Justine Elliot (Richmond, Australian Labor Party) Share this | Hansard source

I continue speaking today about my very strong opposition to the Medibank Private Sale Bill 2006 and the sale of Medibank Private. I very strongly oppose the sale for a variety of reasons, but my main concern is that premiums will undoubtedly rise once the sale goes through. That is a concern that many locals have expressed to me, particularly the many pensioners who live in the electorate of Richmond.

As I have already said, as a precursor to the sale of Medibank Private we saw the closure of the Medibank Private office at the Centro Tweed Shopping Centre, Tweed Heads, just before Christmas. The distress that caused throughout the community was quite extreme. I would like to give just one example: Mr Derek Andrews, who is 77 years old and is a local from Kingscliff, was doubly disappointed when he tried to pay his Medibank Private premium at the Tweed Heads office. He went there and found that not only had the health fund office closed down but the nearest office was on the Gold Coast and that that office does not accept cash. So Mr Andrews, a pensioner, had to battle through the traffic to get to the Medibank Private office at the Pines Shopping Centre, Elanora, in Queensland. He was then forced to convert his annual premium of $1,575.60, which is a lot of money, from cash to two money orders. So there we have it: Mr Andrews goes to the Medibank Private office at Tweed Heads, finds that it is closed, battles through the traffic to get to the Gold Coast and is then told that it is a cashless office. He then had to get money orders, which meant he had to find the nearest post office and then had to spend another $6 on top of the premium to get the money orders. This has caused huge distress to Mr Andrews and to many other people who were not aware that this office was to be closed.

What is most annoying is that, between the Gold Coast and Lismore, there is no Medibank Private office, and we are certainly going to see a lot more closures right across Australia when it is sold. The closure of the Tweed Heads office was certainly an indication that Medibank Private was going to be up for sale. It is unfair, particularly to the people in the electorate of Richmond, because we now have four Medibank Private offices on the Gold Coast and one down in Lismore. But for a very large number of pensioners it will be very difficult, particularly for Mr Andrews.

It is not just this side of the House that is opposed to the sale of Medibank Private; it is not just the Labor Party. We are hearing from the Independents, the Greens and the Democrats as well. But there are many others in the community who have declared their opposition to the sale, and the list includes the Doctors Reform Society, the Community and Public Sector Union, the Health Services Union and the Save Medibank Alliance, a group that includes Professor John Deeble, one of the founders of the original Medibank, and Ray Williams, a former general manager of Medibank Private. Even the Australian Medical Association is opposed to the sale. So all these different groups are telling the government that it should not proceed with the sale of Medibank Private.

The Australian Medical Association made a submission to the Australian Competition and Consumer Commission on the proposed sale of Medibank Private. They raised serious concerns about higher premiums for Medibank Private customers and reduced competition in the private insurance sector. The President of the AMA said that higher premiums would be inevitable as the new owners sought to maximise returns to shareholders. He went on to say:

There is also a chance of flow-on higher premiums across the whole private health sector because of reduced competition. But the extent of the rises would depend on whether the new owner is a new or an existing player in the sector.

Of course, the AMA is looking at this from the proper perspective—that is, the health care interests of the people of this nation, and the health care interests of the members of Medibank Private particularly. Even Mr Russell Schneider, from the Australian Health Insurance Association, who represents private health insurance funds other than Medibank Private, has raised concerns about the proposed sale. He does not accept this government’s view that the sale will be good for the private health insurance sector. He said:

Health funds need to be concerned for the well-being of their members, not their shareholders.

And that is the change we will see when Medibank Private is sold: the focus will be on the shareholders. He further said:

It is certainly not in the interests of the members, nor is it in the interests of health care for the people of this nation to sell Medibank Private.

Two main arguments in favour of the sale have been put forward by the government. The first relates to competition and the second relates to a conflict of interest from being an owner and a regulator. I will look firstly at the competition argument put forth by the government. The Parliamentary Library research brief examining the government’s competition based arguments for the sale found that there was:

... little evidence to support assertions that a privatised Medibank Private would be more efficient, competitive and less expensive for consumers.

So a publicly listed Medibank Private would not have any more freedom under the act and regulations than it has under its current ownership arrangements. In its 1996 submission to the Productivity Commission’s inquiry into private health insurance, Medibank Private said:

A situation where a for-profit ‘middleman’ (health insurers) is also involved [in addition to private for-profit healthcare providers] will unnecessarily escalate the premium (price) for private health insurance.

The government says that a privately owned Medibank Private would have lower management expenses than it achieves under the current ownership arrangements. The thing is, there is nothing that a privatised Medibank Private could do to achieve such efficiencies that it cannot do under its current ownership status. In any case, if we are looking at a reduction in management expenses, whether that be rent, staff, salaries or marketing costs, that will ultimately mean a reduction in the number of offices and the number of staff. So we will see services fall as premiums rise. This is undoubtedly what everyone is aware of. As I say, locals whom I speak to are aware of that and we are hearing from many different medical associations and other bodies that are aware of that—it seems that everyone in the community is aware of what the reality of the sale of Medibank Private will mean except for those in the Howard government who are not prepared to listen to what people are saying about this.

