Submission to the Select Committee Into the Abbott Government's

Submission to The Select Committee into the Abbott Government’s Budget Cuts

August, 2014

Introduction

The Queensland Nurses’ Union (QNU) thanks the Senate Select Committee for the opportunity to comment on the Abbott Government’s Budget Cuts. Nurses1 are the largest occupational group in Queensland Health and one of the largest across the Queensland government. The QNU is the principal health union in Queensland covering all categories of workers that make up the nursing workforce including registered nurses (RN), registered midwives, enrolled nurses (EN) and assistants in nursing (AIN) who are employed in the public, private and not-for-profit health sectors including aged care.

Our more than 50,000 members work across a variety of settings from single person operations to large health and non-health institutions, and in a full range of classifications from entry level trainees to senior management. The vast majority of nurses in Queensland are members of the QNU.

At the outset, we call on the Australian Senate to continue to reject entirely:

 the proposed Medicare Co-payment and health funding arrangements;  the proposed changes to funding and fee-setting arrangements in higher education;  all other outstanding budget initiatives that give rise to entrenched inequality in this country.

Following the release of the reports of the commission of audit whose findings influenced many of the budget propositions, the QNU and our peak body the ANMF engaged John Moran an historian and researcher to provide a detailed response. This submission draws on his work to comment on some of the areas where we believe the 2014-5 federal budget will produce detrimental effects to Australian workers and society in general.

National Commission of Audit as an Ideological Platform for the 2014-5 budget

In October, 2013, the federal Treasurer, Joe Hockey, and the Minister for Finance, Senator Mathias Cormann (2013), announced a National Commission of Audit to “review and report on the performance, functions and roles of the Commonwealth government”. The National Commission of Audit (the audit commission) released two reports (2014a, 2014b)

1 Throughout this submission the terms ‘nurse’ and ‘nursing’ are taken to include ‘midwife’ and ‘midwifery’ and refer to all levels of nursing and midwifery including RNs, Midwives, ENs and AINs.

2 recommending significant cuts to spending on healthcare, education, unemployment benefits and pensions, aged care, child care, family payments and the new National Disability Insurance Scheme (NDIS).

Under its terms of reference, the Abbott government gave the audit commission clear instructions to recommend ways to achieve its ideological objectives of reducing the role and functions of government and to reach a surplus target of one per cent of GDP within the next ten years. Given the partisan membership of the audit commission2 and the nature of its terms of reference, there was no possibility the reports would represent an independent assessment of the national finances. Quiggin (2013) describes the solemn announcement by incoming Coalition Treasurers of the creation of an independent commission of audit to examine all areas of government spending as a ‘theatrical ritual’. Indeed this ritual is inevitably the convenient precursor to harsh budget measures that break election promises.

Less than two weeks after releasing the audit commission’s reports, the Abbott Government brought down its 2014-5 budget. The budget has been the instrument for implementation of a number of the audit commission’s recommendations or variants of them.

This federal budget marks the beginning of a wide-ranging agenda to change Australia through economic policy based on neo-liberal principles of small government and large private interests. An outdated ideology that finds its origins in the 1980s moves to dismantle the mixed economy and reduce the role of government informs the audit commission’s reports and thus underpins the 2014 federal budget.

The experiences of the last 30 years have discredited many of those ideas, especially experiences such as the:

• recent Global Financial Crisis (GFC) caused by virtually uncontrolled private financial institutions overseas; • failures of various privatization ventures including those involving public hospitals; and • significant cost increases for essential, basic services now supposedly subject to “market” forces.

The QNU rejects the basic assumptions on the role of government put forward by the audit commission and the attempt to refashion the Australian economy and society through the

2 The Abbott Government appointed Tony Shepherd to chair its audit commission. At the time Mr Shepherd was president of the Business Council of Australia (BCA), a position he had held since late 2011. He was also chairman of listed company, Transfield Services, between 2005 and October 2013. The other Commissioners also had connections with the BCA or the Liberal party.

3 budget. The QNU believes government has a vital and effective role to play in the delivery of quality, cost effective services, including healthcare and education.

The Prime Minister himself has described it as a ‘values’ budget and of course the Treasurer has advised Australians this is the end of ‘the age of entitlement’.

