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An Independent Queensland Regional & Rural 

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(Cairns... Far North Queensland)


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Selwyn Johnston



One person, with the support of the community, can make a difference





When the Howard Liberal Government was returned to power in 2004 with a potential majority in the Senate, the Prime Minister claimed a “mandate” for his program. He also stated the mandate would not be abused.  

Whether or not he was entitled to claim this mandate is another thing but one thing you can be assured of is that he was not re-elected to government on the basis that he would sell Medibank Private. In fact, it would not be unreasonable to assert that the sale of Medibank Private at that time was as far from the public mind as it could possibly be. It was simply not on the public radar. 

At the time you may recall that the election was rather ‘Presidential’ in style and really the electorate was making a choice between Howard and Latham. Perhaps Latham was ahead of his time but the electorate certainly favoured Howard, which hardly amounted to the granting of an overwhelming ‘mandate’ for the many obscure and minimally publicised policies. The sale of Medibank Private was one falling into this category. 

Since the Coalition’s election to power, following the fall of the Keating Labor government, the Liberals have preceded swiftly with a policy of divestment of taxpayer-owned assets, more often than not selling them to the existing owners, the taxpayers. A contradiction in its own right! 

This race to the privatisation of taxpayer-owned assets is part of the philosophy of globalisation. Globalisation is a concept designed to facilitate the growth of international monopoly capitalism, generally at the cost of the individual smaller economic nations and where they are democracies, the degradation of the democratic quality of life in that nation. 

The philosophy of globalisation is gradually loosing favour in a large number of previously compliant nations of the world, and of course there have been those nations that have never accepted it. An even greater number embraced it unenthusiastically or possibly even under duress. The sale of Medibank Private cannot, on any grounds, be justified as a benefit to its membership or the Australian private health industry generally but there are obvious gains to the international insurance, or financial services industry generally. 

In order to remove some of the repugnance that the proposed trade sale is already creating the fall back position seems to be to offer the enterprise to the “Mum and Dad” investors.  More likely than not at the end of a few years the outcome will end up in the same level of heartbreak and financial devastation as that of Telstra’s T2 tranche.  

But the scenario remains the same. Medibank Private in Government hands has to be very accountable to the public, the electorate, and so much so that in order to increase its acceptance the Governments offers a 30% rebate on premiums. It would not be unreasonable to ask of the Government if, after privatisation, this rebate would remain and if so who would fund it, the government or the new owners or perhaps even the members. 

Again if the enterprise is sold there will have to be large company budget items to cover things like capital amortisation, interest, profits and the now to be expected plethora of highly paid executives from the CEO down, not to mention the private Board.  

On the other hand, as long as the Government breaks even on the operation, it makes its profit or benefit from the strain removed from the public health system, and this represents its profits.  

Under Government ownership it would be run with moderate management overheads, and a cheaper capital amortisation as the Government funds it at government “at cost”, below commercial interest rates, as is done with most public institutions. 

Surveys done on the public attitude to the sale of Medibank Private show that the overwhelming majority of the electorate would oppose the sale. That majority is of the order of 70%, a high proportion of the electorate in any language. More telling is that when you add to those opposing the sale to those undecided and otherwise with reservations, the results come out showing only about 10% of the electorate supporting the sale.  

Government backbenchers may like to ponder on this figure for a minute or two as they already have the downside of the sale of Telstra T3, the Industrial Relations Laws, Iraq, Afghanistan and a number of less major but sectionally significant issues that they have to overcome to achieve re-election. They may find that the electorate tolerance is spent. 

So unless the government can offer substantial and long-term benefits to the public from the sale of Medibank Private then it may be prudent to back off from the sale. The example of a country that does have a fully privatised medical insurance system is the United States of America, and it is common knowledge that over there medical insurance costs well over $US10,000 annually and that an ever increasing proportion of the public can’t afford it. Also, coupled with a public health system that would make Peter Beattie look good, the United States system would seem to be the model to avoid like the plague rather than to follow. 

The suggestion by some members of the Coalition that foreign ownership should be restricted to a figure around 30% is a pure smoke screen. Any good constructive accountant could drive a Mack truck through this proposal and the majority of Australians are aware of it. One of the things of which we hear very little in this field is a thing called ‘beneficial ownership’, but that of course would almost breach some ‘Privacy Law’ or other. A convenient opinion to say the least! 

The rushed sale of the Telstra T3, the proposed sale of Medibank Private and the likelihood that two more Australian icon companies, the Coles Group and the Fosters Group will be sold to overseas private equity funds, raises serious questions as to just whom this government is actually working for. It certainly does not appear to be the Australian public! 

This is particularly the case when in the recent budget Treasurer Costello quietly made changes to the law that would make overseas private investment funds exempt from capital gains tax on this type of deal. The advantage for them being, apart from the immediate capital gains tax relief, they could reconstruct the companies, rip down costs [aka Australian jobs] restructure the companies and make off with an even greater profit. Naturally the hyped up created enterprises would be sold to Australian investors, either directly or through superannuation funds, and, as with T2 the ‘Mums and Dads’ could watch at their leisure the steady erosion of their investment. 

So perhaps its time the government told the electorate exactly what is happening. It would be very revealing if they told the truth, something not likely of this Government given their track record.




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Written and Authorised by Selwyn Johnston, Cairns FNQ 4870