Mr TRUSS (Wide Bay—Deputy Prime Minister and Minister for Infrastructure and Regional Development) (09:01): I move:

That this bill be now read a second time.

On 15 April 2014 the Australian government announced that the site for Western Sydney’s new airport will be Badgerys Creek. This delivers on a government promise when in opposition to make a decision on Sydney’s future airport needs during its first term in office.

It demonstrates the government’s commitment to the Western Sydney region. A new airport will be a major boost for the local economy and create thousands of jobs during construction and a pipeline of jobs once an airport becomes operational. These benefits are being seen already with the start of construction of road upgrades to support the proposed new airport.

The government continues to deliver on this commitment with the progression of formal consultations with Sydney Airport Group on developing the proposed airport and the commencement of a new environmental impact assessment for the Badgerys Creek site.

A new airport for Western Sydney will create infrastructure for the 21st century and generate jobs and economic growth in Western Sydney.

To ensure these outcomes can be realised as soon as possible, the Airports Amendment Bill 2015 amends the Airports Act 1996 to provide for the creation of an airport plan for the proposed Western Sydney Airport. The Airports Act provides the framework to manage and operate Australia’s federally leased airports.

The airport plan will authorise the initial development and specify the Australian government’s requirements for the airport.

It will do this by taking processes ordinarily relating to master plans and major development plans currently in the Airports Act and combining them into a single streamlined process applicable to a greenfield airport development.

In doing so, the bill recognises the importance of the environmental assessment process currently underway for the airport and confers an approval function on the environment minister in relation to environmental matters.

The usual process in major development plans is for a referral to be made to the environment minister for the project to be assessed under the Environment Protection and Biodiversity Conservation Act 1999 if required and for the environment minister to provide advice to the Minister for Infrastructure and Regional Development, who is the final decision maker on the plan.

Badgerys Creek is a greenfield development, and preparation of an environmental impact statement is underway and will be finalised under the EPBC Act. This bill will require the Minister for Infrastructure and Regional Development to incorporate in the plan any environmental conditions imposed by the Minister for the Environment following completion of the EIS.

The community will have the opportunity to comment on both the environmental impact statement and airport plan as consultation on each will occur at the same time.

Once the airport plan is in place, no further planning or development approvals will be required prior to initial construction commencing. It will enable detailed design and construction planning to commence as soon as possible after contract signature.

This is a practical, common-sense measure that recognises the unique circumstances of a greenfield airport development.

The bill also includes measures that would help the government pivot to ready alternatives if Sydney Airport Group turns down an offer to develop and operate the proposed airport.

Under the 2002 sale agreement for Sydney Kingsford Smith Airport, the owners of Sydney Airport have a right of first refusal to develop and operate a second major airport within 100 kilometres of Sydney’s centre.

Once the consultation period is complete, the government will come to a decision on the need for and nature of a second airport in Western Sydney. This is a contractual step required before the government can make an offer.

This offer must be made to Sydney Airport Group first. If it declines to accept, the offer can be made to third parties or the Commonwealth can undertake the project itself.

However, the Airports Act currently effectively prevents the Commonwealth from taking either of these actions in the event that the Sydney Airport Group declines to accept the offer.

Section 18 of the Airports Act requires that the airport lessee companies for Sydney's Kingsford Smith Airport, and any airport site declared to be the Sydney West Airport, as it is referred to in the Airports Act, must be subsidiaries of the same company. This is a legacy provision from the Airports Act as originally passed in 1996.

While the government is contractually obliged to engage commercially with the Sydney Airport Group and is not opposed to a common ownership situation, it needs to be legislatively possible for the two airports to be under different ownership in the event that Sydney Airport Group turns down an offer to develop and operate the airport.

The Airports Amendment Bill removes the requirement for common ownership, providing the Commonwealth with the commercial flexibility to deal with third parties or to develop the airport itself if required.

The bill also removes the airport cross-ownership restrictions currently placed on Sydney West Airport. These restrictions prevent cross-ownership of more than 15 per cent between Melbourne, Brisbane or Perth airports and a new airport at Badgerys Creek. The amendment will help maximise the success of any market offering in the event Sydney Airport Group choose not to exercise an option to develop and operate the airport.

This amendment is about giving the government the commercial flexibility it requires to get the best outcome for the people of Western Sydney and the Australian economy more broadly.

Separately, the bill contains some mechanical provisions to facilitate declaration of the airport site and other preparatory work.

The Airports Amendment Bill 2015 will help ensure the economic and social benefits of an airport for Western Sydney can be realised as soon as possible.

I commend the bill to the House.

Debate adjourned.

Mr MORRISON (Cook—Minister for Social Services) (09:08): I move:

That this bill be now read a second time.

This bill will introduce several 2015 budget measures improving the fairness and sustainability of the pension system, and reintroduce some measures previously introduced in 2014 bills that are still before the Senate.

For improved fairness and equity, the first of the new budget measures will make sure a fairer proportion of a superannuant's actual defined benefit income is taken into account when the social security income test is applied. From 1 January 2016, this measure will introduce a 10 per cent cap on the defined benefit income that can be excluded from the social security income test.

A defined benefit income stream is a pension paid from a public sector or other corporate defined benefit superannuation fund, where the pension paid generally reflects years of service and the final salary of the beneficiary. Current arrangements allow some defined benefit superannuants to have a large proportion of their superannuation income excluded from the pension income test.

People receiving Veterans' Affairs pensions will not be affected by this change, and defined benefit income streams paid by military superannuation schemes will be excluded.

From 1 January 2017, the bill will reduce from 26 to six weeks the length of time the age pension, and a small number of other payments with unlimited portability, will generally be paid at the basic means-tested rate while the person is outside Australia.

After six weeks, payment will be made on a proportional basis according to the length of the pensioner's Australian working life residence—a concept representing the length of time the person has resided in Australia between age 16 and age pension age.

Pensioners overseas on the implementation date will stay under the current 26-week rule until they return to Australia. Subsequent trips will be under the new six-week rule. Those pensioners with 35 years or more of Australian working life residence and those already exempt from the proportional payment rules—such as some recipients of the disability support pension—will not be affected.

A further measure applying from 1 January 2017 will rebalance the assets test to make it fairer and better targeted and to help ensure the pension system is sustainable into the future. The changes will:

increase the assets test free areas to provide additional assistance to part rate pensioners with moderate asset holdings—(We estimate more than 170,000 Australians on a part-pension will get a higher pension as a result of these changes);

provide an additional increase in the free areas for non-homeowners to ensure fairer treatment for those who do not own a home and therefore do not benefit from the principal home exemption; and

better target the pension by increasing the assets test taper (or withdrawal) rate for assets above the new free areas from $1.50 to $3.00 per fortnight for each extra $1,000 in assessable assets—this will reduce support to pensioners with higher levels of assets who have greater capacity to support themselves. This last change will restore the taper rates that were in effect from 1994 to 2007.

The purpose of providing tax incentives to encourage people to build up their superannuation is so they can draw down on it in their retirement.

People with higher levels of retirement savings have the capacity to draw down on their assets, as intended, to support themselves in retirement rather than calling on the taxpayer for a pension for support. Those most affected by the changes would only have to draw down a maximum of 1.84 per cent of their assets to make up for the loss of their part-pension and maintain their current levels of income.

Importantly, pensioners who lose pension entitlement on 1 January 2017 as a result of the changes will be automatically issued with a Commonwealth Seniors Health Card, or a health care card for those under pension age, without the need to meet the usual income requirements. Additionally, veterans whose service pension is cancelled under this measure will retain their Veterans' Affairs Gold Card.

This bill also takes the opportunity to reintroduce some measures relevant to pensioners from the 2014 budget.

The first of these measures is to cease payment of the Seniors Supplement for holders of the Commonwealth Seniors Health Card or the Veterans' Affairs Gold Card. This measure is currently before the Senate in the Social Services and Other Legislation Amendment (Seniors Supplement Cessation) Bill 2014.

In reintroducing this measure, the implementation date will be moved to 20 June 2015 (meaning the last quarterly payment of Seniors Supplement would generally be made on 20 June 2015).

Lastly, the bill reintroduces two measures currently before the Senate in the Social Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014. These measures are to cease the Pensioner Education Supplement and the Education Entry Payment—with a new start date in each case of 1 January 2016.

The government believes in fairer access to a sustainable pension. This bill will result in an increase in pension payments for those with modest to low levels of assets, while requiring those with more substantial assets to draw on the assets that they have built up to ensure that they do not have to draw down on a pension in their retirement.

But what we will not do is: we will not increase the rate of tax on those who have saved for their retirement. We do not consider someone's own savings, and drawing down on their own savings, as a welfare payment. For those who need a welfare payment, that is what the pension is for, for those most in need. And to those who saved for their retirement: we thank them for doing that and ensuring that they can sustain themselves in their retirement and not be drawing down on the taxpayer. I commend the bill to the House.

Debate adjourned.

Mr MORRISON (Cook—Minister for Social Services) (09:16): I move:

That this bill be now read a second time.

I am pleased to introduce the Passports Legislation Amendment (Integrity) Bill 2015 to the parliament.

The bill amends the Australian Passports Act 2005, the Foreign Passports (Law Enforcement and Security) Act 2005 and makes minor consequential amendments to a number of other acts. It also repeals the Australian Passports (Transitionals and Consequentials) Act 2005.

The bill is the result of a review of Australian passports legislation 10 years after it was enacted.

The bill seeks to refine and clarify the legislation and to strengthen the government's ability to respond to unlawful activity in relation to Australian travel documents.

The government is committed to maintaining the integrity and security of Australian travel documents in the interests of all Australians.

The Australian passport is the most valuable identity document used in Australia and is recognised as one of the most secure and trustworthy travel documents in the world.

The integrity of the Australian passport protects ordinary Australians from identity theft—which is a growing problem in Australia and internationally—and also continues to support our national security framework, which is a priority for this government.

The integrity of the Australian passport ensures that Australian travellers are accepted at borders across the world and gives other countries the confidence to allow Australians visa-free access to facilitate their travel.

The principal amendments to the passports act being introduced by this bill are that:

(1) the bill will provide that a travel document may be issued to a person on the minister's own initiative, to facilitate a lawful requirement to travel;

(2) the bill will align the definition of 'parental responsibility' more closely to that in the Family Law Act; the minister suspects, on reasonable grounds, that false or misleading statements, including information or documents have been given in relation to a travel document or an application for a travel document;

(4) the bill will modify the existing offence framework and add a new offence to strengthen the government's ability to respond to the fraudulent use of Australian travel documents.

Issue travel documents without consent for a lawful requirement to travel

The first of these key changes is to provide that a travel document may be issued to a person, on the minister's own initiative, to facilitate a lawful requirement for a person to travel.

This is limited to the following circumstances:

to remove or deport a person who is the subject of a lawful removal or deportation order, to or from Australia;

to extradite a person who is the subject of a lawful extradition request, to or from Australia; and

to effect an international prison transfer.

A person should not be able to delay or obstruct a lawful expulsion to or from Australia by refusing consent to the issue of a travel document.

There are already existing avenues for people to seek review of the substantive decision to extradite or remove them.

Australia is a contracting state to the International Civil Aviation Organization's Convention on International Civil Aviation. The convention stipulates that a contracting state shall issue a travel document to one of its citizens to facilitate their return to the contracting state within 30 days of a request by another state to do so.

Currently, we do not have a clear legal basis on which to issue documents in order to comply with the international standards set by this convention. Indeed, on occasion we have had to refuse requests from the contracting states to issue a travel document to an Australian citizen, because the person in question did not consent. The proposed amendments to the passports act will allow us to comply with the ICAO standards where contracting states request we issue travel documents to our citizens in the future.

Amending the defini tion of parental responsibility

The second key change relates to the definition of parental responsibility for the purposes of determining who is required to consent to a child having a travel document.

Child passport applications are one of the most complex aspects of passport operations.

Due to the changing dynamic of family composition in Australia over the last 10 years, we have seen a noticeable increase in the number and complexity of child passport applications without full parental consent.

For a small number of applicants, the current requirements can cause unnecessary distress, delays and confusion.

The bill will ensure that the reference to parental responsibility in the passports act is consistent with the concept in the Family Law Act and remove any confusion as to who is required to consent to a child having a travel document.

The bill provides that the following persons are required to consent to a child having a passport:

parents (who have not had their parental responsibility removed by a court);

persons who, under a court order, have parental responsibility or with whom the child is to live; and

persons with guardianship, custody or parental responsibility for the child under an Australian law.

Those persons who have a court order to 'spend time with' or enable 'access to' a child but who do not have parental responsibility, will no longer be required to consent to a child having a passport.

It is inappropriate that the passport act, as it currently stands, accords a person more parental responsibility for a child than is permitted by the court.

It means that a parent who has been granted sole parental responsibility under a court order is no longer required to seek the consent of other persons who have 'access to' the child.

It is important to note that these amendments do not remove the legal requirement for a person travelling overseas with a child to seek consent to the child's travel from all persons who have court-awarded 'access to' or 'spend time with' orders for the child.

It remains an offence under the Family Law Act to take a child overseas without consent from all persons in whose favour a court order is made in relation to a child.

This information is clearly included in information booklets distributed to all passport holders, in the passport itself and on the passports website.

The bill will also clarify the Department of Foreign Affairs and Trade's role in issuing travel documents by making consent relate to a child having a passport, rather than consent for a child to travel internationally.

The department issues travel documents. This is a point-in-time decision. Once issued, it has no control over where or when a child travels overseas. And, independent of any travel, a passport is an important identity document.

As such, it is more appropriate that consent relates to the child having a passport.

The bill will also address an anomaly in the current legislation to ensure that the child consent provisions cover children born outside of marriage in Western Australia.

This is because Western Australia has not referred its powers relating to ex-nuptial children to the Commonwealth.

These amendments will clarify the process for applying for a child passport where court orders are in place. They will protect and strengthen the rights of persons with parental responsibility to make decisions about their child.

Refuse to process a fraudulent travel document application

The third key amendment in the bill is to provide that a passport application may not be processed if there are reasonable grounds to suspect fraud. This would be a reviewable decision.

It is an offence under the passports act to provide false or misleading information, statements or documents in relation to an application for an Australian travel document.

This provision may be used instead of, or in addition to, a criminal prosecution for these offences.

Fraudulent travel document applications threaten the security and integrity of the Australian passport system.

It is essential that the government send a clear message that any kind of fraud in relation to Australian travel documents will not be tolerated.

Fraud in a travel document application ranges from a person forging the signature of a guarantor for convenience to identity theft.

It is important to note that this provision does not prevent a person from being issued a travel document. But they must submit a fresh application with the correct information and supporting documents and meet all other eligibility requirements.

Revise existing offences and add offence for fraudulent use of travel documents

The fourth and final key amendment in the bill is to revise a number of existing offences and add an offence to target the making and providing of false Australian travel documents.

These amendments will strengthen the government's ability to respond to the increasing threat of fraud.

Travel documents are a key enabler of serious crime.

Strong passports legislation helps protect Australia from the use of false identity and citizenship documents and related criminal activity, including people-smuggling, terrorism and drug smuggling.

This bill amends three offences relating to the provision of false or misleading information, statements or documents in relation to an application for an Australian travel document. The amendments provide that these offences also apply to the travel document itself and not just the application.

These amendments are designed to address, in part, cases where a person maliciously reports a passport as lost or stolen so that it will be cancelled to intentionally disrupt the travel of another person.

This amendment will also target persons who seek to fraudulently collect someone else's travel document using false identity documents.

The bill amends the existing offence for selling an Australian travel document to provide that it is also an offence to sell a false Australian travel document.

This bill also amends the existing offence for damaging or destroying an Australian travel document so that it is also an offence to manipulate or tamper or interfere with a travel document. To avoid any doubt, the amendments specify that this offence applies to the chip embedded in a travel document.

These amendments are intended to capture those who intentionally alter genuine Australian travel documents for fraudulent or criminal purposes as well as those who create counterfeit Australian travel documents.

The bill adds one new offence for making or providing false Australian travel documents with the intention that they will be used or accepted as genuine.

This offence mirrors an offence for making or providing a false foreign travel document in the foreign passports act.

The maximum penalty for this offence is imprisonment for 10 years or 1,000 penalty points, or both. These penalties are consistent with other offences in the passports act and foreign passports act and related offences in other Commonwealth acts.

They reflect the gravity of offences that threaten the integrity of Australia's premier identity document.

In summary, the amendments to the offence provisions in the passports act are necessary to deter and respond to the increasing fraudulent use of travel documents, and the wider implications of such activity in enabling serious crime and identity theft.

Refusing unacceptable names and signatures

One further amendment to protect the integrity of the Australian passports system is a provision to enable a name or signature that would appear on an Australian travel document to be refused if it is unacceptable, inappropriate or offensive.

It is not appropriate that on Australia's most important identity document a person may use a name or signature that is, for example:

offensive or obscene; or

could mislead others into believing the bearer holds a title or an award.

While these situations rarely occur, it is important that a clear legal basis exists to refuse such names or signatures to protect the integrity of Australian travel documents.

Clarify and simplify the legislation

In addition to these key amendments, the bill refines the current provisions by:

removing the need to refer to the Passports Determination to work out which provisions in the act apply to which travel documents;

combining related subsections to avoid duplication; and

clarifying existing provisions consistent with current practice.

Conclusion

In conclusion, this bill seeks to refine and clarify the existing passports legislation that has stood us in good stead for the last 10 years.

It seeks to protect the Australian community by preventing and deterring the fraudulent use of Australian travel documents and related crimes.

The Australian passport is unquestionably the most important identity document in Australia. It is held in high regard around the world. It is critical that the government ensures that this does not change.

This bill helps us to do just that.

I commend this bill to the House.

Debate adjourned.

Mr FRYDENBERG (Kooyong—Assistant Treasurer) (09:28): I move:

That this bill be now read a second time.

The Excise Tariff Amendment (Ethanol and Biodiesel) Bill 2015 implements the government's 2014-15 budget measures to reform the taxation treatment of biodiesel and fuel ethanol. As part of that implementation the Energy Grants and Other Legislation Amendment (Ethanol and Biodiesel) Bill 2015 abolishes the Cleaner Fuels Grant Scheme.

In last year's budget, the government announced changes to the taxation of biodiesel and fuel ethanol to better balance the need to support these important Australian industries while keeping the budget position on track.

Currently domestically produced biodiesel and fuel ethanol and imported biodiesel are subject to the same rate of excise as petrol and diesel. However, these fuel producers and importers are able to access a grant for the full amount of duty paid.

The Cleaner Fuel Grants Scheme refunds excise and excise equivalent customs duty paid on both imported and domestically produced biodiesel.

A similar scheme, the Ethanol Production Grants Scheme, which refunds excise paid on fuel ethanol to domestic producers, will cease on 30 June 2015.

Instead of these grant schemes, the excise payable on domestic production of biodiesel and fuel ethanol will be reduced to zero and will then gradually increase to a reduced rate. The new excise rate for biodiesel will reach 50 per cent of the full rate of excise that applies to petrol and diesel, and the new rate for fuel ethanol will reach approximately 33 per cent of that rate.

Imported biodiesel and fuel ethanol will be subject to the full fuel duty rate.

The government is mindful of the important role that domestic fuel ethanol and biodiesel producers play in the economy and the importance of encouraging diversity in Australia's fuel mix.

Biodiesel and fuel ethanol producers contribute to the Australian economy through their fuel production processes, and having a range of alternative fuels has a positive effect on Australia's energy security.

