Should the Australian Government Privatise Medibank Private?
Should the Australian Government privatise Medibank Private?
Since the 1990s the Commonwealth and State governments of Australia has privatised a sizeable portion of the public sector (Reserve Bank of Australia 1997). The prospect of privatising Medibank has been a controversial matter since its proposal by the Howard government in 2006, although the former government failed to do so, the Abott government announced on March 26th, 2014 that the company will be sold off through an initial public offering (IPO) in the 2014-15 financial year (Mcllroy 2014). This essay will argue that Medibank Private should be privatised and sold publicly through an IPO for short and long term economic and social benefits. In order to determine the validity of this argument this essay will analyse articles and other academic evidences to first look into Australia’s history of privatisation and a brief history of Medibank Private. The essay will then analyse the conflict of interest the current system generates. Further, it will explore the advantage of privatising Medibank Private, including increasing competitiveness in the market and money generated for other social and economic projects.
The Reserve Bank of Australia (1997:7) defines privatisation as the full or partial transfer of ownership of public assets to the private sector (Reserve Bank of Australia 1997). Privatisation gradually increased across the world in the 1980’s originating in Chile, the UK and New Zealand which was a ‘radical reversal’ of the ideology of state ownership (Heraclerous 1999). According to King (2003:2) privatisation began in Australia during the 1980’s with the deregulation of the financial sector and airlines and was accelerated in the 1990’s (King 2002). The first major company to be privatised in Australia was the Commonwealth Bank in 1991 through an IPO (Docherty 2014). Since then the government has privatised multiples state owned companies like Qantas and Telstra (Zhuanf et al. 2014).
Since the 1990s the Commonwealth and State governments of Australia has privatised a sizeable portion of the public sector (Reserve Bank of Australia 1997). The prospect of privatising Medibank has been a controversial matter since its proposal by the Howard government in 2006, although the former government failed to do so, the Abott government announced on March 26th, 2014 that the company will be sold off through an initial public offering (IPO) in the 2014-15 financial year (Mcllroy 2014). This essay will argue that Medibank Private should be privatised and sold publicly through an IPO for short and long term economic and social benefits. In order to determine the validity of this argument this essay will analyse articles and other academic evidences to first look into Australia’s history of privatisation and a brief history of Medibank Private. The essay will then analyse the conflict of interest the current system generates. Further, it will explore the advantage of privatising Medibank Private, including increasing competitiveness in the market and money generated for other social and economic projects.
The Reserve Bank of Australia (1997:7) defines privatisation as the full or partial transfer of ownership of public assets to the private sector (Reserve Bank of Australia 1997). Privatisation gradually increased across the world in the 1980’s originating in Chile, the UK and New Zealand which was a ‘radical reversal’ of the ideology of state ownership (Heraclerous 1999). According to King (2003:2) privatisation began in Australia during the 1980’s with the deregulation of the financial sector and airlines and was accelerated in the 1990’s (King 2002). The first major company to be privatised in Australia was the Commonwealth Bank in 1991 through an IPO (Docherty 2014). Since then the government has privatised multiples state owned companies like Qantas and Telstra (Zhuanf et al. 2014).