Bills Digest no. 47 2006–07
Medibank Private Sale
Bill 2006
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Financial implications
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Medibank Private
Sale
Bill 2006
Date
introduced: 18
October 2006
House: House of
Representatives
Portfolio: Finance and Administration
Commencement: Sections 1 to 4, and Schedules 1
& 2 commence on the day of Royal Assent. Schedule 3 commences
on the designated sale day (see below).
The purpose of the Bill is to make amendments and introduce
provisions necessary to give effect to the Government s decision to
sell Medibank Private in 2008.
In April this year the Commonwealth Government announced its
intention to sell Medibank Private, the health fund that has been
government-controlled since its inception in 1976. As with many
proposals for privatisation of publicly owned or controlled
entities, the proposal to sell Medibank Private has met with much
controversy. On 1 September this year, the Parliamentary Library
released a Research Brief titled The proposed sale of Medibank
Private: Historical, legal and policy perspectives (the Research
Brief).(1) The release of that document coincided with a
public debate over the sale, culminating in the government
announcing that the sale would not occur before 2008, but that it
would proceed with the introduction of this Bill, in order to lay
the groundwork for the sale. The Minister for Finance has denied
that there has been any deferment of the sale.(2)
One of the issues canvassed in the Research Brief was that of
members rights in the Medibank Private fund. One conclusion reached
was that it was arguable that members had the right to the benefit
of the existing surplus assets of the fund, and that a sale of
Medibank Private, if it was to adversely affect those rights, could
give rise to a claim against the Commonwealth for
compensation.(3) Contrary to some media reports of the
contents of the Research Brief, it did not suggest that the members
own the fund. Nor did it suggest that the members could block the
sale . Rather, it concluded that any action was likely to come in
the form of a claim by members for compensation.
After the release of the Research Brief, the Sydney Morning
Herald reported that the board of Medibank Private Limited had
received legal advice some years earlier that:
raised questions about whether the Commonwealth
was the sole owner or its 2.8million members also had ownership
rights.(4)
Other parties raised the issue of members rights from a moral,
rather than legal perspective. Notably, the Australian Medical
Association (AMA) called for the fund to be mutualised,
stating:
The AMA, while not wishing to comment on the
legality of the situation, doubts the morality of the sale given
that much of the value of Medibank Private is in its financial
reserves which were not contributed by the government but rather,
extracted from the members in compliance with regulatory
requirements. This does not imply any criticism of the regulatory
requirements. Reserves are necessary for proper prudential
management of private health funds.
If the Government no longer wishes to be involved
as an operator of a private health fund, there is a strong case for
mutualising Medibank Private and retaining the equity with those
who have contributed it, namely the members.(5)
The conclusions expressed in the Research Brief on the issue of
members rights prompted the Department of Finance and
Administration to seek legal advice, which was tabled in Parliament
by the Minister, Senator Minchin, on the 4th of
September 2006. The advice obtained was prepared by lawyers Blake
Dawson and Waldron.(6) The authors of that advice
conclude, in relation to the central point canvassed in the Brief,
that the Commonwealth will not be liable to pay compensation
.(7) The Blake Dawson Waldron advice appears to form the
basis of the conclusions on this issue in the Explanatory
Memorandum to the Bill. These conclusions unambiguously reject any
suggestion that the members of Medibank Private could be entitled
to compensation upon any sale, or that the members have rights in
excess of those of, for instance, purchasers of car or house
insurance.
Despite the stance taken on the legal issues involved, the
government has, contrary to earlier indications,(8) now
committed itself to including some entitlement for existing members
in the eventual sale plan.(9) This may be in the form of
a special entitlement to, or discount on, shares in any initial
public offering. That the government recognises that its expressed
legal conclusions may not be absolute is also demonstrated by the
inclusion, in this Bill, of a number of safety-net clauses,
including one allowing an express right to compensation for members
in the event that the kind of arguments highlighted in the Research
Brief prove to be correct.(10)
Given that the details of any benefit to members to be included
in a scheme for the sale of Medibank Private have not been made
public, the issue of members rights remains a live one, and,
accordingly, will be revisited below. The legal issues involved are
complex, and it cannot be said with certainty that the conclusions
expressed in the Explanatory Memorandum and the Blake Dawson
Waldron advice would not ultimately prevail. The reasoning offered
in support of those conclusions is, however, open to question, and
the conclusions expressed in the Research Brief including that it
is arguable that the Commonwealth could be liable to compensate
members of Medibank Private remain valid.
In essence, the problem with the position that has been adopted
by the Government is that it seeks to conceptualise the issues
narrowly characterising the status of members of Medibank Private
as equivalent to of those of purchasers of contracts of insurance.
This approach ignores or overlooks aspects of the legislative
regime that support a different view. Successive Parliaments have
fostered a regime for private health insurance in Australia that
gives to members of private health insurance funds a status higher
than that contended for by the Government. This broad problem can
be seen in specific arguments raised by the Department of Finance
and its advisers, as shown below.
As mentioned above, on Monday 4 September 2006, Senator Minchin,
Minister for Finance and Administration, tabled in the Senate, an
advice by solicitors Blake Dawson Waldron (the BDW advice). The
substantive conclusions expressed in the BDW advice rely on three
main premises:
- that membership of the Medibank Private fund entails primarily
a contractual relationship that can be terminated on 2 months
notice at Medibank Private Limited s discretion
- that members have no enforceable rights to benefit from the
general assets of the fund otherwise than through claims under
their insurance policies, and
- that Medibank Private Limited is the beneficial, as well as the
legal owner of the fund assets.
According to the BDW advice, membership of Medibank Private
entails primarily a contractual relationship that can be terminated
on 2 months notice at Medibank Private Limited s discretion, and
can only be secured in advance for a period of 12 months at
most:
Membership of the Fund is, under the Rules,
dependent on payment of the premium in advance. MPL [Medibank
Private Limited] may refuse to accept more than 12 months worth of
advance premiums. In addition, MPL may terminate a membership on 2
months notice. It must give a reason for doing so, but termination
would appear to be at MPL s discretion.(11)
It is worth taking a moment to absorb exactly what this
proposition means. A person who had been a member of Medibank
Private for many years, paid their contributions as they became
due, and acted within the rules of Medibank Private and the law
could, according to the BDW advice, have their membership
terminated arbitrarily, at any time, by Medibank Private Limited,
provided it gives a reason for doing so. The existing members of
Medibank Private might well find this proposition alarming. They
might wonder, for instance, about the integrity of the Government s
Lifetime Health Cover program, in respect of which Medibank Private
s own website explains:
About Lifetime Health Cover
This Federal Government initiative rewards those
who take out hospital cover early in life and maintain it, by
allowing them to pay lower premiums throughout their life compared
with others who take out hospital cover when they re older, or who
allow their cover to lapse for long periods.
From a legal perspective, the proposition might, if true, have
been a strong point in favour of the conclusions expressed in the
BDW advice. This is because it would mean that members could
scarcely claim entitlement to future long term benefits from fund
assets as their memberships could be terminated at any time at the
whim of Medibank Private Limited they would have no right to
continuity of membership.
