Thank you, Mr Acting Deputy President. I am sorry; I did not quite hear your call initially, because there has been so much screeching and yelling from the other side. I think the previous speaker may well have lost some self-control, and I do not think it augurs well for how people see the Senate working to have to listen to that. If I may, I will ask you, Mr Acting Deputy President, to speak up if you need to speak to me during my speech today.
Today we are debating a package of three bills, and I will get to the detail of them later. I will preface my remarks by speaking a bit about the purpose of the private health insurance rebate, because it is relevant to explaining why this government has chosen to means-test the rebate. The private health insurance rebate was introduced by the previous coalition government along with the Medicare levy surcharge as part of a suite of measures intended as a carrot and stick approach to get people to take up private health insurance. By subsidising the cost of private health insurance the option was made more attractive for potential private health insurance customers, and the Medicare levy surcharge provided a strong disincentive to remain uninsured and to rely entirely on the public system. In fact, many people are better off financially by taking out private health insurance rather than paying the surcharge. A strong private health insurance industry is important because it helps to take significant pressure off our public health system. However, the private health insurance rebate is an expensive policy and one that is rapidly growing in cost. So it is time to re-evaluate the private health insurance rebate and consider whether its current design is providing the best value for money.
The bills currently before the Senate include the Fairer Private Health Insurance Incentives Bill 2012, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2012 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2012. The bills will introduce three tiers of income thresholds for singles and families at which the private health insurance rebate will decrease from its present level. For the 2012-13 year those with incomes under $84,000 per year for singles and $168,000 per year for families will not be affected by the changes and will continue to receive the full rebate, including the 35 per cent rebate for people aged 65 to 69 and the 40 per cent rebate for those over 70. A single person earning over $84,000 per year will move to the next income tier; the next tier is if they earn over $97,000 per year, and the next one is at over $130,000 per year. A person with private health insurance will receive a reduced rebate depending on their age and income. For example, if a single person under the age of 65 earns over $84,000 per year, their rebate is reduced to 20 per cent, 10 per cent or zero, depending on which income range they are in. Regardless of their age group, people in the top income tier will receive no rebate at all. The income threshold for families is worked out by doubling the threshold for singles. The threshold is also increased by $1,500 for each dependent child after the first. The Medicare levy surcharge for those who do not take out private health insurance will increase for some taxpayers, from one per cent to 1.25 or 1.5 per cent, depending on which income range they are in.
To illustrate how these reforms make the private health insurance rebate fairer, roughly 14 per cent of single taxpayers earn over $84,000 per year, yet they receive about 28 per cent of the rebate paid to individuals. In other words, one-seventh of singles receive almost one-third of the benefit. Under these reforms they will receive about 12 per cent of the total rebate paid to singles. For couples, 12 per cent have incomes above $168,000, yet they receive about 21 per cent of the rebate paid to couples. Under these reforms they will receive approximately nine per cent of the rebate paid to couples.
The thresholds at which the rebate will cut out completely in 2012-13 are $130,001 a year for singles and $260,001 a year for couples. This measure is expected to deliver savings of around $2.9 billion over the forward estimates and $100 billion over the next 40 years. This measure is important if we are going to have ongoing sustainable funding of our health system into the future.
The Intergenerational report 2010, published in February 2010, states:
The private health insurance rebate is the fastest growing component of Australian government health expenditure.
Expenditure on the rebate is expected to increase by over 50 per cent per person in real terms over the next 10 years. So if we are going to tackle the challenges of health cost inflation then it is important that we fund our healthcare system on a sustainable basis.
