Christmas has come early for the battalion of brokers, advisors, consultants and assorted carpetbaggers with the announcement of the forthcoming IPO of Medibank Private (ASX code presumably "MPL").
The looming privatisation by Commonwealth Finance Minister Mathias Cormann raises many, many issues.
Topping the list are:
a) What is the prime objective of the sale?
b) Is it in the taxpayers' interest for the health insurer to be sold?
c) Assuming it is in the taxpayers' interest, is the Commonwealth government's choice of an IPO the best way to go about it?
d) How much are the advisors (financial, legal and marketing/communication) engaged being paid? What incentives were thrown their way? Is their role solely to complete the transaction? To maximise proceeds of sale? To maximise the widest distribution of stockholders?
e) Will the government guaranty that insurance premiums will not skyrocket?
Let's focus on (c) for the moment.
Earlier this year, both the Government and the Opposition muddied the waters with their partisan and less than comprehensive comments.
The ABC in March 2014 reported, "the Opposition believes the insurer should stay in public hands and has raised concerns about premium increases and the future of Medibank Private employees".
The Opposition Leader is indeed on strong ground querying, if not forecasting, premium hikes once Medibank is sold. He is however whistling Dixie when he wonders out loud about the fate of Medibank's employees. Does he really think it is the job of the Australian taxpaying public to keep public servants employed performing a task when less of them could (quite possibly) perform those very same functions?
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