Budget; Family Tax Benefits; Pharmaceutical Benefits Scheme; States; East Timor; pension

2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998
Sir John Gorton
May 20, 2002
Bega Cheese Co-op, PBS, Budget, Private health insurance, Leadership, Telstra
May 22, 2002
Sir John Gorton
May 20, 2002
Bega Cheese Co-op, PBS, Budget, Private health insurance, Leadership, Telstra
May 22, 2002

Budget; Family Tax Benefits; Pharmaceutical Benefits Scheme; States; East Timor; pension


Interview with John Miller and Ross Davie

Tuesday, 21 May 2002



SUBJECTS: Budget; Family Tax Benefits; Pharmaceutical Benefits Scheme; States;

East Timor; pension


Nineteen to nine, and as promised we have the Federal Treasurer, Mr Peter Costello,

in the studio. Good morning Mr Treasurer.


Good morning Ross.


Fairly rowdy reception we are led to believe on the Gold Coast with some protesters

yesterday, have you had much of that as you go around the country on your Budget

selling mission?


No, I think there were about five or maybe ten there yesterday protesting against

the war in Afghanistan. As you can imagine the Government is not going to be

persuaded by five or ten protesters to end its engagement with our allies in

Afghanistan. We think it is important to take strong action against the terror

networks that were operating out of Afghanistan. We think it is important for

Australia’s security and for world security.




They’re entitled to their view.


Sure. Well, the latest Newspoll would tend to bear you out. That Newspoll,

incidentally, conducted for The Australian newspaper shows 44 per cent of respondents

believe they will be personally worse off under this Budget, up from 29 per

cent from the last Budget. Have you seen those figures?


I have seen today’s Newspoll, yes I have, and the Newspoll that I saw was that

there was a majority of people that thought that the Budget was good for Australia.

When you say to people, well, do you think it has got benefits for you, I think

that there are a lot of people that say that there are but there are others

that say that it doesn’t. But that is not surprising. This is not a Budget which

is designed to be giveaways. This is a Budget which is designed to support Australia’s

defence effort, to secure our borders, to take a strong stand in relation to

terrorism and to secure the Australian economy. It is, budgets are when you

lay down your financial plans and I think most people think it was a fair Budget

but it needed to be a firm Budget.


It was never going to be an easy one to sell, was it, because you tax cigarettes,

or alcohol, or gambling or whatever and you are taxing a percentage of the population.

You start taking money off, or adding money onto prescriptions and you are affecting

absolutely everybody, aren’t you?


Well, not necessarily, there has been a lot of talk about this, people say,

for example, I have seen it often said, oh you will pay more for Ventolin for

asthma. That is not right. We have a scheme that subsidises expensive medication

and the most you can pay if you are a non-pensioner is $26.80 and the most you

can pay as a pensioner is $4.60. But there is a lot of medication that is below

that ceiling of $28.60 and it does not move in price. I think this is a point

that has been lost…


It is a point that’s been lost, yeah…


…that if you are paying for Ventolin at the moment, I think around $17.20

you will be paying $17.20. It is only those prescriptions that are over the

ceiling that you will be paying $28.60 and that is the highest it can go. For

example, we listed a treatment for cancer on the Pharmaceutical Benefits Scheme

last week and it cost $6745.

Now, the most a pensioner can pay for that prescription is $4.60. The taxpayer

subsidy is $6740 approximately. But if it was below the cap then it does not

move. And I think that point has been lost on a lot of the debate actually.


Yeah. Alright, Mr Treasurer, we have got a couple of callers on the line for

you this morning so we might do that right now and you can talk to the Treasurer

on 131332 if you wish.

Glen, from Ballshill, yes Glen.


G’day Glen.


Good morning John, Ross and Mr Treasurer.


Hello Glen.


I’m ringing up about the Family Tax Benefits. What is happening with that?


Family Tax Benefits which were introduced back in July of 2000 are continuing.

