There’s confusion about what is or isn’t on the table for cuts after Health Minister Sussan Ley conceded the Senate won’t pass increased patient contributions for PBS drugs, but said the $1 billion ‘savings’ will have to be found elsewhere. See more below for how it unfolded.

But if the Minister and the Federal Government is finding it so hard to find the savings they need to fund vital health and other services, then there’s a solution in sight: scrapping fossil fuel subsidies which have been estimated in Australia to be worth $47 billion over the next four years.

According to this article in The Lancet, Indonesia and Iran have eliminated fossil fuel subsidies to finance health coverage and other social priorities, a strategy being considered by other countries wanting to pursue universal health coverage – even when it can be tricky to manage politically.

It says:

As increasing numbers of such countries move towards universal health coverage, redirection of fossil fuel subsidies could become an increasingly important policy instrument to enable simultaneous tackling of several development priorities. Specifically, these countries will be able to expand health coverage, mitigate climate change by reducing their use of fossil fuels, enhance economic growth, and reduce income and health inequalities. Perhaps just as importantly for the political leaders concerned, such reform will enhance their popularity and ensure continued political relevance for them in future elections

The article notes that Indonesia has eliminated the fuel subsidies that constituted nearly 20 per cent of government spending between 2009 and 2013 and, coupled with food subsidies, amounted to the same sum the central government had earmarked for health and education.

“In implementing this unpopular policy, President Joko Widodo has immediately allocated additional funds to scale up coverage for social services. This scale-up has included the launch of a new free health-care card for poor households not covered by previous health insurance schemes.”

The Federal Opposition is today saying the government’s health policy is now “in complete chaos after Treasurer Joe Hockey today overruled the Health Minister and forced her to reinstate her unfair hikes in prescription costs”.

Here (below) is the statement the Minister put out last night, followed by excerpts of her interview on ABC’s 774 in Melbourne with Rafael Epstein (supplied by the Minister’s office).

Rafael Epstein: So, this proposal from last year’s Budget saves you a billion over four year. It was included in last week’s Budget. Was it only dropped today so the saving could be booked last week?

Sussan Ley: Look, a measure that doesn’t pass in a previous Budget sits on the books and effectively this is a bill that’s stalled in the Senate. When I came in as Health Minister, I went and talked to the crossbench, took standings from my colleagues and I think it’s fair to say the crossbench senators said they weren’t going to support it. It’s there for the role of government to rework, maybe redesign, a measure that keeps its intent, that keeps its savings tasks, that recognises our fiscal responsibility. I am definitely not walking away from this amount because we have to do some heavy listening across government to look after our nation’s finances into the future. But I also…

Rafael Epstein: Sorry, can I just clarify, are you saying that you’re committing as a Minister and as a government that that billion dollar saving over four years, you’ll find that elsewhere, is that what you’re saying?

Sussan Ley:  It will be found and I want to link it in a general sense to the task that we have to pay for new drugs into the future because I think it makes sense and I think people understand it, now how we put it in as far as – you know, it’s an existing measure around co-payments and safety nets but we want to keep medicines affordable for consumers. I have kept that focus all the way through and I will continue to keep it and that’s why the Consumers Health Forum and others have said we’ve done a good job with our Pharmacy Agreement and the PBS so far and we’re going to keep them at the table because they have the interests of those who struggle to pay for medicines at heart and that’s important but with $50 billion of new listings for drugs to be paid for in the next five years, this is unprecedented and I want to make the case, I want to make the case to the community and to the Parliament that this is something governments do need to invest in. How we do it is a matter of designing the right policy but we do need to make sure that we have those lifesaving drugs available for people.


Rafael Epstein: Oh no, I know, I might have that wrong. I mean, you tell me, was the saving in last week’s Budget or not?

Sussan Ley:  It was counted because it’s an existing measure that’s sitting in the Parliament and I have committed to find the saving and to exercise a responsibility in fiscal terms that I need to in my Budget but I just want to make the point that the community generally is very welcoming of the message that I am giving that to pay for new drugs we have to find a way to do this. I don’t get…


Rafael Epstein: Sure, but how are you going to square that circle? I mean, you’ve just lost a billion worth of savings, you proposed as a government the GP co-payment last year, you’ve dropped that. Where on earth are the savings going to come from?

Sussan Ley: These are challenges Raf, but they are challenges that we are up for. Now, in talking to my colleagues in the Parliament, when I explained to them the quality of life difference that these drugs make and the fact that for example Mekinist – which is a drug for advanced melanoma that we’ve just listed, its real cost is $131,000 a script. You as a concessional patient can get it for $6, you and I can get it for $37. When we make the case and make the argument, there is general broad acceptance that yes, governments have got to find a way to pay for this. So, I’m happy to work with the Parliament, I’m happy to work with the people and in consultation come up with something that delivers us the ability to buy these drugs and make them available to people who need them.


Clearer? Or looking at those fossil fuel cuts even more now?



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