Unfortunately, there has been a lot of hysteria surrounding what will happen to participation in private health insurance once these measures are enacted. In fact, I have just sat here and listened to 20 minutes of that hysteria. Might I say, it all sounds very familiar. The attitude of the private health insurance industry when it comes to these changes is like the boy who cried wolf. Remember in 2008, when we changed the income thresholds for the Medicare levy surcharge? The private health insurance industry, backed up by the federal opposition, said that one million people would drop out of private health insurance. Of course, those opposite hate being reminded of this claim because, in fact, the reverse happened—the industry gained 800,000 new customers who took out private health insurance policies. Treasury modelling estimates that, as a result of the proposal currently before the Senate, around 27,000 people will drop their health insurance policies. This means that 99.7 per cent of private health insurance customers are expected to remain in private health insurance. This is against a backdrop of strong growth in private health insurance, with 45,000 people taking up a policy last quarter. These reforms will only result in reduced rebates for about 1.7 million adults—around 670,000 singles and 520,000 families—whereas the vast bulk of private health insurance customers, about 7.75 million Australians, will not be affected. Only 130,000 adults will be expected to pay an increased Medicare levy surcharge.
The Leader of the Opposition, Mr Abbott, has said that he will scrap this measure if the coalition win government. He describes this policy as an ‘article of faith’ for the coalition. However, he has refused to commit to a timeline. But that does not surprise any of us on this side. Of course Mr Abbott will not commit to a timeline, because doing so would add to the coalition’s ever growing budget black hole. Already having a $70 billion black hole, Mr Abbott is reluctant to add another $2.9 billion to the ledger. So, instead of making an explicit promise about when he will overturn this measure, he tries to have his cake and to eat it too. This is such an ‘article of faith’ for the coalition that they propose to do it not as soon as they get into government, not in their first budget, not even three years down the track—but at some vague, indeterminate time in the future.
Mr Abbott’s failure to commit to a time frame highlights a worrying trend in the fiscal approach of those opposite—and that is simply the fact that they do not have one. They have a leader, a shadow Treasurer and a shadow finance minister who cannot seem to agree on anything. They refuse to commit to a surplus in their first term of government, and I read earlier today that the opposition have now said that all their policies have been costed, so we look forward to seeing the results of those costings. It will be interesting to see how long they actually take to be made public.
What is evident from the Leader of the Opposition’s proclamation that he will scrap this measure but does not know when is that the opposition have no idea at all when they will be dig themselves out of the $70 billion black hole they have created for themselves. They will not commit to a surplus, they will not explain how they will find $70 billion in savings to fund their commitments, and they will not commit to a clear timetable on something that Mr Abbott describes as an ‘article of faith’. In addition to their lack of any fiscal credibility, what the opposition’s policy reveals is who they really represent. It is not low-income or middle-income Australians but the wealthiest in our nation. This was exposed last week when the Treasurer, Wayne Swan, astutely observed that, while Mr Robb and Mr Hockey would not defend better superannuation for Australian workers or tax breaks for small businesses, they were quick to jump to the defence of the likes of Gina Rinehart, Clive Palmer and Twiggy Forrest. In fact, I think the defence of Australia’s mining magnates is the only thing that is uniting the coalition’s economic team. But let us go back to the private health insurance rebate.
According to Australian Bureau of Statistics data for 2009-10, households in the top 20 per cent income range spend almost four times as much on private health insurance as the bottom 20 per cent. I am not going to get into this phoney argument about whether a family on $260,000 a year income is rich. That whole argument, and the labelling of the government’s proposal as ‘class warfare’, as we know, are nothing but red herrings. This is an article of faith for us: someone on the salary of the Prime Minister or the Leader of the Opposition does not need any more incentive to take up private health insurance than the Medicare levy surcharge. They certainly do not need the private health insurance subsidised by ordinary working Australians. This is what the debate simply boils down to. I think $130,000 for an individual or $260,000 for a family may not mean being rich, but ordinary Australians would agree that it is enough income to be able to comfortably afford private health insurance. If the opposition want to maintain the cry of class warfare, they are the ones engaging in class warfare when they suggest that CEOs and corporate lawyers should have their private health insurance subsidised by teachers, nurses and hairdressers. Not only are they engaging in class warfare but they have chosen to side against middle Australia. If the opposition want to be honest about the ideological drive behind their policy of opposing means testing of private health insurance rebates, they should stop engaging in disingenuous drivel about class warfare.
