who brought in the three pillars of lifetime health cover as well as community rating.

This 30 per cent health rebate has got us to a system where one in two Australians, not the rich and not the poor, can contemplate paying $11 a week out of their pocket—after the $4 discount from the 30 per cent rebate and on top of the $80 a week we spend on the health care of every Australian—and pay for their own cover and take the burden off the public system. It is a very good investment. Never forget the contributions that have been made as a result of that 30 per cent rebate. For every $4 discount that this federal government provides through the 30 per cent rebate, $11 a week of a person's own money is poured into the system. That has built the infrastructure and without that it would not exist.

We do not have to go back very far to recall what it was like two decades ago under the last Labor mob, when private health insurance participation fell to 34 per cent and could not be rescued through the wit of the other side. They failed to understand the value of private cover and private health. The productivity report last year made it very clear that the cost per service in private hospitals and from independent providers is very competitive—and, to be honest, it is usually cheaper than getting it done publicly. I put the proposition to you, Mr Speaker, because you live in an aspirational part of Australia where a large number of people are privately covered: what is the implication of those people downgrading their health care and taking exclusions for surgery—for example, assuming they will never get cancer or electing not to have allied health cover on their policies? What will happen is that they will turn up at a public facility and add themselves to the long waiting list. We know that the services delivered through the public system are slower and more expensive. Eventually, we will pay the tab for this $700 million that they are trying to claw out of the health system today. We will never forget that the money clawed out today will be paid for in an exquisitely clever cost shift to the state systems which will have to fund locums to replace doctors who leave and public allied health services to replace the private ones. Ultimately, as people add themselves to waiting lists, we will have waiting lists for waiting lists where people will never get a service because they will either pass away or go private. Those are the only two ways to get off a public waiting list in a situation where services are not being delivered.

This is a very serious matter, a matter of life of death, and everyone here feels strongly about it. In contrast, on the other side the government are blinded by the potential for savings. And not because they are passionate about investing savings into the state hospital system. Oh no: that money will never make it there. This is about getting a surplus in the next budget. It is about saving the government's economic reputation and they are using health measures as a Treasury strategy, to find savings to get back into surplus. That is what it is all about. If there were any passion for health on the other side of the chamber, we would have seen it in their stimulus package, but alas, they proved, when the money was there, that they would not spend it on health.

When they inherited the health fund from the Howard government with millions of dollars in it, taken from bona fide surpluses, it was simply shifted across to be used for a completely different purpose but never invested wisely. At the end of this year, that health fund balance will be zero. That money will be gone. It will have disappeared with no plan for the future. The government have no plan for the future and no plan for those who are privately insured.

In conclusion, we have an exquisite dual system of public and private provision. We have doctors, allied health workers and nursing staff who work in both sectors. It is the health providers who work for Australians regardless of which service they choose. Privately insured people use the public system. When waiting lists get too long, public patients use the private system. The two are equal, they are balanced. At the moment they are serving one in two Australians. It is a model which should not be interfered with, tampered with or molested. It should be left as it is. The 30 per cent rebate works exquisitely well and Australians of all incomes—we have talked about the proportion who earn less than $35,000 a year—can rationally choose between taking private cover and sending their children to an independent school. It is that choice that the government have always been opposed to.

I have said the government are committed to downgrading the Australian people at just the time when Australians aspire to upgrade, to have options, to have choices. Those choices will be taken away by the Gillard Labor government.

John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

The relentless attack on ordinary Australians by the Gillard government—and the previous Rudd government—has moved to health care once again this week with another broken promise. Labor's disastrous decision to reintroduce this legislation will have frightening consequences for the provision of health care right across Australia, none more so than in regional Australia, country Australia or the bush.

Our health is the one thing we value above all else. It does not matter how successful you are in life: your family's health and your health is the number one item. In the bush especially we do not have the same access to health care as our city counterparts. We know that and we accept it as fact of life. We know we have to look after ourselves because, should we get sick, there are a lot of hurdles to overcome before we even get to hospital. There are significant distances to travel, which is a physical thing we have to get over and a cost. We have fewer services and specialists to cater for our needs. What is more, by and large our regional hospitals are vastly under resourced, understaffed and underfunded. An example is in the Central West of New South Wales in the electorate of Calare—in fact everywhere in western New South Wales—where there is only one serious health facility west of the Blue Mountains and that is the new Orange Hospital. It has a lot of doctors and a lot of specialists and has to look after the western central region of New South Wales. And heaps of the little hospitals around it have closed in the last decade.

I guess we should not be surprised at the reintroduction, against their promise prior to the 2007 election—

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

Not the 2010 election.

John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

It is the same government. The government promised that they would not take this course. There are some things Labor governments hate, this one in particular. They hate private schools. They hate private health.

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

No, they don't!

John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

They most certainly do and all their actions show it. They totally ignore that, through private schools and private health, taxpayers are saved an enormous amount, an amount taken on by individuals and organisations—schools, medical facilities, whatever they might be. People in the bush are already at a disadvantage. For our regional communities private health insurance is a godsend. I have already said that there is a lack of hospitals. Many hospitals are understaffed and that is supplemented by the fact that private hospitals take a load off the system. That system may be overloaded in the cities but city services are pretty good compared with what is available in regional Australia and regional New South Wales in particular.

Forty per cent of regional Australians hold private health insurance and over 50 per cent of all Australians overall. In the Calare electorate, it is something over one-third. That is a third of the population that, by and large, do not have to overload the public hospital system any more.

People insure themselves knowing that, should they be diagnosed with a serious health condition, they have the security of a doctor and treatment when they need it and that that is something they have paid for, mostly, over many years.

The availability of specialist services is one of the most serious implications of not having private health insurance. Without doubt, private hospitals help the public system attract a number of specialists in a region and they tend to work together to make it much more viable for a specialist to operate in a country town. The fact that the private health system is there financially helps doctors more, but most of them are very keen and very willing to work in the public system as well.

The two systems need one another, which is what makes it crazy to deliberately decide to downsize that which we all need. As I have said before, regional Australia needs it more, even though fewer of us are in it than are in it in the cities. In Calare, for example, there are four private hospitals. We almost lost one a couple of years ago with the closure of St Vincent's Private Hospital in Bathurst. The closure came as an enormous shock to the region as it would have been without an essential centre and that would have totally overloaded not just Bathurst's system but Orange's major hospital system as well. Fortunately, through a joint venture between Orange Day Surgery Centre and Day Procedures Australia, the hospital was able to continue operating as the Bathurst Private Hospital. There are still ongoing discussions regarding the redevelopment of the health service.

When you say something political when it is obviously so much about politics, you get accused of being cynical, but I am deeply concerned that, should this Labor government continue on its warpath of harming private health insurance, the longevity of Calare's private hospitals, without a shadow of a doubt, will be threatened and we may gradually see the deterioration of our limited private health services until we are left with none.

The one thing that sticks out like a sore thumb in all this is that, while Labor are eager and willing to pull a couple of billion dollars a year out of the private health system and out of contributing to its longevity, they are not putting that money back into the public health system, which will have to immediately deal with the overflow of people who move from private to public health. To me, that does not say anything about caring for people; it says a lot about trying to get yourself out of a black hole by playing with people's medical futures.

While there may be few, private hospitals act as an essential hub for regional healthcare delivery. As I said, the over 33 per cent of residents of Calare who have private health insurance are using these services, and it is these families and individuals who can ill afford to lose the benefits they have enjoyed over the past decade, relieving the public system of an awful burden that it would have to bear without any extra funding to deal with it. Those who can no longer afford private health insurance will abandon insurance policies and rely on our already strained public health system. This will mean longer waiting times in our hospitals and reduced access to health services for the already disadvantaged members of the community.

This Gillard Labor government is once again attacking middle Australians, who are already battling with the rising costs of living. When you drive up interest rates by borrowing $100 million a day you are not going to make things much easier for Middle Australia. For the sake of the Calare community and wider regional Australia—not to mention our whole country—this legislation needs to be buried.

All Australians should have access to affordable health care and a real choice in managing their healthcare needs. This is what the coalition supports and will continue to support—providing all Australians with choice through private health insurance. The reason for this rebate was to not overload the public health system. The reason for it was to keep people in the private health scheme, not because it is elitist but because it is necessary. The public system is incredibly expensive. That goes without saying. All medicine is. They are going to overload it because of the money they are going to save and there has not been one word about putting it back into the public system, which will immediately become even more overloaded.

Every dollar of funding provided for the private health insurance rebate saves $2 of costs that are then paid by private health insurers. Those with private health insurance make up a huge 52 per cent of Australia's population—12 million Australians. Of these, 10.3 million have hospital treatment cover. As I said, over one-third of Calare's people will either leave private health insurance altogether or downgrade, seeking cheaper products, which will have second-round effects for public hospitals.

I think the crossbenchers need to think awfully carefully about this policy, given their regional nature. I am not saying it is not going to affect people in the cities. Of course it will. It will overload the public system in the cities as well. But the public system in regional Australia, particularly in New South Wales, is in a worse state than in the cities. Those crossbenchers—who are, by and large, from regional Australia—need to think this through very carefully. They might have defied their electorates before and think they have got away with it, but I can assure them they have not. And they will not get away with this one. With people abandoning or downgrading their health cover, the cost of private health insurance will become so high that it will be beyond the reach of lower income earners. On all of the coalition's and independent analysis calculations, there are no benefits in cutting the private health insurance rebate. It is obvious that they are not going to save money. They are going to have to put more money into the public system when they drive more people into it. So it is obviously not about money. This is about the idea that people should not have private hospitals and should not have private schools. Why? It is in the taxpayers'—

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point of order of relevance: I let the member for Calare off a couple of times when he started to talk about the education system. He, a number of times, has said that the government does not support private schools. It is not right, but it is not even relevant. This is about private health insurance.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

The minister will resume his seat. I am listening carefully and the member for Calare is within the scope of the debate.

John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

Should the government make savings from this venture, they will only be forking them out again, putting them back, because, without doubt, wherever you are in Australia this is going to overload the public hospital system even more. This is a cost-shifting measure by the Labor government. In the 2007 election, shadow health minister Nicola Roxon, now the Attorney-General, declared:

… Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private Health Insurance rebates …

I notice there is quiet over the other side of the table now.

This is yet another broken promise by an incompetent Labor government which is hell-bent on punishing ordinary Australians. They are punishing the ordinary Australians who value their health and are willing to take responsibility for their own health care. But this is not a government that encourages private enterprise or responsibility. These are the people who know—they have a sense of obligation—that if they can afford it they should do it; if they can afford health care they should take on that responsibility, wherever possible, and leave public beds for public patients.

