In the four years since the Rudd government converted Medibank Private Limited (MPL) into a profit-making insurer, the Commonwealth has peeled off $1.366 billion in dividends and taxes. Profits after tax for MPL have totaled $964 million, and the health fund’s net assets totaled $1.4 billion at the end of last financial year. MPL has earned the Commonwealth a 16-fold return on the $85 million investment they put into it. The Abbott Government is determined to sell this lucrative asset – and the selling price will reportedly be anywhere between $2 - $4 billion. One does not need to be a mathematician to appreciate that this is significantly undervalued. Valued at the top of this projection, MPL is earning the Commonwealth 14.5% interest. Both a suppressed report from Deutsche Bank and the following fascinating analysis of the true commercial worth of MPL is in excess of the government’s most positive suggestions. https://facebook/michael.danby.39#!/michael.danby.39/posts/408488609254691 The government’s decision to sell MPL also revives an old debate over whether any prior rights of the 1.8 million members to the net assets could be trampled in the process. The position of members – whose contributions have overwhelmingly funded MPL since 1976 – was widely debated when the Howard government tried to sell it in 2006. afr/p/business/healthcare2-0/medibank_sale_raises_members_rights_R6LbJaIan9URjBgKjPiYRK A Parliamentary Library Opinion published on September 1, 2006 – shortly before the Howard government pulled the sale – found that MPL’s then 1.3 million members were entitled “to the benefit, through their memberships, of the fund and associated assets”. “These are valuable rights,” the authors said. The net assets at the time were $848 million. Under the laws of the day, “the members are entitled to share in the benefit that this net asset position will bring to the fund” – less the $85 million government contribution – they found. In the absence of local precedent, the authors consulted The Ownership of Enterprise by Yale law professor Henry Hansmann. They found that MPL was “effectively without owners”. The founding Chief Executive of MPL, Ray Williams, said that “there is not one cent of Government money invested in Medibank Private, thus any attempt to make a profit out of the sale/privatization of Medibank Private would be an act of theft.” theftinsurance.au/theft-insurance-articles/2002/5/13/act-of-theft-if-medibank-is-sold-to-boost-coffers/ “Instead of paying the money to government they should be reducing [members] premiums,” he said. smh.au/national/public-service/medibank-private-sale-tantamount-to-theft-says-founder-20140328-35nat.html#ixzz2z7pFyT4T Sharing this view is Fred Millar AO CBE, who served as Chairman of the Health Insurance Commission for 15 years. In his Chairman’s report for 1987-88, Millar commented, “The Government has no financial interest in Medibank Private’s assets and reserves. They are the property of its contributors.”thenewdaily.au/news/2014/04/01/medibank-feature/#./?&_suid=1397718331612045184142779080405 The proposed float of MPL conveys risks to investors, primarily the possibility that the Commonwealth of Australia may not be the beneficial owner of the assets now accorded to the company. Again, this is apart from the issue of whether MPL is sold at a firesale price by a short-sighted government to fill an alleged Federal Government budget blackhole, partly created by the Treasurer. smh.au/federal-politics/political-news/minute-reveals-treasury-told-swan-not-to-boost-rbas-reserve-fund-20131025-2w748.html Medibank Private seems to have fallen into a Governance Blackhole and a recent column in the Australian Financial Review by colourful former Labor Leader Mark Latham may give the explanation. Firstly one must proceed on the basis that something can be true even if Mark Latham says it’s true. In an assessment of the corporate swirl around the NSW Liberal Party, he looks at the factors that brought down Barry O’Farrell and may destroy Assistant Finance Minister Senator Arthur Sinodinos. Latham argues, “For the many Australians concerned about the integrity of our governments, the powerbroker-parliamentary-lobbyist model is Exhibit “A” – compelling evidence of how public office is being used for private gain. Politics has become just another monetarised commodity. Unfortunately, the Abbott Government has given the lobbying industry more things to lobby for.” danbymp/content/pdfs/lathamfin.pdf Their next target is Medibank Private.
Posted on: Tue, 22 Apr 2014 08:34:02 +0000
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