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The government is throwing everything at an obstreperous senate to push through its unpopular budget measures. By Sophie Morris.

Pushing the budget

Finance Minister Mathias Cormann made a deft move on the petrol tax.
Credit: AAP Image

When Tony Abbott gave a speech to scientists last week, urging them not to leave Canberra without “knocking on the door of a crossbench senator” to make the case for the $20 billion medical research fund, funded by the Medicare co-payment, the crossbenchers braced for an onslaught.

The response was underwhelming.

“It’s interesting,” says independent Victorian senator John Madigan, who likes the idea of medical research but not the thought that it would be funded by increased doctors’ fees. “We haven’t had a single call.”

Palmer United Party senator Jacqui Lambie says that far from researchers heeding the prime minister’s call to beat a path to her door, the only lobbying she had after Abbott’s speech to the Association of Australian Medical Research Institutes was from the Australian Medical Association.

“We got the AMA saying they don’t want the co-payment,” she says.

The government won’t be deterred. As it reaches six months post-budget with major higher education, health and welfare measures worth $20 billion over four years still blocked, it is investigating all options to overcome senate resistance.

Getting unpopular changes past an essentially populist senate crossbench is proving to be quite a challenge. As well as urging stakeholders such as medical researchers and universities – which want to hike fees – to lobby crossbenchers, the government is still trying to court Clive Palmer and his senators. Ministers are also making threats of funding cuts if the measures don’t pass.

“The government will continue to negotiate with sensible senators to implement its plan to fix the budget, boost growth and create new jobs,” says a spokeswoman for Treasurer Joe Hockey.

The apparently muted response from medical researchers to Abbott’s rallying cry is a telling reflection of the government’s budget missteps it is now trying to correct. This was supposed to be a budget centrepiece and a good news story. But the tactic of introducing the compulsory co-payment under the cover of the creation of a new and exciting research fund appears to have fizzled.

That’s not to suggest that the proposed fund has not fired the imagination of medical researchers and won over high-profile supporters in the business community. But even they are reluctant to link it to a compulsory $7 co-payment for GP visits or check-up tests.

An elite group of business leaders and academics has formed an action group to make the case for the Medical Research Future Fund and argue that it must be resourced at the level proposed in the budget, in what could be seen as a tacit endorsement of the co-payment.

Action group member Christine Bennett, chairwoman of Research Australia, is adamant this is not the case. “We are not discussing or putting an opinion on the co-payment. We are only presenting the incredible value of medical research,” she says.

Therein lies the rub for the government. Now it is expected to establish the fund, even though it may not secure the passage of the increased fees that were supposed to contribute to it.

AMA president Brian Owler says the debate on the co-payment should be separated from the issue of funding research. He argues it is possible to set up the fund without the co-payment, which was supposed to contribute about $6 billion over five years.

“It’s a cynical move on behalf of the government to use the research community like this, when the money is coming out of the pockets of everyday Australians going to the doctor or for X-rays or blood tests,” he says. “You could still have a medical research future fund of a slightly smaller quantum, or funded over a longer time frame.”

Health Minister Peter Dutton has confirmed the fund will go ahead, but said in August that: “If the co-payment falls over, then that is going to be a big blow to the medical research future fund.”

Abbott told the medical researchers last week the fund was “history-making, culture-shifting, life-changing”, and implored them to lobby crossbenchers: “For our country’s sake, for the world’s sake – have a look at this fund.”

PUP pressure

If the Coalition is having little success enlisting the medical community to the cause of lobbying senators in support of the co-payment, its best hope is cutting a deal with Palmer. Not that he is providing any encouragement on the health, education or welfare changes.

His rhetoric remains trenchantly opposed to the increased fees for doctors’ visits and university courses, and dole delays for under-30s. But the government takes heart from the fact he has made an art form in the past four months of objecting vociferously to government proposals before eventually voting for them.

