In the News

In the course of this year we are increasingly learning about waste and cost blow-outs in Federal Government programs across many departments, one notable example being the dodgy installation of batts under the multi-billion dollar Home Insulation Program.

However in the midst of this climate of Government profligacy, it was astonishing to learn that Australian soldiers might have been wearing combat uniforms made from fabric sourced from China in order to save money.

The Disruptive Pattern Camouflage Uniforms – known as DPCU – is a high-tech fabric largely developed in Australia by organisations including the Defence Science and Technology Organisation. 

Recently, we learned that a tender to provide 120,000 uniforms over two years would have included an option of fabric being provided from China.  For this $13.6 million tender, there would have been a saving of $1.5 million, or about ten percent, to have the material for uniforms sourced from overseas.

It is hardly in our in our national interest to provide this intellectual property to a foreign manufacturer, who also supplies third parties, simply to save money.

The Government has since back-flipped, and the option for the material to come from China will not be exercised, but the tender should not have been accepted in the first place and it should never have been considered.

All Government Departments are expected and should be encouraged to provide taxpayers value for money. However, this is not about Defence legitimately trying to make savings, this is about scrimping on uniforms for our military, the risk to our manufacturing industries, and potentially sending jobs overseas.

At a time when billions are being spent and sometimes wasted on program blow-outs and over-runs, it says much about the Government’s priorities that our nation’s intellectual property, the material used in our soldiers’ uniforms, could have possibly been sourced from China. Any saving would have been a false economy. 

I strongly believe our defence industries must not be put under pressure like this to pay back debt for profligate spending. Please feel free to pass on your thoughts to me about this at alex.hawke.mp@aph.gov.au

Mr HAWKE(Mitchell) (11:15 AM) —I rise to speak for a second time on the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 [No. 2]and related bills because, of course, this legislation has already been rejected by the Senate. We now see a government desperate to impose this ideological agenda on the Australian people. It is an agenda that they did not apprise the Australian people of prior to the last election. Indeed, all of the statements from the shadow minister for health, now the Minister for Health and Ageing, and the Prime Minister indicated that they would not touch the rebate system. Quotes to that effect are numerous right up until 2009. Even as late as 24 February 2009 we heard:

“The Government is firmly committed to retaining the existing private health insurance rebates,” Ms Roxon told The Age.

That is the minister for health in 2009, telling the Australian people that that government is firmly committed to retaining these rebates.

People are entitled to ask: what is really going on? When the Senate has turned this legislation down, saying it is a breach of election commitments and not an appropriate way to manage the health system, why would the government seek to reintroduce this legislation in the face of such opposition? The answer is their mismanagement of the budget. Of course, now we do not have any money to fund a proper healthcare system. This is not an issue of private health versus public health. This debate is not about that, although some of those opposite are trying to turn it into an ideological debate. This is about how we fund the healthcare system. Funding is certainly one of the issues we have heard a lot about in this debate, and it is something I would like to talk about. How we fund all of the needs of the healthcare system is critical.

In Australia the biggest component of federal government expenditure is welfare. It is more than double the expenditure on health in Australia. That is important to note, because we have a strong and thorough welfare system that spends in the order of $110 billion a year, more than double the healthcare budget, and that is not counting state budgets and all of the money spent by state governments. Yet every government in this country, whether state or federal, knows that we are facing a funding crisis in relation to health. How do we meet future challenges? How do we fund those challenges? The answer is not going to be found in government expenditure alone. No government can afford to increase expenditure to fund healthcare challenges completely. We need a private healthcare system. It is not a luxury or something that we can take for granted. We need to ensure that it is a strong and vital system. The legislation that is before us today is going to undermine that system.

There is a public healthcare system available to those who cannot afford private health care and a private system for people to fund by putting their own capital into private health cover so that they can make a contribution to their own health care, thereby lifting the burden off the taxpayer and enabling money to be spent where it is needed. That is why I say there is an ideological component in the legislation before us. Certainly the ‘fairer’ in the title of the legislation is a misnomer. There is nothing fairer about changing these rebates, putting more pressure on the public system and ensuring that there is a worse healthcare outcome for all. It is commonly the rhetoric of socialist governments to say things are fairer when they are bringing everybody down. Simply put, this is something that will drag everybody down.

Coming from an electorate that has the highest proportion of families in this country, I reject the contention that people on $75,000 a year are wealthy. I reject the contention that couples on $150,000 are wealthy. I come from an electorate with a high average income, the second highest average income in Australia. However, most of that income is spent on mortgages. My electorate also has the highest proportion of mortgages of any electorate in the Commonwealth. It is one of the fastest-growing areas in Sydney. I know that all of that disposable income is spent on simply affording the family home in Sydney. I know that people on $75,000 pay a higher marginal tax rate and that people on $150,000 pay one of the highest tax rates. You cannot simply say that people on $75,000 or $150,000 with two, three or four kids are wealthy, so they can afford not to have these rebates. That is not a proposition that I accept. It is about the signals that you send to people out there in the community as a government. What is the signal from this legislation? The signal is: we do not want you to take up private health care. The indirect signal you will send is: the government does not prioritise private health as something that is valued. It is only a 30 to 35 per cent rebate. It is something that says to people: if you are prepared to put your capital into your own health care, the government will make a contribution as well.

