One of the first initiatives of the newly elected Whitlam Labor government in 1972 was the nationalisation of the Australian health care system. Every doctor in Australia was bleating about "the doctor-patient relationship", when it was obvious the only relationship the doctors were interested in was the relationship between the patient's wallet and the doctor's bank account. The health system didn't implode as the doctors had predicted, but it did cost them money.
Compared to the US system, the Australia health care system is a model of sanity. No-one asks, if you have a heart attack, who is your insurer? Everyone is covered for these events. However, if you have private insurance, which is subsidised by the government, you will go to the head of the queue for elective surgery, such as hip replacements, knee operations and so on. Thus, private insurance is a discretionary item.
The Australian healthcare system is a mixture of public and private. It is impossible to meet the demand for health care, as it is always expanding. As the population ages, as in Australia, health outlays will grow and the demands on the healthcare system, especially for elective surgery, will expand. Having a vigorous private health system makes good economic and political sense.
For many years, Australia has had a strong private health insurance industry. Most states had a major insurer, usually mutually owned, such as the Hospital Benefit Fund (HBF) in Western Australia. In other words, it was a not-for-profit model. Now, the health insurance sector operates on a profit based model. Some of the main players are BUPA from the UK and the acquisitive NIB.
Medibank Private was established in 1976 to provide competition to the private sector insurers. No government would dare interfere with the basic model of health care in Australia. That would be political poison. The doctors whine they don't make enough money, but I haven't seen any of them claiming low income benefits at Centrelink. Medicine is like anything else. Stars like ophthalmic surgeons make a motza while the average general practitioner can make around $250,000 if he or she is in a high volume practice.
Shadow Treasurer Joe Hockey announced in February 2010 that Medibank Private, which is wholly government owned, would be sold off by an incoming Coalition government. Medibank Private is the government's ;private health insurance company. The incoming Liberal Treasurer needs to find $60 billion fast. As for the Libs so called "razor gang" finding this sort of money through savings in the bureaucracy, having seen several in action, I have three things to say -- "ha ha ha". To do this, they would have to find savings equivalent to abolishing the Department of Defense, the biggest department in the federal government. If you believe the razor gang can find these sorts of savings, I have a nice near-new bridge going cheap.
Medibank Private is a profit maximising entity. The substantial annual dividend it pays to the government is very much appreciated. No reason exists why the government should own it. From personal communication, Medibank Private does not attempt to restrict premium increases to the rate of inflation. Premiums are increasing at about twice the rate of inflation. Due to the "community rating" model, policy holders liable to catastrophic injuries due to the nature of their employment or recreation, such as professional sportsmen and skiers, pay the same premiums as everybody else. Changing this would open a can or worms no-one would like to confront. The private health sector is one of those things Labor "doesn't like" because "rich people" use it to jump the queue. Queues are the essence of socialism. Private health will get a much better deal from the Coalition.
If Joe Hockey were wise, he would aim for an initial public offering (IPO) rather than a trade sale. A trade sale to industry would raise a lot of money quickly, but it would put the noses of millions of policy holders -- or "members" as Medibank Private prefers to call them -- out of joint. A float along the lines of the Commonwealth Bank of Australia IPO would make Joe Hockey a very popular man.
Friday 22 February 2013
Friday 8 February 2013
Why Melbourne doesn't have an airport rail link
Transurban has one good asset -- its CityLink system. CityLink is a good system, it provides quick and reliable freeway transport for motorists across Melbourne. The rest of its assets are a pack of dogs. Without CityLink, Transurban would be a dog too, not the steady earner beloved of pension funds. Or a "dog with fleas" as Gordon Gekko said.
The absence of a rail link to Melbourne Airport suits Transurban fine, because you can only get to Melbourne Airport by car, taxi or bus. The SkyBus service costs $17 one way. Taxis cost around $50 from the airport to the city. A rail link would mean Transurban would lose a great many of these customers. Transurban operates toll roads, so it makes sense for them to maximise traffic.
Tansurban is not alone in applauding the lack of an airport rail link. Australia Pacific Airports, which operates the airport, has just completed a multimillion dollar upgrade of its parking facilities. It costs around $20 just to park long enough to pick someone up. It is almost impossible to pick someone up from the curb at the airport. Melbourne Airport's parking fees are said to be among the highest in the world. Australian Pacific Airports would be very upset by an airport rail link, which would see much of their business disappear. Even a recent suggestion there should be a dedicated bus lane on the freeway to the airport caused barely concealed alarm.
