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Wednesday, 24 August 1983
Page: 178


Mr CARLTON —by leave-I join with the Minister for Health (Dr Blewett) in congratulating the Health Insurance Commission, its Chairman, Mr Millar, and commissioners, the General Manager, Mr Wilcox, and his team on making further progress in trying to bring the Health Insurance Commission somewhere into the field of competition with the private health insurance funds. This has been a very difficult task, given the inherent difficulties of managing a public sector body in competition with private sector bodies. The public sector bodies, of course, have the difficulties of management practices dictated by the Public Service and Public Service awards for their employees, including security of tenure and special superannuation arrangements. These difficulties have been well known to the Commission and it has certainly done a good job, against odds, in bringing this body closer towards what one would expect from good private sector performance. I certainly do not withdraw any of the congratulations that I gave the Commission when I was Minister for Health. I believe it deserves full credit.

I have to point out to the House that in a number of quite important respects the Minister's statement is, as are many of the statements of this Minister relating to the introduction of Medicare, utterly misleading. I will point out the respects in which it is misleading. The Minister said:

The report shows beyond doubt that the Health Insurance Commission is an efficient organisation and on a sound financial footing.

He referred to the trading surplus for the year of $18.1m compared with $14.5m for the previous year. He neglected to mention that $8.9m of that surplus-that is, about half-came from a single State, Victoria. The Minister said that the Commission's net assets had grown to $58.5m from the previous level of about $ 40m-odd. However he neglected to mention that, of the $58.5m in fund reserves at 30 June 1983, $41.1m was placed in Victoria.

In the introduction to the report, the Chairman pointed out that the reserves expressed in terms of months of break-even contribution income for the Health Insurance Commission as a whole had risen to 1.3 months which was over the one month standard of performance required of the larger funds. What the Chairman failed to point out, and the Minister also failed to point out, was that the performance came almost entirely from Victoria where the reserves, of course, were $41m out of a total of $58.5m, and where the months of break-even contribution income were 2.3, which was almost 2 1/2 times the standard requirement. However, in New South Wales the months of break-even contribution income were 0.5-only half of the standard-in Queensland they barely got over the edge with 1.1; in South Australia they were 0.3; in Western Australia they were 0.4 and in Tasmania they were 0.5.

What we have here, looking at the figures produced by the Minister, is a report for the Health Insurance Commission in Victoria. Since one of the requirements of Medibank Private was that it compete in each of the States, as the other funds are required to-it must report its reserves and its operating surpluses State by State, as the other funds are required to-in only one State is it really performing in any way as it should. To say that the report shows beyond doubt that the Commission is an efficient organisation and on a sound financial footing is utterly and truly misleading.

The Minister reminded us that last night the Treasurer (Mr Keating) said that $ 10m of the reserves would be paid back to the Department of the Treasury by the end of this financial year. If the reserve position for the various funds State by State is as shown in this report, and if the funds are prevented from shifting Victorian funds elsewhere-the reserves would of course have been put there by Victorian contributors and I quite properly prevented the funds from shifting reserves when I was Minister because different conditions apply from State to State-there would be no way in the world that the Health Insurance Commission could legitimately or prudently send back $10m worth of reserves to the Treasury. That would be a totally unsatisfactory move and would in no way assist the Commission in building up an adequate level of reserves in States other than Victoria. It is a sleight of hand for the Treasurer to recover $10m out of the statutory corporation to make the figures look good and to enable the Minister for Health to make this utterly misleading statement. In referring to the $10m being returned, the Minister stated:

It provides further evidence of the successful nature of the Commission's operations.

It provides no such evidence at all. All it means is that because of the obfuscation with the transformation of this body into a new vehicle for Medicare it is possible to fiddle the books and take $10m back to the Treasury and ignore the consequences on the reserve position in each of the States. In a number of material respects the Minister's statement about this report is utterly misleading.