The government's role in facilitating the success of Australian industries has to be balanced against the government's debt and the cost to the future prosperity of Australians of fiscal policies that do not maintain a sustainable trajectory back to surplus.

For this reason the government has decided to move domestically-produced fuel ethanol and biodiesel into the excise system and to apply excise with reference to energy content. This approach is consistent with the government's approach to other alternative fuels and will ensure that fuels are taxed fairly and transparently.

The approach in these bills recognises both that biodiesel is a close substitute for conventional diesel and that fuel ethanol has lower energy content than petrol or diesel.

This treatment in respect of domestically-produced biodiesel and fuel ethanol is consistent with Australia's longstanding government policy to tax alternative fuels at half the energy equivalent rate. This policy recognises not only the potential benefits of these alternative fuels but also the desirability of tax neutrality across alternative fuels. This puts in the hands of Australians the choice of fuel rather than it being dictated by its tax treatment.

The government is committed to working constructively with the opposition and other members and senators to pass these reforms through the parliament.

The government is setting Australia on a realistic return to surplus. We will make the decisions that are needed to repair the budget and maintain the integrity of the tax system.

These decisions form the basis of an economy that will be well placed to ensure the future prosperity of Australia and Australians.

The government's progress back to surplus has made significant progress. As part of the commitment to repair the budget, the government is prepared to make the right decisions to ensure the return to surplus occurs as soon as possible. The 2015-16 budget maintains a steady and credible trajectory towards surplus despite a $52 billion write down in tax receipts and the iron ore price almost halving since the 2014 15 budget.

The savings provided by these measures are part of the government's broader plan to return Australia to surplus.

Full details of the measures are contained in the explanatory memorandum.

Debate adjourned.

Mr FRYDENBERG (Kooyong—Assistant Treasurer) (09:33): I move:

That this bill be now read a second time.

The Energy Grants and Other Legislation Amendment (Ethanol and Biodiesel) Bill 2015 is one of a number of bills in this package that implements measures to change the taxation treatment of fuel ethanol and biodiesel.

The measures remove existing grant schemes and instead provide that the domestic production of biodiesel and fuel ethanol will be subject to a reduced but gradually increasing rate of excise.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.

Mr FRYDENBERG (Kooyong—Assistant Treasurer) (09:34): I move—

That:

(1) this House refer the following matters, relating to the impairment of customer loans, to the Parliamentary Joint Committee on Corporations and Financial Services for inquiry and report by 31 March 2016: the

(a) practices of banks and other financial institutions using a constructive default (security revaluation) process to impair loans, where constructive default/security revaluation means the engineering or the creation of an event of default whereby a financial institution deliberately reduces, through valuation, the value of securities held by that institution, thereby raising the loan-to-value ratio resulting in the loan being impaired;

(b) role of property valuers in any constructive default (security revaluation) process;

(c) practices of banks and other financial institutions in Australia using non-monetary conditions of default to impair the loans of their customers, and the use of punitive clauses such as suspension clauses and offset clauses by these institutions;

(d) role of insolvency practitioners as part of this process;

(e) implications of relevant recommendations of the Financial System Inquiry, particularly recommendations 34 and 36 relating to non-monetary conditions of default and the external administration regime respectively;

(f) extent to which borrowers are given an opportunity to rectify any genuine default event and the time period typically provided for them to do so;

(g) provision of reasonable written notice to a borrower when a loan is required to be repaid;

(h) appropriateness of the loan to value ratio as a mechanism to default a loan during the period of the loan; and

(i) conditions and requirements to be met prior to the appointment of an external administrator; and

(2) in undertaking this inquiry, the Committee take evidence on:

(a) the incidence and history of:

   (i) loan impairments; and

   (ii) the forced sale of property;

(b) the effect of the forced sale of property in depressed market conditions and drought;

(c) comparisons between valuations and sale price;

(d) the adequacy of the legal obligations on lenders and external administrators (including s420A of the Corporations Act 2001) to obtain fair market value for the forced sale of property; and

(e) any related matters.

Question agreed to.

The SPEAKER: It is very good to see the House referring a matter to the joint committee.

Mr BILLSON (Dunkley—Minister for Small Business) (09:35): Firstly, in summing up this discussion may I thank all those members who have contributed to the debate—a spectacular 31 members in this chamber, including 16 coalition MPs and 15 from the opposition. And isn't it great that those electorates represent around 300,000 small businesses that have been able to have their interests, their concerns, their aspirations, discussed in this chamber. That was a very worthwhile use of parliamentary time and a great opportunity for Australian small business men and women to know that this parliament is very focused on their interests and their ambitions and goals, and what we can do to energise enterprise and support their contribution to the economy and jobs.

Small business and primary producers make a very important contribution to the Australian economy. They test and pioneer innovative ideas and business practices which are critical to future economic growth, job prospects and improved living standards. These measures are part of a broader package to help small businesses and family enterprises to grow, as they also provide support for farmers and farm businesses and rural communities in drought affected areas across our continent. Firstly, the Tax Laws Amendment (Small Business Measures) No. 1 Bill amends the tax law to lower the company tax rate by 1.5 percentage points, to 28.5 per cent, for incorporated small businesses, potentially helping up to 780,000 small business companies to retain more earnings and improve their cash flow. This is the lowest small business company tax rate since 1967. These amendments will also enable small companies to distribute surplus franking credits accumulated in previous years, reducing the tax their owners pay when they receive dividends. The lower tax rate will apply from 1 July 2015 to incorporated small businesses.

The Tax Laws Amendment (Small Business Measures No. 2) Bill will amend the tax law to expand the accelerated depreciation provisions for small businesses. For small business this involves lifting the threshold for immediate deductibility from $1,000 to $20,000 in allowing assets above this threshold to be depreciated in the simplified pooling arrangements. These arrangements allow these more expensive assets to be depreciated at a rate of 15 per cent in the first year and 30 per cent per year thereafter. This expansion to accelerated depreciation will be available from 7.30 pm on 12 May 2015 to 30 June 2017. As 97 per cent of primary producers are small businesses these amendments will also provide a significant benefit to many, many farmers.

To provide further assistance the bill will also amend the tax law to allow primary producers to access accelerated depreciation rates on fencing, water facilities and fodder storage assets. Primary producers will be allowed to immediately claim a tax deduction for expenditure on fencing and water facilities such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills. Expenditure on fodder storage assets such as silos and tanks used to store grain and other animal feed will be depreciated over three years.

The amendments will improve resilience for farmers facing drought, improve cashflow and reduce red tape by removing the need to track expenditure over time. The accelerated depreciation for primary producers will be available from 7.30 pm on 12 May. These are key elements of the coalition's jobs and small business package introduced by the Abbott government on budget night, and I commend these bills to the House.

Question agreed to.

Bill read a second time.

Mr BILLSON (Dunkley—Minister for Small Business) (09:40): by leave—I move:

That this bill be now read a third time.

Question agreed to.

Bill read a third time.

Mr BILLSON (Dunkley—Minister for Small Business) (09:40): I simply commend the contribution of colleagues as a cognate, and I commend the bill to the House.

Question agreed to.

Bill read a second time.

Mr BILLSON (Dunkley—Minister for Small Business) (09:41): by leave—I move:

That this bill be now read a third time.

Question agreed to.

Bill read a third time.

Ms KING (Ballarat) (09:42): I rise to speak in this cognate debate on the Medical Research Future Fund Bill 2015 and related bill, and in doing so I rise six months after the government promised that this so-called landmark of its last budget was supposed to already be in operation. In fact we should have really been debating these bills yesterday. What we saw was, frankly, eight hours of debate on a bill in which 150 members of the House of Representatives were all going to vote yes. This was purely because—and those opposite decided that they had to restrict their members to five-minute speeches towards the end—they all wanted to make sure that they had something to say in their electorate newsletters. In the meantime there is this bill, there is the bill that enacts the sixth pharmacy agreement, and there are a number of other bills in the health space that are languishing because the government wanted to have eight hours of debate on a bill that every single person in this House agreed with.

Going back to this bill: the government promised, with much fanfare in its last budget, that the Medical Research Future Fund would be established by 1 January this year, meaning that this bill would have had to come before House in November last year for that to be achieved. In fact it was originally listed to do so but did not appear. What is far worse is the government does not appear to have used those months of delay by actually doing any detailed policy work needed to develop the best possible fund to support health and medical research in this country—no work at all.

We know the idea for a Medical Research Future Fund first came about just weeks before the last budget and it was announced with no consultation with the National Health & Medical Research Council, no consultation with Australia's chief scientist, no consultation with the medical research community at all, and the health department only found out about it a few weeks before the budget. What is clear in the months that followed is that the government has not set up a fund that will distribute funding subject to peer review or to proper independent oversight. It has instead established a fund that will allow the government to distribute health and medical research funding in this country according to its own decisions. There is no peer review and no independent oversight in the legislation at all, which will allow the government to fund its own pet health and medical research projects.

I do intend to go into some detail about the concerns Labor has, but they are concerns that I express out of disappointment above anything else. If we are to have a Medical Research Future Fund, it should be established in good faith and in cooperation with the health and medical research community and it should have good governance at its heart. Because if we do not do this, if where the money goes is subject purely to the government's decision making, we are absolutely trashing the reputation of Australia's health and medical research. The government should be using this fund to invest in the best possible health and medical research, based on independent peer review and on the advice of experts in the field who are independent of government and subject to the scrutiny of their peers. These are principles that do not appear to be reflected in this bill, which is a real lost opportunity.

In developing the bill, the government certainly has not been consulting with the health and medical research sector. I am very concerned that the way it has been drafted does not even meet the principles of governance that the government itself has set. If the government took this fund seriously, as it claims publicly to do, then you would think it would have taken the time to consult with the health and medical research community and eminent individuals like Simon McKeon, who is responsible for the strategic review into health and medical research. You would also assume that the government would take a principled approach to ensuring that funding is administered at arm's length from government, if it truly believes in the value of health and medical research. To do anything less will trash the reputation of health and medical research in this country.

If you do take the government at its word on these things, you would be right to be surprised and greatly concerned at the way the government has drafted this bill. We know how much more competitive health and medical research grants are becoming. If the government truly believes in supporting the best health and medical research projects, not just its pet projects, it would be taking the advice of experts. I know that the health and medical research community has been as surprised as Labor about the way the funding is to be administered through this fund. It should be rightly sceptical about what it will mean for the quality of projects being funded, which is why Labor will be making amendments to this bill, especially as they relate to the disbursement of credits.

The 2014-15 budget glossy explicitly stated that:

Fund earnings will be directed to medical research, primarily by boosting funding for the National Health and Medical Research Council.

I want to repeat that: 'primarily by boosting funding for the National Health and Medical Research Council'. That is from the government's own budget papers, their own health budget glossy, on establishing its fund. That is what it said it was going to do. I am sure the former CEO of the NHMRC, Professor Warwick Anderson, and, I suspect, all those involved in the health and medical research community, are very disappointed to see the way this bill has been drafted, especially when the NHMRC was never consulted on the announcement that there would even be a fund in the last budget. Professor Anderson did in fact warn of this on 15 April this year when he said in a Press Club address:

I think the researchers out there and in the audience today have to keep an eye on this so the public benefit from this big investment, and the public will benefit best if the public disbursement is peer reviewed.

Sadly, those views have now been realised and the bill, as it now stands, does not include disbursements from the fund that are subject to independent peer review.

So, once again, the reason that Labor has such significant concerns is that this bill does not reflect the principles that the government set even for itself, and it does not guarantee that a single extra dollar in funding will travel through to the National Health and Medical Research Council. Specifically, the bill does not provide the governance assurances that would satisfy Labor that the fund credits will be disbursed in the most prudent manner. Frankly, the way that the government has established it leaves no assurance that funds will not simply be channelled to fund the coalition's own election commitments and pet projects, so long as they meet very broad purposes as stated in the bill.

As it stands, the bill is creating what could very likely become another government slush fund: $20 billion in funding with no independent oversight of how the earnings from that money is to be spent. Credits are not proposed to be directed through the existing mechanisms for health and medical research in this country—the NHMRC. They are not even primarily going to be disbursed through the NHMRC. It is not even proposed to have the disbursements overseen by an expert panel or even have any peer review at all. In fact, despite the government saying—as did the Treasurer saying in his second reading speech—that there would be an advisory board, there is no mention of any advisory board in this legislation at all. Setting that aside, why would you establish a separate advisory board, a potentially separate peer review system, if that is what they are proposing? Why on earth would the government consider it appropriate to set up a completely separate body? But there is not one mention in this legislation of any advisory board or any separate peer review.

The bill also allows the finance minister to credit funding to the COAG reform fund for making payments to the states and territories, as long as it fits the purpose of the bill as broadly defined, as well as to corporate Commonwealth entities outside the general government sector, such as the CSIRO. And note that it is the Minister for Finance, not the Minister for Health or the Minister for Industry and Science. I am very concerned that this bill allows for the Minister for Finance to debit funds from the Medical Research Future Fund to the MRFF Health Special Account for the purpose of making grants to financial institutions for medical research. It allows, particularly, for it to be credited to corporations.

Departmental officials at Senate estimates yesterday could not provide an answer about what sort of corporations might be funded other than to reference an assumption that this is a catch-all inclusion to ensure that no potential funding recipient is excluded. So everybody is in. They were unable to give the Senate estimates committee even a definition of 'medical research' that would be funded under the scheme. Instead, we were told a yet to be appointed ministerial advisory committee that is not in the legislation will advise the government on what research could be funded under the program.

Remember, Treasurer Joe Hockey said this was the fund that he hoped would find the cure for cancer. The fund that was going to cure cancer will now, it seems, be directing money to pet projects. Designing mobile phone apps is one of the uses the fund could possibly be put to. Its priority is determined not, as promised, by the National Health and Medical Research Council but by an as yet to be appointed ministerial advisory council that is not in the legislation at all, so there is no obligation for the government to pay any attention to it. The principles on which it will make decisions are also not in the legislation, and the finance minister is able to hand out grants as he sees fit.

This is sounding awfully like what Senator Brandis has done to the Australia Council, taking the money away from independent, arms-length experts and claiming it for himself—a giant, personal arts slush fund for his favourite projects. That is simply not good enough when it comes to the health and medical research sector in this country. This is a signature policy for the government, and the governance is simply not there in the bill. The health and medical research community ought to be very concerned that these governance structures are not in place and that the government can effectively allocate money from this fund however it pleases.

Given the government's record when it comes to health, the opposition has the right to be very cynical about what this government's actual motives are. We know from Senate estimates that there is to be an advisory board of eight people providing the government with advice on what medical research and medical innovation is to be funded. There is no mention of such an advisory council or board in the bill and no explanation given as to why the NHMRC is not doing this, given that a Medical Research Endowment Account—already a special account—is already managed for that purpose.

We know from Senate estimates, too, that the Department of Health had no consultation whatsoever with the health and medical research community on the development of this bill, something I find quite astonishing. It is also of significant concern that existing funding to the NHMRC is in no way quarantined. As Department of Health officials confirmed in Senate estimates, it will be a policy decision of government as to what the existing NHMRC funding arrangements are. So there is a very real prospect here that, as money comes into the MRFF via the massive cuts to health, money will be ripped out of the back door of the NHMRC and, instead of a boost to medical research, all we will get is an accounting transaction funded by billions of dollars of cuts to the health system.

The lack of any formal role in this legislation for the National Health and Medical Research Council in the way the bill has been drafted is something that Labor finds deeply concerning, and anybody who cares at all about health and medical research and has any integrity in this place should have concerns about it as well. At best, it is sloppy policy. At worst, it is a deeply cynical example of rank political opportunism. It is, frankly, astonishing just how little policy work has gone into developing this bill. It is a fund that is so important. If it is a fund that is to support this activity in perpetuity then it should not be kept at arm's length from the health and medical research peer review community.

This, unfortunately, is becoming something of a characteristic of this government, and what comes to mind immediately, as I said, is the decision around the arts council and this government's complete disregard for any independent oversight. If the government is to achieve its objectives, then its governance structures for this fund—not just for the investment of this fund but for the governance structures for the way in which the earnings of this fund are dispersed—must be above question. They must be, because this is health and medical research we are talking about.

It is not like road funding, and we believe there should be proper governance processes for that as well. The government has a different view, but we believe there should be, through Infrastructure Australia, proper processes for that as well. This is health and medical research. If the government wants to trash the reputation of health and medical research in this country by creating a great big fund and deciding where this is going to go to—and there are lots of voices out there about a whole raft of things that people want to develop or research—then the government has set up a fund that will exactly do that, which, of course, brings me back to the role of the National Health and Medical Research Council.

The principal reference to the NHMRC in the bill is that the government, under just one of the funds established in this bill, could possibly ask the CEO of the NHMRC to manage some of the distributions, and that is it. It does not sit with the test the government has set itself that the funding go primarily through the NHMRC. That is what the government said it would do. That is not what it is doing in this bill. It is a very important point. What is the point of having the NHMRC if it is only to be recognised in such a cursory way, almost as an oversight in this bill? If the purpose of the NHMRC is as the pre-eminent body through which health and medical research is funded in this country, why is it treated in such a shabby way by the government in this bill?

The NHMRC held its first meeting in February 1937 and became an independent statutory authority within the portfolio of the Australian government Minister for Health and Ageing operating under the National Health and Medical Research Council Act 1992. The NHMRC is already responsible for administering more than $700 million in health and medical research grants every single year. It has six principal committees, including the Australian Health Ethics Committee, Research Committee, Embryo Research Licensing Committee, Human Genetics Advisory Committee , Health Care Committee and Prevention and Community Health Committee—eminent experts across the country who independently peer review health and medical research as part of the NHMRC functions.

So why on earth would the government be seeking to set up, not entrenched in legislation, another advisory board which the government may or may not pay any attention to, and why on earth would it set it up separate to any existing structure? Why is the government setting up an advisory board of some eight people, as we understand—no-one seems to know who they will be or what they will be doing—in secret, in essence, with no details about it all? We have no details about who the people will be, but the biggest problem is that it is not entrenched in the legislation at all. It has no official role at all.

Equally important is that Department of Health officials could not say what definition of medical research and medical innovation would be applied. It was, as I noted at the time, a policy development process that read more like a script of The Hollowmen than the way an adult government conducts itself. I remind people that this is how I previously reflected on the bill on the establishment. You might recall an episode of that satirical TV series where political staffers, concerned about the lack of a budget centrepiece, decide at the last minute to create a $150 billion national perpetual endowment fund to meet the nation's future challenges. 'The best part is we'll never need to specify how it'll all work,' the character of central policy unit director David Murphy declared. The similarity between the coalition's policy and The Hollowmen episode was also noted by Rob Sitch, one of the creators and stars of the show. Mr Sitch told a recent Melbourne Press Club event:

When the budget came out, it was like they'd watched the show and gone, 'That's actually a really good idea.'

That is all particularly worrying when you look at the way in which this has evolved.

It is particularly worrying given that the health portfolio is supposedly responsible for advising this eight-member advisory panel that will provide the government with some advice, which it may or may not pay attention to, as to how disbursements of what, I remind people, will eventually be $1 billion a year should be invested. Equally, as I said, this is not how the fund was envisaged to work—not at all. As I already stated when the fund was announced as part of the 2014-15 budget, it was promised that 'fund earnings will be directed to medical research, primarily by boosting funding for the NHMRC'. With something as important as this, the government should not be picking winners—it is not in a position to decide what is the best health and medical research in this country—in a way that, in essence, will allow it to fund a whole raft of projects. It can fund projects through the COAG Reform Fund to states and territories. It can fund projects through the Medical Research Future Fund health special account to private companies. It can fund Commonwealth corporate entities without any say from the health and medical research sector or any peer review around whether the project it is choosing is the best.