In fact, the assertion made in the BDW advice is quite clearly
incorrect. It is an error brought about by a narrow focus on the
rules and constitution of Medibank private at the expense of a
broader consideration of the regulatory regime for health
insurance. The fund rules, cited in the BDW advice as the basis for
the contract between the fund and members, are required, if they
are to be of any effect, to be consistent with the National
Health Act 1953 and regulations, including any conditions of
registration.(12) Private health insurers are subject,
as a condition of their registration, to a number of
requirements.(13) Included amongst those is the
principle of community rating . This principle has been described,
by a former Coalition Government Health Minister, as a keystone of
the Australian private health insurance system.(14)
An organisation must ensure that its constitution, rules and
actions, are at all times consistent with the principles of
community rating.(15) There is a community rating
principle in respect of the refusal or cancellation of
memberships.(16) An organisation must not refuse or
cancel a membership if such refusal or cancellation amounts to
improper discrimination.(17) Improper discrimination is
defined in section 66(1) of the National Health Act:
66(1) improper discrimination means a
discrimination that is related to all or any of the following
matters:
(a) the suffering by a person from a chronic
disease, illness or other medical condition or from a disease,
illness or medical condition of a particular kind;
(b) the gender, race, sexual orientation or
religious belief of a person;
(ba) the age of a person, except to the extent
that the person s age may be taken into account under section
73BAAA and Schedule 2;
(baa) the place of residence of a person, except
to the extent that the person s place of residence may be taken
into account under section 73AAL;
(bb) any other characteristic of a person
(including but not limited to matters such as occupation or leisure
pursuits) that is likely to result in an increased requirement for
professional services;
(c) the frequency of the rendering of professional
services to a person;
(d) the amount, or extent, of the benefits to
which a person becomes, or has become, entitled during a
period;
(e) any matter prescribed for the purposes of this
paragraph.
As the Explanatory Memorandum accompanying the Bill that
introduced the provisions quoted above explains:
Community rating prohibits RHBOs [registered
health benefits organisations] from discriminating against
contributors in relation to access to private health insurance and
the use of private health insurance products, except in specified
circumstances.(18)
Even in cases of non-payment of contributions, registered
organisations are effectively required to give members two months
to bring their payments up-to-date.(19) The clear intent
is to ensure free, fair and continuing access to health insurance.
It is difficult to conceive of a situation in which a registered
organisation, purporting to terminate membership without good
reason, could convince an arbiter that it was not in breach of the
community rating principle. The view that community rating affords
protection for continuity of membership is one shared by the
Department of Health and Ageing, which has advised that:
Members are currently provided with the right of
continuity of membership through the principle of community
rating.(20)
The effect of these provisions is that, far from being liable to
have their memberships terminated on two months notice at Medibank
Private Limited s discretion, members of the fund are entitled to
retain their status as such, so long as they pay their dues and
comply with the law (and any lawful fund rules). To the
extent that any of the fund rules were inconsistent with that, they
would be of no effect. The Medibank Private rule relating to two
months notice, would, in the circumstances, be likely to be read
down to mean that members who were not financial must be given two
months notice to remedy, as is required under the Act. Any inquiry
into the rights of members should begin, therefore, from the
premise that continuity of membership is more a matter of the
members discretion than that of Medibank Private Limited.
As pointed out in the Research Brief, the not-for-profit status
of a registered health benefits organisation has consequences under
the Act, including that such an organisation may not distribute
profits and that all income of the fund must be credited to the
fund, including income that is not immediately required
for the payment of benefits.(21) Funds not
immediately required for payment to members are nevertheless
to be credited to the fund and not distributed as profits. When
that requirement is read together with the express requirement to
give priority to the interests of members in any dealing with fund
assets,(22) it is difficult to conceive of what the
legislative intent could possibly be other than that, in the case
of not-for-profit funds, such income be retained for the ultimate
benefit of members. The BDW advice tries to avoid this consequence
by arguing that:
It is clear that a payment of surplus to
shareholders in a for profit registered health benefits
organisation can be made while still giving priority to the
interests of contributors. This is confirmed by section
73AAD(2)(d), which expressly allows for for profit registered
organisations to make such payments.(23)
That argument is not convincing. The effect of subsection
73AAD(2)(d) is to make an exception to the principle that funds
must give priority to members in dealing with assets, so that
for-profit funds can distribute profits. It has no relevance for
organisations that are not established for profit, as is
the case with Medibank Private Limited. This serves to introduce
another issue, that is, the change of status from not-for-profit to
for-profit.
The BDW advice accepts that, at present, Medibank Private is a
not-for-profit fund and that members could take action restraining
Medibank Private Limited from distributing profits and even recover
loss for a breach of the requirement (subject to being able to
demonstrate such loss).(24) The BDW advice implies,
however, that this could be avoided simply by Medibank Private
Limited changing the provision of its constitution that makes it a
not-for-profit company.(25) The effect of the BDW advice
in this regard is that, an organisation might establish itself as a
not-for-profit, register as such and hold itself out to members as
being an organisation which is subject to all the applicable
restrictions under the Act such as non-distribution of profits, and
that its assets are to be managed with priority to members
interests, establish reserves on that basis over a period of years
and then, without reference to members, unilaterally change its
status and freely distribute its reserves as profit. If this were
correct, the effect of the restrictions on not-for-profits under
the Act could, in some circumstances, be entirely undermined. [On
this point also see discussion below under schedule 2, Part 3,
Profit status of Medibank Private ]
In fact, the position is, to say the least, far more complex
than the BDW advice contends. As the industry regulator, the
Private Health Insurance Administration Council (PHIAC)
acknowledges, the National Health Act is not entirely clear on the
process of changing status.(26) The word profit appears
in only two subsections of the Act, and nowhere in the regulations.
In one subsection, it is used to clarify that an organization
established for profit may become registered as a health
benefits organization, despite limits in place on profit
distributions in not-for-profits.(27) In another, it is
used to make clear that, if the registered organization has been
established for profit it may distribute profits to
shareholders.(28) It is noteworthy that the phrase used
on both occasions is established for profit . On a literal
interpretation, an organisation that was not established for profit
cannot become so merely by changing its constitution or its rules.
This point appears to have been grasped by those drafting the Bill,
who have added a provision amending the National Health Act so that
the phrase an organisation established for profit is replaced with
an organisation that is, or is to be, conducted for profit , and so
that an organisation that is conducted for profit may distribute
profits and return capital to shareholders.(29) Indeed,
this argument is expressly recognised in the Explanatory
Memorandum.(30) These changes do not, however, affect
the question of the current status of members rights, which is
central to a determination of the question of compensation.
On the current wording of the Act it is arguable that an
organisation established as a not-for-profit could not alter that
status by changing its constitution and would in fact be in breach
of the Act if it distributed profits, despite anything in its
constitution. A change of status could come about only by winding
up the organisation and establishing a new organisation that was
for profit . This would hardly be a surprising result, given that
historically, the industry ethos has been largely a not-for-profit
one and its regulatory regime has been framed accordingly, with
some recent and minimal exceptions in respect of organisations that
are established for profit.
