Fairer Private Health Insurance Bills

Ms BIRD (Cunningham) (13:25): Madam Deputy Speaker, I extend my appreciation for your assistance with my participation in this debate today. I support the three bills before the House: 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.

It is my intention to briefly deal with the content of the bills that are before us and to put that on the record, and also to address both the implications for my own electorate and some of the arguments that have been presented in opposition to the bills. I acknowledge at the outset that those arguments in opposition have not been followed by a commitment to have a different position after the next election, so it will be interesting to see what the sustainability of those arguments will be.

It is proposed in these bills that there be three new private health insurance incentive tiers introduced with the intention of better balancing the mix of incentives for people to take out private health insurance. The proposed measures will, firstly, introduce means testing for the private health insurance rebate and, secondly, increase the Medicare levy surcharge for people on higher incomes who do not hold appropriate private hospital cover. The proposed private health insurance tiers will operate in accordance with new thresholds for the 2012-13 financial year if they are implemented on 1 July this year.

The reality of these new tiers is that a single person earning $83,000 or less will see no change. A family earning $166,000 or less will see no change. The changes to the rebate and levy commence at the first tier level for people earning $83,000 to $96,000 as a single and $166,000 to $192,000 as a family. There are two further tiers, so that for a single to not have a rebate at all they would have to be earning more than $129,000 while a family would have to be earning more than $258,000—that is, they would need to earn more than a quarter of a million dollars before the rebate was gone on private health insurance. The Medicare levy surcharge would continue for those three tiers at one per cent, but for people earning $86,000 or less as a single or $166,000 or less as a family there would be no change to the levy surcharge.

That is the proposition being put in place through these bills. It is a new means-testing arrangement and its intention is to make the rebate fairer and more sustainable over time. It has been a priority of this government to ensure that we get the balance right between government subsidy and personal responsibility regarding these sorts of costs, and we believe that that is what these bills do.

It is important to point out that the Treasury estimates, that contribute to these bills, indicate that 99.7 per cent of people are expected to remain in private health insurance under the combined initiative of these three bills. Around 27,000 individuals with incomes between $83,000 and $96,000 for singles and $166,000 and $192,000 for families may drop their private health insurance cover, according to the Treasury estimates. It is also important to acknowledge that there are 7.75 million Australians whose private health insurance cover will not be affected by the changes in these bills, and they are the people, as I indicated earlier, earning under their commencement tiers—that is, under $83,000 for singles or $166,000 for couples. It is also important to acknowledge that around 1.7 million adults—that is, 670,000 singles and 520,000 families—will receive a reduced rebate and pay a higher net premium. It is important to recognise we do not deny the fact that we are seeking a greater individual contribution from those we believe are capable of making it. Many on the other side have put the argument that this is about calling these people rich and not acknowledging the pressures on them of the cost of living. Far from it! It is an acknowledgement that people pay and contribute according to their capacity, and we believe in the tiered system that as people's income increase they have the capacity to make a co-contribution towards these particular levies.

I want to indicate what those figures mean for my own area of Cunningham. In Cunningham there are 1,060 singles and 520 couples who will be impacted by the changes to the tiers for the payment of the rebate. In putting this in the local context it also important to acknowledge that in my own area there has been an unprecedented investment in health—in particular, health infrastructure and the health workforce—that I had not seen prior to Labor coming to government and which certainly did not happen under the Howard government. Indeed, it did not happen under previous state Liberal governments in my area. I well remember for many years the western end of Wollongong Hospital being a hole in the ground. It had been dug out by the previous Labor government in preparation for a whole new wing and it remained a hole in the ground until a Labor government was re-elected and the new wing of the hospital was built.

I am also pleased that under a federal Labor government there has been a significant contribution to the capital for the Cancer Care Centre at Wollongong Hospital, and a significant amount has gone to the Shoalhaven outreach arm of that cancer care so that cancer services across our region are far more effectively delivered now than they have ever been. Only recently I announced new capital injections for a range of GPs in my areas to expand their own private clinics to be able to provide a wider range of services and more preventative health services than they were able to do previously. So there has been for the constituents of my area a significant increase in the health services being delivered. The new Medicare Locals and the new hospital boards will further see a better local responsiveness to those sorts of health needs.