The federal budget fails to address fair ways to increase the nation’s revenue (see for example the high income earners tax that is only for a limited time). Instead of penalising the young, the old, the poor and the sick, the budget could have reasonably considered a range of tax options, including a financial transactions tax on speculative trading and the closing of various business and investment tax loopholes, as effective ways of moderately increasing the tax take from those more than capable of affording it. We note with interest that the Treasurer could, however, manage to find $53.3 million over two years to fund the Royal Commission into trade unions.

By concentrating largely on expenditure, the Treasurer and most of his colleagues have attempted to convince Australians that the previous government’s spending was out of control. In fact, its spending level was below that of the Howard Government from 2000 to 2004 and equal to the Howard-Costello levels from 2004 to 2006 (Australian Government 2013).

The QNU therefore rejects the premise that this federal budget needs to rein in spending on programs that assist those in need while ensuring mining and big business does not contribute more revenue. The obvious inequity of the Abbot government’s budget is one of the reasons it has met with such widespread resistance. Like many other Australians, we are not convinced by these actions of a federal government that seems to think talking down the economy in order to build up the economy is a clever strategy.

The so-called ‘bottom line’ is that this budget provides significant benefits to those in the community who can afford it the most while taking from those who can afford it the least. The audit commission was a useful marketing tool in softening up the Australian public with its rhetoric about an unstable economy that was vastly in debt in order to make its eventual budget cuts appear less damaging.

The reality is that the losers far outnumber the winners. The Treasurer’s dogged attempts to gain support from the Senate cross-benchers to pass the more contentious budget measures has been met with a level of animosity that mirrors the electorate. The following snapshot gives an indication of the imbalance in the federal budget and its clear ideological preference for reduced government spending on major areas of public benefit such as health and education.

Budget winners

Politicians took a ‘pay freeze’ for 12 months. Public school chaplains received a $245 million boost. High income earners keep tax breaks from negative gearing and superannuation contributions. While those on incomes greater than $180,000 must now pay a 2% debt levy for the next three years, the funding cuts in other areas have no such time limit. Infrastructure receives $11.6 billion in funding for new projects. Mine-owners no longer have to pay the Minerals Resource Rent Tax. Medical research will receive the interest earned from a $20 billion ‘future fund’ that is financed through the Medicare co-payment.

Budget Losers

All Australians born after 1958 will have to work until they are 70 before being eligible to receive a pension. Sick people will pay more for medicines and a $7 co-payment per visit to the GP. On the upside, if they are so poor they have a concession card and so sick they have to visit more than 10 times, they do not have to pay for more than 10 visits. Young unemployed will have to wait 6 months before they are eligible for the dole, and can only receive a maximum of 6 months benefit for every 12 months they are out of work. Public health will lose $50 billion in new funding over eight years. Public schools will lose the funding they would have gained under the Gonski plan – around $30 billion. Public service will lose 16,500 employees. University students will have to pay higher fees in a ‘deregulated market’. Disability pension holders will face eligibility checks under tighter qualification criteria. ABC and SBS lose 1% of their annual funding. The environment has had $1.3 billion slashed from renewables investment, the $2.55 billion commitment to the government’s ‘direct action policy’ will now be spread over 10 years instead of 4 years, and while $525 million has been given to the ‘Green Army’, $438 million has been slashed from Landcare.

Underlying the quick-fix budget overhaul is an ideology that shifts the onus of ‘repair’ from older, established and relatively wealthy Australians to those who are younger, disenfranchised and less well off.

Recent polling (Hetherington, 2014) suggests that Australians are starting to question the alarmist rhetoric of the Abbott Government. An ongoing survey using a representative sample of 1445 adult Australians asked for their views on a range of tax and public spending issues. The findings showed that:

• A majority of Australians (53%) now believe they pay about the right amount of tax, a jump of 17 percentage points since the last survey. By contrast, the share who say they pay too much tax has fallen by 18 points; • After falling in earlier surveys, the proportion of those who said that high income earners paid too little tax jumped by 17 points to 72 per cent; • Those who want to see spending increased or maintained increased by eight points to 85 per cent, while those who wish to see spending cut fell by four points to eight per cent; • Australians increasingly view the tax system as unfairly regressive; • Australians want increases to public services to be funded by high income earners who they do not perceive as paying their fair share. Sixty-nine per cent of respondents said that increased funding for public services should be paid for by tax increases on the top five per cent of income earners or removal of tax concessions on superannuation and housing, which also flow primarily to high income earners.

