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Budget no cure for rising health costs

CHOICE welcomes superannuation measures but says budget points to healthcare pain

3 May 2016

CHOICE says consumers will benefit from superannuation reforms in the 2016-17 Federal Budget, but warns households will feel the pain of rising healthcare costs.

Healthcare pain

The consumer advocacy group has called out the Federal Government's decision to keep the Medicare Benefits Schedule fees at current levels to June 2020, which it says will effectively freeze benefits in the face of rampant healthcare inflation.

"This measure effectively locks in the 2014 price the government pays for all services provided by general practitioners, medical specialists, allied health and other professionals," says CHOICE CEO Alan Kirkland.

"It will very likely see consumers paying greater gap payments as the price the government pays for Medicare services will not even keep up with inflation," Mr Kirkland says.

"This comes on top of changes to the Pharmaceutical Benefits Scheme that still stand to push up the price of medicines for many consumers, especially those with chronic conditions. Although these measures announced in 2014 have not been passed by Parliament, they have not been removed from the forward estimates.

"CHOICE's nationally representative Consumer Pulse survey found that, in March 2016, over half (55%) of Australians are already worried about the cost of visiting their GP.[1] This number will continue to grow as consumers face greater out-of-pocket expenses for basic healthcare."

Superannuation reforms


The Treasurer and Assistant Treasurer have confirmed a critical superannuation reform, announcing the Federal Government will legislate that the objective of superannuation is "to provide income in retirement to substitute or supplement the Age Pension."

"The new objective for superannuation is crystal clear: to provide income in retirement. Consumers will benefit from this in the long run as further changes to the law will have to reflect this objective," Mr Kirkland says.

"It's a guiding principle to make sure that the money saved in super has to be used for consumer interests – not the many other purposes that people would sometimes like to use it for," says Kirkland.

"The Federal Government also announced changes to tax incentives to encourage new financial products for retired consumers, such as annuities that provide annual incomes into old age, as well as changes that will make it easier for those aged 65 to 75 to make contributions to their super.

"This is good news for those planning for retirement. Consumers need more options at the retirement stage beyond being handed a large lump sum at 65 and being told to sort it out themselves.

"However, with new products in the financial system come new risks to consumers. Developments in the large and growing superannuation system need to be accompanied by investment in regulation to keep an industry known for harming rather than helping consumers in line.

Consumer regulators need more funding certainty

"While we welcome the additional $127m in funding for ASIC announced last week, this will not be enough if ASIC is to live up to community expectations about its role in regulating an industry that has failed to clean up its own act," Mr Kirkland says.

"The Federal Government is yet to confirm what new industry funding arrangements will look like for ASIC. There is a real risk that industry funding, which is initially proposed to be negotiated with industry each year, could leave the financial regulator with less money for essential consumer protection work.

"We are also concerned about the ongoing effect of 'efficiency dividends' on regulators like ASIC and the ACCC. This budget includes an additional 'efficiency dividend', taking the total to 2.5% in 2016-17.

"In a time of heightened consumer concern about the behaviour of some of our largest corporations, regulators should be shielded from further cuts through efficiency dividends," Mr Kirkland says.
 
[1] CHOICE Consumer Pulse – March 2016, total sample in wave 8 of the Consumer Pulse is n=1062. Fieldwork was conducted between 11 and 24 March 2016 by GMI/Lightspeed Research Australia.

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