Senator FORSHAW(7.43 p.m.) —The Health Insurance Commission (Reform and Separation of Functions) Bill 1997 has two purposes. The main purpose of the bill is the separation of Medibank Private from the Health Insurance Commission and the consequential corporatisation of Medibank Private. The other purpose of the bill is a rather minor one: to expand the role of the Health Insurance Commission to enable it to expand its range of services to the public.

I do not intend to deal with the second aspect of the legislation because the ALP is not opposed to the expansion of the role of the HIC in regard to some of those additional services that it will be able to provide in future. That aspect is of a minor nature compared with the primary purpose for which this legislation is brought before the parliament; that is, to separate out Medibank Private from the Health Insurance Commission and to corporatise it. The ALP is strongly opposed to this action and is strongly opposed to this bill. We will be opposing the bill when it comes time for the second reading vote.

We note that the Australian Democrats have indicated in the report produced by the Senate Community Affairs Legislation Committee that they will support this legislation. I also understand that the government intends to move a minor amendment to the legislation relating to the period of time to be allowed for transfers of public servants between the Health Insurance Commission and the new corporatised body, and I will deal with that in due course.

We are very disappointed that the Democrats will be agreeing with the government on this occasion, because this legislation—make no doubt!—will lead to the eventual full divesting of Medibank Private from public ownership; in other words, Medibank Private will be privatised. I expect that the government will get up in due course and say, `No, that's not going to happen. All we're doing here is separating out Medibank Private from the Health Insurance Commission and corporatising it. We will give you a guarantee that it won't be privatised in the future.' As I will demonstrate shortly, you just cannot believe them—when and if they actually say that.

Whilst it is clear that, at least in this initial stage, the newly corporatised Medibank Private will still be 100 per cent government owned, this is the first and the major step on the road to full privatisation. Not that much more will have to happen down the track—if this bill goes through as it appears likely to. And that will be unfortunate. It will be a great shame because Medibank Private, along with Medicare, is now enshrined in the fabric of this country as being a government owned facility that ordinary Australians can join to take out private health insurance. Indeed, Medibank Private provides an excellent level of service and leadership to the rest of the private health insurance industry.

Whilst we may not always agree that increasing the charges is necessarily something that should happen; nevertheless, there is no doubt that, on any yardstick, Medibank Private has led the way in private health insurance for a long time in this country. It has also acted as an influence on the rest of the industry in its introduction of new products and in the provision of health cover for those wishing to take out health insurance. This legislation is unnecessary. There are no good and cogent reasons for it: none were put during the debate in the other place and none were put in the proceedings before the Senate committee.

Medibank Private currently is the largest health insurance fund in Australia. It has approximately two million members or 27 per cent of the market. As I said, it is providing competition in the health insurance industry and it has not suffered from any restrictions under its current structure. You have to ask yourself, `Well, why change it?' As we so often hear the government say, `If it ain't broke, why fix it?' That adage certainly applies in the case of Medibank Private.

The real reason for this legislation put forward by the government is that there is a perception that somehow Medibank Private gains an unfair advantage from being within the Health Insurance Commission. In the second reading speech the Parliamentary Secretary to the Minister for Schools, Vocational Education and Training (Mr Abbott) said:

Through the separation, the government will ensure that Medibank Private cannot be perceived to have any competitive advantage over other private health funds through its association with Medicare or other government program functions of the HIC. It reinforces the government's commitment to the principle of competitive neutrality.

So it is a perception. I would suggest to this Senate that the government should think long and hard about bringing forward a bill that is based essentially on a perception. This line of argument was repeated by departmental representatives before the Senate inquiry. In its report on page 12 the committee quotes Dr Loy, appearing on behalf of the department:

The aim of the government in putting forward the bill to separate Medibank Private and the Health Insurance Commission was, as has been mentioned several times during the hearing today, to address the issue of the perception and reality of competitive neutrality, first.

This perception that somehow Medibank Private derives some unfair advantage in competition with the privately run health funds was also reiterated by the representative from the Australian Health Insurance Association—that is, a representative for the other health funds. But absolutely no evidence was provided to the committee as to how Medibank Private gains some unfair advantage. There was no evidence whatsoever which showed there was any cross-subsidisation that benefited Medibank Private to the disadvantage of the other private health funds.

Indeed, while the government is saying that this legislation is based upon removing a perception, removing a concern that exists amongst the other private health funds, the government representative made it clear to the committee that that was not a genuine concern at all. Dr Loy said:

That is not to say that the government accepted that there was any real cause for concern. The arrangements that were made between the government programs side of the Health Insurance Commission and Medibank Private were as sensible and robust as could be desired. Nonetheless, there was a perception and a reality of being able to establish Medibank Private on a competitively neutral basis with other funds.

Some senators may recall—and it was certainly pointed out in the report of the Senate committee—that back in 1992 this issue was addressed by the Joint Committee of Public Accounts when it looked at whether or not Medibank Private gained some unfair advantage. The committee found that there was no real evidence of any cross-subsidisation. It found that the operations of Medibank Private were carried out in such a way that it was able to compete on a level playing field—to use the common terminology—with the other private health funds.

Mr Schneider, who represented the health funds in the Senate inquiry, was at no stage ever able to say, `Look, here is a situation where our funds have been disadvantaged.' Indeed, he even went so far as to say that in the marketplace, once you separate Medibank Private from the Health Insurance Commission, once you move Medibank Private out of the Medicare offices and make them stand alone, it is not going to alter things very much in terms of the other private health funds.

