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Transcript of interview with Fran Kelly: ABC Radio National: 24 October 2012: private health insurance rebate; medical students; baby bonus.

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Interview with Fran Kelly - Radio National 24 October 2012

Fran Kelly: One of the key savings measures in this week's budget update is a plan to further cap the private health insurance rebate. It will be the second time this year that the Federal Government has taken to the rebate to find a total of savings up three and a half billion dollars.

In February, Labor won a four-year battle to means test the 30 per cent private health insurance rebate, saving two and - $2.4 billion.

On Monday, they had another go, which would put - which would save $1.1 billion from the bottom line by capping future rises in line with un… inflation.

But the Treasurer, Wayne Swan, says the Government is not hostile to the rebate.

Tanya Plibersek is the federal Minister for Health, she joins us now. Minister, good morning, welcome to Breakfast.

Tanya Plibersek: Hello Fran, how are you?

Fran Kelly: I'm very good, thanks. Minister, Labor's never really backed the private health insurance rebate. This is the second cut to the rebate this year if it goes through. Is it part of a campaign to get rid of it?

Tanya Plibersek: Oh no, Fran. I mean, the private health insurance rebate has been the fastest growing area of health expenditure and that's just unsustainable. We've got a lot of things that we want to do with our health dollar. We want to list new medicines, we want to help build new hospitals, new comprehensive cancer centres, the kids' dental program, which will mean 3.4 million kids find that it's as easy to go to the dentist as to go to the doctor.

These are all cost pressures and private health insurance growing at the rate that it's been growing, the rebate is just unsustainable.

Fran Kelly: But talking of cu… cost pressures, I mean, this is going to further put - increase the cost pressures on individuals because the cutback announced this week won't stop the private health insurers putting up their premiums will it? It will just offer less help to Australians who are struggling to pay those premiums.

Tanya Plibersek: Well Fran, it's going to make a difference at about $14 a year for an individual, and about $28 a year for a couple or a family. I understand that it's annoying when people say, you know, that that's not much of a difference.

Fran Kelly: Mmm.

Tanya Plibersek: But over the course of a year, I think people will barely notice $14, frankly.

Fran Kelly: That might be fair enough, but what about some of the older Australians who sign up later in life, because they already pay a penalty for signing up late. Now, they're going to be whacked again because you'll no longer given 30 per cent rebate on that penalty. And, for some, that's a lot more than $14 a year, it's hundreds of dollars a year extra. Why is that fair?

Tanya Plibersek: Well, the…

Fran Kelly: And why is that necessary?

Tanya Plibersek: So, you're describing two measures. The first measure is indexing the growth of private health insurance to the consumer price index…

Fran Kelly: Yeah.

Tanya Plibersek: … keeping it to inflation. And the second measure for people who have been following it as closely as you have, Fran, is that the penalty that people pay if they delay taking up health insurance - private health insurance after the age of 31, it's a two per cent penalty each year.

The average for this second measure, where the Government will no longer be paying the rebate on the penalty averages at about $114 a year, which is a little higher.

But Fran, here's the thing. That lifetime health cover penalty is introduced to encourage people to take out private health insurance. It was introduced years ago. People have had a good opportunity to know that that penalty is in place.

Fran Kelly: But Minister, some people can't…

Tanya Plibersek: When - no, no, Fran, I need to…

Fran Kelly: Okay.

Tanya Plibersek: … explain this. If you introduce a penalty for speeding, you don't expect the Government to pay 30 per cent of your penalty for speeding. If you introduce a penalty to encourage particular behaviour, it makes no sense that the Government reduces that penalty by picking up a third of the cost.

Fran Kelly: But you - I accept that, but a lot of people can't afford private health insurance. It's expensive. So, a lot of people take it up only when they're really

forced to, they're older - as they get older and their health demands are more and they need that insurance. They're already taking on that penalty to pay that.

Don't we, as a nation, need, in fact, older Australians to take out private health insurance? Don't we need to encourage that because they're the ones who are using most of the services funded by the insurers. If they're priced out of that, then there'll just be a further demand on the public hospital system.

[Mobile phone rings]

Tanya Plibersek: Um, ah…

Fran Kelly: That's okay, you're distracted by the phone.

Tanya Plibersek: I was actually distracted by my daughter's - someone trying to face time my daughter at 7.30 in the morning.

Fran Kelly: [Laughs]

Tanya Plibersek: And I'll be onto that as soon as I'm finished this interview.

No, I understand the point that you're making, Fran, but people have had a long time to get used to the idea that if they don't take out private health insurance that there will be a penalty attached. People have seen this one coming for years now, and it just doesn't make sense to have a penalty that encourages particular behaviour and then to reduce the effect of that penalty by subsidising it by a third. Or, indeed, in the case of the older Australians who you are describing by subsidising it by up to 40 per cent.

So, you know, I understand what you're saying about older people. Older people are much more likely to have private health insurance than younger people. Most of them have made provision for that for many years, for decades, in fact, because it's been an important part of their planning for the future. There's very few people that take it out in the, sort of, ages that you're talking about. The maximum number of years that the penalty exists is 10 years. Many people, in fact, are coming to the end of their 10-year penalty period now.

I don't think that it is unreasonable when the Government has had in place for many years a penalty for a particular behaviour that we end up paying a third of that penalty.

