Medicare ‘Gold’ unfunded and unsustainable – Press conference, Melbourne

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Medicare ‘Gold’ unfunded and unsustainable – Press conference, Melbourne




Press Conference

Treasury Place, Melbourne

Friday, 8 October 2004

3.40 pm


SUBJECTS: Medicare ‘Gold’ unfunded and unsustainable


Labor’s so-called Medicare ‘Gold’ policy has exploded this afternoon.

The Department of Finance has just released a costing which shows that in

the first two years alone, the costs will be $700 million more than the

Labor Party said. And what’s more the cost of this policy will escalate

at 10 per cent per annum. But that is just the tip of the problem for Labor.

Because the Finance Department has costed this as blowing out by $700 million

after allowing for a Commonwealth claw-back from the States under the health

agreement of $3.3 billion.

I want to take you to the Finance costing where this is stated, it is on

page 3 under the heading Caveats or qualifications to the costing.

It says, ‘the full cost of Medicare ‘Gold’ will depend upon

the outcome of the Medicare Partnership Agreement negotiations and the amount

of funding that is returned from the State and Territory Governments to

the Australian Government. The estimated cost of treating people aged 75

years and over in public hospitals is $3.3 billion in 2006-07, $3.5 billion

in 2007-08. These costs are broadly shared between the Australian Government

and State and Territory funding. Should the negotiations not result in the

return of the full amount, the costing will increase by the amount retained

by the States and Territories.’

That is, there is a $700 million blow-out if the Australian Government

can get back half of the costs for treating people over 75 from the States

and Territories. Half of that cost in those two years alone is around $3.3


Now, if the Australian Government were to get the return of that money

from the States, that would be a 20 per cent cut in Commonwealth grants

under Health Care Agreements. This policy is premised on a 20 per cent clawback

of Australian Government funding under the Health Care Agreements.

Let me make a prediction, no State Government is going to agree with that.

No State Government is going to re-open these agreements and allow the Commonwealth

to clawback 20 per cent of its funding. And of course if the Commonwealth

can’t claw that $3.3 billion back, you just add that to the costs of Medicare


Which State Labor Premier has been informed by Mark Latham that Mark Latham

intends a clawback of $3.3 billion under the Health Care Agreements? None.

Which State Labor Premier will agree to it? None.

I just want to refer you to one other document. When Mark Latham was asked,

as he has been on numbers of occasions through this campaign, when he was

asked whether or not he would fund Medicare ‘Gold’ by clawing money

back from the States, he was asked by Sally Loane on ABC Radio

on the 4th of October, he said: ‘They’re wrong in assuming

that as well. There is not going to be a move to take money off the States,

out of the hospital agreement.’ That is what he said to the public. What

he said to the Finance Department was: ‘…cost my policy on the

assumption that there is a clawback.’

A very elaborate game has been going on here. One thing to the public and

another thing to the Finance Department. He had to say that to the Finance

Department so that his policy would only blow out by $700 million. If he

hadn’t have said that to the Finance Department it would have blown out

by another $3.3 billion. So take your pick.

This policy is underfunded, undercosted, unsustainable and unbelievable.

And this afternoon the Finance Department report has shown that to be the



Are you suggesting that Mr Latham has lied to the public?


Well Mr Latham said to Sally Loane: ‘there is not going to be a move

to take money off the States.’ That is what he said to the Australian public.

His policy, when it was costed by the Finance Department, assumes a 50 per

cent clawback. Which is it?


Well from my reading of the next sentence Treasurer, he seems to be saying

that rather than taking the money back he will be adding to the money out

of Medicare Gold, with the money below the 75’s will stay there and he will

add to it (inaudible).


In which case his policy costs another $3.3 billion. 


No in which case that money is still used for over 75s and it remains there

and he adds to it as growth money.


Hang on let me take you back to what Finance says. It says this: ‘should

the negotiations not result in the return of the full amount, of the full

50 per cent, the costing will increase by the amount retained by the States

and Territories.’ Take your pick. He either claws it back and his policy

blows out by $700 million or if he doesn’t claw it back he has got an even

bigger problem.


Doesn’t it just even up the $700 million that he was under on the other



A $700 million hole and a 20 per cent claw back, so what is that? You know,

he is either taking 20 per cent of Commonwealth funding back from Health

Care Agreements or he has got a $4 billion problem on his hands. You take

your pick.


When were these costings completed Treasurer?


I believe they were completed at about three o’clock this afternoon. They

are on the website of the Department of Finance.


Handy timing.


Well you know, I have said all the way through this campaign that the Labor

Party has been putting in its costings as late as possible to hide from

scrutiny. Here we are, it is four o’clock on the Friday before election

day and we are getting the costings on Labor’s health policy. Now, why?

Well, they wanted to scoot to the election without this scrutiny. And we

are still waiting for the costings, by the way, on the full tax policy.

I suppose we should be grateful for small mercies.


When were they submitted to Finance and Treasury?


Medicare Gold?




Medicare ‘Gold’, I believe was submitted on the 4th of

October, either the 1st of October or the 4th of October.

Don’t hold me to that date.


If it was the first, given that you said this morning that it takes five

days, it would take five days to do the tax costings, (inaudible) talk about

the timing (inaudible) has taken seven days?


The Medicare ‘Gold’ was submitted after the cut-off period. The cut-off

period was 5 pm on the Thursday, Medicare ‘Gold’ was either submitted

on the Friday or the Monday, I can’t recall which, but after the deadline.


What does it say Treasurer about the Charter of Budget Honesty, I mean

should it be compulsory for these matters or what do you…


Look, I have always assumed that political parties that wanted their policies

to have credibility would put their costings in. If a political party doesn’t

put its costings in then I think you should just disregard what it is saying.

What I have argued all the way through, all the way through this campaign

I have been arguing, why haven’t they put the policy in. I have been demanding

that they put the policy in. I have been asking the press to ask this of

the Labor Party. What we had was an elaborate game and where does it end?

Four o’clock on Friday, the Finance Department releases a report, it says

that the Labor Party’s policy is $700 million short if it claws back 50

per cent of the cost of treating over 75s and if it doesn’t, just add that

on to the cost. Now you take your pick what Mr Latham really intends to

do. He intends to absolutely blow his policy or does he intend to rip 20

per cent of funding, Commonwealth Government funding out of the States.

You ask him which it is. Thank you all very much.


At least one poll is tipping a Howard landslide tomorrow. Is that what

your research is showing?


Look, I think that it is very close. I think either side could win this

election. I do not believe that anybody has a winning position yet and I

think there are probably still a lot of Australians that are making up their

mind overnight and some will make up their mind when they go into the ballot

box and I think there is enough of them to swing the election either way.

Thank you.