Private health rebate changes causing Labor 'a lot of pain in electorates'

The ins and outs of some of the seemingly endless fights over the Albanese government's budget measures are often arcane or difficult for many people to easily understand.

That's the case, for example, with the legislation to crack down on trusts, introduced on Wednesday, which has been surrounded by a lot of heat.

But the tug of war over the government's plan to remove, from April next year, the age discrimination that favours older people taking out private health insurance is a very simple issue for voters to get their heads around, wherever they stand on the merits of the measure.

It's now a central battle for the government and it will be hard for it to rescue the measure without sacrificing big dollars — just when Treasurer Jim Chalmers needs to preserve the budget's savings.

In terms of personalities, there's a lot to watch too, with new Greens leader David Shoebridge and Health Minister Mark Butler as main players.

Both have something to prove in how this ends. It's Shoebridge's first big legislative test in his new role, and he flagged earlier the Greens would be more assertive under his leadership.

For Butler, seen as one of the frontrunners to eventually succeed Anthony Albanese, it will be another benchmark of his ability to land a deal — providing clues on how well he will handle the complexities ahead in his job of reforming the National Disability Insurance Scheme.

Ryan accuses government of hiding impact

Under present arrangements, people 65 and over who have private health insurance receive a bigger rebate than those who are younger. The amount is larger if they are 70 or older.

By removing the "top-ups", the government would save $3 billion over four years. It has said this would be put into aged care, which is much in need of money.

Its justification for the measure is equity — that it is unfair that people should be treated differently on the basis of age.

On Wednesday the opposition, Greens and other crossbenchers joined in the Senate to knock the legislation off the government's agenda.

The Greens say that, as the price of passage, they want pensioners removed from its ambit.

"You can't take a billion dollars from 1.2 million pensioners," Shoebridge says.

Butler on Thursday reintroduced the bill into the House of Representatives. Its future was unclear when parliament broke late on Thursday. The weeks ahead will see negotiations between the government and Greens.

There'll be plenty of time for the bill's critics to intensify their lobbying, which has already been full-on. One Labor backbencher, receiving a flood of emails, says the measure is causing a lot of pain in electorate offices. This MP thinks the government should at least remove pensioners from those hit, if not drop the bill entirely.

Teal independent Monique Ryan, a medical doctor, has been a strong critic, commissioning data from the Parliamentary Budget Office (PBO).

Ryan said after the Senate vote: "It's unfair and unreasonable to strip support from older Australians who have worked for decades to retain their private health cover in retirement.

"The PBO analysis I commissioned found that half the $3 billion in savings the government had planned would have been taken from the pockets of the older Australians least able to afford them."

Ryan accuses the government of trying to hide the impact of the changes.

"It claimed that 44,000 older Australians might drop their cover because of these changes. The Health Department says it is closer to 80,000. That would shift the cost of their health care to public hospitals, and the government has refused to say how much that would cost the states."

For the government, and in particular the treasurer, the rejection of the health rebate bill capped off yet another fraught week, which saw Chalmers embarrassed when the prime minister seemed to be claiming all the ownership of last week's backflip over the Australian Taxation Office's credit card ban.

Budget update will be another test

This budget has such a long tail that it is running into the preparations for the mid-year update, due in December. Many concessions and corrections have had to be made.

At the macro level the news continues to be grim, with the latest International Monetary Fund's World Economic Outlook this week showing Australia expected to have continuing high inflation, in the top band of developed countries. Thursday's job figures showed unemployment at 4.7 per cent in September, a five-year high.

Expectations remain of another interest rate rise in this cycle, but Chalmers will fervently hope the Reserve Bank will press the pause button at its early November meeting, as is currently considered likely. Thursday's jobless numbers increase the prospect of a hold in November.

Chalmers finds himself under the most pressure that he has experienced in his time as treasurer, with no relief in sight and the budget update looming as yet another test.

Given his present problems and preoccupations, it was interesting that Chalmers this week delivered a major speech recognising the risks posed to Labor by One Nation and warning the progressive side of politics not to insult those attracted to voting for that party.

It was a timely reminder, as One Nation appears an increasing threat to Labor. A landmark test for the left side of politics will be next year's New South Wales election where, despite the Minns Labor government having a reasonable record (unlike Victorian Labor), One Nation appears to be gaining quite a strong foothold.

For the federal opposition, on the objective evidence this week should have been a very good one, with the government seriously on the back foot.

Yet Angus Taylor and the Coalition still fail to present as a credible alternative, a message reinforced by implication in former treasurer Josh Frydenberg's autobiography, released this week.

Many in the current parliamentary Liberal party are highly critical of the former Liberal deputy leader producing the book now, or at all. But the point is, while people may dispute the solutions Frydenberg offers, he has held a mirror to the Liberals' problems and inadequacies.

The party has to fix what the mirror shows — it's no good just panning the man holding it.

Michelle Grattan is a professorial fellow at the University of Canberra and chief political correspondent at The Conversation, where this article first appeared.