The $4 billion sale of Medibank Private will be used to partly fund Sydney’s future infrastructure, including an airport at Badgerys Creek, it has been revealed.
The federal government announced yesterday it planned to sell the government-owned private health insurer by next year.
But rather than use the proceeds to help with what Treasurer Joe Hockey has described as the debt crisis left by Labor, the government confirmed it would put the money into building things.
While many of the infrastructure projects being planned for western Sydney will require more immediate funding, larger projects such as the second airport undefined which has yet to go to cabinet undefined will now be partly funded from the proceeds of the Medibank Private sale.
Tomorrow Mr Hockey will meet state and territory treasurers to broker a deal in which he will tie future infrastructure funds to the sale and recycling of state public assets.
Sources said the federal government had set an example before the meeting by announcing it would use the money from privatising its own assets undefined such as Medibank Private undefined to put into the national infrastructure funding pool.
The Daily Telegraph revealed last month that the federal government would announce a $200 million-plus infrastructure package for western Sydney to accompany the airport.
However, it is expected that the infrastructure package to be announced in the May budget will now be significantly larger for western Sydney.
Finance Minister Mathias Cormann confirmed yesterday that the Medibank Private sale would go ahead in the 2014-15 financial year.
He said a scoping study had confirmed there was no longer a compelling case for the federal government to own the insurance provider.
He said the study also showed the sale would not necessarily result in higher premiums for its members.
“Medibank Private is a commercial business operating in a well-functioning, well-regulated competitive private health insurance market with 34 competing funds,” he said.
“There is no market failure in the (private) health insurance market.”
“The sale of Medibank Private will remove the inherent conflict currently in place where the government is both the market regulator and the owner of a large participant in the market.”
The federal government has appointed three new board members undefined Clayton Utz corporate lawyer David Fagan and experienced company directors Linda Nicholls and Christine O’Reilly undefined to oversee the sale.
The federal opposition has said it is opposed to the Medibank Private sale but admitted it was powerless to stop it because legislation already existed that would allow it.
Labor’s manager of opposition Tony Burke said the sale would wipe out dividends paid by the insurer to the government and reduce the ability to return the federal budget to surplus.
Source: news.com.au Original article.