So although the audit commission and the Treasurer insist the budget is all in the interests of everyday Australians, many of them are sceptical.

Health Care in the 2014 Budget . Health The QNU believes healthcare based on clinical need is a human right and patient care must always take precedence over profits. The federal government has actively promoted the notion that Australia is on an unsustainable spending trajectory in health based on the audit commission’s unsurprising predictions.

The QNU rejects this proposition and therefore rejects the need for the expenditure cuts, greater private contribution and “small government” proposals for healthcare implicit in the budget.

The QNU believes Australia has a manageable health budget, even as the population ages over the next few decades, and there is actually scope to increase the role of government in areas such as affordable dental care. We also reject arguments that the size of the health budget, as a proportion of GDP, is growing unsustainably. The projected growth is not unsustainable and it is not uncommon for the makeup of economies and budgets to shift as needs change. Societies change their spending priorities and economic profiles change with them. Growth in expenditure in any given area is not, in and of itself, an indicator of unsustainability. The long-term recommendations of the audit commission indicate this federal budget is a first step towards shifting the vast majority of people onto private health insurance where Medicare will become a government ‘safety net’ arrangement for the ‘most’ disadvantaged. 6

Medicare is for everyone - it is not a welfare system.

The QNU will be making a separate submission to the Senate Select Committee Inquiry into Health Policy, Administration and Expenditure in which we will provide more detailed information on the impact of the budget on health. However, we take this opportunity to express again our concerns about the proposed Medicare co-payment, changes to health funding arrangements with the States and aged care.

Medicare Co-Payment and Health Funding

Immediately after the release of the 2014 budget, the QNU wrote to several members of the Australian Senate calling on them to reject the proposed Medicare co-payment of $7. Although health experts3 have systematically condemned the proposal, the budget introduces a co-payment of $7 for each General Practitioner (GP) visit and any out-of- hospital pathology and X-rays.

The existing rebate for these services will be reduced by $5 but GPs will be able to recoup $7 by levying a patient charge. The co-payment aims to generate savings by acting as a deterrent for GP use based on the premise that if people have to pay, they will only go to the GP when it is absolutely necessary. After the first 10 services, a ‘safety net’ will apply for pensioners and card holders.

The federal government well knows the effects of this initiative, but has decided to proceed regardless. Australians already have high out-of-pocket expenses4 for medical care by world standards and many avoid or delay medical care due to cost. Earlier this year, the Senate Select Committee into the Abbott Government's Commission of Audit received written submissions and heard evidence that co-payments may lead to cost shifting rather than cost saving. Indeed Professor Stephen Duckett told this Committee that if only one in four or one in five people who might otherwise have gone to a doctor decides to go to a hospital emergency department then there are no savings for the Commonwealth government at all and substantially increased costs for state governments through further pressure on the public hospital system (Duckett, 2014).

Studies have found that over a third (36%) of Australians with chronic conditions reported problems with accessing healthcare due to cost; 17% of Australians had “skipped a medical treatment, test or follow-up recommended by a doctor, because of cost”; and 35% of Australians reported not accessing dental treatment due to its cost. When people are not

3 See for example the recent publications and commentary of Professor Stephen Duckett and Dr Anne-Marie Boxall. 4 The out-of-pocket healthcare costs in Australia have risen at much faster rates than most other countries, and this has already placed a cost-barrier in the path of low-income groups. Overall out-of-pocket costs amounted to 17.3% of total health expenditure in Australia in 2011- 2012 (AIHW, 2013, p. 32). 7 able to access appropriate care, their condition can become more serious which results in increased expenses both to them and to the community as a whole (Doggett, 2009).

We are concerned that the co-payment will:

 force more people to attend emergency departments;  reduce use of GP visits for preventive services such as immunisations and cancer screenings;  be an unfair burden on the poorest and sickest members of the community who are most likely to defer visits to the GP because of cost;  cause those who do not qualify for the safety net to miss out on care.

