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

I rise to speak in absolute opposition to the sale of Medibank Private. We on this side of the House are absolutely committed to keeping Medibank Private in public hands. The previous speaker, the member for Moncrieff, claimed several times in his speech that the opposition were engaging in a scare campaign regarding the sale of Medibank Private, but I have to say that it does not need the opposition to scare the Australian people when it comes to this government—it is scary enough all on its own. In fact we could take a holiday for the next year and the Australian people would still be increasingly fearful as they look at this government’s approach to industrial relations, welfare, the selling off of our assets and the way it is completely ignoring one of the most serious issues we face: that is, climate change. We oppose the Medibank Private Sale Bill 2006 bill not because we are trying to scare the Australian people but because the government has well and truly failed to make its case. It has failed to make any economic argument that the sale of Medibank Private would benefit the community, nor has it made the case that it has the right to sell Medibank Private from underneath its members.

There are elements in this legislation that demonstrate that the government knows full well that it has not made its case. This is a bill that on the one hand sets up the framework for the privatisation of Medibank Private and at the same time protects the government if it has got it wrong. We of course believe that it has got it wrong. It is telling that the government moves in this bill to protect itself from its errors but is not concerned about protecting the community if it has got it wrong. So it protects itself, but it puts the community right in it. We believe of course that the best way to protect the Australian community is to get it right: get the bill right before you bring it to this House. Do the work and make sure that you get it right, then you will not need to build in protections for yourself. We do not believe that the government has made a case for the privatisation of Medibank Private—and, looking at the contents of this bill, nor does the government.

Once again we are looking at a piece of legislation that is more about ideology than reality. I once heard a very wise woman in my electorate talk about politicians. I cannot remember who she was, unfortunately, and I would really like to give her credit because she gave a beautiful explanation of some of the characteristics that you see in politicians from both sides of the House. She said that in politics you can find people who are so based in idealism and ideology that they cannot see reality but that, on the other hand, there are those at the opposite end who are so based in reality and pragmatism that they have lost the ability to see the ideal. I can see my parliamentary colleague nodding. We all know people in this House who sit at either end of the spectrum—each has its their place as one of a range of views. Sometimes it is quite good to be able to borrow a purist view to inform your own perspective on a complex issue. But save us from a government that is founded in one end or the other.

When it comes to this government and its Prime Minister, particularly when it comes to privatisation, we have an ideologue—a man so obsessed with ideology that he cannot even bother to deal with the practicalities of actually going about what he believes he must do. He has a blind belief in the ideology of privatisation. For the Prime Minister, private is always better than public. It is a matter of faith. Never mind all of the opinions that offer a contrary view. Never mind the practical problems of the rights of members, which have been raised by so many in the debate that has surrounded the government’s decision to privatise Medibank Private. For the government, private has to be better because it is, according to John Howard. Never mind the realities of the company—its three million members and their rights. Never mind that three million members have made their choice to stick with Medibank Private, many of them having done so for many years. This is Howard’s ideology and he believes he is absolutely right!

He spruiks choice. The whole government spruiks choice. Never mind that three million Australians have made their own choice and chosen to go with Medibank Private as it is. Never mind that those three million members are happy with Medibank Private. Never mind that the vast majority of them, certainly the ones whom I have spoken to, actually like Medibank Private exactly as it is. This is old ideology first raised 20 years ago as part of a sweeping privatisation agenda. It has been carried along in his bag of tricks for 20 years and is being brought out now and foisted on three million Australians. There is nothing new in this Prime Minister. All the big-ticket items from this Prime Minister come from 20 years ago. There is nothing new here, and we can see that in the Prime Minister’s complete inability to face the climate change challenges that this country faces.

Ironically, Medibank Private was created by the Fraser government back in 1976 to contribute to an efficient, competitive and viable private health service industry. There are now three million Medibank Private members, as I have said. That represents almost 30 per cent of the entire private health insurance market. Those three million people are exercising their right to choose to go with Medibank Private. Again, Howard spruiks choice like a mantra but dismisses it completely for those three million people—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member will refer to members by their title or by their electorate.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to 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.

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

I find it very interesting that the member for Parramatta complains about price rises of 40 per cent over the last five years, when Medibank Private is a government owned body. Surely, if we were worried about the price increases over the last five years we would say, ‘Let’s try to do it differently.’ That is the weakest argument I have ever heard, coming from someone opposite, suggesting that what has happened in the past is a valid reason for changing the situation. (Quorum formed) Isn’t it interesting that, barely 30 seconds into my speech, Labor decides to deprive me and this chamber of free speech in what I think is a very important debate. Obviously the Labor Party thinks it is an important debate, given the number of people who have decided to put their name on the speakers list.

I think Labor have got Medibank Private confused with the original Medibank that was introduced by Bill Hayden on 1 July 1975. Things have changed a fair bit since then. Why would we want to keep a business in government hands when we already have 38 different companies out there competing on the open market?

The member for Parramatta and the member for Lalor suggested—and I think it is a very obvious red herring—that the government would have to compensate the policyholders. The government have had legal arguments. Labor have suggested that the Parliamentary Library has a different argument. I would always suggest that professional legal expertise is far more important than legal expertise obtained from a library. The member for Parramatta also suggested that market forces will drive customers away. That has nothing to do with this debate. This debate is about whether we think a business—one that is obviously run quite competitively, with 38 other competitors—needs to be government owned. I do not think so.

Certainly, the Labor Party did not think we needed the Commonwealth Bank to be in government hands when they were in government. They did not think Qantas needed to be in government hands when they were in government. They have pretty good form on this. When they were in government they would privatise anything that was standing if they thought it would bring them some extra money for their coffers. The problem with the way that Labor handled privatisation was that they used most of the proceeds as general revenue rather than the way we have used it: to reduce Labor’s debt.

I remind people in this chamber of Labor’s record on debt. Over the period of 90 years from Federation, there were two world wars and a depression and we built a new capital city. After 90 years of Federation, up until 1991, we had accumulated $16 billion in debt. However, every year for the next five years Labor repeated that $16 billion debt—an amount which the country had taken 90 years to record—and took our debt from $16 billion to $96 billion. We have taken the responsible attitude of not selling the family silver, and we have said that we will use that money to retire debt. (Quorum formed)

It is a record for me to have two quorums called when I have been making a speech. I wonder whether I can create another record and get a third. The whip’s position is quite fascinating. This must be her greatest contribution to the parliament since she has been here.

There are very clear reasons why we should sell Medibank Private. Firstly, we must note that in the competitive private health insurance sector there are 38 competing funds. What viable policy reason does a government have to continue to own a health fund? Qantas is one of the most competitive and financially strong airlines in the world, and we can therefore clearly see the benefits of a company being run privately by the best people available—not by the government but by the best people available—and in the interests of the shareholders.

Let us be honest here. Businesses are best run by people who know what they are doing—not necessarily by bureaucrats. Qantas was privatised by the Labor government. From a business point of view, it is clear that competition in the market gives consumers options. And isn’t that what we are all about—giving choices, options for people to decide which fund is best for them and how their money is best spent? By making Medibank Private a fully commercial and privately owned company, that will allow the business to be more efficient through lower management expenses. It will give scope for expansion into new business areas, for example other forms of insurance and other medical or financial products. Through a more efficient operation, this will enable the health fund to further restrain premium growth.

Many people question whether the sale will lead to a rise in premiums. Obviously health insurance premiums will rise in the future because of the increased costs of medical technology and the cost of professional medical staff, and this is relevant to all health insurance providers. However, Medibank Private’s premiums will not rise as a result of the sale of the fund; it will be just like other funds. It is all about giving Australians a choice of private health cover for themselves and their families—and we all know that Labor hates private health.

In 1976 the government set up Medibank Private and provided the initial capital. Medibank was the precursor to Medicare, which I think Labor is confused about. The government injected an additional $85 million in 2004, and it has taken the risk of owning this business for the past 30 years. It is therefore entirely appropriate for the benefits of the sale of Medibank Private to be passed on to Australian taxpayers. They are the ones who have taken the risk, and they should get the benefit.

The sale will allow the government to provide an additional $500 million in medical research grants to the National Health and Medical Research Council and $170 million for the establishment of a research fellowship scheme. This probably would not have been possible without the privatisation of Medibank Private. It will be very interesting to see the benefits used in this way. We were all visited in the gallery today by young children suffering from juvenile diabetes. Part of this $500 million could be used to find a cure. Instead of using taxpayers’ funds to run a health insurance business, it makes more sense to use those funds for medical research.

With all these facts, Labor in their usual stance are opposed to the sale. They continue to talk about how this sale will affect Medibank Private customers, but all along Labor do not give two hoots about the customers, because they really hate private health insurance. Labor’s policy over the past few years has been to oppose the health rebate. They have no plan at all for making private health insurance stronger. Labor’s plan is to oppose everything for the sake of it; it is another of their scare campaigns.

This government has a long-term plan for giving Australians a choice in health insurance. We are strengthening private health insurance generally, including through the proposed sale of Medibank Private. Through this sale the Howard government is actioning a broader strategy for making the Australian economy stronger and is underpinning the prosperity of all Australians. We retain our process to regulate price increases, so why is it necessary to hold on to Medibank Private? We control prices by regulation. Medibank Private will become a private corporation, as are the other 38 competitors, and will compete on a level playing field. I believe that it is very important to support this sale and to support the bill before the House.

Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

I welcome the opportunity to contribute to this debate on the Medibank Private Sale Bill 2006 and the proposed sale of Medibank Private. Unfortunately, this debate is not as comprehensive as it should be. I say that because, unfortunately, the government has withheld an important scoping study on the sale. It has refused to publicly disclose the information so that it can be part of the discussion before the House this afternoon.

That is an example of what is a growing and worsening trend in the operation of the Howard government. The record will show across a series of debates in the last 12 to 18 months a growing and disturbing trend in the House, aimed at stifling debate and limiting the value and effectiveness of bills which very seriously will have a potential major impact on the Australian community. It also reflects an arrogance by the government. If you look at the debates that occur in the House, which includes the Main Committee, you find that the opposition is completely dominating debates in the number of members speaking.

Obviously we have a far smaller representation at the moment, but we are trying to make sure that there is proper accountability and scrutiny of legislation. At question time, questions are not answered. It is the same with questions on notice, some of which are requested by constituents who are trying to get details of what the government is doing. All too often now we get answers back which tell us nothing. I can refer to one answer from the Minister for Small Business and Tourism in the last couple of days, which relates to the removal of the executive officer of Tourism Australia. A considerable amount of taxpayers’ money has been paid out, but when I questioned the government on the terms and conditions of the severance package the answer given by the minister was that they are ‘confidential to government’. There is also an agreement in place that prevents the departing head of Tourism Australia from revealing that information.

