30.5.13 Private Health Insurance Amendment

Mr HAWKE (Mitchell) (12:16): I
want to acknowledge the member for Moncrieff's elegant contribution in relation
to budgetary management. It is certainly the case that we are here today
witnessing a government producing a series of very bad budgets, with
consequences for the lives of all Australians. But it is not just bad budgets
that produce the bills that we see before us, including the Private Health
Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill; it
is the ideological crusade that the Labor Party have been on for some time to
rewrite key fundamental planks of Commonwealth legislation so they are of their
own ideological making.

There is no doubt the Labor Party believes in the stick
approach to government rather than the carrot, not recognising that human
behaviour best responds to incentives and not to punishments. We do need a
system of incentives in Australia to ensure that we have a complementary health
system where we have both a public system and a private system. For the Labor
Party to continually set up health care as a battle between public and private
systems is to the detriment of both systems. It is very important that the
government provide proper incentives for people to pay for their own health
care, and to pay for as much of their own health care as they can afford. That
system produces a better outcome not just for people with private health cover
but for the public system as well. As former minister Martin Ferguson said last
night, we have to grow the pie in order to share it. He made an elegant point as
a member of the Labor Party in saying that we have to grow that pie to share it
better. That means a bigger private health system, with more people who can
afford it paying for it, to enable people who cannot afford it to use the public
services. The points that we see in this legislation in the dying days of this
government are exactly along this approach: rewrite legislation in a way that
suits their ideological agenda, which has always been antithetical to private
health insurance in Australia.

What is wrong with private health insurance in Australia? In my
electorate about 86.5 per cent of people have some form of private health
insurance. It is a great figure. It is a figure I am proud of because people are
making a contribution to their own health care, investing in it and ensuring
that the burden is not put on people in areas who can afford it less. The
biggest concern with this legislation before us today is that premiums will rise
as a result of it. We estimate that in some cases the rise could be up to 27.5
per cent from 1 July. That is a big premium increase and a big cost-of-living
increase. Who will be affected by such an increase in private health insurance
premiums the most? It will be those low-income earners and families on lower
incomes who put aside money for their private health insurance to take care of
their families the best way they think appropriate. They will feel the biggest
impact of the government's measures at a critical time in our economic cycle. No
wonder we are here today opposing it.

We are certainly concerned about the affordability of private
health insurance in general and about the operation of private health insurers
with the increased complexity and red tape that will be brought in if this bill
is passed by the House. There is no doubt that the government has a view to
rewrite key Howard government measures. Lifetime Health Cover was a key Howard
government initiative which came into effect on 1 July 2000. We understand it is
a loading on private health insurance premiums applied at a rate of two per cent
for every year that an individual is over the age of 30 when they take out
hospital cover, and a cap of 70 per cent is applied. This measure was always
intended to ensure people take out private health insurance at an early age and
maintain their cover. It is a worthy objective and it has had reasonable
success.

In the Senate inquiry into this measure, the Department of
Health and Ageing, the government's own advisers, stated that statistics from
the Private Health Insurance Administration Council indicate that Lifetime
Health Cover has had a positive effect in supporting private hospital
membership, with an 18.7 per cent increase in the number of 30- to 34-year-olds
taking out private hospital cover since its commencement in July 2007. So, as a
policy mechanism, even the Department of Health and Ageing are saying, 'This is
working—this is producing people in the age category of 30 to 34 increasing
their private hospital cover and supporting them to carry it through into older
age.' It is a measure that is delivering. But, of course, we understand that the
government has no respect or regard for measures that work if those measures
disagree with its ideological position. We have seen that in relation to the
border protection regime put in by the Howard government—measures which were
changed because of an ideological difference and which altered a functioning
legislative framework and produced the disastrous results we have seen.

What consequences will be felt by the private health providers,
what consequences will be felt by those in the 30- to 34-year-old category, what
consequences will be felt by the public health system when the government, for
purely ideological reasons, comes along and says, 'This measure is working
pretty well, but now we want to alter the very system that is producing 18 per
cent more 30- to 34-year-olds taking out private hospital cover of their own
volition and maintaining it'? It is very disturbing. It is one of the reasons we
are very concerned about the government's approach to private health, never mind
that the Prime Minister and Labor members opposite repeatedly ruled out before
the elections that they would have any agenda to do such a thing.

