Wednesday, April 26, 2006

Rod Lyons: Tax breaks best remedy for sick public health system

There can be little argument that despite the vast amounts of public money poured into the public health system the patient is in a parlous state.

Reports of figure fudging by the Government and the various district health boards suggest nothing positive is being done and the outlook remains bleak. Frankly, there is little chance of recovery under the present practice and I do not believe more public funds will lead to any real improvement.

What is required is a new and radical approach to use all health resources in the country and ensure the total money spent is used more effectively. Two major steps would, I believe, have a great impact on the health treatment prospects of all New Zealanders.

First, make all money spent on private health treatment tax-deductible (perhaps to a maximum of 33c in the dollar).

Before anyone pooh-poohs this idea, let us look at the real impact. If a patient requiring hip surgery, for example, were to spend the $15,000 or so required in the private health sector, it would free another space in the public system at a cost of only $5000.

No doubt the Finance Minister would say the Treasury cannot afford such largesse but if the money came from the health budget there would be no impact on government income.

The result, however, would be to relieve three private patients at the cost of one public operation, get three people back in the workforce paying taxes and also release three surgical spaces in the queue for the public health system.

Second, if contributions to health insurance funds were also made tax deductible, many more people would take insurance up. This would relieve pressure on the public health system and again, the money could come from the health budget, making no financial impact on the Treasury.

No doubt the nay-sayers will claim this approach would create a two-tiered health system but that is really what we have today, except we would have more being treated privately.

There are huge additional positive benefits. Public waiting lists would be truly reduced instead of the cosmetic changes we see today, designed only to make the figures look good.

People would be encouraged to take care of themselves rather than relying on the Government and the private health insurance, care and treatment industries would flourish, and undoubtedly contribute additional tax dollars.

The question which needs to be asked is: Could this type of reform take place under the present socialist government?

If one recalls the greatest health reforms in Australia took place under Gough Whitlam's Labour Government, there is nothing to say it could not also happen here but if it takes a change of government then that would be a small price to pay to cure the ailing patient which is our health system.

Nobody would be left behind as the public system would be there as a backstop but it would no longer be cluttered up by people who could afford to take responsibility for their own needs.

While analysing this approach whatever government is in power should also look at associated areas of public expenditure. The one which comes most immediately to mind is superannuation.

Making employee superannuation contributions tax deductible at 33c in the dollar to a maximum of say $30,000 (in Australia this is around $70,000) would, if invested in New Zealand-focused funds, result in the investment industry flourishing.

However, the main impact would be to encourage the people of New Zealand to take control and provide for themselves and their futures and lead us out of the "nanny state" into which this country has fallen.

* Rod Lyons has no interest in the health industry except as a consumer. He does have private health insurance.

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