I find this alarming—I think that taxpayers expect some accountability. We have a proposal here for the sale of a major public asset, Medibank Private, which came into operation in 1976. Medibank Private represents the outcome of taxpayer investment over many years, which has been of benefit to all Australians. Yet we have a government that arrogantly says: ‘The debate’s coming on. We’re not prepared to make available for public scrutiny or the scrutiny of this House the scoping study which goes to the centre of the debate on the sale of Medibank Private.’ I think the Australian community has to understand that, more and more, there is an arrogance by this government which holds in contempt not only the House but also the Australian people. It is time for the Howard government to be held accountable for its actions.

That is why in this debate we have to get the Australian community to focus on what is at stake. Medibank Private is Australia’s largest not-for-profit health insurance provider, and it provides health insurance for some three million Australians. That number represents a considerable proportion of Australians. Represented in that number are many constituents in my electorate of Batman, in the northern suburbs of Melbourne, where over 35 per cent of residents have private health insurance. Many of these Australian families are signed up to Medibank Private, as I have been since 1976, when Medibank Private first came into operation. I declare my membership of Medibank Private, as I should as part of this debate, and I am proud to do so, having seen the demise of Medibank by the election of the Fraser government in December 1975. At least there was the creation of Medibank Private. I automatically joined Medibank Private in support of the need for private health insurance in Australia and a requirement to act in support of the public provider.

Having said that, Medibank Private is important not just to me and my family but to many constituents of Batman and to over three million Australians. It is an institution that many Australians cherish. They understand its importance in providing access to quality health insurance. Interestingly, a recent ACNielsen poll found that 63 per cent of people are against the sale of Medibank Private. Again it is the arrogance of government: ‘We know better than 63 per cent of Australians and the three million Australians who depend on this public provider.’

If legislated, the bill will amend the National Health Act to allow the government to sell its 85 million shares in Medibank Private. The bill will place foreign ownership and Australian identity restrictions on directors and national officers for a period of five years. What will happen at the end of five years? The bill will allow pre-privatisation profits to be redistributed to shareholders, following the privatisation. Obviously that is about the government trying to buy a bit of political mileage in the Australian community, and similarly with the foreign ownership and Australian identity restrictions for directors and national officers for a period of five years.

The changes will mean that the status of the fund goes from not-for-profit to for-profit. It will also ensure that the fund is liable for any compensation claims that arise from the sale, not the Commonwealth. Again this is the government wiping its hands of its responsibilities. It is running away from the potential legal liabilities that might arise from its decisions.

I believe that these are significant amendments and they should not be underestimated. The government has claimed that they are necessary to enable the fund to become more competitive and allow for downward pressure to be placed on premiums. It is also claimed that they will enable the fund to become more efficient by reducing management costs and that they will allow it to pursue new areas of business. The Minister for Finance and Administration, Senator Minchin, the architect of this sale, claims that these amendments will remove the government’s conflict of interest in being the main shareholder of the fund and, subsequently, the largest player in the industry—the medical or health industry—whilst also being the industry regulator. They are substantial claims, and one would think that the argument for them is backed by substantial reasoning.

Medibank Private is supported by three million Australians. A recent poll on whether or not Medibank Private should be sold found that 63 per cent of the Australian population surveyed were against the sale. Yet, once again, we are standing here in the House debating a significant bill which will continue the government’s agenda of privatisation.

The Medibank Private Sale Bill 2006 represents the sell-off by the government of another publicly funded institution without any details of the rationale behind the decision. Surely a government with a major sale such as this should be required to justify its decision and also to make available for public consideration the details which led to its decision. In the end, when you think about it, it is taxpayers’ money that funded consideration of this sale and the determination of the final policy position.

That leaves the House debating a bill that it can only half debate because the Howard government has failed once again to clarify how its claimed improvements can be achieved. If the government wants to make claims of what will occur as a result of the sale—new business opportunities, lower premiums and other claims—I simply say: put the substance of them on the table.

With that in mind I ask the House: why does the government continue to throw doubt on its own legislation by stifling debate? In essence, what has the Howard government got to hide yet again? Perhaps valid reasons are highlighted in its modelling, which it conducted as part of the scoping study for the sale. We do not know because the government will not make the scoping study available. The truth is that this study and the results that have been publicly disclosed have left the rest of us, especially Medibank Private members and the Australian community at large, wondering what the government is hiding. That is the only conclusion you can reach. What is the government hiding with this scoping study? People are guessing why a government would purposely conceal a vital document that is driving its decision-making processes. Why is this document not being made available for them to consider?

We all know that the Howard government have long had Medibank Private in their sights. The fund has formally been on its asset sale program since 2002, when the first scoping study was commissioned. So it is not new. The government have been about this end objective for a considerable period of time. It is not what they said prior to the 1996 election. Whether it is ‘never, ever’ or ‘not at this particular time’, any undertakings and commitments are a movable feast with the Howard government.

I believe that it would indeed be an error if the sale of Medibank Private could not be justified economically, lawful or morally and its privatisation were just an inane reaction by the Howard government to any government owned business. Is Australia Post next? That is the only conclusion one can reach. Where will the community service obligation go if Australia Post is next on the chopping block? Where will rural, regional and remote Australia be without access to Australia Post’s services? There is not much left, and this government has an agenda about selling all government institutions. I suggest to the House that Australia Post will be next. Maybe we will get an answer to that as a result of this debate.

That takes me to what the Minister for Health and Ageing has said. Recently, he said, ‘The government is instinctively in favour of privatisation.’ Will we sell the private health insurance provider, with a membership of three million Australians, simply because it is and article of faith for the Liberal Party to sell any government business that operates in a competitive environment? You would have to apply the same conclusion to a publicly owned institution such as Australia Post. There is no difference in the mind of this government. Effectively, it means that the government will apply this rule to everything. So you ask yourself: where will it end? Will anything stand in the way of such an approach driven by ideology? It is just like its approach to industrial relations: kick low-paid workers, especially women and young people, in the guts because it suits its ideology. The same applies to the sale of Medibank Private.

I want to refer to the comments of the minister for health again. It would seem that the sale of Medibank Private is not the desire of the Australian people. In August this year, the minister stated that he accepted privatisation was not often popular and that the Australian public might not immediately agree with the Howard government that this sale is in their best interests. He has reaffirmed time and time again that the sale of Medibank Private is firmly on the government’s agenda, although it could not be completed until 2008 due to next year’s election and the remaining sale of Telstra. Yes, another institution is on the chopping block—one that goes to the future capacity of this nation to roll out broadband. But the privatisation hammer—the ideology of the Howard government—prevails yet again.

The bare bones rationale that the government has provided is that it has received financial advice—which will not be shared with anyone—which indicates that the sale makes common sense. If that is the case, make the advice available. In the absence of any further reasoning provided by the government, we can only be left to think that the government is no longer making decisions about how it governs the nation. It is left to the financial advisers—the secret men and women in the back rooms around Parliament House.

This raises an interesting question about the morality of the sale. Much has been made in the media of the legality of the sale, following a Bills Digest from the Parliamentary Library. It suggests that current members have a greater claim in the sale than previously assumed by the government. This came in the form of a claim by members for compensation. I praise the library’s courage in making this advice available. We must always defend the integrity and independence of the library. As far as I am concerned, that is a fundamental requirement of all members of this House, irrespective of their political persuasion. This advice clearly proves why the library is doing a great and valuable service for the Australian community.

I say that because this is an interesting aspect of the bill. It is about its significance, and it is about members’ moral and legal rights. The Australian Medical Association released a media statement following the announcement of the sale stating that it:

... 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.

I thoroughly agree with that objective statement by the Australian Medical Association. If the government no longer wants to be involved as an operator of Medibank Private, a private health fund, there is a very strong view amongst members that there is a case for considering mutualising Medibank Private and retaining the equity with those who have contributed, namely the members. The three million members are entitled to have their views considered.

In the light of this and similar arguments, the Howard government has now distanced itself from its original viewpoint that reflected the unambiguous conclusions of its legal advice that rejected any suggestion that the members of Medibank Private could be entitled to compensation upon any sale. Alternatively, the government has now committed itself to including some entitlement for existing members in the eventual sale plan. Hence, I disclose my membership of Medibank Private, as I should, as part of this debate. This is an important shift in the government’s position on the issue. It makes me wonder: if this bill could be properly debated, if all the relevant information that has guided the government’s decision-making process were to be laid out in the open, what sort of bill would actually be passed by the House?

Unfortunately that does not appear to be what will happen today. It is a common ploy, for any decision that could be unpopular, to feign consideration over a period of time in an endeavour to allow resentment to settle while also allowing for the market to be quietly tested. That is what is going on at the moment. And this is why, perhaps, we could only half debate the bill today—because the government, if it came clean on its agenda behind the privatisation of Medibank, would be exposed for not acting in the best interests of the Australian public and especially not acting in the best interests of its three million members and the many families that depend on Medibank Private.

Before I conclude, standing alongside my colleagues in opposition to this bill, I would like to raise one more interesting point. The bill will see the status of the fund change from not-for-profit—and apparently quite easily, according to the government’s legal advice, through a change in a provision of Medibank Private’s constitution that will make it a for-profit company. Effectively, this means that an organisation has the potential to establish itself as not-for-profit, register as such and hold itself out to members as an organisation which is subject to the applicable restrictions under the National Health Act. There is the potential for its assets to be managed with priority given to member’s interests, establishing reserves on that basis over a period of years, and then, without reference to members, for the organisation to unilaterally change its status and freely distribute its reserves as profits. That is an interesting legal conundrum. Is this the precedent that we want for the future of the legal system in Australia, in passing this bill? The implications of the legislation are serious.

A privatised Medibank Private would mean that a much greater proportion of the sector would suddenly, overnight, be for-profit and would mean that the sector would be much more commercially orientated. This could have the disastrous effect of forcing the not-for-profits to become more commercially driven in order to compete. This, in turn, could increase the pressure on the government for more commercially orientated and less community orientated regulatory reform. Once again, these are serious issues associated with the bill that need to be debated openly and thoroughly.

The sale of Medibank Private, as we appreciate on this side, for ideological reasons on the other side, has been coming for about four years—if not more, secretly. Why does it therefore have to be pushed through the House of Representatives without any clear rationale? There is no good reason for that approach to legislative change in Australia. The lack of reasoning that has stifled debate casts doubt on the merits of the bill and, for that reason, the opposition is justified in opposing this bill.