It should also be noted that PHIAC does not treat changes of
status as being a simple matter of unilateral change of an
organisation s constitution or rules. PHIAC has advised that there
have been six occasions where organisations have changed their
status to for-profit.(31) Where there has been a request
to change status, the Department and PHIAC have convened
registration committees to consider the issues. In making its
decision, PHIAC has considered the interests of contributors and
the financial position of the fund.(32) The latter is
important because, in the case of a fund in a poor financial
position, there may be no issue of loss of members rights to
benefit from fund assets. There may be no surplus asset position to
enjoy. In the case of a fund in a good financial position, however,
such as Medibank Private, it seems hard to make the case that a
change of status that resulted in members losing their right to the
benefit of the fund s financial position would be in their
interests.
Another point made in the BDW advice in relation to members
rights that warrants a response is that relating to repealed
section 82ZGA of the National Health Act. The Research Brief drew
attention to the section and explained that:
This section provided for the winding up of funds
conducted by organisations which had not, by 1 February 1984,
applied for registration as a combined health benefits organisation
(in that year the scheme of the Act changed from one registering
separate medical benefits and hospital benefits organisations to
one registering only health benefits organisations). An interesting
provision appeared in the form of subsection 82ZGA(3), which
provided that, where a fund was to be wound up as a result of
failure to apply for registration under the new regime, the scheme
for the winding up of the fund must make provision:
for the refunding to each person who was a
relevant contributor to the fund, in respect of the contributions
paid to the fund by him, of an amount equal to so much of the
excess as bears to the amount of the excess the same proportion as
the sum of the contributions made by the relevant contributor in
respect of the relevant period bears to the sum of the
contributions made by all relevant contributors in respect of the
relevant period.(33)
The Research Brief notes that the section was repealed in 1992
but asserts that it remains of some interest. The BDW advice, on
the contrary, asserts that:
Those provisions are clearly irrelevant; indeed,
their repeal demonstrates that Parliament intends that contributors
as such not have such an interest in Fund
assets.(34)
The first part of that assertion is debatable, and the second
part is quite plainly wrong. The relevance of the section is that
it provides support for the propositions that:
- the scheme of the legislation has always contemplated that the
members have the ultimate entitlement to benefit from the fund
assets, and
- the Health Insurance Commission did not hold beneficial
ownership of the fund and its assets before Medibank Private
Limited and hence that ownership could not have been transferred to
the latter in 1998 (see below).
The repeal of the section does not have the effect contended for
in the BDW advice. This is confirmed by reference to the
Explanatory Memorandum to the Bill repealing the section, which
explains that the intent was to repeal a number of redundant
provisions relating to medical and hospital benefits funds which
have been replaced by registered health benefits organisations
.(35) That is, the motivating factor for the repeal was
simply the redundancy of the provision and the repeal does not
evince any Parliamentary intention that contributors not have such
interests in funds.
For the reasons outlined above, members of the Medibank Private
fund have rights:
- to health insurance on the terms provided for in the
organisation s rules and under the Act
- to continuity of membership (subject to acting lawfully and
paying their contributions), and
- to have fund income credited to the fund and applied,
ultimately, for their benefit.
The second of the substantial points argued for in the BDW
advice is that it cannot be said that members have any
enforceable rights in the fund assets, apart from their
rights to be paid health benefits under the rules. This is so, it
is said, because:
there is no procedure under which a contributor
could compel [Medibank Private Limited] to apply any Fund assets in
a particular way.(36)
Medibank Private Limited could, the advice contends, simply sit
on any surplus and contributors would have no recourse
.(37) The implication of this is that, without an
enforceable right to benefit from the fund s asset position,
members could not show they suffered by loss of the
entitlement.
These conclusions are, to say the least, debatable. If Medibank
Private Limited indefinitely sat on surplus profits, it would
almost certainly be in breach of the requirement in section 73AAC
of the National Health Act that priority be given to the members
interests in the management of fund assets unless it could
demonstrate that, by doing so, it was somehow acting in the
interest of members. It cannot be said with certainty that members
could not enforce their rights under section 73AAC. Firstly, the
National Health Act itself provides for a very broad enforcement
scheme in respect of failures to conduct funds in accordance with
its provisions. Under section 73BEM the Minister may apply to the
Court for orders redressing breaches of the Act including orders
for the payment of compensation to any individual for loss
sustained as a result of the breach, and any other order
considered appropriate by the Minister and the
Court.(38) There is no reason why this could not be an
order compelling a registered organisation to apply certain of its
funds in a particular way. There is no also no reason why the
Minister could not act bring such an application at the behest of a
member or members. Hence, it is possible that a health fund could
indeed be compelled to apply surplus income in a particular way,
such as through lowered contribution rates.
Secondly, it is at least arguable that, quite apart from section
73BEM, members could, where a registered organisation unreasonably
refused to apply surplus funds to their benefit, bring an action in
their own right seeking compensation for breach of statutory duty,
or for an order compelling the organisation to comply with the Act,
perhaps by applying funds in a particular manner.
The BDW advice argues that Medibank Private Limited is the
beneficial, as well as the legal owner of the assets comprising the
Fund .(39) Beneficial ownership is equated with real or
true ownership.(40) In Commissioner of Taxation v
Linter Textiles Australia Ltd (in liquidation) [2003] FCAFC
63, in considering the meaning of beneficial ownership, the Federal
Court referred to the English Court of Appeal decision in Wood
Preservation Ltd v Prior [1969] 1 WLR 1077. The judges in that
case considered that the term beneficial ownership involved the
ability to appropriate to oneself the benefits of ownership (per
Lord Donovan at 1096) or the right to deal with the property as
your own (per Harman LJ at 1097).(41)
Medibank Private Limited could not appropriate to itself the
fund assets nor does it have the right to deal with such assets as
its own. It may have the right to deal with fund assets but it is
required, under the National Health Act, to conduct such dealings
in the interest of members of the fund.(42) The
assertion is made in the BDW advice that it cannot be the case that
not for profit status of an entity implies that the entity does not
hold beneficial title to its assets . That is not however, an
accurate statement of the argument it seeks to refute. It was not
argued in the Research Brief that not-for-profit health funds are
incapable of having beneficial ownership in assets. It was pointed
out, however, that fund assets are given special treatment in the
National Health Act. The Act clearly distinguishes between funds
and registered organisations and, equally clearly, between
assets of funds and assets of registered
organisations. There are many examples of this, perhaps the
most significant of which is that there are separate regimes, under
the Act, for the winding up of funds and the winding up of
registered organisations, and those provisions distinguish between
assets of funds and assets of registered
organisations.(43) It is not that registered
organisations cannot hold beneficial title to assets, but that they
do not hold beneficial title to fund assets, the ultimate
benefit of which is intended for the members.