I will vote against this legislation and I certainly hope those on the cross bench do their duty to their constituents and do the same.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2011 and related bills. This legislation provides for the means testing of Australia's private health insurance rebate. Make no mistake: these changes will force people out of private health insurance coverage and onto cheaper policies that provide either less coverage or no coverage at all, shifting their healthcare needs to an already overstretched public system.

As with any market, when you have people pull out it pushes the cost up for everyone who wants to stay in that market. That is what we are going to see in private health insurance markets with the passage of this legislation. The smaller take-up of insurance products will drive up premiums, just further entrenching the increased cost of having private health insurance that smaller rebates will create, preventing even more Australians from being able to pay. The government's insurer, Medibank Private, has itself announced that it is expecting 37,000 of its members to completely drop their insurance as a result of these changes, while another 92½ thousand people with insurance are likely to downgrade their cover. Given that this is just from one insurer, the impact across the entire industry is set to be devastating.

For a Labor government that wanted to expand the level of federal funding for Australia's health system, this is a clear U-turn to shift some of the burden from its own health related expenses over to the state funded system. We have a public health system in Australia, particularly in my state of Queensland, that is in tatters. We simply cannot afford to have the consequences of this legislation add to that burden, as they undoubtedly will.

At the Townsville General Hospital, we already saw the consequences of funding cuts late last year with doctors concerned about around $54 million of funding for the hospital being dropped. It took a public campaign to force the government to reinstate just a small portion of that by supporting a paediatric intensive care unit at the hospital. If the Queensland government cannot afford the public health needs of the region now, and the paediatric intensive care unit is $8.4 million, how can we expect the Queensland health system to handle the greater strain of the system unless North Queenslanders can afford private health coverage?

The first point that needs to be made in this debate is that the legislation is not about fairness. Despite the way the Labor Party has tried to argue these changes, it is not the superficial class-warfare argument that low-income earners are subsidising health care for the rich. This bill directly impacts 2.4 million people in those three income tiers who face increased premiums, of 14 per cent, 29 per cent and 43 per cent, for all three tiers. Added to this is the fact that every Australian on a private health insurance policy will be impacted when they have to face higher costs for their coverage as a result of the upward pressure that this legislation places on insurance premiums. There are around five million Australians with private health insurance who are on an annual income below $50,000. At a time when the cost of living is already going through the roof, those five million people will have to cop higher premiums on their health insurance as a result of this legislation. How is that going to give low-income Australians a fair go?

Giving every Australian access to high-quality health care at an affordable price is a core principle of Australia's healthcare system. Providing choice in health care is not only an important right in itself but further allows government to manage healthcare access and ensure that its quality is maintained by taking pressure off the government funded public systems. For Australia to have a choice, private healthcare options need to be affordable, and a big part of that is rewarding Australians who choose private health care. The previous, coalition, government introduced a raft of measures, including the private health insurance rebate, the Medicare levy surcharge, and lifetime health cover, which provided Australians with more affordable healthcare choices. The outcome of this was to see private healthcare coverage in Australia jump by over 10 per cent to coverage of more than 44 per cent over the course of the Howard government. Econtech states that for every $1 spent supporting private health insurance $2 is saved by the public system. In Townsville, a private organisation, Queensland X-Ray, in conjunction with the Mater Hospital and without any funding or support from this government, have gone and bought their own positron emissions tomography or PET/CT scanner at a cost of $2.4 million. The cost in the public system was $9 million. The Queensland health system has said that it is going to put in another one now that the other one has arrived. The PET scanner is an outpatient service; it is not an inpatient or dedicated part of oncology treatment. The public system will do a maximum of three scans per day. At Queensland X-Ray they will do up to 15 or, if necessary, 17 scans per day. That is the difference between public and private health care. They will go through and do the work required because it is there to be done. They are already receiving calls from patients coming from Darwin, Cairns and all over the place to use this new facility, because it is a properly driven, properly funded and properly run machine with no help from this government. The private health system has proven to be a crucial part of Townsville's health network. Thanks to the city's two private hospitals, the Mater Hospital and the Mater Women's and Children's Hospital, Townsville now has its own PET scanner.

Any measure that is a blow to private health cover is a blow to healthcare access in North Queensland. Some 49,435 people in my electorate have private health insurance, with just over 70,000 people covered out of a population of 195,000. This bill poses a serious threat to the standard of health care that those Townsville residents can afford and it poses a serious threat to the availability and quality of health care of everyone in Townsville who find themselves at the already overburdened Townville Hospital. Private hospitals are responsible for treating 40 per cent of patients in Australia. This significant proportion of health care keeps the pressure off the public system. We cannot afford to have that figure plummet as a result of lower private health coverage. It is incredibly narrow-minded of this government to try and save a few bucks on the private health insurance rebate at the expense of not just Australians with private health insurance but also the state government and its provision of public health care.

Forecasts have put the cost of this bill to the public health system at around $3.8 billion recurrent. Queensland Health is in a shambles and we are going to put more pressure on them here. Who is thinking of these things when they are putting this stuff together? In considering this bill, I spoke with Aaron Newman from Queensland Country Health, a private health insurance provider based in Townsville. Quite apart from being a major sponsor of the mighty North Queensland Cowboys, their research is telling them that up to 20 per cent of their clients may drop out of private health insurance immediately but that there is a high likelihood that people will also drop out of their extras.

A lot of this debate has centred around the hospital system, but I would like to talk about allied health and dentistry—those things which do not appear at the hospital and which are seriously affecting the regions. Places like Ayr, Ingham and Charters Towers, which are not inside my electorate but which currently provide physiotherapy and dentistry, may find that their client lists are diminished as people travel to Townsville and put further pressure on existing government resources. This may lead to yet another drain on the local community, as they are unable to sustain those sorts of businesses. The physiotherapist will go and the dentist will go, as the fabric of the town slowly but surely disappears because their residents cannot afford to maintain private health insurance and maintain these businesses in those regional centres and the smaller towns which feed into them. Queensland Country Health are very worried about a section of the community refusing to pay the extras and going into the public system.

There is also a real threat that if and when this does happen specialists in regional private hospitals who do complicated surgery will move to bigger cities to get their work. We heard the member for Hinkler talking about his private hospitals and the same stories are being told in every regional centre. As the work dries up they will have to move on. We have just gone through the exercise of trying to get a fair deal on building insurance for strata title buildings in Townsville and North Queensland as other insurers left the market. We have had increases of over 1,000 per cent in premiums as, one after another, insurance companies left the North Queensland market to concentrate on the big cities where they can get an economy of scale. Can this government or anyone in this government with its record of poor management guarantee that this will not happen in the health industry? They cannot guarantee it and you will see these things disappear. Medical professionals are just like everyone else when it comes to work: they will go where they are going to get paid. If the government makes it hard for them to make a living, they will just pack up and follow the others back to Sydney and Melbourne and the public purse will again have to pick up the tab for all the transport costs of people having to go down for routine operations that are being done in private hospitals and public hospitals in Townsville now.

Private health insurance is a key part of Australia's health system. It provides healthcare choice to Australians and relieves pressure from the publicly funded system, which results in savings for government and allows good health care to be provided to those who need it but cannot afford to pay for it. Part of making this choice affordable to all Australians is our private health insurance rebate, which helps make the insurance affordable and acknowledges that those who purchase it are saving the government money. Attacking the structure of this rebate will hurt people in regional Australia and Townsville with private health insurance and it will hurt healthcare institutions in Townsville and across the country. That is why this government said it would not do it before the 2007 election and why I will not be supporting it now. Let me say again that not one dollar of compensation will be going to the states. It is estimated that they will have to pick up 184,000 extra procedures, and the cost is estimated at $3.8 billion to save $2.4 billion for the federal budget. There are six seats in Townsville and we have four new candidates standing in seats held by other parties. Our nurses and doctors have already been belted by the Queensland Health pay debacle and they now have to cop it again with this bill. I call on the three sitting Labor members in Townsville to stand up for the health workers and stop this madness. The state Labor government must come out in support of cancelling this legislation because they simply cannot afford it. Queensland Health is broke now. They are in all sorts of strife. I also call on the four Liberal National Party candidates—John Hathaway for the seat of Townsville, David Crisafulli for the seat of Mundingburra, Sam Cox for the seat of Thuringowa and Liz Schmidt for the seat of Dalrymple—to stand shoulder to shoulder with Rosemary Menkens and Andrew Cripps to bring this down and make sure that they stand up for justice in our city and in our region.

This bill is not about health; it is about the vain hope of this government returning to a surplus. They do not care who or what they have to hurt on the way through. That is why they are willing to pass a cost of $3.8 billion onto the taxpayers of every state to save $2.4 billion and try to get back into surplus. I will not be supporting this bill and I will not be supporting inequity in health for any Australians.

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Local Government) Share this | Link to this | Hansard source

I am very pleased to speak on the Fairer Private Health Insurance Incentives Bill 2011, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2011. What an Orwellian title. What is fairer about ripping money from people who want to invest in our health system and take the pressure off the public health system? It is not fair to the people who thought about it. It is not fair because it is a broken promise.

I will try not to go into all the detail as others have done but to introduce new material that reflects the views of my electorate. The effect of the bill is that, starting at $80,000 of income, people who are privately insured will not get the 30 per cent rebate. The income threshold is higher for couples. Those who do not privately insure and are above a certain income level will start paying a greater Medicare levy surcharge. We are into the class warfare. The Labor Party would say: 'These people do not vote for us, so who cares? We will go and belt them up, grab the money off them where we can and try to paint ourselves as the champions of people on lower incomes.' In Australia the fact is, if you go down the street now and get knocked over by a car or have some sort of accident, you will end up in an Australian hospital in an emergency centre and you will get treated for nothing if you are not self-insured. So much for this being about doing the right thing by those on lower incomes. They already get looked after because we have a very good health system as it stands now.

I was fortunate enough to join this parliament in 1996 and this was one of the great things that the Howard government introduced. A 30 per cent rebate, taken either as a tax return or as a drawdown, put incentive back into belonging to private health care. It was a great incentive for those who did not want to insure to do so. I think we used this example at the time: why should someone like Janet Holmes a Court's mother-in-law get free health care when she can afford to pay for herself? She will not insure because there is nothing in it for her. The incentive was always there with the rebate.

The sad part about this is that it is a broken election promise from a government that does not mind breaking promises almost on a daily basis now. They have no shame when it comes to rolling over on a commitment they have made. We have seen this with the carbon tax. We have seen what the Prime Minister did recently to the member for Denison on his pokies reform because she did not need his vote anymore. This is just cant and craven opportunism by the Labor Party. They have lost twice before but they suddenly decided they have a chance of getting it through. They do not need Mr Wilkie's vote because they got the former Speaker out of the chair so they could get an extra vote. We know how it is all done. It is very Machiavellian. That is why we are standing here today talking about these things.

