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Thursday, 18 August 2005
Page: 58


Ms GILLARD (1:12 PM) —I apologise for the quality of my voice; it is a good day to be talking about health. If the Health Insurance Amendment (Medicare Safety-nets) Bill 2005 was correctly titled it would be titled ‘The Tony Abbott rock solid ironclad guarantee broken promise bill’ because it represents the end of Minister Abbott’s credibility as Minister for Health and Ageing. What Minister Abbott staked his reputation on in the lead-up to the last election was securing an arrangement with the minor parties in the Senate, actually with Independent senators, which enabled the government to get through the Senate the so-called Strengthening Medicare package.

Mr Deputy Speaker Hatton, you would undoubtedly recall that the Howard government had consistently throughout the last term of parliament sought to turn our Medicare system into a two-tiered system, very reminiscent of the American health system. The only thing that prevented the government doing that under the very ill-fashioned title Fairer Medicare was the fact that it did not have control in the Senate. The government tried to get various types of packages through, having had its original intention to basically end Medicare as we know it blocked. Finally, Minister Abbott struck an arrangement with Independent senators that put through the Strengthening Medicare package and, most particularly, the Medicare safety net.

Even at the time it was being legislated it was abundantly clear to every health expert that the design flaw in the safety net was that it was going to be inflationary and it was therefore inevitable that the costs of the safety net would blow out. Mr Deputy Speaker Hatton, I am sure you track Senate committees with great alacrity and you would recall that many of the health groups that went before the Senate committee—indeed, it was unanimous—made that point. So the government was on notice from the very first day that it struck the deal with the Independents and was certainly on notice from the time that it put the legislation in place that this was going to be inflationary of health costs and that the costs of the safety net were going to blow out.

When one raises that point Minister Abbott always says that it is a criticism of doctors to suggest that they would inflate health costs in view of a change in government policy, but it is not a criticism of doctors at all. Obviously, doctors, like all rational human beings, respond to the price signals of the system within which they work. I suspect that if we structured a program for panel beating where, after a certain expenditure level, the government would assist with panel beating costs, we would not be surprised to see the price of panel beating rise in Australia. It would just be a rational response to the price signals being sent. The government very strongly sent those price signals to doctors.

It was not, in any way, the government’s intention to put in place a system that, over the longer term, would be robust enough and fair enough to address what was undoubtedly a real issue. The real issue for Australians was the growing out-of-pocket costs they experienced when they needed to see a specialist or use a diagnostic technology. That problem was real. The Medicare safety net was never designed as a long-term, robust and fair solution to that real problem. It was always designed as something that the government could get through in time to advertise in the run-up to the last election. It was designed as something that it would be able to use to address the political problem it then had in health, and continues to have to this day, because people do not trust the Howard government with their health care.

Minister Abbott is the minister who is most exposed in terms of this legislation and the breach of his word, because he is the minister who gave the rock solid, ironclad guarantee. But if we go back to the time of the election we find that it was clear that throughout the Howard government there was a conspiracy to keep reassuring the Australian people that the Medicare safety net would be kept, and kept unchanged, after the election—even at a time when ministers in the Howard government would have known how bad the blow-out in expenditure was, and would have known that that was unsustainable and was going to be addressed by a cutback after the election.

Minister Abbott made the following assurances in the context of the election campaign. All of the assurances have been broken, and will certainly be broken by this legislation. On 16 September, Minister Abbott said:

I absolutely guarantee that the safety net, as the government has put it into operation, will continue. I absolutely guarantee that.

He went on to say:

This government does not believe in cutting health spending.

Minister Abbott said:

The MBS is not a budget-limited, bureaucratically controlled program; it’s a demand-driven, patient-initiated program. That’s the way the MBS has always been and that’s the way it will always continue under this government, and that’s one of the reasons why medical services in the community have been much more effective and much more efficient than some other aspects of the overall health system.

Most famous was his statement on 6 September 2004. The reporter, Ticky Fullerton, asked:

Will this government commit to keeping the Medicare Plus safety net as it is now, in place after the election?

Tony Abbott replied:

Yes.

Ticky Fullerton asked:

That’s a cast-iron commitment?

Tony Abbott:

Cast-iron commitment. Absolutely.

Ticky Fullerton:

Eighty per cent of out-of-pocket expenses rebatable over $300, over $700?

Minister Abbott’s reply:

That is an absolutely rock solid, iron-clad commitment.

But Minister Abbott was not the only one who made these types of representations. Treasurer Costello, on 2 September, said:

The parameters of the Medicare safety net will not change.

