KENNEDY:
Welcome to AM Prime Minister.
PRIME MINISTER:
Good morning.
KENNEDY:
When the Government introduced the Medicare safety net 12 months ago you obviously thought that it was economically sustainable, but things have now changed. How did the Government get its costings so wrong?
PRIME MINISTER:
Well it's not so much that we've got our costings wrong; it's that the scheme turned out to be a lot more popular than was calculated at the time. It was our original wish that the thresholds be 500 and 1,000 and we were obliged to reduce them to 300 and 700 in order to gather the support of the independents to get the measure through the Senate. And it is true that during the last election campaign the levels of 300 and 700 were committed to, but it is also the case that the overwhelming debate about the safety net in the last election campaign was whether or not it was going to be retained at all. And I would say to Belinda Saunders and I would say to other people who are understandably critical of the Government's decision to lift the threshold, that if the Labor Party had won the last election there would be no safety net at all and that Prime Minister Latham, as he would have been, and Mr Beazley would have been a member of his ministry, would now be announcing the total abolition of the Medicare safety net because that was their policy and that remains their policy.
Now I don't like having to lift the threshold, but it is still at $500, not just for low income families but indeed for middle income families; families with children getting Family Tax Benefit A, and that can be up to $100,000 a year of family income depending on the size, such a family can still access the safety net at the lower threshold, which is now $306 and will be able to access it at the higher level when that comes into effect which will be $500. So this safety net, even with the higher threshold, will mean that the great bulk of families, the great bulk of families, and also people on concession cards will be able to get that 80 per cent of the excess they pay a doctor or the excess they pay a specialist - it seems to be a common misunderstanding that this is restricted only to people who go and see a GP, it also includes consultations with specialists.
KENNEDY:
During the election campaign you must have known that there were signs that the cost was blowing out, yet you went to the election campaign giving a guarantee that the thresholds wouldn't rise...
PRIME MINISTER:
Well let me give you some figures...
KENNEDY:
... the AMA President, Bill Glasson, says that people will now feel cheated. Isn't he right?
PRIME MINISTER:
Well people will be disappointed, people will be critical, I accept that, this is not a popular decision, I understand that. But can I say in relation to Dr Glasson I understand the line he is running, could I remind him that when we made the announcement of the agreement on the 300 and the 700 he in fact said back in March of last year, and I quote his words, "that where they draw the line", that's meaning us, "whether it be 300, 500, I think that's up to figures. You know as far as what it's going to cost the community". In other words what he was really saying was the level of the threshold was something to be determined by the Government. Now I don't like having to make this announcement, but I had a choice between maintaining something, the cost of which is ratcheting up, or alternatively taking some unpopular decisions now so that in the longer term can we keep the safety net.
I believe in the safety net. I think the safety net is really the key answer to the extra bills you get when you have an unexpected illness and this idea that only better off people go to specialists, can I just gently correct the comment that was made earlier, that's not right. If your child breaks his or her arm, or you have some kind of unexpected illness with a child, you have to see a specialist no matter what your income is and under us there will always be a safety net. Under Labor there will be no safety net. And Mr Beazley may carry on and criticise, which he will, I accept that, but he should be reminded that his policy is to have no safety net at all.
KENNEDY:
But you won the election and as you heard in Nick Grimm's story, ordinary Australians are now hit with higher fees and lower rebates. Shouldn't you have cracked down on doctors, particularly the specialists, instead of the patients.
PRIME MINISTER:
Well where there is abuse - and I go back to something I said on the eve of the election - I said before the election that if we found any evidence of abuse by doctors we would crack down. But what we are addressing here is the general long term sustainability of the scheme and the advice that we have, the most recent advice, is that the four year cost of this scheme with thresholds of 300 and 700 to the 30th, right up til the 30th of June 2008 would be $1.4 billion, and up to the 30th June 2009 would be $1.65 billion. Now that is a great deal higher than what was announced in the Budget and certainly a great deal higher than the calculation of $1.2 billion which was made by the Department of Finance on the eve of the election. So what you see is a pattern of the cost ratcheting up and action was needed, unpopular action, I acknowledge that, in order to put it on a more sustainable basis. But can I just remind your listeners against Stephanie that we are keeping the safety net, under Labor there would be no safety net and people like Belinda Saunders and others would be infinitely worse off under Labor's policy because there would be no safety net at all.
KENNEDY:
Can you guarantee there won't be any more changes to the threshold?
PRIME MINISTER:
Well we don't have any in mind but I am not going to give an iron-clad guarantee in relation to that. We believe that the changes that I have announced will put it on a sustainable basis and we certainly wouldn't want to go through this again. I understand people will be critical and I regret this, I am very sorry that it's occurred, we had a very difficult choice to make, it's either let the thing drift to an unsustainable position or take these painful but necessary steps now, still retaining a generous safety net. I mean it still will be $500 and after that you get 80 per cent of everything back, and that covers the overwhelming bulk of families as well as everybody on concession cards.
KENNEDY:
I'd just like to quickly move to another issue. You've softened your position on signing ASEAN's treaty of Amity and Cooperation, you said there was a substantial new element in talks, can you explain what's changed?
PRIME MINISTER:
Well the substantial new element is that it's quite clear from discussions I've had yesterday that what is in contemplation is Australia's involvement in the whole East Asian Summit process, not just attendance at one meeting.
KENNEDY:
So has Australia been offered membership in the East Asian Summit?
PRIME MINISTER:
Well nobody has been categorically offered anything yet, but clearly what is in contemplation is the potential involvement of Australia in the whole thing. Now it's not the most important thing on our foreign policy agenda, but it's an additional thing and what I have said is that in those circumstances we have to look at the reservations we have, and we retain reservations about the treaty and I said yesterday that if all things were equal and nothing were in contemplation in relation to these meetings and this summit, then we wouldn't be signing the treaty. And we still have reservations. But what we propose to do over time, and there's no hurry about this, we've got quite a bit of time, is to have a look at the detail of it, have some discussions with our friends in the region and see if we can't reach a situation where the concerns we have are dealt with and if indeed the opportunity is there for us to fully participate then we'll do so. But we're not desperate to do it and I'd need to be satisfied that the concerns we had were properly addressed and I'd need to be satisfied that there was nothing contrary to the national interest in our taking any steps in relation to this treaty, which did come out of an earlier era but sometimes you've got to put that in balance against the advantages of being involved in something that's valuable in the future.
KENNEDY:
Alright, thank you very much, John Howard, thank you for joining AM.
PRIME MINISTER:
Thank you.