FRAN KELLY: Well the Prime Minister says the Government is listening, learning and improving. His comments came when he announced a third policy back down for the Government in less than a fortnight. The much maligned $7 compulsory GP co-payment has now been dumped. It will be replaced by a $5 discretionary fee to the GP, meaning it will be up to doctors to decide whether they impose it or not. In a significant carve out eight million children, pensioners and other concession card holders will be exempt. Finance Minister Mathias Cormann joins us from Melbourne this morning, Minister welcome back to Breakfast.
MATHIAS CORMANN: Good morning, good to be back.
FRAN KELLY: A new and improved proposal that is how the Prime Minister described this yesterday. Why is this new fee better than the old one?
MATHIAS CORMANN: We have listened to the concerns that were put to us by the community and by our backbench Members and Senators. We have worked in recent weeks on the Expenditure Review Committee and in particular of course, the Health Minister has done a lot of work to respond to the concerns that have been raised and come up with a better policy moving forward, which maintains the principle of a price signal, but better targets that price signal, but which also still helps us to ensure that we put funding for our world class health system on a sustainable foundation for the future.
FRAN KELLY: What took you so long Minister? The Government has been haemorrhaging on this ever since the May Budget. People have been telling you basically since then, for seven months, you should exempt children, pensioners and concession holders. Why did it take you so long to listen and learn?
MATHIAS CORMANN: We are dealing with all of the measures in the Budget sequentially and in a prioritised fashion...interrupted
FRAN KELLY: Really, even though this one was causing you so much political pain, you left it until it was next cab off the rank?
MATHIAS CORMANN: The co-payment measure was due to come into effect on 1 July 2015. It is not as if we have been sitting on our hands and not been doing anything since 1 July, since the Senate changed. We got rid of the Carbon Tax, which was good for families and business. We got rid of the mining tax and with that achieved $50 billion in savings over the next decade. We dealt with a whole series of Budget measures and reform priorities and of course now we have finalised this particular Budget measure, which is an important structural reform, which will put Australia on a stronger foundation for the future.
FRAN KELLY: Let's talk about how you're going to do it. You're going to reduce doctor's rebates by $5. It will be then up to the doctors to decide whether to pass it on to patients. We have heard this morning from Doctor Brian Morton, he is a GP, in fact he is Chair of the AMA's Council of General Practice. He says most of them will pass it on. Let's have a listen:
DR BRIAN MORTON (EXTRACT): Don't forget that the GP runs a small business. There is rent to pay, staff costs. Over the last 10-20 years there hasn't been proper CPI indexation of the Medicare rebate. It is going to make it very difficult for GPs not to charge a $5 cost. There will be a lot of pressure for GPs to do it.
FRAN KELLY: Aren't you just trying to outsource the cost recovery to the doctors so it is the doctors, not the Government that cop the backlash?
MATHIAS CORMANN: No, what we are doing is we are making sure that funding of timely access to high quality health care for patients remains affordable for taxpayers over the medium to long term. When you have growing demand, which we have, in the context of an ageing population, growing demand for health care services, there is a need to ensure that our limited resources are allocated as efficiently as possible. A price signal is a proven way to ensure the efficient allocation of limited resources. What we have done is to ensure that the price signal is more appropriately targeted. We have excluded pensioners, concession card holders, children under 16, veterans, patients in nursing homes and the like, but for everybody else, we do believe that it is appropriate for patients to be asked to make a small contribution toward the cost of accessing a medical service, a GP service.
FRAN KELLY: But on the one hand you are saying it is discretionary, the doctors don't have to charge it if they don't think they should or they would. But at the same time, you clearly want them to because the Prime Minister and also the Health Minister is saying that they want a price signal built in. And you just said it too, we need a price signal in the system. So you are really encouraging doctors to charge us this extra $5 aren't you?
MATHIAS CORMANN: What we have done is we have moved away from a mandatory co-payment that applies to everyone to an optional co-payment which applies to general patients, not to patients on a concession card and the like...interrupted
FRAN KELLY: Yes, but you don't want it to be optional do you? Because you want that price signal in there?
MATHIAS CORMANN: Well it is optional, because it is ultimately down to the judgment of the GP if and to what extent the GP will charge the $5, or up to the $5, to recoup the deduction in the Medicare rebate, to give effect to that.