The Prime Minister, on 19 July, said:

... most recently through the introduction of the Medicare safety net, which is daily looking after more and more Australian families. They are some of our goals, not only for the next three years but, indeed, for the next ten years.

The Prime Minister, on 28 August 2004, said:

As the months go by, the 220,000 Australians that have already benefited from the safety net will grow and grow and grow.

On 8 October, a journalist asked:

The Medicare safety net, there appears to have some—

and the next bit was inaudible—

in the costs and there’s a concern that some specialists are increasing prices to benefit ...

The journalist went on:

So do you commit to keeping the safety net in place as it is now?

The Prime Minister answered:

Well, I commit to keeping it in place ...

These assurances were being offered across the Howard government—most spectacularly by Minister Abbott in his cast-iron, rock solid guarantee—in the lead up to the election. On every occasion possible Howard government ministers went out and pledged to Australians that the Medicare safety net would be kept in the form that it was before the election, with $300 and $700 thresholds before you triggered your entitlement to increased Medicare rebates under the Medicare safety net policy. You could not have had a clearer example of a government staking its reputation and its credibility on the promises it made in relation to one policy area. The Howard government was right out there promising Australians no change.

But what was happening under the waterline where they did not want electors to have a look before election day? I can tell you very clearly what was happening there. Anybody who had access to the data—and all of the people I have talked about most certainly did—knew for sure that the safety net was blowing out absolutely big time. If we go to the first year of the safety net’s operation—remember, it came into operation on 1 January 2004; that was when expenditure started to be counted, though payments flowed some time later—the minister for health was continually boasting, through regular press releases, that there were higher levels of registration for the safety net than the government had anticipated and that there were more successful claimants under the safety net than the government had anticipated. He would put these press releases out as good news announcements.

We know that in June 2004, actual spending on the safety net was 40 per cent more than had been estimated in the budget. The minister knew this as a fact in mid-July—that is on the public record. In July 2004, actual spending on the safety net was 60 per cent more than was estimated in the budget. The minister knew this as a fact in August 2004—and that is on the public record. In June the Department of Finance and Administration was also starting to look at the estimates, as there were indications that the program was growing more rapidly than estimated—that has been admitted at Senate estimates hearings. The Herald Sun reported that an internal Health Insurance Commission audit revealed evidence of changed billing practices amongst doctors to help patients reach the safety net faster. The same report showed that more than 3,000 patients in Victoria got onto the safety net in only one month. The audit revealed a $1.4 million blow-out in the scheme in Victoria in June alone. At a Senate estimates hearing in August 2004, the Department of Finance and Administration admitted:

… it did become clearer that this program was increasing faster than we had estimated at budget time.

Senate estimates also revealed that a senior finance officer in the department was so concerned about Medicare safety net expenditure blow-outs that he contacted Finance Minister Minchin’s office about the matter and spoke to Senator Minchin’s advisers. It is a matter of public record that the advisers subsequently briefed the minister about the blow-out. This occurred prior to the caretaker period coming into play, and it was explicitly stated at Senate estimates hearings by the Deputy Secretary of the Department of Finance and Administration, Mr Phil Bowen.

What did Senator Minchin say when questioned about this? He clearly could not deny that, prior to the election and prior to the caretaker period, he knew there was a huge blow-out in the Medicare safety net, because a departmental officer was so anxious and concerned about the degree of expenditure that they had taken the unusual step of ringing the minister’s office to say it was a major problem. What did Senator Minchin say when he was asked about these matters at the Senate estimates hearing in May 2005? He used a defence used by Howard ministers which will ring familiar to people in this place and beyond. He said: ‘It was not formal advice to me,’ and ‘It was hearsay,’ and ‘It was not actionable information,’ and ‘I am not going into the detail of what, if any, communications go on within the government on this or any other matter.’ The Minister for Finance and Administration—the bloke whose job it is to make sure that government money is looked after and, in particular, that expenditure by government conforms to what is provided for in the budget and that there are not unnecessary blow-outs across government—had been told by his advisers that a departmental adviser was sweating so badly on the Medicare safety net blow-out that he had rung the minister’s office. The minister had received that advice from his advisers and subsequently, with the usual Howard government sleight of hand, described it as ‘hearsay’. One word for that is ‘remarkable’—and there is a series of less charitable words which I probably should not take you to, Mr Deputy Speaker, because we might cause an incident.


The DEPUTY SPEAKER (Mr Hatton)—You probably shouldn’t.


Ms GILLARD —I probably should not. It seems to me unbelievable in the extreme that the minister for finance can sit in his office with his advisers and receive information about the state of government expenditure and describe that information as ‘hearsay’. These are not people sitting around a dinner table in a restaurant. These are not people out for a cup of coffee. These are not men having a drink in a bar and shooting the breeze. This is the minister for finance sitting with his advisers and having conveyed to him important and actionable information.