I will also say, in conclusion, that the time has come for the Howard government to have a look at its operation in the House. We are the representatives of the Australian people, who are supposed to properly consider legislation before the House and seek accountability. This is a prime example of the Howard government’s arrogance. A scoping study was prepared at expense to the Australian taxpayer, yet it is locked up in the cabinet vault. The Australian taxpayers own that scoping study. I call upon the Howard government to make that scoping study available to enable a proper debate. If it does not, one can only conclude that this is about secrecy and arrogance in government and a clear decision yet again by the Howard government to hold the Australian public at large in contempt and to treat the three million Australians who are members of Medibank Private with utter contempt. That is the only conclusion one can reach—but, then again, that is part and parcel of the nature of the Howard government in 2006. And that is why the Australian community is, more and more, growing sick and tired of its arrogance and contempt and the fact that it is driven by one thing: not good policy, but a mere requirement to occupy the Treasury benches so as to distribute the perks of government to its mates. The opposition is correct. The sale of Medibank Private is wrong. (Time expired)

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

What a wonderful transformation. Here we have the Labor Party, which in the past has never really cared about private health insurance, now suddenly profoundly concerned about the future of Medibank Private. The party that was very happy, when it was in government, to see the demise of private health insurance is now supposedly its greatest champion. In the 13 years that Labor was in office, we saw a steady decline in the membership of private health insurance. Here we have again the opposition wanting to shut down the debate on the Medibank Private Sale Bill 2006.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Excuse me, Mr Deputy Speaker.

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

The member for Macquarie has the call.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I am seeking the call.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Macquarie has the call.

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Deputy Speaker. So we had a steady decline during those years of the Labor government, and no effort at all to try to protect—

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

On a point of order, Mr Deputy Speaker: could I draw your attention to the state of the House.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Is it a point of order, or are you drawing my attention to the state of the House?

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I am drawing your attention to the state of the House.

(Quorum formed)

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

Before the Labor Party sought to stop me exercising my democratic right in here, I was wondering about the reason for the sudden conversion of those opposite. The party that for 13 years were opposed to private health insurance now are suddenly supposedly its greatest champion. They did nothing to stop that steady decline in numbers that would have pushed private health insurance membership to below the critical mass of where it was sustainable. Now, supposedly, they are its greatest champion.

This is the party that in November 1998 voted against the government’s legislation to allow a 30 per cent rebate on private health insurance. This is the party that voted against the government’s measures to make private health insurance more affordable and more widely available in this community. Now suddenly it is its greatest champion! Suddenly it wants to be the defender and the protector of private health insurance! This is the party that had no time for private health insurance when in government and now supposedly wants to protect it. Let us just look, for instance, at what was said by the former Leader of the Opposition in the recently published The Latham Diaries. The former member for Werriwa said:

We have worked out a way of dealing with the despised private health insurance rebate.

The ‘despised private health insurance rebate’.

We need to kill it slowly ... dismantling it slice by slice.

This is from the former leader of the party that now supposedly is the protector and defender of private health insurance. Again I quote from the former Leader of the Opposition referring to the current Leader of the Opposition:

At different times Beazley has boasted to Caucus that it—

the private health insurance rebate—

will go.

This is the party that now wants to be seen as the defender of private health insurance. It is either a dramatic and wonderful conversion or rank hypocrisy.

Let us look at Labor’s broader record on privatisation. Again, it is not what they say but what they do. What was Labor’s record on privatisation when they were in office? They sold the Commonwealth Bank, sold Qantas, sold Commonwealth Serum Laboratories, sold Snowy Mountains Engineering Corporation, sold Aerospace Technologies and sold the Moomba-Sydney Pipeline. On and on the list goes. They even had clear plans to sell Telstra.

There is no difference between the opposition and the government in the acknowledgement of the benefits of private ownership of government commercial enterprises. We had the member for Brand in 1995, when trying to justify the spate of asset sales of the former government, out there promoting the reasons for private ownership of these commercial enterprises, saying how it would increase their efficiency and how there was no need for the government to own those enterprises. Now suddenly they are opposed to these privatisations.

The approach of the former government and the approach of this government in terms of acknowledging the efficiency of private ownership in these corporations are very similar. But there are two marked differences in the approaches to asset sales or privatisations of the Labor Party and of the coalition. The first difference is that the coalition is clearly up-front in saying what it intends to do. We have said in the past that we would be selling Medibank Private and we have said in the past that we would be privatising Telstra. On the other side, not once in their 13 years did the Hawke or Keating governments commit before an election to what they had intended to do.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, could I draw your attention to the state of the House.

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

Quorum required. Ring the bells. But in calling for the quorum I advise the honourable member for Shortland to study House of Representatives Practice page 269 and some interesting historical rulings made in 1934 and 1935.

(Quorum formed)

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

Before I continue I would just like to recount to the House what one of my colleagues has just said. This has been highly embarrassing for him; he has had a group of highly paid professional and business people in his office this afternoon who were unable to continue the business that they came to Canberra, at their own great personal expense, to conduct because of the antics of the other side. It is a disgrace that the Labor Party would treat with contempt members of the public who are here to do their business and want to see parliament doing its business instead of playing these puerile, infantile games. It is a disgrace and I hope the public is aware of this.

I return to what I was saying. The two differences between the Labor Party and the government in privatising commercial government business are not a realisation or an acknowledgment of the greater efficiency of private ownership but simply a result of two facts. The first is that at least the coalition is up-front. For a long time we have made very clear our policy of privatisation. In the 13 years before the spate of commercialisation, private asset sales, of the other side, not once did the Hawke-Keating government tell voters that that was what they had planned. In fact, they did quite the contrary. In the outrageous case of the sale of the Commonwealth Bank by the then Labor government, in their prospectus, in an official public document, in September 2003 the Labor government said, ‘We have no intention of reducing our ownership to less than 50.1 cent.’ This was an official government document that stated their position, and yet what happened? One year later that public commitment was denied and they sold the other half. Just one year later, we had the member for Brand publicly trying to justify what one year earlier they had denied they would do.

The second difference between the approach of the Labor Party and that of the coalition when it comes to privatisation is the way in which the proceeds are used. Just think of what happened with that massive spate of privatisations under the last few years of the Hawke-Keating government. Did that money go to pay off debt? Did that money go to building infrastructure? No, that money was flushed down the drain with a whole lot of other money in irresponsible, profligate recurrent expenditure. It was expenditure that, in addition to those massive asset sales, ran up another $70 billion worth of deficits in just five years. By contrast—and the contrast could not be clearer—with this government the proceeds of any asset sales have gone towards retiring the debt left by Labor and now go into the Future Fund to help accommodate the costs associated with an ageing population. In fact, of this sale of Medibank Private, $670 million has been committed for medical research. The hypocrisy of those on the other side could not be more glaring.

I would like to turn briefly now to a couple of the specifics of this sale. This sale of Medibank Private will add—contrary to the assertions from the other side—to competition in the private health insurance industry. It will—and this has been commercial advice to the government—increase their ability to diversify and add pressure to other private health insurance providers. There are 38 private companies already offering private health insurance and this will add to the competition between those. The CEO of NIB health insurance, Mr Mark Fitzgibbon—who should know: he is in this business—said this:

The pressure on premiums will be reduced if Medibank goes private. We expect much more aggressive competition from a privately owned Medibank.

This is someone in the industry, a CEO of a major health insurance provider, acknowledging that this competition will force premiums down.

While I am on premiums, it is interesting to make this point. We hear from the other side that we have had these terrible rises in private health insurance premiums under the Howard government.

Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Link to this | Hansard source

We have.

Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

There might have been rises but look at the facts. The rises for the last 10 years under this government have averaged 5.5 per cent per annum. What did they average in the previous 10 years? For the 10 years under the Labor government, the rises in private health insurance premiums averaged 11 per cent per annum. That is double what they have been under this government. If you want to look at the facts on who has done the best job in keeping premiums down, you will see that it has been the coalition government. There is no reason for the government to own one of 39 private health insurance companies. The fact is that ultimately the final say for premium rises, the final approval, has to come from the government on the report of the Private Health Insurance Administration Council, so it is a nonsense for the other side to say that this privatisation will force premiums up.

The fact is that there is no reason for the government to have money tied up in a private health insurance company, one of 39, when that money could better be spent on medical research and on providing for our ageing population. The fact is that, in their more candid moments, Labor know this. It is just sad that, yet again, populism forces them into the role of opposition for opposition’s sake.

Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Link to this | Hansard source

In the course of my contribution I hope to be able to answer some of the assertions made by the member for Macquarie. I thought the debate was supposed to be about the Medibank Private Sale Bill 2006 rather than the expansive historical excursion that we were taken on by the Chief Government Whip. I want to begin by saying that I oppose the bill, and I do so for a number of reasons. I want to take issue with the Chief Government Whip when he asks: why should the government have its money tied up in a health fund? I think that is a very important issue and one that I do not think has been resolved, as to who owns the assets of Medibank Private. Is it the members who have contributed to it over a substantial period of time, and what role does the government have over those assets? I will come to that a bit later.

The bill that we have before us is really one that gives effect to the intention of the government to sell Medibank Private. They have now decided to do so by a share float. But, of course, they are not going to do it before the federal election. They are running scared because of popular sentiment about this issue and they are leaving the decision until after the election. Interestingly enough, as the explanatory memorandum to this bill makes very clear, for the government to achieve its sale objectives, it is necessary for Medibank Private, which is currently conducted on a not-for-profit basis, to convert so that it can be conducted on a for-profit basis. That has really significant implications for the policyholders in Medibank Private, and the change to a for-profit basis will have an impact on other health funds in the sector. The explanatory memorandum to the bill goes on to state:

When Medibank Private Limited becomes a “for profit” company, it will be able to pay dividends or return capital to its shareholders. This includes using the surpluses already built up in the Medibank Private Fund.

It is interesting that 30 years ago the Fraser government established Medibank Private, arguing then that a government owned company would introduce greater competition in private health insurance and strengthen the capacity of the government to reform and regulate that industry. Yet, 30 years later, the Howard government proposes to sell it. The decision to sell it is not made on any rational or convincing grounds, and the community understands that well. Senator Minchin, the Minister for Finance and Administration, had this to say:

We’re not selling this for the money. We think it’ll be good for the industry and good for consumers of private health insurance.