People will drop their private health insurance. If anybody thinks that this is about the rich, they should think again. Pensioners in my electorate continue to struggle to pay for their private health care because they are high users of health care and they want a choice. That is the difference between the Labor Party and us: we believe in choice; they do not believe in choice. They believe one size fits all. The pensioners say, 'If I want some specialised attention, whether it is a hip or a knee, I can have the doctor of my choice and the specialist of my choice and I do not have to wait.' They say to me, 'Mr Randall, we are really doing it hard,' but they believe in private health care. This will not affect them, but the principle of private health care is being eroded in this whole context. Goodness knows where it will end up.

When I was a young boy my dad was not a wealthy person. He was a carpenter. We were a single-income family. My mother used to take her HBF stamp book into the newsagency and get it stamped. She wanted private health care for her four kids because she thought it would be better for us should we ever get sick. That is the mentality of people who want a choice. Here we are with this continual erosion after the government said in this place and elsewhere that they would not do it. The then health minister, Nicola Roxon, stated on 26 September:

… Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private Health Insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

The Prime Minister repeated it in 2009. They have continually said it on the record. They have misled the Australian electorate. Just as they said there would be no carbon tax, they said there would be no eroding of the private health insurance rebate. What have they done? They have dishonestly turned around and done the opposite. And now, of course, they are in trouble—because they are a high-spending government. They are spending like drunken sailors, as the Treasurer would say. They cannot stop themselves from spending, so they have to get their money from somewhere. This is a form of reverse tax; they are actually taking the money off those who are privately insured, just as they are doing to the miners and to industry with the carbon tax. This is a high-taxing government that want to find money anywhere they can to prop up their bad behaviour. They want to rip money out of the pockets of Australian families and seniors to try and achieve this—just as we saw with the flood levy.

The government believe that the rich in Australia are people like a nurse and a policeman living together who earn enough money to get them to $160,000. There are many people in Australia on very low incomes, but middle-income Australia are the ones being burnt here—and they account for many of my constituents. They are the ones who are being attacked by this government. It is not just the wealthy that we keep hearing about, and the phobia they have with people like Gina Rinehart and Clive Palmer; this is attacking middle Australia, aspirational people who want to help themselves and obtain better opportunities for themselves and their families.

So we are not talking about the rich. This is ideological, as I said, because it removes choice. Do remember that this is the same Prime Minister that, in opposition, with Mark Latham as leader, came up with Medicare Gold—that whacky idea sold to her by somebody in the industry. She has continued to want to dismantle the pristine and magnificent health system we have had for years. When Hillary Clinton came to this country when her husband was the American President, she had a meeting with Michael Wooldridge and said, 'Can you tell us how you run this marvellous healthcare system? Running the public system in parallel with the private system—it is the envy of the world.' She had a meeting to try and find out how we do it. It was one of the healthcare marvels of the world. And here we are, in for the dismantling of it, because of an ideological class war battle of the Labor Party.

You can hear the Labor Party feigning concern about workers in this House on a daily basis. The best thing you can do for a person is give them a job. But what are we hearing about at the moment? Jobs are being lost in industries all around Australia. So much for the workers. The Labor Party are not really interested in the workers; they are just interested in their money, and taking it from them.

Why are we in this position today? Let's make the point about the Independents and the so-called Independents. We never expected the Greens to do anything. Mind you, dare I say it, the Greens today have got something for their vote—$160 million, so at least you have to give them something for their vote—but certainly not the member for Denison, not the member for Lyne and not the member for New England. They just roll over and have their tummies tickled, just fall straight into line. The members in those seats have very high numbers of end users of health care in their electorate, and those tens of thousands of people in their seats will judge them very harshly. But they got nothing for their vote; they prevaricate, they pretend that they might be hard to get and they run to the media and say, 'Oh, no, we're going to hold out.' But, no—unlike the Democrats of years ago, who were considered to be rented by the hour—these guys actually signed themselves up to be rented for the whole term of this parliament. They are just in lockstep with this government—no matter what they do, they will get their vote all the time, because they know, when they go to an election, they will get absolutely cleaned out, so they want to stay here as long as they can. So that is why they are doing this, against the will of their electorates, against the wishes of the middle-income earners of their electorates. They are willing to do this for current gain, but they will be judged very harshly when the opportunity arises.

Let us just go back a step and find out why this is silly and stupid. Dare I refer to an article in the Australianon 10 May 1995 entitled, 'Medicare levy to rise by about $30 a year'? It is all relative: $30 a year was a lot of money back in 1995. It says:

Labor ignored the private health system. Private health insurance membership fell from 63.7 per cent of the population in 1983 to below 34 per cent in 1996 …

I wonder what happened in 1996! The article continued:

At the same time private health insurance premiums rose by an average of 12 per cent every year. The decline in membership restricted choice and placed unsustainable pressure on our public health system.

So, at the moment, Australia is currently in the position where we have about 64 per cent of Australians who are in some way privately insured through a range of healthcare systems and we are heading south once this gets through.

Now, dare I say, one of the Labor champions of that time—the powerbroker, the man who used to tap Prime Ministers et cetera on the shoulder—Graham Richardson, was the Minister for Health. Let's see what Graham Richardson said. In 1993, Labor's health minister, Graham Richardson, warned that if private health insurance coverage were to drop below 40 per cent of the population, the entire health system would be in danger of collapse. When Labor left office the rate of coverage had plummeted to 34 per cent. Dare I say: deja vu! Here we go again: this is what we are heading for under this government.

Graham Richardson said on 28 November 1993:

We've always had the view that the private system had to coexist with the public system. If it doesn't, the public system can't cope.

I will end by going to an editorial—although I have so many emails from my electorate asking us to do what we can do to stop this reckless move by this reckless government—from the WeekendAustralianof 11-12 February this year:

Politically, the move will be felt in outer-metropolitan and provincial marginal seats—traditional Labor areas—where many tradies and small business operators earn more than the $83,000 for singles and $166,000 for families at which the rebate will be reduced. As with plain cigarette packages and more meddlesome anti-discrimination laws, striking a blow against private health insurance and individual choice smacks of a leftist mindset that some in the government would like to inflict on an unwilling electorate with vastly different priorities. Such ideology is especially out of touch from the concerns of aspirational voters with heavy mortgages. They and their families would resent being forced to queue for public hospital treatment and struggle to pay for services such as orthodontic care for their children, for example, if they were unable to maintain private cover.

That was a major Australian newspaper in its editorial belling this for what it really is. It is an absolute disgrace that we are in here today reaching this position when the government said it would not do it. This is not about trying to get stuck into the Gina Rineharts, as we keep hearing from the Treasurer in this place. This is about this side of the House standing up for middle Australia, standing up about the cost-of-living pressures they face on a daily basis, such as fuel at $1.50 a litre and all of those sorts of things that they are trying to deal with—feeding their kids, clothing their kids and insuring their houses. And what is happening? The government is going to make it harder for them to stay in the system. Of course it will be eroded. It will remove the amount of money that they are able to put into health care, because they just will not have it.

We heard from other members in this place that this is about mates and all that sort of stuff. This is not about mates on any side. This is about doing the right thing for a decent, and one of the most coveted, universal healthcare systems in the world. We do not want to go to the British system, where there is one size fits all. We do not want to go to a system where it is tattered and out of touch. In this country we have some of the best health professionals. These health professionals are currently affordable for those people who can afford to pay a little more to be privately insured. This is disgraceful legislation. It should not be in this House, because the government said that they would not bring it here. Yet here we are, standing here today facing another broken election promise, and all those on the other side should hang their heads in shame. (Time expired)

Sharman Stone (Murray, Liberal Party) Share this | Link to this | Hansard source

The Fairer Private Health Insurance Incentives Bill 2011 and cognate bills amend various acts to implement three new private health insurance incentive tiers. In simple terms, the legislation puts a means test on the private health insurance rebate. This is the third time that the bills have come before the House. It has twice before been defeated because this is bad legislation with terrible consequences, especially for rural areas but in fact for all families who may not be able to stand in the queue waiting for their elderly parent's knee replacement or who want a choice of specialist or doctor when their young child has an accident or is chronically ill and who understand where the best help may be.

Ironically, it was a Labor government that introduced Medicare in 1975. Medicare has always been described as a universal health insurance system. It is meant to be a system with equality of access for all Australians. It is a system that, as the previous speaker said, is the envy of the world. We do not suggest that it is cheap, but in a developed country like Australia we happen to believe that the health of our citizenry is worth a great deal of investment.

According to Private Healthcare Australia, there are 12 million Australians who have private healthcare cover at the moment. This legislation will directly impact on every one of the 12 million Australians who have that private health insurance. Every one of those 12 million Australians will have to consider their options if these bills are passed. They will have to ask themselves whether they can afford to continue their private health insurance or whether they have to join the long waiting lists in the public hospital system for urgent medical attention.

Australians with private health insurance are not what Labor likes to call 'the rich people' of the country, and I find it very offensive when we sit here in this place and hear names referred to as 'the rich' who are therefore somehow abhorrent and deserving of punishment. Almost half of the 12 million with private health insurance have an annual household income of less than $50,000; 25 per cent have an income of less than $35,000. Under any definition it is rather amazing to consider these people 'rich', even in the lexicon of Labor. The government would have you believe that it is stopping rich people from rorting and taking advantage of poor people. This is an appalling attempt at wedging and dividing according to Victorian era notions of class.

Labor's changes would affect single people on incomes of $80,000 or more or couples with incomes of $160,000 or more. Again, these are not people who have a lot of money to spare. They are not Labor's so-called 'rich people'. According to the ABS, the average weekly full-time earnings in August last year were just over $71,500.

In my electorate of Murray, 40 per cent of the community have private health insurance. That is not higher than average at all. But we in my electorate have done it tough recently, with seven years of drought, with floods and now with appalling federal government policy which threatens to take away people's water security and make it impossible for them to continue to be food and fibre producers. So my electorate is already looking hard at whether it can afford the current private insurance rates. With the changes that these bills imply, there is no doubt that private health insurance cover is going to get much more expensive. My constituents want private health insurance, but even now they are considering whether they can afford it. We must not make it harder for them. They are good people and they deserve decent health care. They do not deserve to wait five or six years for a new knee.

