The Federal Government denies the sale of Medibank Private will push up the cost of private health insurance and damage the budget bottom line.
(Transcript from World News Radio)
Finance Minister Mathias Cormann has announced the sale will go ahead next financial year, saying it is not the job of the Commonwealth to run a private health-insurance company.
But the Opposition’s finance spokesman, Tony Burke, says the government will lose annual dividends of up to $500-million by privatising Medibank, adding to the deficit.
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Created in 1976 under the Fraser Government to provide competition to for-profit health funds, Medibank has 122 branches nationally.
It is Australia’s largest private-health fund, with 3.8 million members in a market of 34 funds.
There are concerns branches in regional areas could be especially vulnerable to closure if the business is sold, but the Government says it is confident regional areas will not suffer.
Senator Cormann has announced the initial public offering, saying an independent study concluded there is no compelling reason for the government to own Medibank Private.
The study has also found no evidence premiums would increase as a result of the sale, which analysts say could raise around four billion dollars or more.
The Government says it plans to use the money raised from the sale for infrastructure projects.
But Labor is unhappy with the proposition.
Opposition finance spokesman Tony Burke says the previous government factored into its budget a provision for Medibank to pay the government a minimum $100-million dividend each year.
He says, with the sale, the Commonwealth loses that dividend.
“The issue for taxpayers that we need to remember with this is this sale adds to the deficit. You’re talking about an asset that the Commonwealth already owns. What the Commonwealth loses with the sale is the dividend each year. So you’re talking about adding, depending on the year, anything up to half-a-billion dollars to the deficit in any year. And that’s off the back of* us already having, in a few months of Joe Hockey as Treasurer, $68-billion added to the deficit.”
Senator Cormann says it is unsustainable to continually draw large dividends from the insurer.
He rejects Labor’s claim that the sale of Medibank Private will increase the budget deficit and says continuing to draw a dividend would push up premiums.
“Medibank Private had a very successful year last year. They made a big profit last year of $233-million, which was up 84 per cent on the previous year. Yet, the shadow minister for finance wants the government to hit Medibank with more than double that in a dividend payout to the government every single year. That is not sustainable, and that actually would push up premiums for Medibank Private policyholders.”
Greens MP Adam Bandt says selling Medibank Private to build roads is lazy and stupid economics.
Mr Bandt says Medicare Private is an asset delivering returns to the Australian people and there are other ways for the Government to raise money.
“Joe Hockey has confected a crisis in the budget so that other ministers have an excuse to run around like TV rug salesmen saying, ‘Everything must go.’ The problem is, once you sell off assets that the public has, you never get them back. If the Government wants to find an extra couple of billion dollars to help balance the budget, they should be looking to Gina Rhinehart and Co (Company) and fossil-fuel subsidies — for example, the diesel-fuel rebate, which costs us about $2.2 billion a year.”
Laws passed in 2006 allow the government to sell the insurer without the need for parliamentary approval.