.
THE
SALE OF MEDIBANK PRIVATE
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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