| Publication: | The Australian |
|---|---|
| Date: | 18 May 2009 |
| Section: | The Nation |
Lenore Taylor and Siobhain Ryan | May 18, 2009
TREASURY has found the Coalition's savings alternative to Labor's means-testing of the private health insurance rebate would fall up to $3.2 billion short over a decade.
The Coalition's threat to block the budget measure in the Senate was further undermined yesterday when insurers questioned whether Labor's means test on the rebate would trigger an exodus from the private health system.
Malcolm Turnbull has singled out the means test on the 30 per cent rebate as the one budget measure the Coalition will oppose, saying it is ideological and designed to drive people out of private insurance and into the over-stretched public health system.
But the chief executive officer of insurer NIB, Mark Fitzgibbon, told The Australian that although he was not happy with the budget changes, "we don't think it's going to be that material to the business". Treasury has estimated that just 0.3 per cent of current members will abandon their cover as a result of last Tuesday's budget measure, which means-tests the "carrot" of the rebate but increases the "stick" of higher Medicare surcharges for the well-off uninsured.
"I would tend to support that view, that the impact on lapse (rates) will be minor," Mr Fitzgibbon said.
In his budget address in reply, the Opposition Leader proposed a 12.5 per cent increase in tobacco excise as an alternative way of raising the $1.9billion over four years the Government intended to save with its new means test.
"There's a tough choice for a weak Prime Minister," Mr Turnbull said. "Raise $1.9 billion by making health more expensive and putting more pressure on the public hospital system or raise it by adding about 3c more to the price of a cigarette and taking pressure off the public health system," Mr Turnbull said on Thursday.
But Treasury analysis released yesterday showed that over the next 10 years the cigarette tax increase would reap $3.2 billion less than the Government's proposed savings from the private health insurance rebate.
Because the savings from the means test continue to increase over time, while the savings from the cigarette tax remain at best static as fewer people take up smoking, the cigarette tax increase provides about $700 million a year less revenue by 2019-20, according to the analysis.
"The measure is designed to preserve the balance between the public and private health systems, with over 99 per cent of people with private health insurance expected to keep their private cover," Treasurer Wayne Swan said yesterday.
"By blocking this key savings measure, Mr Turnbull is voting to ensure low- and middle-income Australians continue to subsidise the private health insurance of millionaires."
Interviewed on the Nine Network yesterday, Mr Turnbull refused to match Labor's promise that government spending would not grow by more than 2 per cent a year once the economy returned to growth - a promise central to its claim to be able to return the budget to surplus by 2015-16.
"We will abide by the disciplines we set. Two per cent seems fair but what I'm not going to do is give a pledge about the financial policies we will take to the election, in a year's time or more today. We've got to assess it in the light of the situation at the time," Mr Turnbull said.
Finance Minister Lindsay Tanner said the refusal undermined Mr Turnbull's attack on Labor's projected levels of deficit and debt.
"Malcolm Turnbull couldn't give us any details of how he would reduce the deficit and now he won't even commit to matching Labor's spending cap. He really is all talk and no action," Mr Tanner said.
But even before the Government's budget announcement, the take-up of private health insurance had slowed, new figures show.
Official statistics released yesterday showed health fund membership had flatlined for three consecutive quarters, marking the first interruption to growth since mid-2006. The March quarter data put membership rates as a share of the population at 44.6 per cent, after revising down December and September figures which had previously shown percentage rises.
If the Coalition stands by its opposition to the private health insurance move, the Government is likely to have to negotiate its passage through the Senate with the Greens and the two independents.
Health Minister Nicola Roxon said yesterday the Government was determined to press ahead with the private health rebate savings, but agreed the increase in tobacco excise could also be a good idea, linking it with the so-called alcopops tax.
Mr Turnbull has now indicated the Coalition will drop its objections, saying it would "definitely look at it again".
"I certainly agree that tax measures can have a health impact, and that's what I have been arguing for over 12 months with the alcopops tax," Ms Roxon said. "I think, of course, that can apply to tobacco; we've seen in terms of history, Australia has done successfully on that."
Kevin Rudd continued to sell the budget's infrastructure package, travelling to a solar energy facility in NSW to talk about the Government's $1.4billion solar flagships program, for which a competitive application process has yet to begin.
The final report from the Government's preventive health taskforce, due in June, is expected to recommend an increase in tobacco excise.
