For those looking for evidence that economic reform is hard in Australia, look no further than the news — broken by The West Australian’s Andrew Probyn — that the government is considering putting Medicare, the Pharmaceutical Benefits Scheme and Human Services payments systems out to tender.

The Labor Party immediately attacked the proposal as “privatising Medicare”, while independent senator Glenn Lazarus complained of public service jobs being lost.

But the process of providing the Medicare Benefits Schedule, PBS and welfare payments requires a vast bureaucracy and complex systems to deliver funds to health professionals and clients across the country. There is no reason why, potentially, it could not be handled by a private sector provider, especially one that could afford to make improvements to the government’s outdated payment system. This would not involve “privatising Medicare” — it would simply reduce the cost and improve the efficiency of Medicare.

But there would be significant risks. More than virtually any other government activity, medical, pharmaceutical and welfare payments systems comprise highly sensitive data about virtually every Australian. The security of such data, and guarantees against any extraneous use of such data, must be built into an outsourcing tender from the very beginning.

Anyone who has had experience of Commonwealth outsourcing — especially IT outsourcing — will know that private providers routinely fail to live up to promised service levels and appear happy to accept penalties for doing so, because they are making so much money from their basic contracts. When it comes to the security of medical and welfare data, such an approach would be disastrous. Data security should be the threshold issue on which outsourcing is considered — not Labor scare tactics about privatising healthcare.