Below is a media release issued jointly today by the Department of Health and Ageing and the Department of Finance and Administration, announcing the Government's decision to retain ownership of Medibank Private.
Government to retain Medibank Private ownership
The Minister for Finance and Administration, Senator Nick Minchin, and the Minister for Health and Ageing, Senator Kay Patterson, have today announced that following careful consideration by the Government, a sale of Medibank Private Ltd will not proceed at this time.
In announcing its decision to retain Medibank Private in government ownership, the Government reaffirmed its commitment to further improving the viability and sustainability of the private health insurance industry, to take pressure off potential premium increases and increase the attractiveness of the industry for investors.
"The Government is strongly committed to ensuring a viable and cost-effective private health insurance (PHI) industry. Reforms such as the 30 per cent PHI rebate, Lifetime Health Cover and legislation enabling 'gap' cover have made private health cover more affordable and accessible for Australian families," Senator Patterson said.
"We've also introduced recent reforms to rein in the escalating cost of prostheses that have placed huge pressure on premiums, to require funds to disclose additional information about their management expenses so customers can compare funds' performance, and made changes to reinsurance arrangements to encourage funds to be more efficient and innovative and pass the cost savings on to members.
"The Government is of the view that the reforms it has already put in place have strengthened the PHI industry and reduced pressure on public hospitals," she said.
Senator Minchin said that current market conditions and Medibank Private's $175m loss for the 2001-02 financial year, also contributed to the Government's decision not to proceed with a sale at this time.
As part of its decision, the Government has agreed to measures to strengthen Medibank Private's financial and operational performance - including seeking the implementation of a comprehensive Business Improvement Plan to build on Medibank Private's recent progress in turning around its financial performance.
The Government also agreed that the Minister for Finance and Administration will become the sole Commonwealth shareholder of Medibank Private, to provide a clear distinction between the Commonwealth's roles as industry regulator and business owner. The Commonwealth's shareholding in Medibank Private is currently administered jointly with the Minister for Health and Ageing.
The Minister for Health and Ageing will continue to have responsibility for regulation of the private health insurance industry.
"The decision to retain Medibank Private in government ownership at this time reflects the Government's sensible and responsible approach to its privatisation programme," Senator Minchin said.
Before taking a decision on the future ownership of a major business asset, the Government conducts a thorough review of the business and industry in which it operates, through a scoping study process. In the case of Medibank Private, the Government has taken the view that a sale should not proceed at this time.