We know there are very real challenges for health and medical research. We know there are very real challenges for the National Health and Medical Research Council as we have more and more researchers doing more and more fantastic work in this country and the pool of money becomes harder and harder to stretch across those researchers. But, if we do not have a strengthening of the NHMRC processes and if we do not have a very clear view that we must have independent, peer reviewed allocation of funding for health and medical research, we will trash the reputation of the NHMRC and we will trash the reputation of health and medical research in this country.

As I said at the start of my remarks, the government have not undertaken any policy development work here. They announced it in the budget, did not consult anybody, did not really tell the health department, set it up in a particular way, decided they were going to do this and did not do the policy work behind it at all. Then, despite the fact that there have been months and months when they could have started to speak to the medical research community, they have not done so. Labor has. The members for Chisholm and Scullin have had almost 30 consultations with the health and medical research community. They have met with almost every health and medical research institute across the country. They have met with people who have been involved in medical research for a long period of time. They have heard about a whole raft of issues. They have looked again at the McKeon review. They have actually done the work. They have undertaken an important consultation and one that will continue to inform Labor's policy development process when it comes to health and medical research.

In the almost two years I have been shadow minister for health, I have travelled to a number of health and medical research institutes. I have been to the Garvan Institute, the Murdoch Children's Research Institute, the Westmead Millennium Institute for Medical Research, the Burnet Institute, the Victor Chang Cardiac Research Institute, the Walter and Eliza Hall Institute of Medical Research, the Hunter Medical Research Institute, the George Institute for Global Health and the South Australian Health and Medical Research Institute and spoken with hundreds of researchers doing terrific work across this country. It has been a privilege to meet with them. As we know, many of the recommendations in the McKeon review reflect what health and medical researchers have been telling us about what needs to be done to support reform in the sector as part of these consultations. But, rather than take the recommendations of McKeon and look at the totality of what is needed in health and medical research, this government has done no policy work. There is a real challenge heading right down the pathway now around what is going to happen with the employment of substantial numbers of health and medical researchers come the end of this year. Instead, this government has, in essence, set up its own private slush fund in this bill to allow it, at its own whim, to disburse large amounts of funding that have come, remember, from massive cuts to our health system.

From the moment this fund was announced, Labor have been consistent that we will always support measures to grow health and medical research in Australia but that it should not be at the expense of sick Australians. Before I get to the measures that are contributing to the fund, it is worth briefly mentioning the budget's handling of the fund itself. As Ross Gittins, The Sydney Morning Herald's economics editor, outlined, the fund is every bit as much an accounting trick as it is a medical research fund, but it is one that only students of government accounting can see. As Ross Gittins says:

The saving to the budget bottom line is immediate, though the change means this saving will be reduced a fraction by the increased spending on research.

Like many budget fiddles, this one relies on exploiting loopholes in the definition of the bottom line, the 'underlying cash deficit'.

Indeed, the minister himself boasted of how the $20 billion Medical Research Future Fund can be counted in the budget as a savings measure to offset debt, with only net earnings being distributed for medical research. In August last year, he admitted:

Up to $20 billion of revenue generated, which under the proposal would be generated in the first six years, helps to build up a capital fund and that in itself helps to reduce government net debt as the capital fund accumulates.

And the net earnings, only the net earnings of that fund will then be reinvested into additional medical research, which in itself will help improve health services …

Returning to Ross Gittins' article, he goes on to express his concern that, over time, the government will allocate less money to the National Health and Medical Research Council, meaning the overall level of health and medical research funding will not increase at all. This is something that remains a great concern for Labor, as this government has proved it cannot be trusted on any measure, especially when it comes to health spending.

This is a government which wiped $57 billion from public hospitals and denied it was a cut. This is a government which wanted to levy a tax on every visit to the doctor and said it was about improving Medicare. This is a government which took another $600 million from crucial health programs and described it in the budget as 'rationalising and streamlining'. So, forgive us if we remain suspicious of this government's consistent refusal to rule out simply using this fund as a means of shifting the existing funding for medical research. Having learnt nothing from the experience of announcing this policy without consultation, the government has still not consulted the health and medical research community in developing the MRFF, which is why the opposition have some serious concerns about the way the government intends to establish it.

In terms of the funding in this bill, according to the budget papers the MRFF will have a cumulative balance of $3.4 billion this year, $5.7 billion in 2016-17, $9.3 billion in 2017-18, and $14.3 billion in 2018-19. But we know that these figures cannot actually be relied on, and it is quite duplicitous of the government to be making these promises to the medical research community when the government itself knows that the figures cannot be relied on.

We know $1.3 billion of the capital going to this fund is from the pharmaceutical benefits hike to the price of medicines that, whilst it passed this House, will not pass the Senate. The government knows this measure does not have the support of the parliament. And the government is trying to have it both ways on the MBS indexation freeze. This is a cut of more than $2 billion from Medicare over this budget that will have a serious impact on bulk-billing rates, out-of-pocket costs and the level of access vulnerable patients have to general practitioners. We know from analysis published in the Medical Journal of Australia that it is in fact a GP tax of some $8 plus that the government has put in the budget by stealth. Of course, funds from this measure will be put into the Medical Research Future Fund. It also includes the massive cuts to public hospitals, and we know that other cuts in the government's 2014 budget—again, many of them to the not-for-profit sector—will as well.

If the government do truly believe in health and medical research, it begs the question why, in this budget, they have cut $2 billion out of health, again, and some of it in an incredibly petty way when you look at the cut to support for those with inborn errors of metabolism. They have not allocated any of that to the Medical Research Future Fund. We know from Senate estimates that all that is in fact going to other health priorities—in other words, the government is going to make a range of announcements around that.

The government have also included in this bill the transfer of the remaining $1 billion in the Health and Hospitals Fund. This is not something Labor will support. We think it is important that that money remain available in a fund to enable better health services and funding of other parts of the sector, so we will certainly be talking bit more about that. As I said at the outset, Labor are very strong supporter of medical research. We proved that in government. We committed large amounts of money to health and medical research, including building large medical research institutes across this country.

This bill does not meet the government's own test of good governance and it does not reflect the expectation that the funds would primarily be going to the NHMRC. With that, I move:

That all the words after "That" be omitted with a view to substituting the following words: "while not declining to give the bill a second reading, the House notes the bill:

(1) does not achieve the objectives the government itself has set;

(2) relies on cuts to vital health programs; and

(3) does not define medical research and innovation in the way in which the government has itself described it."

The DEPUTY SPEAKER ( Mr Randall ): Is the amendment seconded?

Ms Macklin: I second the amendment and reserve my right to speak.

The DEPUTY SPEAKER: The original question was that this bill be now read a second time. To this the honourable member for Ballarat has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The question now is that the amendment be agreed to.

Ms SCOTT (Lindsay) (10:13): I rise in support of the Medical Research Future Fund Bill 2015. This is a bill that provides opportunity for all Australians. This is a bill that looks to the future health of all Australians and celebrates the inventiveness and ingenuity of Australian researchers.

For too long, regions like Western Sydney have been forgotten; regions like Western Sydney have been underestimated. With this bill for a $20 million medical research fund, along with the infrastructure plan, we will see coming together a Western Sydney innovation corridor stretching from the Hawkesbury agripark to the north-west growth sector to Sydney IQ, which forms part of the medical research health and education precinct in Lindsay, my own electorate. The Sydney IQ park will have 6,000 jobs in health and education and research in this exact region. At the Sydney Science Park in Luddenham that I have spoken about many times in this House, there will be 12,200 jobs and 10,000 research positions. This is a very exciting project. Yes, there will be agribusiness in this facility; but this facility looks at all sorts of health and education projects—computing, engineering, mathematics, geotechnical water and environmental engineering research projects, medicine, medical devices and allied health expertise—and includes an institute for society, culture and economies, a school of social science and psychology, and the urban research centre and related projects. That is just the UWS contribution to the Science Park project by the EJ Cooper Group. Over and above the value of the real estate, they will be investing $2.5 billion to create 12,000 jobs in science, education and medical research. That is exciting news. That is wonderful news.

When we look right across this region, we have Oran Park, the fastest growing city centre in Australia. The University of Sydney Camden Campus also looks at more projects in exactly this space. Then we get down to the integrated health hub. The integrated health hub is in Campbelltown, and I am sure the member for Macarthur will touch on this later.

These projects with the University of Western Sydney, where they have signed a memorandum of understanding with the Beijing University of Chinese Medicine—together with great universities such Sydney University, and the University of Western Sydney—will start looking at ways of providing the clinical trials for Chinese medicines. This is groundbreaking research that is taking place in Western Sydney and starting to form. Those opposite want to cut it off at the knees. They do not want to see these sorts of things sprout. They do not want to see the infrastructure investment to create jobs and research and to create future industries for our country.

For too long the very future of this country's $1 billion clinical research industry has been put at risk through funding uncertainties, with many programs operating under a year by year funding model. Through the last decade we have seen the number of clinical trials being conducted in Australia fall. In 2013, Professor Brendan Crabb of the Association of Australian Medical Research Institutes said:

Falling success rates on medical research grants will eventually reach breaking point and start seriously discouraging young researchers from sticking to their career.

In fact, for many working in the research sphere, plan Bs—other jobs—are essential, just in case. To quote Dr Tim Nielson PhD, biochemist and media commentator:

Australian scientists are some truly remarkable individuals. Their tireless work pushes back the frontiers of knowledge daily to eradicate disease and eliminate human suffering worldwide. Every time one quits to become an accountant, we potentially lose a cure for AIDS or cancer.

I am proud to be part of a government that understands these concerns and that is prepared to turn almost a decade of neglect around by giving certainty to this sector. This government is delivering a Medical Research Fund worth $20 billion by 2019-20. This is truly a game changer for our country.

The University of Western Sydney, which is in my electorate of Lindsay, is now ranked in the top 100 universities under 50 years of age. This is a smart, young and innovative institution focused on outcomes and striving for research excellence. It is being awarded internationally for its work. The standard of research from the University of Western Sydney is continuing to lift higher and higher, and it is now higher than the average leading institutions right around the world. It makes sense for other smart global universities, research institutions and organisations to partner with a fine institution like the University of Western Sydney. As a result, the university has now lifted the lid and is looking to the future and the projects they can engage in.

Some of the projects that they have underway today include the work being conducted by Professor Annemarie Hennessy, the Dean of the UWS School of Medicine. She is currently working on groundbreaking research that seeks to understand the basis of dangerously high blood pressure known as pre-eclampsia, which is seen in some pregnant women. Also, work is currently being undertaken at the Ingham Institute by Professor Ian Gosbell, university professor in infectious diseases and microbiology, to develop a means to protect our hospitals from the highly resistant bacteria MRSA, known as the golden staph. Professor Gosbell's research has already shown that this bacteria survives in biofilms on stainless steel surfaces even after extensive cleaning. Destroying these biofilms is the only way to get rid of this dangerous bacteria in hospitals. Then there is the work of Professor Phillipa Hay, a university professor in the mental health space. Professor Hay is currently exploring the mental health issues associated with eating disorders, and evaluating treatments for anorexia and overweight individuals with bulimia or other binge eating disorders. Also, the School of Medicine is currently running a large-scale, multisite clinical trial, led by Professor Jenny Reath, that is seeking to understand and prevent ear disease among Aboriginal and Torres Strait Islanders.

This government is focused on the best and brightest Australian medical researchers and for them to remain at the forefront of developing treatments and cures that will improve the lives of all Australians and millions, perhaps billions, of people right around the world. This government wants to provide the sector with clarity and certainty, and encourage people to stay within it. In the words of the University of Western Sydney's vice-chancellor, Professor Barney Glover, 'The Future Fund will enable the University of Western Sydney and our peer institutions to considerably upscale our research capacity and collaborations in health and medically aligned fields of direct benefit to the region and further afield.' The fund will act as a much needed complement to the university's large-scale investments in health and medical teaching and research infrastructure from our Campbelltown and Westmead campuses, with additional research being added to locations like Penrith,' which is in the Lindsay.

This bill sends precisely the right message to investors and the global community. It sends the right message to supporters and participants in medical research, both domestically and internationally. It demonstrates Australia's commitment to being a leading contributor to the clinical area of research and innovation for decades to come. Professor Barney Glover has been a trailblazer in many ways in driving UWS forward. This government is absolutely focused on delivering this bill, in delivering the $20 billion for the medical research fund. This legislation will create the biggest endowment fund of its kind in the world. This fund will help to ensure Australia continues to advance world leading medical research projects, attain first-class researchers and ultimately deliver improved health and medical outcomes for all Australians. This opportunity lies in the hands of this parliament.

This bill will support an initial contribution of $1 billion from the uncommitted balance of the Health and Hospitals Fund, then further savings will see money allocated to build up the capital target level of $20 billion projected for 2019-20. This financial year will see the first $10 million in additional medical research funding distributed. That will reach over $40 million, as estimated, for distribution over the next four years. Most importantly, this funding is in addition to the government's existing budget for direct medical research of around $3.4 billion over the next four years. On the management side, this fund will be managed by the Future Fund Board of Guardians, which has a proven track record in managing investment portfolios on behalf of the government and maximising returns over the long term. For determining grant recipients, the government will separately establish an expert advisory board to provide advice on medical research strategies and priorities to inform how annual distributions from the medical research fund are to be spent.

This is a well thought through policy that delivers and grows on our commitment to the medical research sector. This is a vital investment. It is an investment that is needed today for the medicines that will cure the illnesses of tomorrow. This is not only an investment in the sector; this is an investment in Australia, an investment in future health. It is an investment in our country and in all of humankind. I am proud to stand in support of this bill. I am proud to stand in support of a bill that will help make my part of Australia, my part of Western Sydney, a wonderful vision for well into the future. I am proud to commend the bill to the House.

Mr STEPHEN JONES (Throsby) (10:25): Finally the parliament has before it, after a delay of more than one year, a bill which will establish the Medical Research Future Fund. The fund was supposed to be operational by 1 July this year, and clearly that will not be the case. The delay in bringing the bill before the parliament is a demonstration of the chaos, confusion and misdirection that has been at the heart of the government's approach to health policy. We know from the evidence produced at budget estimates last year that the genesis of this fund and this bill was a thought bubble designed as a smother for the government's $57 billion worth of cuts to hospital and health funding in the last budget. It has subsequently become a victim of the government's hapless and botched attempts to reform the health system by attacking Medicare and introducing a GP tax, and as a consequence of all this the bill has had a tortuous entry into this place—and it may yet have a tortuous pathway to the Senate. I support the amendment moved by the member for Ballarat. If it is agreed to, it will give this bill and the research facility it proposes to fund a chance of surviving in the manner in which it was intended.

Good policy arises from a good idea but it requires that that good idea be subject to careful scrutiny, weighing up both the costs and the benefits of the proposal and importantly going through a process of consultation and reflection. This bill suffers from the lack of a careful deliberative process. There is a good idea at the heart of this bill—let me be very clear about that. It is an idea supported by all Labor members in this place. Unfortunately, that good idea—the establishment of a perpetual fund for health and medical research—is crippled by two major fatal. The first of those flaws, which has been identified by the member for Ballarat, is that it is taxing and cutting from the sick today to fund treatments for the future. That is the first fatal flaw at the heart of this bill. The second flaw is that the government proposed to establish a medical research fund—they promised to establish a medical research fund—modelled on the principles of the NHMRC. They promised a medical research fund but the bill delivers a ministerial slush fund. It has none of the checks and balances built into the National Health and Medical Research Council, and unless those flaws are dealt with we are going to be delivering not a medical research fund—with all the checks and balances, peer review, scientific assessment, merit-based application and approval for funding—but a ministerial slush fund run by ministerial discretion. I will have more to say about that.

As the member for Wakefield, who is with me in the chamber, knows, Labor has been a big supporter of medical research. Indeed, in our last term of government we delivered over $3.5 billion in health and medical research funding. This included over $700 million to build and upgrade health and medical research facilities right around the country. We also commissioned the McKeon strategic review into health and medical research to set up a 10-year strategic view about what we needed to do to improve the levels of public and private investment in medical and health research. The review made it very clear that a levy like the Abbott government's proposed GP tax is not the ideal or, indeed, the preferred model on which to fund a medical research endowment fund such as is proposed. That is probably why many in the medical and health research community have had such severe misgivings about the government's proposal. They, like Labor, support the establishment of a national endowment fund for medical and health research. But they are deeply concerned about the proposition, as was the McKeon strategic review, to tax the people who are sick today to fund the treatments of the future. What the government has set out to do from the very beginning is to fund medical research on the basis of taxing and withdrawing funds from the people who need it today to fund treatments in the future.

It was George Bernard Shaw who famously said:

A government that robs Peter to pay Paul can always depend on the support of Paul.

But we stand here today to draw attention to the problems of robbing Peter. I want to put on the record some of the cuts that have been made to support funds going into the health and medical research fund. More than half a billion dollars has been cut from public dental health programs. Billions of dollars has been cut from public hospital funding. Almost $400 million has been cut from preventive health programs. It is absolutely scandalous that $160 million has been cut from Aboriginal and Torres Strait Islander health programs. Hundreds of millions of dollars has been cut from the health flexible funds that are supporting vital drug and alcohol rehabilitation services, important preventive health services and important work undertaken by organisations like the Heart Foundation, the Cancer Council, the Consumer Health Forum, the Public Health Association and countless other organisations.

We have also had cuts to veterans' dental and allied health programs, to the Healthy Kids Check program, to electronic record funding and to the Pharmaceutical Benefits Scheme. This includes a proposal that is still before the Senate—members of the government are demanding, as we speak, that the Labor opposition pass it through the Senate—which would see a cost increase of $5 for all general patients and 80c for concessional patients for drugs listed on the Pharmaceutical Benefits Scheme. They are demanding that we pass these bills in the Senate. At the same, they are bragging that they have locked up an agreement with the pharmacies which is going to cost the government less in terms of the PBS bill. So they are paying the pharmaceutical companies less, but charging the Australian consumer more, for goods listed on the PBS.

Wherever you look—from preventive health programs, to Aboriginal and Torres Strait Islander health programs and health and hospital funding to the states—there is evidence of the government robbing Peter to pay Paul and then saying we have got to back them on this. Labor will not support this. We will not support an unconscionable attempt to round up the health and scientific research community, put them in a headlock and say, 'Unless you support these egregious attacks on health and hospital funding in this country, you're not going to get the much-needed medical research that you all desire.' Labor, which stands on its record of over $3 billion worth of investment in medical research, says medical research should be funded to improve Australians' health. The government sees the reverse—that Australia's health budget should be cut to fund medical research.

I want to say something about the second fatal flaw. I describe this fund as having the potential to be a ministerial slush fund. Some might say this is a bit harsh, a bit uncharitable. But let me explain why. When the government announced this with all the fanfare back in May 2014, we were told that the Medical Research Future Fund earnings would be directed to medical research, primarily by boosting funding for the National Health and Medical Research Council.

With all the misgivings I have already laid out about the funding of this fund and the source of those funds, a proposition based on that could enjoy our support because we know the basis on which funds are distributed by the National Health and Medical Research Council. It is at arm's length from government. It is a process which is overseen by the medical and scientific research community. Applications are carefully weighed on their merit through a tortuous process—some would argue too tortuous. There is a rigorous scientific process of assessment for all of the applications that go to the NHMRC. If the government were proposing that this fund would just act as a new source of finance for the NHMRC, we would have misgivings about the way they were funding it. But we would be totally on board with the way they propose to distribute these funds. This would be through a peer reviewed, rigorous, scientific, arms-length process that does not have the government or a minister—and we have seen some pretty ordinary health ministers in this parliament—handing out so-called research funds to pet projects in marginal seats. We have heard all sorts of contributions in this parliament and in previous parliaments which, if characterised in the right way, might be able to be dressed up as a health concern warranting further research. I congratulate the government and the NHMRC for the excellent work they have done in exposing the pseudo science the lies behind the alleged health practice of homeopathy.