The government is attacking hardworking families—as I say, those who are trying to pay a mortgage, trying to pay the increases in childcare fees that this government is imposing and trying to pay the higher electricity charges that this government is presiding over. They are in dread of July, when the carbon tax will hit, take out jobs and make it almost impossible for them to meet their daily costs. On 1 July 2012 it will be D-day, doomsday, the day this government will bring in changes to the Medicare levy if it can, if these bills pass, but also the day when the carbon tax will be introduced.

These bills before us will force families and older Australians to decide whether they turn on their heaters in winter or whether they can instead afford to pay private health insurance. We should not have our citizenry forced to make such shocking decisions. On the one hand, the government is saying that as you get older there is an increase in the rebate for private health insurance from 30 per cent of the premium to 40 per cent, but an increase in rebate is no use if you cannot pay for the private health insurance basics in the first place.

Analysis from Deloitte on the economic impact of changes to the private health insurance system shows that in the first year 175,000 people would withdraw from private health cover, not being able to afford it, and a further 583,000, or over half a million, would downgrade their cover—again, because they simply would not be able to afford it. Over five years it is expected that 1.6 million would drop cover and 4.3 million would downgrade. The Minister for Health, on the other hand, would have us believe that this will not make a difference at all. 'No problems at all,' says the minister. In a press release on 19 January the Minister for Health, Ms Tanya Plibersek, said:

… Treasury modelling estimates that, after these changes come into effect, 99.7% of people will remain in private health insurance as a result of incentives such as Lifetime Health Cover and the Medicare levy surcharge.

Well, I suggest that Labor has got it wrong again and so has Treasury modelling. I prefer to believe Deloitte's economic impact research because it is the reality.

The expected withdrawal of people from private health insurance will result in larger premiums and we will see literally millions drop their private health insurance. This will have an enormous impact, particularly in country regions. We do not currently have equity of access to health services in country areas. We have a very great difference in the health outcomes of men, women, children and the elderly in rural areas compared with metropolitan areas. Our incidence of cancer is higher. The number of people who die earlier is higher. We have more accidents on farm and off-farm. We need at least equal access to health services in country areas. I would argue that we need better health services than those available in metropolitan areas.

A lot of our health services are now delivered through usually small but very adequate private hospitals. They supplement the work of the public hospitals in places like Shepparton, Bendigo and Ballarat. We know that the changes proposed in this legislation will kill off a number of those private hospitals. We also know that they will not be able to attract specialists—the metropolitan based surgeons, gynaecologists, obstetricians, paediatricians, specialists in immunology and so on—because those specialists invariably come to the private hospitals where they are better reimbursed. That is why they are attracted. These changes will kill off the private hospitals in my country areas and will also kill off the access to specialists and expert medical practitioners. I think that is appalling, and I condemn this government for overlooking that fact or for not caring.

What does a young person do who is active in sport and wants to make sure that they can have swift and immediate treatment if they sustain an injury? Under this new legislation, this young person is likely to have to say: 'I'll just have to join the queue. I'll just have to take out a ticket in the lottery. My knee reconstruction will have to wait because I'm in a very long queue. I can't afford private health insurance.' I think that is appalling.

Independent economics firm Econtech Pty Ltd has determined that every dollar of funding provided for the private health insurance rebate saves $2 of costs that are then paid by private health insurers. Public hospitals treat 40 per cent of all patients in Australia. I have already referred to their dependency on private health insured people. It is not surprising that Deloitte estimates that public hospital costs will add an extra $1.4 billion in additional recurrent costs to the government budget of 2016. What appalling and short-sighted action this is, not to mention a breach of faith, since this government, when trying to convince the population to vote for it, claimed it would not meddle with private health insurance. We know a lot of other promises have gone west when it comes to this government, but this was another one of the significant promises that it has broken.

I turn now to Strathbogie shire in my electorate of Murray. It is only a small shire of some 10,000 or so people. It has two hospitals in Nagambie and Euroa and a medical centre in Violet Town. The problem for residents of the Strathbogie shire is that there is not a single public health bed in the shire. You are required to be privately insured in the Strathbogie shire if you want to access a local hospital, particularly in the case of emergency. I want members on the other side to think through this dilemma. When you do not have any public beds but people cannot afford private health insurance, and when there are only private beds in the bush nursing hospital, which is the case, what do those people do? They call a friend or neighbour to drive them with their broken leg from Euroa to Benalla or Shepparton—an hour-plus one way. You cannot have babies in these local hospitals. There is a serious impact when you make the cost of private health insurance even greater in areas where there are no public bed alternatives.

This is a serious issue of equity of access to health services in a developed country that used to take pride in admitting anybody at the door of a hospital for urgent and immediate treatment. It is an intolerable situation. It has resulted in some 3,500 public patients in the shire of Strathbogie being taken to hospitals outside the shire every year because there are no public beds in the shire. Most are sent to Goulburn Valley Health, as well as to Wangaratta and Benalla. It is not fair. The shire of Strathbogie is not out the back of Uluru or somewhere near Katherine in the Northern Territory; it is only 2½ hours up the Hume Highway from Melbourne. It is a disgrace that the shire is having to beg for public beds. This legislation is only going to exacerbate the problem for them.

Prior to the 2007 election Labor was adamant that there would be no changes to the private health insurance rebates. It knew what the public understood about private health insurance. It knew it would be an anathema to announce that the government were going to interfere with the brilliant system that Australia has, but here we go—this is what they are doing. Here we go again, lining up with the other disasters. We have the BER stuff-up, where schools in my electorate have not as yet had a sod turned despite the promised $2 million or so for their building. We have the lack of value for money in those Building the Education Revolution infrastructure efforts. We have the pink batts disaster, where people died, and we are still trying to sort that out with the extra millions being spent. We have the set-top boxes debacle, where little old men and women pensioners could have been given, for a few hundred dollars, a brand new television set but instead had a retrofitted box which did not work on their old set and which still has not given them access to television like other Australians. The waste of money by the Rudd and Gillard Labor governments goes on and on—five successive deficit budgets.

How is this government going to bring the budget back into some semblance of order given that it keeps talking about having a surplus? I think they have hit on this great plan: they are going to cut the private health insurance rebate. This bill will add $2.5 billion to government coffers, as someone clever in Treasury has worked out. This is appalling. To this Labor government, I say, get your house in order, start to manage the finances of this country appropriately and put a measure or a rule across all of your projects that you now mismanage and bungle and fail to deliver in a timely way. Do not attack private health insurance. Do not take away from the ordinary men and women of Australia access to health services that are necessary for a decent life. Certainly in rural and regional Australia, don't kill our private hospitals and make us wait even longer for essential medical services. This is not the Australian way.

I say shame on the Labor government for imagining that they are going to bluff their way through this period, with the Independents, who no doubt still have long shopping lists, there to support them. We have to reject this bill completely. I will not support it and I am responding to all the constituents who have asked me to say no. I will absolutely be saying no.

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

I would like to commend the member for Murray for her thoughtful contribution on the Fairer Private Health Insurance Incentives Bill 2011, and I associate myself with the concerns she raised, particularly when she highlighted the regional impacts of this legislation. I will be joining my colleagues in opposing the bill.

There is an increasing air of desperation that surrounds everything this government undertakes and this, I believe, is most apparent in the bill before the House. This bill is not about improving health services; it is about fixing a budgetary black hole, as the member for Murray just indicated. It represents another clear breach of trust between this government, its Prime Minister and the Australian public.

If those opposite are still wondering why the support for the Prime Minister continues to diminish, they need to look no further than the lack of trust that exists between her and the Australian public, and that flows into a complete lack of respect for this Prime Minister and the government she leads. Quite simply, the member for Griffith, Kevin Rudd, could not trust the Prime Minister, and why should anyone else.

Despite repeated assurances that Labor would not touch the system of private health insurance rebates, here we are again today debating another policy change that represents a monumental betrayal of the Australian people. Increasingly, the Australian public see that the member for Lalor is a deal maker. She is not a Prime Minister. She will do anything and say anything to cut a deal and hang on to power, even at the expense of Australian jobs and at the expense of adding to the cost of living for Australian families. Her negotiations to form a minority government were all about deal making. She made a deal with the Greens, and that is how we ended up with the carbon tax, which is another fundamental breach of trust with the Australian people. The Prime Minister made a deal with the member for Denison on pokies reform and then promptly reneged on that arrangement which was another breach of trust. And who knows what other deals she has done among her factional allies and her union mates to cling to power. Australians simply have no reason to believe the assurances being offered by this Prime Minister that the changes to health insurance we are debating today will not have negative impacts.

This is the Prime Minister who repeatedly assured the Australian people that there would be 'no carbon tax under the government she leads', and then proceeded to introduce a tax that kills jobs as it destroys Australia's competitiveness on world markets. On that point, even if you accept the Prime Minister's protestations and assurances that her government is not responsible for job losses in the manufacturing sector, why is the government making it harder for Australian businesses? If ,as the Prime Minister likes to say, the job losses are simply growing pains and are more about the high Australian dollar and global markets, why add to the cost base of Australian industries? Why at this time impose the world's biggest carbon tax and make it tougher for Australian businesses to employ people?

The Prime Minister's handling of the carbon tax and the trust deficit she has created are consistent with a pattern of behaviour that has dogged both the Rudd and Gillard governments. I do not make these comments tonight with any great sense of pleasure or triumph, because there is an overwhelming sense of disappointment in my electorate with the way this Prime Minister is running a government that is clearly out of its depth and unable to manage national affairs. As someone who does have genuine respect for the office of Prime Minister, it gives me no personal satisfaction to listen to people speak very disparagingly about Prime Minister Gillard.

Overnight my office, and many other offices, I am sure, received more emails criticising the Prime Minister. This time they are focused on the issue of private health and the absolute sense of betrayal they feel. The Prime Minister has to take responsibility for her actions. The people of Gippsland are merely reacting to her performance in the role. They were prepared to give her a go, and she has let them down. It has been a prime ministership of monumental disappointment and it all boils down to trust. Now we have this growing lack of respect for her ability to manage our nation through what are increasingly turbulent times.

The bill before the House will hurt Australian families by adding to their cost of living and by placing more pressure on the public health system. I do not think there is much debate about that. Even on the other side they acknowledge that there will be people who will be adversely affected by the government's proposed changes in this bill. If you make something more expensive, you will have an impact on demand for the product and people who are already facing serious cost of living pressures will make the decision not to purchase the product.

The changes before the House will force people to drop their private health insurance cover or choose cheaper cover with more procedures excluded. There is no question it will cause upward pressure on insurance premiums and force more people into an already over-stretched public hospital system.

