Brendan O'Connor (Gorton, Australian Labor Party) Share this | Hansard source

It was only fitting that the member for Kennedy was able to finish his contribution. He always makes a very interesting contribution. I can see from his contribution to the debate that he will not be supporting the sale of Medibank Private. He mentioned near the end of his speech that the conservative government established an act in 1952 to regulate private health funds. When we talk about Medibank Private, we should talk about how it was created. It was created in 1976 to mitigate the adverse effects on Medibank as a result of the election of the Fraser government. Like all tory governments—the Howard government is no different—the government realises that Labor’s policy of having a universal health system is so popular that they cannot abolish it. They can hurt it; they can slowly erode the benefits of a universal health system.

The Fraser government, with its Treasurer John Howard, was in the same position then in some respects as the Howard government is in now. It could not go to an election proposing the abolition of Medibank, but it started to tear it down. That was an unpopular move. It had to mitigate the effects of the policies that were hurting the universal health system that was introduced by the Whitlam government in its first term, in October 1976. Just a year after the introduction of that universal health system, Medibank, the government sought to mitigate those effects. Medibank in the end was a pillar in the creation of a dual public-private health system. It was, and is still today, a non-profit entity. It has national coverage and has become Australia’s most popular health fund, representing 30 per cent of the private health insurance market. It is a very important player in the field.

Therefore, it is important to discuss in this place whether we should sell or not sell Medibank. It is alarming not to see the government defending its decision to sell. One would have thought that after the member for Kennedy had spoken in the debate a member of the government might have wanted to explain to the Australian public via this chamber why they should sell this important organisation and why there is a need to sell it after the next federal election. But not only is no government member prepared to contribute to this debate, which shows how little regard the government has for the chamber or for the health system of this nation, but also the Minister for Health and Ageing has chosen to gag the debate. I am informed that there are even more Labor members wanting to contribute to this important matter of public policy. At half past one today they will be denied that right. So members representing constituents across the land will be denied entering into a debate about whether we should sell or not sell Medibank Private. It is a disgrace that the government is not able to defend its position. The government is choosing to announce the sale. The government thinks that, by announcing that the sale will not occur until after the next election, the Australian people will somehow not hurt them at the next election.

The Australian people are far smarter than that. I believe they are concerned about the potential sale of Medibank Private. The decision to sell Medibank will be one of the matters that will be before the Australian people at the next election. There are many others. There is the extreme and unfair Work Choices legislation that is affecting many workers across this country already. That legislation will increasingly affect workers in this nation—the way in which penalty rates and award conditions can be removed and employers can sack employees unfairly, without those employees having any recourse to question the decision. All of those things are occurring. The Australian public will make up their minds as to whether they want to have an extreme and unfair industrial relations system. There is the decision for us to enter the war and not return the troops from Iraq. The Australian public is increasingly concerned about climate change and global warming. Again, the government is failing to act.

In the decision to sell Medibank Private, you see the government’s ideological obsession about privatisation, about selling off an institution that was created by the Fraser government. I always say to people: ‘I am not suggesting the government is only extreme or unfair in certain areas when compared with former Labor administrations. Look at the way this government operates in the area of industrial relations, and certainly with its decision to sell Medibank Private, when compared to the Fraser government or governments preceding the Fraser government’—in other words, other tory conservative governments. Medibank Private is the creation of a Liberal-National Party government, and it is going to be flogged off. Sufficient reason for the sale has not been given.

As I said, Medibank Private currently has 30 per cent of the private health insurance market. In its early days it undoubtedly contributed to keeping premiums down as its competitors continually undercut them. You could say that Medibank Private has been the Australian Democrats of the private health insurance industry, that they have been keeping the so-and-sos honest. Unfortunately, if the bill for the sale of Medibank Private passes, I fear that Medibank Private will head the same way as the Australian Democrats appear destined to be heading. 

A number of reasons have been put forward by the minister for health—although I do not see them being echoed in this place now by members of the government—about why we should sell Medibank Private. They are not compelling reasons. It seems to me there is a burden upon the government to explain why there is a need for change and what the supposed benefits are. There are essentially two arguments used by the government. Firstly, they assert it will lower all private health insurance premiums. Secondly, they assert that the government should not be both a participant and a regulator in the same industry.

I would like to turn my attention to those two government assertions as to why there should be a selling-off of this institution. I would argue that there is no evidence to support the claim that a privatised Medibank Private will lower premiums. Apart from the fact that the government have a poor track record on predicting declining premiums, the government’s logic here just does not stack up. Where is the money going to come from to provide a return to those who buy shares in a privatised Medibank Private? The government argue that lower administrative costs would be a result of the sale but this is not supported by the facts.

The facts show, effectively, that Medibank Private already has the lowest administrative costs in the industry. They are certainly well below the industry standard. So how can it be argued that we need to sell Medibank Private to lower the premium when already the Medibank Private premium is lower than the industry average? That certainly is contrary to the logic of the arguments raised by the Minister for Health and Ageing. Until now, Medibank Private has never paid any dividends to anyone. Any profits have been ploughed back into reserves. If the profit or surplus is too high, then the following year’s premiums are adjusted. If Medibank Private is sold and the government takes away the reserves, whoever buys it will have to invest a lot of money—some estimates are close to $1 billion. This is likely to push premiums up rather than reduce them. As Medibank Private is the country’s biggest insurer, any premium rise by Medibank Private will allow its competitors to raise their prices too. So all the people in the community who have private health insurance should be alarmed—not only the members of Medibank Private—as should the competitors. The regulation of Medibank Private by government since its inception on 1 October 1976 has ensured that it is not easy for private health insurance companies to raise their premiums.

It is important to place this argument in the context of the history of health provision in this country. It was a conservative government that created Medibank Private. It did so because its decisions to diminish the service provisions of Medibank at the time were hurting the Australian public. It created this institution to mitigate those effects and now we have a conservative government seeking to privatise its own scheme. We say that the arguments which have been proposed—certainly the argument that premiums are going to fall as a result of the sale—just do not add up.

Concerning the alleged conflict of interest, for all practical purposes I am hoping to illuminate the House and the government about matters to do with Medibank Private. The government has placed the Australian people in the dark because no cogent argument has been put forward by the Minister for Health and Ageing, or by the government frontbenchers, as to why we are to sell Medibank Private. I am in the dark.

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