Andrew Murray (WA, Australian Democrats) Share this | Hansard source

I move:

(4)    Schedule 2, page 10 (after line 24), after subitem (5), insert:

     (5A)    Without limiting the generality of this Part or the operation of subitem (6), a Medibank Private sale scheme may involve:

             (a)    mutualisation of Medibank Private; or

             (b)    private float of equity in Medibank Private; or

             (c)    private placement of equity in Medibank Private; or

             (d)    any other method the Commonwealth considers appropriate.

I want to make a couple of brief remarks to add to those I made earlier. One remark I want to make in passing is that I do not respond well to calling the members of Medibank Private customers because I think ‘member’ has an entirely different meaning to ‘customer’. I think you would find that, in law, members of Medibank Private, by virtue of their payment system and the way in which they use products and services, would be considered different to, say, a customer who pops in and out of a retail shop. I am not likely to fall in easily with the minister’s terminology.

What I really want to say about this amendment is that I would have liked to see the mutualisation area discussed more. One of the difficulties we face is that there are claims about the effects on competition, price and products as a result of this sale through a public float. The strong view held both in the market and by most of those who made speeches in the second reading debate and who were part of the committee process is that, if there is a public float, the shareholders will want a return on their investment. There are a few things attached to that. The government refused an earlier amendment designed to ask it to ask the Productivity Commission to do work to recommend to the government ways in which the private health insurance market could be made far more competitive, because the government will not do that when it sells Medibank Private. It will sell it into an environment where the market is singularly imperfect—it is rigid, it is not mobile, there is a low level of portability and there is a low level of comparability. That is a danger. There is the potential for price gouging of members to occur.

Further, when you shift from a not-for-profit status to a for-profit status, you lose tax concessions which apply to not-for-profit entities. When moving to a for-profit status, shareholders will want a set return on investment, which is determined by the price they pay and the measures they use to determine what they want in return. Mutualisation is also a lower cost option. When you sell through a public float you pay the fee takers and the commission makers a vast sum of money. That will not happen to the same extent in a mutualisation process, in my view. You would not have the same demands on return if the members were to own their own outfit. In many ways, mutualisation is better from the point of view of product, service, price, cost and the competition that exists in the market. However, I know the minister has a closed mind on that particular option, which is unfortunate, but I did want to add those remarks in moving this amendment.

Question negatived.

I move Democrats amendment (5) on sheet 5135 revised:

(5)    Schedule 2, page 51 (after line 4), at the end of the Schedule, add:

63 Hypothecation of revenue

        (1)    A fund, to be called the Medibank Sale Health Fund, is established.

        (2)    The net proceeds of any sale which takes place under this Schedule must be placed in the Medibank Sale Health Fund.

        (3)    Funds in the Medibank Sale Health Fund may only be appropriated for the purpose of advancing health in Australia.

Amendment (5) relates to the hypothecation of revenue, which is unusual for me to contemplate because I am not generally a great fan of hypothecation; I think it unnecessarily restricts the government. But I bring to bear the assessment I made in my minority report—that is, as the minister outlined, I do not think the case has been adequately made for keeping Medibank Private in public hands. What the minister did not mention is that I also think the case has not been adequately made for Medibank Private not to stay in public hands. I think the case needed to be made better. If that is so, you are talking about the question of realising funds as the principal attraction of sale.

I happen to think that when Labor were selling assets whilst they were in government to some extent they were distressed sellers; they needed the dough. The shadow minister is welcome to contest that view but I think there was a far different environment for government budgets at that time. They needed the money and, to some extent, that is what is driving sales in the states, I might say—a sense that they need money. But quite often in the states, particularly in my own, they sell assets because they say that the opportunity cost of keeping an asset of one kind is such that they would rather take that money and put it into different forms of infrastructure that they are think are more in the public interest. I appreciate that sort of argument, because sometimes you are invested in one thing but you would be better off invested in another. Essentially that is my view.

If there is not a very strong a case for either selling or keeping Medibank, and therefore the greatest attraction is the amount of money you can raise, then you have to say what you are going to use the money for. I can see only three possibilities, although perhaps there are others. One option is to tip it into general revenue, which as a policy man, a finance man, I find very unattractive as a matter of principle—I think it is the wrong thing to do. The second option, and what I understand is the government’s preferred option, is to tip it into the Future Fund. While I can see the long-term benefits of putting a couple of billion dollars into that, it is not really attractive to me. The third option is to spend it on infrastructure in health itself, where I think there are some great needs. As people know, the Democrats have been on about the needs in the mental and dental areas for many years. It is not because we are all mad with bad teeth; we think these are areas of great concern. However, I have not gone so far as to say that the government of the day would have to be told where it puts its money. I have simply said that it should go into a Medibank sale health fund. That would be the most desirable use of the money based on the opportunity cost principle.