Senator the Hon. Mathias Cormann
Minister for Finance
The Coalition has long been committed to the sale of Medibank Private.
Medibank Private is a commercial business operating in a well functioning and competitive market with 34 competing funds.
As such there is no compelling policy reason for the Government to continue to own Medibank.
The privatisation of Medibank will also remove the current conflict where the Government is both the regulator of the private health insurance market as well as a large market participant in a competitive market.
Proceeds from a sale of Medibank would allow the Government to fund other policy priorities or pay off debt.
The Government has the authority to proceed with this sale through the Medibank Private Sale Act 2006, which the former Government chose not to repeal over the past six years.
The Coalition is committed to progress the sale of Medibank Private through a proper and methodical process provided market conditions are right for the sale.
Today we announce the first step in that process, the commencement of a scoping study into the sale of Medibank Private.
The scoping study will commence by the end of November and will be provided to Government by the end of February 2014.
This will enable proper consideration of the sale in the context of the 2014/15 Budget process.
The process will be administered by the Department of Finance, which early next week will commence a competitive tendering process to appoint advisers to conduct this scoping study.
The scoping study will provide recommendations on all relevant aspects of the sales process, including the sale method, timing, cost, relevant regulatory issues, estimated proceeds and the readiness of Medibank Private for sale.
It will be framed around the Government's objectives for the sale, which are:
- to contribute to an efficient, competitive and viable private health insurance industry;
- to maintain service and quality levels for Medibank contributors, including in regional and rural Australia;
- to ensure the sale process treats Medibank employees in a fair manner, including through the preservation of accrued entitlements;
- to minimise any post sale residual risk and liabilities to the Government; and
- having regard to all of the above objectives, to maximise the net sale proceeds from the sale.
The scoping study will allow the Government to make fully informed decisions on all relevant aspects of the sale.
Importantly, the Government has not made any decisions yet regarding the timing and structure of the sale.
We will await the findings and recommendations of the scoping study before making those decisions.
During this process Medibank Private will continue to operate as usual and services to policy holders will not be affected.