JOHN BARRON: The Federal Opposition today unveiled a major election commitment aimed squarely at its desire to cut government debt. Shadow Treasurer Joe Hockey this afternoon pledged that a future Coalition government would sell Medibank Private. He said the sale would fetch up to four and a half billion dollars, which would be used to retire government debt.
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JOE HOCKEY: One area of reform that has always been close to my heart is privatisation. It clearly defines the role of a government as against the role of the private sector in the modern economy. There are some activities that are best left to the private sector. There are some government entities, like Medibank Private, that behave as if they are in the private sector. There is now plenty of competition in private health insurance. All offer health insurance services in competition with Medibank Private. There is no longer a need for government-owned health insurers to ensure competition in the market. Medibank Private operates as if it is in the private sector, so it should be sold to the private sector. We believe in smaller government and we believe in less government debt. So I announce today that the Coalition will sell Medibank Private and use every dollar from the proceeds to help pay down Labor's debt. We estimate the sale of Medibank Private would raise between $3.5 billion and $4.5 billion to help pay off Labor's debt.
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JOHN BARRON: Shadow Treasurer Joe Hockey this afternoon. Joining us now on ABC NewsRadio Drive, the Federal Finance Minister, Lindsay Tanner, who's responsible for Medibank. Mr Tanner, good afternoon.
LINDSAY TANNER: Good afternoon.
JOHN BARRON: You heard Joe Hockey there, saying there is no longer a need for government-owned health insurers to ensure competition in the market. Do you agree?
LINDSAY TANNER: No, I don't. In fact, Medibank Private is playing a very important role of innovating and leading the market. It's the largest health insurer, particularly pursuing reform aims so that it can help people especially with chronic illnesses and diseases manage their health conditions better and more effectively. That means lower health costs and therefore lower premiums. And it also has, in recent times, had a history of having premium increases that are below the industry average. So we believe it is an important element in the wider health picture for the Government as a means to create some positive influence in what's a major part of the overall health picture.
JOHN BARRON: Joe Hockey says Medibank isn't good for competition, how can it be when it's buying up its competitors. He cited the case of ahm.
LINDSAY TANNER: Well, in fact that makes the point and it reveals how little Joe Hockey knows about this subject, because ahm was actually quite a small private health insurer but a very innovative one. And Medibank Private purchased ahm, based in Wollongong, because of its very innovative strategies for managing chronic illnesses and diseases, and helping its customers improve their health outcomes and therefore reduce their costs and reduce premiums. So Medibank Private purchased ahm not because it wanted to get bigger, it purchased it for the quality of what it could bring to Medibank Private. So it demonstrates the point that the reason that Joe Hockey wants to privatise the - Medibank Private simply is not valid.
JOHN BARRON: He says that he'd use all four and a half billion dollars to pay down government debt. He says that would help the budget bottom line. That would be a good thing, wouldn't it?
LINDSAY TANNER: Well, he appears to have plucked the four and a half billion dollar figure completely out of the air. I'd be interested to know on what basis he's reached that estimate. In fact, when the former Liberal Government proposed to sell Medibank Private a couple of years ago, we in fact - end of the sale process when we took office, they valued it around about the $2 billion mark or thereabouts. And certainly, in our own budget figurings, we got a formal valuation of the asset at way, way below the figure Joe Hockey is now citing. So I've got no idea on what basis he's making that claim. But there is another reason that undermines his argument, and that is that in last year's budget, we converted Medibank Private to a dividend-paying and tax-paying company so that it competes on equal terms with some of the other companies in the sector who are private companies. That means that it pays dividends to the Federal Government, substantial dividends that will flow in the future. So if it is sold, those dividends will be lost and that will dramatically reduce any net benefit to the budget that you will get from lower interest payments on debt as a result of the sale.
JOHN BARRON: If you're not looking at selling off Medibank, are there other government-owned entities that you're thinking, yeah, we could get a bit of money out of that?
LINDSAY TANNER: Oh, we've got no plans for any other privatisations of any consequence. There are always small sales of things, particularly land, for example. We obviously got aims to sell unnecessary blocks of land that the government does own in various parts of the country for housing purposes, for example, but there are no entities that - government organisations that we propose to privatise.
JOHN BARRON: The Opposition has made a lot of the debt that has been incurred through stimulus measures over the last year or so. Is it a priority at this stage to try and bring that down, or are you happy with the level of debt as it is?
LINDSAY TANNER: The Government is committed to getting the budget back into surplus and getting debt down to zero. The level of debt will peak at about nine and a half per cent of GDP, of our total economy. That, in fact, is lower than Australia's government debt was for almost all of the 1990s and it is very small compared with most comparable countries. The levels of debt in the rest of the OECD, particularly major countries like the United States, the UK, Germany, France, Japan, are way, way higher than Australia's. It is entirely manageable and it is purely a product of the global financial crisis pushing the budget into deficit, and the Government acting to protect the jobs of hundreds of thousands of Australians whose jobs would be in jeopardy if the Coalition approach were taken.
JOHN BARRON: Thanks very much for your time this afternoon.
LINDSAY TANNER: Pleasure to talk to you.
JOHN BARRON: That's the Federal Finance Minister, Lindsay Tanner, joining us.
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