Not-for-profit private health insurers are subject to
requirements under the National Health Act that make them unique in
many respects. One such respect, argued for in the Research Brief,
is that assets comprising the health benefits fund are not
beneficially owned by the organisation. The Act imposes certain
rights and duties in respect of fund assets that have the effect
that the fund assets are without beneficial owners. That is,
without entities who can, at least while the fund operates,
appropriate to themselves the usual benefits of ownership. The
result is that a strong case can be made for the proposition put in
the Research Brief that Medibank Private Limited is not properly
described as the beneficial owner of the Medibank Private fund
assets.
The BDW advice makes two further objections to this reasoning,
being that:
- There is no canon of statutory interpretation that would lead
to the conclusion that the Parliament intended by section 73AAC(1)
to deprive registered health insurance organisations of the
beneficial title to assets comprising the funds they operate. There
is a long standing presumption that, without clear words,
legislation is not to be interpreted as alienating or interfering
with vested property rights; and
- if section 73AAC(1) were to have the effect that the Brief
suggests, it would be invalid by virtue of the Constitution section
51(xxxi), as it would have amounted to an acquisition of MPL s
property without compensation.(44)
Both of these arguments miss a critical point. Namely, what is
being suggested in the Research brief and here is that Medibank
Private Limited has never held the beneficial title to the
fund and its assets. Hence, there is no question of the legislation
taking anything away from the company. There are at least two
reasons for this conclusion.
Firstly, transfer of assets from the Health Insurance Commission
(HIC) to Medibank Private Limited was effected in 1998, by
instrument made by the Minister s delegate under the Health
Insurance Commission (Reform and Separation of Functions) Act
1997.(45) That instrument transferred various
assets owned by the Commission. For the same reasons as
outlined above, the HIC did not hold the beneficial ownership in
fund assets and accordingly, the beneficial interest in those
assets did not come within the class of things to which the
instrument was expressed to apply (ie. assets owned by the
HIC).
In addition, the Health Insurance Commission (Reform and
Separation of Functions) Act defines the term asset broadly to
include beneficial interests, and hence gives a broad discretion to
the Minister to make declarations vesting assets in Medibank
Private Limited. It is notable, however, that the actual instrument
effecting the transfer of the assets of the Commission and the fund
to the company does not purport to transfer the beneficial interest
in the fund or its assets to the company.(46) This can
be contrasted with the instrument declaring the transfer of shares
in Medibank Private Limited from the Commission to the
Commonwealth, which expressly transfers the legal and beneficial
interests in the shares.(47)
As expressed in the Research Brief, it is arguable that members
of Medibank Private could be entitled to compensation if the terms
of any sale do not adequately account for their right to the
benefit of fund assets. It was not asserted in the Research Brief,
and is not asserted here, that this means that Medibank Private is
owned by its members, or that members could block the sale.
Additionally, the argument made in the Research Brief and here is
that members may have rights over the existing assets of the fund.
The Research Brief refers to Medibank Private s 2005 annual report
which cites a net asset figure of $653.3 million.(48) It
is this figure in respect of which members entitlement is discussed
(account would also need to be taken of the Commonwealth s $85
million equity). It is not argued, for instance, that there is an
entitlement to any premium that Medibank Private as a business
would attract on sale. If any entitlement to be offered to members
upon a sale is of a value that reflects the net asset position,
then the question of compensation may not arise.
The two main policy arguments made by the Government in relation
to this Bill are essentially the same as those made in April 2006
when it announced its intention to sell Medibank Private.
The first of these relates to the implications of the sale for
competition in the private health insurance sector. The
Government s argument is that:
- a scoping study by Carnegie Wylie has found that privatisation
will enable Medibank Private to operate more efficiently, through
lower management expenses and expansion into new business areas,
and
- this would lead to greater competition in the private health
insurance industry as a whole (and hence place downward pressure on
premiums).
The other argument made by the Government is that
selling Medibank Private will remove the Government s conflict of
interest in being both the industry regulator and owner of the
largest player in the industry.
The Research Brief examined the Government s competition-based
arguments for the sale and found that there was little evidence to
support assertions that a privatised Medibank Private would be more
efficient, competitive and less expensive for consumers
.(49) Since the Research Brief was published, the
Government has announced that it intends to sell Medibank Private
through a share market float in 2008. The Bill seeks to authorise
and facilitate this process. An important feature of the proposed
changes, from a policy, as well as a legal, perspective, is the
conversion of Medibank Private from a not-for-profit to a
for-profit business.
To what extent does the additional information about the mode of
sale assist with understanding its likely impact? Does this
information lead to the conclusion that a privatised Medibank
Private will be more competitive?
It can be reasonably assumed that greater competition would be a
likely outcome of the sale if the following were the case:
- conversion of Medibank Private to a private, for-profit health
fund would enable it to overcome any significant constraints on
competitiveness imposed under current regulatory arrangements,
and/or
- some other opportunity(ies) for enhanced competitiveness (not
related to regulatory constraints) became available to Medibank
Private as a result of its conversion to a private, not-for-profit
health fund.
A publicly listed
Medibank Private would not have any more freedom under the Act and
regulations than it has under its current ownership arrangements.
The only exception to this is in relation to the probable change in
status to for-profit . If such a status change is achieved, then
Medibank Private Limited will be able to distribute profits. This
in itself would not necessarily allow Medibank Private to operate
more efficiently or effectively. Indeed, some argue that it may
simply have the effect of adding an additional layer of cost to the
business. As Medibank Private argued in its 1996 submission to the
Productivity Commission s inquiry into private health
insurance:
A situation where a for-profit middleman (health
insurers) is also involved [in addition to private for-profit
healthcare providers] will unnecessarily escalate the premium
(price) for private health insurance.(50)
The Government has
argued that a privately owned Medibank Private would have lower
management expenses than it achieves under current ownership
arrangements. Management expenses are the costs of administering
the fund and include rent, staff salaries and marketing costs. A
privatised Medibank Private could seek to reduce costs in any of
these areas. However, from a regulatory point of view, there is
nothing that a privatised Medibank Private could do to achieve such
efficiencies that it cannot do under its current ownership
status.
The Explanatory
Memorandum argues that the sale will:
reduce the administrative requirements that
Medibank Private Limited has because of its status as a Government
Business Enterprise [GBE] and enable it to compete on a more equal
basis with other major private health insurers, which are not
subject to these obligations.
These administrative
requirements derive principally from the provisions of the
Commonwealth Authorities and Companies Act 1997 and
requirements of the Governance Arrangements for Commonwealth
Government Business Enterprises (1997).(51) It is true
that these requirements constitute a governance burden that does
not apply to other health insurance organisations. However, the
Explanatory Memorandum does not make clear whether the removal of
the governance burden it faces as a Government Business Enterprise
would reduce the management expenses of a privatised Medibank
Private in any significant way. There is likely to be some
reduction in management costs but this could potentially be
balanced out by the additional costs associated with its
responsibility to distribute profits to shareholders.
