Anne McEwen (SA, Australian Labor Party) Share this | Hansard source

The Medibank Private Sale Bill 2006, which we are debating today, is yet another litmus test for the public to gauge this government’s lack of social responsibility. It is another opportunity for Australians to see this government dismantling social goods and taking away things that are of benefit to all Australians in favour of a system where nothing is in public ownership and everything is hostage to the vagaries of private enterprise—which this government posits as some kind of economic nirvana.

Labor does not support this legislation, and Labor has pledged to abandon the idea of selling Medibank Private when we are elected to run this country on behalf of all Australians. The arguments in favour of the sale are based on ideology, not fact. It is the same basis for legislating that we have become used to in the 10 long years that this government has been in power. Never mind that the public do not want public assets sold off; just sell them off anyway. Never mind that there is no good economic reason for it; just sell them off anyway. It is a predictable approach so often shown by this government in matters of national importance, an approach that shows the government refuses to be guided by the principles of equity and fair play and will not be deterred by the best informed opinion or by the most reasonable argument for the common good.

This a government that has rolled back the broad idea of fair play and social responsibility for a narrow concept of so-called ‘values’ that further legitimises and endorses the rights of the least vulnerable over the majority of Australians who deserve greater social protection and consideration. Here again we see the government using its Senate majority to fulfil the long-held dreams of a Prime Minister who has a passion for erasing any social good put in place by former Labor governments. As we know, the Prime Minister does not like Medicare but is not game enough—yet—to dismantle the social good. He voted against the creation of both Medibank and Medicare and has in the past pledged to destroy Medicare. As I said, that would be too unpalatable for the Australian public at the moment, so instead he is targeting the next-best thing, which is Medibank Private—despite the fact that Medibank Private has been a part of Australia’s history, culture and economy since 1976 and, even more importantly, despite the fact that it is a successful organisation, and despite the fact there is no good reason to sell it. What other reasons could the government have for selling off Medibank Private Ltd, when the weight of discussion says that there is little evidence to support the merits of the proposal in this legislation? In fact, the sale could be a double whammy in also failing to provide a check on the cost inefficiencies of the health system generally—let alone all the other possible damaging consequences that have not been addressed by senators opposite.

It is another example of the slavish devotion this government shows to competition and privatisation, a devotion that could well prove detrimental to the wellbeing of many Australians who can least afford to be victims to this government’s unreasonable and narrow agenda. It is clear that the ideological imperative is at work again in this legislation, but the government will never admit that. What reasons do they put forward for flogging off Medibank Private and what independent academic and objective support is there for those reasons? Not much, I suggest.

Senator Minchin, the Minister for Finance and Administration, said the decision to sell was reached because the government has no good policy reason not to sell and it is necessary for the government to remove the perception of conflict of interest as both regulator and provider. The latter point is an interesting one, a position that assumes without any basis that government presence in the market actively compromises efficiencies through control, potential or real. That argument is erroneous. It is just a smokescreen for ideology.

Even when Medibank Private is privatised, as it no doubt will be, despite the lack of any good reason to sell—there is no doubt this legislation will pass the chamber—it will be subject to the myriad legislation and regulation that already control the health industry in this country. The argument that government control impedes efficiency conveniently ignores the real control the government has in regulation. It is disingenuous to claim government ownership of the fund is a conflict of interest when government has that regulatory control.

Then there is the argument that somehow flogging off Medibank Private will make it more efficient and effective. Even a good report card for Medibank Private, in an unusually forthright brief prepared by the Parliamentary Library—a report card that highlights its good performance in the provision of efficiencies, services, premiums, innovation and competition—cannot save it from the Prime Minister’s draconian sell-off. The library brief, which is very comprehensive, offers no evidence for the government’s position on the economic efficiencies that are claimed to flow from the privatisation of this asset.

Even former Liberal Prime Minister Malcolm Fraser, as the report indicates, knew that one of the benefits of Medibank Private under government ownership would be to help keep premiums down. But, as the library brief further points out—and common sense tells us—a not-for-profit structure is far more likely to act in the interests of its members, because the imperative is clearly not just to reward shareholders.