We have two types of Family Tax Benefit. We have got one for parents with children

and one for the single income family where the mother is staying at home and

is not earning income. And the benefits under both of those were increased last

back in July of 2000 and they are continuing to be paid.


Okay Glen, does that answer your question?


Will it be an increase with the CPI at all, Mr Treasurer?


The Family Tax Benefits do increase. I can’t actually tell you the formula

at the moment but they do actually increase.


Alright Glen, thank you for your call. Jenny, Jenny from Ipswich. Yes Jenny.


Good morning Mr Costello.




Do you think it’s fair to penalise pensioners’ medication costs to help subsidise

the massive perks given to retired Prime Ministers and why would you never means

test all the perks, or all the handouts?


Well, we do not, there is no connection between policy in relation to pharmaceutical

benefits and retired Prime Ministers.


But you can understand, you can understand the feeling out there when they

see, when the people see retired politicians, in particular retired Prime Ministers,

not that you would deny them, you wouldn’t want to see a retired Prime Minister

living in the gutter but they certainly don’t. You can understand, even though

people may be labouring under a misapprehension here that the very real impression

given is, is that the pensioners and the others do it tough and that cuts, if,

when cuts are made it is that end that gets cut, not the top end?


Well, let me make a couple of points about this. If you are talking about retired

politicians you would have read in the newspaper today that in fact retired

politicians did have their benefits cut.


Yes, Comcar benefits.


That’s right, but previously…


But that’s not, that’s not…


Well, hang on, let me go through it, let me go through it…


Okay, alright.


…okay. That, if, for what, twenty, thirty, maybe I don’t know, fifty years,

retired politicians were entitled to a car service and that was cut. So let’s

put that in context. Let’s come to the issue of the Pharmaceutical Benefits

Scheme, and I, you know, I think it is really important that we explain this.

If you are a pensioner it does not matter what your medication costs, you pay

$4.60. I gave you an example of a medication that costs $6000.




You do not pay $6000, you do not pay $5000, you do not even pay $500. What

you pay is $4.60 regardless of the cost. Now, if you have 52 scripts in a year,

that is more than one a week, they are free. You do not pay anything. Now, it

is important to understand this John, that these medications do not come for

free, the Government does not make them. The Government buys them for hundreds,

sometimes thousands of dollars and the taxpayer subsidises the hundreds and

the thousands of dollars and the contribution, the co-contribution that pensioners

pay is $4.60. Now, I think that that is a scheme which, which ensures that pensioners

get medication at very low co-payment rates. But if you want to keep bringing

more medications onto the scheme, sometimes bringing them on at a cost of five

hundred, a thousand, or more dollars, you have got to make the scheme sustainable,

otherwise what the Government will just say is that we can’t bring new scripts

onto the, onto the Scheme. We do not want that situation to arise.


Okay, now we have fielded a lot of questions who aren’t pensioners, who are

family, Mum and Dads with three or four kids. Their concern is that when a sickness

goes through the family, Mum gets sick and maybe two of the kids get sick, down

they go to the chemist and they are up for three prescriptions, and all of a

sudden they are paying out maybe, $75 worth of prescriptions, and the increases

to the cost of those prescriptions multiplied by a number of kids and Mum and

Dad is starting to become unsustainable.


Well, let’s go through this again, because, you know, I think it is very important

that we get the facts out in relation to this. There are, there are about half

prescriptions are below the ceiling rate anyway. The ceiling rate is $28.60.

I gave you the example of Ventolin. Ventolin is below that. The price of Ventolin

does not change. It is not the price of every medication that changes. The only

thing is, you can pay up to $28.60 if the price was above that, if it is in

the hundreds or the thousands. Most antibiotics, well, let me give you an example

of an antibiotic – Augmentin costs $18.19, the price does not move. If you are

going to the doctor for the kids for Ventolin or Augmentin, or something like,

the price is not moving. It is only the prescriptions that are in the thirty

dollar to three thousand dollar, or thirty thousand dollar range that actually

move, and you pay a maximum of $28.60. But, if you have thirty of those prescriptions

in a year thereafter you go on to the concessional rate.