We beg to differ. In the argument I will put in my contribution, I will show why we beg to differ. First of all, we know that Medibank Private is Australia’s largest health fund. It is a national fund and it currently provides cover for about three million of our fellow Australians. You have to ask: where is the morality in the government selling a fund whose assets have been built up by member contributions? Its assets in the 2005 annual report are listed as being up to $653 million. As the President of the AMA made clear recently—and I would have thought that he was well versed in this industry:

... much of the value of Medibank Private is in its financial reserves—

$653 million—

which were not contributed by the government but rather, extracted from the members in compliance with regulatory requirements.

Medibank Private members have played a huge part in building up the value of this fund and, in my view, no share offer deal—whatever that might be; whatever arrangement the government finally comes to—can properly compensate members for selling out from under them the fund that they have built over the last 30 years.

This issue is a significant one in the debate. It is about the rights of existing members of Medibank Private. One of the conclusions that obviously the government does not like was that reached in a research brief prepared by our independent Parliamentary Library. It is arguable that members have the right to the benefit of the existing surplus assets of the fund and that a sale of Medibank Private, if it were adversely going to affect those rights, could in fact give rise to a claim against the Commonwealth for compensation. The AMA, again, for example, has argued:

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 to it, namely the members.

Obviously, the government did not like this advice or conclusion from an independent source, so they rushed off to lawyers at the top end of town, to one of their favoured legal firms, Blake Dawson Waldron. They, of course, provided the advice that the government wanted. I must say that the issue of the rights of members, in my view and in the view of our shadow minister, remains a very live one in this debate.

It must be a live one because the government has made some concessions. It is now talking about some entitlements for existing members in the eventual sale plan. This could be in the form of a special entitlement to or discount on shares. But I repeat my contention that no share offer deal can properly compensate members for selling out from under them the fund that they have built in the last 30 years.

The not-for-profit health insurer, as it operates today, recently announced its results for the last financial year. Its profit has increased 53 per cent to a healthy $200 million. This has happened at the same time as its premiums rose by nearly six per cent on average. So it seems to me that the government has had this agenda in mind for quite some time and that it has been fattening up Medibank Private just like it did to Telstra in the lead-up to its privatisation and sale.

Let us look at the reasons, or the lack of reasons, that the government has given to explain the sale of Medibank Private. The explanatory memorandum accompanying the bill argues—and I find this bizarre—that there is no sound policy reason for the Commonwealth to continue to own a health insurance business. But, at the same time, it provides no rational or compelling argument for its sale. In my view, there are much weightier arguments for the fund to remain as it is. The Minister for Health and Ageing, Tony Abbott, at least told the truth in justification of the sale. He said:

... the Government obviously is instinctively in favour of privatisation.

So, really, it is an ideological obsession on the part of this government rather than any good argument on either economic or public interest grounds for its sale. Our Prime Minister has never made any secret of his belief that government has no business running commercial enterprises, even—ironically, on this occasion—one founded by a former Liberal government. The Prime Minister made clear his views as long ago as 1988 in a speech when he said:

... the fatal flaw in public interest is that you cannot operate a quasi-commercial undertaking in a public service environment.

Back in April this year, the government stated its intention to introduce legislation in this year’s budget for the sale of Medibank Private. The Minister for Finance and Administration said:

... we would hope to complete a sale in financial year 2006/07.

He then said:

We have not made a decision yet on the method of sale. Broadly speaking, the options to us are a trade sale or a public offering.

I think that now, because of that ongoing debate about who actually owns the assets, concessions will be made to the policyholders, and no doubt we will see some favourable share arrangement leading up to the floating of Medibank Private. But there is no doubt that public opinion is strongly against the sale of Medibank Private, just as it was strongly against the sale of Telstra. It was particularly so in seats like the one Deputy Speaker Scott represents. So, fearful of the political backlash before the election, the legislation is being introduced but the sale is not going to happen until some time in 2008.

If you do not believe my argument about the lack of compelling reasons for the sale of Medibank Private, let me quote to you from a column written by Terry McCrann, a noted economist who is not often on the side of Labor on issues, but I thought his advice and reasoning was very cogent. He said:

The argument for its sale is pretty thin. Yes, like Telstra it is operating in a field of private sector competitors.

But it is a field absolutely controlled by government policy, and intricately interwoven with both public health in the broad and Medicare itself in the particular.

Unlike Telstra, it’s hardly worth the money so far as the federal budget is concerned. The $2 billion could easily disappear in another year or two in Iraq or a ‘parameter’ variation to the budget numbers.

There’s also a particular problem with a float over a trade sale. That would mean a company listed on the stock exchange which would have to make a profit for shareholders.

In contrast the entire private health insurance sector is today at least nominally non-profit.

So what does the introduction of a profit-based player in the private health insurance sector mean?

They all switch to profit-making? Or Medibank Privatised can’t compete?

We know that Medibank Private has always been a not-for-profit fund. But, on sale, as the explanatory memorandum makes out so clearly, it will inevitably have the profit motive as its primary consideration. In my simple view, this can lead only to one conclusion: if you have to satisfy the shareholders, then higher premiums for Australian families will follow as surely as night follows day. As I said earlier, given that Medibank Private is currently Australia’s biggest health insurer, once it becomes a for-profit company, that will obviously have implications for the rest of the sector. If the market leaders’ premiums are going to rise, it will not be too long before the others follow. Quite frankly, this is really bad news for the 36 per cent of my community that I represent in this parliament covered by private health insurance.

The claim made by Senator Minchin and the government that premiums will not increase as a result of this sale is a statement that lacks any credibility and any logic. It is not just disputed by reputable economic commentators but by the AMA as well, whose president said the obvious:

....the sale of Medibank Private would drive up premiums as the new owner sought to maximise returns to shareholders.

We all know the government has form on promises about premiums that are never met. I can remember in 2001, when I was newly elected to this parliament, that we were told that all the government’s policies would put downward pressure on premiums. Since I have been elected, private health insurance premiums have risen by 40 per cent—so much for downward pressure on premiums! That can only get worse if it is privatised and becomes a for-profit company.

We all know the current Minister for Health and Ageing’s predisposition to rubber stamp premium increase requests from the private health funds. He confirmed this recently in his own words when he said:

The standard I have adopted since becoming the Minister is that I will normally approve increases as long as I am confident on expert advice that they are justified by the needs of the funds ...

So why should people in the community put any store on promises made by this government about health insurance premiums, when they know the outcomes have been so different from the promises? These outcomes have led me on many occasions to raise concerns on behalf of the people I represent about the increase in costs of private health insurance.

Since 2001 the overall increase in premiums has been an astounding 40 per cent and, for some funds, the increases have been much higher. The member for Macquarie, in his historical dissertation, seems to miss this point completely. Let me give you one example. Last year constituents reported to me that the NIB fund raised premiums on average by 17.3 per cent at a time when the government was publicly claiming that the average increase in the sector was just under eight per cent. They can say that the average is eight per cent, but when you disaggregate those figures you can see that one fund, on average, at the different levels of coverage, had a 17.3 per cent increase. I pursued these exorbitant increases on behalf of the people I represent with the Private Health Insurance Ombudsman, but no redress was offered.

With increases in gap fees and increases in premiums, is it any wonder that many of my constituents tell me they are not receiving value for money from their fund? They feel they are paying more but getting less. I cannot understand for the life of me why the minister cannot force this sector, which is subsidised by taxpayers to the tune of $3 billion and more a year, to come up with a product that covers all your costs when you use a private hospital.

Not only are people slugged by increasing premium costs, but the gap continues to rise and people are asking, ‘Well, what’s the value in it?’ Regrettably, many people that I represent—pensioners and low-income people—will continue to be forced out of private health coverage. And this will be even more the case when Medibank Private is sold. These annual increases well above the rate of inflation—sometimes astronomically above—are a breach of government commitments and they are putting enormous pressure on household budgets. And, as I said earlier, the worst is yet to come.

I really do not see that the sale of Medibank Private does anything substantial to address the very critical issues that this nation faces in respect of health reform and health needs in our community. We need to do a lot more to ensure that private health insurance is affordable and provides real value for money. It is not good enough for this minister and the government—which likes to paint itself as the great friend of the private health sector—to ignore the big macro issues such as the cost of medical technologies and the future demand that will come with an ageing population. Those issues, let alone the sustainability of private insurers, seem to me to be the key issues for the entire health sector, and I do not see how the sale of Medibank Private would add anything constructive to addressing the long-term needs that we all know are so desperately required out there in the community.

We know that private health funds are paying out more in benefits, but at the same time out-of-pocket costs, the gap and other non-insured health costs are growing and placing an increasing burden on all health consumers. This is also occurring for the non-insured as the public sector is also moving costs onto individuals or at least not fully meeting new costs as they arise.

I think it would have added much more substance to the debate about long-term reform in the sector if the minister had made that the key issue rather than trying to pretend that there is some value to the Australian consumer and to the industry through the sale of Medibank Private.

I want to conclude by saying that community sentiment and expert opinion is strongly against the sale. This is the reason the sale has been deferred to 2008. It is not because of the Telstra float but because the Prime Minister and the minister understand the way people feel about this proposed sale. A recent Herald/ACNielsen poll found 63 per cent of voters opposed the sale and only 17 per cent supported it. And even among the government’s supporters, almost half in this survey opposed the sale.

The government has put off the sale until after the next election in the hope that in a year’s time people will have forgotten about the issue. Well, the community must know—and we will make sure they know—that if the Howard government wins the next election, Medibank Private will be sold. And they should know that the sale of Medibank Private will push up premiums. That is the inevitable consequence of selling Medibank Private and making it a for-profit organisation. If it is for-profit, its primary consideration is profits and accountability to the shareholders. So the sale will push up premiums and, very importantly—and the community needs to understand this—the premiums will go up not just for current members of Medibank Private but for all private health insurance members. Once the dominant player in the market sets the pace then inevitably the others will follow.

I know that the government, for political reasons, is deferring this sale, but I think we ought to say on the record that it is the intention of the Labor Party to make the community well aware of the implications of this sale. Certainly, I intend to be writing and communicating with the roughly 36 per cent of electors I represent who are currently covered by private health insurance, warning them of the serious consequences for them, their families and their household budgets if the Howard government is re-elected with its clear commitment to the sale of Medibank Private.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I would firstly like to associate myself with the comments made by the member for Throsby. Like her, I will be communicating with those private health insurance holders within the Shortland electorate, because I believe this is one issue on which the government has totally misread the feelings of the community.

The Howard government is a government comprised of ideologues fixated on changing the face of Australia. These ideologues seek to obliterate any body, institution, policy or societal direction that does not coincide with their jaundiced view of the world. It is a government driven by philosophy—a philosophy that does not necessarily align itself with the common good or, put another way, does not necessarily align itself with what is best for Australia—Australian families and Australians as a whole. In this case, the government’s ideological commitment to the great god privatisation has impacted on its ability to clinically assess whether privatising Medibank Private will deliver the best to Australians.

