Julia Gillard (Lalor, Australian Labor Party, Shadow Minister for Health and Manager of Opposition Business in the House) Share this | Hansard source

And make sure it is the Fin Review. And then finally they are forced to confirm, not by way of proud announcement and not by way of press conference with two ministers, TV cameras and a transcript. No, they just let it be known in quiet voices that actually they have deferred the sale until after the next election.

You might well be asking yourself what has changed since 26 April. And the answer is quite clear, because every day in every way the sale of Medibank Private has fallen apart in front of this government’s eyes. It has been almost the most ham-fisted attempt to get anything done that we have seen from this government to date, and there is a pretty high bar given some of the incompetent displays this government have engaged in. The first problem this government had was that they ran into legal difficulties about who owned Medibank Private. They did not even know, at the end of the day, whether it was clearly theirs to sell. The Labor Party had raised with the library the question of the legality of selling Medibank Private, and on a Friday the library released this parliamentary research brief entitled The proposed sale of Medibank Private; historical, legal and policy perspectives. This research brief comprehensively went through the arguments as to who owns Medibank Private and who is entitled to sell it and concluded that the government was in difficulties.

The government was in difficulties in selling all of the Medibank Private fund because the members of Medibank Private had an interest in that fund. So the first big problem for the government is this research brief that says, ‘Well, maybe it isn’t the government’s to sell.’ That happened on a Friday, and I do not think it should be a mystery to anyone in this place or beyond that by the Sunday the Treasurer was on national television musing about whether it would be best to float Medibank Private and whether it would be best to give some shares to policyholders. He said on the Laurie Oakes show on Channel 9:

Laurie, I think this could be an area where we could achieve some other policy goals, and I would actually like to see us very carefully examine the possibility of offering Medibank to the public, particularly to policyholders.

So the government runs into legal difficulties selling Medibank Private and it thinks, ‘How can we patch over that? How can we pretend to Medibank Private policyholders that they are actually going to get something out of this?’ It has got the Treasurer out there saying, ‘I would quite like to float it and I would quite like to give some shares away to policy owners.’ Then the minister for finance, the minister for health and the Prime Minister say the same thing quite quickly.

So if it had just been a debate about whether they were going to rip policyholders off, they might have kept going with the sale. But that was not the only hurdle they encountered or the only problem that this government have encountered with the sale of Medibank Private. The second main problem they encountered was that their claim that the sale of Medibank Private was going to put downwards pressure on private health insurance premiums was increasingly becoming a laughing stock. That claim was viewed as increasingly laughable by anybody in the health sector who knew anything about the private health insurance market, and by Australians beyond that.

Of course, the nails in that coffin, putting to bed this absurd claim that somehow Medibank Private’s sale was going to be good news for private health insurance premiums, came from all sources. Most particularly, they came from noted economic commentator Terry McCrann, who basically said that, if you had an economics degree of any sort, you would see through this argument in one second flat. He said:

There’s also a particular problem with a float over a trade sale.

He was talking about the government’s preferred method of selling at that stage. He went on:

That would mean a company listed on the stock exchange which would have to make a profit for shareholders.In contrast the entire private health insurance sector is today at least nominally non-profit.So what does the introduction of a profit-based player in the private health insurance sector mean?They all switch to profit-making? Or Medibank Privatised can’t compete?

So there you have it in the words of a noted economic commentator—someone who has been quoted time after time with approval by the Prime Minister—who is basically saying that privatising Medibank Private, particularly by way of float, is going to introduce a profit motive not only into Medibank Private itself but possibly more broadly across the private health insurance sector, and that is going to be bad news for premiums.

Of course, the voice of Terry McCrann is joined by others, including the AMA. I quote the President of the AMA, who said, ‘Higher premiums would be inevitable,’ as the new owner sought to maximise returns to shareholders. Even the Minister for Health and Ageing, who is at the table, when asked on the weekend that has just gone by, basically said with a shrug of his shoulders, ‘Well, you know, of course, if I had to put up Medibank Private premiums and give approval for that, of course I’d do that.’ Up those prices would go.

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