What we have here, first and foremost, is this government caving in to the whingeing and carping of the private health funds. They have been doing it for years. They have been complaining about Medibank Private being a government-owned health fund. They do not like it and they have never liked it. They have been trying their hardest to get the government to dismantle it or to separate it, and to put it in a position whereby it would eventually be privatised. If they could see a way to weaken Medibank Private and thereby, hopefully, benefit themselves, then they would try.

The private health funds have managed to convince this government to bring in this legislation, as I said, in their own words `to fix up a perception'—to get rid of a mirage. What sort of a basis for legislation is that? That is an irresponsible approach to legislation in a very important and critical area—the area of health care and giving the opportunity to Australians who so wish to take out private health insurance.

The government says, `It is still going to remain in government ownership. We are not going to privatise it, so you do not need to worry about what we are doing here.' It is interesting to read the Hansard in which, at the outset, Senator Knowles, who chaired the legislation committee, stated:

I understand that there has been some confusion over comments made about the bill being deferred. For the committee's information, the bill is only being delayed by one week in the House of Representatives to enable further consideration on tightening the provisions which would prevent any possible future privatisation of Medibank Private without necessary parliamentary approval. Any further questions on this aspect can be directed to the departmental officials later in the hearing.

The chair of the committee, Senator Knowles, told the committee and the witnesses on 4 September that the government was going to amend the legislation in the House of Representatives to make it legislatively certain that Medibank Private could not be privatised in the future without parliamentary approval.

When the witness for the union, Mr McKenna, appeared to give his evidence, he expressed the concerns that he and his members had about the potential privatisation of Medibank Private once you got down to this stage of corporatisation and the concern that he had about potential redundancies and loss of employment. Senator Knowles got stuck into him. She harangued him. She asked him questions. She said:

You talked about your concern about the possible privatisation. Are you aware of what I was saying earlier—that the bill has been delayed for one week in the House of Representatives to tighten the provisions against privatisation?

Mr McKenna said:

I was not aware of that.

The chair continued:

Are you also aware that Medibank Private could have been privatised under the previous government or by this government under the current legislation as it stands at the moment?

Mr McKenna replied:

No, I was not aware of that.

The chair then said:

. . . the government is actually doing what has not been done in the past—that is, tightening up that loophole to prevent that.

That is, to prevent privatisation. She went on to ask him:

I am interested to know, from your point of view, which party or parties you see would be the advocates of privatisation, given that it is the coalition government that is actually amending the legislation that way?

I have not got time to read the rest of the Hansard , but Senator Knowles, as chair of the committee, was getting stuck into the witness representing the union and saying, `You've got these unfounded fears about privatisation in the future. You are wrong, because the coalition is going to amend this legislation'—and that was why it was being delayed in the House of Representatives—`to make sure that does not happen.'

Guess what? No such amendment was ever moved in the House of Representatives. No such amendment is before this chamber. The quite vicious attack by Senator Knowles upon this witness, trying to put him in his place and suggesting to him that this coalition government was going to ensure that Medibank Private would never be privatised, her attack on a representative of the union movement who was expressing the concerns of his members, was shown to be hollow and totally erroneous. There has been no such amendment.

Why not? Having gone to all this trouble making this grandiose statement at the start of the Senate committee's hearing about what the government was going to do to ensure no privatisation in the future, when it came to the crunch, they did not do it. Senator Knowles stands condemned for the way in which she sought, in my opinion, to harangue a witness. In the end, she has been shown to be the one who got it wrong.

As I have said, this legislation has been brought before this chamber to do the bidding of the private health insurance industry—that is, to remove Medibank Private from the HIC. That is something they always wanted and that I believe will ultimately be damaging to the interests of Medibank Private members.

What other things are going to happen as a result of this? Currently, there are 270 Medicare offices throughout Australia and, by virtue of earlier legislation and the budget process, we know that 44 of those will be closed. But the remaining 226 Medicare offices currently providing Medibank Private services are going to lose those services. Medibank Private is going to be totally separated from Medicare. In future, there will be no Medicare offices providing Medibank Private services. That will be a major change in the level of service to members of Medibank Private. Some two million people will no longer be able to access Medibank Private through their local Medicare office.

What is going to happen in its place? The proposal is to open 70 Medibank Private offices. There will be a reduction from 270 down to 70 of outlets providing services for Medibank Private members. No-one in their right mind would try to argue that that is not a huge reduction in the service available to Medibank Private members. They are going to be severely disadvantaged, particularly in rural and regional areas. I am sure my colleague Senator West will take up that issue in greater detail.

Think about the impact that this will have upon the elderly, they are not the only ones who will be affected. There are a substantial number of people who have long had the opportunity, as Medibank Private members, to visit their local Medicare office to lodge claims for Medicare and Medibank Private. In the future that service will be gone. What does this government say will replace it? It says that people will be able to use fax machines in pharmacies or lodge claims over the telephone.

One final matter relates to the impact of these changes upon employees, particularly the proposal that there be only a 12-month period available to employees to elect for a transfer between the HIC and Medibank Private. That is something that we will get to when we deal with the amendments specifically in the committee stage. This legislation is totally unnecessary; it is potentially damaging to the industry and we oppose it entirely. (Time expired)