While we are talking about members, nearly three million Australians are members of Medibank Private. We should acknowledge that the rights and entitlements of those members are not at all certain in this legislation. Senator Murray, who spoke just before me, has made reference to that point, and I will make a few more comments about that further on. Why sell a public institution that has since 2001-02, as Standard and Poor’s have observed, set long-term strategies for profitability and efficiencies and has again, as seen from 2004-05 reports, delivered on those strategies?

We know from independent reporting that Medibank Private’s administrative expenses are below the industry average. You would have thought that that was a demonstration of the efficiencies that the government claims Medibank Private needs to implement. It has already implemented those efficiencies and is a well-run organisation. The results at Standard and Poor’s, an independent organisation held in high esteem by economists and others in our community, vindicate Medibank Private’s efforts in this regard. Surely those are the results that a government wants from a health insurance provider, any health insurance provider. It appears, from all the evidence, that being both regulator and provider is neither detrimental to the fund’s performance nor to competition in the sector generally.

In addition, Standard and Poor’s noted that Medibank Private has embraced innovative marketing strategies and has been very competitive in a market that Standard and Poor’s itself calls ‘competitive and highly volatile’. It is entirely possible that the sale of Medibank Private could lead to a lessening of competition with a greater concentration of larger insurers perhaps unwilling to embrace the innovative competition strategies in the manner that Medibank Private has.

Indeed, Medibank Private has triumphed. It is the No. 1 insurer in four states and has, as I said, almost three million members and 30 per cent of the Australian health insurance market. It is an iconic institution and a favourite of the Australian public, who join Medibank Private not just because it is competitive, efficient and provides good services but because it is in government control. It is one of the features that attract people to become members of Medibank Private.

As I said, it is a successful organisation and we are told that competition in the industry makes for successful organisations. Medibank Private is successful, so now we fundamentally want to change it. Why? There is no justification for the government’s arguments in that regard. The bar to better competition and outcomes in the opinion of many experts is not in the current mix of health insurance providers but in the structure of the regulatory framework under which the industry operates.

I understand the government is looking at that regulatory framework. Wouldn’t it have made sense to have done that first, to see what the rules of play are going to be before changing the teams on the field? As for public policy reasons, according to health economist and expert on health insurance Dr John Deeble, Medibank Private has successfully supported universality and equity through minimal levels of regulation. So what exactly are the ‘public policy reasons’ that the minister claims are reasons for this legislation before us?

The Senate Standing Committee on Finance and Public Administration’s inquiry into this bill and the subsequent report grappled with the justification for the government’s position. The dissenting reports from the opposition and minor parties underlie the paucity of argument that the government has put forward to support this retrograde bill. The government senators’ report from that inquiry woefully failed to support, let alone robustly support, the purposes of the bill—except the purpose of maximising the amount of money that the government will rake in when it flogs off this valuable public asset. If we look at the other grounds that the government senators relied on in their report, we find the already discredited claims about some ill-defined public policy, the concocted conflict-of-interest arguments and the furphy over the benefit of competition, when Medibank Private is already competitive and successful.

Then we have the government’s reliance on the CRA International report, which comments favourably on the proposed privatisation and the possibility—not the certainty—of improved efficiencies and lower premiums. There is not much else in that CRA report that the government can hang its hat on. Both the AMA and the health insurance expert to whom I referred to earlier, Dr Deeble, are dismissive of the government department commissioned report.

It is interesting to note that the AMA starts its additional submission to the Senate inquiry by saying that it has no philosophical objections to the sale of government assets when appropriate and yet goes on to say that it believes the sale of Medibank Private will lead to higher premiums for members of private health funds. The AMA says:

In the first instance, the higher premiums will have an impact on the members of Medibank Private. However, Medibank Private is a major player in every State/Territory health insurance market. Higher premiums will make Medibank Private less competitive and will allow other funds to raise their premiums also.

In the view of the AMA:

... these outcomes are deleterious to the broad strategy of support for private health insurance. The sale of Medibank Private will inevitably have a deleterious impact on the Budget cost of maintaining that support. The Parliament needs to consider all budgetary impacts of the sale, not just the expected sale proceeds.

That AMA submission goes on to provide substantial data supporting its position. I will not repeat that here. But it is telling that an organisation whose membership is not known for its left leanings and its left ideology believes that this privatisation is going to be a bad thing for the people of Australia.

