Australian Senate blocks Labor government's $3 billion aged care health rebate plan

The Coalition, the Greens and One Nation have teamed up in the Senate to scrap a bill that would have dumped private health insurance rebates for people over 65, infuriating the Albanese government, which had planned to use the $3 billion in savings on aged care.

Health Minister Mark Butler vowed to reintroduce identical legislation on Thursday, as he singled out new Greens leader David Shoebridge for being obstructive.

This is Labor’s latest defeat in the Senate over its reforms to the ballooning $40 billion aged care budget. The unlikely alliance between the Greens and Coalition had already forced the government to spare Meals on Wheels from a merger, provide more human oversight of the algorithmic assessments of clients’ needs and to fast-track 20,000 home care packages.

Cuts to the automatic private health insurance rebate for over-65s were announced in May’s budget, with Butler saying the billions in savings would provide an additional 5000 aged care beds per year.

The Coalition and the Greens railed against the proposal, saying low- and fixed-income pensioners would be the least able to absorb additional costs, estimated to be hundreds of dollars a year for those with the highest cover.

Opposition health spokeswoman Anne Ruston and independent senator Jacqui Lambie moved a motion to discharge the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill on Tuesday afternoon. The move, an alternative to voting down a bill, received support from Coalition, Greens, One Nation and independent senators.

Addressing the media after the bill was discharged, Shoebridge said his party would happily support the move if carveouts were made in the legislation for pensioners. Ruston said she would welcome a bill that exempted pensioners, but wanted to see the push scrapped entirely.

“Until the government’s prepared to be transparent so that Australians can see: whether this really is a save; who it’s going to be impacted; and how much they’re going to be impacted by. I think the government should do that before they come back and ask the Parliament to consider anything further,” Ruston said.

Butler has argued that repealing the bonus would make the system fairer by basing it on income instead of granting older Australians a rebate 8 per cent higher than younger people on a similar income.

He told journalists after the bill’s discharge that he would reintroduce identical legislation on Thursday, saying the Senate needed to engage in an orderly debate instead of the “pile on” that took place on Wednesday.

“This afternoon we saw the resurrection of the ‘no-alition’ under the new leadership of David Shoebridge, a partnership that is determined to thwart the agenda of the government without debate,” he said at a snap press conference on Wednesday afternoon.

“This is an absolute travesty that flies in the face of any of the members of the Coalition’s professed commitment to sound budget management, and flies in the face of, I thought, what was a clear understanding across the parliament of the need to fund better aged care services.”

Insisting he would give the Senate “another chance to have a debate”, Butler said the government would consider any further amendments in good faith.

“But this idea of just discharging a bill without a reasoned, proper debate is pretty extraordinary. And if this is the standard operating procedure for the new Greens leadership, then I think that party has made a profound mistake.”

The minister confirmed the government had been in negotiations with the Greens’ health spokesman Jordon Steele-John as recently as last week, following Shoebridge’s ascension to the party’s leadership. Butler would not say whether an agreement had been reached at that time.

Asked repeatedly whether the bill’s removal from the chamber would hurt the budget, or whether Labor intended to redraft the legislation, Butler said he would “press ahead” with the current plan to scrap the rebate.

Wednesday’s revolt in the chamber followed the release of a Labor-led Senate inquiry report last week that backed the bill, arguing there was widespread support for increased investment in aged care.

However, the report also noted objections from the Australian Medical Association, which said more funding for beds should not come at the expense of private health insurance holders, and from the Council of the Ageing Australia, which said the proposal could be unfair.

Treasury had forecast 44,000 of the 3 million over-65s with private health insurance would be pushed into the public health system because of the changes. But new health department analysis released this week estimated that around 78,000 Australians aged 65 and over would drop their private health cover by 2030.

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