Federal election 2016: What if voters buy ALP’s Medicare nonsense

With the health budget running at $150 billion yearly and posing a huge challenge to a deficit nation with rapidly increasing debt, the populist character of election 2016 becomes dangerous, with false choices at its heart.

Bill Shorten, unveiling last Thursday his main election pledge so far, said: “This is a battle to defend bulk billing. As such, it is a battle to defend Medicare. Mr Turnbull and his colleagues know that if they can bring bulk billing undone, then they bring Medicare undone.”

You may not realise Malcolm Turnbull seeks to bring Medicare undone. How stupid of you. The Coalition’s political ineptitude is such that it hardly bothered to highlight bulk billing under the Coalition has been at 85 per cent compared with 79 per cent under Labor. In short, the Coalition is pledged to bulk billing and has a better record than Labor on the test proposed by Shorten.

Unveiling the policy, the Opposition Leader said the election was a binary choice between Medicare and big business. “This election is about choices,” he said. “I happen to choose and Labor chooses our Medicare system over giving tax cuts to the top end of town.” Shorten would save bulk billing before “giving Australia’s largest banks a $7.5bn tax cut over the next 10 years”.

Who wouldn’t? What a choice: backing Medicare or selling out to banks and big corporates. No ALP opposition leader has run on such a big-spending, anti-business, populist agenda for decades. The notion Australia faces a necessary choice between corporate tax relief and bulk billing is nonsense. It doesn’t face any such necessary choice. Things don’t have to be that way.

Yet the political system is imposing this choice. It reveals the new Labor-Coalition ideological battle driven by the nation’s growing fiscal crisis — whether the adjustment comes mainly on the spending or tax side. This is about competing values, ideology and policies. It is a dangerous moment for the country.

Opposition finance spokesman Tony Burke said this was a “rare” election because “the dividing lines are so clear”, a variation on Shorten’s theme that the Coalition backs the big end of town while Labor backs the people.

Labor’s health spokeswoman Catherine King, interviewed on Sky’s Australian Agenda,said the nation had a choice between corporate tax cuts and more health spending: “Is it important to give tax cuts to big business? Or do you invest in health? That is a choice that this election is about, absolutely and utterly.” If Labor can persuade enough voters this is the choice, then Shorten wins.

The day after Shorten’s pledge to unfreeze the Medicare rebate at a cost of $2.4bn over the forward estimates and $12.2bn over the decade, the heads of Treasury and Finance delivered their pre-election fiscal warning — that Australia was vulnerable, increasingly exposed, needs a “considerable effort” to cut spending growth and that more economic reform is essential to retain living standards growth. They were wasting their breath — the proof being the health debate. The campaign so far displays scant evidence of any need for economic reform or the spending discipline necessary to deliver the growth forecasts in the budget.

Judged by these tests the Coalition’s position looks weak. As for Labor, it campaigns as though the state constitutes a vast funding reservoir whose purpose is to provide as much healthcare and education care as consumers desire. This is not being compassionate; it is the sign of a stupid country.

The 2014 Commission of Audit said: “Healthcare spending represents the commonwealth’s single largest long-run fiscal challenge. Australia’s health system is not equipped to face future challenges and a universal healthcare system is unlikely to be sustained without reform. We need to make the system we have work better. Also, in a system like ours, the community must become more aware of the real costs of healthcare.”

Labor rejects any new price signals in the health system. It rejected the Abbott government co-payment; it rejects the Turnbull government Medicare rebate freeze; it wants no impediments on patients going to the doctor. Now it goes further as Shorten pledges a new law “to ensure Medicare remains in public hands”.

It is the worst form of gesture politics. At a time when more public sector efficiencies are essential Shorten wants to impose new roadblocks. Turnbull has no plans to privatise Medicare — a separate issue from the government looking at outsourcing payment arrangements.

Labor’s philosophy was outlined by King last weekend: “I think this government’s gone too far. What you’ve seen them do is, they’re trying to cut money. They’re trying to shift costs to patients. They’re trying to shift costs to states when it comes to public hospitals. We’re saying they’ve gone way too far.”

The test for Shorten is whether his populist audacity will prevail or bring him crashing to the ground. Scott Morrison and Mathias Cormann claimed with fanfare yesterday Labor had a $67bn black hole. The government’s plan is to destroy Shorten over his spending agenda and its consequences, with Turnbull branding him as “billion-dollar Bill”. The negative campaign against Shorten will be ­ferocious. But the Morrison-Cormann figure yesterday was nonsense, an overreach that hardly helped the Coalition.

Many of the government’s claimed Labor policies are not Labor policies. It claimed Labor’s restoration of the foreign aid budget would cost $19.27bn when the policy released at the weekend by Tanya Plibersek only involves an extra $800 million across the forward estimates. That just makes the Coalition look stupid.

Does Labor have a problem? You bet. It has huge spending pledges. And it has blocked upwards of $18bn in the Senate. To the extent Labor sticks by these positions — and it may change some — it needs to compensate for these savings. In addition, its tax increases are rear-end loaded, creating a problem for its bottom line across the immediate four years of forward estimates. Being better over 10 years won’t do the trick.

Chris Bowen and Burke have signalled their plan: to have a better budget bottom-line when final costings are released. It will be an immense task. The danger for Labor, however, is that in the interim Shorten is branded as a spendthrift and that branding, the companion to his populism, will be entrenched.