The opposition should look ordinary working Australians in the eye—people on $40,000, $50,000 or $60,000 a year—and say to them, ‘We think your taxes should be subsidising the health insurance of people on double, triple or even a hundred times your income.’ I do not think any on that side have ever done that. That is what we are really talking about—that is who the coalition represent. It is who they represented with their opposition to means testing the baby bonus and their opposition to our changes to the Medicare levy surcharge thresholds and the luxury car tax. It is who they represented with the introduction of Work Choices and their opposition to the minerals resource rent tax and consequently their opposition to a tax break for small business and better superannuation for ordinary working Australians.
The same goes for the position of those opposite on a carbon price. They would rather subsidise polluters than make them pay for the pollution. Millions of low- to middle-income households would be better off under the household assistance component of our clean energy future plan, but Mr Abbott and his colleagues would rather see pension increases and tax cuts reversed, ripping money out of the pockets of ordinary hardworking Australians. It just goes to show that the debate on these bills is a microcosm of a broader issue. This issue is one of the great ideological divides that separates Labor and the coalition and it is the divide of basic fairness.
I remember back in 2008, during the debate about our changes to the Medicare levy surcharge, that I referred to the coalition as the sheriffs of Nottingham. I think that label still suits them today. The same toxic ideology continues to evade the coalition, that the well-off should be looked after at the expense of the needy. Our fundamental belief is that government, in providing assistance to families and households, should give priority to those who need it the most. Contrast this with the Liberal-National coalition who seem to take the view that the job of the government is to give priority to looking after the top income earners in the country.
What this debate boils down to simply is that $130,000 for an individual or $260,000 for a family may not be rich but that ordinary Australians agree it is enough income to comfortably afford private health insurance. If the opposition want to maintain the cry of class warfare, let us be clear that it is not coming from this side but coming from those opposite. When they suggest that corporate lawyers and CEOs should have their private health insurance subsidised by hardworking teachers, nurses, hairdressers and garbagemen, then we know where the class warfare really is.
If the opposition want to be honest about the ideological drive behind their policy of opposing means testing, then they should stop engaging in this tirade of screeching and carrying on that all of us in here and those listening just had to listen to. Mr Acting Deputy President, I think they think that if they screech the loudest that somehow makes them more morally correct and right, but let me assure you that is not the case. Those on the other side should take a good hard look at themselves. They should take some chill pills and settle down a bit because all we hear from that side is yelling and screaming and the tirade that I used to witness from two- and three-year-olds when I was a childcare worker. I did spend a number of years in the childcare industry and most of the children I cared for then were much better behaved than those on the other side. In fact, if they were children I was caring for, I would certainly give them the ‘ignore them’ treatment, because that is all they deserve. I think that the people out there listening to any of this debate would certainly think the same.
Those opposite should go out to ordinary working Australians and look them in the eye—the people on $40,000, $50,000 or $60,000 a year—and say to them, ‘We think your taxes should be subsidising the health insurance of people on double, triple or even a hundred times your income,’ because that is what they are purporting. That is what we are really talking about. The coalition do not represent ordinary working people. They opposed the means testing of the baby bonus, they opposed the changes to the Medicare levy surcharge threshold and they opposed the luxury car tax. It is who they represented with the introduction of Work Choices and their opposition to the minerals resource rent tax. They want to deny ordinary working Australians better superannuation because, as far as they are concerned, as long as their rich mates are looked after, life is fine and rosy.
On this side we believe in a fair go for all and we believe in making sure that that fair go can be accessed by all. The debate on these bills is a tiny sample of the broader issue and the way those on the other side think. Our fundamental belief is that government should provide assistance to families and households and that priority should be given to those who need it. Contrast this, as I have said, with the Liberal-National coalition who take the view that the job of the government is to give priority to those on the top incomes in this country. I think that is atrocious. They really need to think about what they are doing. It is just more of their negativity that has been constant over the past few months and years. On that final note, I commend the bill to the Senate.