Mr Champion: Doesn't that work?

Mr STEPHEN JONES: Member for Wakefield, we know that no science lies behind homeopathy. The NHMRC has looked at this and has said there should be no government support for this alleged health practice. We can just imagine if a well-organised group got behind a member in a particular seat and put a proposition to a minister about the sorts of pressures that could be brought to bear on a minister to fund perhaps research, to gainsay the claims that are being made about homeopathy. Everything from fluoride research to people like the current Treasurer, who quivers every time he drives past Lake George and sees windmills on the horizon. Are these the sorts of projects that the fund is going to fund? Some might say I am using extreme or alarmist examples but I use this as a mechanism to point out the second fatal flaw at the heart of this bill. It is not putting in place an arm's-length process which enables research funds to be distributed on the basis of their scientific merit as approved and assessed by scientific piers. Yes the national interest should always be brought to bear but it should exist at arm's length from government.

The member for Ballarat has moved some important amendments to the bill before the House today. I support them. I know in his contribution the member for Wakefield will be supporting them and indeed all Labor members of the House will be supporting the propositions. We do so saying yes, of course, we support the excellent research being done by our national health and scientific institutions such as the Garvan Institute, which I visited recently, which is doing world-leading research in gene mapping and the therapies and science that can be brought to bear in that area. I have mentioned only one or two. There are numerous world-class research institutes. They deserve— (Time expired)

Mr VARVARIS (Barton) (10:40): It gives me great pleasure to speak on the Medical Research Future Fund Bill 2015. As the federal member    for Barton, I thoroughly welcome the prospect of the Medical Research Future Fund as I know it will have an enormous, positive impact on the St George community. This bill is very much needed in this nation. Should the bill be passed, it will provide an enormous boost to our nation's medical research institutes and allow the best and brightest of our medical researchers to find the needed cures for diseases. Not only will it boost research in Australia but also it will foster growth in this area that is desperately needed not only for our citizens but also for millions of others around the world.

As a nation, we may be an island the furthest away from other First World nations, but we have proven time and again that we have the capacity to achieve amazing milestones that is the envy of the world. We are the nation that invented Wi-Fi, Aerogard, polymer banknotes, extended-wear soft contact lenses, and Relenza—a broad-spectrum flu drug that is the best in the world. Innovation and knowledge is what drives research and development in Australia and we believe nothing is off limits. That is why this side of the House is absolutely committed to ensuring our research foundations and institutes are provided the resources to enrich our communities' health care.

We have reached a critical time in society where our rapidly ageing population is living longer but not always healthier. Many diseases such as cancer, dementia and heart disease are on the rise, often causing a deterioration of the quality of life for those affected. Without mentioning the sheer cost this means to our health services and sector, essentially it means that people are often spending the better part of their lives riddled with disease, suffering and in pain, where they should be enjoying life with family or doing activities they enjoy. While it is important that we have a robust healthcare system to look after those who need it, it must also be met with research so that we can put a stop to diseases and ailments, particularly those which may be preventable.

This side of the House is ensuring the best and brightest of Australian medical researchers remain at the forefront of developing cures which will actively improve the lives of Australians. I know that in Barton this is a priority concern for my residents, many of whom are ageing and want to live out their retirement doing the things they love, whether spending time with family, catching up with friends, playing lawn bowels or social group activities, as opposed to stays in hospital and never-ending visits to doctors. Establishing the Medical Research Future Fund, starting on 1August this year, will create the biggest endowment fund of this type in the world. It will allow for a systematic funding model that will ensure we continue to foster renowned medical research and development projects and attract and retain the best and brightest in the medical field, so that we can provide Australians with the treatments and cures needed.

This bill will ensure the fund can receive an initial contribution of $1billion from the Health and Hospitals Fund. From 2015-16, the net earnings from the fund will provide a permanent revenue stream, mainly to the National Health and Medical Research Council. In addition, the estimated value of savings from the Health portfolio will be contributed until the fund reaches a target capital level of $20 billion, projected to be in 2019-20. The fund will distribute around $1 billion a year into medical research from 2022-23. This is an extraordinary achievement for our medical research sector, and I would hope that both sides of the House join together in ensuring this can pass so it can commence on 1 August this year.

As I mentioned earlier, in my electorate of Barton medical research and health care is a top priority for many of my constituents. Whilst we have excellent facilities in the St George region—including St George Hospital, St George Private Hospital and Calvary Hospital, which actively service those in the southern suburbs of Sydney, and provide vital health care in the aftermath of injury, disease or ailment—the St George & Sutherland Medical Research Foundation cannot be overlooked with regard to their vital contributions. I have had the pleasure of having met Peter Christopher, the chief executive officer, many times in the past to discuss how we can work together to deliver the needs of the community. Peter oversees the operations of the research foundation to raise funds and increase awareness of the vital work of medical researchers at the St George and Sutherland hospitals.

Recently, Peter and I had the great pleasure of meeting with the Minister for Health, the Hon. Sussan Ley, in my Barton office, who listened to the key members of the foundation tell what they have achieved and what plans they have to accomplish even more in the area of medical research. Of course, their visions cannot be turned into reality without funding.

One of those visions includes a plan for a national centre for research into ageing and chronic care in the St George and Sutherland shire. This will be the first of its kind in Australia, and, importantly, this is the right place for integrated care, because the region has an ageing population, and 30 per cent of those at St George Hospital receiving treatment are in the ageing category, and the core focus of this centre would be research into healthy ageing. Furthermore, this aligns with the federal government's release of its Intergenerational report, which addresses the issue of an ageing population and the implications for the cost of health care.

The chair of the foundation, Professor John Edmonds, has also indicated that he wants the St George region to be at the forefront of research into integrated health care, which works towards keeping people out of hospital and cared for in their homes. Currently, an integrated care program exists in the shire and has achieved outstanding results. Whilst the centre is based locally, it will have national benefits. I support the foundation because research will raise the bar at our hospitals. It will increase national benchmarks that affect all Australians. The region should have the best medical care and facilities available to it, and the plans for the centre are vital for this to happen.

The foundation was created in 2007 after an active group of senior doctors at St George Hospital decided to establish an independent body for the purposes of funding and promoting the medical research community. After both the local community and St George Bank pitched in to assist, the body transformed from a dream to a reality.

The St George & Sutherland Medical Research Foundation consists of a board with senior medical staff and business leaders, and the Scientific Advisory Committee, and nurtures active collaboration between the St George and Sutherland hospitals. I want to draw attention to this collaboration, which is unique and vital to the achievements of the foundation. The collaboration between the research institute and the hospitals has actively fostered a growing research culture that contributes consistently to improved clinical outcomes.

With such positive research and results, the foundation itself was able to provide grants for research between 2007 and 2013, something that community partnerships with St George Bank and Ramsay Health Care have allowed. Some of the research areas include immunology, infectious disease and sexual health, colonic motility, appendicitis and intestinal inflammation, gastrointestinal cancer and so forth. These are just some of the studies the foundation has undertaken, through its specialists, as part of their vision for a healthier future for all Australians.

The Medical Research Future Fund is a solid investment into facilities such as the foundation which will be managed by the Future Fund Board of Guardians, so that there can be maximised returns over the long term. This is important, as the future of our medical researchers is about ensuring funding is available to support their work.

Today's bill ensures that the Medical Research Future Fund will be established as a dedicated investment channel that provides a secure revenue stream to be used for medical research and medical innovation. By allowing for a secure revenue stream, institutes like the medical research foundation will have opportunities to secure additional funding for current and future projects, and this means that they will be one step closer to finding the cures and treatments for diseases that affect so many Australians.

The establishment of the research future fund provides a much-needed gateway for other research institutes and foundations to plan for medical research and development—foundations like the Gynaecological Cancer Foundation, whose launch I attended last week. This reaffirms why this bill today is so vital. Every two hours in Australia, a woman is diagnosed with gynaecological cancer. Statistics of this kind are unacceptable, given that we have progressed so much in our nation. Yet we have been unable to find a definitive cure to date, with many women being made aware of the cancer spreading through their body only once it is too late. Again, funding for medical research is what is needed for key breakthroughs, so that women have the opportunity to detect warning signs early on. Currently, women often mistake symptoms of gynaecological cancer for something thought to be less significant, or symptoms evade current forms of blood testing. The foundation, which normally relies on private and corporate donations, now has an opportunity through the fund to allow for increased levels of medical research.

Today's bill is an important turning point in our nation. The bill is about providing for constructive methods and strategies by which money can be raised and distributed for this vital sector that helps save lives through treatments and cures. Without a secure revenue stream, we cannot continue the calibre of medical research taking place in Australia, and the health of our citizens will worsen.

We must ensure that the best and brightest talents in medical research will continue to remain in Australia. We must reward innovation and knowledge with appropriate allocation of resources so that the vital role they play in our health sector continues.

Medical research underpins the health system of our future, and without an appropriate revenue stream we cannot fund new research or add to existing research. The Medical Research Future Fund will ensure that we keep our promise when it comes to maintaining health investment while delivering a sustainable health scheme into the future.

We want to ensure that people who are living for longer are doing so with good quality of life, not spending their later years in hospitals or housebound. The Medical Research Future Fund Bill is a measured step in providing for the future of medical research in Australia. It will ensure we retain the best talent in the industry and find key breakthroughs in diseases and ailments that affect so many Australians. I commend this bill to the House.

Mr CHAMPION (Wakefield) (10:52): I suppose it is a sad indictment on this government that they have taken what is a bipartisan issue—medical research, something that enjoyed broad support in the community; how could it not, given all the important things that are done by our research community and the outstanding breakthroughs that they make and the hard work that they do, that we all benefit from?—but have presented a bill to the House which, sadly, after their 2014 budget, turns this issue somewhat into a partisan one. The first way they did that, as the member for Throsby said, was by robbing Peter to pay Paul. That is, they are cutting from sick people today to fund research into the future. And we know how they were cutting, because this fund was originally linked to the first iteration of the GP tax, which was a $7 co-payment, not just when you visited the doctor but when you got a blood test, when you got a scan or when you returned to the doctor. And, as I have said to the House many times before, the people who were most at risk of that $7 GP tax were people with asthma, diabetes or some other chronic health condition. I have had asthma, so I know just how desperate a problem that can be. But if you do not go to see your GP you will only make that chronic condition worse. So, we saw the $7 co-payment morph into four different variations of that, until we got to the current iteration of that co-payment. And now, as described in the Sydney Morning Herald, on page 13:

'Co-payment by stealth' could push up costs of GP trips, says Owler

That article outlines Professor Brian Owler talking about how the cuts to Medicare rebates to doctors were going to implement a co-payment by stealth.

We know what the original co-payment would have done. It would have stopped a million visits to the doctor in its first year of operation and half a million visits the year after. In Senate estimates this week it was revealed that no modelling had been done on a cut of Medicare rebates to GPs, no modelling had been done about the effect that would have on people going to the doctor. That can have very serious consequences for health care in our community—in particular, for people with chronic conditions—and it will only cost the community more, in higher hospital costs, because if you are asthmatic and you do not see your GP enough you will end up in an emergency department. That is the worst-case scenario. And if you are diabetic and you do not see the GP enough, and even if you do not see a podiatrist enough, you can end up with very serious health implications, including amputation of limbs.

We know that primary care, which of course begins with our relationship with our general practitioner, is essential to a well-run health system. So, we know that many of the savings that are going into this fund are funded in a regressive way in terms of our health care—regressive for the consumers and regressive for the system in that we will see higher impacts on hospital costs later on. The problem with this is that they are not just cutting from the primary end. We had $57 billion worth of cuts to our health and education systems in the last budget. We had an additional $2 billion taken out of health in this budget, including from things like the Child Dental Benefits Schedule and from preventive health, including drug and alcohol counselling—which is odd for a government that is running ads about the ice epidemic and has backbenchers going out into the community holding forums about the ice epidemic. It is odd to then cut drug and alcohol counselling and drug and alcohol services in the community. We know these cuts are going on, and we know their impact will be felt today, tomorrow, next month and next year, compounding cuts as the capacity of health services in the community to respond to these very serious challenges is reduced. Once those networks and workers and community services disperse, it is very hard and very costly to put them back together. So, these cuts are a particularly stupid way of going about things.

We all support medical research. As the member for Throsby said, we put over $3 billion into it, and we largely operated within the framework of the NHMRC, which governments previously have done. I cannot remember it being an issue of controversy in my entire time in this parliament. I am sure that the Howard government, for all its sins, was entirely uncontroversial in this area as well. It was broadly an area of bipartisanship. Yet here we have no attempt to reach across the aisle and, importantly, no attempt to consult with the medical research community. And the announcement of this fund and of the way they were funding it came out of the blue. So I think there is an issue of consultation and productivity in the setting up of this fund. It was supposed to be set up by 1 January this year, and now we have backbenchers earnestly asking us about it, hoping it will begin by 1 August, hoping that this bill will pass the House. Yet in last year's budget this bill was meant to be in operation. The legislation was meant to be passed, and this fund was meant to be in operation by 1 January this year. So, there is an issue of productivity and the intentions of this government in putting together this fund. Even if you push aside the manner of funding it—the cuts, the GP tax—and say, 'We're setting up this fund,' there is the issue of the consultation they had before the time with members of the council and with other medical research organisations. As well as the issue of consultation, there is the productivity of actually getting the fund set up. That is a very important issue for us to consider.

The second issue that we have really got to think about is the issue of accounting: why have they set up this fund in the way they have? Ross Gittins has pointed out that one of the aspects of this fund is that it is a saving to the budget bottom line. This is what he is quoted as saying:

The saving to the budget bottom line is immediate, though the change means the saving will be reduced by a fraction by the increased spending on research. Like many budget fiddles, this one relies on exploiting loopholes in the definition of the bottom line, the 'underlying cash deficit'.

One of the attractions of this fund that the government does not talk about is that it improves their budget bottom line. It takes a whole lot of money out of health and puts it in a locked box—which is of benefit to the budget but, at least initially, it is not of great benefit to researchers. One of the savings of this fund comes from taking a billion dollars out of the health and hospitals fund and rolling it into this medical research fund. That health and hospitals fund was set up to fund health and hospitals, not research, and we have got the rolling of a billion dollars into that fund.

Another concern we have with this bill revolves around accountability and oversight. It is an important consideration because we know that there is anxiety in the community and, I think, in the medical research community about the architecture and infrastructure around medical research. Professor Warwick Anderson, a former CEO of the National Health and Medical Research Council, said on 15 April of this year about the fund:

I think the researchers out there and in the audience today have to keep an eye on this so the public benefit from this big investment, and the public will benefit best if the public disbursement is peer reviewed.

That is a very, very important consideration. We know that we have had this infrastructure, the NHMRC, disbursing some $700 million in grants every year. They have six principal committees: a health and ethics committee; a research committee; an embryo research licensing committee; a human genetics advisory committee; a health care committee; and a prevention and community health committee. We know they have already got an infrastructure set up to disburse funds which is trusted by this House, trusted by governments and, most importantly, trusted by the community. That is important because we do not want this fund of $20 billion left to the vagaries of a minister, a backbench or political concerns. We might not get the nightmare scenario the member for Throsby spoke of, but we might just have the normal operation of politics being applied: lobby groups, interest groups and the media. Sometimes this is a good thing for the House. Sometimes it focus our minds on areas of public concern. But sometimes that means where you get the best return for your money might not be where the public concern is or it might not be in the area of most pressing need. Public perceptions are often different from the real, or evidence based, priorities, so we have to be very, very careful about that. One of the things about having this infrastructure, the National Health and Medical Research Council, is that it applies peer review, science and rigour to the way we consider these things. And it is trusted.

These are the reasons for our amendments and the cause of our concerns. As I said before, we do not support the way this government has gone about funding this fund—with a GP tax of $7 every time you go to a GP, every time you go for a scan, every time you go for a blood test. That still remains their intention, make no mistake about it; they just could not get it through the other place. So what the government have resorted to is a brutal cut to the Medicare rebates for GPs—and we will see the consequences of that—even though they have not had the courage to model that.

Mr Frydenberg: You would have loved to have had the idea of a medical research fund!

Mr CHAMPION: Labor has rejected GP taxes and co-payments before, Assistant Treasurer. We certainly reject the cuts to health, to hospitals, to doctors and to nurses in the community. How could cutting into primary care, cutting into GPs—stopping asthmatics, diabetics and people with chronic diseases from going to their GP—possibly be sensible? It is a silly thing to do, because they end up in hospitals—and this government has cut hospitals as well. The manner of funding this fund has been manifestly unfair. Whatever good can come from this fund—and we hope a lot of good does come from it—will be mired in the misfortune of other people who are losing out on their health care today.

Mr BROAD (Mallee) (11:06): The very nature of being human is that we are finite, and one of the consequences of that is that we do suffer from illness and only have a limited time here on earth. But if there is one thing through which the human race has enhanced itself and expanded its life opportunities, it is medical research; it has been as a result of learning from great scientists, great researchers. Many of those researchers do so because of a belief in how they are contributing to humanity not because of money that they get from doing the research.

I think back to Australia's contribution to medical research. We are but a small population of 21 million people in a massive world of, I believe, seven billion people. There have been many great things that Australians have done because Australians, by their very nature, are innovative. There used to be a saying: 'Give an Australian a piece of fencing wire and they can fix anything', and that is good. I think about the great discovery of penicillin. We take it for granted that we can actually sew up the wound and then provide penicillin so that that person can recover. There are things that people would have traditionally died from had it not been for the Australian who discovered penicillin. We simply would not have seen people live who would otherwise have died. There is also the bionic ear, and burns specialists where we have seen great doctors who have worked on burns, and there is also the recent announcement about melanoma treatment.

We do need a fund. We do need to give some surety to those who are considering research in Australia that there is hypothecated money set aside. It is true that bipartisanship exists in this parliament to put money out of every year's budget into research. No-one is talking about that going away. The attraction of having a fund affords us the opportunity to be able to say with real legitimacy to a researcher, 'You can continue your research in Australia. You can continue to expand something that you think might be on the cusp of discovery, and you can develop it here'. So many times one of the great criticisms of Australian research in many fields of science, in many fields of technology, is that we have not had the mechanism to keep that research in Australia, and we have seen that research go offshore. That is sometimes okay. It is okay if the research goes offshore and still benefits the human race. But it wouldn't it be nice to see that the ingenuity of Australians is well rewarded and that there is surety for them to stay here and invest through medical research because we have a hypothecated fund that will be as much as $20 billion which we can put aside to assist medical research.

In my electorate one of the things that is raised with me is Parkinson's. There is no cure for Parkinson's. We have a Parkinson's support nurse and we have a very active Parkinson's group, but there is no cure for it. Multiple sclerosis is another insidious disease where people can have a fast or slow deterioration, and we still do not know how we can minimise that. Type 1 diabetes of our children has been raised with me several times and how much type 1 diabetes impacts a family when a young child gets it. There is a diabetes support group in Birchip, a little country town, and the people are really muscled together and stand by one another to support one another through that disease. If we could have more research perhaps, just perhaps, we can minimise the effect on those families and on those young children.