The federal government predicts co-payments will produce budget savings of over $1 billion that will go towards a medical research fund. Therefore the Treasurer and Finance Minister’s rhetoric that the health system is unsustainable falls flat because the co-payment will not even go towards funding the system.

The Treasurer claims the research fund will help to discover the “cures of the future”. Meanwhile, the sickest and most vulnerable members of the community will fund the research, not the large medical and pharmaceutical interests who will also benefit from the outcomes. This places academics in a position where they must rely on funding from the sickest Australians in order to pursue medical research, a cynical move that speaks volumes for this government’s disregard for both sectors of the community.

The budget enables States to charge $7 for hospital emergency department visits, however, we note in Queensland, Campbell Newman has ruled out his possibility (at least for now). It is therefore likely that those who cannot afford the co-payments will seek treatment at emergency departments and place further pressure on the acute sector. The elderly and those with chronic disease will be the most affected by co-payments and are likely to delay or avoid seeking care. However, instead of introducing systems that could improve their access to healthcare, this government has created barriers. The most vulnerable members of society will feel the impact of this short-term savings initiative.

Another area of particular concern in the 2014-15 budget is the federal government’s retreat from the agreed funding arrangements with the State and Territory governments under the National Health Reform Agreement. The move away from the Commonwealth sharing the cost of the growth of hospital admissions and other activity is anticipated to cost the states and territories billions of dollars in health funding from 2017.

This unanticipated move has angered most Premiers and will no doubt be the subject of further detailed negotiations. While the Queensland Premier is decrying this action by the federal government it is important to remember that his government has been responsible

8 for unprecedented job and service cuts in Queensland Health. Over 1650 Full Time Equivalent (FTE) nursing and midwifery positions have been cut from Queensland Health since September 2012 out of a total of over 4300 FTE job losses in Queensland Health5, with devastating impacts for health workers and the communities they serve. The same small government agenda that drives the Queensland LNP government also propels the Abbott Coalition government, just as their respective Commissions of Audit provide the ideological platform for their budget cuts.

Aged care

Despite several years of campaigning for greater regulation in the aged care sector and equitable payment for nurses, the 2014 budget has transferred the $1.5 billion in funding intended for the aged care Workforce Supplement to the general funding stream. This means residential and community care providers have received the increase without needing to sign enterprise agreements, or sanction any other mechanism that would entitle nurses to wage justice.

Nurses working in this sector will continue to receive significantly less wages than their colleagues in the public and private sectors. This, in turn often results in an inadequate skills mix6 because of the shortage of Registered Nurses in this sector. Any plan to further deregulate the aged care sector will put profits before the interests of residents. It reflects the perceived needs of business, not the needs of residents.

While we note that regional, rural and remote aged care providers will receive an additional $54 million over the next four years, the 2014 budget also abolishes the payroll tax supplement paid to the for-profit residential care providers and this will put more pressure on staffing and wage levels.

The QNU will continue to campaign for greater regulation and accountability, not less, in key areas of aged care including:

• securing a greater wages share for nurses employed in aged care, who, since the Howard Coalition Government’s first round of deregulation in the late 1990s, now earn considerably less than their colleagues in the hospital sector; • improving nursing staffing numbers and skill mix so staff can provide quality, safe care;

5 These figures are accurate as of 22 August and are based on information supplied to the QNU from Queensland Health. Despite orders from the Queensland Industrial Relations Commission, the QNU has had to make numerous Right To Information requests to obtain correct data on the number of abolished positions. 6 This refers to the most appropriate mix of staff required to provide safe, quality care and is based on the ratio of Registered Nurses to other nursing staff. 9

• improving transparency and accountability in government funding and consumer payments; and • licensing of all workers, including assistants in nursing/personal carers and irrespective of whatever job title their employer might give them, providing nursing in aged care.