The case made for the
sale also suggests that an additional source of competitiveness
would be that a privatised Medibank Private would be able to expand
into new business areas. However, as noted above, from a regulatory
point of view, the only difference between a for-profit and
not-for-profit health benefits organisation is that the former is
entitled to distribute profits to shareholders. There would be no
change to the areas in which it is entitled to do business. While
the government is planning changes to the regulation of the sector
(through a forthcoming Private Health Insurance Bill) that would
enable funds to expand into new areas of business (for example,
out-of-hospital care, financial services, life insurance and other
general insurance products) these are intended to apply to
all registered health funds, not just
for-profits.(52)
A privatised Medibank
Private would be in a better position to raise capital through the
issuing of shares. One way that this could potentially improve
operational efficiency is through the use of this additional
capital to invest in such things as improved information technology
systems or organisational restructuring. Such investments could, in
theory, lead to the kinds of operational efficiency gains that
might make Medibank Private more competitive.
While, as noted in
the Research Brief, Medibank Private has traditionally been
particularly aggressive in pursuit of expansion, innovation and in
competition with other funds, there is also the possibility that
Medibank Private could diversify into areas of business other than
insurance and that this may provide scope for increased
competitiveness. Medibank Private Chief Executive Officer, George
Savvides, while arguing that there are no constraints [associated
with the current ownership arrangements] about being a best
practice organisation in the health sector today , has also argued
that privatisation could possibly allow the fund to achieve greater
goals .(53) It is not clear what goals Mr Savvides had
in mind nor why a privatised company would be better placed to
achieve them. It may be that political imperatives
associated with public ownership might constrain Medibank Private
from taking advantage of attempts at business diversification that
for some reason were electorally unpopular (though there is no
evidence that this is currently the case).
One claim about how the sale of Medibank Private might increase
competitive pressures in the sector is through inspiring a wave of
ownership changes among other funds in the sector. As noted in the
Research Brief, Standard and Poor s has recently argued that any
sale of Medibank Private is likely to materially affect the
competitive dynamics of the industry .(54) While
Standard and Poor s did not specify the precise nature of the
effect on competitive dynamics, it appears to see the main impetus
for change in the possibility that the sale may lead to
rationalisation and greater concentration within the
industry.(55)
However, the
Government s intention to sell by way of share float appears to
diminish the possibility that the sale will inspire a wave of
industry rationalisation/concentration. This is because Standard
and Poor s view appears to be predicated on the possibility that
Medibank Private would be sold to another fund. The idea was that
this would lead to the creation of a very large health fund and
that other funds would seek to increase in size (e.g. through
amalgamations) in order to compete. Floating Medibank Private on
the share market is unlikely to have this effect (in the short
term) because it is likely that this would simply lead to a change
of ownership, rather than the creation of a new, larger health
fund. This is made likely by provisions in the Bill that prevent
any one person from holding a stake of more than 15% of Medibank
Private.(56) These provisions hold for five years from
the designated sale day . It is possible that after five years a
large fund (for example) could take a larger stake in Medibank
Private and that this could set off a wave of additional
amalgamations in the sector. The likely impact on competitiveness
within the sector of this kind of future scenario is unclear at
this stage.
The Government argues that the sale of Medibank Private will
lead to reduced management costs and allow the fund to pursue new
areas of business but it is unclear how these improvements will be
realised. The proposition is based on the conclusions of a scoping
study undertaken by Carnegie Wiley, however detailed information
from the study has not been provided. This means that there is very
little publicly available information to support such claims.
There would appear to
be nothing, from a regulatory point of view (apart from being able
to distribute profits to shareholders), to show that the new
Medibank Private will be able to do to improve its operations that
the current organisation cannot. A privatised Medibank Private
would be free from the governance burden that applies to GBEs but
it is not clear whether this would significantly reduce the
organisation s management expenses. A publicly listed Medibank
private could potentially improve operational efficiency through
the use of additional capital to invest in improved information
technology systems or organisational restructuring. However, it is
not clear that any reduction in management costs would be greater
than the potential increase in costs associated with Medibank
Private s new responsibility to distribute profits to
shareholders.
As noted in the
Research Brief, in 2005, BUPA (Australia s largest for-profit
health fund), had lower management costs and premiums than Medibank
Private and than the industry average. However, it had less success
in retaining members, received a higher proportion of total
complaints compared to market share and returned a lower percentage
of benefits to members as a percentage of
contributions.(57) This highlights the difficult
regulatory and operational environment in which all
private health funds must operate (regardless of ownership status).
Premiums, benefits and levels of service are part of a finely
balanced, integrated whole, rather than aspects of performance that
can be easily separated and traded-off against one another.
The Government has often argued that selling Medibank Private
will remove what it describes as its conflict of interest in being
both the regulator of the industry and owner of the main health
fund. The implication is that under current arrangements, the
Government is in a position to regulate the sector in a way that
advantages it as a business owner.
In theory, it is possible that the Government could act in such
a way, though the Government has not provided any explanation of
the likely form/s of any such conflict. Medibank Private receives
no obvious regulatory advantages over health benefits
organisations. There is no direct financial incentive for the
Government to provide such advantages given that it does not
receive dividends from Medibank Private. Arguably, there is a
potential conflict of interest related to the fact that the
Government is both the regulator of the sector and the vendor in
any possible sale in that it could conceivably regulate the sector
in such a way as to maximise the share price for Medibank Private.
However, any such conflict exists simply by virtue of the
Government s decision to sell, not in relation to the ordinary
operation of the organisation.
Further, it could be argued that the Government sufficiently
addressed the conflict of interest issue when it decided in 2003 to
make the Minister for Finance and Administration the sole
Commonwealth shareholder of Medibank Private, to provide a clear
distinction between the Commonwealth s roles as industry regulator
and business owner .(58) Previously, the Commonwealth s
shareholding in Medibank Private had been administered jointly with
the Minister for Health and Ageing.
The assumption that there is an inherent and/or problematic
conflict in being both the regulator of an industry and owner of a
major player in that industry also requires comment. First, it
appears to imply that governments are not capable of dealing with
conflicting imperatives in an appropriate manner. Second, there may
be particular instances where the advantages associated with any
real or perceived conflict might be considered to outweigh the
disadvantages associated with its removal. For example, some have
argued that a predominately not-for-profit private health insurance
sector is more likely to focus on the needs of members and on
community objectives such as equity than a predominately for-profit
sector.(59) One outcome of the removal of the government
s potential conflict of interest through privatisation will be to
make the largest single private fund (Medibank Private has 29 per
cent of market share) a for-profit fund and hence significantly
increase the profile of the for-profit segment of the sector.
While not strictly a conflict of interest issue, some have
argued that it is inappropriate that the Government is in a
position to subsidise Medibank Private s operations through the
provision of capital. As the Liberal Party Senator for Tasmania,
Guy Barnett, a prominent advocate for the sale of Medibank Private,
has argued:
How is it that such a large government funded
asset is able to draw on taxpayers funds to bolster its own
dominant position, while being of no benefit to a large number of
taxpayers who, I might add, either have no private health insurance
or have membership with other private health insurers? Such a
distortion of the market cannot be and should not be tolerated. It
is entirely unfair on other health funds and their members The fact
that from time to time taxpayers are asked to contribute funds to
Medibank Private creates an unfair playing field for other private
health insurers, given that this fund is the country s biggest
player.(60)
The Government has provided capital to Medibank Private on three
occasions since 1976. Further, as noted in the Research Brief, when
the fund was operated by the HIC, Medibank Private s financial
operations were always kept separate from those of the Commission
and its other functions that is, Medibank Standard then Medicare so
that the government did not subsidise the operation of Medibank
Private, its administration was paid for from members
contributions.
