Media Release

27/2009
12 May 2009

Medibank Private to Become a For-Profit Government Owned Business

The Rudd Government announced today that Medibank Private will be converted to a for-profit Government owned business.

Lindsay Tanner, Minister for Finance and Deregulation said the conversion from a not-for-profit entity would result in Medibank Private being on equal footing with major competitors in the private health insurance market.

“This is an important change as it will ensure competitive neutrality in the private health insurance industry. For the first time, Medibank Private will pay tax on profits and return dividends to the Government,” Lindsay Tanner said.

“Medibank Private is currently treated differently from other Government owned businesses, such as Australia Post.  This conversion will bring it into line with those other businesses. It will also give the organisation additional freedom and incentive to continue to innovate.

“Importantly, this conversion will mean that Medibank Private will continue to be held in public hands.”

Lindsay Tanner said the Government had worked closely with Medibank Private on the conversion.

“Any future dividends paid to the Government will be set in consultation with the Medibank Private Board to ensure that they have no impact on the premiums that Medibank Private members pay.

“The Medibank Private board has provided written assurances to the Government that these changes will not lead to premium increases.

“The employment conditions of employees will also remain unaffected by the conversion.”

The Government and Medibank Private board will start the process of conversion in the coming weeks and it is expected that process will be complete in late 2009.

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