The other argument made by the government is that selling Medibank Private will remove the government’s conflict of interest in being both industry regulator and owner of the main health fund. Medibank Private receives no obvious regulatory advantage over other health benefits organisations. Indeed Medibank Private was separated off from the Health Insurance Commission by this government in 1997. The health minister at that time said in his second reading speech:

... the separation of Medibank Private from the Health Insurance Commission, HIC, and the creation of a new Medibank Private corporation. Through the separation, the government will ensure that Medibank Private cannot be perceived to have any competitive advantage over other private health funds through its association with Medicare or other government program functions of the HIC. It reinforces the government’s commitment to the principle of competitive neutrality.

Yet, we have heard from the government that Medibank Private has to be sold because it has an unfair competitive advantage. In 2003, the government sufficiently addressed the conflict of interest issue when it decided to make the Minister for Finance and Administration the sole Commonwealth shareholder of Medibank Private. This, according to a joint press release issued by the Minister for Health and Ageing and the Minister for Finance and Administration on 17 June 2003, was to ‘provide a clear distinction between the Commonwealth’s roles as industry regulator and business owner’.

There is also a question of legality. No doubt the House is very aware that the Parliamentary Library has produced a research brief which has raised serious issues about the proposed sale of Medibank Private. The government got some legal advice but, to the absolute credit of the Parliamentary Library team, the Bills Digest did not shy away from their research findings and raised some very serious concerns about the accuracy of the legal advice the government has received on this matter. As expressed in the research brief, it is arguable that members of Medibank Private would be entitled to compensation if the terms of the sale do not adequately account for their right to the benefit of fund assets. Whilst denying that the warnings contained in the research brief were credible in respect of compensation to members of Medibank Private, the government simultaneously took steps to protect itself against just such an event occurring.

The bill contains a provision to ensure that the fund, not the Commonwealth, is liable for any compensation claims that arise from the sale. The bill allows for pre-privatisation profits ‘surpluses’ to be re-distributed to shareholders following privatisation. It also acknowledges the prospect of a legal challenge to the sale and has included a clause which makes Medibank Private rather than the Commonwealth liable for any compensation which might arise from such action. It seems that law and justice are not always the same thing and, indeed, nor are legality and morality on many occasions. It seems absurd that the government is moving the onus onto Medibank Private, obviously aware that some major legal issues will come about from the sale of Medibank Private.

The last issue I want to raise concerning this ideologically driven legislation—and I believe it is a very important issue to raise—is that the bill now contains safeguards directed at securing the Australian character of Medibank Private and at ensuring diversified ownership. It should be noted, however, that these provisions will expire five years after Medibank Private is sold. In five years time, there will be no limit on how much of Medibank Private can be owned, controlled and operated by one person or company. Further, after five years there will be no restrictions on foreign ownership of Medibank Private. After five years there will be no requirement that central management and control is exercised in Australia, no requirement that there is a substantial business and operational presence in Australia and no requirement that directors are Australian or that Medibank Private remains incorporated in Australia. This means, yet again, that one more of Australia’s national companies can be owned and controlled by foreign investors.

This part of the legislation distresses people. Everyone can see exactly where the sale is leading. We will see premiums rise, services fall and, after five years, Medibank Private being taken over by a foreign company. It is of particular concern to many locals in my area that this is a foregone conclusion, that this will be the end result should the sale of Medibank Private go through.

The government decision to sell Medibank Private is based upon an ideologically driven privatisation agenda and without regard for the implications of this sale on the affordability of private health insurance for Medibank members right across the nation. The government is totally disregarding the arguments put forward about the sale. The government has not provided any evidence that members of Medibank Private or, indeed, private health insurance holders generally will be any better off as a result of this sale. The reality is that they will not be better off; they will be worse off.

The government obviously does not care about the thousands of people in the Richmond electorate who will be adversely affected, particularly many elderly residents—those on pensions and fixed incomes—who are very distressed about this. They will not be able to afford the increases in premiums. This sale does not just affect people in Richmond; it affects people right across Australia. Three million members of Medibank Private will be adversely affected.

The reality will be that premiums will rise and services will fall. We will see more closures of Medibank Private offices. We saw the closure of an office in Tweed Heads as a precursor to this proposed sale. Obviously the government do not care about that either because they are hell-bent on flogging off our national assets. The stark reality of doing that is to make things harder for Australian families and workers who are already under huge pressure. We have seen a massive increase in the cost of living, with increases in interest rates and speculation about further interest rate rises. In my electorate this causes great distress to families, particularly pensioners who are on fixed incomes. On top of all of this, we are going to see increases in premiums for private health insurance.

This government just walks away from Australian families and the demands placed upon them, because it does not care. It is not interested in helping them out. Everyday it seems that there is another struggle. As I said, we are seeing the cost of living going up and prices going through the roof. This is causing great concern to people. But the government is hell-bent on flogging off whatever it can and on driving its own ideological agenda. It is doing its own thing and not listening to the concerns of anyone who is struggling. (Time expired)

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