There are other misleading aspects of the report which relate to its operating characteristics. The Minister said that it was clear that this body would be the most effective and cost efficient of all the alternatives that could be considered by the Government for the operation of Medicare. Observers of this tussle between the Minister and me will be well aware of the fact that I disapprove very strongly of his move to nationalise 60 per cent of Australia's health insurance business within Medibank and thereby throw 5,000 people out of their jobs in the private health insurance sector. That is his way of making things more efficient. Certain aspects of this might, on paper, appear to be more efficient but the House should understand that this body, which has been well managed by the Commission and its general management, has been operating directly in a competitive environment with private funds over the last few years . That has been a substantial spur for the Commission to improve its financial position gradually over the years. It at least keeps the Commission moving in a competitive direction.

Under the Minister's proposals to centralise all basic insurance within the Health Insurance Commission, the Commission will now be moving most of its business from a competitive climate, competitive with private funds, into a public sector monopoly. The Minister claims that this will be a cheaper way of doing things. That flies in the face of all history of statutory corporations and government activities. Once we withdraw this vast bulk of the Commission's activity from the competitive situation and make it a public sector monopoly there will no longer be any possibility for real comparison with the private sector.

We had a comparison with the private sector recently when the private health insurance funds submitted competitive bids to run Medicare under contract. That would have been the sensible thing to do, leaving all the existing employees in their jobs, leaving existing computer equipment working on the Minister's behalf competitively under a competitive bidding situation and leaving the existing network of offices to provide one stop shopping for all the customers under Medicare. I do not agree with the policy of introducing Medicare. Even if I did agree with it I still could not agree that it is sensible to move away from an existing network of service and to centralise it within this body. Tens of millions of dollars of funds, which outweigh enormously the miserable $10m taken back into Treasury under last night's Budget, will go into the opening of over 80 new offices, the purchase of millions of dollars worth of unnecessary computer equipment. All of this puts 5,000 people out of jobs in the private insurance sector.

The convenience argument is a nonsense. It will not be more convenient to have this business centralised under Medicare. Currently it is possible for people conducting their health insurance business to go to the one place to have it all done. Under this system if one is insured with any fund outside Medibank Private one will have to go to two places to conduct one's business. One will have to go to Medibank for the ordinary business-the basic business-and for one's extras, private hospital cover and any ancillary benefits, one will have to go to one's private fund. I said earlier that I was concerned that Medibank would take advantage of this particular situation and grab all the private sector business from the funds for the extras. The Minister has since taken fright and he has prevented Medibank from increasing its customers in the ancillary insurance area . So on the one hand he has preserved, I would think, the 40 per cent of the remaining business of the private funds, but not prevented the destruction of 60 per cent of their business. At the very same time he has put a further crippling arm on Medibank. Its management will have to go round with one arm tied behind its back, as it has in many respects in the past, and try to run a decent shop with these unnecessary and unnatural restrictions. On the face of it, I have to support those restrictions because I do not want to see the private funds destroyed, but they merely show up the utter illogicality of the Minister's arrangements.

The next thing the Minister said is that this new arrangement will be better for detecting fraud. Here we come to one of the most unbelievable aspects of this whole sorry tale because the main purpose that the Minister has in introducing Medicare is to bring in this so-called free system of health care delivery. He is going to try to bludgeon the medical profession into going on to bulk billing for general patients. If we follow the Canadian example-I went over and had a look at it about a month ago just to check up how this sort of thing is done-the customers, the patients, will come into the doctor's surgery, never see a bill and the sum will be paid direct by the government to the doctor. If the Government wants to increase the possibility of fraud and overservicing tremendously, this is the way to go about it. I understand that in the Budget the amount allowed for fraud and overservicing detection will go up from $4m to $8m-$8m for the policemen who will try to stop doctors giving in to the additional temptation that will be placed in front of them under the Medicare system.

