Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
BRW wrong on Medibank private sale.

Download PDFDownload PDF

Senator the Hon Nick Minchin

Minister for Finance and Administration Leader of the Government in the Senate

Media Release

55/2006 28 September 2006

BRW Wrong on Medibank Private Sale

The Business Review Weekly article today on Medibank Private is completely wrong in claiming there is a “bombshell” in the company’s constitution that would delay a sale, the Minister for Finance and Administration, Senator Nick Minchin confirmed today.

In deciding to sell Medibank Private, the Government undertook a comprehensive examination of the company and the legal requirements that must be met for any sale to occur.

“The Government has long made it clear that the sale of Medibank Private will require changing the company from ‘not for profit’ to ‘for profit’ status. By definition, there is no market for shares in a company that is not for profit,” Senator Minchin said.

“Conversion to ‘for profit’ status is envisaged under the National Health Act. There are already five ‘for-profit’ funds in Australia, including the third biggest health fund in Australia, BUPA, which has 10 percent of the national health insurance market. The Medibank Private sale legislation, to be introduced next sitting fortnight, will facilitate the conversion process.

“Part of converting Medibank Private to ‘for profit’ status involves amending the company’s constitution. Our sale plans have always included putting in place an appropriate ‘for profit’ commercial constitution prior to the float. The process of changing the constitution is simple, involving the signing of a resolution by the Government.

“The process of conversion to ‘for profit’ is a process likely to take several months and has always been factored into the Government’s sale timetable. The Government sought advice on this process as part of the scoping study. It is likely that the conversion of the company to ‘for profit’ status, including amending the constitution, will occur in 2008, prior to the sale being concluded.”

BRW also claimed that the sale had been delayed.

“It is a myth that the Medibank Private sale was deferred. The Government had never announced a timetable for sale. Rather, we announced our general intention to sell Medibank Private in April 2006, but then sought further advice on how and when the sale should occur. Last month I announced that the sale would occur in 2008, for practical commercial reasons.

“The advice to the Government from our Telstra sale advisers was that it was not in taxpayers’ interests to have two competing share market floats, and that holding the Medibank Private sale even several months after T3 could affect demand for Telstra shares,” Senator Minchin concluded.

Media Contact: David Wawn 02 6277 7400