Andrew Southcott (Boothby, Liberal Party) Share this | Hansard source

We have just had an indication that, if Labor are elected at the next election, the sale of Medibank Private will not proceed, but that will be cold comfort for the premium holders of Medibank Private because the Labor Party, true to their form in the past, will trash private health insurance. The Labor Party have never liked private health insurance, they have never liked the private health insurance rebate and they have never liked any of the reforms which have been made to improve private health insurance. The sale of Medibank Private would be cold comfort for its premium holders because Labor’s track record on private health insurance is not good—it is one to be ashamed of.

In the period from 1986 to 1988 we saw premiums rise by 40 per cent due to direct actions of the Hawke government, including the withdrawal of the Commonwealth day bed subsidy and Commonwealth government support for private health insurance. When John Howard became Prime Minister, the foundations of our health policy were to have community rating for private health insurance, bulk-billing and free access to public hospitals. It is a nonsense to draw the long bow of suggesting that in the future we would not retain these elements, which have always been part of our health policy.

In addressing the Medibank Private Sale Bill 2006, I would first like to address the issue of why we should sell Medibank Private. Medibank Private is a government owned private health insurance fund. We currently have 38 health insurance funds. There is no good reason for the government to be in this market. There is sufficient competition and there is portability between health insurance funds. There is no reason to have government ownership of Medibank Private. When the Labor Party were in power they were the kings of privatisation. They privatised Qantas, the Commonwealth Bank, the Commonwealth Serum Laboratories and ANL. But that was in government. In opposition they have opposed every privatisation. There is no reason for the government to own a private health insurance fund. It would be adequate to have it on the share market. Selling Medibank Private would allow us to do other things, like having an extra $500 million in medical research for the NHMRC and announcing a $170 million research fellowship. It is all part of the overall approach of the Howard government to have disciplined economic management. This is why we have had budget surplus after budget surplus and delivered income tax cuts year after year. It takes a lot of discipline to run an economy which is now worth $1 trillion.

The next issue to address is the issue of a float versus a trade sale. A feature of the private health insurance market is that there are two or three big players in each state market, so it needs to be looked at on a state basis. Medibank Private is generally No. 1 or No. 2 in each of these state markets. The other major players are MBF, BUPA and HBF in Western Australia. The advantage of a float is that you keep the structure of Medibank Private intact. You do not have to face the issue that competition may diminish. All the sale of Medibank involves is a change in ownership. Although not completely analogous, many of the private health insurance funds have gone from being mutuals through the demutualisation process. They have gone from being not-for-profit to being for-profit. Members of these funds have noticed no difference in the way the funds operate. As far as the members are concerned, life goes on and the funds operate as normal.

The third issue to address is the timing of the sale. Currently the sale of T3, the third tranche of Telstra, is underway. It would complicate things to have a second privatisation. We are advised that it takes nine months to complete a full sale, so the best time for the sale would be in 2008. But it is important to pass the legislation now so that everyone has certainty and the company can plan for privatisation in 2008, if we win the 2007 election.

The fourth issue to address is what will happen with premiums. What I can say is that changing Medibank Private from not-for-profit to for-profit will have no impact on premiums. Changing Medibank’s ownership from government ownership to being owned by shareholders will have no impact on premiums. The things that will drive premium rises in the future will be the things that have driven premium rises in the past—improvements in technology, increasing numbers of prostheses and the ageing of our population. Premiums have to be approved by a committee of the government. Funds have to provide good reasons for any premium rise. They have to show how a premium rise will improve their capital adequacy, for example. So the idea that Medibank Private moving from not-for-profit to for-profit will of itself lead to a premium rise is wrong.

In regard to the fifth issue, the legislation has a shareholder cap so that no individual shareholder can own more than 15 per cent of the company. This shareholder cap will last for five years from the time of sale. There are also provisions that any foreign ownership is subject to the Foreign Investment Review Board and that, when the five years is over, any takeover of Medibank Private will be subject to the ACCC. The ACCC have said that they will look at this, and they will look at the state markets. They will look at ensuring that there is no substantial diminution of competition.

The sixth issue that needs to be addressed by this bill is community rating. Community rating has been here for 10½ years under the Howard government, and it will continue into the future. If the government is re-elected, community rating will stay. Community rating is the principle whereby funds pool the risk. The funds do not charge a higher premium for sick people, and they do not charge a higher premium for elderly people. This is important; the Howard government has always stood for it and will continue to stand for it. It is just rubbish for the shadow minister to assert as she did that in some way the sick, the elderly and so on will face higher premium rises in the future. It is a rubbish claim. Community rating will remain. It is a typical scare tactic of the shadow minister to suggest otherwise.

When we look at Labor’s policy on private health insurance, they have never been in favour of the private health insurance rebate. You only have to read the ‘gospel according to St Mark’: The Latham Diaries. Entries include:

13 February 2004—A good meeting this morning with Gillard’s health expert, Stephen Duckett and Hal Swerissen. We’ve worked out a way of dealing with the despised private health insurance rebate. We need to kill it slowly, dismantle it slice by slice.

During the 2004 election campaign, Mark Latham wrote:

Medicare Gold combines my plan for killing the private health insurance rebate with Ducker and Swerissen’s vision for extending federal responsibilities in hospital care. It required a lot of work to model the private insurance implications and to ensure the cooperation of the states, all handled by Gillard.

Some may say: ‘Well, that was Mark Latham. He’s not a member of parliament; he is no longer leading the Labor Party,’ but, looking at an earlier entry from the diary, we find someone who is very much so. In 2000, Mark Latham wrote of the private health insurance rebate:

At different times Beazley has boasted to caucus that it—

that is, the private health insurance rebate—

will go.

When the Howard government came to power in 1996, we faced a situation where the private health insurance level was at 30 per cent. It was falling to the level where private health insurance would not have been sustainable after 13 years of neglect under the Labor Party. Firstly, we introduced private health insurance incentives and then the 30 per cent private health insurance rebate. The introduction of Lifetime Health Cover in 2000 saw private health insurance stabilise at 43 per cent and it has remained at that level for over six years, since 30 June 2000.

At the last election, we promised to increase the rebate to 35 per cent for people over 65 and to 40 per cent for people over 70. I heard a lot about how we had allegedly broken promises. That was a promise at the 2004 election, and it was the first piece of legislation we introduced when the parliament reconvened in 2004. But the government is not resting on its laurels on private health insurance. We have announced that we will spend $60 million over four years to make private health insurance even better value for money and will look at enabling private health insurers to extend their cover for preventative health care. When considering chronic diseases, diabetes and so on, it is very important that we allow the funds to manage their population and to focus on preventative health care.

The Private Health Insurance Ombudsman will establish an industry website to give people access to unbiased information about health funds and their products. This is a very important part of how a market operates: to have information available so people can make their decisions. As I said earlier, Lifetime Health Cover was a very important initiative, and it has kept the level of private health insurance in this country at a point where it is sustainable.

The government has a great track record on private health insurance, whereas Labor has an atrocious track record on private health insurance. Anyone who holds a premium with any fund should fear the return of a Labor government. We saw what Mark Latham and Kim Beazley said. Look at their track record. It is not good. I support this bill. This bill will allow the government to get out of a business which it does not need to be in; there is sufficient competition already there. I commend the bill to the House.

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