The Abbott government will go ahead with the sale of health insurer Medibank Private as it attempts to heal the budget.
Finance Minister Mathias Cormann says an independently-prepared scoping study into the planned sale has reaffirmed the government’s long-held view that there is no compelling reason for it to own a private health fund.
The sale will be conducted in the 2014/15 financial year, but the precise timing and structure of the initial public offering are yet to be determined.
“The scoping study found no evidence that premiums will increase as a result of the sale,” Senator Cormann told reporters in Canberra on Wednesday.
He was coy on what the government hoped to raise from the privatisation, but it has been previously valued at around $4 billion.
Further details will be announced in the May 13 budget.
Analysis: Sale not entirely unexpected, says Eureka Report commentator James Kirby
Medibank Private has around 3.8 million policyholders, so what does its sale mean for them?
And which other widely used government business may be next?
SBS Business reporter Ricardo Goncalves spoke with Eureka Report financial commentator James Kirby for more.
Opposition attacks decision to sell Medibank Private
Labor said the sale would mean the government would miss out on annual dividend from Medibank of as much as $500 million.
Opposition Leader Bill Shorten also launched an attack on the government’s handling of the mid-year budget review, saying it was lying about the budget situation to justify its agenda of cruel cuts.
It made a mockery of former Liberal treasurer Peter Costello’s Charter of Budget Honesty, he told the National Press Club in Canberra.
The budget will be a test of leadership for Prime Minister Tony Abbott and Treasurer Joe Hockey and that framing a budget requires more than fudging figures and accounting trickery, he said.
Independent analysis commissioned by Labor from the Parliamentary Budget Office had shone a light on the government’s deception, Mr Shorten said.
“It shows Tony Abbott and Joe Hockey have tried to doctor the debt and deficit figures to set the scene for severe cuts and broken election promises.”
Shadow treasurer Chris Bowen said the analysis showed the impacts of the coalition government’s decision to drop the former government’s fiscal rules and commit to nearly $14 billion in new spending.
Gross debt would be 40 per cent lower in 2023/24 than forecast by the government in the mid-year budget review and the budget would be $34 billion in surplus that year, rather than a $12 billion deficit, according to the analysis.
Mr Hockey insists his budget numbers tell the truth and “Labor’s didn’t”.
He ridiculed the suggestion that if the coalition had kept to Labor’s budget rules the budget would be coming back to surplus.
“The problem is that Labor never kept to their budget rules,” he told an exceptionally rowdy parliamentary question time.
He reminded the house yet again that on more than 300 occasions Labor had promised to deliver a surplus, but they never did.
“They have no economic credibility, they got every single number wrong and they left the Australian people to pick up the bill from a very bad Labor government,” he said.
Separate modelling suggests there would need to be $55 billion worth of savings in 2023/24 alone to achieve a surplus.
Key facts about Medibank Private sale
– Australia’s largest private health fund with 3.8 million members in a market of 34 funds.
– Set up in 1976 under the Fraser government to provide competition to for-profit health funds.
– It will be sold through an initial public offering in 2014-15, subject to market conditions.
– Analysts expect the sale to raise up to $4 billion.
– The government has appointed three new board members – David Fagan, Linda Nicholls and Christine O’Reilly – ahead of the privatisation.
Source: Finance Minister Mathias Cormann/ Senate Estimates/ Medibank Private Annual Report 2013