Michael Forshaw (NSW, Australian Labor Party) Share this | Hansard source

For the record, let me indicate at the outset that I am a member of Medibank Private and have been for many years—more than I can probably recall but it is certainly over 20 years. I am pretty familiar with Medibank Private; I am also very familiar with the history of its development since it was created by the Fraser government in 1976. I will come back to some of that history in a moment. However, I want to take a few moments to respond to some of the arguments and propositions put forward by Senator Barnett in leading for the government in this debate and putting forward the reasons why he and the government he represents believe Medibank Private should be sold.

First of all, in a rather wide-ranging speech which essentially was nothing more than an attack upon the Labor Party, the Labor governments of the past and the Labor states, he raised all the arguments we have heard so often—that is, that the Labor Party, both at the federal and state levels, had privatised government assets in the past, so how could we have the temerity to oppose the sale of Medibank Private? As always, the coalition refer to the Commonwealth Bank and to Qantas, so I will respond again just to remind them that just because you sell one government owned asset or a group of assets does not mean you should sell them all. The test for privatisation is: does the asset serve a particular public purpose such that it should be retained in public ownership?

Today is not the time—because we do not have the time—to debate the whole issue of privatisation at large. But essential to that question is whether or not the business being sold, or the asset or the enterprise or whatever term you want to give it—and those distinctions can be relevant—provides a service to the community. Of course, what we recall about such enterprises as Qantas and the Commonwealth Bank, notwithstanding their iconic status and how they may have been created in the first place, was that, when they were sold by the previous Labor government, they were businesses competing in a market and acting just like every other player in the market. For instance, in the airline industry Qantas was competing internationally and, as we all know, whilst it was and still is Australia’s flagship carrier and a world leader in the aviation industry, at the end of the day probably no more than about five to 10 per cent of Australians ever saw the direct benefit of Qantas—that is, those who had the opportunity to fly. The sort of capital injection needed to maintain Qantas was clearly one that meant that it would be better off in private hands rather than calling on the taxpayers to spend billions upon billions of dollars to upgrade and maintain its fleet.

It was a similar situation with the Commonwealth Bank. At the time it was not even the largest bank in Australia and it had pretty much lost its role as a protector, if you like, of the interests of many Australians. Banks such as the National Australia Bank, Westpac and others were undercutting it and were providing services in many cases well beyond what the Commonwealth Bank was providing. But, of course, assets such as Medibank Private—and I will call it an asset for the moment—and Telstra are different. I will come back to that.

Senator Barnett also said, ‘The states have sold all these insurance companies, like the GIO and so on.’ The first imputation in his comment was that they had all been sold by Labor state governments. I noticed that my colleague Senator Moore listened intently as well and, when Senator Barnett ran through the list, it was clear that most of them had been sold by Liberal governments. He referred to Nick Greiner, Rob Borbidge and Ray Groom—all conservative premiers. He kicked a bit of an own goal there. Again, he was talking about insurance companies that are in the business of selling insurance for a whole range of products.

We come to Medibank Private then. It is a private health insurance company. It is the largest in the country, it is government owned and it has probably almost twice as many members as any other fund. But it is different, and you just cannot put it in the same boat as companies like the GIO or Qantas. Why? It was clear in Senator Barnett’s contribution that he just does not understand what Medibank Private is all about. I listened intently to his remarks in that 20-minute speech, and I did not hear the words ‘health care’ mentioned once—not once. He talked about how he had been a business owner, that he was an expert in business and how businesses have to compete in a market. The whole speech was laced with references to business and to markets, as though we were talking about a transport company or a company selling bananas or whatever. He never once mentioned health care, and that really disappointed me because I would have thought that Senator Barnett, who I know has a genuine interest in and a commitment to improving health in this country, particularly with regard to obesity, would not ignore the fact that we are talking here about health insurance. That is why I want to return to some of the history.

Let me just remind Senator Barnett of a couple of comments. Firstly, in the Medibank Private annual report 2004 it stated:

Medibank Private is a not-for-profit Government Business Enterprise, with the sole purpose of providing high quality, excellent value private health insurance to our almost three million members. Medibank Private must earn sufficient returns to be financially sustainable, and build reserves to weather volatile, unforseen circumstances that may adversely impact member claiming. No dividends are paid and all of Medibank Private’s financial resources are directed to member benefits.

It further stated:

As a not-for-profit organisation, every dollar of profit is retained within the fund for the benefit of members.