We have come a long way. I remember doing biology in year 12 back in 1993—I am showing my age—and we watched a video on open heart surgery, bypass surgery. I remember thinking that it was incredible. Here was the bypass surgery, which was very much in the early days, and expectancy of life and survivability after that was a little bit rare. Now, when I look at my family, I have a dad who has what he calls the 'zipper' on his chest, and he has had a three-way bypass. Now they just wheel them in, and the surgery adds years and years of productive capacity and years and years of life expectancy. We have come so far.

We can argue every day about how we fund the research, and there were some suggestions in the previous budget that were unpopular with the Australian people, and we have removed those suggestions. That is what a government does if a government listens. The most important thing is that we do believe that the health of Australians is important. I think everyone in this parliament from both sides believe that. We do believe that medical research and those researchers who conduct that research do it out of a sense of passion not out of a sense of financial reward. We do believe that we need to stand by them and create an incentive to attract that research into Australia.

I was really proud to see a Medical Research Future Fund being announced by our side whilst we are in government. In many years to come, when we are retired from the parliament and are back in the workforce or back into whatever we do, we will look back and say this is something we were proud that we set up and that it will reap long-term yields and benefits for the Australian people. Those who spoke about some of the concerns about the fund will say, 'Well, on balance, it actually was a good reform'. So this is a really good thing for the Australian people. I am proud to be able to speak on it this morning, and I commend the parliament for bringing this up and look forward to the health benefits that will come out of this fund.

Mr NEUMANN (Blair) (11:14): I rise to speak on the Medical Research Future Fund Bill 2015 and related bill. You will see a difference between the contributions on this side of the chamber and those on the government side of the chamber during this debate. On the government side of the chamber they will talk in glowing terms and platitudes about how wonderful medical research is. And who can deny that? It is a very good thing. Labor in government invested a record amount of money in medical research. It is a very good thing. On this side of the chamber we will agree with them in relation to that. But on this side of the chamber we will criticise the process by which this legislation came to this place and we will criticise what they are actually establishing and how it will operate—so there will be no forensic or detailed speeches in relation to what this fund will look like and how it will eventually be carried into effect—as the shadow health spokesperson, the shadow assistant health spokesperson and the shadow parliamentary secretary did, and as I will do now.

When this particular bill was conceived, I have to say it resembled something you might see in a conversation between Jim Hacker and Sir Humphrey Appleby in a Yes Minister episode, or, indeed, something you could imagine in the bowels of the Prime Minister's policy and media unit in the episodes of The Hollowmen. I am really worrying and wondering if any government spokesperson or member will actually use the phrase 'future-proofing medical research', as we heard in that infamous episode of The Hollowmen. When this fund was announced it caught just about everyone off guard. Even the Commonwealth Chief Scientist, Professor Ian Chubb, told the ABC that the government had not even bothered to consult him beforehand. If the government spent months laying the groundwork for what the Treasurer would describe as the biggest medical research endowment fund in the world, you would imagine he would have consulted his own Chief Scientist. But, no, they did not have a science minister at the time in the government, and they must have misplaced to the Chief Scientist's telephone number, or even his mobile number. The reality is the government has not spent any time planning for its Medical Research Future Fund. It had not consulted stakeholders. Apparently it was kept inside the bowels of the government and it would seem that the fund was cooked up in Treasury and Finance without the input of the Department of Health, and certainly without the input of the NHMRC or any other important stakeholders who you would think had some interest in medical research.

It was announced in the 2014-15 budget to detract from the cavalcade of cuts and broken promises that that particular budget perpetrated upon the Australian public and our health system. The government was amazed that there was a lukewarm reaction to the billions of dollars it said it would put into this future fund, because what they did was slash funding for public hospitals, cut $400 million from preventative health funding, cut about $165 million from Indigenous health funding, cut half a billion dollars from the public dental programs and also made cuts to drug and alcohol rehabilitation services. Curiously, after I leave this chamber I am going to a House of Representatives committee meeting on Indigenous affairs for an inquiry that looks into the harmful effects of alcohol in Indigenous communities. And yet, they cut that funding from Indigenous health programs and they cut the funding for drug and alcohol rehabilitation services.

Any residual enthusiasm for the fund evaporated immediately when people realised the impact that the Abbott government's GP tax would have on their health system and on their family and individual health. Australians are unlikely to fawn over a fund when they are required to put in either seven dollars or five dollars each time they visit the doctor or take their sick kids to the doctor. In an electorate like my electorate of Blair, where the bulk-billing rates are currently at about 92.2 per cent, you would not expect people to be bashing on my electorate door in Brassall Shopping Centre in Ipswich saying, 'Gee, Shane, I think it's about time you actually got on board with this medical future fund. It's the right thing to do.'

I have to tell you that I am in the middle of doing my country shows in my electorate—it is a regional and rural electorate—and I can tell you, having been there till 9 o'clock at night for two nights and 6 o'clock the next night, and doing country shows in places like Lowood and Esk, no-one has come up to me and said, 'Gee, it's great that they have cut all this funding from health and hospitals so they can put it into a future medical research fund. Gee, that is a good idea, Shane, you should be voting for that in parliament. Isn't that a great idea!'

This Medical Research Future Fund had a pretty rough start, as I said before. Never mind that they slashed all that funding. Never mind that they failed to consult. What they have done in this legislation bears almost no resemblance to what they talked about in their glossies or to the wonderful glowing terms used by the Prime Minister, the Minister for Health and the Treasurer in what they had to say about this Medical Research Future Fund.

What do we see in the legislation? We see a stark lack of proper governance processes and procedures. There is no evidence at all that the government put any policy work in place when they established this fund. It does not even live up to the government's own principles, declarations and descriptions. There is no peer review whatsoever. There is no independent oversight at all. It does not look like they have considered this. It does not look well crafted and it does not look consistent with the public policy announcements they made earlier. It is more evidence of a government in chaos and confusion in terms of decision making.

Let us have a look at what the legislation says. The bill states that the health minister could—I said 'could'—request the National Health and Medical Research Council, the NHMRC, to manage fund disbursements, but it does not obligate the minister to do so. So it is possible, if not probable, that the NHMRC will be bypassed by the minister. The minister can delegate responsibility for disbursements to institutions such as universities or medical research institutes. But the minister responsible, whoever he or she may be at some stage in the future, is not required to do so.

The processes described in the bills provide little oversight of the disbursements from the fund, a fund initially to have $13.9 billion and to grow to $20 billion. In its current form, any government could fund any project, regardless of merit, provided that project meets the purpose of the legislation. That is why Labor is seeking amendments in relation to it. Projects can be funded without oversight from an independent advisory panel. There was supposed to be one. Where is it in the legislation? There is no peer review process and no obligation to consult the NHMRC. The government has claimed that the advisory board will provide advice on the disbursal of the funds. If that were so and if it were integral to the efficacy and the effectiveness and, indeed, the efficiency of the legislation, if it gave it substance and credibility, the advisory board would be in the legislation. But it is not.

Another big concern is that any government in the future can direct funds itself for its own political purposes. It could be that some future government of either political persuasion could use this fund as a slush fund to assist in marginal seat campaigning. It is possible, under the way this legislation establishes this medical research fund. These bills enable the finance minister to credit funds to the COAG reform fund for making payments to the states or territories for expenditure on medical research or medical innovation. The finance minister can also direct credits to the fund's health special account to grant financial assistance to medical research institutes, not-for-profit organisations, universities and corporations.

However, this is consistent neither with the government's own claims about how the fund would operate nor with how it was ever envisaged to work as declared by the government when they took us all by surprise and established this fund. When the government announced the fund it promised:

Fund earnings will be directed to medical research, primarily by boosting funding for the National Health and Medical Research Council (NHMRC).

The bills before the chamber do not reflect that intention. Another concern is a very broad definition of 'medical research' and 'medical innovation' in the bills. There remains this lack of clarity about which savings have gone into the fund so far. Are those savings invested from those in the 2014-15 budget? We do not know. It is going to grow to $20 billion, and then the earnings from this fund will be disbursed for whatever reason the government wishes, lacking fundamental governance structures in the way the government said it would not.

The legislation is simply ripe for pork-barrelling. You can just imagine it happening, and you can just imagine the ANAO doing a report at some future time in relation to this, just as the regional rorts of the Howard government were castigated by the Auditor-General after 2007. It is deeply concerning the way this legislation was—

The DEPUTY SPEAKER ( Mr Mitchell ): Does the member for Bass wish to raise a point of order?

Mr Nikolic: Deputy Speaker, under standing order 90, members' motives cannot be impugned. I believe that the honourable member is impugning motives with terms like 'pork-barrelling' and other nonsensical terms of that nature.

The DEPUTY SPEAKER: There is no point of order. The member for Bass will resume his seat. The member for Blair will continue.

Mr NEUMANN: One wonders whether the Audit Office has ever signed off in relation to this. A government ever keen to exploit the politics of this could simply disburse the money the way it wants. This government, clearly, is work-shy when it comes to this particular legislation. It has not done the nitty-gritty, hard policy work, and it has not set up this fund in the truly bipartisan way that it should have. Behind the scenes, it is quite clear from the way it has been done that the Prime Minister's office has made another captain's call.

No-one in this place would dispute the fundamental importance of health and medical research. Scientific innovation and inspiration, at home or abroad, has improved and saved the lives of many we love and cherish, and no political party has ever been more supportive of health and medical research in Australia than Labor. We invested more than $3.5 billion in such research when we were last in government, including more than $700 million to build and upgrade health and medical research facilities across the country. When we were in government, we did consult with the health and medical research sector, the Department of Health and the Chief Scientist. We always had a science minister, and had the phone number of and knew how to contact the Chief Scientist.

We do not believe in any way, shape or form that you should fund the cures of tomorrow at the expense of those who are sick today. We should not. That is the problem with this legislation, and that is the problem with the way this government has established this fund. For that reason, I support the amendments as proposed by the Shadow Minister for Health.

Dr GILLESPIE (Lyne) (11:28): Before I speak on the Medical Research Future Fund Bill 2015 and the Medical Research Future Fund (Consequential Amendments) Bill 2015, I just cannot let a few of the earlier comments go through to the keeper. Allusions to Yes Minister machinations—not funding medical research because people currently ill are missing out on medication—is such a misconstruction of what is essentially a great innovation. Also, to call the Medical Research Future Fund a potential pork-barrelling fund is really quite offensive. It is a case of the pot calling the kettle black. If the truth be known, the Health and Hospitals Fund, which was treated as a capital works budget—and some may allege that there was pork-barrelling in that—was actually set up as an endowment fund by the Howard government. It was rolled over and given a new name. Instead of acting as an endowment fund should and delivering projects out of the dividends, the capital was chewed up extensively. This is exactly what we are trying not to do with the Medical Research Future Fund.

This will be an endowment fund. For those who do not understand what that means—and there are some people even in the other house who appear not to have understood this when the legislation first came up—an endowment fund delivers dividends, and it is the dividends that will fund the medical research and innovations so that there is something there in perpetuity. Long after any one minister, parliamentarian or Prime Minister has come and gone, it will be there in perpetuity, like many of the other great endowment funds that fund research around the world. It will be created by funds from the Health and Hospitals Fund being rolled over into the Medical Research Future Fund, and it will be able to be distributed to a range of entities, including universities, not-for-profit research bodies, Commonwealth bodies such as the CSIRO, state research facilities, individuals and corporate entities. There are many research and innovative bodies around the country that will be able to access these funds.

In 2015-16, because there is potentially only a small amount going into the fund, it will take a long time to grow the fund up to its eventual level of $20 billion. We have not put a time frame on it because a lot of the initiatives and efficiencies that will drive savings will remain in the health system and fund research. If we were to follow the previous speaker in criticising medical research—if we had followed that advice for the last 30 or 40 years—we would still be using leeches, humours and cupping. Medical research has got us to where we are now.

There are a range of appropriation mechanisms. The fund will utilise the Future Fund's financial management skills, but the costs to the Future Fund will be appropriated on a pro rata basis. This will not be subsidising other functions of the Commonwealth government's Future Fund. The intention is that it will have an advisory board of up to eight eminent people with particular skills in innovation, research and policy—all the skills that you would need for appropriate governance of such a fund. It will provide strategic advice and direction, but the actual nuts and bolts of the research covers a whole span of possibilities: laboratory research, clinical trials, research scholarships and fellowships, commercialisation of new innovations and drugs, translational research, and investment in research infrastructure and facilities. It will utilise the NHMRC, which has enormous skills that have been developed over many decades in assessing individual research projects. It would be crazy not to utilise its skills, so the intention is to do so.

It is a separate fund to the medical research endowment account as the Medical Research Future Fund and the NHMRC are destined to be separate bodies. So let me reassure you if you are in any of the august, well-established and world-renowned research institutions in Australia like the Hunter Medical Research Institute just down the road from my electorate. In my own electorate, much clinical research goes on at the North Coast Cancer Institute, directed by august physicians such as Stephen Begbie over many years. Be reassured if you are at the Queensland medical research institute or other bodies in Brisbane, at the Garvan Institute or the Millennium in Sydney, at the Children's Medical Research Institute, the Murdoch Children's Research Institute, the Harry Perkins Institute of Medical Research, Flinders University or Walter and Eliza Hall Institute of Medical Research—the list goes on and on. Our great research universities have many research capabilities. Be reassured if you have interest in oncology and cancers, heart disease, vascular disease or diabetes, like the work being done by the Baker IDI institute on vascular disease and diabetes—very common diseases. All the advances that come out of research will have material benefit for generations to come. It is a constant process that has to be continued around the world, and Australia really fights above its weight. Be reassured if your research is in kidney disease, neuro-degenerative diseases like Parkinson's disease or multiple sclerosis, or genetics. There are so many fields of endeavour in medical research because there is such a plethora of illnesses that afflict the human condition. We have a great record of achievement in bionic ears, the colony-stimulating factors that are used in leukaemia treatment and kidney disease, sleep apnoea, foetal ultrasound, SIDS and spina bifida. The list just goes on—there are too many for me to mention—but this fund will create great a base for the medical research body in Australia.

Once the fund gets to $20 billion—I do not know how quickly it will get there—a five per cent return on that would be $1 billion a year. There are great innovators in medical research and in medical industries in Australia. Currently, we only allocate 0.75 per cent of our GDP towards medical research. If you compare us to our OECD partners like those in North America and Europe, we are contributing only 64 per cent of what they are putting in. So this will fill the gap and we will punch above our size and weight. For every dollar spent on research, it has been estimated that you get a health benefit of $2.17. For the 23,000 existing researchers around the country and the 40,000 people employed by the medicines industry, and for the millions of citizens of Australia and the world, I commend this bill to the House.

Mr GILES (Scullin) (11:37): I also rise to make a contribution to the debate on the Medical Research Future Fund Bill 2015 and the Medical Research Future Fund (Consequential Amendments) Bill 2015. I follow a very interesting contribution from the previous speaker, the member for Lyne. He spoke very effectively about some of the challenges Australia faces in the context of medical research within which this debate takes place; but, unfortunately, the issues that he addressed are not matters that are resolved by the legislation before this House, which is very disappointing.

These bills give effect, belatedly, to the government's commitment last year to set up a medical research fund. We on this side of the House have some significant concerns about supporting such a fund. The amendment moved by the shadow minister, the member for Ballarat, is intended to ensure that the fund meets its stated purpose. Presently, this cannot be said to be the case. There is more to be done if we are to ensure that Australia's world-class researchers have the support they need to secure our future health needs and to enable us to take full advantage of their discoveries through translation.

Over the last six months, I have been meeting and consulting with medical researchers around Australia, with my colleague and friend the member for Chisholm, to develop Labor's response to the challenges of supporting medical research. We have visited universities and medical research institutes and met concerned eminent people in the science and medical research community. I take this opportunity to thank all of those who engaged with the member for Chisholm and me. I recognise the extraordinary interest the sector showed in contributing to the debate on this issue and to informing our policy response on the challenges of securing Australia's medical research future. It is disappointing, of course, that the legislation before us evidences no such consultation—that the government has not availed itself of the extraordinary insight to be found across that profession.

As a Melburnian I take great pride in the work that is done in the Parkville precinct, around the Alfred and around the Monash Medical Centre. But it was striking to see the extraordinary, innovative and life-altering work that is taking place, as we speak, right around Australia in extraordinary facilities like the TRI in Brisbane, the Garvan Institute of Medical Research in Sydney and the SAHMRI in South Australia; and to see the important work that is being done in South Australia, in Adelaide, bringing together clinical practice, research and higher education to see the benefits that can be derived from those sorts of synergies—matters that are critical to advancing our medical research future, matters not touched on by this government as yet.

It was also very interesting to me to hear from medical researchers. It is one thing to hear from bodies engaged in medical research about the concerns they have about workforce development—concerns that would be alleviated by a future Labor government, which would address the deep concerns we have about science, technology, engineering and maths education—but it is quite another, and indeed affecting, to hear from researchers themselves, young researchers and midcareer researchers, who have an obvious passion and enormous capacity for their work but see great disincentives put in their path.

The previous speaker spoke about Australia's lamentable position compared to the OECD average in terms of funding medical research; and, to the extent that this fund goes some way towards turning that around, that is to be commended. But there is so much more to be done if we are to ensure that our best and brightest are applying their talents to securing Australia's future health needs.

These conversations I had over the last six months, these dozens of meetings, were a pleasure and a privilege, and they have shown me clearly what is at stake in this debate: the range of challenges in supporting medical research effectively in clinical practice, in universities and in our world-leading medical research institutes; the exciting opportunities that are there for us to harness to transform lives; and the ability to create good jobs of the future. This debate has also demonstrated once again the gulf between the rhetoric of the Abbott government and the reality when it comes to medical research.

In the more than a year since the Medical Research Future Fund was announced—to the surprise of just about everyone, including the sector—not much has happened. We recognise now that this fund was supposed to be up and running by 1 January of this year. That did not happen, of course. I do acknowledge one significant bit of progress, although not one that resulted from consultation on the part of the government: it is very pleasing to see the abandonment of the link between the GP tax and medical research. Labor and the community made the case, beyond argument, that the sick today should not pay for the health advances of the future. That is something that should be acknowledged in the course of this debate. But what can explain the delay in bringing this legislation forward? It certainly is not exhaustive engagement with the sector, as the bill and, indeed, the Treasurer's second reading speech demonstrate.

More generally, while it is one thing to provide a mechanism to deliver more money to medical research, it is quite another, clearly, to adequately support this critical sector. By way of contrast, let us think about the approach that Labor took in government. It commissioned the McKeon review, an exhaustive process of engagement which provided a 10-year plan for the sector, deeply anchored in first principles, which did not see medical research as something good in and of itself but tied investments in medical research to the health needs of Australians. Let us not forget about that work and let us keep working to that template, which continues to be very highly regarded in the sector.

I think it is worth mentioning, before touching on the details of the bill, the broader context of this debate. On the one hand we see a government that is engaged in the most savage cuts to the health budget, and on the other we look narrowly at the prism of medical research, where the NHMRC grants program is under extraordinary pressure. Something needs to be done. I touched, earlier, on the clear anxiety shown by young and mid-career researchers and the real fear that our best and brightest will be pushed away from this field, either into clinical practice or overseas.

Let's pause for a moment as we consider the legislation before the House, and consider the opportunity that is before us and that is open to the government. This fund is about two things—it is about putting more money into medical research but seemingly, unfortunately, not solely into research. More money for research, though, is a good thing. Equally importantly, we have an opportunity to try to do things differently. We cannot forget this. The challenge is not simply about providing more money to do the same things.

