Senate debates

Monday, 4 December 2006

Medibank Private Sale Bill 2006

Second Reading

7:42 pm

Photo of Joe LudwigJoe Ludwig (Queensland, Australian Labor Party, Manager of Opposition Business in the Senate) Share this | Hansard source

I rise to speak on the Medibank Private Sale Bill 2006. This bill is the Howard government’s latest attack on the prosperity and pocketbooks of Middle Australia. The legislation before the Senate this evening will give the government the power to sell Medibank Private and it will reclassify the organisation as a for-profit fund. Let me provide a brief overview of this bill. This bill does a number of things. The first schedule of the bill provides for the sale of Medibank Private, it amends the Health Insurance Commission (Reform and Separation of Functions) Act 1997, with the effect that the Commonwealth is no longer required to retain ownership of shares in Medibank Private, and it also allows for Medibank Private to distribute profits that it accumulated while it was operating as a not-for-profit entity.

The second schedule of the bill contains a range of conditions relating to the sale of Medibank Private. Firstly, it provides for a range of schemes under which the fund may be sold. It also alters the status of Medibank Private, changing it to a for-profit corporation which may distribute profits. Finally, it puts restrictions on the ownership of Medibank Private and ensures that it must retain its Australian identity for the next five years.

But let us get this clear. This bill is being rushed through. What this government now specialises in is rushing legislation through this Senate without proper scrutiny. In fact, it is making it an art form in this place and should be condemned for it. Despite the fact that the government has made the decision to sell Medibank Private, and despite the fact that it is rushing through the legislation to give it power to sell, the government has indicated that it does not intend to sell the fund until 2008 at the earliest. You immediately have to ask yourself why the government is so keen on pushing the legislation through at this point in time. Have we nothing better to do? Isn’t there other legislation we could consider? These are all good questions that need an answer, but I am sure we are not going to get one from the government. Instead, we are dealing with this bill some years before it is necessary. Instead of waiting in order to ensure that legal and policy questions are decisively answered, we are going to continue with this bill.

There are significant legal issues that have been raised in this sale—and they have been raised not only in the research brief by the Parliamentary Library. But let us go to that point first. These legal issues were raised in a paper produced by the Parliamentary Library earlier this year, titled The proposed sale of Medibank Private: historical, legal and policy perspectives. I am sure that senators are aware of the comprehensive issues raised in this paper, so I will not dwell on them in detail. However, to briefly recap, the library raised the issue that members of the fund may hold certain rights to surplus assets of the fund. If the fund were sold by the government, there may be some claim by the members for compensation. I note, of course, that the government was quick to table legal advice from Blake Dawson Waldron that purports to show that the members of Medibank Private would not be entitled to compensation.

Two interesting points arise out of that. Firstly, the government do not often table legal advice—in fact, I have asked for it to be tabled at estimates and here many a time in order to get a standard response, but it is not the government’s practice to do this—but, in this instance, we see them rush it out in response to a library brief. That in itself is an unusual position: to respond not to the politics of the day but to a library brief. At that point, it was not even a committee report, a government report or an issue raised here. Be that as it may, this point remains unresolved. There is no conclusive decision of a court to which you can point to say that it has been finally decided. Subsequent publications of the Parliamentary Library have also picked up on some matters in the advice that still remain open to interpretation. I have yet to see another piece of legal advice from the government about those matters, but it may find its way forward through the minister and be tabled here. If not, I am sure the shadow minister will take up the matter in the committee stage.

While it is not my role to adjudicate on the competing advices that have been provided by the library and Blake Dawson Waldron—I am not in a position either to say that Blake Dawson Waldron is the correct and preferable choice—I urge the government to step back and make sure that we get it right. I would have thought that the more important thing to do would be to ensure that we avoid a situation where we might be locked in litigation for years because of the government’s rush to sell off or—perhaps I could use a bold phrase—because of the government’s eagerness to sell off this asset without ensuring sufficient time to allow those matters to be at least comprehensively dealt with and proper legal advice obtained and to ensure that the market is not left hanging in this respect. If the government is in such a rush to sell off this asset, we have to ask why it does not add further relevant legal advice and table that to ensure that there is certainty in the marketplace and that these matters are properly resolved or wait to ensure that they are resolved.

I think there is another string to the government’s bow. Not only are they keen on selling assets; they are also keen on their ideological approach. However, when you look at the government’s plan to sell off Medibank Private, when you depack it, it should not be seen as anything other than a pure ideological bent towards an economic rationalist agenda that is out of line with average Australian families. The basis of the sale was summarised neatly by Ms Julia Gillard from the House of Representatives, who quoted the Minister for Health and Ageing as basically stating, ‘What we do as Liberals is to sell things.’ So there you have it: this is a decision based on the ideological rhetoric of the minister for health. I cannot even hold Senator Minchin accountable for that! They are Liberals and they sell things—that seems to be their catchcry. Perhaps I can ascribe that to Senator Minchin eventually, but not now.

