Ms WORTH (Parliamentary Secretary to the Minister for Health and Family Services)(1.03 p.m.) —I thank all members for the contributions they have made to this debate on the Health Insurance Commission (Reform and Separation of Functions) Bill 1997 . The member for Dobell (Mr Lee) asked for the criteria which are applied in selecting Medicare offices for closure. I think I have heard the Minister for Health and Family Services (Dr Wooldridge) already answer questions on this but, as the member for Dobell has asked about it, I will tell him again. The first criterion is that there be minimal disruption to the public. Therefore, a branch will be within 12 kilometres of another branch. That is why most of these closures are occurring in metropolitan areas.

Mr Martin —In Labor seats. Is that one of them?

Ms WORTH —We will get to that in a moment. The second is the ability to redeploy staff and the third is the volume of face-to-face claims. That is all about whether there is a high volume of bulk-billing in a particular area. That is probably the greatest single contributing factor to the offices that are being closed. One is actually being closed in my own electorate, which members opposite might be interested to know, and I am certainly a member of the government. But I recognise that area as an area where there is a very high volume of bulk-billing.

The fourth criterion is the leasing arrangements; that is, the ability to terminate a lease, assignment or sublease. No branches are closing as a direct result of the separation of the HIC from Medibank Private. The good news for rural areas is that, within two months, we will have an extra 100 claiming facilities for rural Australians. This is another example of this government's commitment to rural Australia and, certainly, a great win for the bush.

The question of the selling of Medibank Private has also been raised by opposition speakers. The government does not intend to sell Medibank Private. The member for Dobell asked for details on this matter; I can give him some details. The National Health Act 1953 has had a possible hole in it, which would allow the government to sell its interests in the fund while retaining Medibank Private as a hollow shell. This provision has been there for years, through Labor and Liberal governments.

A question from the member for Dobell to officers of the Health Insurance Commission and an adviser to the minister on 27 August raised the possibility of the income stream of Medibank Private being sold. After checking with the Health Insurance Commission, the minister subsequently was informed that the National Health Act 1953 allows for a fund to be merged with another authorised fund and makes no comment on the ability of a related transfer of compensation. It seems, from legal advice, that it is possible to merge a fund with another and for the owner of that fund to pay for that merger. There is nothing new about this. That provision has been there for years. The government has decided that, because it has been there for such a long time, it is not necessary to make any change now. I repeat that the government has said that Medibank Private is not for sale.

I have been astounded that the opposition would come in here and talk about our privatisation record and what we might be going to do about this, because before the election we said we would not sell Medibank Private. We will stick to our word. Labor's record on privatisation is really quite different: they said that they would not sell the Commonwealth Bank and they did; they said they would not sell Qantas and they did. In contrast, this government went to the election saying that we would sell one-third of Telstra, and we have done so.

The opposition has also raised questions about this legislation risking higher premiums. Premiums will not increase as a result of this separation. There will be no cost impact at the macro level. Premiums did increase as a result of Labor's mismanagement.

A new CEO and board devoted to Medibank Private, for example, will obviously have cost implications. However, this will be managed within the total management expense budget. Net management expenses represent less than five per cent of the fund's total expenditure. Priorities will be assessed and costs will be examined by a board whose sole purpose is to run Medibank Private.

Labor spent years saying that Medibank Private does not enjoy a cost advantage, so I am now surprised to hear them say that costs will increase. The opposition really cannot have it both ways: they were either right then or they are right now. I do share with the member for Bradfield (Dr Nelson) a dislike of hypocrisy.

The member for Jagajaga (Ms Macklin) has raised the question of job security. The member for Jagajaga wants us to protect the job security of those in the Health Insurance Commission. We will do that by the very mechanism that the member for Jagajaga de plores—and that is compulsory staff transfers. Without this measure, the terms and conditions of staff cannot be protected. It provides visible certainty to staff regarding their terms and conditions of employment, including their mobility rights. The Health Insurance Commission has put administrative mechanisms in place to ensure that staff are consulted and that their preferences are taken into account.

On the question of additional costs to taxpayers, which once again the member for Jagajaga raised, she deplores the additional cost to taxpayers, including massive upheavals and replication of computer and information systems. Using technology is an ongoing process, requiring constant update and adaptation. Electronic claiming, for example, now accounts for over a quarter of the Health Insurance Commission's Medicare business. While the member for Jagajaga may wish to use pen and paper and queue with customers, the HIC is moving ahead into a more sophisticated method of service and delivery. Information systems will, as I mentioned earlier, include the 100 additional pharmacy claiming facilities in rural Australia as well as electronic and telephone claiming.

