Senator Katy Gallagher accused the Greens, Independents and Coalition senators of robbing the aged care system of $3bn as the Senate vote 38-23 to stop the over 65s rebate cut.
The Senate has killed the Albanese government’s controversial plan to cut private health insurance rebates for older Australians, voting 38-23 to remove the legislation from its agenda as finance minister Katy Gallagher launched a furious attack on the Greens.
The vote late this afternoon followed a motion (797) from independent Senator Jacqui Lambie and opposition health and aged care spokesperson Senator Anne Ruston to discharge the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026 from the Senate Notice Paper.
The motion was carried by 38 votes to 23, effectively stopping the bill from proceeding through the Senate.
The legislation would have removed the additional private health insurance rebate available to Australians aged 65 and over, with the government expecting to save approximately $3 billion to redirect into aged care.
More than three million older Australians, including around 1.2 million pensioners, would have been affected, according to the Coalition.
Gallagher turns on Greens
Speaking immediately after Senator Lambie moved the motion, Senator Gallagher accused the Coalition and Greens of abandoning their stated positions on government spending and private health insurance.
“Well, the government will not be supporting this motion and will no longer take any lectures from anyone in this chamber about government spending and finding savings,” she told the Senate.
“This is the ‘Noalition’ back together voting to discharge a bill that would have seen $3 billion reinvested to deliver more aged care beds, while at the same time responsibly managing the budget.”
Senator Gallagher then singled out the Greens, citing their published policy supporting the redirection of public subsidies for private health insurance into the public health system.
“And when they get tested in this place, what happens? They run away. They run a mile away from what it says on their own website,” she said.
Addressing Greens Senator Penny Allman-Payne directly, Senator Gallagher declared:
“Let’s be clear about what you’re doing today. You are denying $3 billion injection into the aged care system.”
The exchange prompted interjections across the chamber before the President called senators to order.
The motion was subsequently put to a division, with the President declaring it carried by 38 votes to 23.
Ruston claims victory
Senator Ruston described the result as a victory for older Australians who would have faced higher private health insurance costs under the government’s proposal.
“Today the Senate stood with older Australians. Labor was left standing alone with its cuts,” she said in a statement following the vote.
“This is a win for every pensioner who has paid their premiums for decades and was about to be punished for it.”
She urged federal health minister Mark Butler not to attempt to revive the legislation.
“Mark Butler should take the hint. Don’t try to sneak this cut back onto the agenda. Drop it for good.”
Senator Ruston said just five of the 635 submissions published by the Senate inquiry into the bill had supported the proposed changes.
She also pointed to Department of Health, Disability and Ageing modelling released under Freedom of Information, which estimated that 78,000 older Australians would drop their private health insurance by 2029-30.
That figure was substantially higher than the 44,000 estimate previously cited publicly by Mr Butler, although the department’s modelling related the two estimates to different financial years.
The department’s figures also indicated that a single person aged over 70 with Gold hospital cover could face an additional annual cost of around $400, according to Senator Ruston.
“If pensioners can’t afford to keep their cover, they don’t stop needing care. They put off treatment, get sicker, and end up on public hospital waiting lists that are already far too long,” she said.
Related
Regional hospitals in spotlight
Shadow regional health minister Dr Anne Webster welcomed the Senate’s decision, warning that the rebate changes would have placed additional pressure on regional private hospitals.
“Our regional private hospitals serve millions of older Australians, and this cut put some of them at real risk of closing,” she said.
“When a regional private hospital closes, those patients don’t disappear. They end up on the waiting list at a local public hospital that is already struggling for staff and specialists.”
Senator Ruston thanked Senator Lambie and the other senators who supported the motion, as well as the older Australians and health sector organisations that had campaigned against the legislation.
“This happened because people made their voices heard. Hundreds of older Australians wrote to the Senate inquiry, gave evidence and contacted their senators,” she said.
The Coalition has pledged to oppose any attempt by the government to bring the bill back.
The Senate’s decision comes less than a week after Senator Ruston told Health Services Daily she was “very, very hopeful” the Greens would help stop the legislation, following dissenting reports from the Coalition, Greens and Senator Lambie opposing the bill.
The successful motion removes the legislation from the Senate’s current business. It was not a vote on the bill’s second reading, and does not prevent the government from attempting to introduce the policy again through future legislation.
Independent MP in the House of Representatives, Dr Monique Ryan applauded the Senate move, saying:
“Since this bill was introduced to parliament, I’ve argued that it’s unfair and unreasonable to strip support from older Australians who have worked for decades to retain their private health cover in retirement.
“The PBO analysis I commissioned found that half the $3 billion in savings the government had planned would have been taken from the pockets of the older Australians least able to afford them.
“The government went out of its way to hide the impacts of these changes.
“The Parliament needed to block this bill to protect older Australians. I’m relieved the Senate has done just that.”
Private Healthcare Australia, the peak body for health insurers, welcomed the defeat of the bill, with CEO Dr Rachel David saying:
“This is a powerful demonstration of how much older Australians value their health insurance and the security, choice and access to care it provides.
“We thank everyone who shared their stories, contacted their local MPs and made their voices heard. Their advocacy has helped ensure the concerns of older Australians could not be ignored.
“Health funds understand the challenges of an ageing population and the growing need for care for people living with complex chronic conditions. We are ready to work constructively with the government on sustainable solutions that support older Australians and Australia’s health system.
“But meaningful reform requires genuine consultation with health funds, older Australians, clinicians and other stakeholders.
“We need to work together to understand the impacts and identify the best path forward – one that protects access to care while ensuring the system remains sustainable for future generations.”