What we do not know, and what the Howard government has not revealed, is what happened next. When I asked the Minister for Health and Ageing in this place what discussions he or his office had with Senator Minchin or Senator Minchin’s office at this point, he said, ‘I’m not going to play your game.’ When I asked the same question of the Prime Minister, I got the same answer: ‘I’m not going to play your game.’ The question of truth in government is not a game—and it is not my game; it is about the essence of our democratic institutions and it is about what a government should do and say to the Australian people when it is seeking their trust and their mandate at an election. Anybody in the Australian community, if asked, would say without any hesitation that what they want to know before the election is just the simple truth. They do not expect people to promise them the world; they expect people to tell them what is going to happen and they make their decision on the basis of that accurate information. But they do not expect to be told untruths like this—and that is what the Howard government did.

I am confident that, over the life of this parliament, we will find the missing bits in that puzzle and prove that there were discussions at the highest level of the Howard government about changing the Medicare safety net after the election. We will prove that they were talking about that before the election and that they were having those discussions before they went out and pledged their credibility—and, most particularly, Minister Abbott’s credibility—by giving rock solid guarantees that the scheme would not be changed when, behind closed doors, they were already discussing the nature of the changes.


Mr Garrett —It beggars belief.


Ms GILLARD —As my colleague the member for Kingsford Smith says, it absolutely beggars belief. Minister Abbott is asking people to believe a version of events which, once again, beggars belief. He has never denied being briefed on the blow-out. He is asking people to believe that even though he was receiving information on a regular basis, whether it be in the form of increased registrations, increased claimants or the HIC audit, that expenditure on the Medicare safety net had blown out by pretty close to a factor of three—a scheme that had been budgeted at $440 million over four years was going to blow out to around $1.2 billion—it never once occurred to him that some policy changes might be needed. That is what he is asking us to believe. It is unbelievable. It did not happen. Minister Abbott was in discussions about changing this scheme before he went out and gave his rock solid ironclad guarantee.

The only other possible version is that Minister Abbott was the only person in government who was not worried about Medicare safety net expenditure and Minister Abbott is so financially incompetent that he thinks it is acceptable for a government minister to watch a public policy program blow out threefold and think it will never be changed. There are only two versions for Minister Abbott: either he knew on the day he made his rock solid, ironclad guarantee that it was not true—that is version No.1 and the most likely—or he is so incompetent at being minister for health that it never occurred to him that an expenditure blow-out of three times the amount might mean a big problem and that the way the policy was designed had to be changed.

No other version can exist. Minister Abbott, when all of this originally happened and it was clear that his rock solid, ironclad guarantee was going to be broken, should have resigned. He should have resigned either because he had not been honest with the Australian people before the election or because of incompetence. Either way, he should have resigned at the time this policy was changed. We will keep after the facts, and I am confident we will find them. They will then be put before this House and the Australian people.

When we go beyond the financial data, we find there are also continuing issues about what this legislation’s winding back of the safety net is going to do. In the election campaign the minister scored an amazing own goal by publishing the Medicare safety net data by electorate. I note that it is the only time he has done it. It showed that expenditure on the safety net was highly skewed to the wealthiest electorates in Australia and highly skewed away from the less wealthy electorates. We know from a departmental official that the minister’s own department is saying this legislation will mean that one million people who otherwise would have qualified for the safety net will no longer qualify for it. So the movement of the thresholds in this legislation will cut out one million people who otherwise would have been able to claim.

What we do not know is where those one million people are likely to be located or the likely income bands of those one million people, but that would be trackable; it is capable of being put before the Australian people. You would just look at last year’s expenditure patterns and you would say: ‘With the threshold variations from $300 to $500 and $700 to $1,000, who got safety net money last year who won’t get it this year? In which postcodes or electorates are they located?’ There is a reason why that analysis has not been released, and it is not because it is difficult to do. It is because it would undoubtedly show that the one million people who are going to miss out are the one million people in the poorer parts of Australia and that safety net expenditure after this change is going to be more fundamentally skewed to the wealthy bits of Australia.

Why is that? It is simply because, the higher your income, the more likely it is that you will have a high expenditure on health. The ABS survey of household expenditure shows that the lowest household income quintile spends just $22 on average per week on health while the highest household income quintile spends $77. That means there are people who, faced with large out-of-pocket costs for potential treatment, go without treatment. It means that people with discretionary income who can sustain high out-of-pocket costs will have the treatment and, therefore, are more likely to be able to add up the out-of-pocket costs, which will enable them to access the safety net. The design of the safety net is skewed towards the upper income end, and after these changes it will be even more badly skewed towards the upper income end. That is information Minister Abbott does not want Australians to have.

