Radio interview with Minister Butler and Michael McLaren, 2GB – 5 March 2025

MICHAEL MCLAREN, HOST: The Federal Government, with Baxter Healthcare, have struck a $40 million deal to expand onshore manufacturing. As we know, the context is key. We had hospitals last year left with critical shortages of IV. That prompted emergency responses in which the Federal Government had to convene a taskforce. They scrambled to secure extra supplies internationally. Many people weren't getting the IV that they needed, or that was the anecdotal evidence. But from 2027 onwards, we should have the supply needed for the population. Baxter, through that facility in Western Sydney, will be producing an additional minimum 20 million units, according to Natasha Robinson, who sort of led the journalistic charge on this broader story of IV for a couple of years and is to be commended for it. Anyway, Mark Butler, as you know, is the federal Health Minister, who's instrumental in getting this over the line. He's on the line. Minister, thank you for your time.
 
MINISTER FOR HEALTH AND AGED CARE, MARK BUTLER: My pleasure, mate.
 
MCLAREN: So I mean, this has to happen. Can we just confirm or deny upfront, though, that we already have some onshore manufacturing capability? We just don't have enough?
 
BUTLER: That's right. Baxter has been out in Toongabbie manufacturing this product for 50 years, doing a terrific job, but not quite enough to cover all of the country's needs. In addition to the IV fluids being produced out at Toongabbie, we have relied on global markets, to a degree, as well in the past. That became a problem last year, as you know, as we came out of COVID. A lot of these global markets were severely disrupted. For the first time, really, in anyone's memory, we started to experience a little bit of a shortage of these IV fluids. They're not what are called a ‘notifiable medicine’ under the federal laws. This caught us by surprise. We had to, as you say, come up with an immediate solution to bring all of the jurisdictions together because obviously the public hospital system is the biggest user of these IV fluids, along with private hospitals, and people in the primary care sector. We had to get a very clear handle on what was happening. It became very clear to me that we didn't, as a country, want to continue to rely upon the vagaries of the global market. Some months ago, I started having a discussion with the good people at Baxter about whether they could expand their manufacturing operation at Toongabbie to cover all of our needs, so that not only would we deliver more good manufacturing jobs in Western Sydney – they already employ almost 1,500 people out there – but we would also provide a secure supply, going forward, of this critical medical product.
 
MCLAREN: Yes. I mean, it has to happen as part of national sovereignty. It is smart and you are to be congratulated. The situation that developed last year, I mean, when I flew back in, incidentally from overseas, I had terrible gastro and no more details than that, but they pump primed me with IV fluids almost as soon as I got home. I think I took four bags in a few hours, so I took my fair share. I was speaking to the paramedics at the time and said, “Listen, guys, what was the deal with the shortage? Was it because we couldn't manufacture the fluids, or we couldn't make the plastic bags in which the fluids are stored?” And they said, “Oh, look, we don't know”. You're the Minister. What was the cause of the shortage? Was it the fluids or the bags? Because it seemed to almost coincide with Qenos shutting down?
 
BUTLER: No, it didn't have anything to do with the Qenos operation. Globally, there was a big bounce back in activity after COVID, so there was a lot more surgery happening. Some of the big manufacturing operations around the world had been disrupted. Last year, a very big manufacturing operation in the United States, in North Carolina, was hit very hard by hurricane, which obviously disrupted the global market as well. It was a bit of a ‘perfect storm’ of a whole lot of things happening around the world. It just drove home, to me, the need for us to set up our own sovereign capability here. We use about 60 million units of IV as a country every year. We didn't quite have enough manufacturing to cover all of that. With the expansion that is going to come from this investment, we're putting in $20 million as a government and the company is putting in $20 million. Once that's up and running, it will manufacture more than 60 million units, so we'll have enough to cover us now and into the foreseeable future. Also, Baxter will be able to export to countries like New Zealand, which has traditionally relied upon us a little bit for manufacturing.
 
MCLAREN: Because I think New Zealand was one of the interesting examples last year and from memory, Minister, they didn't have a shortage, yet we did. So there were people wondering why Australia, and why not some of these other contemporaneous jurisdictions?
 
