Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Hansard source

I would like to thank the previous speaker, the member for Prospect, for his contribution. I am sure those who are listening to this debate will note that it made much sense, because it is clear that the substantive arguments used by the government to validate the sale of Medibank Private do not stack up. We know that the Medibank Private Sale Bill 2006 repeals sections of the National Health Act to allow the sole shareholder of Medibank Private—that is, the Commonwealth—to sell its 85,000,100 shares in the fund. Medibank Private is, of course, a Commonwealth owned private health insurer. It is Australia’s largest and only truly national private health insurer. A little later I will refer to its importance in the marketplace, particularly in the area in which I live.

Whilst a sale of Medibank Private has been debated for some years, it was only in April of this year that the Minister for Finance and Administration and the Minister for Health and Ageing announced they would finally move to privatise the company. This bill, as others have said, is the government’s attempt to do that. In preparation for a sell-off, the bill provides for changing the status of the fund from a not-for-profit organisation to a for-profit organisation, placing foreign ownership and Australian identity restrictions on directors and its national office for a period of five years, allowing pre-privatisation profits to be redistributed and ensuring that the fund, not the Commonwealth, is liable for any compensation claims that arise from the sale.

Like my Labor colleagues, I am opposed to the privatisation of Medibank Private for a number of quite valid and, I think, quite important reasons. Firstly, there is no evidence that the sale will reduce premiums or increase competition. That is particularly important for people who live in the community of Lingiari, which covers all of the Northern Territory except Darwin and Palmerston. It is an area, as I have said many times in this place, that covers 1.34 million square kilometres and also includes Christmas Island and Cocos (Keeling) Islands in the Indian Ocean. This will do nothing to increase competition in that market and it will become amply evident why that is the case when I approach those issues very shortly.

Secondly, premiums are principally driven by health costs, an issue which the Howard government has failed to adequately address through its health policies—and we know that the shadow minister has been able to make that case time and time again. It has not been refuted by the government, nor has it been responded to in any way that would give the public any assurance that the government is on top of the issue. Thirdly, the Howard government cannot guarantee that the sale will have a positive impact on members, and as a result is allowing a six-month notification period to allow members to transfer out of the fund prior to the sale. That is rather odd, would you not think? If they were so confident about the sale, you would not expect them to believe that a large number of members would want to transfer out within a six-month period.

Fourthly, the government cannot guarantee that the sale will have a positive impact on members and their premiums, and as a result is not allowing scrutiny of the impact of the change of Medibank’s status—and that, of course, should be of concern to all of us. Fifthly, Medibank’s privatisation will have little or no effect on their current operational requirements or ability to operate as a private company. They are already a competitive fund, recording large surpluses in recent times and relatively low management expense ratios.

But a large part of my objection to this bill is in the failure of the government, once again, to propose legislation in this place which will have a meaningful, lasting and positive effect on those people who live in regional and remote parts of Australia, particularly in my own electorate, principally—but not only—because of the health indicators that are there for all to see. Where there is extreme poverty, there is inequality and disadvantage, and people suffer incredibly poor health. It is very clear that there is nothing in this legislation that will either promote increased competition in the private health market or do anything to address the inadequacy of health services in those communities. The government will, and do, come into this place and argue that the bill is about improving the effectiveness and efficiency of health provision. That, of course, is according to their own ideological view, because, in reality, in electorates like mine the record of the government in relation to the provision of health services is one of abysmal failure.

Let me go to the whole question of private health insurance in regional Australia. Health experts Buddhima Lokuge, Richard Denniss and Thomas Faunce have undertaken the task of assessing the effectiveness of private health insurance in the regional areas of Australia in improving access to health services. This, of course, is fundamentally what we would want it to be—not taking out private health insurance for the sake of taking out private health insurance but taking it out in the hope that it would improve access to health services for the people who take out that insurance and take pressure of the public health system.