And in the event they can’t win over the Palmer United Party leader, ministers are also working on the individual PUP senators, hoping to persuade some to either break ranks or shift the party’s position internally. Call it picking off the PUPs, or splitting the litter, or just trying every which way to get budget measures through an obstreperous senate.

Finance Minister Mathias Cormann has been assiduous in this. The Liberal senator from Western Australia has built a good relationship, in particular, with the west’s PUP senator Dio Wang, who favours an economic rationalist approach to policy.

But Palmer’s other troops are proving harder to tie down.

Lambie may seem the most likely to split from the party, but she is even more populist than Palmer and staunchly opposes budget measures that could hurt “battlers”. She declared, in an interview with The Saturday Paper last week, that she will leave the party if it fails to stick up for the underdog.

That outburst related in particular to budget changes that are supported by both Labor and the Coalition but which she wants her party to oppose, because there would be some impact on defence force veterans.

A spokeswoman for the PUP’s senate leader, Glenn Lazarus, confirms that ministers have been trying to secure meetings with him but says there is no point to it as the party’s opposition to budget measures is rock-solid.

On Thursday, Lazarus did make time to meet the AMA president. Following that meeting, Owler felt the PUP still strongly opposed the co-payment and Palmer confirmed this at a press conference later that day, vowing his party would prevent it being inflicted on the Australian people.

Another tactic the government is pursuing involves threats about funding cuts that could be implemented without legislation. The government has already circumvented the senate on the petrol tax and has options to do so for parts of its university and health reforms.

The prospect of reduced funding might increase the pressure on senators to consider approving plans to allow higher fees for universities and doctors’ visits.

Regulation instead of legislation

Cormann’s manoeuvre to increase petrol tax via regulation rather than legislation can be seen in this light. It was politically deft.

The calculation was that by the time the regulation needs to be converted to legislation, it will be awkward for Labor and the Greens to demand the cash be returned to big oil companies.

But it was also a sign of the government’s determination – or desperation – to secure the passage of revenue-raising measures as it approaches its December budget update, known as the mid-year economic and fiscal outlook.

The petrol tax move showed the government was prepared to risk the wrath of motorists and “Bowser Bandit” headlines in the tabloids, as well as accusations it was being sneaky, in order to make a down-payment on its promise to “repair the budget”.

The government says the move, which unwinds a Howard government freeze on petrol tax indexation, will cost most families just 40 cents extra a week, while bringing $2.2 billion over four years to federal coffers. The price will rise again every six months, but the government is lucky that easing oil prices will blunt the immediate impact when the increase is first applied from November 10.

Hockey was conspicuously absent from Cormann’s announcement on the petrol tax.

While the measure was in Cormann’s bailiwick as acting assistant treasurer, Hockey’s attendance might also have been awkward, given his observation in August that the “poorest people either don’t have cars or actually don’t drive very far in many cases”.

The treasurer did weigh in this week on university reforms, furnishing Labor with a line that could have been tailor-made for the advertising campaign it is mounting about higher education funding.

“We’ll find any way we can to take the money out of universities,” Hockey told The Australian Financial Review.

It sounds pretty blunt when quoted like that, but he was echoing an earlier sentiment from the education minister. Two months ago, Christopher Pyne had flagged cuts to research funding if it were not possible to legislate to reduce course funding by an average of 20 per cent, as proposed in the budget.

While talking tough, the government is also exploring compromises with the crossbenchers, including a possible reduction in the dole waiting period for under-30s from six months to one month.

Ministers who initially said they wanted changes passed this year are now also flagging that negotiations could extend into 2015. They may well be hoping that some of the puff goes out of Palmer’s sails after the Queensland election, opening the possibility of a smoother senate.

This article was first published in the print edition of The Saturday Paper on Nov 8, 2014 as "Who’ll budge it?". Subscribe here.

Sophie Morris
is The Saturday Paper’s chief political correspondent.

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