It is no wonder that they are forced to use such a simple argument in favour of their scheme. There is no evidence that the sale will reduce premiums or increase competition. As I have noted above, in the past, Medibank Private has even argued against this position. The Howard government cannot guarantee that the sale will have a positive impact on members. Some of the statements and arguments put forward in the House pointed to a Howard government broken promise in 2001. The promise was that his election policies would lead to reduced premiums; instead, premiums have risen by almost 40 per cent since that time.

This is a government that, with its control of the Senate, is becoming more arrogant each day we sit. This is another example of the Howard government’s growing arrogance. Since the Howard government seized control of the Senate, we have seen one ideological attack after another, firstly on conditions, such as those attacks in the Work Choices legislation on Australian families, where the government is committed to its agenda of driving down the working conditions of ordinary Australians. We have seen the sell-off of Telstra but we have not seen a commensurate increase in the service to rural and regional Australia. We have seen what could only be described as an ideological bent—and perhaps I can ascribe this one to Senator Minchin—with the introduction of the voluntary student unionism legislation. We are seeing it again with this bill.

Labor is opposed to this bill. It is an extreme position just like the coalition’s IR agenda, just like their voluntary student unionism legislation, just like their ability to sell-off Telstra without considering the wider ramifications. There is no need to sell Medibank Private now. There is no evidence that the sale will reduce premiums and increase competition. The government argue for two main points: efficiency, which will engender greater competition—it is a sort of Milton Friedman argument—and, coupled with that, the idea, ‘We also might have a conflict of interest and therefore we need to sell it.’ When you unpack those two arguments, they are not supported enough to warrant the sale of Medibank Private. If those arguments won out on every occasion, that would mean, in all instances, that there is no public-private debate to be had—the private must always be more efficient than the public. That is a ridiculous argument. There are reasons why in the public domain it is better to have private enterprise, and competition results. There are other competing interests which dictate that it is better for some things to remain in public hands. Of course that is an ongoing argument that can be had on another day but it is not an argument that rationally could be put up in this debate.

The fact is that this bill will have very little impact on the ability of Medibank Private to operate as a private company. It will make no difference in terms of the operation of the National Health Act, but it will now no longer be required to provide reports to the shareholder minister. However, what it will do is to vastly increase the percentage of the healthcare fund market that is for profit as opposed to not for profit. All this means, in truth, is that Medibank Private would be entitled to distribute profits. It will not lead to increased competition. The bill before us will not introduce a single new health insurer into Australia. That is the essence of increasing competition in a marketplace. In fact, in the past Medibank Private has actually made the argument that it would increase the premiums. In a submission to the 1996 Productivity Commission inquiry into private health insurance, it stated:

A situation where a for-profit ‘middleman’ … is also involved … will unnecessarily escalate the premium … for private health insurance.

So even Medibank, in the past, has argued that this form of reform will not make premiums any cheaper.

There is also a serious concern about the manner in which the government is ramming this bill through parliament. Even with the bill through, the government, as I have said, is not expected to sell Medibank Private until 2008. It really is incumbent on this government to convince the Senate of the need for the piece of legislation now rather than in 2007 or 2008, depending on the timing of the sale.

This is particularly salient when one considers that there is substantial concern surrounding some of the legal aspects of the sale—such as the ownership of the assets, which I have already touched on. So where is the rush? Why doesn’t the government put aside the legislation for the time being and make sure that all of these issues are resolved before continuing? It is not to argue that you should never act; it is about ensuring that if you do think the market is the place then you also must think the market must have certainty. To have certainty, you should ensure that what you are doing will provide certainty and will not create uncertainty in the marketplace.

Let us be clear: the Howard government’s extremist agenda for Medibank Private is not one that is based on any rational assessment of the benefits of the policy. It is not based on community sentiments. It is based on their own extreme ideological viewpoint, and—I will say it again—their growing arrogance and contempt. It is based on the idea that they are Liberals and they like to sell things.

But, fundamentally, it is the product of a government that is growing more and more out of touch with Middle Australia each day. It is a product of a government that has seen health insurance premiums rise by 40 per cent since 2001. This bill is yet another peg in the Howard government’s plan to drive down the conditions of Middle Australia. John Howard no longer governs for ordinary Australians. He now governs—and we have said this again and again—for the big end, for those who sign up to the banner that ‘we are Liberals and we sell things’. The bill before us today is really about an ideology that is now out of touch and extreme and should be voted down.


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