The member for Bonner spoke about a fear campaign, and there is a fear campaign being run by the Prime Minister of this country in relation to this matter. With Laurie Oakes on Sunday we saw that fear campaign dramatically exposed to the Australian people. The Prime Minister claimed on national television that, if this measure was not passed by the parliament, there would be a cost to the Australian taxpayer of $100 billion. He claimed that that was in the Intergenerational report and that the Intergenerational report backed up his claim that, if we did not do this, private health in Australia would cost the taxpayer $100 billion. Clearly that was a complete and utter misrepresentation. The Prime Minister said:

What the Intergenerational report tomorrow will reveal for the first time is that the cumulative impact of knocking that major reform back is in the order of one hundred billion dollars over the next several decades.

Of course, when industry went to research this claim it found it is not in the Intergenerational report. Indeed, industry rejects completely that this is the case. Why would a Prime Minister make a claim of $100 billion? There is a real contention about this quote, because $100 billion is what we already spend on welfare. We spend less than half of that on the health budget—$50 billion goes into health. Is health worth $100 billion over several decades? Most people in this chamber and most people in the Australian public would say, ‘Absolutely it is.’ If we are providing a rebate which means the government pays one small component and other people put a larger component of their capital into their own health care then that is a great system because the government has the smallest share of the payout in that case.

If you remove that incentive, we have heard many arguments from those opposite that there will only be a few people who leave the system. I can say anecdotally, even from speaking to people in my own age category—and I am one of the youngest people here—that people do not just say that they will leave the system. Speaking to people who have private health cover I hear that they will reduce their level of cover. That is an issue that has not been addressed by those opposite. Reducing the level of cover and putting a burden back to the public system is not going to be a good outcome either. Even if it is a small amount—10,000, 15,000 or 20,000, whatever we want to argue about the figures, it could be more and it could be less—that will place an extra burden on the public system.

Then there are the people who will reduce their level of cover or will not be attracted to take up private health insurance. How will that be a better outcome for the health system in Australia? That is what this government has failed to demonstrate. I want to record here that private health insurance is not just for the rich. There are over one million people with private health and hospital cover who live in households with a total annual income of less than $26,000—over one million of these households have some form of private hospital cover. They are saying there is a value in putting their hard earned capital of $26,000 or less into the private health system. Why would they make that assessment? It is because there is great value in putting aside your capital to look after your own health and it is a value judgment they have made. It is because the government has a system which rewards them for doing so and it is a good system. Why then should a person on $75,000 not be entitled to a reward? They work just as hard; they do earn more money and they get taxed more as well. They have as many taxes, charges and imposts as anybody else. It is as vital to those people as it is to people on $26,000 that there is an incentive to take up private health because we still operate under that mentality that we have a universal healthcare system—that is still one of the prime directives in public health in Australia—and so anybody is entitled to put the whole burden of health care onto the public system. I say that we should retain the incentives because those incentives are working and doing a good job for us in keeping our system sustainable—and we do have a major funding challenge.

I think where this debate turns to an ideological issue has cost us enormously. Taking my own electorate again, a brand new private hospital, the Hills Private Hospital, has opened. It has an emergency ward; it is a fantastic thing. It cost in the order of $200 million. Speaking to the managing director, who has worked in public and private health in Australia, in New Zealand and in the UK, it could not have been done in the public system for less than double that amount. He is very clear about that. We want private capital in health, we want private capital in research, we want private capital in health insurance and we want them to build hospitals. It is a good thing; it is not something that we should be threatening or rejecting. It is a complementary and positive thing to the public healthcare system and it is something that we must be very focused on continuing to encourage.

When I spoke to the people running the Hills Private Hospital about getting someone to open it, they told me that they have opened three private hospitals in western Sydney, under the New South Wales Labor government, in areas where, for the New South Wales Labor government—let us be very clear—it will be a long time coming before they can build a hospital. Even though in the north-west of Sydney we have had a massive growth in population, a huge expansion in the number of families and in the demand for services, and a scaling back in hospitals like Blacktown, Blue Mountains, Hawkesbury of all kinds of units and services, there is no plan to build a major hospital in the north-west of Sydney. If the private sector did not deliver this hospital, there would be no new hospital in north-west Sydney even though it is one of the major growth corridors in our largest city in the country.

So we can talk about records all we like. We can talk about the Labor record at state government level or we can talk about the Howard government record at federal level, but the reality is all governments are increasing funding to health, they are increasing it substantially and it is not enough to meet the expectations and the demands. That is the reality of this debate. So why would we take a measure in this chamber today to reduce the incentives for people to put their own capital into their own health cover? It is an absolute and utter wrong signal to the market. I always enjoy getting lectured by Labor members such as the member for Bonner about the market because they have a lot to say about the market these days—everybody is a free market person today, as was once famously said. The reality is that signal to the market at this time that we are reducing incentives to take up private health insurance from whatever categories of income and age group is the wrong signal at the wrong time. It will mean that fewer people will put less capital into their own health which is exactly what we do not want at a time when we are facing funding crises, shortfalls and challenges across the entire health system and nobody has the answer to that.