The Minister reminds me of a policeman who, coming down the High Street at night, sees the doors of the supermarket open. Instead of shutting the doors he moves to the opposite side of the road, sets up a counter to count the amount of goods stolen from that store over the rest of the evening and subsequently tries to retrieve the goods from wherever they have gone. The Minister, with his fraud and overservicing detection system, is opening the doors to further abuse by introducing this bulk billing arrangement under Medicare. He is stepping up expenditure and using taxpayers' dollars again-$4m up to $8m-to have a surveillance system under which someone sits on the other side of the road and watches the money being taken out of the doctors' surgeries. That is an absolute nonsense.

The question of jobs has to be looked at again with respect to the Health Insurance Commission. I still have not tracked down exactly where all these jobs are going to go under the new arrangements. The problem is very simply-I do not want to bore the House by going through too many figures again, so I will be very quick in retracing what I said earlier on this occasion-that about 8,500 people are currently employed by the private health insurance funds. About 60 per cent of their business will be taken over by Medibank under this centralisation, socialisation scheme. That means that 5,000 of the 8,000 jobs have to go. According to the principal adviser on these matters, Dr John Deeble- not according to the Minister, I might say; he said something different-2,500 extra jobs will be required in Medibank to cover its expanded operations. That gives a net loss of jobs of 2,500. That does not mean that 2,500 of the 5,000 employees who lose their jobs will be employed by Medibank. The people will not necessarily be the same. A larger number of the 5,000 employees will lose their jobs because of the need to recruit for the new Medibank operation early before the private funds have declined in their business. In fact, Medibank has to recruit at the beginning of October. If the Minister is lucky the whole thing will come on to stream in February. There will be a bulge, and a lot of the people who will be left with the private funds in February will not be able to come across to Medibank.

The Minister has said that anybody who is taken on by Medibank in the interim is likely to be sacked when an employee of a private firm comes along for employment because that person will get priority. Not only do we have the sacking of the 5,000 originally from the private funds, but also the Minister has invented this new double-sack procedure where anybody who is taken on by Medibank in the interim period is liable to be sacked the moment some new person comes in through the door. Members of parliament on the government side in each of the various constituencies will have a pretty time when this great human turmoil is occurring early next year. That will be a very interesting situation.

The other problem on numbers is location. It will not be possible to place anywhere near this number of people from the private funds in Medibank, they will not be in the right place. There will be a centralisation of locations under Medibank and it will not be possible to take people from the very widespread offices of the private funds and move them all into the centralised Medibank locations.

The Minister has been making statements about this employment problem which are just not believable. He keeps going round saying: 'There will not really be any problem. We will give preference to the employees of private funds, the State governments will take them on to their payroll in various undefined ways, the private funds will be allowed to get into new businesses and they will build up and absorb people. By and large, given the slough, the retirements and this and that it really will all go away and there will be no difficulty'. In a statement reported in the Canberra Times on 16 July of this year he said:

There will be something like an extra 3,000 jobs . . . under the Medicare arrangements . . .

He went on to make various assurances to the private funds as to how easy it would all be to get over this problem. Mr Derek Shaw, the President of the Voluntary Health Insurance Association, saw the reports released on 16 July and spoke to the Minister. A report of his remarks reads:

Mr Shaw said 5000 jobs were at risk but the minister had indicated through press reports on July 16 and to him via the Director-General of Health, that all employees would still have a job.

'Dr Blewett said they will, so we would be very confident about that,' he said.

Heaven forbid. The report continues:

'Both the Parliament and public see this matter of employment as a very strong issue'.

That is certainly correct. The report continues:

He believed most of the at-risk positions would be absorbed by the expansion of the Health Insurance Commission to act as sole agency for Medicare.

That is 2,500 out of the 5,000 people, less the location difficulties. The report goes on:

He said it was up to Dr Blewett to work out where the remainder would go.

