The public service will continue work on a revamp of Medicare’s payment systems, but Malcolm Turnbull has now ruled out any role for the private sector in the solution as he fights to quash Labor’s claim he intends to privatise Medicare.



Turnbull has also created a special election poster with a signed “guarantee” that he would never privatise Medicare to reinforce his announcement on Sunday that the Coalition had now abandoned plans to investigate the outsourcing of the payments systems, which Labor is seeking to characterise as “privatising” Medicare itself.

PriceWaterhouseCoopers will also continue to advise the public servants working on the payment system, under an existing $5m contract, a Coalition spokesman confirmed, but the advice will no longer include the possibility of outsourcing, which has been at the heart of the process since it began in 2014.

As he sought to kill of Labor’s attack, Turnbull attempted to downplay the extent to which the idea had ever been discussed within government.

“Some work has been done by the department so I gather but it has never been a decision of the government to outsource any part of Medicare services. It’s never come to the cabinet to be considered to outsource any part of Medicare services,” he said.

But some documents about the issue sought in a freedom of information request by journalist Sean Parnell, of the Australian, were denied on the grounds that they were cabinet in confidence, or in one case, “a draft of information ultimately included in a submission to cabinet in relation to the payments contestability agenda.”

The government was never investigating privatising Medicare itself, but the freedom of information documents from the health department reveal advanced planning for the implementation of a 2014 announcement to consider the outsourcing of payments systems for Medicare benefits claims, pharmaceutical benefits claims and “a range of health service payments to Department of Veteran’s Affairs health providers”.

According to the documents market testing “confirmed a high level of interest from the commercial sector in providing these claims and payments services” with 48 responses to a request for expressions of interest as senior bureaucrats considered how to update antiquated government payment systems. The government never confirmed who was interested but speculation included the big banks, Australia Post or Telstra.

But after Labor ramped up its claim that the possible outsourcing of payments systems represented the privatisation of Medicare, Turnbull announced on Sunday that “every element of Medicare’s activities will continue to be delivered by government”.

Despite the government’s policy reversal and unequivocal denials, Labor insisted the Coalition should not be believed.

Bill Shorten said Turnbull was “a weak leader and when under pressure will do and say whatever he thinks to get him through the next day of media campaigning or interview.”

He linked the issue to Labor’s broader health policy attack.

“His his words are contradicted by his actions. Please don’t fall for the fact that Malcolm Turnbull gets up in the morning and says something and then simply believe what he says. Look at his actions. It is actions and not words which matter here. Look at what they do and not what they say.

“If Mr Turnbull wants to protect Medicare, here is a simple test – properly fund the hospitals. Reverse the cuts to the GP rebates. Reverse the cuts removing bulk-billing percentages for hospitals. While you are at it reverse the cuts for the price of medicine,” he said.

The president of the Royal Australian College of General Practitioners, Dr Frank Jones, told Guardian Australia his members were far more concerned about the freeze on Medicare rebates. The RACGP is running a campaign against the freeze, including posters and leaflets in surgeries and advertising, arguing that it will halve the number of doctors who can afford to bulk bill all patients.

Grattan Institute health program director Stephen Duckett said the real question was the fact that Australia’s Medicare funding model was established to deal with small providers and had not changed as medicine became increasingly corporatised.

“The system was set up to pay individual doctors or pathologists, but now it is often paying huge listed companies which in most circumstances would require commercial tenders and arrangements.

The Department of Health formed the digital payments services Taskforce earlier in the year, under first assistant secretary John Cahill.