Julie Owens (Parramatta, Australian Labor Party) Share this | Hansard source

Yes, Mr Deputy Speaker. The government spruiks choice like a mantra, but the Prime Minister dismisses it completely for those three million people who have chosen a different path. Those three million people think that Medibank Private as it is is the way to go, but the Prime Minister knows better. He thinks he knows what is better for them and is going to make sure that they have it. For the Howard government, private is better than public; it is an article of faith. I am sure they chant that every morning. There are 39 other health insurance companies in the Australian market, yet these three million people have chosen Medibank Private—30 per cent of the market have chosen Medibank Private.

I say to John Howard: leave those three million people alone. They have made their choice. They are happy with it. Find someone else to pick on. If Medibank Private is so inefficient and so inferior to private companies then market forces will drive customers away from Medibank Private to one of the other 39 companies. If Medibank Private is so inefficient in public hands that it is not doing the job then market forces will do the job, and I am sure the government understands that idea.

The government cannot even put up or argue a reason for selling it off. They assert that the sale will allow the fund to be more competitive. It already has 30 per cent of the market and three million members. It has posted surpluses in recent times and has consistently low management fees, but apparently it needs to be sold off in order to be more competitive. How much more competitive does the government want it to be? It has three million members and 30 per cent of the market. It is posting surpluses and has consistently low management fees. There is nothing in the privatisation of Medibank Private that actually allows it to move in ways that would make it more competitive. All that it does allow Medibank Private to do is to distribute dividends to shareholders. That is the single significant change that this bill would make to Medibank Private.

The government asserts that allowing Medibank Private to be more competitive by selling it off is somehow going to put downward pressure on premiums—even though a Medibank Private will no doubt seek to pay dividends to its shareholders. The government has form when it talks about premiums for health insurance. It has been talking about downward pressure on premiums for years and yet, during that time, they have actually risen 40 per cent. There is no reason to believe that Medibank Private—one of 40 companies serving the health insurance market in Australia, representing 30 per cent of the market, without any real, significant change in the way it operates and suddenly needing to pay dividends to its shareholders—would somehow force down premiums. Who believes the government? Nobody.

Terry McCrann, a well-respected commentator, has said premiums will rise if you privatise Medibank Private. The AMA has said that premiums will not fall because of this; they are more likely to rise. There is no evidence that the sale will reduce premiums or increase competition. In fact, after the sale there will be the same number of providers that there were before and the vast majority will be not-for-profit organisations. There are 40 health insurance providers in the Australian market, and only four are for profit. Forty health insurers before the sale of Medibank Private; forty health insurers after the sale of Medibank Private—the same number. There is quite significant choice for the Australian people, yet 30 per cent of them still choose Medibank Private.

The government claims there will be downward pressure on premiums, yet there is evidence to suggest that Medibank Private moving to a for-profit format could cause a domino effect through the rest of the industry, and we would see more of those 36 not-for-profit health insurers moving to a for-profit model, again distributing dividends to shareholders and forcing premiums up, not down. Premiums have gone up 40 per cent since 2001, when the government began promising that there would be downward pressure on premiums.

The government, of course, has had a private report, but it will not release it. That report might or might not confirm the government’s position but, since the government will not release it publicly, one has to be sceptical about its content even though the government paid for it. Nor is the government sure that it stands on solid legal ground in selling off Medibank Private from underneath the three million shareholders. The government had initial advice that there was a problem, so it went out and got some advice from a private firm that better suited its needs. Now the Parliamentary Library has come back and said, ‘No, members have rights.’ The interesting part of this bill in relation to this is the way the government is protecting itself just in case it is wrong. My expectation, as I said earlier, is that the government would protect us all by actually getting it right before it introduces the bill to the House—not by protecting itself in the bill after the event just in case it got it wrong. But, true to form, we have a government looking after itself first and doing the wrong thing by three million Australians who are members of Medibank Private.

Do the three million members have rights—yes or no? There are different views on this. An initial research brief by the Parliamentary Library concluded that it was arguable that members had the right to the benefit of the existing surplus assets of the fund. It was not argued that the members owned the funds but that the members had rights to the existing assets of the fund. After the release of that research brief, the Sydney Morning Herald reported that the board of Medibank Private had sought legal advice some years earlier and raised serious questions about whether the Commonwealth was the sole owner and whether its 2.8 million members at that time also had ownership rights.

The current assets of Medibank Private are around $500 million. That is $500 million that three million Australians might or might not have rights over. The bill, however, allows that preprivatisation profits be redistributed to shareholders following privatisation. In other words, the bill takes that $500 million that three million Australians might have rights over and allows it to be distributed to the shareholders that buy Medibank Private in the float. The government commissioned its own legal advice, which puts another position altogether. The lawyers Blake Dawson Waldron conclude that the Commonwealth will not be liable to pay compensation to members—a quite clear difference of opinion between the lawyers that the government engaged to review the situation and the independent review from the Parliamentary Library. The government, however, still manages to hedge its bets. It is still really not sure about what is happening here. Even though its independent legal advice has said the government will not be liable to pay compensation, it has still put in the bill some commitment to compensate existing members—but in exactly what way is not disclosed. There is still a lot of doubt and speculation about exactly what that means.

Given that the nature of the compensation has not been disclosed and that it is still an open question, one has to assume that the issue of whether those members have rights is still an open question. Once again, the government has given away that it knows that full well—because it has ensured in this bill that, if those three million members seek to make a claim, that claim will need to be made against the company, the privatised Medibank Private, and not against the government. In other words, even though it swears that its independent legal advice says there is no problem, it still sets about leaving the way open to compensate members just in case it is wrong, and it builds in a clause that says, ‘And, if we did get it wrong and you’re going to make a claim, claim it against the private Medibank Private, not against the government.’ It has well and truly managed to protect itself in this little bit of folly that it is entering into on behalf of the Australian people. The government is most likely dudding three million ordinary Australians and, if it gets it wrong, it will be dudding quite a few ordinary Australian shareholders as well.

This is a bill which does not serve the interests of Australia well. This plan to sell Medibank Private has not been thought through. The work has not been done by the government. No economic case has been made that demonstrates that there will be an economic benefit to the community as a result of the sale of Medibank Private. In fact, quite the contrary: there is considerable evidence that premiums will rise because of the sale of Medibank Private. Nor have the government demonstrated that they are confident that they have the right to sell Medibank Private from under the feet of its three million members, and they have demonstrated that by ensuring that they protect themselves in this bill if they have in fact got it wrong.

I strongly suggest to the government that, even if they continue to want to sell Medibank Private, they take this back to the drawing board and ensure that they have got it right before they do so. I would further suggest to the government that they should not even be considering selling it and that the evidence that premiums will rise is overwhelming. Their track record of ensuring that premiums do not rise is appalling, with a 40 per cent rise over the last five years.

This is not a government that has shown it knows how to manage this area well. This is a government that has increased the cost to ordinary Australians by an incredible amount over five years, and this bill will only make the situation worse. I urge the government to vote against this bill.

See this speech in context