Coalition implodes on $7 Medicare payment

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The chaos enveloping the Government’s budget has turned internecine, from The Australian:

FRUSTRATED backbench MPs have blocked an attempt to fast-track the Abbott government’s $20 billion medical research ­future fund in a show of strength amid growing despair at the way their leaders are communicating their economic strategy.

The Coalition’s economics committee refused to approve a draft bill to set up the controversial fund in a blunt signal to ministers that it would not “rubber-stamp” fresh ideas after seeing the government struggle to argue for its existing reforms.

…Preparing the ground for a grim budget update in the next fortnight, Mr Hockey gave Coalition MPs a 45-minute PowerPoint briefing in which he warned of new “headwinds” facing the economy

…“The economic briefing was good but convincing Coalition MPs and senators is not the issue — the issue is convincing members of the electorate that our policies are right,” one MP said. “On the one hand we’re saying that conditions are sound, on the other we’re saying there’s a budget emergency.”

This is another PPL-style credibility killer. If the budget is sliding why on earth are we putting the co-payment into a research fund instead of using it pay down debt? And that’s before the policy is addressed as part of any push to increase the Budget’s fairness.

Let’s recall the policy’s provenance. Back in June, it was revealed that the Fund was a late addition to the Budget, and that health department officials only began working on the policy in April, just weeks before it was announced. Moreover, Australian Chief Scientist, Ian Chubb, was not consulted about the Fund before it was announced.

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Health Minister, Peter Dutton, has also ruled-out using money from the Fund fund to commercialise Australian medical breakthroughs, thereby raising question marks about whether it would actually boost the nation’s intellectual property.

What is becoming increasingly clear is that the Government developed the Fund for two main reasons:

  1. To distract the electorate from co-payments on medical services, as well as the cuts to state hospital funding announced in the Budget.
  2. To develop a giant slush fund.
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Surely, if the government was truly interested in improving health outcomes, then it would be better to use the funds to keep medical services more affordable and accessible, invest in increased medical services in regional and remote areas, or any number of other worthwhile initiatives, rather than depriving people of actual medical attention?

The entire proposal is ill considered, rushed, unfair, contradictory and only serves to ruin the underpinning electoral promise of fixing the budget. No wonder the Libs themselves are in revolt.

I’m beginning to wonder if the crisis enveloping Prime Minister Abbott and Treasurer Joe Hockey isn’t mounting towards some kind of imminent change. The article say not but includes this:

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West Australian MP Ken Wyatt stood at one point and rebuked the “arrogance” of ministerial staff members, which some took as a coded reference to the centralisation of power in the ministerial wing. “The criticism that they’ve put barriers up around the Prime Minister is absolutely true,” an MP said. “They’ve put walls around him for their own benefit and that’s a big mistake.”

That sounds like a siege.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.