Senator the Hon Mathias Cormann
Minister for Finance
Date: Thursday, 27 March 2014
TOM ELLIOTT: The Federal Government, as has been spoken about a fair bit recently, has decided to privatise or sell Medibank Private. A lot of people don’t realise this but Medibank Private is really just a private health insurer that just so happen to be owned by the Federal Government. It has got nothing to do with Medicare so it is important that people don’t think Medicare is being sold. One of the people in charge of the sale is the Minister for Finance, Mathias Cormann. Mr Cormann, good afternoon.
MATHIAS CORMANN: Good afternoon.
TOM ELLIOTT: Now a lot of people have asked us if they are policyholders at Medibank Private will they get an allocation of shares or at least a priority to get some shares in the float? Is there a good answer for them?
MATHIAS CORMANN: We are yet to make those decisions. What we announced yesterday was the in-principle decision to proceed with the sale in 2014-15 by way of an initial public offering. The precise structure of the sale, and the question you’ve asked me there goes to the structure of the actual IPO, we’ll make those decisions closer to the time.
TOM ELLIOTT: Is the Government just selling Medibank Private because it desperately needs the money?
MATHIAS CORMANN: No. We don’t think that there is any good public policy reason these days for the government to run a private health fund. The private health insurance market is a very competitive, well-regulated, well-functioning market with 34 health funds. Medibank Private is a commercial business. It operates as a private for-profit business now. We think that there is an opportunity for us to release the capital through this sale and invest it for better purposes. Also we think that selling Medibank will actually help strengthen competition in the private health insurance market and help improve services at better value for everyone.
TOM ELLIOTT: How will it help strengthen competition?
MATHIAS CORMANN: Because without being tied to government ownership, Medibank Private will have more freedom to pursue growth opportunities and will have more freedom to be more creative in the way they improve service quality and efficiency.
TOM ELLIOTT: I read about the history of Medibank Private and I think it was proposed in the late 60’s and brought into operation in the early 70’s, correct me if I’m wrong, but the idea was that it would act as, I don’t know, like a point of competition for the Government to keep the other health insurance funds honest. Are you comfortable that if the Government sells it off that the other insurance funds will stay honest?
MATHIAS CORMANN: Yes we are. There are 34 private health funds who are all competing for customers. After the sale Medibank Private will still be a big health fund, which will still be competing with 33 other health funds for customers. Private health insurance premiums are also highly regulated and that regulation will continue. Arguably the Commonwealth, the Federal Government, right now has a conflict in that we are both regulator and one of the largest market participants. So for the competition to be able to more freely deliver efficiency and benefits for consumers it will actually be good if the Federal Government is just the independent umpire setting the rules rather than to be one of the players as well as the umpire.
TOM ELLIOTT: Mr Cormann just on a separate issue, one of your colleagues, Senator Brandis the other day, I think he was speaking to either the Greens or the Labor Party in Parliament and he said, he made the comment that it is ok to be a bigot. He was talking about the repeal of certain parts of the Racial Discrimination Act. I see that that has caused some disquiet within the Coalition. I mean some people within the Coalition have come out and said we support Senator Brandis, others have said ‘No’ he is on the wrong track. What do you think? Is it ok to be a bigot in modern Australia?
MATHIAS CORMANN: What Senator Brandis was doing was to stand up for free speech. Right now we are having a public debate about how freedoms across Australia can be improved. We took a policy to the last election where we said that we would remove section 18C of the Racial Discrimination Act in its current form. We’ve put a proposal on the table on how we think that can be improved. There is a process now underway, the process of consultation where everyone has the opportunity to express their view and there will be a final judgement at the end of that process. The key here is that in a democracy it is very important to protect and preserve freedoms, including the freedom of speech. We might disagree with what others have to say but we should always protect their right to say it as part of our democratic system.
TOM ELLIOTT: Senator Cormann, Minister for Finance, thank you very much for your time.
MATHIAS CORMANN: Always good to talk to you.
TOM ELLIOTT: Mathias Cormann there, West Australian Senator, will be in charge of the sell-off, the float, of Medibank Private. He did say that a decision has not finally been made on shares, now I’m not saying that you should buy shares in it or not, but I reckon there is a fair chance that if you are a policy holder you might get, not given shares, but given the opportunity to buy some.