Hawke and his deputy Brian Howe had become convinced that without further price signals, the costs of healthcare would continue to grow. Costly decision: Former prime minister Bob Hawke lost substantial popularity after introducing Medicare co-payments. Credit:Jay Cronan Perhaps because they knew it would be unpopular, they unveiled the $3.50 co-payment charge without consultation as part of the budget. It was coupled with a cut in the rebate so that people who paid their doctor directly were also hit with an increase of about $3.50 in healthcare costs. Hawke immediately faced a backlash from the public, the Australian Medical Association and the Left and Centre Left of his party. The AMA accused Hawke of deceiving it because pre-budget discussions had been entirely about the cut in the rebate. The architect of Medicare, Dr John Deeble, slammed the plan as ''unjustified, ill-advised and destructive''.

The ACTU stepped in as well, saying it was ''not convinced that the [$3.50] co-payment proposal necessarily solves the problem of overservicing''. But the real trouble was within the ALP itself. The Left and Centre Left factions briefed the media that the co-payment would hit the poorest. The ALP executive made its displeasure known, too. Then ALP national secretary Bob Hogg said the changes would ''not be a plus'' at the next election. Howe was forced to suspend the introduction and set up a backbench committee to consider other options. The committee came back with a slapdown for Hawke. ''The introduction of co-payment for direct billing actually implements the first stage of Liberal Party policies and puts at risk the community's widespread acceptance of Medicare,'' its report said.

The states were also up in arms and some threatened to introduce outpatient fees to stop people flocking to hospitals to avoid the new upfront charge. In the end, a compromise was reached with the Left, for a reduced $2.50 charge, as a face-saver for Hawke. But the battle had left such bitterness that it was only a matter of time before Keating moved. As treasurer, Keating had opposed a co-payment charge and made sure his views were well known to his caucus colleagues. Just a week before Christmas he ousted Hawke. The payment was gone by March 1992. Loading

The Abbott government's renewed pursuit of a co-payment has been given impetus by a research paper by Terry Barnes, a former senior health adviser to Tony Abbott. It argues that co-payments would provide a ''simple yet powerful reminder that we have a responsibility to look after our own health and not simply pass on all the costs of and responsibility for caring for ourselves to fellow taxpayers''. The issue might not be as divisive within the Coalition, but it will again draw opposition from doctors, welfare groups, pensioners and, importantly, from state governments, most of which are now Liberal.