The impact of this will not just be felt by those on higher incomes, who will incur up to a 43 per cent increase in their premiums. It will be felt by all Australians with private health insurance as they face higher premiums into the future, if these changes proceed. There is a class warfare element to this debate, which I find very disturbing. We have had the minister and others trotting out lines about it not being fair for a person on $50,000 a year to be subsiding the private health premiums of a person on $200,000 per year. Those are the kinds of lines they are hoping to get away with in the media to stimulate a bit of class warfare in the broader community. What they forget to mention is that the person earning $200,000 a year will already be on the highest income tax bracket and in all likelihood will be making a bigger contribution to government revenues through that system alone. They would also contribute more under the existing Medicare levy system. So the politics of envy and the class warfare associated with those comments from the Labor Party should be condemned by all members of this place.

I appeal to the crossbenchers. They have the opportunity to save this government from itself. This government is about to make another huge mistake that will hurt everyday Australians, particularly in regional areas. The crossbenchers have the opportunity to stand up for their electorates and prevent this government from passing on more pain to the Australian community.

The coalition supports choice in the health system, and, by supporting private health insurance rebates, we have been successful in taking pressure off the public system. The private system is an important part of health service delivery in Australia today but, if you listen to those opposite, it seems that they regard it as a playground for the rich and famous to have trivial treatments. The fact is that private hospitals treat 40 per cent of all patients in Australia and perform 64 per cent of elective surgery. In 2009-10, that amounted to private hospitals servicing more than 3.5 million patients.

If this bill is passed, it will not be just the wealthy who will be hurt by another Labor broken promise. It is estimated that 2.4 million people will be directly affected by these changes, and they will face immediate increases in their premiums. Deloitte's analysis of the changes shows that, in the first year, 175,000 people would be expected to withdraw from private hospital cover and a further 583,000 would downgrade their cover. Over five years, it is expected that 1.6 million will drop cover and 4.3 million will downgrade.

It is significant that this government has not disclosed the numbers of people expected to downgrade, but, as premiums increase significantly for those in the income tiers, it is reasonable to expect they will seek cheaper products, which would have second-round effects for the public hospitals. That is the fundamental point to this debate, and it has been made over and over again by speakers on this side of the House. If people drop out of the private health system or take a reduced form of cover, the premiums will increase for those remaining in the system.

It completely destroys the insipid argument which has been put forward by the Minister for Health and others—that those on low incomes will not be affected by the removal of the rebate. They will suffer the flow-on consequences as those who are affected by the withdrawal of the rebate exit the system or take a lower form of cover and put upward pressure on premiums in the future.

You simply do not make the public health system stronger by weakening the private system. This bill will erode confidence in our private health system, and not a single extra dollar will be spent on the public system as a result.

All of this is coming from a Labor Party which went out of its way to promise the health industry and the Australian people that it would not make changes to the existing system. The letter to the Australian Health Insurance Association in 2007 made it abundantly clear that Labor supported the existing system:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

Federal Labor will also maintain Lifetime Health Cover and the Medicare levy surcharge. Labor will maintain the existing framework for regulating private health insurance, including the process for approval of premium increases. Zero per cent premium adjustment is not Labor policy.

Many on this side have quoted the member for Lalor, the member for Griffith and the former minister for health in relation to this issue. They all sought to assure the Australian people that Labor would be a safe pair of hands if given the responsibility of government. But clearly that was not the case. When they were given the opportunity to govern, when the Australian people put their trust in the Australian Labor Party, true to form Labor set about another bout of class warfare and tried to undermine those people who had dared to prepare for their own health needs in the future. This broken promise is a betrayal of the Australian people who believed those reassurances offered by so many Labor members in the past.

The legislation before the House is not about health reform; it is about class warfare and the politics of envy and it is all about propping up a budget that has been blown to pieces by reckless spending and a wasteful government that has failed to deliver value for money for taxpayers' dollars. And those opposite wonder why the Australian people simply do not trust them to govern.

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

I am pleased to stand up on behalf of my constituents to oppose Labor's plans to remove the private health insurance rebate. The Fairer Private Health Insurance Incentives Bill 2011, which has been argued by both sides for some time now, demonstrates the ongoing way in which the Labor Party, the government of this nation, continues its full-frontal assault on ordinary Australians. The great shame about this piece of legislation—which is coming before the chamber for the third time—is that it is yet another example of the Labor Party saying one thing before an election and doing something quite to the contrary after the election.

We know that the Prime Minister has form in this area. We know that the Prime Minister makes all sorts of commitments to all sorts of people and then walks away from them. Springing to mind, of course, is the Prime Minister's most significant betrayal of the Australian people, when she gave the commitment not to introduce a carbon tax. As Prime Minister of the nation, she walked away from that commitment and now she is introducing a carbon tax. The Prime Minister also gave a commitment not to alter the 30 per cent rebate on private health insurance, but, again, the Prime Minister has walked away from that commitment. The Prime Minister also gave a commitment to the Independent member for Denison. She actually had a written agreement with the Independent member for Denison indicating that she would move for mandatory precommitment for poker machines. Now the Prime Minister has walked away from that agreement.

And who could forget—certainly the minister at the table, Mr Bowen, the Minister for Immigration and Citizenship, would not forget—that the Prime Minister committed to the former Prime Minister, the member for Griffith, not to challenge for the leadership and said that he had her 100 per cent support. We all know how that turned out. The betrayal of the Australian people with this legislation that is before the House is no different to the betrayal by the Prime Minister of the member for Griffith.

I am certainly pleased to stand here and put unequivocally on the record my complete and total opposition to these pieces of legislation, which go a very long way towards completely ripping out the incentive that Australians have to take out private medical insurance. I want to talk about the application of this legislation to my electorate of Moncrieff. The Gold Coast is a city that is really doing it tough at the moment. We are reliant on two key industries: the tourism industry and the construction industry. Both of these industries have been severely and adversely affected by the downturn that is taking place globally. Of course the pain is being further compounded by the rapid appreciation of the Australian dollar. In fact, the appreciation of the Australian dollar is a consequence of Labor's heavy debt binge. It is not the sole reason, but Labor's addiction to spending is part of the reason why interest rates have been forced to go up and are more likely to go up than if Labor had got the budget under control.

That notwithstanding, the pain felt by Gold Coasters is very real. They have seen asset deflation, they are seeing increasingly rising costs of living and many of them are simply struggling to make ends meet. Despite this fact, 59.8 per cent of my constituents have private health insurance. Approximately 53,556 out of 70,726 have private health insurance. In my electorate, some 49,312 voters, which represents 55 per cent, had hospital treatment insurance, and approximately 53,147 voters, which is around 59.3 per cent, had general treatment insurance. In other words, significant numbers of my constituents have private health insurance. They have it because it is a value proposition.

It is a value proposition because, despite the fact that the public system on the Gold Coast is staffed by very good doctors, by very good nurses, by people absolutely committed to quality public health care, it is forced to endure less than great—let us put it that way—resources from the Queensland state Labor government. We have a hospital on the Gold Coast that simply is not up to the task when it comes to meeting the needs of Australia's sixth largest city. We have a hospital that already struggles with demand exceeding their ability to supply health services. I want to stress again that these are very committed workers in the public health system, but they are let down by a lack of commitment by the Queensland state Labor government and they are let down by a lack of resourcing. Now, unfortunately, they are also going to be let down by the federal Labor government, which is walking away from yet another commitment.

An article in today's Gold Coast Bulletin about a pensioner missing out on surgery states:

The 73-year-old woman was to have her gall bladder removed at Robina Hospital on Thursday when staff told her the surgery had to be cancelled because of emergency cases and a lack of beds.

The woman, who did not want to be named, arrived at hospital at 7.30 am and was prepared for surgery but it was cancelled and she was discharged at 10.30 am.

A senior doctor told the Bulletin the Gold Coast Health District was on a "code yellow" on Thursday, which meant there were no beds and "services were overwhelmed".

Yesterday district chief executive Dr Adrian Nowitzke denied the hospital was on a code yellow and would not comment on how frequently the code occurred.

However the senior doctor said the code was experienced sometimes three times a week on the Coast.

So we see from this most recent news article that the Gold Coast is a city that already has a public health system that is groaning under the stress of a rapidly growing population and a lack of resourcing.

Under Labor's you-beaut brilliant plan that is before the chamber tonight, they are simply going to push more people from the auspices of private health insurance into the public system. You are left to wonder whether this government really has any idea about the repercussions of the decisions it takes. This decision is being undertaken in an attempt to claw back money. This is the federal Labor government's policy initiative to try to do something to reign in their debt and deficit.

The problem is that these measures would not be necessary if there had not been such rampant and reckless public spending and waste by this government over the past three years. When you think about the billions of dollars that have been wasted on pink batts and on overpriced school hall buildings—many of them charged at two or three times what it actually would have cost to build similar infrastructure—and when you consider the money wasted on the solar program and the blow-outs on Fuelwatch and GroceryWatch and those kinds of initiatives, you realise that the Australian people have a very genuine reason to be angry with the Gillard Labor government. The Gillard Labor government wasted all this money—$900 cheques to dead people, blow-outs in the cost of pink batts due to putting them in and then taking them out again—and now the Australian people are forced to pay the bill through higher insurance premiums as a direct consequence of the bills currently before the chamber.

I stand alongside Gold Coast families. I stand alongside Gold Coast families who know that they do not deserve this. As a coalition we were committed to making it easier for people to have choice when it came to private health insurance. It was the coalition government that introduced the Medicare safety net. It was the coalition government that introduced the 30 per cent rebate. We did these things because we were able to manage Australia's economy well. We paid off all of Labor's debt last time. We got unemployment down. We were able to reinvest the dividend of good economic management socially to make sure that Gold Coast families and all families across Australia were in a better position to enjoy the benefits of solid economic stewardship. And now they have the contrast. They have the contrast of what happens when you have a government that has $50 billion deficits, that blows $136 billion of public net debt and that is borrowing in excess of $100 million a day to feed its spending addiction. Now they face the consequences of a Labor Party that is simply out of control when it comes to fiscal discipline. Now they pay the price of seeing premium increases of 13, 26 and 43 per cent on their private medical insurance as a direct consequence of Labor now attempting to do something about its level of debt and deficit. The most concerning part of all this, besides the betrayal of the Australian people and despite the fact that the Prime Minister said that she would not introduce this policy but now is doing so, is that the government is not being upfront and frank with Australians and Gold Coasters about the impact of this policy. The government owned insurer, Medibank Private, has predicted that 37,000 of its members alone will drop their cover and 92,500 will downgrade their level of cover. When you consider that the minister has claimed that the impact of this policy will be that only about 27,000 people across the sector will drop their cover you start to realise that the government is not being frank or fair dinkum with the Australian people and with Gold Coasters.