On many occasions when I meet with people and address public groups, people ask me about the difference between the government and us. I think this piece of legislation shows very distinctly the difference between the government and the opposition. We on this side of the House are committed to delivering the best outcome to the Australian people, and we do not believe that by selling off public assets—in this case Medibank Private—we would deliver that to the Australian people.

At the start of my contribution to this debate I think I should declare an interest, as I am a member of Medibank Private. As a member, I am horrified that the private health insurance company that I have chosen to take out my private health insurance with is to be sold. The reason I decided I would take out private health insurance coverage with Medibank Private was purely and simply that it was publicly owned. I believe that the sale of Medibank Private will make me reconsider my decision to remain a member of that private health insurance fund.

I ask the question: will the sale of Medibank Private benefit people in Australia? The answer is no. The government says, ‘Yes, it will, because it will lead to greater competition.’ It uses the hoary old argument that the regulator cannot be the owner and operator of an enterprise. It argues that it will be much more efficient if it is privately owned. We on this side of the House argue that, no, it will not deliver better outcomes—what it will deliver is higher premiums. Currently the excess in Medibank Private is put back into the fund and delivered as services to the members. In the future that profit will go to the shareholders. The purpose of Medibank Private will be to make a profit and to deliver that profit to its shareholders. That changes the whole focus and the whole modus operandi of Medibank Private.

I have already mentioned that I believe the sale of Medibank Private will lead to increased premiums, and one of the biggest complaints that constituents have about private health insurance is the gap between what they pay and what they receive back from their private health insurance fund. I can only see this increasing with the sale of Medibank Private. The sale of Medibank Private will lead to a change in the goals of Medibank Private. No longer will it have a goal of providing services and benefits to members; rather, as I have already mentioned, in the future it will have the goal of providing profit to its shareholders. I should say very distinctly now that I am opposed to the sale of Medibank Private, just in case the members in the House have not picked that up. I can see no logical reason for the sale of Medibank Private. I do not believe it is going to deliver a better outcome to those people in Australia who hold private health insurance. Rather, I think that it is going to lead to escalating costs and poorer service.

The Medibank Private Sale Bill 2006 changes the way that Medibank Private currently operates. The bill makes necessary changes to the National Health Act and other amendments to allow the government to sell its share in Medibank Private. The bill brings to light a number of issues which I think add to the controversy of the sale. It is limiting foreign ownership, adding an Australian entity rule for directors and limiting the location of the head office for five years. Five years passes in a blink, and my question is: what happens after five years? The bill is excluding National Health Act provisions which will allow the change of Medibank Private’s not-for-profit status to be a disallowable instrument.

The bill is also excluding National Health Act provisions which would allow the Minister for Health and Ageing to examine the impact of the change on the status of members and premiums and disallow the change on public interest grounds. I have already indicated how important the public interest is and that governments must make decisions based on the public interest. The bill will allow current surpluses to be redistributed successfully to IPO subscribers but, at the same time, it includes compensation provisions for which funds would be liable in the event that legal action were taken.

That brings me to the Blake Dawson Waldron advice that the government has received. I have to say that I have serious reservations about that advice. The advice that was received was that the membership of the Medibank Private fund entails primarily a contractual relationship that can be terminated by Medibank Private with just two months notice. It also said that members had no enforceable rights to benefit from the general assets of the fund and that Medibank Private Ltd is the beneficial as well as the legal owner of the fund.

I would like to draw the House’s attention to the paper that I am referring to at the moment, which was prepared by the Parliamentary Library. It had input from the legal section as well as the social policy section, so it is quite an in-depth paper which goes across all aspects of this sale. It is not at all supportive of the sale. It disagrees with or at least raises serious concerns about the advice that was given by Blake Dawson Waldron. In doing that, it goes to the rules that surround private health insurance and the fact that before their membership is terminated a member must be given two months notice—that is, when they are behind with their premiums. A person has a right to be a member of the fund. It is not the fund that terminates membership; rather, it is a member’s choice.

This paper also highlights the fact that community rating is the underlying principle of private health insurance—and the government is seeking to ignore that. The explanatory memorandum accompanying the bill states:

Community rating prohibits RHBOs [registered health benefits organisations] from discriminating against contributors in relation to access to private health insurance and the use of private health insurance products …

I would argue that this flies in the face of the advice the government is relying on—and rightly so—because community rating does underpin private health insurance in this country. Members are currently provided with the right of continuity of membership through the principle of community rating. That is something that we on this side are very committed to and that, I would have thought, all members of this House are committed to. It ensures that private health insurance operates in the way it does in this country and that people cannot be discriminated against because of some illness they have had. If that were to happen, it would undermine the whole system.

The government need to look at this provision very carefully. They need to be very careful when accepting the Blake Dawson Waldron advice. I think they should examine the Bills Digest prepared by the Parliamentary Library, which has taken into account all aspects of this issue. It is also about the not-for-profit status of registered health funds—and this is a not-for-profit fund. It is interesting that the whole concept of the way in which Medibank Private operates will change if it is changed into a for-profit health fund. Medibank Private is currently a not-for-profit fund. I believe—and I know that members on this side of the House are quite convinced of this—that members of the fund would be in a position to take action.

I think the government are also quite wary of that, because they have put into the bill a section to cover them for this—the section that deals with the change in the status of the fund to a for-profit fund. The bill seeks to exclude the requirement that this change in registration would impact on that. So I think that even the government are very mindful that members could have the right to take action against Medibank Private. The government do not want to be caught with this, so they are shifting it onto Medibank Private and, possibly, future shareholders.

The moral perspective, rather than the legal perspective, is also very important here. I would like to quickly turn to what the AMA have to say on this. They say:

The AMA … doubts the morality of the sale, given that much of the value of Medibank Private is in its financial reserves, which were not contributed to by the government but, rather, extracted from the members in compliance with regulatory requirements.

The AMA are saying, in other words, that the members of Medibank Private own it—they have contributed to its financial status—and, as such, there is a real problem with selling it. They also make the point that, if the government no longer wishes to be involved, there is a strong case for mutualising Medibank Private.

I thought it might be useful for the House to note that a number of groups are opposed to the sale of Medibank Private, including the AMA, the Doctors Reform Society, the Community and Public Sector Union, the Health Services Union and, of course, the Save Medicare Alliance, which includes Professor John Deeble, who was one of the founders of the original Medibank, and Ray Williams, former general manager of Medibank Private. The Australian Consumers Association has also raised concerns about the impact of the sale and, of course, we on this side of the House are very concerned about the proposed sale.

I think the conflict of interest argument, in which the government argues that you cannot be both the regulator and the operator, is a furphy. The government has, over the years, been both the regulator and the operator, and that has not created any conflict of interest. With regard to the injection of funds: in 1976, at the commencement of the fund, there was an injection of $10 million, and that was in a very different form from the form it is in now; in 1978 there was an establishment grant of $11 million, but that has been repaid; and, in recent times, there has been an injection of funds. This government throws up furphies all the time. It never really explains or identifies how there is a conflict of interest.

The other point that has been raised is that this sale would make Medibank Private more efficient because it would lead to lower management costs. I would argue that it would make it less efficient because the whole purpose of its activities would be to meet and satisfy the needs and desires of its shareholders. To do this, I think that along the way efficiencies would be lost, and, of course, there would be less competition. I know that Queensland members of this parliament have been quite concerned about the sale of Medibank Private. They are aware of the concentration of ownership of private health insurance in Queensland, with MBF and Medibank Private having almost a total share of the market. To some extent I think that is why the government has decided to sell Medibank Private in the way it has—but that applies only for five years, and in five years time that concentration can be further exacerbated.

The government’s decision to sell Medibank Private is a flawed decision. It will not deliver better outcomes to members of Medibank Private. It will not deliver better outcomes to Australians, including families, who have private health insurance. Rather it will lead to increased costs and potentially less competition. It is a decision based purely and simply on ideology. The Howard government is a slave to privatisation but not such a slave that it is prepared to sell Medibank Private prior to the next election, because the Howard government knows that the Australian people do not support this sale. In typical Howard government style, it will deliver the bad news and the bad policies after an election and hope the Australian people will forget prior to the next election.

The Australian people have woken up to the Howard government. They know that the Howard government says one thing before an election and does something different after an election. I am totally opposed to the sale of Medibank Private, for the reasons I have outlined. One reason above all others is that it is contrary to the interests of the Australian people. (Time expired)

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

This government loves delivering choices.

Peter Dutton (Dickson, Liberal Party, Minister for Revenue and Assistant Treasurer) Share this | Link to this | Hansard source

Hear, hear!

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Along with a number of choices—I am glad the minister at the table is joining in—we have seen a number of so-called reforms that this government plans to bring in, but certainly so far the choices have not been on subjects confronting the Australian public. At the next election voters will have a whole range of choices when they come to the ballot box. They will get a choice between the government’s extreme industrial relations policy—which the government packaged as reform—and a system based on fairness and decency, which will be taken to the election by the Australian Labor Party. They will also have a choice between the government and the opposition on Australia’s involvement in Iraq. Again, this week has seen much debate on that matter played out in this parliament and in the country’s newspapers. That will be a very clear choice for the Australian public when they go to the ballot boxes some time late next year.

More to the point, they will have a choice between the vastly different approaches to combating things such as climate change and they will have a choice between the proposals of this government and those of the opposition in relation to the sale of Medibank Private. Let me make it very clear that I and all members of the Labor Party stand quite opposed to the sale of Medibank Private. Labor is not convinced by the government’s argument as to the Medibank Private Sale Bill 2006 that the sale of Medibank Private is good for competition, that it will be good for existing Medibank Private members or, for that matter, that it will be good for future customers of Medibank Private. That is why Labor is pledging to keep Medibank Private in government hands at next year’s election. Unlike the government, Labor is in touch with the views of the Australian public on this matter.

Mr Deputy Speaker, as you and no doubt every member of this chamber are aware, at this stage polling shows that the punters out there do not support the sale of Medibank Private. They do not believe the government when it says that people are going to be better off and they certainly do not believe the government when it says that the privatisation of Medibank will result in downward pressures on premiums.

Possibly the most interesting aspect of this debate is the heated dispute that has emerged over the rights of existing Medibank Private members. I am sure the government is aware that Medibank Private members have played a huge part in building the value of Medibank Private. It is quite true that the government injected $85 million into Medibank Private in May 2004, but the main value of Medibank Private is derived from the reserves contributed by members over a significant period of years. The members have assisted with the dramatic turnaround of Medibank Private as a company: losses of $175.5 million four years ago turned into an operating profit of $220 million last year, which obviously makes it very attractive to equity investors at the moment.