It is true that there will be a percentage of people in my electorate who will look at paying a higher Medicare private health insurance payments than they currently do. I do not believe what I would consider to be scaremongering about the number of people that will drop private health insurance because they have to pay a bit more for it.

That brings me to the issue I want to address, in the last half of the time I have to address the bills before us, about the arguments that have been put in opposition to these bills. The member for Mayo spoke not long before I contributed to this debate. Broadly, there are a couple of things that the opposition are basing their arguments to these bills on. Firstly, they are putting the argument—it is a bit ho-hum, but to be expected I suppose—about broken promises, which they argue that this is. I indicate to them that this is the third time these bills have been brought before this House, and they were brought before this House before the last election. In fact, this is a continuation of an attempt by this government to deliver a better balance in this area. It was certainly clearly outlined as we debated the issue—as many of those opposite have pointed out—before the last election. So it is important that we put the record straight on what the history of these bills has been before this chamber.

Secondly, the argument by those opposite about whether or not people are rich—this sort of class-warfare debate—is a fairness debate. I sometimes find it quite astonishing that I stand in this place arguing about what I would have thought were long-term traditional Liberal Party values about self-resilience, self-reliance and getting rid of the hand of government in our lives. It was fascinating during the carbon tax debate to hear this side of the chamber arguing for a market based solution and the other side saying: 'No, we want a managed economy. We are going to pick and choose winners and where we put government money to address a problem.' Here we have the same thing again. Here we have our side of the parliament arguing that government should only be intervening and providing support where it is necessary and those on the opposite side arguing that it does not matter how much you earn, you have got a right to expect something from the government. I think most Australians are at a much more balanced position than that. They think that governments should provide support but they also think that people should be able to provide support for themselves and their families according to their capacity. That is what these bills are working towards doing.

I mention the member for Mayo contributing to the debate because I acknowledge that on 7 February he had a column in the Australian Financial Review where he outlined what I would have thought were the very arguments that would underpin the importance of this particular debate and provide support for the position that the government seeks to put in place with these bills. In this article the member for Mayo said:

Rather than lecturing European governments over their debt crisis, our Prime Minister would be better advised to tend to her own backyard. After years of waste and mismanagement, Australia's budget future hangs in the balance.

Many of Europe's debt problems are due to popular but overly generous social welfare programs.

Most commentators now acknowledge that European governments have been writing cheques for years without any consideration of whether they could afford to do so. This has resulted in an intergenerational debt crisis.

Unfortunately, Australia's long term fiscal position is in danger of being placed in an eerily similar position because of a growing government-driven culture of dependence.

I was quite surprised, therefore, when the member for Mayo got to his feet. I anticipated on the back of this writing and public contribution to public policy debate that he was about to announce that he was supporting these bills, because these bills do exactly what it is that he was arguing in his column good government policy should do. He further quotes the Leader of the Opposition:

Tony Abbott's framework economic speech last week made a fundamentally important point: governments should do only what people can't do for themselves, and no more.

That is exactly the foundation and the concept behind the bills before us. I am astonished that those opposite would continue to oppose them, except that it is clear it is purely a political position.

Finally, in the few minutes I have left I want to address the final argument which is that this opposition to the bills is about greater good for all because all of these people will drop out of private health insurance, they will all be back onto the public system and therefore it is an impost on everybody, not just on those who are on the higher tiers of income. The reality is that this drop out has never happened previously. In 2008, when the government increased the Medicare levy surcharge threshold, there were insurers predicting that 913,000 people, about ten per cent of those with hospital cover, would drop their private health insurance as a result of the threshold changes. That was a PricewaterhouseCoopers report commissioned by the insurers peak body.

The opposition spokesperson on health said that one million people would leave private health insurance as a result of that change. The reality is that that drop out never happened; instead, the number of people with hospital-level private health insurance has steadily increased since that time. As at September last year, 10.4 million people in Australia have hospital cover. That is the highest number since the introduction of Medicare. Even the evidence of what has happened with previous changes to the levy surcharge does not sustain the scare campaign of those opposite. These are sound bills based on good health policy, sound economic management and good fiscal responsibility. It is astonishing that those opposite continue to oppose them. We can only assume that they do it for gross political benefit.