SARAH FERGUSON, PRESENTER: Federal Health Minister Peter Dutton today called for a fearless, far-reaching debate about Australia's health system, saying that current spending is unsustainable. He's now flagging major changes to health services, with Australians who can afford it paying more for healthcare and medicines. The minister has revealed he's looking at a potential Medicare co-payment, which some argue could mean the end of universal healthcare. It comes after a controversial week in the Health portfolio, with junior Health Minister Fiona Nash accused of doing the bidding of the junk food industry, pulling down a healthy consumers' website years in preparation. Peter Dutton joined me earlier from Brisbane.

Peter Dutton, thank you very much for joining us.

PETER DUTTON, HEALTH MINISTER: Pleasure. Thank you, Sarah.

SARAH FERGUSON: You said in your speech today that in the past 10 years the cost of Medicare has increased by 120 per cent, the Pharmaceutical Benefits Scheme by 90 per cent, hospital care by 80 per cent. You say that's not sustainable and something must be done. What exactly is it that you are planning to do?

PETER DUTTON: Well the first thing that we have to do is have a conversation with the Australian people to say that we want to strengthen and modernise Medicare. It's a system that, obviously, all Australians, including myself, hold near and dear. But it's a system that was set up in the 1980s and we have to accept the changing and ageing demographic of our society, we have one of the highest obesity rates in the world, we have cancers that if early detection takes place, we can help those people if we have better connections between people and their GPs - all of those things are great, but they have to be paid for. So we have to look at where it is we're spending money at the moment, whether or not that's the most efficient way to spend the money so that we can strengthen and sustain our system into the future.

SARAH FERGUSON: Now, does that include increasing the costs of healthcare for those who can afford to pay more?

PETER DUTTON: Well I think it does and at the moment government pays about 70 per cent of that which we spend on health each year, and I know these figures sort of gloss - are glossed over or go over people's heads, but $140 billion at the moment we're spending each year on health that we raise about $10 billion a year out of the Medicare levy. There is enormous amounts of money to be spent. There are lots of technologies coming through, and as a First World country, we want to adopt those early and we have to have a conversation about how we pay for those and those that have a capacity to pay in many cases are already paying within the system, but we have to have a discussion about how it is that payment model works going forward.

SARAH FERGUSON: Individuals are already contributing about 18 per cent of the cost of their own health care. Are you saying those payments are going to have to go up?

PETER DUTTON: Well I'm saying when you look at the fact that over the course of the next four years the funding is projected to go up in public hospitals by 50 per cent. If you look at over the course of the last 10 years where payments have gone up under Medicare Benefits Schedule where we pay the doctors and pay for pathology and diagnostic tests and whatnot, it was $8 billion a year 10 years ago; it's $18 billion a year today. We have to look at the next 10 years where we we're going to have millions of people who will go onto the age group of over 65. I want to make sure that we can provide for those and we do have to have a national discussion about who pays for what and how the Government pays going forward and how consumers pay for those health services.

SARAH FERGUSON: Specifically, for example, are you in favour of introducing a Medicare copayment. A figure of $6 a visit has been touted already?

PETER DUTTON: Well there are suggestions that have been made both in favour and against this particular proposal, but it's one aspect that the Government will need to consider. The Commission of Audit obviously ...

SARAH FERGUSON: And what's your own view - what's your own view on that? Excuse me.

PETER DUTTON: Well my own view is that people at the moment pay a co-contribution through when they buy their medicines, regardless of their income. People pay as little as $6 for a $17,000 prescription, a single prescription. People pay a copayment at the moment for their private health insurance. 11 million Australians have private health insurance. Many Australians already pay a copayment when they go to see the doctor. Now, the issue is how you guarantee access, particularly for those who are without means, and how you don't deter people from going to see a doctor if there is some sort of a payment mechanism in place.

SARAH FERGUSON: You also raise the issue today of the ageing population. Is your government going to be forced to make older people who have more resources pay more for their healthcare?

PETER DUTTON: Well, I don't want to single anybody out, but what I would say is that as a general principle, in a society where we have an ageing of our population, regardless of people's age, if they have a means to contribute to their own health care, we should be embarking on a discussion about how that payment model will work.