I want to talk briefly about three matters: what is in these bills; the concerns; and what is not in the legislation that is critical to supporting medical research in Australia's future. The substantive bill that is before us establishes the fund and special account for the purpose of distributing grants to states and territories, medical research institutes, universities and corporate Commonwealth entities or corporations. The breadth of this is the first concern we have. It also allocates some funding from the Health and Hospitals Fund to the Medical Research Future Fund—another concern. It provides some mechanisms for credits and debits from the fund and sets out the main purposes. These, like many elements of the bill, mirror our other nation-building funds. This is clearly an off-the-shelf product, not one that has been designed to be fit for its special purpose. The bill also sets out the investment policies for the fund and goes on to provide a mandate for the fund that includes the need to enhance the Commonwealth's ability to provide grants of financial assistance that support medical research and medical innovation. This definitional issue is another significant concern.

The consequential amendment bill provides for some amendments to a number of acts to facilitate the fact that the Future Fund will exist in the context of other funds being managed by the Future Fund, and makes amendments to reflect the abolition of the Health and Hospital Fund and certain other transitional amendments.

In terms of the substantive bill, we have to be very clear in recognising that one thing the bill does not do is fulfil the promise of the fund to direct fund earnings to medical research, primarily by boosting funding to the NHMRC. But there are wider issues of governance before us. The mechanisms for disbursements are drawn very broadly. This is not how we were led to believe the fund would work, and it is not consistent with those claims. The definition of medical research and medical innovation is very broad and goes way beyond the expectations of the sector and the wider Australian community. While there is a capacity within the bill for the effective delegation of responsibility for providing funding, this is completely discretionary, and that goes to the real risk that funding can be applied regardless of merit. This is an extraordinary thing to do when we think about the sorts of investments we are supposed to be supporting and the sort of rigor that the community—the scientific community, the medical community and the Australian community—are entitled to expect. This is the sort of rigor that we should be requiring through peer review processes. This is compounded by the absence of any mechanisms for independent oversight. The governance issues in this bill are shocking, and clearly demonstrate a failure to consult with the community and to consider how we can best provide for medical research. It is really concerning that, in the past year and a bit, the government has not constructed a fund model that is fit for purpose, even on the government's own terms. Let's leave aside these broader questions about the first principles we should be trying to fulfil through the legislation before us—it fails the test government set itself.

When we come to this debate about health and medical research, it is critical to acknowledge Labor's support for health and medical research through the funding commitments we made in government, and also through the work we did in commissioning the landmark McKeon review, which did provide and continues provide an effective long-term vision. The review is something that the minister, and indeed the government, should have regard for because it contains something that this government seems to be incapable of, and that is a clear and clearly articulated vision for the future of medical research—a vision for future wellbeing in Australia, and also a vision for the jobs of the future. It displays an appreciation of the need to break down the silos that continue to exist between clinical practice and research.

What is absent from the government is an understanding of policymaking in a considered and effective way that involves consultation, and the need to take on board the views of experts and all those affected. What is missing is an appreciation of the critical importance in dealing with the question of robust independent peer review in determining allocations. What is missing is any appreciation of striking a balance between supporting high-quality basic research, which is so important and something that we do very well, and building on our translational capacities. There is also no consideration of funding innovation and no consideration of the critical questions around workforce—these are questions that are compounded by the uncertainty caused by the government's radical higher education deregulatory agenda.

We have here an opportunity to offer certainty to young researchers. I read with interest an article in the Sydney Morning Herald by Louis Wang, one such young researcher, and someone excited by the announcement of this legislation and the establishment of the fund, but someone who I fear will be gravely disappointed when he sees what is actually before the parliament.

Supporting medical research is vital for all of us in this place. I have heard effective contributions from government members, and that is pleasing to hear; but mouthing these words is not enough. Engaging with the sector and taking on board their views is critical. The legislation before us is really an object lesson in how not to develop innovative and effective public policy. There is an opportunity for the government to get it right by supporting the amendments moved by the member for Ballarat.

Mr WOOD (La Trobe) (11:52): I strongly support this bill establishing the Medical Research Future Fund. It establishes a fund for medical research initially with a contribution of $1 billion and eventually $20 billion. For the life of me, I cannot believe Labor is not supporting this bill outright. The only time people ever become aware of the need for a medical research fund is when there is a tragedy in the family or the community and someone finds out all of a sudden that a person has a rare disease, a rare illness. I have found that in my electorate on a couple of occasions. Normally the people concerned have seen doctor after doctor and eventually they come across a medical specialist who realises what the illness or the disease is. That is why I cannot believe the Labor Party is not fully supporting this medical research fund bill. It is a brilliant bill, and it is about all those young people sitting up in the gallery today—it is about their future and about the future of all Australians.

In 2007 some parents came to visit me in my office in Boronia. They were the Webbers, who lived in Beaconsfield, and they had a little boy called Jimmy, who was 12 years of age. The parents could not tell me what Jimmy's future was with Jimmy in the room, so we asked Jimmy to leave. It soon became very apparent that he needed some urgent surgery. He had pressure on his optic nerve, and the problem was that the anaesthetist did not want to put him under because he had polyps in the throat and the dilemma was that if they undertook the surgery he could die but if they did nothing he could go blind. It was an awful situation for parents to be in. I asked them whether there was anything we could do, and they told me there was a miracle drug called Elaprase, developed in the USA. This is what we want to see—we want to see drugs like Elaprase developed in Australia; that is what this fund is all about. The drug was not available through the Therapeutic Goods Administration as it was still undergoing evaluation. Jimmy needed this medication urgently but it was not cheap—it was between $600,000 and $800,000 per year. Why was it so expensive? Because pharmaceutical companies need to get some return for doing this incredible research into drugs like Elaprase. I approached Dan Brown, the CEO of the company, Genzyme, and had a chat to him about whether we could put Jimmy on a trial—there were a number of trials going on in Australia at the time for Hunter syndrome. Initially we did have some resistance but I congratulate Genzyme because we eventually had some success. Working with them, compared to many other pharmaceutical companies, was a pleasure. They could see the common sense in putting Jimmy on a trial, and in return I would move heaven and earth to make sure we got Elaprase listed. The great news was that Jimmy did get the drug and he is now doing fantastically in life. The great news, too, was that all the other sufferers in Australia also had access to this drug, and also similar ones called MPS1 and MPS2.

The side effects of Hunter syndrome in severe cases include altered facial features, profound mental retardation, spasticity and aggressive behaviour. The very worst-case scenario is that most are boys and most do not survive until the age of 20. I did have some parents in my electorate in Officer who, once we had the drug approved, did at a function tell me that their child had died of Hunter syndrome but how grateful they were to know that he had not died in vain. I congratulate my colleagues at the time—we all signed a letter which we presented to John Howard, and I believe the current Prime Minister, Tony Abbott, was the health minister, and under the Life Saving Drugs Program of the Pharmaceutical Benefits Scheme the drug was made available for the treatment of Hunter syndrome. It was great news that we got the drug.

I come back to the key point—the medical research fund. I know the Treasurer was criticised for this at the time, but the most important time in someone's life is when they need help. The benefits from this fund will be astronomical for the families it will help in Australia—but also overseas. Australia is a well to do country and you normally find that medical researchers, who do such a fantastic job, will naturally share their breakthroughs with other countries. That is what scientists are about. They go into their field to help other people.

Another example of a lifesaving drug was brought to my attention by Jenny Scott, who is the grandmother of Bianca Scott. Jenny lives in my electorate, and Bianca suffers from aHUS. I have also met in my electorate young Holly Van de Loop, who also suffers from aHUS. In 70 per cent of cases, aHUS is associated with the genetic or acquired abnormality of a part of the immune system known as the complement system. This can lead to severe inflammation of the blood vessels and blood clotting that damages kidneys, causing them to fail. aHUS can occur at any age, with nearly half of all people diagnosed aged 18 and over. This disease is just as life threatening in adults as it is in children. Within one year of diagnosis, 64 per cent of patients with aHUS will, tragically, die, require dialysis or develop permanent kidney damage despite plasma exchange, which is very expensive. This paints a very bleak picture.

But again through medical research there was a breakthrough—a drug called Soliris. When Jenny Scott, Bianca's grandmother, approached me about the capacity Soliris had to save her granddaughter's life, I knew I had to act. Tragically, Jenny's son died of the same illness. So I fought hard to have Soliris provided to Bianca and Holly—as I had for Jimmy Webber. I congratulate all the members of parliament involved in this—in particular, my colleagues from Queensland who worked with the New South Wales health authorities. They arranged for Bianca to receive the drug she needs so vitally. I congratulate Minister Peter Dutton on his negotiations with the company. It saw a great outcome for all aHUS sufferers in Australia. Holly will now be able to use this drug if she ever needs it because now Soliris is listed under the Life Saving Drugs Program.

This is a great example of why the coalition supports having in place a fund which, no doubt, will make incredible breakthroughs in medical research in Australia and throughout the world. We have to back our scientists. We have to back our researchers. We have great universities in Australia. We need to support them and their medical research teams—and all scientists.

A medical research fund benefits hospitals and health care providers. In that, they will be able to engage in active research to provide for more effective health care, have access to pioneering clinical trials—and clinical trials are so important—and attract pioneering health professionals. Presently, the Australian government only invests 0.075 per cent of our GDP on health and medical research. This is just 64 per cent of the OECD average. We need to greatly improve this—and the beautiful thing about this fund is that it will improve this. Every dollar invested in health and medical research generates an average return of $2.17 in benefits to the nation. Australia has its own unique approach to medical concerns. With Indigenous health problems, tropical infectious diseases and emerging health risks specific to our country, it makes sense for this research to be Australian based. Given all of this, I would hope it is now very clear to the Labor Party that it should support the medical research fund.

In closing, I would like to use the words of Professor Christine Bennett AO, the Chair of Research Australia:

Investing in health and medical research is about better health and well-being, greater productivity and a stronger economy, and giving hope to people living with health problems for which research is the only hope.

I recommend that members of the parliament attend a Rare Voices function. I congratulate Steve Irons for the great work he has done with this group. When you go there and meet the parents and the children who are suffering with rare illnesses, you will see that this fund is about helping them. I very proudly support the Medical Research Future Fund Bill 2015.

Mr GRAY (Brand) (12:04): I rise to speak in this debate on the Medical Research Future Fund Bill 2015 as a former executive director of the Western Australian Institute for Medical Research. This foundation is now known as the Harry Perkins Institute of Medical Research. It is named after the very significant first Chair of the Western Australian Institute for Medical Research, Mr Harry Perkins. I worked for the Western Australian Institute for Medical Research at a time when the Howard government had begun to take a real interest in medical research, led by then health minister Michael Wooldridge. Michael Wooldridge should be recognised in this place as having been a science and medical research health minister. He was a minister who placed front and centre the need to lift medical research to a prime role in our public health care systems.

At that time, the government and the minister sponsored a report into medical research by Peter Wills. The Wills report still stands as a seminal piece of work teasing out and understanding the role that medical research plays in our public hospital system. What I mean by that is not the role that medical research plays in understanding disease, defining therapies, creating better cures and creating better health care; it is actually the understood impact that public hospitals participating in both medical research and patient care produce better outcomes for having medical research incorporated into the health management protocols at a clinical level within public hospitals.

This revelation provided a great imperative for the government to better integrate research into our public hospitals, producing what Peter Wills, in his report, called a virtuous cycle'—a virtuous cycle to improve health care, a virtuous cycle to improve outcomes in public hospitals, a virtuous cycle to incorporate clinical practice in medical research into the same organisations' instruments and, on some occasions, the same people to produce better outcomes. This would improve, of course, the science itself, the understanding of disease, the creation of better therapies, the creation of better clinical practices and the provision of better outcomes. Minister Wooldridge is to be congratulated for that work.

Australia has a proud record in medical research. We often like in this place to take great pride in our Nobel laureates in medical research. In Western Australia, the work of Barry Marshall and Robin Warren is greatly acknowledged and recognised not simply for the outstanding work that it is but because their work on helicobacter, on stomach ulcers, defines a better place for medicine in our public hospital systems and importantly in tackling an area of disease that was massively debilitating. The use of surgical interventions to deal with stomach ulcers would incapacitated patients potentially for some months and perhaps even for years; whereas the understanding of helicobacter and the treatment of ulcers as being the result of a bacterial infection created very genuine steps in medical research that gave people not just a better chance of diagnosis and recovery but also meant that the impact of the medicine and the treatment itself was much more mild and benign and left patients more capable of dealing with their work, their jobs, their lives and their families immediately following the intervention by the therapies developed by Marshall and Warren.

I was reminded of this late last year on the death of Don Metcalf, who was one of the great researchers at the Walter and Eliza Hall Institute of Medical Research in Melbourne, one of the great researchers into cancer therapies and blood borne diseases. Don did his work with Professor Glenn Begley, who later became the scientific chief executive officer at the Western Australian Institute for Medical Research. Glenn left the Institution for Medical Research in the early 2000s and took up a position as global head of haematology and oncology research at Amgen in California. Glenn's work at Amgen defined a whole new area of drug therapies. He was responsible at the time for building the haematology and oncology research program within Amgen. He also had scientific responsibility for marketing Amgen products, involving preparation and presentations at multiple FDA face-to-face meetings and at FDA drug advisory committee meetings. That experience allowed Professor Begley to have a unique perspective of therapies and of many of the new discoveries that were being considered by Amgen.

A little background on Glenn: in his early studies he first described the human G-CSF and in later clinical studies he first demonstrated that G-CSF 'mobilised' blood stem cells but hastened hematopoietic recovery compared with bone marrow transplantation. What this means in English is that the work that Begley and his team did better understood the hormonal response to bone marrow transplants and in managing that hormonal response meant that a bone marrow transplant could be done in a better way to create a healthful effect more beneficially and to ensure a reduced rate of rejection from bone marrow transplantations. The finding revolutionised the approach to clinical cell transplantation and his basic research focused on haematopoietic regulation. He defined the functions of CSFs and their receptors using animal models. He was the first to molecularly clone the transcription factor SCL and demonstrate its critical role in leukaemia and normal haematopoiesis. Dr Begley is board certified in Australia as a medical oncologist, as a laboratory haematologist and also he has a PhD in the cellular and molecular biology. He is highly significant in this field. He has published over 200 scientific papers and was elected to the prestigious American Association of Physicians in 2008.

In an article published in 2012 in the journal Nature,Professor Begley considered where cancer science was and he put it under the spotlight as he discovered some disturbing results. He discovered:

Over the decade, before pursuing a particular line of research, scientists … in the haematology and oncology department at … Amgen in Thousand Oaks, California, tried to confirm published findings related to that work.

During a decade, as head of the global cancer research facility at Amgen, Glenn Begley had identified 35 landmark publications, papers in top journals from reputable labs, for his team to reproduce. Begley sought to double-check the findings before trying to build on them for drug development. Scientific findings were confirmed in only six—that is, in 11 per cent of the cases. Another way of viewing that is that 47 out of 53 papers could not be replicated. Even under the limitations of preclinical research this could only be described as a shocking result.

When Amgen's replication team of about 100 scientists could not confirm the reported results, they contacted the authors. Those who cooperated discussed what might account for the inability of Amgen to confirm the results. Some let Amgen borrow antibodies or other materials used in the original study or even to repeat the experiments under the original author's direction. Some authors required the Amgen scientists to sign a confidentiality agreement barring them from disclosing data at odds with the original findings:

The world will never know which 47 studies, many of them highly cited, are apparently wrong—

said Professor Begley. This is critically important. Begley went on to say:

It was shocking. These are studies the pharmaceutical industry relies on to identify new targets for drug development. But if you're going to place a $1 million or $2 million or $5 million bet on an observation, you need to be sure it's true, that it is accurate and that it is good science. As we tried to reproduce these papers we became convinced that you can't take anything at face value—

in this area of science. Begley talked about one particular meeting with a lead scientist at one of the studies being looked at. Professor Begley said, 'We went through the paper line by line, figure by figure.' He said that he explained that they re-did the original experiment 50 times and could not replicate the original result. He said that they had done it six times and got the result once. The scientist said that they had done it six times and got the result that was reported just once. But he put it in the paper because it made the best story.

I just want to repeat that. If you contemplate this in the context of the scientific research that is being done, you have Amgen carrying out 50 tests on a published piece of scientific research that could not replicate the result that had been published. Then, on interrogation, the scientist said that they had done the experiment six times, that on one occasion they had got that result and that they published that result because that apparently made the best story. This is deeply disturbing.

A team at Bayer HealthCare in Germany produced similar results to those which Begley and his team had reproduced at Amgen. In a 2011 paper titled, 'Believe it or not', they analysed in-house projects that built on 'exciting published data' from basic science studies. Exciting published data does not necessarily mean accurate published data. It does not necessarily mean published data that will lead to a therapy. It does not necessarily mean data that will lead to a cure. It means merely that it was published data and that it was exciting. If you go back to the original scientist's commentary, the scientist argues that the material was published because it made the best story. This is not just disillusioning; it is deeply disturbing.

The Germans also concluded that the key data could not be reproduced. Of 47 cancer projects at Bayer during 2011, less than one-quarter could reproduce previously reported findings, despite the efforts of three or four scientists working full time for up to a year. Bayer dropped that research project. These investigators were all competent, well-meaning scientists who truly wanted to make advances in cancer research. They wanted to save lives, they wanted to make recovery processes better, they wanted to restore health and they wanted to give people better and more healthy lives.

I mention these stories not simply because they are true or because they are disturbing but because nowhere in this bill do we see any mechanisms that would fix the problem that has been identified in medical research in the United States and made public by a very significant Australian cancer research in Professor Begley. We need to give this consideration because we are talking here of a medical research fund that measures many tens of billions of dollars, that will potentially have an impact on medical research that will cast a shadow down the corridors of time for many generations. Fixing medical research to make sure that medical research works in the scientific interest is a critically important thing to do. It is what good science is based on, it is what good medicine can be built upon and it is ultimately what the work of the Wills inquirers discovered for Michael Wooldridge in 1999. It ultimately relates to good health care, good patient care and better outcomes in our public hospital systems.

As Wills reported so many years ago, in 1999, there is a virtuous cycle. Let's not see that virtuous cycle broken by bad science, let's not see that virtuous cycle broken by wasted public money and let's not see that virtuous cycle broken by a culture and practice in research laboratories that pursues the idea of publishing material that is of a sexy nature as opposed to publishing material that is important scientific discovery. The line that the in-house projects were published because they were exciting data, exciting for a media story, is deeply, deeply concerning. We need to have science that is built on good practice, that is published because it provides insights and that then, in our public hospital systems, can provide better medicine. This is an important part of what we do in this place.

Mr McCORMACK (Riverina—Parliamentary Secretary to the Minister for Finance) (12:19): The Medical Research Future Fund Bill 2015 is an important bill. There is a lot of interest in it. We stand by the fund in this legislation. We understand Labor have amendments to move at the consideration in detail stage, and we are keen to see those amendments.

Mr Albanese: Madam Deputy Speaker, I raise a point of order. If the parliamentary secretary representing the Minister for Health is summing up, there was a speaker on his feet seeking the call to contribute to the debate.

The DEPUTY SPEAKER ( Mrs Griggs ): I have been given different information.

Mr Albanese: The member for Charlton, on the list that is circulated, you will note, is down to speak and should be given the call. Then, if the member for Riverina wishes to stop the debate, it is up to him to put a procedural motion after the member for Charlton has the call—in which case he does not get to sum up.

The DEPUTY SPEAKER: Parliamentary secretary?

Mr McCORMACK: I move:

That the question be now put.

The DEPUTY SPEAKER ( Mrs Griggs ) (12:36): The immediate question is that the amendment be agreed to.

