Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Hansard source

I do not know whether I will take the full 14 minutes for my speech, but I do want to fill in some of the historical holes that the minister tended to omit—which just happened to fit in with when the Liberal Party was in government. I know it is going to come as a rude shock to you, Madam Deputy Speaker Burke, and everyone listening to this broadcast, but the minister’s statement omitted—what would it be?—the 40 years that the coalition was in government and the changes for the better made to the Pharmaceutical Benefits Scheme during those years.

I want to go back to 1919, when it is arguable the Pharmaceutical Benefits Scheme actually started under one of my predecessors, the former member for North Sydney, Billy Hughes, and the Nationalist Party. In 1919 he set up the Repatriation Pharmaceutical Benefits Scheme, which I am advised by the library was established to provide free pharmaceuticals to ex-service men and women. It was the Repatriation Commission that reached agreements with the various Australian pharmaceutical societies to provide necessary medications for veterans of the First World War and the Boer War. So, even though Billy Hughes was obviously a member of a number of different political parties, I am reasonably confident that at that time he was a member of the Nationalist Party and as Prime Minister he introduced that significant initiative. He was a discerning man, Billy Hughes. In fact, I am going down to Old Parliament House this afternoon, where there is an exhibition on Billy Hughes’s life. He was the member for a number of seats. He was the longest serving member of the House of Representatives and one of my predecessors.

Having said that, I think old Billy should be given some proper recognition, because it is hard to believe—and, Madam Deputy Speaker Burke, I know you are struggling with the concept—but not all good things were solely the responsibility of the Labor Party! There were other parts of the development of this great nation that were actually borne by the Liberal Party, the National Party or the Country Party, and in fact the Pharmaceutical Benefits Scheme was part of that. Having said that, as I said in a discussion in this chamber on one of the bills on the PBS, I was actually very bipartisan. Perhaps that is where the minister got the idea to have this ministerial statement, because at that time I talked about the fact that it might arguably be the 60th anniversary of the Pharmaceutical Benefits Scheme even though there is an argument that it actually started back in 1919.

I recognise that the Curtin government and the Chifley government contributed substantially to the creation of the Pharmaceutical Benefits Scheme. It was in 1949, on the election of Menzies, that the new government introduced a limited scheme to provide a list of 139 life-saving and disease-preventing drugs free of charge to the whole community—that was in the Pharmaceutical Benefits Act 1947. That was the act that was passed under Chifley, but the new regulations providing for those 139 drugs came in on 14 September 1950 under Menzies.

What that indicates is that there was a level of bipartisanship at that time on the PBS, although I must say that the Labor Party at that time had supported a more comprehensive scheme and, because of the close relationship at that time between the British Medical Association and the new Menzies government, I would assume that was one of the reasons why there was some opposition to a comprehensive scheme. Having said that, I regret that I do not know why the BMA was so opposed to a comprehensive scheme, other than the fact that the doctors groups in those days would have been very conservative and probably would have taken the view that introducing a scheme of this nature would place restrictions on the delivery of the pharmaceuticals rather than enhancing the delivery of the pharmaceuticals. Quite frankly, the government, as a total solution to all problems, is not necessarily the answer.

However, in 1951, again under the Menzies Liberal government, the National Health (Medicines for Pensioners) Regulations came in. Those regulations authorised the free provision of medicines listed on the British Pharmacopoeia for pensioners—that is, for the aged, invalids, widows or former service personnel. So in 1951 Menzies actually extended the pharmaceutical scheme as it was at the time. The minister also failed to take account of the fact that in 1953 the Pharmaceutical Benefits Advisory Committee, PBAC, was set up—just a minor part of the PBS, I say with some degree of cynicism. It was and still is a substantial part of the PBS. Even though the medical profession at that time was very opposed to the establishment of a government-appointed committee controlling the pharmaceutical formulary, the government was firm in its decision to restrict pharmaceutical benefits to items on the formulary, and the formulary committee was embodied in the Pharmaceutical Benefits Act. It originally consisted of the Director-General of Health as the chairman and six other people appointed by the minister, and this became the PBAC over time. It became an independent statutory body under the National Health Act 1953, again under the Menzies government. The member for Brand would appreciate my attempts to be bipartisan on this, because these are important historic points.

