None of Medibank Private's almost 4 million policyholders nor its 4000 staff will receive preferential treatment such as share allocations when the government-owned insurer is privatised next year.
Medibank Private for sale
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Medibank Private for sale
Medibank Private will be privatised through a share market offering, but the government says policy holders will not automatically receive shares.
Finance Minister Mathias Cormann announced the sale of the health insurance giant on Wednesday - the first major asset sale by the Abbott government - hoping to net taxpayers up to $4 billion.
The sale is planned for financial year 2014-15, with the proceeds to be spent on infrastructure.
Dashing hopes of an equity windfall for millions of lifelong policyholders, he said Medibank Private belonged exclusively to the government because customers had purchased health insurance not fund membership.
But the one-off windfall may also cost the government in the longer term as it is the biggest revenue earner on Canberra's books, pulling in $315 million in 2013.
''Medibank Private will be sold through an initial public offering in the 2014-15 financial year,'' Senator Cormann said on Wednesday.
Labor's finance spokesman, Tony Burke, said it would cost taxpayers but there was nothing to stop the sale because enabling legislation passed in 2006.
''Medibank Private delivers a dividend to the government that ranges in the order of between $350 million and $500 million per year,'' Mr Burke said.
''The impact on the deficit from today's decision is quite straightforward - the government in one move adds in the order of about half a billion dollars to Australia's deficit each year.''
But Stephen Anthony, a former Treasury official, said the government could achieve cost neutrality from the proceeds of the sale.
''If you get a good price for it, it's possible that you'll reduce public debt interest by an amount up to something like what you were earning from it,'' he said.
The long-planned-for sale has sparked fresh concerns about competition in the sector and the possibility of increased private health insurance premiums in a market no longer influenced by a large government-owned player.
But Senator Cormann said a scoping study had identified ''no evidence that premiums would increase as a result of the sale''.
Steve Hambleton, the president of the Australian Medical Association, said he was ''somewhat reassured'' by Senator Cormann's comments that the scoping study had found no evidence that premiums would rise as a result of a sale.
Consumer Health Forum spokesman Mark Metherell said it did not oppose the sale, but argued the proceeds should be invested in the health system.