That is what Medibank Private is all about: high-quality, excellent value private health insurance for its members. Yet Senator Barnett attacked the government ownership of Medibank Private by saying it had never paid a dividend to the government. He said ‘it had never paid a cracker’—as if somehow Medibank Private had to operate with a huge profit so that it could pay a dividend back to the government. We know how keen the government are about the rights of shareholders and paying dividends—they are very enthusiastic about it, but their performance is pretty lousy. You only have to look at what has happened with Telstra to see that. Senator Barnett just does not get it.

The other thing I want to remind Senator Barnett of is that, when Medibank Private was separated off from the Health Insurance Commission by this government in 1997, Mr Abbott said in his second reading speech:

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

What happened, as those of us who recall know—I know Senator Moore recalls very well, because as a member of the Senate Community Affairs Legislation Committee she has taken a strong interest in this and been involved in many estimates hearings—was that when Medibank Private was separated off from the HIC it lost its right to operate co-located with Medicare offices. That was seen to be a competitive advantage and an unfair one. But Mr Abbott made it very clear in his comments at that time that the government was ensuring competitive neutrality and there was no competitive advantage over other funds. Yet we have here today Senator Barnett saying that Medibank Private has to be sold because it has this unfair competitive advantage. He said it is discriminatory because it is owned by the taxpayers and somehow that is discriminatory against other taxpayers. That is the question: who actually owns it? If the nominal shareholder of Medibank Private is the government, it is the members of Medibank Private who provide the funds for Medibank Private. They provide the income which goes to pay the rebates and goes to build reserves that are relied upon. There is no discrimination whatsoever against other funds. Tony Abbott, I have to say, was right about that point; Senator Barnett was wrong. He just contradicted his own Minister for Health and Ageing in the same speech as he was praising Tony Abbott, the minister, for what a great job he is doing. Frankly, Senator Barnett should go back, read some of the history and some of the reports and learn a little bit more about this area of health insurance.

I want to make some other comments in support of Senator McLucas’s excellent general business motion today. Medibank Private has a very interesting and intricate history. I do not have time to go through that, but I do recommend people have a look at the Parliamentary Library research brief on this issue of the proposed sale. Firstly, Medibank Private was created by the Fraser government. It was created, essentially, for a couple of reasons, one of which was that the Fraser government really wanted to destroy Medibank. Medibank, of course, had been set up by the Whitlam government as a universal health insurance scheme. Private health insurance still existed, but Medibank had been set up. When the Fraser government got in, they ideologically did not like it and those of us who are old enough can recall—I was a young bloke then—on visits to the doctors the one thing you always noticed in the surgeries was a sign on the wall to the effect that you cannot just rely upon Medibank—the practice probably did not bulk-bill: ‘We recommend you be in a private health insurance fund to make sure you are sufficiently covered.’

The AMA did not like Medibank—they hated it. In their view there should be no government run universal health coverage in this country. Fraser in 1976 had to put forward to the people that he would retain Medibank, but he really did not believe in it—just as John Howard eventually had to say that he would retain Medicare but essentially does not believe in it. So they created as a parallel, if you like, this company Medibank Private in the health insurance industry. The arguments that were put forward at the time were that Medibank Private would compete with existing health funds—particularly to provide private health insurance to those who chose to opt out of Medibank—and also that it would increase competition in the private health insurance sector and strengthen the government’s capacity to reform and regulate the industry. That is what happened; it is true. You have to ask: if that is what the Liberal government under Malcolm Fraser thought at the time, and that has been achieved, then why should this Liberal government now go back and turn it all on its head? As I said, the AMA at that time was very strongly opposed to universal health insurance, Medibank, and of course it took the same view when Medicare was created by the Hawke government when it was elected in 1983, which bought back public health insurance for medical costs and left hospital costs and other ancillaries to private health insurance.

I find it therefore very interesting that the AMA, despite the ideological position it has held for so long, now recognises what an important role Medibank Private plays. As its media release has indicated, and as the media has noted, the AMA has raised serious concerns about higher premiums for Medibank Private customers and reduced competition in the private health insurance sector if Medibank Private is sold. To quote the AMA’s media release:

AMA President, Dr Mukesh Haikerwal, said today that higher premiums would be inevitable as the new owner sought to maximise returns to shareholders.

Of course, the AMA is looking at this from the proper perspective of what is in the interests of health care for the people of this nation and what is in the interests of health care for the members of Medibank Private particularly. It is certainly not in the interests of either of those two groups to sell Medibank Private. This government can make all these statements, and their minions and representatives can come out and say, ‘Premiums won’t rise,’ but we have heard it all before. They told us the surcharge would never change. Tony Abbott beat his chest and I do not know if he swore on a stack of Bibles but he certainly made it very clear that it would not be changed. Of course, it was changed.