Question negatived.

The DEPUTY SPEAKER: The question now is that the bill be read a second time.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

Ms KING (Ballarat) (12:38): by leave—I move opposition amendments (9) to (21) and (23) together:

(9) Clause 20, page 19 (line 16), omit "Finance Minister", substitute "Chief Executive Officer of the NHMRC".

(10) Clause 20, page 19 (line 29), omit "Finance Minister", substitute "Chief Executive Officer of the NHMRC".

(11) Clause 22, page 20 (line 17), omit "a Minister", substitute "the Chief Executive Officer of the NHMRC".

(12) Clause 25, page 21 (line 15), omit "Finance Minister", substitute "Chief Executive Officer of the NHMRC".

(13) Clause 25, page 21 (line 27), omit "Finance Minister", substitute "Chief Executive Officer of the NHMRC".

(14) Clause 27, page 22 (line 20), omit "Health Minister", substitute "Chief Executive Officer of the NHMRC".

(15) Clause 28, page 22 (line 24), omit "any or all of his or her powers under section 26 or 27", substitute "his or her powers under section 26".

(16) Clause 28, page 23 (line 1), omit "Note 1", substitute "Note".

(17) Clause 28, page 23 (lines 3 to 9), omit note 2.

(18) Clause 29, page 23 (line 15), omit "Finance Minister", substitute "Chief Executive Officer of the NHMRC".

(19) Clause 29, page 23 (line 23), omit "Finance Minister", substitute "Chief Executive Officer of the NHMRC".

(20) Clause 30, page 24 (line 1), omit "a Minister", substitute "the Chief Executive Officer of the NHMRC".

(21) Page 24 (after line 2), after Subdivision E, insert:

Subdivision EA—Additional function of the Chief Executive Officer of the NHMRC

30A Additional function of the Chief Executive Officer of the NHMRC

      The functions of the Chief Executive Officer of the NHMRC include the function of giving directions and entering into agreements in accordance with this Division.

(23) Clause 60, page 42 (lines 7 and 8), omit "any or all of his or her powers under section 15, 20, 25 or 29", substitute "his or her powers under section 15".

These amendments go to the heart of the problem with the Medical Research Future Fund Bill 2015. At the heart of the problem with this bill is in fact the government's own inconsistency with its own policy statements. It said very clearly in the health policy budget glossy from the last budget that the funds from the Medical Research Future Fund would primarily go to the National Health and Medical Research Council. This bill does not do that. It fails the government's own budget announcements about what this fund is set to do.

Without any governance structures in this bill, without independent peer review of medical research, this bill runs the risk of trashing the reputation of Australia's medical researchers and medical and health research. It becomes purely at the discretion of the Minister for Finance and then possibly the Minister for Health to disburse these funds, without any legislated mechanism for independent peer review or independent governance of this money.

It says everything about this bill—a bill that is about health and medical research, which should be at the corner of health reform in this country—that the Minister for Health neither bothered to put her name down on the speakers list nor spoke in this debate at all. This bill should be about the core of health and medical research. You will note that I am the shadow minister for health. The shadow minister for finance has deferred to me on this bill because the policy and the core of it are about health and medical research.

It says everything about this government that it has failed to consult with the health and medical research community—it has failed to consult with the experts on health and medical research—about how this fund should be established and, more importantly, how disbursements from this fund should be made.

This bill is fine in that it sets up the investment strategy for this fund. That is a similar way to all of the other nation-building funds. But I draw people's attention to the Health and Hospitals Fund, which is established under the nation-building funds. It has within it a legislated advisory board. It has within it, legislated, the guiding principles by which that advisory board should be making its recommendations.

It is a core failure of this bill that it basically says that the Minister for Finance is unfettered, and then maybe, if he decides to credit the Medical Research Future Fund health special account, the Minister for Health might be able to do something with some of the disbursements from this fund. It says everything that the government has basically left it entirely to the discretion of two ministers as to what the priorities for health and medical research under this fund will be. How can you trust this government when it has trashed health policy in this country by suddenly setting up what in essence will eventually be a billion-dollar-a-year fund where the Minister for Finance and the Minister for Health, if she or he gets the opportunity, whoever it may be then, can decide entirely what the priorities are for health and medical research in this country? This is not the way this should happen.

The NHMRC has been operating since the 1930s. It is the independent statutory authority we trust in this country to determine where health and medical research funding should be directed. It already has a special account, an endowment account, in which disbursements are made. The government has neither put any governance structures in this bill at all nor said that its own test funds from this fund will primarily go to the NHMRC. That it has not done so says everything about this government. This is Senator Brandis's arts council when it comes to health and medical research. If this bill is left to stand as it is, it is absolutely undermining the integrity of health and medical research in this country.

Unlike the government, I have bothered to speak to some of the health and medical research community, and they are very concerned about the governance structures in this bill, so I have moved these amendments to give the government the opportunity to fix this. They said that it was primarily to go through the NHMRC. We want to support medical research. We want to support a bill, but we cannot support this bill in its current form. It must be amended.

Debate adjourned.

Dr LEIGH (Fraser) (12:44): This bill increases the Medicare levy low-income thresholds for individuals and families, along with the dependent child and student components of the family threshold. Also, for single taxpayers who are eligible for the seniors and pensioners tax offset, they will not have a Medicare levy liability where they do not have an income tax liability. These movements are generally in line with increases in the consumer price index, although not in every case. Why that is remains something of a mystery. I hope that during the course of the debate the government might enlighten the House as to why it has chosen to increase some thresholds in line with inflation but not others.

It comes in a context of significant cuts to health. We have seen the $80 billion of cuts to health and education under this government. The shadow health minister has just spoken articulately about the state of health in this country under the Abbott government. Labor will support the bill. It represents a rare outbreak of decency, it must be said, from this government amidst an unfair budget. This is a budget which still continues so much of the unfairness of last year's budget, such as the $80 billion of cuts to schools and hospitals, $100,000 degrees and the cuts to family payments. All of those things are still there in this year's budget.

It is a budget which fails the coalition's own test of debt and deficit, with the deficit having been doubled over the course of the last year. It is a budget which fails the coalition test that Tony Abbott spoke of in August 2013, when he said:

… taxes will always be lower under a coalition government.

But this is a budget that has 17 new or increased taxes. In August 2013, the then Leader of the Opposition, Tony Abbott, said that there would be no overall increase in the tax burden whatsoever. But the tax-to-GDP ratio in this year's budget is higher than in any year under Labor. It is a budget which too fails the—

Mr Tony Smith: Mr Deputy Speaker, I raise a point of order: whilst there is always some latitude in debates, the speaker is now straying entirely from the subject of the bill. He is just reverting to a speech that he has given many times this chamber. He needs to confine himself, as he well knows, to the substance of the bill.

The DEPUTY SPEAKER ( Mr Vasta ): I call the honourable member for Fraser.

Dr LEIGH: I can understand that those opposite are sensitive about being reminded that the budget fails their tests as well as our tests. But an increase in the Medicare levy thresholds is to be welcomed; I make no secret of that. It enjoys bipartisan support in this House. One cannot consider that measure in isolation. A sensible debate over the Medicare levy thresholds needs to take into account the NATSEM modelling, which shows that nine out of 10 of the poorest families are worse off under this budget, with a family with school-aged children losing $6000 a year, yet nine out of 10 of the households at the top are modestly better off. We have unemployment going up and confidence going down. We have debt going up and growth going down. The numbers that should be going up are going down. The economic numbers that should be going down are going up. The change to the Medicare levy thresholds—

Mr Tony Smith: Mr Deputy Speaker, I raise a point of order: all speakers have to remain on the subject of the bill. It is not a matter of opinion, it does not matter how strongly the member feels about a subject and it does not matter how verbose the member is; he straying from the bill. If he is incapable of moving from his typescript, which is not on the substance of the bill, he should sit down.

The DEPUTY SPEAKER: I thank the honourable member for Casey, but the member for Fraser has the call. The member for Fraser will be relevant to the bill.

Dr LEIGH: As I was saying before I was interrupted, the change to the Medicare levy thresholds is one which is welcomed. But one cannot look at an increase in thresholds without also considering what this government is doing to the health budget. This government, which has come to office on a promise of no cuts to health, has ripped another $2 billion from health this year. One billion dollars will be cut from programs that fund measures such as preventative health care, drug and alcohol rehabilitation, mental health programs and other crucial health programs. I can see why those opposite do not want to consider the impact that these cuts will have on vulnerable communities, but it is something that must be taken into account.

While an increase in the Medicare low-income thresholds is an appropriate, welcome and bipartisan measure, it is a measure which needs to be considered in the context of a budget that rips money away from health and takes money away from the most vulnerable. This particular measure enjoys bipartisan support, but the unfair measures in this budget most certainly do not.

Mr FRYDENBERG (Kooyong—Assistant Treasurer) (12:50): I would like to thank those members who contributed to this debate. The Tax and Superannuation Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2015 amends the Medicare Levy Act 1986 to increase the Medicare levy low-income thresholds for singles, families, single seniors and pensioners in line with increases in the consumer price index.

For individual taxpayers, no Medicare levy will be payable for those with income under $20,896 in 2014-15. Single seniors and pensioners with no dependents who are eligible for the seniors and pensioners tax offset will not incur a Medicare levy liability if their income is less than $33,044 in 2014-15. Couples and families who are not eligible for the seniors and pensioners tax offset will not be liable to pay the Medicare levy for 2014-15 if their combined income is less than $35,261, plus $3,238 for each dependent child. The amendments to the Medicare levy low-income thresholds apply to the 2014-15 year of income and future income years.

Couples who are eligible for the seniors and pensioners tax offset do not incur a Medicare levy liability when their combined income is less than $46,000. The low-income threshold for seniors and pensioners in couples will not be increased at this time, as this threshold remains sufficient to ensure that senior and pensioner couples who do not otherwise pay tax will not be liable for the Medicare levy. Full details of the measures in this bill are contained in the explanatory memorandum. I commend this bill to the House.

Question agreed to.

Bill read a second time.

Mr FRYDENBERG (Kooyong—Assistant Treasurer) (12:53): by leave—I move:

That this bill be now read a third time.

Question agreed to.

Bill read a third time.

Ms KING (Ballarat) (12:54): I rise to speak on the Private Health Insurance (Prudential Supervision) Bill and related bills. These bills seek to transfer the prudential regulation functions of the Private Health Insurance Administration Council, or PHIAC, to the Australian Prudential Regulation Authority, or APRA, from 1 July 2015 and, in the process, abolish PHIAC effective from that date. As you can see, whilst this intention has been around for a while, it has taken the government some time to bring these bills on. Now we will be hitting the 1 July deadline very quickly. Again, one questions why yesterday we had to spend eight hours debating a bill that all 150 members of this place supported when we have a bill which, if it is not passed by 1 July, will be a problem for the government.

The government cites as justification for these bills its commitment to smaller government, an end to unnecessary duplication and claims that this will over time result in lower costs for industry while ensuring the private health insurance industry remains stable and well regulated. Immediately what leaps out at you from that explanation is the complete lack of any mention of the benefits of this for the 13.2 million Australians now covered by private health insurance. There is no suggestion, in fact, that this move will in any way lower premiums, improve services or achieve anything other than the abolition of a regulator dedicated to both sides of the equation—health insurers and health fund members.

But what it does strongly suggest is that this is the first step towards removing all oversight of health fund premiums, as recommended by the Harper review and openly endorsed by the former minister. It must be remembered that this bill is not in isolation, because the Abbott government is simultaneously moving to abolish the designated Private Health Insurance Ombudsman. That was part of the overall package of smaller government recommendations, again in the name of smaller government. Once the dedicated regulator is gone and the dedicated ombudsman is gone, it will only be a very small step for the minister to declare that it is now too difficult to keep tabs on health insurance, particularly in relation to health insurance premiums, so the annual oversight of premiums can be dropped and it is open slather for the health funds.

Remember, this is now in an environment where for the first time there is not a big government-owned health insurer in there, competing along with the privately owned funds and the not-for-profits. With Medibank Private privatised, we now have a concentrated market largely driven by big health funds seeking to maximise returns for their shareholders. There are obviously, of course, in this space some not-for-profits.

It is worth taking a moment to identify why it was necessary to have a dedicated health insurance industry regulator and why Labor has concerns about handing this all over to a single insurance regulator which, to be blunt, has had a few problems in recent years doing its own original job. The Private Health Insurance Administration Council is an independent statutory authority that reports to the Minister for Health. On its own website, PHIAC says it aims to achieve an 'appropriate balance between fostering an efficient and competitive health insurance industry, protecting the interests of consumers of private health insurance and ensuring the prudential safety of individual private health insurers'.

Equally, and in many ways just as importantly, PHIAC collates and disseminates financial and statistical data regarding health funds to enable consumers to make informed choices. Again, it is a terrific website. I often refer people to this. I know there are some commercial entities in this space, but the government has its own website where people can go and put in all of the information they need to find what might be the best value private health insurer for them. It is the privatehealth.gov.au website and it is a very good piece of information provided by government, not a commercial entity, and it contains all of the private health insurance products.

PHIAC's database compares every single policy across the country and provides this information to consumers, as I said, in a simple and understandable format via its website. It is a critical resource. It is one of the few tools available to consumers to try and keep down the cost of health insurance by shopping around. As I said, it is a government piece of software. It is a website that includes all private health insurers, not just those that pay fees to a private supplier of that information, where you will not get all of the information. So it is a really important service.

Using the PHIAC website and answering a few simple questions—what state you live in, whether you are searching for a single or a family policy, whether you have dependents, whether you want hospital or just general cover, how much of an excess you are prepared to risk to keep down the premium and whether you want top, medium or basic cover—the website instantly sorts through all of the policies on offer, and there are many of them, and offers you 20 or so options and how much they cost. It is an extraordinary resource when one considers that PHIAC regulates 34 private health insurers offering 40,000—yes, 40,000—different products, taken up by 6.4 million policies covering 13.2 million Australians. Does anyone seriously think that a generic regulator of all insurance products can, in any way, provide the level of expertise needed to keep tabs on 40,000 different products? And all this comes at a minuscule administrative cost, which PHIAC estimates adds about 60c per person to the cost of an average premium. As PHIAC's CEO stated recently, in the context of a $3,000, $4,000 or $5,000 annual premium, 'That ain't a lot to ensure that people are protected.'

Some of course might argue that we should just leave it to the market and they question why government should even have a role, especially now that Medibank Private is no longer government owned. Well, the facts are: private health insurance is very different from most other products because, by law, most of us who have private health insurance are required by government to take out this product, at quite considerable cost, or pay a substantial tax penalty. And then, in recognition of this cost, the same government which requires us to pay for this product spends well over $5 billion every year compensating us for that enforced expense. So, when a government forces millions of Australians to take up a very expensive product and then spends billions of dollars a year through the rebate compensating for this decision, this clearly requires detailed oversight to ensure both the taxpayer and the health fund members are getting value for money in that decision.

Right now, under this government, one would have to seriously question whether that is in fact the case. In February this year, the minister approved a 6.18 per cent average annual rise in health insurance premiums. That was the second-highest increase in a decade—second only because the previous year her predecessor had approved a 6.2 per cent rise. Both of those rises were higher than any of the six rises approved by the Labor government that preceded them. But, as complaints to my office reveal, for many members those increases go way beyond the average 6.18 per cent rise quoted by the health minister, with some premiums surging as high as 15 per cent or 16 per cent. This is clearly not affordable for many families, and it is no surprise therefore that the proportion of the population with private health insurance membership now appears to be flatlining for the first time in a decade.

At a time when the government wants to force patients to pay even higher out-of-pocket costs, $57 billion has been cut from our public hospitals, doctors are being forced to cut bulk-billing and charge higher gap payments, and the government is seeking to raise the cost of prescriptions, is it any wonder that families increasingly see private health insurance, or use private health insurance, as an emergency product? It is a compelling argument for why now is not the time for the government to be removing the few powers it has to keep downward pressure on premiums or potentially to be restricting or narrowing the information that is available to consumers about how they might shop around. With just five health insurers holding 83 per cent of the market, private health insurance is a relatively concentrated market. Whilst some people change insurers each year, inertia and a fear of waiting periods tend to keep people with the same private health provider.

Since 2007, health insurers wanting to raise premiums have had to seek approval from the minister for health. Under Labor health ministers Nicola Roxon and Tanya Plibersek, this was no tick-and-flick exercise. Insurers typically found their first request was denied and met with a demand for them to justify their fee rises. From 2007 to 2013, premiums increased on average by 5.35 per cent. Labor also provided $1.54 million to increase the Private Health Insurance Ombudsman's capacity to manage complaints and respond to consumer inquiries, and $2.3 million to establish the private health insurance Premiums and Competition Unit. And importantly, in 2012 Labor asked PHIAC to become the health minister's primary adviser on premiums. As the CEO of PHIAC stated, recently they accepted this request with enthusiasm because, 'In our view, that task matched up exactly with our broader statutory mandate: protecting consumers by promoting competition and ensuring the financial security of the industry.'

But, following the election of the Abbott government in 2013, newly appointed coalition health minister Peter Dutton waved through fee increases by the insurers with lightning speed, just days before Christmas, and not just any increase but 6.2 per cent—the largest increase since 2005. And who was the minister for health in 2005? Well, it was the member for Warringah, the current Prime Minister, who waved through consecutive eye-watering increases of 7.6 per cent in 2004 and eight per cent in 2005. Sadly, any hope that Minister Dutton's 6.2 per cent increase was a one-off was dashed when the current minister approved an almost identical rise of 6.18 per cent. That is three times the current rate of inflation and, for the average family with top hospital cover, amounts to a hit on the family budget of around $200. When it comes to slugging Australians with record health insurance premiums, this is a government which you would say has form on this issue.

The Abbott government clearly regards its powers over private health premiums as just another piece of red tape to be abolished, or, in fact, a nuisance. This is a serious mistake. The government having effectively forced many people through the system to enter into the private health insurance market under the threat of tax penalties, Labor believes the government does have a responsibility to do all it can to keep premiums as low as possible, and it is hard to see how that cause is in any way advanced by scrapping the dedicated health insurance industry regulator and, indeed, the dedicated health insurance industry ombudsman, as I have said in remarks on a previous bill in this place, especially when the replacement has a far from perfect record in looking after the rights of consumers.

In recent years, a number of parliamentary inquiries have been highly critical of APRA's failings in its oversight of a number of companies, including HIH and, of course, Storm Financial. As was noted in a recent article in the Sydney Morning Herald:

APRA has plenty on its plate already and the last thing it needs is a dilution of its focus by giving it additional responsibilities.

And health insurance is not just another form of insurance. As mentioned earlier, it is an extremely complicated product, with 40,000 different premiums on offer, with a bewildering combination of excesses, inclusions and exclusions that insurers can charge, almost at will and often, despite some of the regulations, with very little notice. As the current CEO of PHIAC said, in what he billed as likely his valedictory address to the Health Insurance Restricted and Regional Membership Association of Australia in Canberra just last month: 'The Australian version of private health insurance is a highly idiosyncratic beast, with curiosities such as community rating, risk equalisation, taxation surcharges, rebates and membership incentives, all interacting to form a cauldron of regulatory and commercial complexity. Private health insurance is a mystery for many Australians. They do not really have the capacity or the time to deeply understand the product, yet they know the day will likely come when they will depend on it. And of course, very often, that day is a day full of other stress as well—illness, injury, psychiatric disturbance, and the list goes on.'

