The row over the Abbott government’s plans to try and outsource Medicare’s electronic payments functions, as well as some claims processing, has gone into overdrive after Human Services Minister Senator Marise Payne intervened to hit out at a new union TV attack ad blitz targeted against the move.

The Community and Public Sector Union on Tuesday launched a new television and You Tube video campaign slamming the government’s push to send Medicare’s transactional processing for payments to the private sector, a move that would result in around $30 billion in payments volume being outsourced.

The 30 second ads feature morphing actors portraying variety of everyday people, nurses and doctors saying that the government is planning to “sell-off” Medicare and Pharmaceutical Benefits Scheme (PBS) payments through a “back door” as the beginning of a wider push to privatise Medicare.

If privatising is selling, and outsourcing is buying, those subtleties have been lost thanks to visceral political stoush now hitting the airwaves.

The CPSU’s attack ads come the union knuckles down to the business-end of enterprise bargaining after its governing council gave the green light to members to initiate industrial action over below inflation offers of pay rises combined with a raft of diluted conditions.

Despite the ultimate responsibility for the outsourcing push resting firmly with the portfolio of Health Minister Peter Dutton, Human Services Payne minister has nonetheless intervened firmly in the outsourcing row   which now threatens to engulf all of the Human Services brands that extend across Centrelink and Child Support, Hearing Australia and the former Commonwealth Rehabilitation Service that now insists upon being called CRS Australia.

It is also understood that the push to outsource Medicare’s payments does not sit entirely comfortably within parts of the welfare bureaucracy that favour a far less controversial, more considered and cohesive solution to the replacement of ageing technology.

“The Government is not privatising Medicare,” Senator Payne told Government News. “We [have] taken this action because the IT systems that manage the claims and payments processes are in need of a substantial upgrade.”

Despite the Health portfolio recently talking-up the potential for outsourcing as a way of bringing in private sector efficiency, Senator Payne has taken a decidedly more cautious tone by pointing out that the government was still scoping for potential solution via an EOI as opposed to going to a full tender.

She said the government initiated the EOI process “to determine the level of private sector interest and capability in providing IT services for the claims and payments processes associated with Medicare.”

But the level of financial services industry interest in what is a relatively small but high risk chunk of payments volume is ultimately the critical determinant in whether the government can realise its outsourcing ambitions, irrespective of the political motivations.

Finance sector sources Government News spoke to suggested that the conspicuous talking-up of the Abbott government’s privatisation agenda may draw applause in business circles, but didn’t necessarily translate into bids for work.

One risk that industry is known to be wary of is the potential for policies that affect payments to be changed very quickly. The exposure for service providers there is that private operators could end up carrying the can for expedient or defective policies that don’t sufficiently take into account impacts on customers and end users.

A banking source said that given the relative health of the Australian financial services sector, it had to be asked whether there were easier, less risky options to make money for the potential reward   a natural setting for institutions.

There are also still strong memories of the Howard government’s previous efforts to bring efficiency to government payments and the administration of welfare money. While systems like Medicare’s EasyClaim initiative – which electronically issues Medicare refunds from a point of sale rather than from a Medicare office   eventually got traction, relations with industry descended into litigation following the 2007 change of government.

In 2008 ASX listed payments infrastructure and clearing house ICS Global sued Medicare for abuse of market power after the agency decided to enter the market to enable free transactions between the government and health service providers where commercial providers had previously clipped the ticket on transactions.

While Medicare ultimately agreed to a settlement of $460,000 to pay out ICS subsidiary THELMA in 2009, the episode ultimately served as a lesson about the inherent risks of swift policy changes.

As those memories are reignited in industry, Senator Payne was looking to calm the fears of TV viewers pondering what a privatised Medicare might look like thanks to the CPSU’s ads.

“This is just another misleading and irresponsible scare campaign. Even the most cursory examination shows the union’s claims hold no credibility,” Senator Payne said.

“At this point no decisions have been made. It is much too early to try to predict whether or how this might affect staff at the Department of Human Services.

“Any changes would need to meet the Australian Government’s privacy and security requirements,” Senator Payne said.