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PM says he expects howls of protest after Bud -

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PM says he expects howls of protest after Budget

The World Today - Friday, 8 May , 2009 12:18:00

Reporter: Sabra Lane

PETER CAVE: Next Tuesday's Budget is shaping up to be a classic case of give with one hand, but
take back with the other.

Government ministers have repeatedly said that promised tax cuts will be delivered, but it appears
likely they'll introduce a barrage of new means testing for middle and high income earners to
offset those cuts and promised pension reforms.

This morning, the Prime Minister and the Treasurer didn't deny reports that they're set to start
means testing the 30 per cent private health insurance rebate.

The Opposition says that such a decision would force more people into an already strained public
health system.

And the private health insurance association says it sounds like the Government is now devising
core and non-core promises.

From Canberra, Sabra Lane reports.

SABRA LANE: The Government is getting in early with the bad news and rehearsing its response to the
Budget, with the Prime Minister acknowledging some cuts will be extremely unpopular.

KEVIN RUDD: There will be many howls of protests about things that we are doing. I accept that, I
take responsibility for it, but we've got to cushion the impact of this recession today and restore
the Budget to balance over time.

SABRA LANE: Mr Rudd was talking on Fairfax Radio this morning. He says the promised tax cuts will
be delivered because they've been legislated for.

But it sounds like he's preparing to discard another promise to keep the 30 per cent private health
insurance rebate. He didn't deny it'd be watered down for middle earners and axed for wealthy

KEVIN RUDD: If you're going to engage in long term reform and for example do the right thing over
time for our pensioners, it means that you've got to have an overall long term balance in the sorts
of measures you take in the Budget.

MIKE CARLTON: I'll take that as a yes then.

KEVIN RUDD: No you've got to make sure that you balance things out over time.

SABRA LANE: On NewsRadio the Treasurer Wayne Swan also didn't deny the rebate was on the chopping
block for high income earners.

WAYNE SWAN: I can't comment constantly on the speculation in the newspapers. What I can say to you
is that I won't shirk, neither will the Government shirk the hard choices, especially if that means
making room for a commitment to pensioners and vital national building investments to support jobs.

SABRA LANE: The Opposition health spokesman Peter Dutton:

PETER DUTTON: They're going to drive up the private health insurance premiums, not just of people
with young families, but many pensioners and people on part pensions take out private health
insurance as well and those people will be huge losers, huge losers in this Rudd Government
decision. It stands in direct contrast to at least on half a dozen occasions, where the Prime
Minister himself said that he would not remove or alter the 30 per cent private health insurance

SABRA LANE: Comprehensive details about the planned cuts were leaked to this morning's newspapers.

Those reports says means testing will be introduced for singles earning more than $74,000 and
couples on a joint income of more than $150,000.

The rebate will be tapered down over those amounts, cutting out altogether for singles earning more
than $120,000 and couples on $240,000.

But there's a further sting. The penalty for those who refuse to take out private health insurance
will be jacked up by 50 per cent.

The cuts will save the Government $2-billion over three years.

MICHAEL ARMITAGE: That is a dumb policy decision if it's correct.

SABRA LANE: The chief executive of the private health insurance association, Michael Armitage.

MICHAEL ARMITAGE: It's firstly a major broken promise and I guess all we can say is that this from
the Labor Government's perspective might be seen as a non-core promise which I think is really

SABRA LANE: Reportedly the rebate will now be tapered off for singles who earn more than $74,000
and couples earning $120,000. Many people would argue they can afford it, they can pay.

MICHAEL ARMITAGE: The issue is that there are more than a million people in Australia with private
health insurance who earn less than $26,000. For every person who drops out of private health
insurance, whether they are on a higher income or not, the simple fact is those people on an income
of less than $26,000 will have to pay more next year.

So what the Labor Government is doing if today's article is correct is they are asking those people
who maintain private health insurance as one of their last discretionary expenditures out of their
income of less than $26,000, they're going to insist that they pay more.

I mean this is a bizarre decision.

SABRA LANE: Were you given any heads up that this was coming?

MICHAEL ARMITAGE: None whatsoever, because we were perhaps naive in that we relied on a written
promise from the Prime Minister delivered before the last election in October 2007. He says quite
specifically, "we will maintain the existing private health insurance rebates for the various age

Now that may have been naive for us, but perhaps he's regarding this as a non-core promise and he's
just blatantly not concerned about the fact that the decision will affect every single Australian.

If every Australian who is privately insured, if the decision is correct they will now pay more and
for every person who is no privately insured from now on be competing with more Australians to get
their health care in the public sector.

PETER CAVE: The Australian Health Insurance Association's Dr Michael Armitage speaking to Sabra