Of course the business side of the equation is one thing, but what has received considerable attention is the legal aspects of the sale. Following the announcement that the government intended to put Medibank Private up for sale, there has been much debate about who actually owns it. I would have thought that this would have been a first-order question—that, when you are going to contemplate disposal of an asset, you should actually first make sure that you are the person who has proprietary interest over that asset. It is a reasonably straightforward proposition: any seller has to make sure that they own a thing before they go out and sell it, otherwise a lot of my former clients in the constabulary might take an interest. And the Minister for Revenue and Assistant Treasurer, who is at the table, might have a view about people selling things that they did not quite own.

It seems that the government might be looking to bypass this basic rule when it comes to Medibank Private. Once this matter came on for public debate, the Parliamentary Library commissioned a research paper. It took it upon itself, under its independent charter, to investigate what rights the members of Medibank Private had in this fund. One conclusion reported in its brief was that members may have the right to the surplus assets of this fund. That is not an insignificant conclusion by this independent body. According to the library, the sale could give rise to a claim against the Commonwealth.

This put the government in a bit of a tailspin, and it rushed out and did what it normally does in these sorts of circumstances. You might recall that in the industrial relations debate the first thing that the minister did was to run out and engage a plethora of legal advisers from the private sector to play a role in helping formulate the government’s position on Work Choices. But what the government did on this occasion was to go and get separate advice—in the hope, I suppose, that it would be advice which would give it something to hang its hat on when it came down to the issue of ownership.

The advice that it obtained was from Blake Dawson Waldron. It was tabled by the Minister for Finance and Administration in early September. And that advice indicated that the Commonwealth was not liable to pay compensation. No doubt it was a bit of reprieve for the minister to receive that advice.

Well, which is it? Will we be liable or will we not? The question is yet to be answered in any decisive way. When the library considered the advice from Blake’s—and, again, this is on record—it considered that advice, for various reasons that it articulated, to be wrong. It pointed out a range of problems with the advice and hence it seriously questioned its conclusions.

The $653 million question, when it comes to the sale of Medibank Private, is: who actually owns it? The government claims that it does, and it has produced this legal advice to back up its assertion. The Parliamentary Library seriously doubts the conclusions contained in that advice. So most of us are really left none the wiser on that fundamental question of who actually owns Medibank Private.

Despite the fact that the Commonwealth is sticking to the advice offered by its hired guns in this matter, it has hedged its bets. It has inserted a provision in this bill that seeks to remove the Commonwealth from any compensation claim that may arise as a result of this sale. It has also indicated that it intends to recognise existing members, through an entitlement as part of the public offer structure. So, while the government on one hand is sure that it has the right and is sure that it actually owns Medibank Private, it still seems to feel the need to hedge its bets against any adverse findings of ownership by removing itself from any liability for compensation and it has sought to placate the existing members through a yet to be detailed entitlement in the public offer.

If the government is willing to go to all those lengths to make sure that it is far removed from any possible future legal action taken by any one of the members of Medibank Private, one can only conclude that the government has little confidence in the legal advice it has received from its solicitors in this regard. If the government does not have confidence in its legal advice on this occasion, if it is nervous about the sale, if it needs to go to these lengths—of putting all these hedging positions into this bill to protect itself into the future—then this sale should be stopped, and it should be stopped now, because the fundamental proposition as to who owns it is yet to be determined. It is a simple proposition: if you are not sure that you—as the minister—are the person who actually owns the residual assets in this organisation, then you should not attempt to sell it.

The biggest concern for most people is the impact that this sale will have on industry competition and on premiums. There is a very deep concern among the public—as was the case with the sale of Telstra and other privatisations—that this will be nothing more than another trip down the ideological highway, a trip which, quite frankly, the majority of Australians do not want to take. As a recent ACNielsen poll on the privatisation of Medibank found, nearly two in three respondents wanted the insurer to remain in public hands. Only 17 per cent—that is, less than one in five—actually supported the sale of Medibank Private. This is a pretty significant finding, although, as we have seen with this government pursuing its various ideological agendas, nothing is going to be allowed to stand in its way: not public disquiet, not expert objection—nothing.

The only thing in the past that has stopped this government’s agenda when it comes to privatisation—and I should not have said there was nothing, because there was something—has been Alan Jones. You may recall that when it came to the sale of Snowy Hydro it was the objections of Alan Jones, and the opportunity that the government saw to score points against the Victorian and New South Wales governments, that stopped the privatisation objectives of the Howard government. On this occasion, despite the fact that Alan Jones has labelled the sale of Medibank as immoral, the government does not seem prepared to back down. So, given that the Commonwealth will not back down, what are the impacts going to be?

Medibank Private has about three million members and accounts for about 30 per cent of the private health insurance market in Australia. It has to be considered the most significant player in that market. The nearest insurer in terms of market share is MBF, which accounts for nearly 20 per cent of the market. Given the size and relative market strength of Medibank, serious consideration has to be given to the impact on the market and on competition of its change from being a not-for-profit organisation to one which is profit focused. Labor has a real and serious concern that privatisation is going to result in higher premiums, lower service levels or limits on claims—or, in the worst possible scenario, all of the above.

While the Minister for Finance and Administration continues to stick by the line that the privatisation will place downward pressure on premiums, no-one else seems to be convinced and no-one else whom I have heard speak has rushed out to agree with him on this. No-one who has spoken in this debate, from various philosophical positions, has rushed to speak in support of the minister in his claim that this is going to lead to downward pressure on health insurance premiums. Even the Minister for Health and Ageing, who has been responsible for increase after increase in private health insurance premiums, has conceded that following the sale of Medibank Private premiums are bound to rise.

The minister for health—a man who has approved health insurance increases—when asked recently about the period post Medibank privatisation, said that he would have no hesitation in approving higher premiums. That really comes as no surprise, as the minister for health has hardly been a picture of self-control when it has come to approving premium increases in the past. Why would he exercise some self-control at this stage when it comes to increases in health insurance premiums? So the official line is that there will be downward pressure on premiums, while the health minister believes the exact opposite. With such divergent views within the government, it is probably best that people consider the views of others to gain some insight as to what might happen.

The Age recently reported the comments of an investment banker as follows:

One investment banker stressed that whoever won control of the asset would be planning to extract value using some combination of cutting costs, limiting claims and raising premiums. The owner would hope to make its money in two or three years, the banker said. After that Medibank would probably be sold—either whole or in pieces.

It seems that downward pressure is the last thing that is going to be exerted on premiums. It is incumbent upon the government, should it be successful in getting the privatisation bill through, to provide some sort of assurance to existing Medibank members rather than just throwing them and their premiums to the breeze. The members need some certainty about what is likely to happen to their premiums. That is not being addressed. It is certainly contrary to the position that has been asserted by the Minister for Health and Ageing in this regard.

Health and health insurance are vital areas when it comes to public policy. Changes to Medicare, the subsidisation of the private health insurance industry through the 30 per cent health insurance rebate and the dogged determination of this government to inject the private sector into health care while it extracts itself make the sale of Medibank all the more important. The sale of Medibank will not result in better service. In itself it will not lower administrative costs. It will not reduce the regulatory burden and it will certainly not put downward pressure on premiums. It has certainly become clear that the sale of Medibank will do everything but put downward pressure on premiums. For the doubters out there, the government’s record on premiums stands in stark contrast to its assertions that this sale will place downward pressure on premiums.

People need only remember that since 2001 health insurance premiums have increased by 40 per cent. A change in the primary motivation of Medibank from being a not-for-profit organisation to an organisation motivated by profit—one where the operator will necessarily be geared to generating a profit and return to shareholders—will give an entirely new complexion to the industry. We should bear in mind that Medibank Private at this stage accounts for 30 per cent of that industry. Once the largest operator in the market is let loose—having to placate shareholders and having to generate profits—it will not be long before it starts to place considerable pressure on the government to increase premiums regularly and probably significantly. Naturally Medibank’s lobbying will be supported by the rest of the industry, placing even more pressure on the government, and before you know it the health minister will have his rubber stamp out once more to approve further premium hikes and meet the wishes of the health insurance industry.

Even the best companies in the most homogeneous industries find it difficult to balance the competing motivations of profit, service and competition. So how can anyone really expect it to be any different when it comes to the health insurance industry? I oppose this bill. I think any members who consider the welfare of private health insurance holders should equally oppose this bill. (Time expired)

Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Regional Development) Share this | Link to this | Hansard source

I, together with the member for Werriwa, oppose the Medibank Private Sale Bill 2006. It will put into the health system increased costs that will fall on individuals, and that can only be bad for people struggling to meet health costs. The fact is that Medicare has been and can be a world-class universal healthcare system, providing affordable health care to all Australians—a system whereby what gets you that affordable health care is your Medicare card, not your credit card.

But let us be clear at the outset as to who in this parliament is really committed to Medicare. Labor created Medicare under the Whitlam government; the Liberals under the Fraser government wrecked it. It was recreated again under the Hawke Labor government; the Howard government, when it came to office, wanted to wreck it again. They could not because, by that stage, it had been so entrenched and universally accepted, so what they did was undermine the system and starve it of funds. They ran down bulk-billing and increased patient out-of-pocket expenses. They forced a position in which people who got sick could not go to a doctor but turned up at the emergency wards of public hospitals, adding to the waiting lists. This was cost shifting of the worst order. They forced more and more people into the private system and diverted resources into that system to drive private health insurance, forcing more people onto it. It was another way, if you like, of forcing people to pay more for their health care—shifting the cost from the public to the private.

Interestingly, it is worthwhile reminding the House that the way they paid for the private health rebate was not new money; it was money diverted by their scrapping of the co-contributions system for superannuation—a system that Labor had developed, which the Howard government promised to keep before the 1996 elections, but, when they came to office, they abolished it. They used the savings from that to fund the injection into the private health rebate. In other words, they took a benefit from all of the workforce—superannuation—and redistributed it to private health insurance, covering just half the population.

Also prior to the 2001 election, they promised to keep private health insurance premiums down. I even remember the Prime Minister offering personally to intervene to stop increases in private health insurance. Since then, private health insurance went up each year: in 2002 by seven per cent; in 2003, another 7.4 per cent; in 2004, 7.6 per cent; in 2005, eight per cent; and in 2006, 5.7 per cent. No intervention as promised by the Prime Minister. Another broken promise. End result? People forced to pay more for their health. Honest John indeed!

