David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Hansard source

I rise to speak against passage of the National Health Amendment (Pharmaceutical Benefits) Bill 2015. I do so in full awareness that the bill is a proper curate's egg—good in parts—and contains measures designed to increase price competition and deliver PBS savings to the government. In some cases, they may even result in cheaper medicines for consumers. However, the bill also continues the operation of the pharmacy location rules for another five years—a powerful anti-competitive measure. I put on record my opposition to this piece of opportunistic rent-seeking because it benefits the Pharmacy Guild at everyone else's expense.

Both Labor and the coalition support the continuation of the rules which require a pharmacist to obtain federal government approval to open a new pharmacy or to move or expand an existing pharmacy. I hesitate to suggest a direct link, but I note that the guild is a very significant donor to both parties. Generally, a new pharmacy cannot be opened within a certain distance of an existing pharmacy—usually either 1.5 kilometres or 10 kilometres, depending on the area. These rules also ban pharmacies being placed either within or in a position directly accessible from a supermarket.

Several reviews have recommended the rules be abolished. In March, the review of competition policy led by Professor Ian Harper found the rules were anti-competitive and unnecessary, restricting consumer choice and suppliers' capacity to respond to consumer demand. Last year, the National Commission of Audit recommended the pharmacy sector be opened to competition through the deregulation of location and ownership rules. Such reform would produce more efficient service delivery and allow the development of alternative retail models such as pharmacists dispensing medicines at supermarkets.

A decade ago a Productivity Commission review found that pharmacy regulation increased costs for consumers, taxpayers and the wider community. Poor Tony Shepherd: every single good idea he had at the National Commission of Audit has been ignored by the government that commissioned his services. I suspect, however, that repeating the findings of various reviews cuts no ice with many people, because they fail to see the human cost of the pharmacy location rules. To that end, I am going to do what economic reformers and analysts rarely do: I am going to tell a story—or several stories.

In my first story, it is night. A fever takes hold and a mother starts to worry. A bathroom cupboard is raided, but it is full of medicine past its use-by date. A child is bundled into a car. A waiting room is endured. Then a GP provides a prescription. With child in arms, the mother returns to the car then scratches her head: where is a chemist that would be open at this time of night? Should she drive around in the hope of finding a chemist that is open? Driving past the lit-up supermarket, the mother wonders, 'Why is it so hard to find a chemist?'

In my second story, the enthusiasm of a young pharmacist slowly seeps away. She is at home, twiddling on her iPhone, passing the time. She had a short shift today. They are always short shifts. She is just a temp. She used to dream of running her own pharmacy. The dream took hold during her years of business and pharmacy studies. It lingered on after graduation as she did stints in pharmacies far and wide, working for the man. But now the dream of working behind her own counter, building her own reputation in her own neighbourhood and community, is gone. It was a silly dream.

In my third story, over at the Pharmacy Guild headquarters on National Circuit, David Quilty, the guild's executive director, reclines in his office chair. His late-night meeting with the health minister went well. The guild's members, the owners of pharmacies across Australia, will be pleased. The next Community Pharmacy Agreement—a five-year deal between the guild and the government—is much like the last one, and the one before that. The deal will see pharmacy owners continue to enjoy regulations to protect them and subsidies to enrich them. Mr Quilty recalls how he had to explain the regulations to the health minister: 'They ban new pharmacies within 10 kilometres of an existing pharmacy. Of course, this exclusion zone is reduced to 1½ kilometres if the new pharmacy is to be near a GP or supermarket, 500 metres if the new pharmacy is to be in a large medical centre or small shopping centre and 200 metres if the new pharmacy is to be near four GPs and a supermarket. And two pharmacies are allowed in large shopping centres with more than 100 shops; three are allowed if there are more than 200 shops. Naturally, pharmacies that are directly accessible from a supermarket are banned. And the regulations require any new pharmacy to be approved by an authority that includes incumbent pharmacy owners nominated by the guild.'

Mr Quilty chuckles as he recalls the health minister's bemused look. As the Commonwealth car drives off into the night, the health minister shakes her head in the back seat. She ponders the numbers thrown around in the meeting just gone. More than $18 billion from taxpayers to around 5,000 owners of pharmacies over five years: nice work if you can get it, and well above the hundreds of thousands of dollars that the Pharmacy Guild provides in political donations. A wry smile passes over her face as she heads back to the comfort of Parliament House, a place where deals usually involve the government getting something in return for giving something away. She is philosophical. No previous health minister has been able to cut the taxpayer funds flowing to pharmacy owners or remove the anticompetitive regulations that grant them protection—and perhaps no health minister ever will.

This is corporate welfare in its purest form, corporate welfare in response to a sustained campaign of rent seeking. That is, it involves the Pharmacy Guild spending money on political lobbying for government benefits or subsidies, thereby gaining a chunk of wealth that has already been created while imposing regulations on competitors. This, more than anything else, brings free market capitalism into disrepute, not because there is anything wrong with free market capitalism but, rather, because certain industry players are happy to kick everyone else in the teeth while engaging in the economic equivalent of pillage. The rent seeking, opportunism and overregulation in this bill ought to be condemned.