ALP and Democrats are opposed to sale of Medibank Private.


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02-05-2002 07:30 PM



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02-05-2002 07:30 PM


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02-05-2002 08:02 PM

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2002-05-02 19:30:58

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O\'BRIEN, Kerry, (journalist, ABC)

EWART, Heather


HOWARD, John, (former PM)

LEEDER, Stephen


PATTERSON, Kay, (former Senator)


SMITH, Stephen, (former Member)



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ALP and Democrats are opposed to sale of Medibank Private. -

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Speculation over Medibank sell-off

KERRY O'BRIEN: The Federal Government hardly needs a new controversy over health insurance, but the morning papers delivered one with reports about a plan to sell off the Government-owned Medibank Private.

Such a move could trigger a major change in the health insurance landscape, since Medibank Private is by far the biggest insurer with nearly a third of the market.

It's hardly surprising then that debate over the prospect has jumped straight into top gear.

The only voice missing is that of the Government, which for the moment is saying nothing, but no doubt listening carefully.

Heather Ewart reports.

HEATHER EWART: MAN1: I think it's a good idea.

WOMAN1: I wish they wouldn't keep selling off our assets.

WOMAN2: It's not necessarily a bad thing, is it?

MAN2: I think -- a mistake.

HEATHER EWART: We're in pre-budget mode again, that time of year when well-positioned leaks to the media lay the ground work for any unpalatable medicine in the Budget.

This year, it's the proposed sale of Medibank Private, and as always, the Government doesn't confirm or deny.

JOHN HOWARD, PRIME MINISTER: I'm not going to respond to pre-Budget speculation.

SENATOR KAY PATTERSON, HEALTH MINISTER: That's speculating about what might or might not be in the Budget and I'm sure for the next 14 days there'll be lots of speculation about what might or might not be in the Budget.

HEATHER EWART: But the debate is already off and running, which is exactly what the Government would have intended.

STEPHEN SMITH, SHADOW HEALTH MINISTER: I've got no doubt that the Government wants to try and sell Medibank Private.

I've got no doubt the Government wants to try and do to Medibank Private what it's done to Telstra.

MICHAEL NAHAN, INSTITUTE OF PUBLIC AFFAIRS: The simple story is, it operates on a commercial basis, it competes in a commercial interest, the industry it competes in is highly competitive and therefore there's no longer any basis for the Government to own the commanding heights of the industry.

HEATHER EWART: Even one of Australia's leading health policy researchers, Professor Stephen Leeder, has weighed in with dire warnings about the long-term effect on social values.

PROFESSOR STEPHEN LEEDER, SYDNEY UNIVERSITY: If we lose the vision of the provision of equitable health care, and bring private health insurance in as a main stay for health care, and there's no government control over it -- all the Government is doing is just tipping in $2 billion a year in prop-up support for the industry -- we've got a real problem, a real economic problem.

We've got a health care problem and we've got a social problem.

HEATHER EWART: But would the sale of Medibank Private have any real impact at all on the health insurance industry?

PROFESSOR JEFF RICHARDSON, MONASH UNIVERSITY: Well, it would have no impact or virtually no impact upon the health of Australians, have almost no impact on the health sector as such.

If you privatised Medibank, then you'd expect that the new Medibank would be doing very much the same as the old Medibank was -- raising premiums and financing people to go to private hospitals.

There would be no real effect on either overall health spending or on the operation of the health system.

STEPHEN SMITH: If you have a privatised Medibank Private, as the dominant player, as the market leader, required to return a dividend to its shareholders, required to return a profit, then that will only put even more pressure on premiums and will see even higher premiums and the risk that service will deteriorate and the value for money of products will deteriorate.

HEATHER EWART: Medibank Private dominates an industry that consists of 44 funds.

There's not much disagreement amongst the key players and commentators that there are too many funds, and some are just too small.

MICHAEL NAHAN: There will be a rationalisation needed to be in this industry.

But perhaps a private Medibank Private could go in and in fact facilitate that rationalisation.

HEATHER EWART: Force the others out?

MICHAEL NAHAN: No, buy them out and compete with them, yes.

STEPHEN SMITH: We can look at consolidation and rationalisation in the industry which would lead to greater competition and have the potential to provide better value for money for consumers and reduce the pressure on the ever increasing upward spiral of premiums.

HEATHER EWART: So is the Government's motive in floating the possible sale of Medibank Private driven by ideology or the simple desire for more cash?

PROFESSOR STEPHEN LEEDER: The Government, as I understand it, is looking at selling Medibank Private because it's a bit of a cash cow, it's like airports bring in $1 billion in the short term and it helps deal with the budget that's going to be carrying very heavy freight for defence, and for the policy whereby we deal with asylum seekers.

Both of those are going to be expensive.

So getting $1 billion for Medibank Private helps balance the budget.

PROFESSOR JEFF RICHARDSON: Well, it isn't a good idea or a bad idea in terms of the impact on health.

It's really about assets and who owns assets in Australia.

Should it be the Government on behalf of the public or should it be the private sector?

And there's an ideological split between the right wing and the left wing about the desirability of the Government holding assets.

HEATHER EWART: But in the current climate would anyone really want to buy Medibank Private anyway?

Well, the Labor Party thinks so.

STEPHEN SMITH: There will always be interest in it because you're selling a truly national leader, a truly national dominant player with a great brand name, and that will be attractive.

HEATHER EWART: The bottom line here is whether the sale would have any chance of getting through the Senate, and on current indications it wouldn't -- with both the ALP and the Democrats signalling opposition.

SENATOR NATASHA STOTT-DESPOJA, DEMOCRATS LEADER: The Australian Democrats are not fans of privatisation, especially when it comes to public utilities that we believe serve a community interest and have public benefit.

In the case of Medibank Private, we've yet to hear or see from government how the selling of this asset would actually result in benefits for the community.

HEATHER EWART: It's not just the Democrats who are curious to hear the Government's explanation.

But it seems we'll have to wait till budget night for that.

Still, the Government surely would have predicted ALP and Democrat opposition.

It would also have counted on a public backlash.

So for now, in sheer political terms, it's difficult to fathom what's in this for the Government.

PROFESSOR STEPHEN LEEDER: One of the concerns I have is if the Government steps aside from showing leadership in the private health insurance field, then it's opening up the market in a way that I think most Australians would not wish to see.

HEATHER EWART: And you can bet the Government will be watching the public reaction closely.