Under the bill before us, Medibank Private is now to be sold. Instead of a not-for-profit organisation, it will become a for-profit organisation. As the member for Werriwa said, does anyone really believe that that will do other than force private health insurance premiums up even further? If the government would not exercise control over costs and now it is selling the remaining mechanism by which downward pressure on healthcare costs could be affected, does anyone seriously suggest that the hike in private insurance premiums that we have seen under this government will not just continue upwards? The Prime Minister and the Minister for Health and Ageing parrot the Goebbels chant. You heard it again today in question time when the minister said that this government is the best friend Medicare has ever had. But, like so much of their mantra, the facts are different.

The government, of course, know they are hugely vulnerable on the claim about their support for Medicare. It is, in fact, a huge lie to say that they are the best friends of Medicare. The truth of it is they cannot win free-to-air publicity on their claim, so they buy time: paid advertising to reinforce the chant, money spent—some $100 million of it just on advertising alone for this system—not to improve the system, not to tell people how to better access it, not to help people get their costs down but simply an advertising campaign to identify themselves with the Medicare brand name.

Let us just look at the facts, because I think it is instructive. I sought leave from the minister at the table before—and I hope he has passed it onto the current minister, the Minister for Community Services—to incorporate in Hansard this table which shows the national bulk-billing rate since 1984-85.

Leave granted.

The graph read as follows—

This is a very interesting graph because it shows, in the columns that are red in colour in the original and extend from 1984-85 up to and including 1996-97—essentially when Labor was in office and was committed to rebuilding Medicare, which had been trashed by the Fraser government—that in each of the years, because of Labor’s commitment, we saw an increasingly steady trend to increases in bulk-billing, and so much so that we peaked with an over 80 per cent national bulk-billing rate in 1995-96. There was a continuous upwards trend in all the years because Labor was committed to Medicare.

When the government came to office, withdrew the funds and did not maintain the commitment to Medicare, we saw a steady decline until 2003. Why do we start to see the pick-up after that? Because in 2002-03 Labor hammered the government on this issue. We developed a policy in opposition to repair the system. Labor set about providing the means by which we could rebuild the system—as opposed to wrecking it. We proposed measures to increase the rebate for all bulk-billed patients. In addition, we provided targeted incentives to reward doctors in disadvantaged regions. It was a bold response to restore the universality and affordability of the system. It was costed and funded—it was affordable. So effective was the campaign that the government panicked. You might remember that they changed ministers. They also had to pump money in because they were losing ground in the polls. They increased the rebate, but effectively they only increased it for the aged and children in families. In other words, they embraced the direction of Labor’s solution but nowhere near comprehensively enough.

It is true that the bulk-billing rate has increased since then, but that simply confirms the direction of the policy that Labor was advocating: start fixing the rebate and you will see an increase in bulk-billing rates. But, even with the half-hearted approach that the government has made, bulk-billing rates are not even back to where they had fallen to in 2001-02. They are about 75 per cent, well under the over 80 per cent that they peaked at when Labor was in office.

The system can be repaired, but it requires a belief in it and a commitment from government to repair the rebate system. It is a commitment this government will not make. It is now resting on its laurels thinking that the heat has gone out of this debate, but it will not go out of this debate.

I remind the House of the government’s performance on health care. They gave an ironclad guarantee shortly before the last election was called. In fact, on 6 September 2004 the Minister for Health and Ageing committed to keeping the Medicare safety net at its existing level, only to have the Prime Minister and the Treasurer humiliate him by repudiating that ‘ironclad’ commitment once the election was over. The government say whatever it takes to get elected. Do not believe them. They are not sincere.

But the message from all of this is clear: if you want Medicare as a universal system of affordable care, only Labor—the creators of it, the believers in it, those committed to strengthening it—can deliver that. And strengthened it must be. As we have an ageing population—with medical science driving longevity—health care and aged care, together with superannuation, are the generational challenges of our time. The government pretended to support Medicare—they had advertisements to say that they supported Medicare—but they do not have the commitment. Beyond the deceitful and costly advertising, theirs is a two-pronged solution, forcing Australians to pay more for their health and blaming the states.

Instead of blaming the states, this country needs a federal government committed to funding Medicare and aged care, thereby taking pressure off the hospital system, and using that commitment to forge a new health partnership with the states. Only Labor will make such a commitment.

The government’s position, bad as it is, only gets worse under this bill. Now they want to sell Medibank Private. They say that it will produce efficiencies on the basis of some scoping study from Carnegie Wylie and Co. but they will not produce the study to show how those efficiencies will materialise. I call on the min-ister to produce that study, to show the public and this House the evidence. Do not just make the assertion; give us the material upon which you base that assertion.

It goes further because there is a real issue concerning where the proceeds of the sale will go. When the government first announced its intention to sell Medibank Private in April, the Parliamentary Library produced a report on the consequences of that sale. One of their conclusions was that members of the Medibank Private fund had rights in the sale. The argument goes—and I commend this research briefing to the House—that, essentially, unlike other funds, where members make contributions, private health funds are subject to community rating and members, despite what the rules of the fund might say about the ability of the fund to cancel their membership, cannot have their membership cancelled if it involves discrimination. There is a fairly lengthy list of things for which you cannot be discriminated against. They cannot discriminate, for example, if you are chronically ill or on the basis of your sex or race. They cannot discriminate and force you out on the basis of your age. Essentially, under legislation that governs private health funds, members are entitled to retain membership as long as they continue paying.

A not-for-profit organisation, by its very nature, cannot distribute profits but has to manage its assets in the interests of members. In other words, it cannot simply go about and fundamentally change its status without having regard to the members’ interests. The research paper from the Parliamentary Library is quite categorical: members have rights over the existing assets of the fund. This in turn suggests that members could have a right to compensation if the government sold it.

What do the government say? They categorically deny that members have those rights. They say they do not have to pay compensation, even though there are some interesting adjustments now in the bill that suggest they might recognise that there is a compensation liability there. They essentially say that the Parliamentary Library is wrong. They hastily commissioned Blake Dawson Waldron, their law firm of choice, to confirm their view. The Parliamentary Library responded by categorically rebutting aspects of that part of the BDW—Blake Dawson Waldron—analysis that sought to counter the Parliamentary Library’s assertions.

This is a government not known for being open with its information. It is a government known, in fact, for its avoidance of scrutiny. It rushes legislation in when it suits to deny not only proper debate but informed analysis. I commend the Parliamentary Library not only for the rigour of the work but for the way in which they have been able to respond so expeditiously to the Blake Dawson Waldron legal opinion, because this was material that only came to us in the opposition the very day this legislation was being debated in the parliament. The Parliamentary Library’s work is comprehensive. I commend it to all members of the House. It gives, on the face of it, a significant rebuttal of the legal advice that the government relies upon.

Here we have the circumstances of the government paying for its propaganda defence. I pay tribute to the library, in particular the authors, Luke Buckmaster and Jerome Davidson, for the way in which they have been able to analyse this in the public interest. I do not just urge members of parliament to read this to reject the proposal we have before us; I urge the public, in particular members of Medibank Private, to read the analysis.

What we have is the hired legal mouthpiece versus the independent and first-rate parliamentary research facility. And if anyone doubts that tag, I remind the House that a couple of days ago that is exactly what the minister for health acknowledged they were. This is not just a mere difference of opinion; the Parliamentary Library research conclusion is damning of the Blake Dawson Waldron advice. The government was forced to provide that legal advice because of analysis previously done by the library that the government claimed was wrong.

I made the point before that the government will not release the scoping study from Carnegie Wylie. It is that study upon which they rely to assert that there are efficiencies to be gained from selling Medibank Private. How does the public know? The parliament cannot know, because the government will not release the details of the scoping study. One can only ask the question: will that advice stack up to scrutiny when it is released—if it ever will be released?

The conclusion one comes to is that there is too much uncertainty associated with the bill before the House. Our suggestion to the government is: withdraw the bill. Withdraw it until you release the Carnegie Wylie advice and until you respond to the Parliamentary Library more effectively than simply by saying your preference is to rely on Blake Dawson Waldron. That is not an answer. It is not rigour. It is poor public policy and, if it proceeds, the public will pay again.

Chris Bowen (Prospect, Australian Labor Party) Share this | Link to this | Hansard source

When a government want to sell a publicly owned authority, they need to make the case. They need to make the case to the public as to why it is necessary or beneficial that that organisation be privatised. They need to explain to the shareholders—that is, the public—why that particular public administration should be in private hands. The government has miserably failed to make the case in this instance.

There are a number of justifications that can be used for particular privatisations. Sometimes the rationale for government ownership has disappeared—sometimes the reasons that an organisation was placed into government ownership have disappeared as the world has changed. Sometimes the entity requires a capital injection, and it is not fair to require taxpayers to make that capital injection. Neither of these reasons applies in this case.

Let us have a look at the government’s attempts at justification. The government has said that the privatisation of Medibank Private is necessary to drive down management costs and to introduce private sector efficiencies. But this justification is particularly thin. The management expenses for Medibank Private as a percentage of member contributions are 9.2 per cent. The industry average is 9.5 per cent. The relevant figure for NBF is 10 per cent, for NIB it is 11.8 per cent and for MBF it is 9.3 per cent. It is true to say that for Australia’s largest for-profit medical insurer, BUPA, the relevant figure is 7.7 per cent. I acknowledge that. However, BUPA also has less success in retaining members, has received more complaints about service and has a lower percentage of benefits paid to members as a percentage of contributions than does Medibank Private.

It is very easy to get your management costs down if you provide an organisation or service of lower quality. Of Australia’s four for-profit health funds, each one has higher premiums than Medibank Private. This argument is so thin it is risible. The government says it has a report to justify this claim, the Carnegie Wylie report, a report sitting on the desk of the Minister for Finance and Administration. It is not one he will share with this House, not one he will share with the other house, not one he will share with Medibank Private members and not one he will share with taxpayers. He has kept it on his desk and it is impossible to test the veracity of that report when this government insists on keeping it secret, but all the evidence is that the government’s argument is absolutely ridiculous.

The government also says that it has a conflict of interest in owning Australia’s largest health insurer while being the regulator. But it has not been able to provide one single instance over the last 10 years where this conflict of interest has arisen or caused it a difficulty. The government dealt with this conflict of interest back in—I think it was—2003 when it made the minister for finance the shareholder of MBF, while the minister for health is the regulator. Governments do this all the time, state governments in particular—they keep the organisation in public ownership but separate the ministerial responsibility for ownership and regulation. It has been happening for years. It does not appear to have caused the government too much grief in the last 10 years. Of course, if it is such a big issue the government will be moving to privatise Australia Post any day because the same exact issue arises in relation to postal services.

