Jill Hall (Shortland, Australian Labor Party) Share 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)

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