Easing of Medicare rebate freeze ‘offers little relief for patients’

NEWS: AMA NSW Conference. (L-R) AMA president Michael Gannon and AMA NSW President Brad Frankum. Photo by Edwina Pickles. Taken on 17th Feb 2017. Photo: Edwina PicklesPatients will continue to be hit with rising out-of-pocket health costs under the Turnbull government’s slow thaw in the Medicare rebate freeze, experts have warned.

Health Minister Greg Hunt’s staged approach has left doctors divided, with the Australian Medical Association pledging its support for the government’s policy reset, and the NSW arm of the lobby group describing it as a “crushing blow” for GPs.

The policy took the focus in Federal Parliament on Wednesday, as Labor accused the government of building its health budget on “smoke, mirrors and false guarantees”, as Mr Hunt declared the Coalition were “Medi-friends” to the opposition’s “Medi-frauds”.

Under Tuesday’s budget, the government will gradually lift the Medicare rebate freeze starting this year, with bulk-billing incentives for GP consultation. GP and specialist consultations will be indexed from 2018, specialist procedures in 2019, and targeted diagnostic imaging services in 2020. The measures will cost the government $1 billion over the forward estimates, but only $9 million in the first year.

AMA federal president Michael Gannon praised the government’s moves, but the AMA’s leadership in NSW broke ranks to brand it a major disappointment.

State president Brad Frankum??? said the “small and incremental” increases to the Medicare bulk-billing incentive and Medicare rebate were not enough.

“This is not an encouraging start and we won’t see patients’ Medicare rebates indexed again until July next year,” Professor Frankum said.

“At this rate it will be many years before patients see an appreciable difference in out-of-pocket costs. This is a crushing blow for general practice in NSW and continues to be an ongoing problem for specialists and the patients who need their care in this state.”

Prime Minister Malcolm Turnbull defended the plan.

“What the government committed to in the budget was to unfreeze the freeze on indexation put in place by the Labor Party. It was your freeze,” he said in question time. “What we are doing is restoring indexation in a measured and consistent way.”

Policy expert Lesley Russell, of the Menzies Centre for Health Policy, said a vision for the future was “shockingly absent” from the health budget. She said the “glacial” pace of the Medicare Benefits Scheme indexation thaw meant many Australians would continue to face higher costs.

“We really have to ask questions about what this means for people who are already struggling to afford the specialist and allied health services that they need,” she said. “It seems to me that those costs are going to grow rather than shrink over the next couple of years.”

Stephen Duckett, health program director at the Grattan Institute think tank, said it was too early to tell whether the government’s plan would be enough to keep bulk-billing rates at their current levels.

“Practice costs and income expectations of staff have not increased dramatically over the freeze period as the consumer price index has been moving slowly,” he said. “But each additional day of a freeze means costs and revenues fall further out of alignment.”

AMA Victoria president Lorraine Baker said the budget would not make healthcare more affordable for people in her state for at least another 12 months.

“We would have liked to have seen the freeze lifted and indexed from now,” Dr Baker said. “But at least there’s been progress in the right direction, and that is that we have an acknowledgment from this government that the Medicare system needs to be supported.”

Radiologists complained about the long wait for indexation, while the Consumers Health Forum said: “The staged lifting of the freeze in the budget does mean that many families on average incomes still face the risk of co-payment increases they can ill afford for at least another year.”

With Rania Spooner

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Political divide muddies Morrison’s ‘big heart’ NDIS solution

Scott Morrison’s plan to utilise Australia’s “big hearts” to fund the NDIS is under threat, with both Labor and the Greens raising concerns over the funding plan.

The Treasurer said it was time to put politics aside and ensure the National Disability Insurance Scheme was fully funded.

It was a shift to the middle for the government, which had previously linked funding the $22 billion scheme to its doomed Omnibus bill, ditching the threats and moving to an increase of the Medicare Levy to raise $8 billion over four years, spreading the cost across all working Australians.

On Wednesday, Mr Morrison made it personal, telling the story of his brother-in-law Gary Warren, a fireman who was diagnosed with progressive multiple sclerosis in 1999.

“People, he’s told me, are enormously generous, not just happy to help, but keen to help,” Mr Morrison told the National Press Club, where Mr Warren was in the audience.

“He said, it’s not flash being disabled, it’s not flash. But if there’s anything good about it, he said, it’s that you’re disabled in Australia. That’s an incredibly generous statement about the big heart of Australians. He and I both know they have big hearts. I don’t know a finer man than Gary Warren.

“So last night I was very proud to declare that as a Treasurer in the Turnbull Government, we would fully fund the National Disability Insurance Scheme. That’s what this is about. That story.” The funding of the NDIS has been finalised. Now the journey of opening up community, education & employment begins for many PWD & families.??? Kurt Fearnley (@kurtfearnley) May 10, 2017 iFrameResize({checkOrigin:false},’#pez_iframe’); var frame = document.getElementById(“pez_iframe”);

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Australia’s big banks hit back against ‘populist bank bashing’

Banks are warning they will try to pass on some of the government’s $6.2 billion bank levy to their millions of customers, with Westpac slamming the move as a “stealth tax” that will also hit shareholders and finance workers.