Okay, you have given me examples of Ventolin and Augmentin. Do they fall into

the minority of drugs or…


Oh no, these are the usual drugs for families. Ventolin is the usual treatment

for asthmatics, that is a very common one for kids with asthma. Augmentin and

antibiotics are the very common medications that you will be paying, that you

will using for flu or a throat infection, or something like that. In fact, it

is only the rarer ones that cost the huge sums of money, the hundreds or the



Well, that has put it in perspective for some of those callers we have had,

so, we thank you for that.


Look, on a broader scale I noticed that the State Treasurers are ganging up

on you now. Apparently Nick Minchin, who is the Finance Minister, has said the

States must take more responsibility for poor Australians over the next decade

because they receive every dollar of the GST. The Treasurers of all States except

South Australia, funnily enough, say Senator Minchin’s comments are designed

to pave a way for future cuts to Federal funding to welfare, health and education.


Well, you wouldn’t expect them to say anything else would you? Six State Labor

Treasurers and two Territory Labor Treasurers disagreeing with a Federal Coalition

Government, you know, what’s new? The point I would make about this is that

the State Governments are probably in the best position that they have ever

been in, John, because when we introduced GST, and people forget this, not one

dollar of GST goes to Canberra. Every single last dollar of GST revenue goes

to the six States and two Territory Governments and Mr Beattie gets his monthly

GST cheque to fund his Government. He does not have to take any of the odium

of running this tax system, but he just takes his monthly tax cheque and with

that he has the capacity to fund the Queensland school education system. Let’s

make this point, the GST revenues to the Queensland Government now pay for every

school teacher in every classroom, in every school in Queensland. And then after

they have finished paying for that, they now pay for the policemen on the beat.

So, they are in a pretty good financial position as a result of the Commonwealth

deal, and the Commonwealth believes that they have to be responsible with those

funds, and I think to his credit, even Mr Beattie has recognised that the funding

arrangements have been pretty good for Queensland.


Okay, let’s take another couple of callers. Greg, from Bracken Ridge, good

morning Greg.


Yes, good morning. Look, just a question to the Treasurer regarding the amount

of foreign aid we pay out to other countries. Could he explain why we pay so

much foreign aid?


Well, we pay foreign aid for numbers of reasons, the most important of which

is to help people who are living in poverty or dying of diseases in other countries.

Another reason why we do it is because we want to ensure that countries in our

region are stable and that effects Australia’s security. Let’s take, for example,

East Timor. Australia makes a substantiative aid contribution to East Timor.

Why do we do that? Well, you saw the rampages and the burning of Dili. I think

the Australian public want the Australian Government to do something about it.

We did, we secured it with troops, but, you have got to rebuild a country from

scratch. They are basically building that whole country up from the ground.

Now, there is the humanitarian element to that which I put but also, from Australia’s

point of view, we want a stable East Timor from a national security point of

view, having an unstable country on your northern border, it could be a real

worry in relation to New Guinea, which is the largest recipient of Australian

aid. These countries are on our doorstep and we want secure countries in our

regions rather than ones that are suffering from, you know, internal ructions.


The cynics would say we want a fair relationship with them because of the very

valuable oil fields there, of course, too?


Well, there is a big, yes, there is a big oil and gas field in the Timor Sea

which is between Australia and East Timor, and as you can imagine, it is the

sea in between both countries so both countries say they have the right to tax

the development. Now, we have sat down and had a pretty strong negotiation with

the East Timorese. It is closer to East Timor than it is to Australia. We have

agreed to share the taxation rights on a 90:10 split their way. There is another

field which is a bit closer to Australia and we will have to negotiate. I can

assure you of this, we will do what is fair to East Timor but we will also have

an eye to protecting Australian interests as well. That is what the public would

expect the Government to do.