Now the Minister has the problem of working out where the extra 2,500 or 3,000 people go. Despite the concessions that he gave to the voluntary health insurance funds, it still is not clear in any way where these 2,500 people are to go. Following Mr Shaw's remarks on 2 August it was not the Minister who came back to administer a rebuke, but it was a spokesman for the Minister; it was our friend Dr John Deeble. In the Australian of 4 August 1983 the following is reported by Sue Cook:

The federal Minister for Health, Dr Blewett, will not guarantee employment for private health fund employees after the advent of Medicare, the Government's consultant on its health insurance scheme, Dr John Deeble, said yesterday.

This is rather a different story. She continued:

Dr Deeble, the Director of the Health Economics Research Unit at the Australian National University--

he is also the chief adviser to the Minister on this whole scheme--

said Medibank Private would be recruiting 2500 new staff to run Medicare and private fund employees would be given preference.

This is under this double-sack scheme that I spoke about before. She continued:

'There are some people who will lose their jobs because it (their employment) depends entirely on what activities the funds decide on after Medicare is introduced,' he said. 'The Government won't guarantee employment.'

I have not seen anything put forward since then by this Minister to contradict what Dr John Deeble has said. The Minister has been going round promising continuity of employment to all these people. He has been suggesting that somehow they will be absorbed by State governments, that somehow the health insurance funds will miraculously enter into new areas of business which will take on large numbers of these people, but anybody who has tried to go into new areas of business in the private sector has not found it terribly easy. How they can carry thousands of people over months or even years while those new businesses are being developed is beyond my comprehension. I have had direct private sector management experience and I think it is absolute bunkum to suggest that that can be done.

Mr Dolan comes into the act here. Mr Dolan is supposed to be concerned about employees. He is not concerned about the employees in the Federated Clerks Union who are the people who work in the private funds. He seems to agree with the Government that it is a good idea to shift employees away from unions such as the Federated Clerks Union and into the public sector unions. Mr Dolan and the Minister for Health had a summit meeting of sorts in August and they made a joint statement. They congratulated each other on this marvellous new Medicare system and they said:

The Government has made it clear that claims that at least 5000 people will lose their jobs because of Medicare are exaggerated--

I imagine just as the report of the death of Mark Twain was exaggerated-

especially because of the high turnover rate among private health fund employees and the diversification opportunities that the Government is offering.

That is the form of words that the Minister has been using and continues to use to overcome his difficulty in explaining where the 2,500 missing jobs are. The fact is that he has not been able to contradict Dr John Deeble who says that there is no government guarantee to these people.

But it is not the 2,500 net jobs about which we are concerned. We are concerned about the 5,000 people currently employed in the private funds who will definitely lose their present jobs. Some of them might be re-employed-up to 2, 500, possibly-but location will not allow that. I suspect that 3,000 to 4,000 of these people will not be re-employed directly in this area at all. This is an action by a government that claims to be concerned about employment and job security. These poor people in the Federated Clerks Union, who do not have Mr Dolan's power of patronage given out to them, will be the victims of the determination of this Minister to destroy the private health insurance industry and to centralise all this business in a single, government monopoly organisation on the claim that it will be more cost-efficient. These people's jobs will be thrown to the wind and their livelihoods will be destroyed. They may get jobs elsewhere but things are still tight out in the economy. Things are not easy. In a lot of the decentralised locations where they work they will not get other jobs. This Minister will have on his conscience at least 2,500 people. While his colleagues in the Ministry are making various announcements for job creation schemes this Minister comes into the House and announces job destruction schemes. He announces them concurrently with the expenditure of tens of millions of dollars of taxpayers money in order to bring about the destruction of these jobs.

I make this point in summary and in conclusion. This statement, which appears to be a very simple one on the matter of the interim ninth annual report of the Health Insurance Commission, is yet another instance of the thoroughly misleading statements this Minister continues to make about his Medicare scheme. Almost every single statement in this report that he has read is incorrect in some material respect. Although the main debate on this sorry subject will not occur for another two weeks or three weeks I thought it was necessary to inform the house along the way exactly to what degree this Minister is prepared to mislead this House on matters of very great national importance.