The observations that these experts have made have been recently published in an article titled ‘Private health insurance and regional Australia’ in the March 2005 issue of the Medical Journal of Australia, and those observations are well worth noting for the purposes of this debate. The authors of the article were critical of the government’s approach of increasing federal expenditure on health by means of private health insurance subsidies and tax rebates, particularly in terms of health outcomes for disadvantaged people and people living in regional Australia. They argue that, while targeted programs to increase the take-up of private health insurance may have some effect in urban areas, success is limited in regional areas for two reasons, and those reasons are set out in their article in the Medical Journal of Australia. They say:

First, income is one of the strongest predictors of PHI—

private health insurance—

uptake, and average incomes are lower in regional than in urban areas. Multiple studies show that there is a clear income gradient to the uptake of PHI, with lower incomes groups less likely to have PHI. As a result, PHI as a mechanism for federal health funding disadvantages regional communities, compared with, for example, the distribution of funds on a per-capita basis.

Second, a structural reason why PHI membership is less attractive to residents of regional areas is the limited availability of private facilities. The central reason to purchase PHI cover is to have affordable access to private hospital facilities. ABS and AIHW statistics on hospitals and bed numbers by location indicate that private facilities are concentrated in urban areas.

The article goes on to say:

Across Australia only 16% of hospitals located outside of major cities are private facilities.

Let us just think about that. It is very simple. Where incomes are low and where people are disadvantaged, they are less likely to take up private health insurance, which is hardly arguable, I would have thought. I notice my friend from the National Party, the member for Parkes, is sitting here in the House. He would know that in western New South Wales it is very much the case that, where income levels are low, people find it difficult to meet the payments for private health insurance and therefore do not take it up. Secondly, as he would also know, access to private health facilities, if available at all, is quite remote.

In the case of my own electorate of Lingiari, there is not one private hospital bed. So the access to private hospital services that might otherwise attract people to take out private health insurance just is not there. And this government has done nothing, in the 10 years it has been in government, to provide or promote access to private health services for people in remote communities.

I sit here wondering, often, what the National Party are doing in coalition, because their impact on the coalition in getting a decent outcome for people in the bush is pretty dreadful. In the case of this area it is particularly dreadful. And it is there for all to see.

The government’s aim in privatising Medibank Private is, of course, to improve its competitiveness in the private health insurance market. The Minister for Finance and Administration has told us that this sell-off will result in a Medibank Private that can ‘grow and prosper free of government ownership, while continuing to offer competitive premiums to its members’.

Supposedly, government incentives for Australians to take up private health insurance from privatised health insurance providers will encourage efficient and effective delivery of health services—but, as I have noted, the authors of the Medical Journal of Australia article make it clear that the government’s approach is not an effective of efficient use of resources. The authors of the article conclude:

PHI subsidies are a non-universal and indirect means of channelling public expenditures into the healthcare system. This approach gives governments only limited control over the regional and demographic distribution of funds, disadvantaging groups who are less likely to use or benefit from PHI, including those on low incomes and Indigenous Australians. While Medicare has limitations, its universality and the direct nature of hospital funding allow greater flexibility to promote equitable and needs-based distribution of funds.

I would have thought that that was very obvious. My electorate clearly demonstrates the short-sightedness of the government’s approach, and strongly reflects the observations made by Lokuge, Denniss and Faunce.

As I have described on many occasions in this place, my electorate covers some of the most remote parts of Australia, 40 per cent of the population in my electorate are Indigenous, and most of those are extremely disadvantaged and suffering from immense poverty.

As a result, it is no surprise that the health status of many people in my electorate is parlous. The Australian Medical Association wrote about this parlous state in its position statement on Aboriginal and Torres Strait Islander health published in 2005. In it, it noted that in 1999-2000 the life expectancy of Indigenous men was 56.3 years as opposed to 77 years for non-Indigenous men. For women, the difference was 62.8 years as opposed to 82.4 years for non-Indigenous women. That is a glaring difference.