As can be seen from the table below, the first two of the
Government s capital injections were relatively small amounts
related to the establishment of the organisation and can be
regraded as having been repaid. The third injection (of $85
million) was provided to consolidate Medibank Private s capital
structure (not, as is sometimes claimed, to bail the organisation
out of debt).
Table 1: Commonwealth capital input into Medibank Private
|
Year
|
Amount
|
Reason
|
Amount owing
|
Explanation
|
|
1976
|
$10 million
|
Commencement of fund
|
Nil
|
Entire
amount returned to the Commonwealth (a)
|
|
1978
|
$11 million
|
Establishment grant
|
Nil
|
Payment was
partial compensation for $13.3 million paid by Medibank Private to
Commonwealth for benefits wrongly paid by Medibank Standard. An
amount of $9.4 million, which was owed by other private funds and
which arose in a similar fashion, was written off. Medibank Private
was not compensated for the $2.3 million difference (b)
|
|
2005
|
$85 million
|
To
consolidate a capital structure more consistent with industry
practice. Prior to this, Medibank Private had almost 30 per cent of
the health insurance market risk, but only 16 per cent of its
capital .
|
|
Commonwealth purchased 85 million $1 shares.
|
(a) On
4 December 1978 the Government decided to capitalise the original
grant of $10 million (that is, change it to capital of the Health
Insurance Commission).(61) The $10 million was, however,
eventually returned to the Commonwealth by Medibank Private
apparently due to an administrative oversight in not giving the
Government decision of 1978 appropriate legal
standing(62)
(b)
Therefore, according to Medibank Private, while other funds were
relieved of liability for their debt, Medibank Private effectively
repaid $2.3 million of the total amount owed
.(63)
It is, therefore, correct to state that the Government has
provided some capital funding to Medibank Private. However, the
question of whether this can be regarded as inappropriate is not as
clear. in any case, as suggested above, the argument can be made
that the advantages associated with any real or perceived conflict
might be considered to outweigh the disadvantages associated with
its removal.
- Those to have declared support for the sale of Medibank private
include:
- Catholic Health Australia
- MBF Australia Limited (Australia s second largest health
fund)
- BUPA (as noted above, Australia s largest for-profit health
fund)(64)
Those to have declared opposition to the sale include:
- the Australian Medical Association (AMA)
- the Doctors Reform Society
- the Community and Public Sector Union
- the Health Services Union
- the Save Medibank Alliance (a group including Professor John
Deeble, one of the founders of the original Medibank and Ray
Williams, former general manager of Medibank
Private).(65)
The Australian Consumers Association (ACA), while raising
concerns about the impact on premiums, has not directly indicated
whether it supports or opposes the sale.(66)
The ALP, Greens and Family First have each declared opposition
the sale and can be expected to vote against this
Bill.(67) Recent comments by the leader of the
Australian Democrats, Senator Lyn Allison, in which she described
the sale as unnecessary and ill-considered and raised concerns that
the inquiry into the Bill by the Senate Standing Committee on
Finance and Public Administration will not be full and proper
indicate that the Democrats are also likely to vote against the
Bill.(68)
The Explanatory Memorandum suggests that the financial impact of
the sale on Medibank Private, the Government and the business
sector, is difficult to quantify and will depend on variables such
as market conditions, demand for Medibank Private shares, the scale
of the proposed capital raising and the impact of regulatory
changes for the sector.
Clause 3 provides for the designated sale day
which must be declared when the Minister for Finance is of the
opinion that all shares in Medibank Private are held by persons
other than the Commonwealth, or a wholly owned Commonwealth
company.
Items 1 to 3 amend the Health Insurance
Commission (Reform and Separation of Functions) Act 1997. The
provisions to be amended have the effect of requiring the
Commonwealth to retain ownership of shares in Medibank Private
Limited.
Items 4 and 5 amend the
National Health Act 1953 so as to change the reference in
section 68(3) of the Act from an organisation established for
profit to an organisation that is, or is to be, conducted for
profit , and to make a similar amendment to section 73AAD. The
amendments also provide expressly for the distribution of profit
and return of capital to shareholders in an organisation conducted
for profit . These changes are in recognition of the fact that it
is arguable that, merely by changing its constitution, or even its
registration status, Medibank Private would not become an
organisation established for profit . For more on this see above
under the heading Not-for-profit and for-profit status .
Item 6 adds subparagraph (3)
to section 73AAD. This section effectively provides that surplus
funds generated whilst Medibank Private Limited (and other
registered health organisations) can distribute profits accumulated
whilst it was operating as a not-for-profit. This provision is
central to the question of compensation for members discussed
above, and in the research brief. It effectively undermines the
long-standing provisions of the National Health Act preventing
distribution of such profits and, as outlined above, could give
rise to a claim for compensation on the part of existing members of
the Medibank Private fund, depending on the terms of any eventual
sale. Item 6 is not confined in its operation to Medibank Private
Limited. It will apply to other registered organisations who change
their status from not-for-profit to for-profit, but such changes of
status for other organisations will be subject to ministerial
scrutiny, and will be disallowable where the Minister is of the
opinion that they are unreasonable or inequitable.(69)
As a result of this Bill, the Medibank Private change of status
will not be subject to the same scrutiny (see below under Part 3
Profit status of Medibank Private).
Item 7 provides for a safety-net compensation
scheme, in the event that the amendments to section 73AAD do in
fact constitute an acquisition of property within the meaning of
that phrase in section 51(xxxi) of the Constitution. The effect is
that, if the amendments did amount to such an acquisition, they
would not be invalid, by reason of non-compliance with section
51(xxxi), because a scheme for compensation would be in place.
Although the Explanatory Memorandum describes this outcome as being
unlikely , the inclusion of this scheme in the Bill amounts to a
concession that the kind of propositions put in the Research Brief
regarding the question of compensation for members are
arguable.
Schedule 2 provides a number of technical and
substantive provisions for the facilitation of the sale of Medibank
Private Limited. The more significant provisions are outlined
below.
Part 2 has provisions which anticipate a broad
range of sale schemes that may be chosen to effect the sale of
Medibank Private. Provision is made for the transfer of the
Commonwealth s equity in Medibank Private Limited to a holding
company, prior to a transfer of shares in that company to other
parties. The term Medibank Private company is utilised to include
both Medibank Private Limited and any holding company.
Many provisions of Part 2 provide for the
payment of expenses involved in the sale to be made from the
Medibank Private fund. They expressly provide that such payments do
not breach the restrictions in the National Health Act on how the
fund can be used or the requirement that fund assets be dealt with
giving priority to members interests.
Further details of the sale scheme provisions are provided in
the Explanatory Memorandum.