Time getting away on us, let’s take John from Scarborough. G’day John. John,

Are you with us? No? Let’s go to Carmel from Margate. Good morning Carmel.


Hi, I’d like to ask the Treasurer a question, thank you. The question being,

if you are a single pensioner you have to have 52 scripts before you get your

medication for free, but if you are a married couple it is only twenty-six each,

but the married couple it’s twenty-six between the two of them? Why is it discrepancy,

I was just wondering?


Well, yes, it is a fair question, I have been asked this quite a lot. The reason

is that married pensioners are treated as a family and single pensioners are

treated as a family and the rule is fifty-two scripts for the family. And I

can see if you are a single person you might think that is a bit unfair. You

think that two can live cheaper together than two individually. It is the same

in relation the pension rates though. The married pension rate is not double

the single pension rate because we recognise that if you are a single pensioner

you have got costs like rent, and gas, and electricity, which two can share

if they are living in a couple and get things a bit cheaper. So, they get a

bit lower for the pension, they get advantages on the family point of view,

but that is the way in which the systems work. I can understand the question

behind it but that is the reasoning behind the way in which the system operates.


Okay, Mr Costello, you have not been very kind, lately, to Mr Crean. Where

are we at with Mr Crean and to a lesser extent, Natasha Stott-Despoja blocking

all of this? Is it likely to happen or is likely to undermine his leadership,

as you have said?


Well, I think it will because, you see, he became the Leader of the Opposition,

what, about six months ago, and he said he was going to turn over a new leaf,

that he realised he had been negative and destructive over the last five years.

And he said, I will turn over a new leaf and I will try and be cooperative and

positive as an Opposition leader. We get to his first Budget, first test, as

to whether he can be cooperative and positive and he fails it miserably. Now,

you know, it is like the horse that goes out in the steeple race, you know,

and it says I am going to be a great jumper and it comes to that first jump

and it goes, sort of, neck first into the, into the first jump. And I, you know,

he will never get rid of that negative, carping, whining, destructive image

if he can’t show that he can stand up for the public interest and be positive.

And that is what I would say to him, I think he should reconsider his position.


Alright, we have only got a couple of minutes left. Let’s quickly, Alec from

Coopers Plains. Yes Alec.


Yes John. My wife has been on medication for seven years. Now the Treasurer

says that no one is paying anymore than $4.80. Well, the last two to three years

my wife has been paying $5.85 for this medication, so he has not, he is not

just up to date with the prices, is he?


Well, if it is on the Pharmaceutical Benefits Scheme the most that you will

be paying is $4.60. Now, if you are buying something that is not on the scheme,

and there are a lot of things that aren’t. They might be, for example, natural

remedies, or they might be something that is not a prescription medicine, you

can pay something else. But if it is a recognised prescription on the Pharmaceutical

Benefits Scheme and if you are a pensioner, it is $4.60.


We are getting call after call on the prescription issue but you, you’re saying

that if it is not above that certain $28, whatever it is, ceiling then people

need have absolutely no concern whatsoever?


The price does not change. The only thing that has changed is the ceiling.

If it was below the ceiling before, it is still below the ceiling.




If Ventolin was below the ceiling, as it was at $17.20, it is still below the

ceiling. You see, I, you know the people have sort of put out this idea that

every medication is actually going up.


When that is very definitely not the case. Well, we are just about out of time

but very quickly, you are here for a Liberal Party function, a luncheon today.

The Libs in Queensland, as they are in some other States, in fact most other

States, in Queensland, are not in good shape. Do you see that impacting on you



Well, we would like to help them as much as we can and I am here to support

them. I think it is very important that we support each other and that is what

I will be doing at lunch time.


Alright. Federal Treasurer, Peter Costello, thanks for taking the time out

to take those calls this morning.