Deloitte analysis of the changes that Labor is implementing shows that in the first year 175,000 people are expected to withdraw from private hospital cover and a further 583,000 are expected to downgrade. Over the next five years, it is expected that 1.6 million Australians will drop their cover and 4.3 million Australians will downgrade. For the Gold Coast—Australia's sixth-largest city and a city whose public hospital system, doctors say, experiences a code yellow three times a week—we have the you-beaut brilliance of the Australian Labor Party trying to claw back money through policy changes that would be unnecessary had it not spent so much money to begin with. It is going to drive tens of thousands of people in my city alone from the private system to the public system. We can only speculate what that will mean for a system that is already groaning under the weight of excess demand. I know what it will mean. It will mean that people will lose their lives. It will mean that people who need to have access to life-saving surgery will not get it. It will mean that people who could have had surgery earlier, had there been more people in the private system, will be shunted further down the waiting list as other cases go before them. The very real consequence of these changes is that people will lose their lives. They will no longer be able to avail themselves of elective surgery because they will have had to make hard decisions about what they are going to pay for out of a very finite amount of income.

Gold Coasters are doing it tough. This is not about the elites; this is not about the rich. The Labor Party likes to play those class warfare games because it suits their arguments. This is about ordinary working families in suburbs like Ashmore and Nerang in my electorate. It is about people who are struggling already in suburbs like Southport, Mermaid and Miami. They are struggling to meet the rising costs of living and are now going to be forced to choose between maintaining their private health insurance and paying an extra 10, 15, 20 or 30 per cent more and letting their cover lapse and going back onto the public system. It is a disgrace that the Labor Party puts people in this predicament. It should not have wasted so much money that it now needs to try to claw it back by repealing good coalition initiatives that created the social dividend that flowed under the coalition as a result of strong economic stewardship.

I stand alongside the 59 per cent of voters, some 53,500 people, in my electorate who have private medical cover and who remain steadfastly opposed to this Labor initiative. They are not all millionaires; they are not all exceptionally wealthy. They are just ordinary Gold Coast families who are going to have to pay more now because of this Labor Party policy. It is a great shame that they are forced to be in that situation because this government does not have the wherewithal to get its debt and deficit under control. This government is seeing a billion-dollar blowout in the cost of border protection, it has seen a billion-dollar blowout in the pink batts program, it has seen massive blowouts in the school halls and solar programs, in Fuelwatch and GroceryWatch and in all their other harebrained initiatives. It is money that could have been saved and which would save lives because we would not need these kinds of policy initiatives that the Labor Party is taking.

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Link to this | Hansard source

The bills that we are discussing tonight we have debated before in this place. I sense a feeling that has been conveyed to me by my local electorate that we thought this was a fight that had been had and won. Despite the repeated assurances by the Labor opposition prior to the 2007 election—that there would be no downgrading of and no tampering with the private health insurance incentive, to the point where the now Prime Minister, the then shadow health minister, bemoaned how tired she was of repeating her reassurances to people—shortly after an election where that kind of assurance supported the formation of the Rudd-Gillard government, something completely opposite was put to this parliament. That something was an attack on the very private health insurance incentives that are so important to so many members of the community that I represent. It was an attack that went completely against the assurances, the election promises and the tiresome reiterations about how this was not going to happen. But it did. I suppose this is a not unfamiliar experience for the electors of Dunkley and for the people of Australia. The good sense of the parliament held the government to its word the last time the government tried on this measure, which was introduced not because it is good health policy but because the government's reckless and insatiable spending had created a budget problem that needed to be addressed. The Labor government thought that people with private health insurance were fair game.

As a shadow minister I travel around Australia. I enjoy talking with the people I meet, as I do with the people in my electorate. It is interesting to hear them wonder, which they do often, and pose the rhetorical question: just whose side is the government on? They look at areas of policy where there seems to be hostility and class warfare now emerging and hear language that is appalling and an affront to fair-minded people. We see it again in relation to private health insurance. The government would have you believe that this is somehow a Robin Hood measure, that taking from the rich who have the gall to take out private health insurance will somehow be helpful for those less fortunate. A number of things are wrong with the proposition the government is asserting as its defence for this measure. The vast majority of Australians who have private health insurance would never be characterised as 'rich'. They certainly do not characterise themselves that way, and certainly from the data that is not an accurate reflection of their circumstances. But this money is not actually going into some other targeted health measure; it is just going in to deal with the cavernous structural deficit that this government has created in its budget. It is simply about improving the accounting of the Commonwealth's books; it is not about improving the health outcomes for Australian citizens.

The Australian public is entitled to wonder why it is back here again when the parliament in good conscience repudiated the government's actions the last time they tried this on. I have even examined the ALP's health policy from the last election. It talked about the pea-and-thimble trick in the way that changes in health were to be funded. It talked about emotional health measures. You might recall announcements prompted by the excellent mental health strategy outlined by the coalition. It also talked about emergency departments. I cannot find a single mention of that measure. I cannot see anywhere where the government has disclosed its intention to change its path from the election assurances that were given in 2007 or from the repudiation that the parliament gave the Rudd-Gillard government as it tried to do something completely the opposite of what it undertook to do. And now the government comes in here and says: 'There was an election in between.' There may have been an election in between, but this was the policy that dared not speak its name.

You are entitled as a member of the public who might not consume as much political discourse as we do in this place to still have ringing in your ears the assurances that were given in 2007, the feeble excuses given for the betrayal of those assurances after the election of the Labor government, the repudiation by the parliament to bring the government back to where it said it was going to be as part of its election commitments and then silence. Not a word. Nothing. No election commitment. No clear articulation of its plan to the Australian public. No sense that it could somehow claim a mandate—because this was not discussed—let alone the broader issue of how the government came to grasp onto power after the election.

The Australian public—particularly as it is reflected in the emails that I am getting from my electorate—is rightly outraged. This is a policy argued with a nonsense at its heart, a fiction that this has something to do with health when it is actually about accounting. And there is no mandate whatsoever to bring about this change. It is a change that will have a profound impact on the electorate that I represent. It will also have a profound and increasing impact over time on the broader health system that Australians can enjoy and look to with comfort and security.

We have a parallel system of health care in our nation—a public system that is funded through concepts of universality, with income related contributions towards Medicare and the like as well as through the budget system, and a private system where citizens choose to put whatever quantum of income that is available to them towards their own health needs. This measure was about saying to those people that had forgone other uses of their income but had chosen to invest in their health care that an incentive was appropriate. The incentive is appropriate because it is a way of saying that your actions in bringing your own private resources to the health system complements, strengthens and buttresses the health system by growing the aggregate amount of resources available to the task of raising healthy Australians. That public policy motive is a good one. A 30 per cent contribution is an encouragement, an incentive, for private citizens to make a much more substantial contribution on their own. What you see then is people able to pursue the health care they need through avenues available to them through a system that has two strong pillars—the public and the private systems.

When you start eroding the health and vitality of the private system, you start impacting on the public system and then you start inflicting a decay and an atrophy in terms of all the resources available for health care generally. When people take out private health insurance they bring more than the incentive to the task of health care. If they decide to discontinue that health cover, there might be a short-term advantage for the Commonwealth but there is a substantial loss of a number of times the value of the incentive to the health resources that are available to meet the Australian public's needs.

One of the shiftiest and most deceitful cost transfers from the Commonwealth to the states that we will see is when those people join the hospital queues and the waiting lists as they seek access through the public hospital system. This is a system that is under stress. It is a system that attracts a lot of debate and discussion. It is a system that I would have thought all state governments, regardless of their political flavour, would be pointing out to the Commonwealth as under pressure at this present time. It is a matter of public concern that waiting lists are certainly not decreasing in most areas and in some areas are increasing. Notwithstanding the amount of resources that state governments might put additionally into that task, the Commonwealth is just making an already difficult task much harder.

When you hear the Labor Party and its members in this government talk about how this legislation is only going to hit a few rich people and how certain types of people that they are categorising as 'lower income' will now not be helping to pay for the private health insurance of those that they characterise as somehow 'rich', we need to peel back that argument because it is a hollow, shallow argument that actually undermines people's understanding of the way that the health system operates. Private hospitals treat 40 per cent of all the patients in Australia. If that capacity were not there, the demand would be shifted to the public hospital system. As I touched on earlier, the incentive is but part of a boost to the resources available to the health system where the lion's share, the heavy lift, of those additional resources is made by private citizens who choose to put a share of their own income into their private health needs. In 2009-10 private hospitals treated 3½ million patients. Private hospitals carry out the majority of elective surgery, 64 per cent, in this country; 12 million or more, or 52.9 per cent of Australians, have private health insurance; 10.3 million, or 45.6 per cent of Australians, have hospital treatment cover. In my own electorate the picture is quite similar: 52.9 per cent—right on the national average—of people in the Dunkley community have private health insurance. Those 70,000 people draw some security from that and, at a time when people's financial security is being challenged by cost-of-living pressures and serious concerns about the direction in which this government is taking the economy and the nation, they do not need to feel a greater degree of uncertainty about their health and wellness. That security about their health and about their access to hospital care and health care being there when they need it should not be eroded. But that is what will happen as a consequence of these bills being passed. If you take out higher income people who choose to put a portion of their income into their private health needs, you start diminishing the insurance pool. The insurance pool will lose some of those who might choose to self-insure or those who might take their chances or some who feel they are of robust good health and might not need the help. Those are the very people that give insurance its appeal. They bulk up the insurance pool. Through their contributions they offset the costs of those that may be facing a higher risk of a need for treatment and a higher risk of claims and, as a consequence, they help keep down the cost of that insurance.

If you build in a disincentive, which is what will happen with the removal of the 30 per cent rebate, people will leave. They will leave their cover. The government has tried to put forward this nonsensical fictitious argument that only 30,000 people will quit private health insurance. How remarkable that the government's own private health insurer, Medibank Private, has predicted 37,000 people will quit. That is, one private insurer is forecasting a greater drop-off rate from one insurance fund—a government owned insurer—than the government says will occur in the entire sector. This shows that we need to be very careful about these modelling conclusions that the government tries to throw around as evidence of the wisdom of its decision making.

A Deloitte analysis predicts that 175,000 people will withdraw from hospital cover and a further 583,000 will downgrade their cover in the first year. It expects that over the next five years 1.6 million people will drop their cover and 4.3 million will downgrade. That is an enormous reduction in the insurance pool and can but only push the cost of health insurance up even further. This will create greater problems for the public hospital system as demand is displaced out of the private system into the public system—and there is not a dime of the money the government claims it will save from this measure going in to address that transfer of demand from the private system to the public system.