Transurban, the taxi industry and Australian Pacific Airports are what economists call "rent seekers". Who would benefit from an airport rail link? Only the consumers. And who cares about them? Certainly the Baillieu Government doesn't, because they could change the "no rail link" policy with the stroke of a pen. Good old "Do Nothing Ted" is maintaining his reputation.
The absence of a rail link to Melbourne Airport suits Transurban fine, because you can only get to Melbourne Airport by car, taxi or bus. The SkyBus service costs $17 one way. Taxis cost around $50 from the airport to the city. A rail link would mean Transurban would lose a great many of these customers. Transurban operates toll roads, so it makes sense for them to maximise traffic.
Tansurban is not alone in applauding the lack of an airport rail link. Australia Pacific Airports, which operates the airport, has just completed a multimillion dollar upgrade of its parking facilities. It costs around $20 just to park long enough to pick someone up. It is almost impossible to pick someone up from the curb at the airport. Melbourne Airport's parking fees are said to be among the highest in the world. Australian Pacific Airports would be very upset by an airport rail link, which would see much of their business disappear. Even a recent suggestion there should be a dedicated bus lane on the freeway to the airport caused barely concealed alarm.
Transurban, the taxi industry and Australian Pacific Airports are what economists call "rent seekers". Who would benefit from an airport rail link? Only the consumers. And who cares about them? Certainly the Baillieu Government doesn't, because they could change the "no rail link" policy with the stroke of a pen. Good old "Do Nothing Ted" is maintaining his reputation.
US shale gas makes life hard for Australia
Canada has announced its third export gas project aimed at the Asian market. Another export gas project in Texas is likely to get the go-ahead soon. The hopes of US gas consumers for a captive market have been dashed. The availability of low cost feedstocks has revolutionised the US chemical industry but there is just so much shale gas around in the US it would be silly not to take advantage of the current seller's market in Asia.
Australian gas producers have a window of about five years before US gas projects come on stream but after that the market will become very competitive. When the Panama Canal is widened in 2015, it will be economic to ship Texas Gulf coast gas to Asia. That will really set the cat amongst the pigeons. As predicted in my post "Dump Australian Gas Stocks" (16 Nov. 2012) Australian producers, who are committed to multibillion dollar gas trains, are getting nervous about US competition. Australian gas users as seeking some form of reservation for local use but that bird is unlikely to fly, at least on the terms they are seeking. Also, with shale gas being flared off in the US, it makes no sense not to export it. And the US is a much more reliable supplier than than Oman.
Australian gas producers seem to be getting edgy about missing the market. With major Australian projects way over budget, Shell has said they will build a floating platform for their Browse project, which will be made in Korea, or some similar country, where workers actually work. Of course, Shell is too smart to say "Australian workers are just too expensive and strike prone" but as Bob Dylan said "You don't have to be weatherman to see which way the wind is blowing." Western Australian state Premier Colin Barnett is pushing hard for a land-based facility for Browse, but insiders say he is unlikely to win on this one.
Several other US shale gas export plants are awaiting approval, often with similar stake holders to the Australian projects, for example Shell. It's going to be an interesting couple of years. As for the coal seam gas to be produced in Queensland, it's an inferior product and the wells sunk on agricultural land make it very unpopular with farmers.
Australian gas producers have a window of about five years before US gas projects come on stream but after that the market will become very competitive. When the Panama Canal is widened in 2015, it will be economic to ship Texas Gulf coast gas to Asia. That will really set the cat amongst the pigeons. As predicted in my post "Dump Australian Gas Stocks" (16 Nov. 2012) Australian producers, who are committed to multibillion dollar gas trains, are getting nervous about US competition. Australian gas users as seeking some form of reservation for local use but that bird is unlikely to fly, at least on the terms they are seeking. Also, with shale gas being flared off in the US, it makes no sense not to export it. And the US is a much more reliable supplier than than Oman.
Australian gas producers seem to be getting edgy about missing the market. With major Australian projects way over budget, Shell has said they will build a floating platform for their Browse project, which will be made in Korea, or some similar country, where workers actually work. Of course, Shell is too smart to say "Australian workers are just too expensive and strike prone" but as Bob Dylan said "You don't have to be weatherman to see which way the wind is blowing." Western Australian state Premier Colin Barnett is pushing hard for a land-based facility for Browse, but insiders say he is unlikely to win on this one.
Several other US shale gas export plants are awaiting approval, often with similar stake holders to the Australian projects, for example Shell. It's going to be an interesting couple of years. As for the coal seam gas to be produced in Queensland, it's an inferior product and the wells sunk on agricultural land make it very unpopular with farmers.
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