Good afternoon.
Parliament has wrapped up for the week, but the Albanese government remains under intense pressure.
Labor desperately needs one of its budget saving measures, a reduction in the private health insurance rebates for over-65s, to pass parliament.
But it’s a move with few friends, leaving the government with even fewer options.
Thrown out
In an unusual move, politicians from across the Senate teamed up to throw out the legislation on Wednesday, infuriating Labor.
This kind of cooperation across party lines is uncommon, and by striking the bill, they forced Labor to go back to the start of the process of getting legislation through the parliament.
A defiant Mark Butler soon fronted the media after the government’s defeat in the upper house. The health minister declared he would reintroduce the bill the following day, which he did.
Why are the changes so controversial?
Amid an ageing population increasing the burden on a shrinking tax base, and growing pressures on the budget bottom line, Labor is relying on the changes to help fund aged care commitments.
The proposal has attracted opposition from all sides of politics as well as aged care and private health groups, who all argue the changes would heap additional pressure on the public system.
Under the current system, older Australians with private health insurance get higher rebates than younger people. Labor’s proposed changes would remove all age distinctions so that everyone with private health cover would receive the same rebate (based on their income).
Almost 80,000 older Australians are expected to dump their private health cover by the end of the decade as a result of the policy changes, which would save the budget $3bn.
What happens next?
The Coalition would like to see the policy scrapped, but the Greens have offered the government a pathway out of the gridlock, using the minor party’s balance of power in the upper house. In return for their support, the Greens want Labor to exclude pensioners from the rebate cut.
Both the government and the Greens are continuing negotiations, as Labor weighs up the key demand under the new leadership of David Shoebridge.
Shoebridge was expected to bring a more combative approach to negotiations, and we could be seeing that play out.
Labor faced a similar scenario last month when it was forced to back down and dump plans to place a cap on allied health payments for veterans in another bid to claw back savings.
The Greens are keen to pass the changes to private health rebates, should Labor agree to its condition.
But with only a fortnight of parliamentary sittings left before the summer break, Labor has limited time left to bank a win before the end of a turbulent year.
Photograph: Mick Tsikas/AAP