We always knew they would have this agenda. We have always said
Labor have an anti-private health insurance agenda and that they see it as the
enemy, not as complementary with the systems, and they do not see them as
complementary systems—as they should be regarded—and as beneficial to each
other. They have a view that private health insurance is to the detriment of
public health and that they will take measures in government to undermine the
viability of private health—and that is what we have seen. We do know that the
Prime Minister has a penchant for breaking promises and certainly this
represents another set of broken promises from this Labor government. They say
one thing before an election and do another thing after.

At the moment there are about 10.7 million Australians who have
hospital cover and the government's already existing changes to private health
insurance are having an effect. The government's Private Health Insurance
Administrative Council found that in the five years to 2012—that is, from 2007
to 2012—'exclusions and restrictions may have become much more prevalent and
that the increased use of exclusions may work against the policy objective of
private health insurance in easing the burden on public hospitals'. That is from
the government's own Private Health Insurance Administrative Council. So where
are the government members to defend this measure today and say this is a great
measure and this is what we need? Well, they have run out of speakers. There is
a certain shame that comes with this measure coming into the House because many
government members know that this could potentially increase the burden on the
public hospital system.

We have certainly seen federal Labor spending approximately a
billion dollars to establish 12 new bureaucracies which appear immune to cuts
while funding for private health insurance and public hospitals and dental
health has been slashed. I want to highlight again that our main concern is that
these changes in the bill to Lifetime Health Cover will increase premiums in the
private health insurance industry and, according to reports, by up to a third.
It is a very concerning figure.

It is the case that the coalition strongly supports private
health insurance. This bill, which was introduced last year, also has many
concerning features in its provisions which could add complexity to the private
health insurance sector as well as raise those premiums by up to a third. We
certainly do not support the Lifetime Health Cover component of this bill. As
for the insurance reforms, in the form of the rebates, the Medicare levy
surcharge and the Lifetime Health Cover, I saw that the number of people in this
country with private health insurance increased overall by about 75 per cent,
from 6.1 million to over 10.7 million, in recent years and I think that figure
is a very important one for the House to note. So that is an increase from 6.1
million to over 10.7 million of people with private health insurance. Again, as
the government's own body points out, the reduction in burden on the public
sector from that resultant increase is probably unable to be modelled. This is
at a time when if you go to any state government and ask them, 'How is your
public health system going?' they will say: 'Well, the pressures are extreme,
the burdens are high, the costs are getting out of control. We don't know how we
are going to meet our future demand.' So why would the federal government, at
the Commonwealth level, seek to introduce legislation to increase the burden on
the public health sector? It makes no sense. One of the best things we can do at
a Commonwealth level is provide a system of incentives to allow people, those
who otherwise would not afford it, to have their own private health insurance
and to seek to use that as much as possible and thereby relieve the burden on
those state systems. So why we have this legislation before us today can only be
put down to the ideological belief of those opposite in government that their
ideology that there should be no private health insurance system, is better.
But, of course, what we know from practical experience throughout the country
over many years is that the complementary nature of the public and private
systems produces the best benefits for everyone in this country and it needs to
be strongly supported.

We as a coalition are aware of the budgetary pressures that
exist. That is the reason why the Leader of the Opposition has rightly said that
we will support the government on its cuts to the budget ,whatever form those
cuts take, because we are in such a perilous situation. An emergency created by
the Treasurer of his own making—and of the government's own making—over the last
five years has put us in the position where we have to support measures that
save us from a budgetary crisis, so the coalition is stuck in a position where
we do strongly support the private health insurance sector. I do hear the voices
of my constituents when they raise extreme concern over what the government is
doing to our country, both in a budgetary sense and in a private health
insurance sense. However, we have agreed to support cuts. This is not an
approach that a coalition government would ever take. This is certainly not a
measure that you would ever see from a coalition government. You will see
measures from a future coalition government that support the private health
industry and ensure we have a complementary healthcare system in Australia
between the public and private systems. We do not see government as a system of
punishments in legislative form but always as one of incentives to ensure that
people can access the best benefits possible.