Item 20 is directed at clearing any obstacles
to Medibank Private amending its rules and constitution so as to
enable it to:
- conduct itself for profit
- distribute profits, and
- return capital to shareholders.
All of which it is prevented from doing at present. Medibank
Private members will be required to be notified 60 days before any
such change, but this is for information purposes only the Bill
gives does not give members a right to prevent the change.
Paragraph (10) of item 20 makes section 78 of
the National Health Act inapplicable to a change of Medibank
Private s rules in the manner specified above. Essentially, section
78 exposes proposed changes to the rules of registered
organisations to ministerial scrutiny. It includes this
provision:
(4) Where the Minister is of the opinion that a
change:
(b) imposes an unreasonable or inequitable
condition affecting the rights of any contributors; or ..
the Minister may, by declaration in writing,
declare that the change shall not come into operation.
One result of the inapplicability of section 78, then, will be
that the Minister for Health will not be required to consider
whether the change of rules to allow the distribution as profit of
surplus member s contributions accumulated whilst Medibank Private
operated as a not-for-profit, is unreasonable or inequitable.
Paragraphs (11) and (12) of item 20 indicate
that the Government has received advice that a change of profit
status might give rise to claims by members for damages for breach
of the Trade Practices Act 1974, or for breach of
contract. This is quite separate from the kind of compensation
considerations outlined in the Research Brief. Specifically,
paragraph (12) expressly anticipates the possibility of claims that
representations were made to the effect that Medibank Private is
not, or will not be conducted for profit (and hence that members
would be joining a not-for-profit organisation that would be bound
by its rules and the National Health Act not to convert surplus
funds to profit). The concern appears to be that these such
representations could have constituted misleading conduct, or
conduct likely to mislead, and hence breach the Trade Practices
Act, or that the representations could have formed a term of a
contract between Medibank Private and its members. Paragraphs (11)
and (12) of item 20 negate any such result, by
providing that representations that Medibank Private is not, or
will not, be conducted for profit, do not result in breaches of the
Trade Practices Act, breaches of contract, or a breach of another
law. In anticipation of the possibility that this extinguishment of
any right to claim damages might itself amount to an acquisition of
property other than on just terms, a safety-net compensation
provision relating to these provisions has been included in the
Bill.(70)
This Part has effect for 5 years from the designated sale day
(see clause 3 above). It is directed at preventing an unacceptable
ownership situation pertaining to Medibank Private. Essentially,
this means that one person cannot hold a stake of more than 15% of
Medibank Private.(71) The Federal Court is empowered, on
the application of the Minister for Finance or the relevant
company, to make remedial orders where any unacceptable ownership
situation arises.(72)
Item 31 provides that schemes entered into for
the purpose of avoiding the restriction on ownership provisions,
where they result in increasing a stakeholding, can result in the
Minister for Finance directing the relevant stakeholder to cease
holding the stake. Such directions are to be reviewable by the
Administrative Appeals Tribunal. Items 33 to
42 provide broad definitions directed at
preventing avoidance of the restrictions on ownership.
Like Part 4, this part operates only for 5
years after the designated sale day. The part provides,
essentially, that Medibank Private must:
- ensure that its central management and control is ordinarily
exercised in Australia
- ensure that it maintains a substantial business and operational
presence in Australia
- ensure that it remains incorporated in Australia, and
- ensure that a majority of its directors are Australian
citizens.(73)
Part 8 has miscellaneous provisions including a
general safety-net compensation scheme in case the provisions of
Part 2 amount to an acquisition of property that would, but for the
provision, be other than on just terms.(74)
The Minister for Finance is expressly given the power to
delegate powers granted by schedule 2 to either the Secretary or a
Senior Executive Service employee of the Department of Finance and
Administration.
This Bill contains provisions necessary to facilitate the sale
of Medibank Private. As noted above, and in the Research Brief, a
sale that does not adequately account for the interest of members
in the Medibank Private fund may result in a liability to pay
compensation to members. The Government has indicated that it
intends to offer some form of benefit to members, but is yet to
specify details. This Bill contains no provisions for such
benefits. The Bill contains various safety-net compensation
provisions, making it unlikely that it would be found to be
constitutionally invalid in the event that it was found to acquire
the property of members. Any redress available to members in such
circumstances is likely to be limited to a claim for
compensation.
The Bill contains safeguards directed at securing the Australian
character of Medibank Private, and at ensuring diversified
ownership. It should be noted, however, that these provisions will
expire five years after Medibank Private is sold.
The Government s policy arguments in relation to this Bill are
essentially the same as those made in April 2006 when it announced
its intention to sell Medibank Private. First, it argues that the
sale will enable Medibank Private to operate more efficiently,
through lower management expenses and expansion into new business
areas, and that this will lead to greater competition in the
private health insurance industry as a whole. Second, it argues
that selling Medibank Private will remove the Government s conflict
of interest in being both the industry regulator and owner of the
largest player in the industry.
The Research Brief suggested that there was little evidence to
support the views about the benefits of selling Medibank Private.
Limited further information has been made available about the sale
principally, that it will be through a share float with Medibank
Private converted to a for-profit fund. This clarification creates
a further problem for the Government s case that a privatised fund
will be more efficient, in that Medibank Private will have the
additional responsibility of distributing dividends to
shareholders.
Disclosure: Jerome Davidson is a member of Medibank
Private.
Acknowledgements
Thanks to Associate Professor Christine Parker, Law School,
University of Melbourne, Susan Dudley, Carol Kempner, and other
Parliamentary Library staff who provided helpful comments on
earlier drafts of this Bills Digest. The authors remain responsible
for any errors and omissions.
Endnotes
- L. Buckmaster and J. Davidson, The
proposed sale of Medibank Private: historical, legal and policy
perspectives, Research Brief, no. 2,
Parliamentary Library, Canberra, 2006 07.
- Senator Nick Minchin, Minister for Finance and Administration,
Media Release, 55/2006, 28 September 2006.
- See pp. 15 27 of the Research brief, op. cit.
- Mark Metherell, Medibank sale opens legal can of worms ,
Sydney Morning Herald, 5 September 2006, p. 1
- AMA, Media Release, 5 September 2006 available at: http://www.ama.com.au/web.nsf/doc/WEEN-6TC8XU
- The Minister described the advice as being from Mr Tom Bathurst
QC . The advice appears to have been prepared by lawyers Blake
Dawson Waldron, but Mr. Bathurst has expressed his agreement to its
contents (BDW advice, paragraph 3).
- par. 5(f)
- Gerard McManus, Medibank for sale , 27 April 2006, p. 7.
- John Breusch, Howard builds roadblock to Medibank takeover ,
Australian Financial Review, 18 October 2006, p. 4.
- See item 7 of Schedule 2 to the Bill.
- par. 18.
- National Health Act, section 67B(e)
- National Health Act, section 73AAF
- Dr Michael Wooldridge, Minister for Health and Family Services,
Government to retain community rating as keystone of
strengthened private health insurance system, Media Release,
10 April 1997.
- National Health Act, section 73AAH
- National Health Act, section 73AAI
- National Health Act, section 73AAI(1)
- Revised Explanatory Memorandum, Health Legislation Amendment
(Private Health Insurance Reform) Bill 2003.
