29/02/2012 - 11:20

Somebody will have to pay for $15bn bites

29/02/2012 - 11:20

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The first shots have been fired for a battle over school and dental care spending.

The first shots have been fired for a battle over school and dental care spending.

THE past week’s squabbling by federal Labor parliamentarians masked two major pieces of policy advice with extraordinary numbers attached: a combined $15 billion just for starters. 

For those of us who are worried about the spendathon taking place among governments of all persuasions, it will be worth watching how these new proposals in health and education are slipped into the national conversation, perhaps as an excuse for keeping or expanding the billions that will be reaped by new taxes. 

The biggest amount of proposed spending, in one go at least, was contained in the final report of the National Advisory Council on Dental Health, which recommends federal, state and territory governments invest more than $10 billion extra to ‘fix’ the system.

The other was contained in the Review of Funding for Schooling led by David Gonski, which recommended an additional $5 billion was needed to adequately fund the school system. 

From my reading, both figures are not once off, they are recurring expenditure.  That equates to $15 billion a year, although the Gonski number is based on 2009 numbers and, therefore, is estimated to be more like $6 billion in today’s dollars.

To be fair to Prime Minister Julia Gillard, despite directing her forces in a nasty fight over her job, she did all but dismiss the possibility of implementing the Gonski report. 

Nevertheless, the numbers are out there and the federal government is not immune to spending huge licks of money on pet projects without really weighing up the costs and the benefits.

It is also not averse to the idea of a big new tax. In the case of dental care, just wait for the sugar tax or junk food tax to appear as a way of funding that idea. 

With Queensland likely to soon have an embedded conservative state government, a sugar tax ought not be such a risk given that voter base may be lost to Labor for generations.

All this is done under the guise of reform, Labor’s special way of describing radical, economy-changing taxes.

We have already seen a preview of this with the Medicare rebate debate.

What annoys me most is the rhetoric around the debate. The government, for instance, has the gall to say that the rich were being subsidised.

It is, of course, the other way around, with higher income earners subsidising everyone else, not just because they pay for it, but also because they tend to be much less demanding of services.

The need to rein in Medicare by making higher income earners pay for everything, without even a tax break for buying private insurance and taking themselves off the public’s books, is really about the failure of government to rein in the cost of universal health, where those who don’t pay for the service keep demanding greater levels of it.

Clearly, dental care and education are next in line for this treatment. 

In fact, even the dental review acknowledges the link.

“People with private health insurance have more favourable visiting patterns (for dental care) than those without private health insurance,” the report stated.

“Across all age groups, people with private health insurance were 1.5 times more likely to have visited a dentist in the previous 12 months.  Seventy per cent of people with private health insurance were likely to visit for a check up compared to 43.2 per cent of uninsured people.”

The report says some caution needs to be applied in concluding that private health insurance is the sole reason for the increased visits because certain demographic and socio-economic factors influence private health insurance holders. 

“Even so, studies have shown that insured people who are also eligible for public dental care will access dental care at similar levels to holders of private health insurance who are not eligible for public dental care,” it says.

Private expenditure on dental health is around $5 billion a year. Watch that number explode if it becomes a universal offering like health, not to mention the ballooning numbers of bureaucrats needed to manage it (and let’s not forget the newspapers devoting more headlines to dentists who get busted for rorting the system). 

And then a system that cost us $5 billion a year on a user-pays basis will cost $15 billion a year, with those who use it least paying for most.

In the battle over this new ground, Labor will aim at the rich and the Liberals will talk about people with aspiration.

The reality is they are both seeking to communicate with the same target group; that middle-class bracket that represents the middle third of income earners.

These are typically well-paid people who have enough money to make choices but still get confronted by having to meet big bills. 

Their demands on health are less than the poor and their demands on education are less than the rich. They like to stand on their own two feet, but are wary of being left without a fall-back position.

It is these people who have shifted en masse to the private education system and who will feel the impact most of the Medicare rebate changes.

The left side of politics knows that it needs these people on board with its universal model. It needs state-funded health and schools to be better than they are now to encourage these people to feel safe with the public option, paid for of course, in the main, by the top income earners.

The conservatives think the opposite. They believe that by lowering the cost of services and increasing competition they empower people to take control of their own lives and get ahead. 

By contrast, the universal model offers the highest degree of government control and, therefore, political interference, which is great if you believe that all problems can be solved by some form of centralised thinking.  

But over time, the universal models are proving more and more expensive and inefficient.

Private sector schools and hospitals, operating in partially competitive world, are continually outdoing the public sector. Those who love the universal model blame the private players for cherry picking the best customers and staff, ultimately to the detriment of a system that would work best without such competitive interference.

Dental care, which receives very little state funding, is harder to judge because there’s not much of a state-run version to compare with. Perhaps the best judge of what works is public outcry? I have never heard anyone complain about the dental care system, despite the costs involved when significant work has to be done. Most sensible people are insured or take the risk and wear the consequences.

In that regard, most of us brush our teeth and wear mouthguards when playing sport to try to put off the day when dental care becomes expensive (not to mention painful).

I also suspect most dentists are also in tune with their patients’ financial needs, much like doctors before Medicare came along. In that regard some form of tacit subsidisation of the most needy is done on a case-by-case basis.     

Taking more money from private schools and including dental care in the universal health model, via additional taxes and levies on the higher income people who use them most, seems like a very risky move.

While it may temporarily halt the growing imbalance between the two – including suddenly bringing dental health care to a small minority of people who may not be able to afford it – it won’t solve the problem that monopolies, especially state-run ones, are expensive to operate.

And, ultimately, new ways of paying for all this will have to be found.

• mark.pownall@wabn.com.au

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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