Some on the other side have used the argument that Medibank Private needs to be privatised to give it the full ability to act as a private instrumentality, so that it would have access to private sector capital. This argument is also particularly thin. The Parliamentary Library, which the honourable member for Hotham referred to, deals with this argument in its Bills Digest. It says:

A publicly listed Medibank Private would not have any more freedom under the Act and regulations than it has under its current ownership arrangements.

That has been supported by the chief executive of Medibank Private. Equally ridiculous is the argument that Medibank Private needs an injection of capital and that taxpayers should not be required to contribute that capital. That is an argument which has been put in this House, it is an argument that Senator Barnett in the other house has made publicly and it can be, in some instances, a very powerful argument. It was in Qantas, for example, where a massive injection of capital was needed to keep the organisation afloat. When taxpayers are given the choice of whether to put the money into this instrumentality or direct it to services such as health and education, most taxpayers would not have any difficulty in saying that it should go into health or education. It is a particularly irrelevant argument in this case.

Medibank Private has not gone to the government and asked for capital. Medibank Private does not need capital to stay afloat. Medibank Private does not need a massive injection of funds to undertake modernisation. In fact, in 30 years of existence Medibank Private has had just three injections of capital. There was one in 1976, which was an injection of $10 million to establish the fund in the first place and which was fully repaid to the government. There was another in 1978, again $11 million of establishment grants, which was mainly to reimburse Medibank Private for expenditure it had undertaken. Again, in 2005 there was $85 million to increase its capital to better reflect its market share. So no case has been made to say that an increase in capital is needed and therefore those funds should come from the share market and not from taxpayers.

We have heard the argument from honourable members on the other side, when they were still choosing to make a contribution to this debate before their speakers’ list ran out, that this privatisation is necessary to fund medical research—that the funds from the privatisation will go into medical research. What an insult to say that the only way we can fund medical research, with the largest budget surplus in this nation’s history, is to sell off a public body. What an insult to our intelligence. What an insult to say to medical researchers and people relying on medical research, ‘The only way we can answer your claims for funding priority is to sell an instrumentality which has been owned by taxpayers for the last 30 years.’ It is a disgrace to the parliament that that insult was even raised by members opposite.

Having established that there is very little reason to proceed with this privatisation, it is necessary to examine some of the potential ramifications. The first is that the government is leaving the taxpayer open to potential compensation for policyholders. The government has tabled legal advice from Blake Dawson Waldron that there would be no case for compensation for Medibank Private policyholders. The Parliamentary Library has issued, I would say, an unusually strongly wordedBills Digest which not only questions the advice but rebuts it. I do not pretend to adjudicate between those two pieces of advice, I do not pretend to be in a position to do so; I suspect that one day the courts will do so. But there are views very strongly held on each side and the government would want to have very good reasons for taking the risk of opening the taxpayer up to compensation on such a large scale. If the government wants to take a calculated risk that it is going to open the taxpayer up to this potential compensation then you would want it to have a very good public policy ground to do it, but it does not. It has no good reason to go down this road and it arrogantly rejects any advice which does not suit its political circumstances.

People who have health insurance will want to know what the impact of this privatisation will be on the health insurance market and on their premiums. It is fair to say that the effects will be complex and they are not necessarily all known, but we can be sure that they will be significant. Medibank Private is Australia’s largest health insurer. It covers 29 per cent of the market. It is the largest private health insurer in New South Wales, the ACT, Victoria and the Northern Territory, and it is the second largest insurer in the other states. So its privatisation will certainly be felt. Standard and Poor’s said so. They said that the privatisation of Medibank Private would be ‘likely to materially affect the competitive dynamics of the industry’. It stands to reason that that would be the case when you have the largest provider of a particular service changing ownership in such a dramatic way.

The Fraser government kept Medibank Private in public hands to promote competition, because they did not feel that having a private entity liable for takeover would be in the best interests of the Australian people. Nothing has changed since Malcolm Fraser’s government took that decision 30 years ago on that argument. Thankfully, the government have now decided to proceed with a stock market float as opposed to a trade sale. They originally were going to bring this legislation in and say in a typically arrogant and high-handed manner, ‘We’re going to sell Medibank Private. We are not going to tell you whether it will be a trade float or a stock market float until after the election, but we just want the authority to do that.’ Thankfully, they have changed their approach and have now said it will be a stock market sale, which means that Medibank Private will not, in the first instance, be taken over by another fund. But the restrictions on ownership apply for only five years. The government is legislating that no organisation will be able to take more than 15 per cent of Medibank Private, but this is grandfathered for five years. In five years time, we could see Medibank Private collapsed into another fund. And, of course, Medibank Private will now have a profit motive instead of being a not-for-profit fund. So there is the potential for Medibank Private to be merged with another fund, for the competitive pressure to therefore be taken out of the private health insurance market and, by definition, Medibank Private will now be for profit instead of not for profit.

The government says that this will put downward pressure on premiums, but it does so without any possible justification, rationale or explanation. It comes in here and says, ‘Isn’t the private sector wonderful. If we could just get the bureaucrats out of Medibank Private and install a private sector ethic, then they would be able to put that downward pressure on premiums.’ But the government provides no rational explanation for that and the figures do not back it up—and this is from a government which promised in 2001 to reduce private health insurance premiums and since that time has presided over an increase in private health insurance premiums of 40 per cent. Members of the public have a right to be concerned when they hear this government promising anything on private health insurance.

The arguments for this privatisation are particularly thin. Privatisations can, at times, be necessary. This one represents bad policy and bad economics. It is driven purely by ideology. There is no other possible explanation. This government’s extreme right-wing ideology is being exposed again. As such, it has to be opposed. Not only do Medibank Private health insurance holders need it to be opposed but also every holder of private health insurance in this country needs it to be opposed. The Labor Party will oppose it and we will be making this a key issue in the next election campaign.

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

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

I also rise to speak against the Medibank Private Sale Bill 2006. We on this side of the House are totally opposed to the sale of Medibank Private because it is the wrong decision. Medibank Private should remain in public hands and should not be sold off. But let’s make no mistake about it: this sale is totally ideologically driven, and the very weak justifications for the privatisation offered up by this government are indeed baseless. This is highlighted in the Parliamentary Library briefing, which I will discuss later on.

The public are very concerned about the effect of this sale—I know many people locally have approached me about their concerns—because the reality is that premiums will rise for all private health customers as a result of this sale. There is no doubt about that, and no consideration at all has been given to the three million members of Medibank Private, or indeed to all holders of private health insurance, for the negative impact of the inevitable premium rises. Families are already under huge amounts of pressure at the moment with cost of living increases and interest rate increases. They know, that when this sale goes through, their private health insurance premiums will go through the roof, and it is going to cause great pressure for so many families.

Medibank Private has around 30 per cent of the health insurance market, and in New South Wales around 23.8 per cent of the private health insurance clients are insured with Medibank Private. In my electorate of Richmond around 30 per cent of residents have private health insurance, and that means that when these premiums rise, as they will, there will be tens of thousands of people locally who will indeed be worse off. But this government does not care about these thousands of people in Richmond who will be adversely affected, just as it does not care about the three million members of Medibank Private who will be adversely affected nationally.

Further, none of these figures can take into account the impact on future health insurance clients. We have seen premiums rise by almost 40 per cent in five years under this government, so how much more are they going to rise when there is no regulation? How will our children or grandchildren be able to afford private health cover once Medibank Private is sold and the premiums go through the roof?

In the current situation the not-for-profit nature of Medibank Private means that any surpluses are returned to members via premiums. But, when Medibank Private changes from not-for-profit to for-profit, undoubtedly we will see premiums rise. The board of a publicly listed Medibank Private will be required by law to maximise the profits and returns to its shareholders. It is only common sense, therefore, that a privatised Medibank Private will have to return to shareholders the profit that is currently going to premiums.

The Australian public are very aware of this. They know that premiums will rise and they are very rightly concerned about the negative impact this sale will have upon them. The government says that premiums will not rise as a result of the sale. In 2001 this same government said the introduction of the 30 per cent rebate on private health insurance would put downward pressure on private health insurance premiums. Since then we have seen a 40 per cent rise in private health insurance premiums. Let’s hope, when the premiums supposedly do not rise after the sale, that they do not rise by 40 per cent, just like they did not rise after the introduction of the rebate.

We have a situation now where the Minister for Health and Ageing approves every application from the private health insurance sector for increases in their premiums. The government can come out and say this time that premiums will not rise, but we have heard it all before. We know that it is rubbish. We know that premiums are going to rise. We know that that is the absolute end result of the sale of Medibank Private. I think everyone is aware of this, and we are hearing this right across the board from a whole range of people. Everyone is admitting it except the government. The fact is that they will rise, and rise quite dramatically. There is no doubt about it. And not only will premiums rise but services are likely to fall.

Apart from the management efficiency the government is talking about—by which of course they mean sacking workers—we will see offices closed and access limited. That is going to be the reality of this sale—have no doubt about it. In Richmond we saw as a precursor to the sale of Medibank Private the closure of the Medibank Private office at the Centro Tweed shopping centre in Tweed Heads. That closed just before Christmas, but this office was relocated to Elanora on the Gold Coast, which is in Queensland. It caused a huge outcry from locals when suddenly the Tweed Heads office was closed. It was particularly distressing for the many elderly residents who used the local Medibank Private office. In Tweed Heads there are many elderly residents and, as I say, there was this huge outcry because so many of them had been able to access that office there. It was clearly a precursor to the sale of Medibank Private when they started closing offices right around the place.

Many locals approached me about their concerns that this office was closing down, and what is particularly annoying is that there is no Medibank Private office now between the Gold Coast and Lismore. There were three on the Gold Coast and now there is this other one at Elanora, so there are four on the Gold Coast and one in Lismore. Yet in Tweed Heads we have this huge proportion of elderly people who cannot access a Medibank Private office at all, causing them great distress. So many of them have approached me about their concerns. They were not even informed that it was happening. Particularly for those who are pensioners and on fixed incomes, the distress that it caused them was quite overwhelming but very much indicative of the sort of attitude this government has when it comes to elderly people.

They are still very distressed about it, and added to the distress now, of course, is the fact that Medibank Private is going to be sold, which is concerning them even more because those on fixed incomes—again, particularly those pensioners who are already doing it so tough—just will not be able to find that extra money to afford those health insurance increases that we are undoubtedly going to see with the sale of Medibank Private.

Debate interrupted.