On 1 March 1960—and let me think for a second here; oh, yes, Menzies was the Prime Minister; how about that—the Pharmaceutical Benefits Scheme, or the PBS as we know it today, was established. The main components of the scheme were: a combination of the existing pensioner and general schemes, an expanded range of drugs for the general public and the introduction of a patient contribution, or copayment, of five shillings to provide some control of volumes and expenditure. That is an important point: that was the beginning of the copayment. As we and members on the other side know, it is an important moment when you actually get some copayment in there, so things are not entirely free. Once you break that seal, it gives you an opportunity to have a reasonable charge associated with the public benefit to make that public benefit more sustainable.

But, despite the introduction of the copayment, prescription volumes increased from $24.6 million in 1959 to $60.4 million—that is nearly a tripling—eight years later, in 1968, and Commonwealth expenditure rose from $43 million to $100 million at the end of the 1960s. There was further growth in the PBS over the seventies. From 1969 expenditure was $100 million a year and in 1975 it reached $211 million a year, so there was a substantial increase over that period of time. It should also be recognised, because it was omitted by the minister, that in 1978, under the Fraser government, dentists were invited into the PBS to be able to prescribe a limited range of antibiotics and antibacterial and antifungal drugs as pharmaceutical benefits. They could do that from 1 April 1979. It was the Fraser Liberal government that made those changes. They made a further change on 1 January 1983: a concessional beneficiary category was created to assist the disadvantaged. So it was a Liberal-National government that introduced an initiative so that low-income earners and the unemployed, who are now concession card holders, would pay a concessional amount for listed pharmaceuticals.

I should add that, under the Howard government, access to ophthalmologists was provided under the 2007 initiatives. There is a significant initiative, which the minister did refer to but failed to give credit for, which starts on 1 August 2008, when the Australian government will apply statutory price reductions to the PBS medicines where multiple brands are available and when some medicines will receive a two per cent price reduction and others a 25 per cent reduction. That is very important, and that was an initiative taken by the Howard government to provide the opportunity for the generics to come on board.

This is a very important scheme. Putting aside an important history, one of the reasons the Pharmaceutical Benefits Scheme is successful is that there is bipartisan support for the scheme. I do not take total ownership of the PBS for the Liberal and National parties, but nor should the Labor Party take ownership of the entire history of the PBS. I think we can look at the historical development of the PBS and see that there were various interests at that time—with the benefit of hindsight, perhaps misguided—that were focused on the interests of the patients and on the wide distribution of medicine. For example, India has no PBS, and yet a lot of pharmaceutical companies believe that it is one of the best markets in the world to operate in because there is large demand, they can get the drugs out there quickly, there are not the same sorts of restrictions in any way, shape or form that there are in Australia, and the drugs are more accessible for the general Indian population. But India has a vast number of challenges and one of them is how you ensure that the entire population gets access to pharmaceuticals on a sustainable basis.

We also need to have a rational, level-headed debate about the sustainability of the pharmaceutical industry, which is significant in mainstream Europe and the United States. Obviously, despite having a reasonable presence and a number of manufacturing plants and research facilities in Australia, the pharmaceutical industry is under certain pressures, and we have to recognise that. The other day I likened the pharmaceutical industry to the big movie houses in Hollywood. They are always looking for their next blockbuster. They have very high up-front costs, they have significant research costs and they are hoping that it really works. The difference with pharmaceuticals is that the numbers are so much larger in the main than for any of the big movie houses in Hollywood and, rather than nourishing the entertainment needs of the community, the pharmaceutical industry nourishes the body, saves people’s health and provides wellness support to people when they most need it.

So we welcome the initiatives to recognise the success of the PBS. I hope that the PBS lives to 100 and beyond and that it continues to be sustainable. Sometimes hard decisions have to be made about sustainability. One of those hard decisions was made in the budget, I think, back in 2003-04, when we had to increase the copayment. That was a tough decision. My recollection is that it was opposed by the opposition at that time.

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