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Cabinet in a tangle over co-payment

Divisions: Peter Dutton and Tony Abbott. Illustration: The West Australian

Divisions have emerged in Federal Cabinet over whether the Abbott Government will pursue the $7 GP co-payment or shelve it as part of a policy reset.

Senior sources inside the Government this week identified the co-payment as one of the "barnacles" that Tony Abbott promised colleagues would be removed by Christmas.

But senior ministers have been concerned that key strategy had been formulated inside the Prime Minister's Office without wider consultation.

This prompted Treasurer Joe Hockey and Health Minister Peter Dutton to push back against any abandonment of the co-payment, which would raise $3.5 billion over four years.

Mr Hockey, whose Budget is already under enormous pressure because of falling commodity prices and a hostile Senate preventing $22 billion of savings, said the co-payment was designed to cover the growing costs of Medicare.

He said Medicare costs had doubled in a decade to $20 billion a year, growing to $34 billion in another 10 years.

However, Mr Hockey's Budget did not direct revenue from the co-payment to Medicare but a medical research fund until it reached $20 billion and thereafter into general revenue.

Despite Government sources saying mid-week the co-payment was "dead in the water" because of insufficient Senate support, Mr Abbott yesterday backed it.

"The change should hardly hurt at all," he told Parliament.

"As economists have shown, the ideal model involves a small co-payment, not enough to put a dent in your weekly budget but enough to make you think twice before you call the doc."

Mr Dutton this week ruled out using regulation to introduce a co-payment but said yesterday he was "exploring all options".

Mr Hockey said the Government would attempt to legislate the change but this became more difficult when Liberal Senator Ian Macdonald said he would cross the floor.

"I've indicated to the Prime Minister and others and to the party room that I will be opposing it should it come forward in its present position," he said.

Opposition Leader Bill Shorten leapt on the mixed messages.

"Given that the Government's ministers can't get their own lines right, isn't this just the latest example of an incompetent Government in utter and complete chaos," he asked the PM in question time.