9. National Disability Insurance Scheme (NDIS) Higher Education

The QNU believes the federal government’s higher education ‘reforms’ set out in the 2014-5 budget will undermine the ongoing development of an equitable and effective education system in Australia. The budget announced a number of significant changes to higher education funding including: • a cut, on average, of 20% in Commonwealth financial support for new student places from 2016; • allowing universities (from 2016) to set their own fees for students; • lowering the minimum income level at which students start paying back their student loan (HECS-HELP); • changing how interest is calculated on a student’s loan so that in future interest will be set at the Commonwealth 10-year Treasury bond rate, rather than the lower CPI figure.

Since the 1980s there has been a regular and legitimate debate about the level of the fee and the income threshold for repayment. However, the idea remained that there would still be government regulation of the fees. The 2014 budget predictably cut the government contribution and has ‘deregulated’ the fee-setting arrangements so that universities can charge students according to the ‘market’ rate.

Like so many of its budget measures, this one is based on the idea that education is a commodity where markets eventually act in the students’ favour. Even the audit commission (2014a, section 7.13) expressed some reservation about this:

This is an area where the Commission considers further work is required. While an increase in competition in the Australian higher education market would yield improved outcomes for students, there are questions around whether market forces in Australia are sufficiently strong to yield distinct price differentiation between different courses and universities.

The QNU strongly opposes these changes as we believe they will excessively drive up the cost of university degrees. Australia’s health system depends on sufficient people completing nursing and midwifery degrees and going into these professions. Dramatically

10 increasing the cost of nursing and midwifery courses, as preliminary data suggest will happen under deregulation, could have serious implications for the ongoing sustainability of the nursing and midwifery workforces. According to the National Tertiary Education Union (NTEU) (2014), from 2016 universities and other providers can charge whatever they think the market will bear. Norton (2014) suggests that the deregulation of fees will lead to increases in tuition fees of between 65 per cent and over 200 per cent. Under a deregulated market, the cost of servicing these degrees could also skyrocket.

These changes will not only dramatically increase the cost of servicing student debt ($2.1b over four years), but are highly inequitable. Graduates who take career breaks to care for family members for example will suffer from compounding outstanding debt and interest payments mounting up over time. Those who are least able to afford paying a high price and incurring very high debts will pay the most. These changes also risk imposing significant costs on older students, many of whom are forced back to education because of structural changes in the economy and the need to enhance existing skills or learn a new career.

Again the audit commission and the Abbott Government, in its 2014 budget, want to reverse important social and economic achievements which benefit everyday Australians, while refusing to address significant tax revenue opportunities and acknowledge the role of government in maintaining equitable access to, and reasonable cost-structures associated with, a university education.

The core function of Australia’s universities and other higher education facilities is to provide the nation with a competent, skilled and sufficient workforce, across a wide range of disciplines.

The QNU rejects these changes and fully supports the NTEU’s campaign against the Abbott Government’s attack on Australia’s higher education system.

Superannuation Guarantee

The gradual increase to the Superannuation Guarantee (SG) rate scheduled to result in a 12% rate of SG by 2019/20 has been paused for 3 years. Commencing 1 July 2014, the SG rate for 2014/15 will be 9.5% (a 0.5% increase from this financial year) and will remain at this level until 30 June 2018. It will then increase by 0.5 per cent each year until it reaches 12 per cent in 2022-23, one year later than previously proposed.

The QNU is concerned that the combined impact of this delay in the superannuation guarantee, increasing the superannuation guarantee and reducing the generosity of pension indexation - to be based on CPI increases rather than wages - would significantly reduce retirement savings.

According to the Industry Super Association (Linden, 2014) ‘coupled with the proposed changes in pension indexation and further pause in the Super Guarantee it will result in a 25 per cent reduction in total retirement incomes for someone aged 45 today on average earnings’. As women are already under-superannuated, this is particularly concerning for the predominantly female nursing and midwifery workforce. These measures will make it even harder for them to save for a decent retirement.

Fair Entitlements Guarantee

In another major change, the Budget will save about $90 million over four years from the Fair Entitlements Guarantee (FEG) (previously known as GEERS). The previous government introduced the FEG scheme to ensure that employers pay workers their redundancy entitlements if they go out of business. This Budget puts a cap on the entitlement. Rather than receiving the redundancy payments set out in a collective agreement, workers will receive only the minimum legal redundancy entitlements in the National Employment Standards which will be capped at 16 weeks’ pay.