I say to the Australians who are listening today that people who live in rural Australia, people who live in regional towns, people who live in outer metropolitan areas and people who live in the inner-city areas that are associated with low incomes—inner-city housing estates, for example—are counted amongst the one million who are going to miss out because of this policy change. If you are in an electorate like mine, you are much more likely to be one of the one million people who are going to miss out than if you are in an electorate like the electorate of the minister for health. That is the undeniable truth, and the minister should be releasing that information.

Labor today are opposing this bill because we do not believe that a government should be able to go before the Australian people and break its word. If the Howard government is not prepared to enforce a standard of basic honesty against itself, then at least with our votes we will signal that it should. If the government gives a pledge to the Australian people, it should keep that pledge.

I am sure, when Minister Abbott comes in to sum up what is going to be a lengthy debate—which we will start, but not conclude, today—he will say: ‘Isn’t this all too cute from the opposition, because the opposition didn’t support the Medicare safety net. The opposition, had it been elected as the government at the last election, was not going to maintain the Medicare safety net.’ That is true. What we were going to do—and this is the bit of the story Minister Abbott never tells you—was assist people to avoid high out-of-pocket costs when they needed specialist care or access to diagnostic technology by making that care and technology available out of the public hospital system. We had in our hospitals package, which was a major package of expenditure outlined during the campaign, significant provision for specialist outpatient clinics in public hospitals, which would have offered people specialist care with no gaps. We also had in our health policy new access to diagnostic technologies in public hospitals—once again with no gaps. That would have given people a way of accessing the care they needed on a no-gap basis, addressing the public policy problem that people were starting to experience: high out-of-pocket costs for accessing specialists and accessing diagnostic care.

These are policy matters about which Labor will no doubt say more in the future. But it would simply not be the truth for the minister to come into this place later in the debate and to suggest that the Labor Party, at the last election, did not have a policy solution to the question of high out-of-pocket costs for specialists and for diagnostics. We did, and it is a policy solution that (1) we would have put into place in full and (2) would have been more equitable in who got access to it. The contrast at the last election was the Howard government not telling you the truth about the Medicare safety net compared with the Labor opposition giving a pledge to improve access to specialists and diagnostic care, which in government we would have kept. That is the contrast and we will vote, when this legislation is ultimately put to a vote, against this bill because we are saying the Howard government should have kept its word.

I want to say a few words about the future. We know that the Medicare safety net blow-out problem is not fixed. By the time of the last election we knew, through the Charter of Budget Honesty process, that the Medicare safety net had blown out to $1.4 billion over four years. It was when it blew out $100 million more after the election that suddenly Prime Minister Howard said, ‘That is enough; we are going to prune this safety net back.’ Once again it beggars belief that you would watch a program blow out by three times and then the last $100 million causes you to say you are going to act. Obviously the government knew they were going to act before the election.

But the problem with the Medicare safety net is not over. When Minister Abbott has been asked about where to next with the Medicare safety net he has avoided answering the question and, most particularly, he has avoided giving clear commitments that the Medicare safety net is now running on track to budget expectations. I know why he is not giving those commitments—because I do not think it is running on track. I think, even with these threshold changes in place, that in the next two or three years we will see the Medicare safety net blow out again, and it will blow out again because it is inflationary in its design. This will not be the first time that the Howard government is in this House pruning back the Medicare safety net.

I will bet—and I am prepared to make it a very large wager—that this is the first of a series of bills that we will see pruning the Medicare safety net back. I think the government will come back and change the thresholds again. I think they might come back and try to create some nexus between expenditure and schedule fees. But they will be back in this House time and time again cutting back the Medicare safety net every time, breaching yet again Minister Abbott’s rock solid, ironclad guarantee that it would be kept in its current form.

I have got a challenge for the minister when he ultimately comes back into this House on this legislation. If I am wrong, then Minister Abbott will not have a problem standing at that dispatch box and saying that he will tender his resignation as Minister for Health and Ageing if during this parliament the Howard government seeks to change the Medicare safety net again. If I am wrong, then the minister will not have any problem walking to the dispatch box and uttering those words, ‘I will resign as Minister for Health and Ageing if the Howard government changes the Medicare safety net again during the life of this parliament.’ And if he does not utter those words we know exactly what is going to happen next, and this is just the first but not the final smashing of Minister Abbott’s rock solid, ironclad guarantee.