The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 08/10/2004

TRANSCRIPT 

THE HON PETER COSTELLO MP
TREASURER

Press Conference
Treasury Place, Melbourne

Friday, 8 October 2004
3.40 pm

 

SUBJECTS: Medicare ‘Gold' unfunded and unsustainable

TREASURER:

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 billion.

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 ‘Gold'.

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 case.

JOURNALIST:

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

TREASURER:

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?

JOURNALIST:

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).

TREASURER:

In which case his policy costs another $3.3 billion. 

JOURNALIST:

No in which case that money is still used for over 75s and it remains there and he adds to it as growth money.

TREASURER:

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.

JOURNALIST:

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

TREASURER:

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.

JOURNALIST:

When were these costings completed Treasurer?

TREASURER:

I believe they were completed at about three o'clock this afternoon. They are on the website of the Department of Finance.

JOURNALIST:

Handy timing.

TREASURER:

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.

JOURNALIST:

When were they submitted to Finance and Treasury?

TREASURER:

Medicare Gold?

JOURNALIST:

Yes.

TREASURER:

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.

JOURNALIST:

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?

TREASURER:

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.

JOURNALIST:

What does it say Treasurer about the Charter of Budget Honesty, I mean should it be compulsory for these matters or what do you…

TREASURER:

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.

JOURNALIST:

At least one poll is tipping a Howard landslide tomorrow. Is that what your research is showing?

TREASURER:

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.