How long before John Howard pulls the plug on the Medibank privatisation circus? It’s beginning to make the aborted Snowy sale look easy.
Even before there’s anything in the way of a popular groundswell in favour of retaining public ownership (it took a while for that to happen with the Snowy as well), there’s an array of opinion based on a variety of arguments against Nick Minchin’s latest float hope.
And as for the relevant minister, Terry McCrann reasonably opines: “In his own words yesterday, Minchin effectively ‘announced’ he was not competent to be finance minister.” That was over his ditzy parliamentarian performance pushing T3, starring the memorable phrase “if they haven’t sold, they haven’t lost their money”. No, Minchin is not a licensed financial advisor.
Against the used Medibank sale, there’s already debate sparked by a parliamentary library study about whether it actually belongs to the policy holders rather than the federal government, something that is being pushed along by the Community and Public Sector Union. The AFR says the union is asking Slater & Gordon to advise on whether Medibank Private policy holders could mount a class action if the government tries to sell the health insurer without compensating them.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
In just a quick sampling of the building opinion, Bartho has a look at the sale in the Smage and can’t seem to find any good reason for it while the private health funds (for their own self-interest) don’t want it to happen and Dr Ken Harvey, a research fellow at La Trobe’s public health school, gives it both barrels for potential inefficiencies.
A nice argument is somewhat buried in the AFR’s letters page. Sandy Halley, a former Private Health Insurance Administration Council commissioner, reckons the Medibank Private sale will increase the cost of private health insurance by 10%.
“Economics 101 explains why selling Medibank Private has no economic benefit: the market is now highly competitive; cost ratios are low; the product is elastic, with the main reason for customer movement between funds being price,” Sandy writes. “Now, most funds are mutuals. They retain sufficient earnings only for prudential margins and to increase services and decrease prices for members. They do not need to generate shareholders’ dividends.”
It seems daft that Howard would pick such a pointless privatisation fight. If he so desperately wants the government to be rid of ownership, the solution is to mutualise it properly, locking up its ownership with present and future policy holders and not taking a profit on the deal.
But to do that, the Prime Minister would have to control a Finance Minister whose only interest seems to be maximising sale prices – and never mind his mum’s best interests.