We also know that the instances of chronic disease are too high among Indigenous Australians. If I look at my electorate, the data for the Northern Territory provided in the Centre for Remote Health’s Indigenous populations and resource flows in Central Australia report of 2005 shows that between 1979 and 1995 one-fifth of all deaths among Indigenous people were related to five chronic diseases. They were kidney and renal disease, diabetes, high blood pressure and hypertension, heart attack and related heart disease, and chronic obstructive airways diseases like emphysema and chronic bronchitis.

We know that Indigenous people are suffering these chronic diseases in far greater numbers than non-Indigenous people. In 2001, Indigenous people in remote areas were twice as likely as non-Indigenous people to have diabetes—16 per cent as opposed to two per cent. There is an even greater gap in relation to renal disease. Based on data for 2001, new incidences of renal disease were mostly reported among Indigenous people: 80 per cent in males and 86 per cent in females. This is despite the fact that they only make up 30 and 27 per cent of the population respectively.

We also know that these chronic diseases are attacking Indigenous people at a younger age than non-Indigenous people: between 1991 and 1995, Indigenous males in the NT faced death rates from chronic diseases that were the equal of non-Indigenous males 10 to 20 years older than them.

These figures reflect not only the poor state of health that many in my electorate find themselves in but also the poor access they have to the health services they need, and the health services enjoyed by Australians in other parts of the country. The Centre for Remote Health’s report notes:

In order to improve health status in the region, we require both adequate access to high quality health services and improvements in the social and economic conditions for Indigenous people.

The government’s approach to pushing private health insurance does little to improve the access of people in my electorate to adequate health services.

Despite what the government would have us think, what it proposes in this bill will have very little positive effect for those in my electorate who do not have equitable access to health, and will do nothing to promote competition within the private health sector.

Flogging off Medibank Private for a quick buck does not mean much for a place where there are very low take-up rates of private health insurance. The take-up rate of private health insurance in Lingiari is, in fact, the lowest in Australia. The take-up rate in 2004 was 22.4 per cent. It actually fell slightly the following year, 2005, to 22.3 per cent. This is a far cry from the take-up rate in the former health minister’s seat of Bradfield, where the rate in 2005 was 79.8 per cent, or even the present minister’s seat of Warringah, which has a rate of 65.3 per cent. The rate in Lingiari is also well below the national average, which is 40 per cent.

Of the 22 per cent of people in Lingiari who take up private health insurance, a significant proportion are likely to be members of Medibank Private. Medibank Private is the largest provider of private health insurance in the Northern Territory and, courtesy of the Private Health Insurance Ombudsman’s 2005 State of the health funds report, we know that it has a 42.9 per cent share of the health fund market in the Territory. I am sure those people in my electorate who are Medibank Private members want to see their health insurance premiums kept at a reasonable, affordable rate.

The recent history, of course, is that Medibank increased its premiums in February 2006 by 5.88 per cent, in March 2005 by 7.94 per cent and in February 2004 by 8.95 per cent. The Minister for Finance and Administration tells us this:

… Medibank Private can grow and prosper free of government ownership, while continuing to offer competitive premiums to its members.

Vibrant competition between health funds is the best way to put a lid on premium increases. A privatised Medibank can deliver lower management expenses and can look to expand into new business areas, lowering its average costs across the business.

There has been absolutely no evidence at all given to us by the government to suggest how this sell-off would result in reduced premiums or increased levels of competition in the private health insurance market. I think I have made it abundantly clear that there are no advantages to the people who have private health insurance in the Northern Territory or who are members of Medibank Private in my electorate as a result of these proposals. There will be no increased competition. The market is suffering as a result of the parlous access to health facilities and services, and I have to say that when we look at the Bills Digest it makes that abundantly clear—and what a strong Bills Digest it is in refuting the government’s claims as to why we should be supporting this legislation. I urge the House to support the view of the opposition and oppose it.

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