SARAH FERGUSON: And is that going to require a new form of means testing to make that possible?

PETER DUTTON: Well, not necessarily, and again, this is the recommendations that we'll wait to see from the Commission of Audit. I want to make sure that, for argument's sake, we have a discussion about you or me on reasonable incomes whether we should expect to pay nothing when we go to see the doctor, when we go to have a blood test, should we expect to pay nothing as a co-contribution and other taxpayers to pick up that bill. I think these are all reasonable discussions for our population to have.

SARAH FERGUSON: Now, you set out as the key rationale for your speech today the dramatically rising rates of obesity and diabetes in society, yet your own junior minister, Fiona Nash, shut down a website which was designed to help prevent those scourges. Was that a mistake?

PETER DUTTON: It wasn't a mistake. The Government obviously has a number of people who were advising us in these particular areas. The issue that you speak of is a reasonable discussion to take place. But to put this issue into perspective, there was a system that was proposed in relation to a star rating that people could assess whether or not they purchased particular foods based on that system or that star rating system. The system hasn't started, and as I understand the minister's position, she said that the website shouldn't proceed until there had been a rolling out of this system or a better understanding ...

SARAH FERGUSON: But that wasn't the view of those people who had been involved in putting that website together; they said it was ready to go.

PETER DUTTON: Well again, I mean, you've got Labor premiers sitting around the table in South Australia and Tasmania, two of the worst-performing health systems in the country. I don't place much credibility in what might have been leaked by Labor ministers out of that meeting. I find Fiona Nash not only to be an effective minister, but a very decent person. I think she's served her constituency well.

SARAH FERGUSON: That's not actually the question here. Excuse me, minister, ...

PETER DUTTON: Well it goes to credibility and the credibility that I place in this debate is with Senator Nash and I think she has done the right thing here. We'll have a proper discussion about what we should do in terms of food labelling and the rest of it, but we aren't going to be cajoled or bullied by people like SA or Tasmania or indeed the ACT, who have very poor performing health systems.

SARAH FERGUSON: Forgive me for interrupting. It doesn't just go to the credibility of the minister. I'm asking you for your opinion. These are exactly the tools that public health experts say the public needs to fight diabetes and obesity. Do you still maintain that website should be taken down?

PETER DUTTON: If the system hasn't started, I don't see an argument for the website being up in place and that's the decision rightly that the minister took.

SARAH FERGUSON: Did you know that her chief-of-staff was a lobbyist for the food and soft drink industry?

PETER DUTTON: Well, again, Sarah, these are matters that have been trawled over.

SARAH FERGUSON: What's the answer to the question, if you would?

PETER DUTTON: Well I knew of course, as everybody else did, Mr Furnival's history, but today is our opportunity to talk about ways in which we can strengthen Medicare going forward and that's the speech I gave today and I think that's the discussion the public wants to hear about, about how can we provide ...

SARAH FERGUSON: Except that you're - minister, if I may say, you're the person that raised the issue of obesity and diabetes, that wasn't me.

PETER DUTTON: Sure.

SARAH FERGUSON: You made that the centrepiece of your speech, the opening lines in fact.

PETER DUTTON: Sure.

SARAH FERGUSON: You're saying you knew that Mr Furnival was a lobbyist for the food and drink industry. Doesn't that mean there was a clear conflict of interest between his past and the actions of your minister?

PETER DUTTON: No, the appropriate, the appropriate - as I'm advised, the appropriate declarations were made and signed, and as I say, Mr Furnival now has moved on. Our discussion today was about the fact that we have one of the highest obesity rates in the world. About two in three Australians have - are either overweight or obese. We now have about 2,200 young children and youngsters who are identified as having Type 2 diabetes. That's what I was speaking about today and frankly I think that's a much more substantive discussion to have with the public and if we do that then we can talk about the ways that we can make our system sustainable going forwards.

SARAH FERGUSON: Thank you very much indeed for joining us, Mr Dutton.

PETER DUTTON: My pleasure. Thank you.