The opposition has spent considerable time in this debate criticising the government about how it has managed its support for the private health industry. It is absolute hypocrisy for Labor to criticise this government on private health insurance policies and issues, given its record. Let me remind those present what the previous Labor government has done and why we have had such a mess which we are now dealing with: the previous Labor government abolished the federal contribution to the reinsurance scheme; the previous government cut the Medicare rebate for in-patient services from 85 per cent to 75 per cent; and the previous government abolished the Commonwealth bed day subsidy. These decisions alone led to a 40 per cent increase in private health premiums in just two years.

The old arguments have been trotted out about Medicare being under threat. It is not. But we know that a strong public sector needs a strong private sector, so the government is committed to that. I emphasise again that a lot of damage needs to be undone. The previous Labor government either ignored or did not understand the significance of the private health sector. However, I know that at least one Labor health minister understood the problems and actually had the honesty to refer to them. I quote Graham Richardson when he said:

Labor health ministers are not allowed to believe that the decline in private health insurance is anything other than a vote of confidence in medicare . . . they are also not allowed to believe that the public hospital system will ever find itself unable to cope with the influx of formerly insured citizens, which will one day create one hell of a problem.

This government is now having to deal with that one hell of a problem, caused by Labor's refusal to deal with—or perhaps their woeful ignorance of—the relationship between the private and public sectors. When Labor came to power in 1984, over three in five Australians had private health cover. When Labor left office, it was barely one in three.

We are still dealing with that one hell of a problem that Graham Richardson identified; that is, less people are in private health insurance which has resulted in longer waiting lists in public hospitals. Labor ignored this problem and remained unresponsive to the desire of Australians to have a choice in their health services.

We have inherited a Medicare system in trouble, jeopardised by the rising costs and the weakening of the private sector, which saw over one-quarter of Australians drop their private health cover during Labor's administration. But we are trying to fix it. We have been successful in containing the costs of Medicare while maintaining the bulk-billing rates. Medicare, after growing out of control under Labor, is slowing to a sustainable rate of growth.

We are trying to fix this mess left to us in the private sector through a number of means, notably the private health insurance incentives. Despite criticisms from the opposition, I am pleased to say that we are actually giving $450 to families to assist them with their private health insurance and $250 to pensioner couples. Yet the opposition would have us not provide that assistance.

Premiums have gone up. They have gone up a lot more than we would have liked. The funds are still trying to cope with the legacies of Labor's attitude that private health insurance was unimportant. It is no wonder that so many young people now do not have private health insurance. There was a culture which was rampant particularly under the last government when the former Prime Minister and the then minister for health, the member for Fremantle (Dr Lawrence), were very publicly saying that you just did not need it because you could rely on Medicare. Of course, we know that the Medicare levy only brings in between $3.5 billion and $3.7 billion a year, and Commonwealth expenditure is, of course, closer to $20 billion. So the problems we are having now have been a direct result of former government policy.

I will refer quickly to another couple of matters. This government supports competitive neutrality and is committed to that. Many in the private health insurance industry believe Medibank Private has an unfair advantage by virtue of its association with Medicare. The member for Curtin (Mr Rocher) covered this subject particularly well. While not supporting this view, the government sees value in removing any perception of unfair advantage. The administration arrangements between the Health Insurance Commission and Medibank Private are sound.

Labor has claimed that there are winners and losers and that this bill will only produce losers. That is certainly not so. Staff of the Health Insurance Commission and Medibank Private will be the winners, with a tightly focused board of directors and a general manager devoting full attention to each. Staff will be part of a vibrant, focused organisation, whichever way they choose to go.

Members of Medibank Private will be winners. Those members will be part of a fund eager for new opportunities, employing new technology and a more flexible option of enhanced services. Members of other funds will also be winners because Medibank Private will continue to push and develop new service opportunities which will drive industry forward. I think that is a very important point. Of course, funds are now operating in an environment of support from the government which, as I have been at pains to point out to you, is very different from the contribution under the previous administration.

I again thank members for their contribution and commend this government legislation to the House.

Amendment negatived.

Original question resolved in the affirmative.

Bill read a second time.