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selling off Medibank Private « Previous | |Next »
September 12, 2006

So it looks as if the privatisation of Medibank Private is going to be deferred until 2008. The Howard Government has justified the sale in three ways. Firstly, that there is no good reason to retain Medibank Private in government ownership. Secondly, it would being good for the private health insurance market. This means that it would ensure more competition in the private health insurance market. Competition means lower premiums for consumers is the inference. Thirdly, Medibank's customers would benefit from greater efficiency with a privatised fund delivering lower management expenses. Private is good public is bad is the philosophy of Nick Minchin, the Finance Minister.

True, there would be increased competition, if other private health insurance companies were prevented from owning it through carving Medibank up. However, a privatised Medibank Private would need to make a profit for shareholders. Wouldn't Medibank Private then be run to maximise profits, as Julia Gillard claims? Doesn't that mean increased premiums for consumers?

You can see why there is growing public opposition to a major float of Medibank Private. The postponement measns that the proposed sale as an election issue. Labor would oppose the privatisation of Australia's biggest health fund and argue that a for-profit fund would fuel premium rises.

| Posted by Gary Sauer-Thompson at 9:06 AM | | Comments (6)


I would like to extend an invitation to you to join in on a collective blogging section of our upcoming winter issue of Reconstruction

Here is the original call:

Theories/Practices of Blogging

Our intent in this section of the issue will be to collect a wide range of bloggers and link up to their statements in regards to why they blog (something many of us are asked) and any statement they have on the theories/practices of blogging.

If you already have a post on this you can feel free to use it, or, if you are interested, you can submit a new one.

We will link to each statement from the issue at our site, with the intent of creating a hyperlinked list of statements on blogging that can serve as an introduction to blogging (or an expansion of knowledge for those already blogging).

If you are interested please contact me at mdbento @

Gary, I think people are more likely to oppose the sale more because it is not clear what the costs/benefits are rather than any intrinsic opposition to asset floats.

it sounds a good idea.I would do something on blogging, citizenship and democracy. I did some bits and pieces over at and it would give me a chance to rework it.


Yes, you are probably right. The cost benefits of a public offering are not as clear cut as selling Snowy Hydro are they. Increased premiums are closer to the hip pocket than decreased environmental flows down the River Murray.

How much credibility is there for the view that the sale has been put on hold because of a conflict with the Telstra float? Not much in my view. It's spin to cover the politics.

Gary - Opposition to the sale among the public is about two-thirds, but it is stable rather than growing.

thanks for that---I'd suspected that it was just over 50%. I see that the AFR argues that the Howard Government is not being all that candid about the backflip--as it was with the Snowy Hydro sale.It says:

Of course the government could not admit yet again that it is motivated by such crass political conssiderations (public opposition in an election year), so Senator Minchin has composed a completely implausible alibi--the $2 billion float would have crowded out the $8billion Telstra sale...When decisions like these are made for political reasons institutions and the public are left worse off.

Public opposition never stopped the Telstra sale though. This is not the action of a bold reforming government, is sit?

By the way nice to see you having your own weblog. Good move.