Kevin Rudd came forward and said: ‘I do have an answer to that. If by the first six months of my government we have not solved the problems in health, the federal government will intervene and take over the healthcare system and, of course, take over hospitals.’ We have seen a complete and utter backtrack on that position and we still have no answer or no plans from Kevin Rudd—yet another broken election promise and commitment. We all wait with breathless anticipation to see how he is going to solve the issues of public health that he committed to solve prior to the last election.

In summarising, I have spoken on this prior to this and I think that some of those comments that I made including that three-quarters of my own electorate is covered by private health insurance are really important arguments. I do not see that it is a difficulty to me; I do not see that as a problem. I think that it is a good and important fact that we encourage as many people to take out their own health insurance and we encourage as many people as possible to look after their own health because that allows us to do more in our public system. We should not mistake the signals in these bills. The fact that this government has not worked with the industry and peak body associations to even amend or look at another option in relation to this means that it is ideological and hard headed about undermining the private health insurance system.

There are plenty of third-party bodies—the Australian Health Insurance Association, the Australian Medical Association, the Australian Private Hospitals Association, the Royal Australasian College of Surgeons, the National Association of Specialist Obstetricians and Gynaecologists—who all say that this will put greater pressure on every person who is privately insured and will also put greater pressure on the public system. That is something that we should take from these bodies with great concern. Why add extra pressure to every person in private health? Why add extra pressure to people in the public system? If there is a budgetary crisis in the Rudd government, health ought to be sectioned off from that crisis. If we have gone from a state where we had zero net government debt and a $10 billion surplus to having a $50 billion deficit or more and a problem with the budget, it ought not to be health that is used to solve that crisis. I make that position very clear.

The Prime Minister in trying to allege that there would be a $100 billion cost, which is completely fictitious and not backed up by the Intergenerational report, indicates that he is thinking about how to solve his budgetary crisis—the debt that we have gone into. Health is not the area that we should be looking at. There is no way any federal government, whether it be this government or a future government, can decide to fund every health need and challenge that we are going to face. We are going to need to have a strong private health system as well as a well-funded public system.

Therefore this kind of measure is a retrograde measure. It will mean that fewer people are taking up private health. It means that Australians will pay more for their health care. Even if you argue that it is only 10,000 or 15,000 people, when they leave the private health insurance system—those who understand all about insurance systems know, and all of our free-market economists on the Labor back bench will particularly note this—that you then have less money in the pool to pay all the claims. Therefore the insurance premiums have to rise. There is no doubt about that. There is no argument about that. I know that with all the lectures we are getting from the Labor backbench on the market that that will resonate very strongly with them.

The key points about this legislation are that the government is refusing to budge because it has an ideological obsession with private health, but this should not be turned into a debate about the public system versus the private system. That debate ought to be trash-canned straightaway. The reality of modern Australia is that we have a strong public health system and that we have a strong private health system. Governments provide incentives for people to put their own capital into private health and we need them to do so. We need people to put as much of their own capital into private health as we can encourage them to. We know that even people on household incomes of $26,000 or less—one million of them in this country—made the judgment that they are going to put something aside because of the incentives we as governments have put in place. Why then is that not good enough for people on incomes of $75,000 and over or on $150,000 and over? We want them to put as much of their capital aside as we can encourage them to. You must have incentives for that to happen. You must have incentives under a universal healthcare system.

This is a good system. It is a working system. It is the same as saying, ‘The Rudd government inherited zero net government debt and a $10 billion surplus so we can go on a spending spree.’ Now we know that we are all going to pay the price for profligate spending, for $900 cash bonuses, $22 billion in cash handed out to people. There will be an enormous price to pay. If that is why we are seeing these bills reintroduced again after being refused by the Senate then, certainly, that is a failing of this government.

I also want to say that the government have broken their election commitment. I want to remind everybody about that one more time, because we are going to hear a bit about this. They promised they would not touch the rebate system. They had to promise that prior to the election because all Australians know that the private health insurance rebate system works. It works because the government provided it as an incentive and people take up that incentive. There are 11.1 million Australians who have a form of private health insurance. We have a working system and we need more capital generated into the private system to relieve the public system so that it can be funded adequately for governments to meet the challenges.

Together, as a complementary model, we can achieve a level of quality funding for health in Australia, but it must be together. This ideological division of public versus private will not be useful. It will mean a lot of pain for people in private health. It will add pressure to the public health system. Coming from an electorate with a large proportion of families and people on private health, I can speak with authority and say that people will leave the private system and return to public health, and people will seek to reduce their level of cover. Both of those things are unnecessary. We do not need to take this step. If we do not take this step we can continue to work on how we fund these challenges and how we make sure more people are putting as much of their daily budgets as possible into their health care. That is the way that we will have a chance of funding this system. The reality is that no government in this country can meet the challenges purely through government funding alone.