Fran Kelly: You're listening to RN Breakfast. Our guest this morning is the Federal Health Minister, Tanya Plibersek.

On another issue, Minister, I know you're aware of the problem of international medical students, they're having - not being able to finish their training in Australia because they can't get an internship in a hospital. Why are we investing in training these students in our universities if we can't then turn them into doctors? That's completely counterproductive for us isn't it?

Tanya Plibersek: Yes, it's nuts, frankly, we spend - the state health systems spend an absolute fortune on locums, we import about 2500 doctors a year, we're training medical students here in Australia, we've placed all the Australian medial students, but there remain around 180 full fee paying students who've come from overseas, who would make a great addition to our health system, and it is beyond comprehension that the states and territories don't want them in their hospital systems, given the doctor shortages.

Fran Kelly: Well, I'll come to that in a moment, but even in the notion - on the issue of placing all our local medical students, we spoke to one student today, Ben Veness(*), who says even some local med students can't get places in the states where they've been training, so they're training, they've got a life in one place, and then they're going to have to go back to another place, because in Victoria, for instance, there are no intern positions.

Let me play to you his message to you, as Health Minister, in his interview this morning.


Fran Kelly: Unfortunately the point here is the cooperation is missing between her and the state health ministers, but somebody's going to have to take ultimate responsibility for solving this, and it's not good enough for it to be a political fight between Liberal State Governments and a Labor Federal Government, the society at the end of the day needs all of these interns, and it's going to need that whole training pipeline right the way through. I want to make sure that my mum gets both the cannula and the stent, when she needs it.

Fran Kelly: And what's the timeframe then for any federal minister to fix this?

Ben Veness: For the interns, this seems to happen really quickly, because all of those internship positions need to be accredited, to make sure that we're maintaining the quality, and not just the number of internships, and they've probably got about another nine to 12 months to start thinking down the line about all the additional positions.

[Replay ends]

Fran Kelly: That's Ben Veness, a local med student from Sydney University, speaking to us earlier.

Minister, what more are you doing to try and work this out with the states and territories?

Tanya Plibersek: Well, Ben made a very good point about people that can't return to Victoria because of a decision that the Victorian Government has made to place international students before Australian students, and I think that's a big problem.

But what I've done is put 80 places on the table, of the 180, I am happy to pay for more than half of them, this is not a traditional role of the Federal Government, I'm happy to step in, because I accept that we need these doctors in our systems, we've got doctor shortages in many parts of the country.

What I've asked for in return is that the states and territories also step up, take some extra people into their systems, that will benefit their systems in years to come.

I've said that I'm prepared to attach to my 100 places a return of service obligation, so the young people that train under the money that I'm putting in, will be then asked to go to areas where we have particular shortages when they finish their training, and I think that that's a very good thing for those bush communities that need doctors.

Fran Kelly: But what if the states don't step up, what then?

Tanya Plibersek: Oh, well I'm pretty confident that we can reach agreement with a number of the states, and those states will benefit more than states who aren't prepared to compromise and contribute to what is a shared responsibility.

Fran Kelly: Minister, just finally, the cuts to the baby bonus, of course criticism in a number of quarters, Opposition Leader Tony Abbott says the Treasurer is just wrong when he said that you don't to have so much money to spend on the second baby, because you've already bought the cot, you've already bought the pram. As the Opposition Leader pointed out, it's not uncommon to have one in the cot, and a newborn, is it? You've got - you've had little kids, what do you think?

Tanya Plibersek: Well, I'm still using the cot that I had with the first one [laughs]. Look, of course there are - there are different expenses depending on how far apart your kids are, but the reality is that people will still be getting $5000 for the first, and if it's twins or triplets, you get $10,000 or $15,000, because yes, you do need all of that stuff at the same time. If it's a second or subsequent child, there are some things that you can reuse…

Fran Kelly: It's really just an excuse for cutting back the bonus, isn't it?

Tanya Plibersek: No, it's really a very generous payment, part of a range of very generous payments to families, we've got paid parental leave, we've got family tax benefit Part A, family tax benefit Part B, back to school bonus at 800 bucks for high school kids, 400 bucks for primary school kids, this is one measure in a range of measures, and remember, the reason that we're returning the budget to surplus is in part so the Reserve Bank can keep interest rates low.

A family with a $300,000 mortgage is paying $4500 less interest every year, because we've been able to keep interest rates low.

You've got to look at the whole package of support that's given to families, the family tax benefit for teenagers staying at school is an extra $4200, because of changes we've made. I think that it's terrific to support families with young babies, yes there are very many expenses, but most parents would agree that there are some economies of scale.

Fran Kelly: And minister, the phone's just fading out a bit there, I'm not sure if you've moved, but just finally, the comment from Tony Abbott yesterday when he made this was, you know, perhaps if only the Government was a bit more experienced. Now people have…

Tanya Plibersek: He can come over to my place at five o'clock when the youngest one wakes up, and use all of his experience [laughs] to get him up, I reckon.

Fran Kelly: Do you think that comment was pointed?

Tanya Plibersek: Oh look, I can't answer for what he meant, truly, I'll leave that one for him [laughs].

Fran Kelly: Tanya Plibersek, thank you very much for joining us on Breakfast.

Tanya Plibersek: Thank you, Fran. See you.

Fran Kelly: Tanya Plibersek is the Federal Health Minister.