Annette Ellis (Canberra, Australian Labor Party) Share this | Hansard source

I begin my comments by noting with some irony the arrogance of this government and the level of importance that it puts on this debate. There is not one government speaker listed to participate in this debate today—not one government member’s name appears on the speakers list. We think this is a pretty important debate—in fact, we think it has a high level of importance. We have had the Leader of the Opposition come in and join in this debate, and we have not one name of a government member on the speakers list. That in itself says a lot about the arrogance of this government in terms of its attitude towards its proposed sale of Medibank Private.

It is my privilege to rise today to speak on the Medibank Private Sale Bill 2006. Medibank Private is the biggest private health insurer in Australia, with almost three million members and a market share of almost 30 per cent. The bill will amend the National Health Act to allow the government to sell its shares in Medibank Private. The bill puts in place foreign ownership and Australian identity restrictions on directors and its national office, but only for a period of five years. After five years Medibank Private could go offshore. That would be a sad day indeed. The bill changes the status of Medibank Private from not-for-profit to for-profit. It allows the preprivatisation profits to be redistributed to shareholders following that privatisation. That means the profits it has accumulated as a not-for-profit organisation will suddenly become real profits for shareholders. It is extremely interesting that this bill includes provisions for compensation for which the fund might be liable in the event that any legal action is taken against the sale. I will come back to this issue during the course of my speech in this debate.

The one thing we need to keep in mind when debating this issue is that the Prime Minister has always wanted to sell Medibank Private. When the government came into office, one of the first things it did was to remove Medibank Private offices from their collocation with Medicare offices. What justification was there for that? We never heard any. It could only be to put financial pressure on Medibank Private and start preparing for its eventual sale. The government has been commissioning scoping studies on the potential sale of Medibank Private since it came into office. The Prime Minister has always wanted to sell Medibank Private and, frankly, I truly believe he has always wanted to dismantle Medicare. Let us not forget that the Prime Minister voted against the creation of Medibank, the first universal health insurance system in Australia, and he voted against the creation of Medicare. No matter what he says about the government being the best friend Medicare has ever had, we the Australian community have everything to fear from the attitude of this government and the Prime Minister to health insurance in this country and the Prime Minister’s history on it.

Now the government has come clean and announced that it will sell Medibank Private if it wins the next election. The government is trying to convince the public that there are good reasons for selling Medibank Private. There is little evidence to back up any of those arguments—and I would like to discuss those now. The government argues that the sale will reduce premiums. There is absolutely no evidence of this. Premiums are principally driven by health costs. The government claims that the sale will make Medibank Private more competitive. Again, there is no evidence for this. In fact, expert advice from the Parliamentary Library, through its Bills Digest, highlights the lack of evidence. It states:

The Government argues that the sale of Medibank Private will lead to reduced management costs and allow the fund to pursue new areas of business but it is unclear how these improvements will be realised. The proposition is based on the conclusions of a scoping study undertaken by Carnegie Wiley, however detailed information from the study has not been provided. This means that there is very little publicly available information to support such claims.

There would appear to be nothing, from a regulatory point of view (apart from being able to distribute profits to shareholders), to show that the ‘new’ Medibank Private will be able to do to improve its operations that the current organisation cannot. A privatised Medibank Private would be free from the governance burden that applies to GBEs but it is not clear whether this would significantly reduce the organisation’s management expenses. A publicly listed Medibank Private could potentially improve operational efficiency through the use of additional capital to invest in improved information technology systems or organisational restructuring. However, it is not clear that any reduction in management costs would be greater than the potential increase in costs associated with Medibank Private’s new responsibility to distribute profits to shareholders.

