Treasurer

Interview with Stephanie Kennedy

ABC AM

Tuesday, 12 April 2005

8.10 am

SUBJECTS: Productivity Commission Report on Ageing, Budget

TONY EASTLEY:

The Federal Treasurer says the Productivity Commission has confirmed what the

Government already knew and the report endorses the Government’s emphasis on

increasing workforce participation for people over the age of 55.

Peter Costello acknowledges the looming crisis in the nation’s health system

and says changes are needed now otherwise standards will slip.

He’s speaking to Stephanie Kennedy in Canberra.

TREASURER:

Well, we’ve got to first of all encourage as many people as possible to participate

in the workforce – that is, people who are mature workers, those over

55 – they’ve got to be encouraged to stay in the workforce.

People who drop out of the workforce perhaps because they have an injury at

work have got to be encouraged to return, parents whose children are of schooling

age should be encouraged to participate in the workforce and those people that

are able to participate in the workforce, we’ve got to have an industrial relations

system which rewards them for effort and gives them better wages for higher

output.

KENNEDY:

You’ve been pushing for older Australians to return to the workforce, but even

the Commission says that’s not the only answer.

TREASURER:

The fact of the matter is when fertility rates dropped in the 1970’s, 30 years

ago, the ageing of the population became Australia’s destiny. Demography is

destiny. What is going to happen over the next 40 years was set over the last

30 years. And there’s no escaping from the ageing of the population –

it can’t be turned around now. This is with us.

And so what we’ve got to do is we’ve got to respond to it in ways which will

make the costs of the ageing of the population sustainable. Now, encouraging

people to stay in the workforce – mature age workers, people who are over

55 – at least to retirement age, which is 65, will do something to soften

the impact.

KENNEDY:

The Productivity Commission is urging the Government to take tough decisions

on health, are you willing to do that?

TREASURER:

Well, what this report does is it confirms what I first revealed in the Inter-generation

report in 2002, and it says if anything, perhaps we were a little more optimistic.

But one of the things it finds, for example, is health expenditure on over 65’s

is four times what it is for people under 65. Now, if your population over 65

is going to double, you have a looming health care bill over the next 20, 30

and 40 years, and pharmaceuticals rising even faster.

Now, what we have to do is we have to get the health care system onto a sustainable

basis. If you don’t get it on to a sustainable basis, then standards will inevitably

slip in 10, 20, 30 and 40 years time, just as the population starts ageing.

KENNEDY:

One of the serious problems is older Australians using hospital beds because

there aren’t enough aged care facilities, are you going to provide more funding

for aged care facilities?

TREASURER:

We provided an additional $2.2 billion in last year’s Budget. But I’ll put

an even more important suggestion and that is we have to increase funding for

people to stay at home. We can’t afford to have all older Australians in aged

care homes, any more than we can afford to have them in hospitals.

Where we need to have them is in their own homes, with the support of services

coming in to their homes so that as they live longer, they can stay in the community

rather than go for longer periods into institutional arrangements. And that’s

got to be the goal of social policy here.

KENNEDY:

Are you saying that there’ll be extra funding for carers, for example, in this

coming budget?

TREASURER:

Well, we have massively increased funding for home and community care over

recent years and the demand keeps rising as the funding keeps rising with it.

So, this is something that we’ve been attending to over recent years, and it’s

something that will become an even more urgent issue over the decades which

lie ahead.

KENNEDY:

Older Australians are high users of the Medicare safety net, and that is obviously

blowing out from around $440 million to $1 billion. Hasn’t the Government completely

miscalculated the cost of the Medicare Safety Net?

TREASURER:

No we haven’t, we’ve actually put down in our estimates reasonable anticipation

of those costs. But since you’re on the question, let me remind you of this,

with the population ageing, with the draw down on services four times higher

for over 65’s, the policy that was put forward at the last election, the so-called

Medicare Gold policy – free health care – must have been the most

irresponsible policy ever announced in Australian history. Fortunately nobody

ever had to hang around to see its implementation.

KENNEDY:

But Labor also said at the time that the Medicare Safety Net would blow out

to around $1 billion and it has done, what will you do to reign it in?

TREASURER:

No, Labor said it wanted an even more expensive policy. It wanted free health

care – the so-called Medicare Gold – for people over 65. The most

irresponsible policy probably put down in a federal election period. So fortunately

that policy never saw the light of day.

KENNEDY:

As I asked, what will you do to reign in the $1 billion blow out in the Medicare

Safety Net?

TREASURER:

Well, as I’ve said now, in the last three questions, the answer in Australia

is to get our health services onto a sustainable basis.

TONY EASTLEY:

The Federal Treasurer Peter Costello.