Also of concern is the absolutely inaccurate characterisation of the people that have private health insurance. You will see that half of those 11 million Australians with private health insurance have incomes of less than $50,000. Three million have annual household incomes of under $35,000. If you were concerned about your health status and wanting the emotional security of knowing you had options and choices about the treatment you would receive, you would be more likely to stay. A higher risk—you would be likely to stay; a lower risk—likely to leave. The damage to the insurance pool will be quite remarkable. There will be damage to the health profession. In my own community, many highly skilled and highly regarded, medical professionals deploy their time both in private practice and in public practice. They do not want to be wage and salary earners in the public hospital system. That is not what got them into medicine. But they are happy to make their contribution because they can underwrite their investment in their own skills and their own career through private practice. You start eating away at that and you start changing the personnel profile and the willingness of people to contribute at all.

Let us not underestimate the importance of privately insured patients in the public hospital system. Last time I spoke on this measure I pointed out that in 2006 the Peninsula Health Care Network, best known as the Frankston Hospital and other points of service, pulled in just under $7 million in income from patient and resident fees. That has nearly doubled since 2006 to the point where it is an important input to the vitality of that hospital. The staff are having a red-hot go under increasing demands. They do not need to have that additional revenue stream drained away by this poorly conceived measure or to have greater demands placed on their services as people are displaced from the public system into the private system. There are so many reasons why this is a bad idea— it is dishonest and it is just woeful public policy. I urge the parliament to get behind the amendment moved by the Leader of the Opposition.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

True to form, this Prime Minister and the government she leads are at it again—betraying the trust of the Australian people. The Gillard government is targeting families with private health insurance, treating them as cash cows and milking them to compensate for its own waste and incompetence. The government claims that these cuts to private health insurance rebates are just asking rich people to pay more for their health care. The Fairer Private Health Insurance Incentives Bill will in reality penalise the poor. It will penalise those most in need. If the government achieves its objective of driving people out of private health funds, many of them fit and young people, premiums will rise. They will rise for the poor, they will rise for the sick and they will rise for the pensioners—all the people least able to pay. Hospital queues will grow even longer. The victims of this bill are the people Labor once stood for—those who are sick, aged or disadvantaged.

Once people leave the private health system it is very expensive for them to get back in. The lifetime cover rules mean that premiums will be very high for those who leave their private health insurance and then later on realise they need this kind of assistance. So the government knows that if it can drive people out of private health insurance they are probably gone permanently, which achieves one of its philosophical objectives—to get rid of the private health insurance system. By phasing out the rebate the government shows how out of touch it is with struggling working families and the importance of their health care. The current health minister has just dismissed these people as 'millionaires'. Well, most of them are hard-working families of middle Australia who are not only taking responsibility for their own health care but also taking pressure off the public hospital system in the process. They are also paying taxes which fund other people's health care. They should be rewarded for saving the taxpayer 70 per cent of their own healthcare costs, not punished by a desperate, incompetent and financially strapped government.

The new penalty that the government is proposing to place on higher income earners who drop out is just another tax. As the Australian reported today, their calculations show that 'even after the premium rises caused by the means test on the rebate it will still be $719 cheaper for a family earning $258,001 or more to have basic health cover than pay the existing 1 per cent surcharge'. So this is not about trying to introduce any kind of incentive; this is simply another new tax—another new tax on a sector of the community who are already contributing significantly to our nation's healthcare costs.

I remind the House also that the Prime Minister, Julia Gillard, as the then shadow minister for health, told Laurie Oakes on the Sunday program in August 2004:

We will leave the 30 per cent private health insurance rebate undisturbed because we understand it's factored into family incomes.

She repeated the promise in September, telling the Australian newspaper, 'The private health insurance rebate is here to stay in its current form.' She also said, 'Labor is committed to the maintenance of the private health insurance rebate, and I have given an iron-clad guarantee on that on a number of occasions.' She said, 'I grow tired of saying this. Labor is committed to the 30 per cent private health insurance rebate.' All of these commitments have been made by the woman who is now Prime Minister, and people had a right, surely, to believe the government when she made those kinds of claims.

If you think that these are statements only made by the current Prime Minister, well, her current challenger was quoted in the Australian in February 2008 as saying:

The private health insurance rebate remains unchanged and will remain unchanged.

That was Kevin Rudd.

But it goes on. The then health minister, Nicola Roxon, said in a speech to the Australian Health Insurance Association's annual conference in October 2008:

Private health insurance consumers will still be able to claim the 30 to 40 per cent rebate, and the Lifetime Health Cover incentives will remain in place.

The health minister again told the Age newspaper in February 2009:

The Government is firmly committed to retaining the existing private health insurance rebates.

This government cannot lie straight in bed. Is it any wonder that the Australian people are fed up with them and their conniving and their barefaced deceit? As soon as they were elected in 2007, they moved to cut the private health insurance rebate. This is, I think, the third attempt. They have been at it all the time. And, in reality, the promise that they made to the Australian people was clearly empty.

But there is more at stake than just the veracity of this government, its shamed cabinet ministers and the rot that has set in to the very core of the Australian Labor Party. The complementary nature of Australia's public and private healthcare system is the envy of the world. These sectors are not in competition with each other; they work in tandem. The overwhelming majority of Australians recognise that the coalition got that balance right. People here recognise that the solely public NHS in the UK and the solely private system in the US are extremes to be avoided. The Speaker, I thought, put this argument very well when he spoke on this issue in September 2009. The member for Fisher, who is now the Speaker, said:

The best way to have a strong public health system is to have a strong private health system, and this government through the changes in this legislation will undermine both the private health system and the public health system. It stands condemned.

Those are the words of the Speaker himself.

In fact, taxpayers actually get great value for the money from the 30 per cent, 35 per cent and 40 per cent rebates on private health insurance. The numbers from the Australian Institute of Health and Welfare are telling. Under the current healthcare agreement between the Commonwealth and the states, public hospitals received, in 2009-10, $36.2 billion. They performed 41 per cent of all the surgery in Australia and 35 per cent of the elective surgery. According to the Australian Institute of Health and Welfare, as a result of the private health insurance rebates private hospitals received $2.1 billion. They perform 59 per cent of all surgery in Australia and 65 per cent of elective surgery. By any reasonable, rational assessment, taxpayers are getting bang for the bucks from the private health system, and that system is delivering value for money.

The counter argument is: if you put the rebate dollars into the public hospital system, then the public hospital system will be better. Well, of course, the government is not proposing to do that. They have no plans to transfer the money that they are going to save as a result of the cuts to the rebate, to actually deliver more money for hospitals. Adding another $2.1 billion, if that is the amount that would be provided, to the public hospital system would just be a drop in the ocean compared with the $36.2 billion it already gets. It would just be swallowed up by the same inefficient, state based bureaucracy that milks the system now. But the government is not proposing to transfer any of the money it receives from these cuts to the private health rebate to the hospitals. So the exodus of patients from the private to the public system would cause a new and deeper crisis in public hospitals, adding to the stress and workloads of doctors, nurses and hospital staff, and adding more people to even longer waiting lists.

Everyone knows that, once the insurance pool shrinks, premiums will go up. Adverse selection will mean that the sickest people will remain in hospital in private health cover and their premiums will go up. Research by Deloitte last year shows that 1.6 million people in the government's targeted annual income branches will dump their private health hospital cover with another 4.3 million downgrading. This initial exodus will force up the premiums by an estimated 10 per cent, and that is money that Australians cannot afford. It always needs to be remembered that 5.6 million Australians with private cover earn less than $50,000 a year. They cannot afford increases. The premiums are already high. They are already enough to make families struggle and pensioners to go without. I never cease to be amazed at the number of pensioners who tell me how desperate they are to keep their private health cover and they do without so many things which other people enjoy, because this is a priority for them. This government proposes to penalise those pensioners who have made so much sacrifice over the years because their premiums are going to up.

We already know that hospitals are overrun and Deloitte estimates that more than 845,000 extra admissions would pour through public hospital doors as a result of reduced rebates. The public waiting lists are already on the rise. The Australian Institute of Health and Welfare reported that average waiting times for elective surgery are on the rise after a two-year period of stability. Means-testing the rebate will drive those waiting times higher in the public system. If you are waiting six months now, it will probably be 12; if you are waiting three years, you will wait four years.

Today, a quite staggering 52 per cent of Australians hold private health insurance. That is remarkable and something we should be proud of. It is only possible because of the rebate and particularly the accelerated rebate for older people. People electing to take responsibility for their own health care alleviate pressures on public hospital beds. Even people without private health cover think that the private health insurance rebate is a good idea. They instinctively make the connection between more people in private hospitals equals less competition for public beds. They also see private hospital care as worthwhile and they aspire to have it for themselves. They also accept that people who take personal responsibility for their own health care are entitled to get something back for doing so.

The Gillard government's old-style Labor class warfare is woefully out of touch with the values and aspirations of ordinary Australians, who fundamentally understand the benefit of affordable private health care operating in partnership with the public hospital system. It is not often understood that 40 per cent of regional Australians hold private health insurance and, bearing in mind that there are limited private services available in regional communities, that is a remarkable statistic. Regional Australians know that there may be times when they need special care, that they may need some treatment for cancer or a hip replacement or the like. Even though they may have to travel a thousand kilometres to have the treatment they want with the doctor of their choice and at a time they want it, they are prepared to make that sacrifice and to pay the high premiums.

I am very concerned also about the impact of these proposed changes on private hospitals in regional centres. Many of them already struggle. I have three in my own electorate. St Stephens Hospital in Maryborough, where I have to admit I have been a patient once or twice, is actually teetering on the brink. If there are fewer people with private health insurance in my electorate, I fear I will lose a whole hospital. The government has no plans to help St Stephens in Maryborough stay open. It has not been prepared to offer any assistance, so this valuable hospital service may well be lost to the community. What this government is doing today will be critically watched by the staff and the people who work in St Stephens, and by those people who for several generations now have valued its services. There will be similar problems for the Cooloola hospital in Gympie, as it faces the prospect of fewer privately insured people and fewer people able to use that facility.

Regional communities with private hospitals benefit not just from the facilities but from the specialists those hospitals attract to town. There are so few specialists in country Australia as it is, but with no private health cover or reduced cover there will be even fewer. Patients will have to travel further at greater cost to consultants and treatment, and that also includes poor people who do not have private health insurance because the specialist simply will not come to town anymore.

This is a very short sighted piece of legislation. The Gillard government is raiding families with private health insurance to patch up its haemorrhaging budget. It would be far better if it got its own financial affairs in order and stopped the waste so that people could have better hospital care of their choice and maintain this support for the private hospital system and for private health insurance, which has contributed so much to the quality of Australia's health system.