There is no evidence that changing Medibank Private from a publicly owned, not-for-profit organisation to a shareholder, for-profit organisation would automatically make it more competitive in the market. The government say their claim about Medibank Private being more competitive if it were sold is based on modelling conducted as part of the scoping study. Yesterday the minister finally released the CRA International paper. It suggests that private health insurance premiums will go up as a result of the ageing of the Australian population, the increasing cost per day of hospital care and the increase in the number and value of ancillary claims. CRA notes that there are a number of ways in which a privatised Medibank Private could achieve lower premiums. However, it states that all the opportunities open to Medibank Private to achieve available efficiency improvements are already available. In other words, a publicly owned Medibank Private could easily pursue any of the efficiency improvements suggested in the report.

The day after Medibank is sold there will be the same number of private health insurers. Medibank Private is currently as competitive as all other private insurers in terms of management costs and efficiencies. So why would the sale of Medibank Private automatically put downward pressure on premiums? Clearly, the government’s argument is flawed.

I now turn to another claim made by the government, which is that, if the sale goes ahead, the three million members of the fund will not have to be compensated. Once again, the Parliamentary Library, which is an independent and authoritative voice, has examined this issue. In early September the library stated that there were legal doubts about the ability of the government to sell Medibank Private without compensating members. Only a few days later the Minister for Finance and Administration stated he had legal advice that the library was wrong. The Parliamentary Library has now examined this issue further and has provided a complete rebuttal of the government’s legal advice. The Parliamentary Library states that the issues are extremely complex but that members of Medibank Private could be entitled to compensation if the terms of any sale do not adequately account for their right to the benefit of fund assets.

In fact, the government must not trust its own legal advice, because it has committed itself to including some entitlement for existing members in the eventual sale plan. On one hand the government is saying that members will not have to be compensated, yet on the other hand it is including compensation in the bill. It just goes to show how untrustworthy this government is and how much we have to doubt the very word of this government.

The Australian Medical Association also has something to say about the morality of this issue. It says in a media release of 5 September:

• The AMA, while not wishing to comment on the legality of the situation, doubts the morality of the sale given that much of the value of Medibank Private is in its financial reserves which were not contributed by the government but rather, extracted from the members in compliance with regulatory requirements. This does not imply any criticism of the regulatory requirements. Reserves are necessary for proper prudential management of private health funds.
• If the Government no longer wishes to be involved as an operator of a private health fund, there is a strong case for mutualising Medibank Private and retaining the equity with those who have contributed it, namely the members.

I could not agree more. I believe it is extremely unethical to allow the current profits made by members to be turned over to shareholders. I am one of those members. I am, as I am sure everybody in this country has been at some point in history, an original Medicare member. I was an original Medibank member before that and I am a policyholder with Medibank Private. So I am one of those people, along with the Leader of the Opposition and many others, who have a personal slant on this as well as a public policy slant.

The arguments that I have outlined clearly show that there is no evidence to support the claims made by the government about the sale of Medibank Private. The government is driven to sell it off by its ideological obsession with privatisation. The government is not interested at all in the best interests of Medibank Private members, or of any other private health insurance members for that matter. It just wants to sell it off with any other asset it can find, such as Telstra.

I am very pleased to be on the side of the House that strongly opposes this bill. We oppose it absolutely. Over the past 10 years the government has shown that it cannot be trusted on these issues. It will say anything it can to achieve the outcome of privatisation in this particular instance.

I conclude my comments where I began. I am extremely disappointed, but I do not know why I should be as we have seen it happen before. This is a really important debate. This is a fundamental debate about health issues in this country, about private health insurance and about the future of Medibank Private; yet, as I have said, while today’s speakers list, which I have in my hand, has quite a number of names of people on this side of the House who wish and need to make their point on behalf of their communities, not one government member’s name appears on this sheet. That in itself, I believe, says a great deal about government members’ arrogant attitude. They do not believe they need to come in here and debate this issue, justify their actions and outline their belief in this on behalf of every voter and every Medibank Private member in their electorates—not one word. I think that tells the story. In the meantime we are taking our responsibilities very seriously. On behalf of all my community, I very strongly oppose this sale; I very strongly oppose the government’s attitude towards it. Let us hope that maybe one day we might see some common sense from the government—but we wouldn’t want to be holding our breath, would we?

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