Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance, Senator Cormann. Will the minister advise the Senate on why the government is proceeding with the sale of Medibank Private?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank Senator Canavan for that question. The reason that we are proceeding with the sale now is because the best advice available to us is that market conditions are right to proceed with the sale, but of course we will continue to monitor market conditions as we are progressing that sale through an orderly and methodical process.

On Sunday, I invited on behalf of the government all Australians, including Medibank Private policyholders, to preregister their interest in receiving a prospectus in the context of the sale of Medibank Private, which we expect to release later in October. The sale of Medibank Private has been longstanding coalition policy, and indeed it has been the longstanding policy of this parliament. The parliament, in 2006, passed the Medibank Private Sale Act, and that sale is being conducted consistent with the requirements in that legislation. The truth is that in 2014 there is absolutely no reason for the federal government to be involved in running private health insurance business. Medibank Private is not a government monopoly; it is a commercial business which operates in a well-functioning, well-regulated, competitive market with 33 other private health insurance funds. There is no market failure and, as such, there is no compelling reason for the government to continue to own Medibank. The sale will of course also remove a conflict, with the government as the regulator of that market and currently the largest market participant.

The final point I would make is that suggestions that somehow this would push up the cost of premiums are inaccurate because Medibank Private in private ownership will continue to have to compete for customers with other funds, which of course will limit their capacity to increase premiums, and premium changes will continue to be regulated as they are now.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Minister, you said in your answer that the public can preregister their interest for a prospectus. Why should members of the public and current policy owners preregister that interest?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

We do encourage all Australians to preregister their interest, and those Australians who do will have the opportunity to apply for a greater allocation of shares, if that is what they want to do, once the sale process proper is underway. In relation to Medibank Private policyholders, if they preregister they will be able to get a greater allocation of shares than members of the public who are not Medibank Private policyholders who preregister. Preregistration is essentially an expression of interest in receiving a prospectus, either in digital form or in hard copy. The government would say that it is up to every individual investor to make a judgement, after having carefully considered the prospectus and having taken proper advice, as appropriate, from a financial adviser, on whether that investment is suitable for them.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. How will the proceeds of the sale of Medibank Private be invested?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The proceeds from the sale of Medibank Private will be reinvested in productivity and enhancing infrastructure as part of the government's plan for a stronger, more prosperous economy where everyone can get ahead. The beauty here is that this is microeconomic reform which will see Medibank Private perform even better in private hands, without the restrictions of government ownership, which means that Medibank Private policyholders will be better off. The government on behalf of taxpayers will be able to release the capital that is currently tied up in Medibank Private and will be able to use it for forward-looking purposes, such as investing in new infrastructure for the future. The Medibank Private service, of course, continues to be available and will provide better services. In the meantime, we will be able to reinvest the capital that is released to ensure that we continue to grow the economy more strongly by moving forward.