Employees seeking to claim an entitlement above the maximum set by the NES will maintain rights as creditors to recoup any outstanding entitlement through the winding up of their employer's business.

From 1 July 2014, indexation of the Maximum Weekly Wage used in calculating entitlements for claimants earning above the Maximum Weekly Wage of $2,451, will be paused until 30 June 2018. The changes will apply only to liquidations and bankruptcies that occur on or after the commencement date.

These changes to fundamental entitlements are particularly concerning in industries like manufacturing which continues to decline. They also reflect this government’s willingness to erode workers’ entitlements at any opportunity.

Conclusion

The Prime Minister has said that the 2014 budget is about “shifting our focus from entitlement to enterprise; from welfare to work; from hand-out to hand-up”. The reality is the audit commission and the federal budget that followed aim to shift the role of government from:

• meeting people’s basic needs through equitable collective programs and processes, to imposing more costs and risks on the individual; • providing some basic financial security for everyone, to imagining everyone has the capacity to be an entrepreneur and capable of significant earnings; and

• providing cost-effective risk management, through government, for important needs like health and education, to assuming everyone has the same opportunity and capability as the elite 10 per cent.

With this lopsided budget approach the Abbott Government has simply fallen into line with its audit commission. Indeed, the audit commission (2014a) states that ‘the commission’s proposals can be implemented incrementally’. Clearly, unless the audit commission’s ideas are challenged and balance is restored, we fear there is worse still to come.

References

Abbot, A. (2014) Address to The Sydney Institute, Tuesday, 29 April, Sydney retrieved from http://www.pm.gov.au/media/2014-04-29/address-sydney-institute

Australian Government (2013) Mid Year Economic and Fiscal Outlook 2013-2014 Appendix D retrieved from http://www.budget.gov.au/2013- 14/content/myefo/download/16_appendix_d.pdf

Australian Institute of Health and Welfare (2013) Health Expenditure Australia 2011-2012, Health and Welfare Expenditure series no. 50, Cat. no. HWE 59, Canberra.

Doggett, J. (2009) Out of Pocket - Rethinking health co-payments, Centre For Policy Development, Occasional papers No. 9. Duckett, S. (2014) Proof Committee Hansard, Senate Select Committee into the Abbott Government's Commission of Audit 18 February, p. 29.

Hetherington, D (2014) Per Capita Tax Survey 2014: Public Attitudes Towards Taxation and Government Expenditure.

Hockey, J. & Corman, M. (2013) Joint Media Release ‘Coalition commences National Commission of Audit’, 22 October, retrieved from http://jbh.ministers.treasury.gov.au/media-release/009-2013/

Linden, M. (2014) ‘Budget imposes four-year freeze on super guarantee rises’, Workplaceexpress, May 13, retrieved from http://www.workplaceexpress.com.au/nl06_news_selected.php?act=2&stream=1&se lkey=52309&hlc=2&hlw=super+guarantee&s_keyword=super+guarantee&s_searchfro m_date=631112400&s_searchto_date=1408513561&s_pagesize=20&s_word_match= 2&s_articles=1&stream=1

Moran, J. (2014) Aussie Values – Worth Fighting and Voting For: Nurses and Midwives’ Discussion Paper on the Abbott Government’s Commission of Audit.

National Commission of Audit (2014a) Towards Responsible Government - The Report of the National Commission of Audit – Phase One.

National Commission of Audit (2014b) Towards Responsible Government - The Report of the National Commission of Audit – Phase Two.

National Tertiary Education Union (2014) How much will a university degree cost? Federal Budget 2014 Fact Sheet, retrieved from http://www.nteu.org.au/article/Budget-2014---NTEU-Fact-Sheet-16290

Norton, A. (2014) Australian Financial Review, 14 May, p. 9.

Quiggin, J. (2013) ‘Commission of audit: a crusade of dated ideology and dead ideas’ Canberra Times, 5 November, retrieved from http://www.canberratimes.com.au/national/public-service/commission-of-audit-a- crusade-of-dated-ideology-and-dead-ideas-20131103-2wugf.html#ixzz34qNQFWYx