FRAN KELLY: You're listening to RN Breakfast. Our guest this morning is the Finance Minister, Mathias Cormann. It's his job to try and balance the Budget and there has been a few significant policies like the $7 GP co-payment and other policies stuck in the Senate. The Government has come up with this new plan to try and get the co-payment or some kind of co-payment into the Medicare system. You're excluding or giving 8 million Australians an exemption from the co-payment that's children under 16, veterans, pensioners and health card holders. 8 million people and yet basically you're raising the same amount of money, $3.5 billion that the original co-payment plan would have raised, how are you doing that?
MATHIAS CORMANN: There are different, there are four parts of the revised package. So the $5 reduction in the rebate for those patients other than the 8 million that are exempted is one part of a four point plan. There is also the part of the package which will ensure that we charge a higher rebate for GP consultations of more than ten minutes and a lower rebate for the consultations of less than ten minutes. Essentially we were concerned about the increasing emergence of what is called 'six minute medicine', where patients are moved through the GP practice too quickly perhaps. So we want to reflect in the Medicare Benefits Schedule a bias towards the more substantial service that is provided when a doctor sees a patient for more than ten minutes as opposed to for less than ten minutes. So there's a saving that will come with that. There is also the extension to some of Labor's previously budgeted freezes in indexation of MBS rebates. So all up, the saving will be about $3.5 billion instead of the $3.6 billion or there abouts in the Budget.
FRAN KELLY: But it comes out of general practice rather than out of every Australian's pocket?
MATHIAS CORMANN: Obviously, there is a proportion that will come out of Australians pockets, to the extent that... interrupted
FRAN KELLY: How much of that? How much of the $3.5 billion will come out of us paying $5 extra and how much will the GPs cop?
MATHIAS CORMANN: You know what, ultimately every single dollar that is deployed to the health system by the Government comes out of the taxpayers' pocket. So this... interrupted
FRAN KELLY: No, how much of us from the rest of us, not that 8 million concession holders, but the rest of us, how much of this $3.5 billion will be raised from us paying an extra $5 to go to the doctors?
MATHIAS CORMANN: So the $3.5 billion comes from the adjustments that we're making to how much the Government pays out. How much individual Australians will have to pay depends on the judgements that doctors make when they have their patients in their clinic with them.
FRAN KELLY: But you must have a calculation because you've come up with a $3.5 billion figure?
MATHIAS CORMANN: The $3.5 billion is based on adjustments of what we pay out. Some of that will be recouped by GPs from the patient, but the $3.5 billion is the saving the Government will achieve by being able to spend less in relation to some of these services and some of that will be recouped from patients.
FRAN KELLY: Okay, so I've got a feeling that you don't want to say the calculated figure.
MATHIAS CORMANN: No, not at all. You're asking me to give you a figure that I can't possibly predict, because... interrupted
FRAN KELLY: Oh let me ask you it this way, how much are you saving by freezing the Medicare rebate for four years and reducing the rebate for six minute, visits under ten minutes?
MATHIAS CORMANN: As the Prime Minister said yesterday in his press conference, the three major measures save around about a $1billion each...interrupted
FRAN KELLY: Okay.
MATHIAS CORMANN: In terms of freezing the rebate for three years for GP services that's another $500 million or thereabouts.
FRAN KELLY: Minister, I know you're busy, can I just ask you, the Prime Minister says he's learned from the Medicare mess. What about you, what do you think the main lesson is from this year for the Government? The Budget policies have been poorly drafted, or is the bigger problem the sales job? What's been the problem?
MATHIAS CORMANN: We inherited a very challenging situation. We inherited a Budget in a mess. Budget repair was never going to be easy. But the fundamental task remains. We've got to repair the Budget to strengthen our economy and to strengthen opportunity into the future and we will continue to be focussed on that. Obviously along the way, we're flexible, we'll listen to any feedback and we will feed any feedback into the way forward as appropriate.
FRAN KELLY: Mathias Cormann, thank you very much for joining us.
MATHIAS CORMANN: Always good to talk to you.
FRAN KELLY: Mathias Cormann is the Federal Finance Minister.