The target of Labor’s cheaper-medicine policy is the same as its $8.5 billion bulk-billing boost for adults: middle Australian households who have faced financial pressures over the past few years but missed out on cheaper healthcare policies aimed at the most vulnerable people.
Loading
The announcement builds on Labor’s policy from 2023 to bring the maximum co-payment for PBS medicines down to $30 from $42.50.
The change will make 80 per cent of PBS medicines cheaper – because they currently cost more than $25 – and come into effect on January 2026 if Labor is re-elected. Prices then rise each year with indexation.
Pensioners will keep receiving medicines at $7.70 per script until 2030, after the government froze the price for five years in last year’s budget.
Other pharmacy changes introduced by Labor include 60-day scripts for more than 320 common medicines – which caused uproar among pharmacists, who Albanese then appeased with a $3 billion deal – and reducing the PBS safety net.
It will keep the powerful Pharmacy Guild onside by going partway to meeting the guild’s plea to shrink the patient co-payment to $19.
Labor said those policies have saved Australians a cumulative $1.3 billion in hip-pocket costs since July 2022. It anticipates Australians will save a further $786 million over the next four years under the $25 co-payment.
The federal government will also spruik the policy for achieving cost-of-living relief while bringing down inflation because it reduces consumer prices.
However, it will lift government spending by $689 million in next week’s budget, adding to a $19.8 billion PBS bill forecast for 2025-26 in the December mid-year budget update.
Labor’s spending spree ahead of this year’s election comes as the federal budget is due to head into deficit, leading economists to urge spending restraint. This year’s deficit is forecast to be $26.9 billion, growing to $46.9 billion in 2025-26.
Loading
Labor has defended its budget management by saying it improved the bottom line by $200 billion and recorded two surpluses, saving billions in interest payments. It says its reprioritisations and savings have given it room to spend more in other areas.
The Coalition is leaning on its pledge to cull 36,000 workers Labor added to the public service to find $6 billion in annual savings that can pay for extra spending. However, it has also promised to boost defence funding while arguing Australians are paying too much in personal income tax.
Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.