BUTLER: Some of that had to do with contracts that were put in place that I think we would do a little differently, as state governments and private hospital operators into the future would do as well. We've learned a lot from this. A lot of doctors would say to me, they always just assumed that they could reach back and there'd be a bag of IV fluid there for them. The idea that we might not just run short, but at least have to be a little bit more disciplined about how we use them, was a very new thing for us in Australia. We'd become so accustomed to have having plenty of this stuff. I want to get back to the situation where doctors and nurses and hospital operators don't have to worry about this into the future, and that they are very confident that we've got enough product from a company that's been delivering high quality products for decades.
When I was out there today with Andrew Charlton, the Member for Parramatta, who's been a strong advocate for this extension, I had to pay tribute to the workers out there. Because when there were questions about our supply in Australia, they ran those product lines out in Toongabbie as hard as they possibly could. The workers out there were pulling extra shifts. They really put their pedal to the metal to make sure that they could get out as much stuff as they possibly could. They served the country very well, and I was delighted to be able to put on the table $20 million to match their investment and secure sovereign capability here in Australia.
 
MCLAREN: Just before you go, one without notice, and that is we've obviously got a federal election on the horizon. One of the policies announced already has been this freeze on beer excise. And look, fair enough. But as the health minister and knowing as you do how the excise on tobacco is driving the black market, are you advocating a freeze on tobacco excise?
 
BUTLER: We're not, because we know that the price of tobacco, which had been in real terms, starting to drop away, is a really critical factor in driving down rates of smoking. I know that there is a very new feature in the system, if you like, about the growth in illicit tobacco, and the involvement of organised crime in driving that market because they earn enormous revenue to bankroll their criminal activities. We're thinking about this carefully, and making sure that we're doing everything we can to enforce the law. We'll have some more to say about that in the near future.
 
MCLAREN: Sure, but as you know, enforcing the law, that's one thing but if the law, or another law, which is excise, is making the problem worse, in fact it is the catalyst of the problem, wouldn't it be wise to address the catalyst before you start paying additional police to try to go and enforce the unenforceable?
BUTLER: But on the other side of the ledger, making cigarettes cheaper, we know from all of the evidence, is going to have a very negative impact on our tobacco control efforts.
 
MCLAREN: But, Minister, it is a question?
 
BUTLER: These two things are pulling in the opposite direction. We've got to get the balance right. I agree with you on this, but I'm not quickly going to raise the white flag because Big Tobacco wants us to make cigarettes cheaper and simply give up on enforcement against organised crime. This is not easy.
 
MCLAREN: But I'll tell you who doesn't want you to make cigarettes cheaper, and that is organised crime. They don't want you to do this. I mean, doesn't that tell you something?
 
BUTLER Yeah, but Big Tobacco does. We're fighting both of them at the same time, which is our new dynamic. Fighting Big Tobacco is hard enough. We've been doing it for 50 years. They are a resilient bunch, and they fight hard. But having to do this at the same time, over the last few years, in particular, that organised crime has really driven into this market hard, is hard, I have to say. Governments are working through this. State governments and the Commonwealth together, working through this, to ensure that as much as possible, we can achieve the public health aim of driving down smoking rates, while also cutting off this lucrative source of revenue that organised crime is using to bankroll criminal activities like drug trafficking and sex trafficking.
 
MCLAREN: I agree, well, they're very miserable people, but so just finally, are you saying to me that you think you can arrest your way out of this rather than at least freeze excise, which is the catalyst of the problem?
 
BUTLER: Well, it is a catalyst.
 
MCLAREN: What's the other one? What's the other catalyst?
 
BUTLER Well, it is a determination by organised crime to break into a market. The big increases in the excise were really over the course of the previous decade. The growth we've seen has really been in the last few years. It wasn't when excise was increasing, it was actually when excise had started to flatline. There have been a few 5 per cent increases since that time. But the huge growth in excise was happening a decade ago. Organised crime has driven hard into this area, there's no question about that. That's a new dynamic and it has made it very, very difficult for all governments. But I'm not quickly or easily going to give up on what all experts across the world say is one of the most important levers to drive smoking rates down.
 
MCLAREN: Good to talk. I'll see what listeners make of all of that. Thank you for your time, Mark.
 
BUTLER: My pleasure.