- National Health Act, Schedule 1, para (1)(g).
- Advice provided to the Parliamentary Library by the Department
of Health and Ageing, email, 21 September 2006. In response to a
question about the rights of members to continuity of membership,
the Department stated: The National Health Act 1953, Section 67B,
outlines the way health funds must conduct their business. This
must occur in accordance with the Act and other regulations, and
also the rules of their organisation. Members are currently
provided with the right of continuity of membership through the
principle of community rating. Section 73AAI of the Act outlines
the prohibition of cancellation of membership due to improper
discrimination.
- National Health Act, sections 68, 73AAD.
- National Health Act, section 73AAC(1).
- par. 29.
- BDW advice, par. 22
- par. 21
- Advice provided to the Parliamentary Library by the Private
Health Insurance Administration Council, by email, 21 September
2006.
- Subsection 68(3).
- Subsection 73AAD(d).
- See Schedule 1, items 4 & 5.
- at par. 56.
- Advice provided to the Parliamentary Library by the Private
Health Insurance Administration Council, by email, 21 September
2006.
- ibid.
- pages 24-25.
- par. 28.
- Explanatory Memorandum, Health, Housing and Community Services
Legislation Amendment Bill 1992, p. 36.
- par. 26(a).
- par. 27.
- See also section 73BEN.
- par. 16.
- Kent v The Vessel Maria
Luisa [2003] FCAFC 93.
- Commissioner of Taxation v Linter Textiles Australia Ltd
(in liquidation) [2003] FCAFC 63 (14 April 2003), at par.
30.
- National Health Act, section 73AAC.
- see division 4 of Part VIA
- page 7.
- Australia Commonwealth Government Gazette No. GN 9, 4 March
1998, p. 670 and No. GN 10, 11 March 1998, p. 725.
- Australia Commonwealth Government Gazette No. GN 9, 4 March
1998, p. 670 and No. GN 10, 11 March 1998, p. 725, esp. 740.
- Australia Commonwealth Government Gazette No GN 19, 13 May 1998
p. 1291
- Research Brief, op cit., p. 25.
- L. Buckmaster and J. Davidson, The
proposed sale of Medibank Private: historical, legal and policy
perspectives, op. cit., note 1, p. 1.
- Medibank Private, Submission to Industry Commission, Private
Health Insurance Industry Inquiry , submission no. 168, November
1996, p. 15.
- Medibank Private, Corporate Governance, at http://www.medibank.com.au/aboutus/corporate_governance.asp,
accessed 27 October 2006.
- Department of Health and Ageing (DoHA), Discussion paper
Private health insurance: cover innovation and regulatory
reform, Private Health Insurance Circular, PHI 34/06, DoHA, 15
June 2006, p. 7.
- George Savvides, Managing Director, Medibank Private, quoted in
Sale time for Medibank Private? Business Sunday,
transcript, television broadcast, Nine Network, 23 October
2006.
- Standard and Poor s, Credit FAQ: Building on past successes,
Australian health insurers sustain financial strength , Standard
and Poor s, Melbourne, 17 May 2006, p. 1.
- ibid., p. 5.
- Item 27.
- L. Buckmaster and J. Davidson, The
proposed sale of Medibank Private: historical, legal and policy
perspectives,op. cit., p. 29.
- Senator Kay Patterson, Minister for Health and Ageing and
Senator Nick Minchin, Minister for Finance and Administration,
Government to retain Medibank Private ownership, media
release, 17 June 2003.
- L. Buckmaster and J. Davidson, The
proposed sale of Medibank Private: historical, legal and policy
perspectives,op. cit., p. 28.
- Senator Guy Barnett, Adjournment Medibank Private, 10 May
2006.
- Health Insurance Commission, Fifth Annual Report 1978 79,
Commonwealth of Australia, Canberra, 1979, p. 62.
- Price Waterhouse Urwick, Cost effective delivery of health
insurance to the Australian public , Appendix 7 to Health Insurance
Commission, Submission to the Joint Parliamentary Committee of
Public Accounts Inquiry into the relationship between the
operations of Medicare and Medibank private , 24 January 1992, p.
18.
- Medibank Private, Submission to Industry Commission, Private
Health Insurance Industry Inquiry , submission no. D242, 30 January
1997, p. 9.
- Francis Sullivan (Chief Executive, Catholic Health Australia),
Sell Medibank Private, it no longer justifies government ownership
, Eureka Street, 17 October 2006, at http://www.eurekastreet.com.au/article.aspx?aeid=1797,
accessed 25 October 2006; MBF, MBF welcomes government
announcement of Medibank Private sale, media release, 26 April
2006; $lb Medibank Private sale triggers healthy interest ,
Canberra Times, 27 April 2006.
- Australian Medical Association (AMA), Medibank Private sale
will drive up premiums, media release, AMA, 5 September 2006;
Doctors Reform Society (DRS), Medibank Private sale means more
taxpayer dollars for private health, media release, DRS, 27
April 2006; Community and Public Sector Union (CPSU),
MPL: Union raises concern over Medibank Private sale,
media release, CPSU, 26 April 2006; Health Services Union (HSU),
New poll confirms opposition to Medibank Private sale,
media release, HSU, 19 April 2006; Save Medibank Alliance
website, at http://www.savemedibank.net.au/index.htm,
accessed 25 October 2006.
- Australian Consumers Association (ACA), Medibank sale
sparks calls for reform, ACA, 26 April 2006.
- Hon. Kim Beazley and Julia Gillard, Only a Beazley Labor
government will save Medibank, media release, 11 October 2006;
Senator Bob Brown, Save Medibank Private vote Greens,
media release, 12 September 2006; Senator Steve Fielding,
Family First launches campaign: Hands off Medibank Private
, media release, 17 September 2006.
- Senator Lyn Allison, Medibank legislation exposes
government arrogance, Media Release, 19 October 2006.
- National Health Act, section 78(4).
- Item 58 provides for a compensation scheme if item 20 would
result in an acquisition of property other than on just terms.
- Item 27.
- Item 30.
- Items 44, 45, 46 & 47.
- Item 58.
Jerome Davidson
Law and Bills Digest Section
Luke Buckmaster
Social Policy Section
30 October 2006
Bills Digest Service
Parliamentary Library
This paper has been prepared to support the work of the
Australian Parliament using information available at the time of
production. The views expressed do not reflect an official position
of the Parliamentary Library, nor do they constitute professional
legal opinion.
Staff are available to discuss the paper's
contents with Senators and Members and their staff but not with
members of the public.
ISSN 1328-8091
© Commonwealth of Australia 2006
Except to the extent of the uses permitted under the
Copyright Act 1968, no part of this publication may be
reproduced or transmitted in any form or by any means, including
information storage and retrieval systems, without the prior
written consent of the Parliamentary Library, other than by members
of the Australian Parliament in the course of their official
duties.
Published by the Parliamentary Library, 2006.
Back to top