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Parliament House, Canberra: transcript of doorstop interview: Federal Budget; Pharmaceutical Benefits Scheme; Auditor General report on Wooldridge House; aged care funding.

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Stephen Smith MP Member for Perth Shadow Minister for Health and Ageing


E & OE

Subjects: Federal Budget; Pharmaceutical Benefits Scheme; Auditor General’s report on Wooldridge House; aged care funding.

SMITH: Well, three things today.

Firstly, I am very pleased that we have decided to oppose the Government’s unfair measures to increase the cost of essential medicines by 30 per cent. We are opposing these measures because they are unfair, they’ll hit the sickest and the poorest hardest.

It’s unfair that Mr Howard and Mr Costello seek to repair their deficit off the back of the sickest, the poorest, the elderly and the weakest in our community. So I’m very pleased we are opposing those measures.

The fact that we are opposing these measures should come as no surprise. You’ll recall that in 1996 when the Government was first elected it increased the co-payments in the 1996 Budget. We opposed those measures tooth and nail, we opposed them in both Houses.

Regrettably, on that occasion the Democrats allowed the Government’s legislation to pass and the co-payments were increased. The combined effect of that increase in co-payments and the current proposed increases would see a 70 per cent increase in the cost of essential medicines for pensioners, concession cardholders and families since the Government came to office.

So I’m pleased we are opposing the 30 per cent increase. That 30 per cent increase, if it passes the Parliament, will see the cost of essential medicines for pensioners, cardholders and families under financial pressure raised by 70 per cent since the Government came to office.

That’s the first issue today. Secondly, you will all be aware that the Auditor General has indicated that his report into Wooldridge House will be tabled in the Parliament today. I hope the Prime Minister meets his undertaking that, at the same time, he will table the reports that he has requested from the Department of Finance and the Department of Health.


It will be an interesting read today to see what the Auditor General makes of a scandal of the highest order, when, on election eve, in a secret deal, the Government slipped $5 million for a building in Canberra away from asthma programs and rural and regional outreach services.

The third issue I just want to comment on briefly today is, you will all recall the Treasurer saying on Budget night that all the Government’s promises had been delivered on time, in full. You will, of course, be aware that since Budget night, we have of course shown in the Budget papers that the Government has ripped $325 million out of residential aged care. The justification in the Budget papers for ripping out $325 million from residential aged care is a fall in demand. That is an extraordinary claim. It defies all the anecdotal evidence and all the evidence provided to Members of Parliament and the Opposition by the industry.

They’ve also dudded rural and regional Australia. They gave a firm election commitment that they would spend $100 million in rural and regional aged care. The Budget papers disclose they propose to spend only $79 million.

So another Budget issue, which I hope will now run, is the Government again dudding rural and regional Australia on aged care, but more importantly ripping out $325 million from residential aged care funding.

JOURNALIST: What’s Labor’s alternative for raising funds to pay for an ageing population?

SMITH: Well, we, of course, will be a responsible Opposition. Are you talking here about the Pharmaceutical Benefits Scheme or residential aged care?

JOURNALIST: Pharmaceutical Benefits Scheme.

SMITH: Yes. Well, we will, of course, be responsible. Firstly, the Treasurer is out there trying to blackguard us for being irresponsible and opposing all of their measures. We are not doing that. The Treasurer’s justification for the changes they’re proposing to the Pharmaceutical Benefits Scheme is the long-term viability in this scheme. There are $800 million worth of measures which go to the viability of the scheme and on their face we support them.

I have said, continually, we are committed to the long-term viability of the Pharmaceutical Benefits Scheme and you can do that. But you don’t have to whack pensioners, the sickest, the poorest and the elderly by 30 per cent to sustain the scheme in the long-term. They are doing that simply to raise funds to shore up their deficit.

Now the effect of our opposition to the co-payment increases, if it’s successful, will be to knock $1.1 billion out of the Budget. We, of course, will


be responsible. There are a range of savings that you can find in the Budget, it is full of waste, it is full wrong priorities, it is full of mismanagement and I‘m sure that as Simon Crean’s formal reply unfolds tonight you will see a range of proposals which will go to restoring funding to the Budget.

JOURNALIST: What about means testing the rebate, the 30 per cent rebate…?

SMITH: I have seen that suggestion from the Democrats. Let me make a couple of points. Firstly, I hope on this occasion that the Democrats continue to oppose the suggestion to increase the co-payment. I’ve made the point historically that in 1996 they let an increase in the co-payments through. So firstly, I hope they continue to hold to their utterances that they will oppose the legislation to increase the co-payments.

Secondly, I’ve said consistently on the 30 per cent rebate that that is now very much a part of a family’s budget and people regard that much more as a family budget matter than a health matter. Having said that, as you know, all of our policies, other than the full sale of Telstra, are up for review. The 30 per cent rebate is obviously one of those things which is up for review. As I’ve said previously, some of the suggestions that have been made to me include looking at the removal of ancillaries, include means testing and include limiting the 30 per cent rebate in others ways.

But that is part of our formal policy review and in due course, we will as we get further down the track, be making formal announcements about that as we will in a range of other policy areas.

JOURNALIST: …(inaudible)…

SMITH: Well, in the Government’s $800 million measures there are a range of proposals which go to the way in which doctors prescribe medicines for their patients, which go to the way in which the industry conducts itself in terms of the information that it provides consumers and to doctors. And they are on their face viable measures.

We went to the last election with a range of proposals, some of which the Government has taken up in part or in whole, some of which they haven’t. But there is a range of long-term sensible measures which you can take which, for example, go to the openness and accountability of the Pharmaceutical Benefits Advisory Committee, which go to the transparency of the scheme so that the consumers understands the cost and the issues involved, which go to ensuring that the community is aware of the cost of the scheme.

One of the proposals the Government hasn’t taken up is to put the actual cost of medicines on the labels of the medicines themselves. But there are a


range of proposals which are out there both picked up in the Budget, suggested by us previously, which go to the long-term viability of the scheme.

The Treasurer is out there saying we have had an exponential increase in the cost of the Pharmaceutical Benefits Scheme. The average annual increase over the past decade for the Pharmaceutical Benefits Scheme has been in the order of 10 per cent. That’s been there for the last decade, it’s been there for all of the Government’s term. In the last year, in the last financial year before the election, the increase was about 20 per cent. That was largely the Government’s own work. Listing Celebrex, listing Zyban, the effects of the Treasurer’s quarter billion dollar Budget bungle on the cost that the Treasurer was asserting the Government was saving as a result of the introduction of the GST, on medicines.

All of those things led to a 20 per cent increase in the Pharmaceutical Benefits Scheme in the run up to the election. It was one story before the election a different story after.

The most recent data shows that this year we are back to the average annual increase. Now it’s a separate question as to whether for the next 50 years the scheme can be viable with an average annual increase in the order of 10 per cent. That’s a separate issue from whacking the sickest and the poorest with a 30 per cent increase in the costs of their medicines.