As most bank shares slumped further on Wednesday, Westpac, Commonwealth Bank and National Australia Bank signalled they may defy the government, and attempt to pass on the cost of the levy to depositors and borrowers. ANZ Bank and Macquarie Group – the other banks to pay the tax – said it was too early to determine the financial impact of the 0.06 percentage point tax on bank borrowings.

Market analysts have also suggested banks will be able to partly offset the levy by passing it on to customers, though shareholders will have to wear some of the pain.

After being blindsided by the tax – that the government says will help with budget repair and enhance competition – banks reacted angrily to the levy, which is equal to about 5 per cent of affected banks’ profits.

Brian Hartzer, Westpac’s chief executive, lashed out at the levy by arguing it would affect all bank customers, and that it would hinder efforts to make the banking system more resilient to future financial shocks.

“There is no ‘magic pudding’. The cost of any new tax is ultimately borne by shareholders, borrowers, depositors, and employees,” Mr Hartzer said

Commonwealth Bank chief Ian Narev also said customers, shareholders, or both, would feel the sting from the tax. Senior bank executives will seek further detail from Treasury officials on how the tax will work at a meeting in Sydney on Thursday.

“As with the many recent new regulatory imposts, we need to take some time to work through the implications. This is particularly so, given the lack of detail and the absence of any consultation,” Mr Narev said.

“However, as every business owner or employee knows, every extra cost needs to be borne by customers or shareholders, or a combination of both.”

NAB chief Andrew Thorburn predicted the tax would affect “millions of everyday Australians”, including staff, customers, and shareholders.

“A tax cannot be absorbed. This tax is borne by these people. It is not possible to impose a tax without an impact on people, and therefore the wider community,” Mr Thorburn said.

In a media release, ANZ highlighted the need for banks and Parliament to bridge the obvious divide between them in the long-term interests of the Australian economy.

“While the banking industry has made itself an easy political target, the industry is taking action to significantly improve its relationship with customers and the community.” said ANZ chief executive Shayne Elliott.

“It is now time for all our leaders to move on from populist bank bashing so we can work constructively with Parliament and policy makers on how we can best support the Australian economy.”

Anticipating banks would seek to pass on the levy, the budget included funding for the competition watchdog to run a year-long inquiry into mortgage pricing, and analysts say this extra scrutiny could make it harder for banks to offset the cost.

David Walker, portfolio manager at Clime Asset Management, predicted banks would pass on the levy “eventually”, but it would be tougher for banks to offset than other increases in their costs.

“The political environment for passing on this is more difficult than it is for passing on garden variety increases in wholesale funding costs,” Mr Walker said.

The surprise measure, which will only be paid by the big four banks and Macquarie, is welcome news to smaller lenders, who have long argued they are disadvantaged by the assumption the major lenders are “too big to fail”, which cuts the large banks’ cost of funds.

Shares in Bendigo and Adelaide Bank jumped 3.9 per cent on Wednesday, while Bank of Queensland rose 3.6 per cent and Suncorp was up 2.8 per cent.

Regal Funds Management senior analyst Omkar Joshi said the levy would act as a further drag on banks’ returns, at the same time as revenue growth was weak and banks were being forced to cut costs.

While banks have previously passed on higher costs by pushing up mortgage rates, there is a risk that further rate hikes may pressure some borrowers and lead to higher defaults.

“I think shareholders have to wear some of it. Customers will have to wear some of it, but it’s not something they can simply pass straight through to customers,” Mr Joshi said.

Fitch Ratings said the levy would have a “negative” but “manageable” impact on banks. While the tax would not immediately affect the lenders’ credit ratings, Fitch said it could force banks to compete more fiercely for retail deposits, which are excluded from the tax.

Mr Hartzer acknowledged other countries – such as Britain – had similar taxes on banks but said these were introduced following the global financial crisis, when these governments had taken direct ownership stakes in ailing banks. In contrast, Australia’s banks had their borrowing guaranteed by the government during the crisis.

“No taxpayer funds have been used to prop up the Australian banks. In addition, international jurisdictions that apply measures such as this already have much lower corporate tax rates than Australia – for example, in the UK the corporate tax rate is 20 per cent,” Mr Hartzer said.

CBA shares closed 0.4 per cent lower, Westpac and NAB shares were down 0.7 per cent, and Macquarie Group shares fell 0.6 per cent. ANZ shares bucked the trend, rising 0.8 per cent.

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Senate inquiry to investigate the ‘future of journalism’ in Australia

The Senate will investigate the future of journalism in Australia amid sweeping job cuts and the cannibalism of content by social media giants.

It comes as striking Fairfax Media journalists return to work on Wednesday after walking off the job for a week, following the announcement that one in four newsroom jobs will be slashed.

The public inquiry, backed by senators Sam Dastyari, Scott Ludlam, Nick Xenophon and Jacqui Lambie, will examine the structure of media organisations and their tax arrangements, as well as the increase in so-called fake news.