Mark Coulton (Parkes, National Party) Share this | Link to this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2011. I am strongly opposed to this bill. Not only will this bill be detrimental to the people that I represent in the seat of Parkes; it will be detrimental to the country as a whole and will put tremendous stress on the health industry. In my electorate of Parkes, which I believe is in the bottom five electorates in Australia for per capita income, just on 44,000 people have private health insurance. So the myth that private health insurance is the domain of the rich is a falsehood.

People in my electorate struggle to pay their private health insurance premiums. They sacrifice other things to have the comfort of knowing that when they do need critical health care they can get the treatment that they want. In my electorate we are very well serviced by the public system. We have multipurpose services in the small towns; we have some great hospitals—from the Dubbo Base Hospital to the smallest MPS. There is a synergy between the public health system and the private system. In Dubbo we have the Lourdes private hospital, run by Catholic Healthcare, and the Dubbo Private Hospital that run in cooperation with the base hospital. Those hospitals allow the visiting surgeons and specialists to operate in a regional area. So they not only service the people who live in those towns but they service people from a long way away. It is my concern that, with the shrinking of the private health system that this bill will bring about, we will start to see those doctors ceasing to service the regional areas.

Many of these hospitals are running on a fine margin. We have heard other speakers say that the number of operations that are done by private hospitals per government dollar spent on them compared to the public system shows that they are punching well above their weight. The private hospital in Tamworth in the seat of New England services a lot of my constituents. It is a regional centre and I have been a patient in that hospital myself. It is my understanding that the Tamara Private Hospital will really struggle to keep its doors open if this legislation comes through.

This bill is ill considered for quite a few reasons. If it is designed to improve the government's bottom line, it is incredibly short sighted because this has the potential to really balloon the expenses in health care. The public system is going to have a huge influx of people leaving the private system because they can simply no longer afford it. While people realise that private health insurance is important and they sacrifice to keep it, when they get into a financial bind it is one thing they will drop. It is a bit like house insurance. When people get into a financial bind they will not insure their house and, sure as eggs, they are the people who are going to get a fire or a flood. This is exactly the same. These people will reluctantly leave private health insurance and be reliant on the public system and we are going to see that balloon out.

I have some experience in this. One of my daughters is a doctor who has spent quite a bit of time working in a regional base hospital. The emergency and outpatient jobs that those hospitals do that should already be taken up by other providers is enormous. If this influx of people from the private system hits them, they are just not going to cope. The waiting list now for surgery in many of these regional base hospitals is quite long, so much of the elective surgery is done through the private system. If that ceases to be an option, the health care for the people that I represent will really suffer.

Underpinning all of this is a breach of faith. The former Prime Minister, Kevin Rudd, and the former health minister, Nicola Roxon, had said on numerous occasions that this rebate was not to be touched. Apart from the practical reasons why this is a dumb idea, this is a dishonest move by this government. They assured the Australian people that they were not going to interfere with the health rebate and now they are doing it. If they are doing it to improve their bottom line—it is my understanding that the money that is saved from these rebates is not guaranteed to go into health care; it can go into consolidated revenue—then it is an even dumber idea because it will be robbing Peter to pay Paul and the Australian people are going to end up with a second rate health system.

Up until now our public-private system, which works so well in the cases that I am aware of, has been the envy of other countries. One of the things this country does well is provide a service for the poorest of people and the wealthiest of people. Australian people get a wonderful opportunity to receive health care. This is going to be put into jeopardy. If this government think pushing everyone to the lowest common denominator, pushing everyone onto a public system that is already bursting at the seams, is good health policy or good fiscal policy, they are delusional.

Since 2007 this government has been talking about reform of health, but what we have seen is window dressing and tinkering around the edges. One of the great frustrations with health I have been dealing with as an MP has been the merging of divisions of general practice to form Medicare Locals. I have been dealing with health professionals who are struggling to understand where they fit into this grand plan. It was a plan that was announced without any great detail and the health professionals in my electorate have been bending over backwards to do what they think the government wants them to do without any clear guidelines on whether that is the right thing to do. I believe that this change, on top of the unsettled conditions that have already been created by this government, will be the straw that breaks the camel's back. There is a list of statistics here that I could mention to back up the case as to why this is a very dumb idea, but we have heard those before in the eloquent speeches in this place. So I will conclude by saying I hope that, when this goes to a vote, the members of this House who represent average Australians who rely on being able to access health care in a timely and cost-effective manner consider their constituents and give this bill the scorn that it deserves.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

From all the noise over this issue, here is the truth, from Australia's largest private hospital operator, based on a report to their institutional investors under their legal obligation to tell the truth to the share market—a quote which reads:

In both the short and the longer term, demand for privately provided health services would continue to grow regardless of the rebate. Hopefully, things will stay as they are, but even if the bill is passed and there is a trickle-down effect, the positive fundamentals driving growth in this business will remain.

As I did in the 42nd parliament, prior to the last election, in a majority parliament where no government was dependent on my vote—so no accusations other than merit could be made—I rise today to be consistent and continue to support the means testing of private health insurance rebates in Australia and encourage all MPs to do the same.

I also rise to encourage the government to make this the first of a series of austerity measures that start to turn unsustainable health economics into the sustainable. If I think of individual private healthcare providers, this is a hard call, but when I think of just how many hard decisions need to be made to make healthcare economics in Australia sustainable then this is a relatively easy one. In reality, this is just one of many decisions that need to be made if we are serious as policy-makers in making healthcare economics sustainable.

This is also a hard call if I think of individuals and the personal anecdotes of those who might be directly affected by this decision. But, if I think of Australia and the long-term best use of taxpayers' money, it is a very easy call. We do not have a money tree to enable welfare to be provided to all. That is the reality. This reality says that, if we leave these measures in place without means testing, the cost to Australian taxpayers of no change jumps from $5 billion to the national budget in 2011 to a $10 billion cost per year in 2019, just seven years away. It would be irresponsible of all MPs in this House to ignore this fact. So, for the first and most compelling reason, I continue to support the means testing of healthcare rebates. It is the current reality of unsustainable health economics in Australia. The reality is that this measure will completely blow the health budget of Australia if not changed some time in the next decade.

I also want to put this first point in some political context. I do not just slide across the line on this issue. Nor has the government secured my vote in some sort of metaphorical headlock. Rather, I support these bills with a strong want—that health ministers today and in the future, of all political colours, state and federal, finally have the backbone to make health economics in Australia sustainable, and that this is the underlying principle of this portfolio work for the next decade. And I call on those same health ministers, state and federal, of all political persuasions, to actually do more—whether it is considering new drugs and how they relate to the growing costs of the PBS scheme; the growing costs of an average length of stay for a public patient; balancing the needs in dental health and mental health; aides and appliances; aged care; and the many preventative health measures so important in our functioning and world-leading health system in Australia.

We need politicians in this country with steel in their spines to make some very challenging calls in the next decade to keep our health system as one of the very best in the world. This decision, therefore, must not be the end of the so-called hard decisions. I invite both major parties and the parliament to make this the first of the hard decisions and I will continue to push for more.

The second reason I support this decision is that I continue to be satisfied that the appropriate safeguards are in place if drop-outs or downgrades are higher than Treasury modelling suggests. All information about entries and exits in private health are publicly available from the Private Health Administration Council, backed up by the Private Health Ombudsman for any complaints from any citizen. Both these bodies provide ongoing public data on what is happening in private health insurance, and I encourage people to use both of these when seeking facts or wanting to follow this issue over the coming years. These are important public protections, and I am personally satisfied that public data will continue to drive policy considerations in a transparent way.

The third reason I continue to support means testing is the reality of the impact of this change versus the rhetoric. I note, and have listened closely, to personal stories from home such as those who have private health insurance and are nervous, those who work in local private health jobs and are nervous, and doctors whose business models are reliant on a base of private insurance and are nervous. I have also listened closely to, and note public demonstrations from, the private health sector—one as late as last Saturday outside my electorate office. And I note and have listened closely to the research undertaken by the private health sector, from good people such as Michael Armitage and Chris Rex, who I again met with as late as Monday. I assure all stakeholders involved, and the constituents of the electorate of Lyne, that concerns raised have been considered deeply. In the end, though, I have done two things with those concerns. Firstly, I have integrity-tested all the claims made and am satisfied that all claims have at the very least been considered in detail by government and that the protections of both the Private Health Administration Council and the Private Health Ombudsman will blow the whistle on any advice that over time from government proves itself to be wrong. The second action taken is to separate political commentary and populist rhetoric from what is being actually said to investors and the share market under legal obligations. The difference in the language on this bill is revealing. While the Chicken Little button has been hit by some in politics and some in the private health sector, with a bit of research on what is being said under legal obligations to the financial markets it is clear that even the greatest critics of this decision do not actually believe their own rhetoric.

By way of example, Ramsay Health Care in Port Macquarie are currently threatening to pull a $20 million expansion of their Lake Road hospital. They are currently threatening staff that jobs will go and they are contacting local clients, saying that this bill will be detrimental to their current service delivery. However, when this is all checked against their legal obligations in reporting to the share market, it is a different message. The ASX statement on 25 August from the same company reports a 23.6 per cent rise in full year core net profit, an after-tax profit of $198.4 million in the past financial year alone. The stock market statement indicates that this result 'was driven mainly by a strong performance across Ramsay's Australian hospitals', which includes Port Macquarie. The most telling statement, from August last year in the Australian Financial Review, is the following statement from the CEO of this same Ramsay Health Care group:

In both the short and longer term, demand for privately provided health services would continue to grow regardless of the rebate—

he said. And I quote his exact words:

'Hopefully things will stay as they are but even if the bill is passed and there is a trickle down effect, the positive fundamentals driving growth in this business will remain,' he said.

Therein lies the truth for this chamber. This quote is both telling and appreciated. It is this CEO's quote more than any other that reaffirms my vote and should calm those in Port Macquarie and throughout Australia who may be wondering what on earth the truth is on this topic.

I will continue to work with Ramsay Health Care to grow their business, grow jobs and expand their facilities both locally on the mid-North Coast and throughout Australia. Supporting this bill, though, as identified by Ramsay Health Care themselves when reporting to the share market, is in no way inconsistent with that common goal.

In conclusion, I once again support this bill, as I did in the last parliament, because health economics in Australia is unsustainable and needs change. The protections in place within the private health sector are strong and have data publicly available for every single Australian citizen to follow the cause and effect of this decision, and the reports to the share market from some of Australia's largest health providers indicate that they themselves think this bill will have minimum impact. This House should pass this bill.

Debate adjourned.