Another aspect of this bill that needs to be looked at is the broader current role of Medibank Private. This broad role was envisaged by both former Prime Ministers Whitlam and Fraser when Medibank was set up and it was that Medibank Private was to act as a moral social agent in the health insurance industry. Many experts in the field disagree with Senator Minchin’s view that there exists no social policy ground to impede the sale. Dr Deeble argued strongly that the opposite is the case. Medibank Private has long provided that balance between need and justice. It has offered a stable national presence in the insurance market and has competed financially with other insurers. Importantly, it carries the flag for broad public interest in the health insurance field.

There is much in this bill that needs to be exposed for what it is. Read together, the Senate committee report and the library’s research brief and subsequent Bills Digesttogether with the AMA submissions and other submissions to the Senate inquiry—clearly outline that the government has mounted a slight and untenable case. The predominant weight of evidence should halt this bill in its tracks on the grounds of reason and fair play.

As I mentioned earlier, there are other reasons for stopping this bill, including the unresolved question of the rights of current members of Medibank Private in the sale process and as beneficiaries of the proceeds of any sale. The government has attempted to stave off the legal uncertainties in that regard by seeking a legal opinion from Blake Dawson Waldron, an opinion that has been rebutted by the library in its expertly and independently prepared Bills Digest. The fact that the government is not wholly convinced by its own commissioned legal advice is evident in the moves to include in the bill some safety net clauses that are clearly intended to compensate members if indeed there are future claims by them arising from detriment after Medibank Private is sold. While that is some good news for members, the fundamental question of whether this is something the government can sell without risk of challenge is not yet resolved. Nevertheless, the government pushes ahead with the legislation.

A further issue was raised by the Senate Standing Committee for the Scrutiny of Bills, of which I am a member. So is Senator Murray, who spoke before me. We are going to have open-ended legislation sitting on the books, as the government’s stated intention is not to sell Medibank Private until 2008—that is, after the next federal election. So we are going to have legislation on the books without knowing what the economic, social and political circumstances of the nation will be when it comes into being. That is a very poor way to make legislation, and the scrutiny of bills committee—as it should—will bring to the Senate’s attention every occasion when legislation that has no stipulated commencement date is proposed by this government.

There are then the matters of the future employment status of the staff of Medibank Private and the lack of any consideration of that in this legislation. All we get is a patronising attitude to the issue in the government senators’ committee report, which acknowledges that the ‘prospect of changed ownership may be unsettling for staff’. Yes, the prospect of perhaps losing your job is unsettling. You would think that the government might have thought to address the staff issue in a more constructive way than just saying ‘staff can keep themselves informed and also raise any concerns or questions they might have about the implications of Medibank’s sale’. I am sure being informed is a great consolation to those staff of Medibank Private who are very concerned about what their future employment prospects are. Then there is the question of foreign ownership. The bill acknowledges legitimate concerns about foreign ownership, with some measures to prevent the loss of Australian control of the organisation. However, those restrictions expire after five years. After that, Medibank Private is up for grabs.

I will also make passing reference to comments made by Senator Fielding in his dissenting Senate committee report, in which he says that the government is ‘selling out’ Australian families by selling Medibank Private. Labor could not agree more, and that is why we will not support this bill and why we have given the Australian public a guarantee that Labor will do genuine family impact statements for all legislation that a Labor government brings to the parliament.

In finishing: the evidence garnered in the Senate committee inquiry, the evidence shown in the information provided to all members of parliament by the esteemed Parliamentary Library and the evidence in the department’s own commissioned report is that there is no good economic, social or public policy justification for the sale of Medibank Private. The government senators’ report to the Senate committee is a hopeless conjecture of possibilities and assertions—a ‘romancing the stone’ approach. It is both shallow and selective—a straw argument that fails to sell the case, yet the government arrogantly expects the Australian public to cop it.

The government senators’ report merely echoes the government’s overall attitude. It is a government that is prepared to thumb its nose at anything that does not fit its fixed and narrow vision. It is a government that is not concerned with expert opinion and argument. It is a government that arrogantly and intentionally fails to establish sufficient grounds or arguments for its case. Worse still, it is prepared to vandalise public institutions in the name of its cause, without due regard for the consequences. The government has not made its case for selling Medibank Private, and this bill should not be supported—and it will not be supported by Labor.