Senator Ludlam said media professionals around the world were under increasing pressure to do their jobs, and that the Senate would examine how to make public interest journalism sustainable.

“We’re going into this ??? looking for solution,” he told reporters in Canberra on Wednesday. “We’re not looking here to give anybody a kicking.

“We want to know, what is the business model that allows any entity – public, private, third sector, whatever – to keep well-resourced journalists in the field, keeping this building and its people accountable and serving up the news and information that we need to maintain a healthy democracy.”

Senator Xenophon said the Australian journalism industry was in crisis. “These are matters that must be dealt with,” he said. “This goes to the heart of our democracy. If we want the fourth estate to be vibrant and diverse we need to deal with the issues that this inquiry raises, including fake news.”

“If we don’t grapple these issues as a matter of urgency you’ll see more journalists and camera operators and others that make the news happen losing their jobs. Because you simply cannot have a situation where you have Facebook and Google – between them raking $3.2 billion in ad revenue – and piggy-backing and cannibalising the content of Australian journalists and Australian newsrooms.”

Senator Xenophon said media organisations should be able to take on content aggregators, search engines and social media sites that cannibalise content.

Liberal Senator Eric Abetz, above, released a statement on Wednesday afternoon slamming the inquiry. He said senators would have the power to haul before the committee “any journalist who they believe is publishing ‘fake news’, propaganda, disinformation or ‘clickbait’ “.

“While the Senate rightly examines how taxpayer-funded broadcasters spend their money, individual journalists have never been dragged before Senate Estimates and the Senate shouldn’t be in the business of doing so,” he said.

“This insidious proposal will undermine the freedom of the media and must be called out for the totalitarianism that it is.”

Senator Dastyari said the strike at Fairfax Media highlighted the challenges facing Australian journalism and said it was the role of government and policy makers “to create a vibrant, free, independent press that allows Australian consumers to get the information they need”.

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The Magic Pudding lives, it’s every politician’s fondest fantasy

Malcolm Turnbull promised to govern from the “sensible centre”. In the new federal budget, he has found it.

After a long succession of right-ward concessions to his party’s conservative wing, Turnbull has crafted a budget that seeks to solve problems rather than serve right-wing ideology.

This is very deliberate: “This is not a budget to tickle the ears of ideologues,” Treasurer Scott Morrison put it to Fairfax Media in an interview last week. Decoded: “This is not the Abbott government.”

Some of the problem-solving in the budget is practical but mostly it’s political. Strikingly, it’s been crafted with popularity foremost, or, at least, political inoffensiveness.

In fact, if Turnbull and Morrison had tossed in a tax cut, this could very well be a budget for an election year.

It is ostentatiously more generous in spending on health, schools and public investment, spending more on road and rail and the Western Sydney airport, for instance. It seeks to placate pensioners as well as first home buyers.

And the only tax increases are painless for the voter, at least for now.

The Tax Office is mailing out the big new tax bills to the big banks, to foreigners or to the future – the increase in the Medicare levy isn’t to take effect for another two years.

Uni students may be unhappy about paying higher fees, but Coalition governments regard them as politically ungettable in any case.

Some of the elite schools are upset that their access to the public purse is to be reduced from super-privileged to normal, but Liberal-voting parents aren’t going to take their votes to Labor or the Greens over this issue – those parties are in agreement with the government.

So there’s more spending on voters, yet, miraculously, no increased tax on voters. The Magic Pudding lives, every politician’s fondest fantasy.

Another critical design feature is an effort to protect against the surging populist-nationalist movement. The budget seeks to build a bulwark against the rampaging right such as One Nation with some populist nationalism of its own.

Hitting foreign home-buyers with bigger charges, hitting firms that hire foreign workers with a bigger levy, and hitting the unemployed with some tough new tests all fall into the populist category. Hitting the big banks with taxes and new executive punishments is also a classic move from the populist playbook.

These may seem draconian, but they are designed to protect the political centre from the irresponsible right.

But it’s not an election year. This is the first year of a three-year term. Conventionally, this is the only real opportunity for a government to make unpopular decisions. By year two, a government already has an eye to the next election.

Pandering to the voters in year one is unconventional. It’s a sign of the times, the times where a prime minister cannot be confident of making it to year two, the times of the revolving-door prime ministership.

It’s a sign of a time when an incoming prime minister explicitly limits his own political viability in the job to a maximum of 30 losing Newspolls in a row. If Turnbull continues his losing streak in the polls, he will hit this mark by the beginning of the new year.

In other words, there is no longer any time in the political cycle for a government to take the difficult, unpopular decisions. Where are the economic reforms?

As the chief economist at Industry Super and former Treasury official Stephen Anthony says: “To say that this budget lacks ambition is an understatement – we need a high-growth, high-productivity growth path, and this gives us mediocrity forever.”

The political parties are not solely responsible for this failure, of course. The Australian public in recent years has shown every sign of an entrenched entitlement mentality. The Senate has faithfully defended this mentality, blocking most efforts by governments to make unpopular change.

The result is a budget that, like the government itself, muddles through. And because it has been designed with popularity and populism uppermost, it will muddle through the centre and muddle through the Senate.

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