That, in a nutshell, is why Labor has some very serious concerns about these bills and why they cannot simply be waved through. As such, Labor believes that these bills will require, in the other place, much deeper scrutiny, and we will be seeking to have the proposal to abolish PHIAC referred to a committee, so that that proper scrutiny occurs and so that there can be evidence in relation to the impact this bill will have on consumers in particular, and what impact it will have in relation to the very limited information that is available—and, importantly, available through the government's own website—to at least enable consumers to compare products and what the government intends to do in relation to its obligations and responsibilities in the setting of private health insurance premiums.

Mr CHAMPION (Wakefield) (13:09): It is a great pleasure to follow the member for Ballarat in this debate on the Private Health Insurance (Prudential Supervision) Bill 2015. We can see the amount of interest on the government benches in their own bills! The health minister this morning did not even speak on the bill establishing a medical research fund, so it is a pretty extraordinary day for the parliament. We have had a bill where the minister did not articulate her views on medical research. And then the bill was guillotined. Yesterday they were against the guillotine. They voted against passing their own small business bill. So, you could forgive the public for being a bit untrusting of this government.

So much of what we do in our lives, particularly in societies like Australia, is based on trust. We certainly seek to trust institutions, not just governments but other institutions as well—things like private health insurance. And as the member for Ballarat was saying, the last thing you want in what is a pretty bewildering market is the idea—

Mr Tudge interjecting—

Mr CHAMPION: The minister across the table is talking about my wonderful tie. I bought this upon my election, actually. It is the tie I gave my maiden speech in. But back to private health: we do trust private health institutions. We pay our money and generally we do not look at the fine print. You are relying on two things. You are relying on the institution and its reputation and its ethical considerations in doing the right thing by the consumers of its product. You are also relying on the government to set up an institutional framework that actually underpins some of those ethical considerations and expectations we all have as consumers. And that is what allows us to trust institutions like private health insurance providers, or indeed any insurance provider, and that is what underpins fundamentally many of the transactions in our own community.

We know how damaging it can be to the public interest to have that trust undermined. As the shadow minister said, in cases like Storm Financial, we know that they are regulated by APRA and we know that there were certain failings there, and they have been articulated in various government reports. We do not want that same situation to occur here because the government, in a frenzy of red tape reduction, has undermined the things that protect consumer interest and in protecting consumer interest, reinforce the trust in civic institutions and commercial institutions in our society. We need to be very careful that that does not occur. That is why, when this bill goes to the other place, we will be referring it to a committee, which no doubt will look at those areas in some detail and get experts and others to give us submissions, to look at the framework to see whether this can be done without any detriment to consumers. It is one of those bills where I guess the devil will be in the detail, and we just need to be careful that in the frenzy of enthusiasm against regulation we do not undermine the very things that underwrite much of this commercial activity.

It is interesting that whenever we talk about private health—and we can see the interest on the government benches; they are packed in like sardines over there, listening to my speech on their favourite subject, private health! We normally get a few of them biting from over there.

Mr Hawke interjecting—

Mr CHAMPION: Mr Hawke is over there in the corner. Normally he would give us a contribution.

Mr Hawke: You haven't drawn a crowd of your own people.

Mr CHAMPION: Look at this; it's packed over here. Normally the member for Mitchell would give us an ideological spray; he would normally give us his ideological contribution and tell us all about how the private market was going to benefit us and how public systems let us down, but even he is not biting today. The fish are not biting. The drones from the coalition back bench are not biting. And I can tell you why. Last election they made a whole lot of commitments about private health, and this is one of the things they said in their Policy to Support Australia's health system on 22 August:

Importantly, a Coalition government will alleviate the burden on our public hospitals by reinvesting in private health insurance rebates as soon as fiscal circumstances allow.

And this is what the Prime Minister said on 25 August 2013:

Within a decade, the budget surplus will be one per cent of GDP, Defence spending will be two per cent of GDP, the private health insurance rebate will be fully restored, and each year, government will be a smaller percentage of our economy.

Well, we know what has actually happened. Interestingly enough, ABC Fact Check shows how this promise has been tracking—and the promise has stalled. Doesn't that tell you so much about this government!

The shadow minister, the member for Ballarat, spoke about what has in fact happened. On private health insurance costs—that is, what you pay—there has been no stalling in that department. It has been accelerated—fourth gear, flat out. We have a newly minted minister, Minister Dutton. There has never been a more reluctant health minister in the history of the Federation. He wanted to wreck the portfolio, to gut the portfolio and get out. He wanted to be finance minister or something like that. One of the first things he did, just before Christmas, was oversee an average premium rise of 6.2 per cent. That is the largest increase since 2005, when the Prime Minister, 'Mr Broken Promise', was health minister; and he had some very high health insurance premium rises—7.6 and eight per cent.

The current health minister, who is apparently an improvement on the member for Dickson, has agreed to a rise of 6.18 per cent. So we have got very, very rapid increases in the premiums consumers pay—there has been no stalling in that department—but the commitments the government have made about private health insurance rebates and the subsidies therein have not been met. And they will never be met, because they were not made in good faith. Everybody knows that to restore the private health insurance rebate would be a very, very costly exercise indeed; it would cost the Commonwealth and make a budget surplus unviable. They furiously and disingenuously opposed the very important savings Labor made when in government. They made irresponsible promises when they were in opposition, and they have now seen those promises stalled. Those promises have been broken. What consumers have got instead is not relief from private health insurance premiums but an increase in premiums—additional pressure, higher costs. People have two choices—either pay or get out. If they get out, there are very serious consequences such as losing some of the privileges that you get under lifetime health cover.

This is a government that has got nothing at all to crow about in private health. That is why we see so few speakers on the government list, such little interest in what is normally one of their great ideological endeavours. Normally the member for Mitchell would get up to give a great speech about how the private market always benefits us and how the public system always lets us down. But even he has been struck dumb by this government's miserable record on private health and miserable record on public health. This is a government that is turning its back on the interests of health care consumers in this country, and it should stand condemned for it.

Mr STEPHEN JONES (Throsby) (13:19): Following the member for Wakefield in a debate on any matter—and on private health insurance in particular—is always an intimidating task. I am very pleased that the member for Mitchell is in the chamber at the same time. The bill before the House concerns private health insurance and the Private Health Insurance Administration Council, which was established in 1989. The council is responsible for monitoring the prudential performance of registered private health insurers. The council's role includes the registration of private health insurers; developing solvency, capital adequacy and prudential standards; publishing circulars and statistics on insurer activities and performance, which is a valuable source of information on what is going on in the industry; and administering the Risk Equalisation Trust Fund. Under this bill the PHIAC will cease to exist as a separate body and its prudential and regulatory functions will be transferred to APRA. Private health insurance is of deep concern to all members of parliament and to all Australians who are policyholders. It is also of deep concern and interest to all Australians who are taxpayers, because the industry is intimately linked with government health policy and government finance policy.

Witness the great debates we have had in this place over private health insurance and tax concessions to private health insurance policyholders over the years. The member for Rankin is in the chamber. He was very involved in some of the policies about ensuring that the growth in private health insurance rebates, which is one of the greatest costs in the health budget, was at a sustainable level. The member for Rankin and the member for Melbourne Ports would know that those opposite opposed the reforms we put in place when we were in government about ensuring that we had a steady control in that area of health expenditure. When they came to government and were faced with the responsibility of managing the treasury bench, they changed their view. They have not declared it, but they have not reversed any of the changes of the previous Labor government. That being the case, the industry receives about $5 billion in annual subsidies from the taxpayer. So prudential standards, the regulation of the industry and ensuring consumers get good value for money matters not only in terms of health policy but also in terms of the fiscal strategy of any government from any point in time.

The bill provides for the transfer of functions of the Private Health Insurance Administration Council to APRA from 1 July this year. It will provide for the continued imposition of levies upon private health insurance to fund those responsibilities, that is, APRA's supervision of the industry, the risk equalisation unit and the Risk Equalisation Trust Fund, and a levy to fund should there be a collapse of any particular insurer. I note that stakeholders have not yet had the opportunity to voice their views on the bill. We do not know what the views of the stakeholders will be, and we think that it is a matter of good public policy development that the government should seek the views of stakeholders on the legislation. Perhaps when this matter gets before the Senate there will be the opportunity for that to occur. The bill, as we are told, has no financial impact. While the functions of PHIAC will move over to APRA, the functions themselves do not change.

Unlike the coalition, Labor in government put pressure on the health insurance sector to ensure that premiums, which inevitably will increase, increased at a sustainable rate, and the industry was put on notice to ensure that they were no higher than they absolutely needed to be. Labor provided $1.4 million to increase the Private Health Insurance Ombudsman's capacity to manage complaints and to respond to consumer inquiries, and $2.3 million to establish the private health insurance Premiums and Competition Unit. These measures were put in place because we think it is appropriate, indeed, necessary. Bear in mind, that figure of over $5 billion, which I mentioned, in subsidies to the industry ensures that consumers, policyholders, get good value for money.

It is important to remember how the PHI industry has developed in Australia. When bills come before the parliament on this matter it is always an opportunity for us to talk about the important role PHI has played and how its role has changed over the last century. They started as friendly societies, particularly in communities such as my own where the state played a very miniscule role, compared to today, when it came to the provision of medical services in coalmining, agriculture and manufacturing areas where workplace injuries were all too common. Friendly societies and lodges created their own private health insurance companies to cover the cost of, generally, access to general practitioner services. They grew strongly over the course of the 20th century, but in the 1970s it was quite clear there was a problem. There was a significant problem in the industry and, indeed, a series of reviews of the PHI over that point in time discovered that they were, in fact, ineffective, inefficient and that 17 per cent of Australians outside of Queensland had no health coverage at all. Queensland was different, as you would know, Deputy Speaker Vasta, because of a different history of the health system in that state.

After the Whitlam government introduced Medicare and the Fraser government pulled it apart, the Hawke government re-established Medicare and Australians enjoyed universal health coverage, and PHI levels dropped. There was still a role for private health insurance particularly when it came to the provision of dental services, which today represent over 50 per cent of the claims received by private health insurance companies. So PHI still playa, and has played, an important role in relation to dental care, but rates were dropping. This moved the Howard government, which, at the same time as abolishing the Commonwealth dental program, introduced incentives which would encourage the take-up of private health insurance in the population. Eventually we moved to the lifetime cover provisions together with the rebates that I have already spoken of. That saw a significant uptake in private health insurance but also a significant increase in the cost to the Commonwealth of private health insurance. These things obviously had to be moderated to ensure that we had some sustainability within the industry.

Since coming to office the government have been very active in the health space. In fact more active than successful, but very active in the health space. They have had their targets set on universal health cover through the Medicare system with four different versions of the GP tax. We are seeing bulk-billing rates in general practice declining again after almost six years of consistent increase. Of course there are significant cuts, over $55 billion worth of cuts, to our public hospital system. How is this relevant to private health insurance? As the Commonwealth takes deliberate steps to minimise, to shrink, to control the rate of growth within the public side of the health system, many patients are forced into the private side and are forced to rely even more on their private health insurance cover. This, as we argue, is going to put increased pressure on private health insurance premiums.

The architecture for the prudential regulation and the consumer protections in private health insurance are more important now than ever as the government, through a mean-spirited policy towards health care in this country, is shifting the burden towards private cover. We are going to see upward pressure on private health insurance premiums in this country. These are matters which need to be debated. We have a bill before the House and we expect more. As I said at the outset, there has been insufficient stakeholder consultation in this, and I sincerely hope that, when this bill comes before the Senate, there will be the opportunity for further scrutiny of the matters, which are of great public import and, I am sure, of concern to all members of the House.

The DEPUTY SPEAKER ( Hon. BC Scott ): It being almost 1.30 pm, the debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.

The SPEAKER (15:15): I have received advice from the Chief Government Whip that he has nominated Mr Ruddock to be a member of the Parliamentary Joint Committee on Corporations and Financial Services in place of Mr Coleman.

Mr PYNE (Sturt—Leader of the House and Minister for Education and Training) (15:15): by leave—I move:

That Mr Coleman be discharged from the Parliamentary Joint Committee on Corporations and Financial Services and that, in his place, Mr Ruddock be appointed a member of the committee.

Question agreed to.

Mr HUSIC (Chifley) (16:16): I rise to speak on the Private Health Insurance (Prudential Supervision) Bill 2015 and related bills. What these bills attempt to do is move to the Australian Prudential Regulation Authority the prudential regulation functions that currently exist under the Private Health Insurance Administration Council. This is supposed to take place in just under a month's time, on 1 July 2015, and it will also abolish the PHIAC from that time. According to the government, this move has come about because, in its words, it wants to form smaller government. The government is trying to merge a number of different bodies and ensure there is no duplication. It believes that, in time, this will benefit industry through lower costs and this will ensure there is a degree of stability and proper regulation for the private health insurance industry. I learned about this while sitting as deputy chair of the House of Representatives Standing Committee on Economics, where APRA outlined to us in March that it was preparing for this as well. I want to come back to this at a later point.

When you take into account the government's justification, there is no mention whatsoever about whether this move, which, on the face of it, sounds fairly straightforward—taking the functions from one body, collapsing that body and putting the functions into an existing regulator—will have some sort of flow-on benefit to the just over 13 million Australians who are now covered by private health insurance. You would also imagine that there would be some sort of prediction about whether this move would lower premiums and lift the quality of services. Is this move anything other than a simple abolition of one regulatory body and just flicking all the responsibilities to someone else? Bear in mind that the current regulator in this space does two things year, will the time went beyond two hours obviously it will; it is dedicated to both sides of the equation, as the shadow minister indicated early today—that is, it looks at both the health insurers and the health fund members. But what we are definitely concerned about, and what we believe is likely to happen, is that this is just an initial part of a longer term journey away from any type of robust, genuinely strong oversight of health fund premiums—as recommended in the Harper review and previously endorsed by Peter Dutton, the former minister for health, who is now the immigration minister.

This bill does not operate in isolation. It must also be remembered that the Abbott government is moving to abolish the Private Health Insurance Ombudsman—and, again, they are relying upon the reasoning that this will lead to smaller government. Often these things do build up over time. Regulators emerge because the public has an expectation that things will work in a particular way, that their concerns will be addressed and that, if it is believed that there are channels or avenues of government that are not providing or are not fit for service, you will see these types of regulatory bodies emerge. It would be no surprise that this was what happened with the PHIAC. The PHIAC emerged in response to a community demand to see that the interests of health insurers were balanced with the interests of the clients of those health insurers. That also needs to be taken into account.

Once the regulator is gone and the ombudsman is gone, you can imagine that there will be a lot of power vested in the minister. You can also then imagine that the minister would later complain that there is too much on their plate to be able to take up these roles that were previously done by a regulator and the quality of oversight will suffer as a result. That is something that should concern a lot of people not only in this place but also outside. For instance, there is no longer a big government owned health insurer competing alongside privately owned funds. There is a great degree of concentration within this market. For instance, people may not necessarily be aware that the bulk of the market is made up of only a handful of companies that are providing these types of services. In fact there are just five health insurers who hold 83 per cent of the market, so it is relatively concentrated. While there might be some change between those funds from time to time you will not necessarily see people having a lot of choice in the insurers that they have or that they seek to use.

It is also worth noting that the regulator had to cover 34 health insurers offering 40,000 different products taken up by 6.4 million policies covering just over 13 million people. So there are some big players and there is a multitude of smaller players. There are a lot of products in place, so this is not some easy task. APRA, who is not a dedicated regulator in this space, is going to have to oversight all of this. This of itself will be a challenge.

The House of Representatives Economics Committee now have the opportunity to quiz APRA twice a year. We did so in March and we expect to do so later in the year. APRA are also responsible for a range of different areas by looking at what authorised deposit institutions or lenders are doing. For example, big things on their agenda at the moment include trying to determine how to deal with what the Treasury secretary described this week as a 'housing bubble' in this country as well as the rapid growth of investor loans, which are causing great concern as they reflect the rapid growth in prices and activity, particularly in some of the biggest housing markets in the country in Sydney and Melbourne. APRA also looks into the management of the superannuation pool of savings in this country which is close to $2 trillion. It is massive and is amongst the world's largest pools of savings, and APRA is responsible for that. Now APRA will be responsible for regulating 40,000 different products and 6.4 million policies for just over 13 million people. It is a big job.

When I heard that this was to happen, in March I quizzed the APRA chairman, Wayne Byres, and his associates who were present at the hearing, as to how they were planning for this. APRA have responded on notice that they have set up a project team to manage this transition of the prudential responsibilities, and they are also planning to take on board the associated staff within APRA. We were advised that the project team is primarily resourced, apparently,—and this is contained in a report into APRA by the House of Representatives Economic Committees that was tabled this week—by APRA and PHIAC staff with some involvement from the Department of Health, and, on an as-needs basis, external suppliers as well.

APRA has noted that the key milestones in relation to the updated regulatory framework include a degree of industry consultation for the private health insurance industry reporting of prudential standards. This was supposed to have occurred by the end of March. There were written submissions that were being called for to the industry consultation, supposedly received by 19 May. I am just taking this on board, and it may have slipped and it may not, and it is neither here nor there if it is a short period of time, but there is that work underway. APRA's paper responding to the industry submissions together with the final requirements are supposed to be released before 1 July, which is a big task in itself given the tight time frame.

In APRA's response to questioning by the House of Representatives Economics Committee about this whole transition, they outlined the extent and method of industry consultation to support the transition, claiming that both APRA and the PHIAC are actively working with the departments of Health and Treasury. I understand some health officials are here today, and I appreciate that they are probably working very diligently to make sure this transition is as seamless as possible. They would also appreciate the desire by us to have the appropriate levels of oversight to ensure that it is a relatively seamless process.

There is an important aspect, according to APRA, of executing the transition and that is the engagement with relevant stakeholders, the focus to ensure that the industry understands APRA's approach as a regulator and that there should be a continuity of supervision, which you would imagine would be a reasonable expectation. Since the legislative change has been announced we were advised that APRA has spoken to major industry conferences, and met with industry bodies and various participants. Formal meetings with boards of the individual private health insurers have commenced, many of which were undertaken prior to 1 July. What is absent in that response is that it was very hard to find how much had been set aside in terms of resourcing. The exact detail of how this would be managed was not there. I do not think this is an overly critical response, but I think it is important to note that there were not too many numbers backing up the statement that was provided to us for the purpose of inclusion in our report.

This is a big change. This is going to put some fairly significant strains on APRA. The theory of merging regulators, of getting rid of one and picking up functions and putting them into the other, sounds on paper like a straightforward thing, but it has the potential, certainly from our perspective, to cause major headaches in something this big. From our point of view we would need to see more detail. I do not think the detail that has been provided by APRA, as has been submitted to one House committee, goes far enough. Certainly we are being asked in this legislation to support something without the support of additional, or what I would call robust, detail. We would certainly need that.

When you look at the matter, you can take into account the words of the current CEO of the PHIAC in what he billed as his likely valedictory address in Canberra just last month to the Health Insurance Restricted and Regional Membership Association of Australia. He said:

… the Australian version of PHI is a highly idiosyncratic beast with curiosities such as community rating, risk equalisation, taxation surcharges, rebates and membership incentives all interacting to form a cauldron of regulatory and commercial complexity.

…   …   …

PHI is a mystery for many Australians—they really don’t have the capacity or time to deeply understand the product yet they know the day will likely come when they will depend on it. And of course, very often that day is a day full of other stresses as well—illness, injury, psychiatric disturbance, the list goes on.

This is part of the reason that the opposition has concerns about these bills and why we cannot simply waive them through. It requires deeper scrutiny, and we are seeking to have this referred to another committee for that further scrutiny.