This article is more than 3 years old

This article is more than 3 years old

The health minister, Greg Hunt, has strongly hinted at a big breakthrough on Medicare, suggesting the government will unfreeze the Medicare rebate in the May budget.

This comes as the treasurer, Scott Morrison, has intensified the government’s pre-budget positioning, discarding years of anti-debt rhetoric from the Coalition to promote a new concept of “good and bad debt” on Thursday.

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With the budget just 12 days away, the Turnbull government has been keen to promote its healthy relationship with doctors, particularly the Australian Medical Association and the Royal Australian College of GPs.

In last year’s budget the government extended the pause on the indexation of Medicare rebates for an extra two years to save $925.3m, leading to accusations from the AMA that it was ripping nearly $1bn out of patients’ pockets and undermining the bulk-billing system by forcing doctors to charge more.

Labor campaigned hard on the issue at last year’s election, so both Malcolm Turnbull and Hunt have this year raised the prospect of removing the Medicare rebate freeze to blunt Labor’s attack.

On Thursday Hunt suggested firmly that changes to the rebate freeze were in the offing. When asked if there was a “big breakthrough” coming, he said:

“We’ve done tremendous work, and I want to thank the AMA and the Royal Australian College of GPs for their cooperation so far, I think we’re making real progress.”

“I won’t pre-empt any announcements, but I couldn’t be more thankful for the work of Michael Gannon at the AMA, and Bastian Seidel at the College of GPs.

“I am very hopeful and very confident that we will have deep, long-term agreements which will assist with doctors and assist with the affordability of medical care for patients.”

Funding for Medicare this financial year stands at $22bn and is forecast to rise to $25bn over the next four years.

Morrison said on Thursday that he wanted to change the way in which the budget reported debt, particularly debt incurred to fund infrastructure and debt incurred to fund government programs.

“This will be achieved by reporting the net operating balance alongside the underlying cash balance,” he said.

He also reiterated his call for the need to talk in a more nuanced way about debt, saying he wanted to make the distinction in the budget between “good and bad debt” and assign the level of government debt across portfolio spending areas.

It marked a further departure from Abbott-Turnbull government rhetoric that has cast debt as a disaster, an emergency, a financial melanoma or a house on fire.

Some economists cautiously welcomed his plan on Thursday, with audience members at the Australian Business Economists luncheon congratulating him on the move.



But some economists admitted confusion about how the government proposed to distinguish between “good and bad debt” within different portfolios.



Peter Jolly, the head of global research at NAB, said the “good debt, bad debt” concept could quickly become complicated.

“What starts out as good debt, if the project selection is poor, could quickly become bad debt,” he said.

“And is there some risk that good government debt could chase away the even better private-sector investments [in infrastructure projects]?”

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Richard Dennis, the chief economist of the Australia Institute, said the government’s decision to abandon five years of political strategy in which it told voters that debt was proof they were living beyond their means would be complicated by its attempt to loan $1bn to the Adani Carmichael coalmine project in Queensland.

“The government’s started a new conversation about good debt and bad debt, which is appropriate because we should have a conversation about the things we should invest in and things we can do without,” he said.

“But the problem for the government is they’re in the middle of a fight to deliver a $1bn loan to subsidise a coalmine at precisely the point that the world is buying less coal.

“Does anyone think that’s good debt? It’s kinda ruining their narrative.”