The Government of Australia Should Privatise Medibank - Case Study Example

SHОULD THЕ АUSTRАLIА GОVЕRNMЕNT РRIVАTISЕ МЕDIBАNK Name Institution Professor Course Date Introduction Australian organisations strive to be responsive or anticipate shifts in business setting. Firms constantly adjust their strategies and they realise that intended or planned strategies may fail to pan out in future while the unanticipated prospects and events instigate emergent strategies. Governments, by contrast, are accountable for establishing competition rules and regulate strategic activities adopted by the private sector. Governments intend to attract business actions in their regions besides making the business more profitable. However, governments must guarantee fairness and prevent monopolistic conducts. A crucial aspect of blueprints that impacts competitiveness include the government rule’s stability. A constant change of regulations and rules is not attractive to business. Regulatory blueprints in Australia are changed in only minor means, followed by changes instigated by reserved government investigations, endorsed through task forces appointed by the government (Capling 2003, p.374). Privatisation entails the procedure of transferring an industry or enterprise from public ownership to private ownership. It involves denationalisation or disinvestments of government-owned property or assets to private or individual investors. The government of Australia should privatise Medibank to promote increased competition within the private health insurance sector, lower economic burden, increase efficiency, lower political interference, besides driving improved health and value upshots for the people of Australia. According to Fairbrother (2002 p.8), privatisation in Australia has developed via two phases where the first phase was led by commonwealth government where state business were corporatized and businesses sold. The second phase entailed restructuring of large state monopolies that did not function in competitive markets. In 1990s, the Australian privatisation program became one of the biggest programs in OECD countries (Fairbrother 2002 p.8). The drivers for privatisation include deteriorating set of economic links, operation of national economy, a series of organisational critical review and a need to modernise the public sector. The proposals of privatisation were developed at federal level and put into practice by states where states governments tried to promote their revenue sources via selling their assets. Privatisation also supported restructuring of state corporations. In Australia, there is a widespread multinational involvement in privatised waste management, health and energy areas. While privatisation comes with numerous advantages, it holds major effects for unions and workforce management because these aspects experience distinctive and new set of circumstances. For instance, multinational ownership introduces tenuousness in dealings amid the locally-based centres and globally-based employers. Following privatisation, unions, local managers and workers hold no immediacy that the government ownership provides. In numerous areas of public service prerequisite, federal ministers and representatives of state government do not plan an apparent and direct role in the conduct and organisation of the privatised businesses. The government does not hold any role in bargaining and negotiations of conditions and terms of employment. Management privatisation is given extra impetus in Australia through agreement amid federal government and Australian states (OECD 2012, p.119). National Competition Policy, a series of inter-governmental agreements intends to open up segments of Australian economy specifically those that governments function to greater competition. The major elements of NCP relates to infrastructure reforms, public monopolies reforms and competitive neutrality. Mathias Cormann, the Australian finance minister announced selling of the state-owned health insurance firm through IPO (Mcllroy, 2014). The announcement was made following a meeting of the state and federal treasures. The sale of Medibank would provide the government with funds to reinvest in novel infrastructure projects that include roads, railways and ports. According to Mcllroy (2014), the government employs the asset recycling idea to cover for privatisation. Opponents of the privatisation process believe that privatisation entail theft of public property and handing over of public companies which provide great revenue to the treasury. Although the government does not predict the sale of the health insurance company, past estimates put the sale of Medibank at four billion dollars where investors are required to buy not more than fifteen percent of the share. Those opposed to the sale of the Medibank organisation claim that Medibank is a profit-making function and selling it would imply that a lot of public fund will be lost. However, the government ensures the public that the sales of the state-owned Medibank would argument premiums of private health insurance. Although those in opposition claim that privatisation of Medibank would lead to a loss in annual dividends besides holding a great impact on individuals using private health insurance, privatisation of the firm would be beneficial to the government and the public. Mcllroy (2014) asserts that privatisation of Medibank would shift the direction of health care where health care would become a market commodity rather a social right. Privatisation increases efficiency. Although privatising Medibank, one of the remaining Commonwealth-owned organisations in Australia is met with much rejection, privatisation in the last two decades has been a crucial tool of the government policy. Privatisation increases efficiency given that the public sector is fundamentally less effective compared to the private sector. According to Jain (2002, p.279), privatisation of the public owned assets increases effectiveness, profitability and productivity. Reduced productivity and inefficiency of the public sector are the major causes of privatisation. The organisers of the public sector hold no independence in taking decision because most decisions in this sector are made by ministers; hence the decisions are politically inspired. Decisions in public sector take long to make thereby prompting under-utilisation of the production capacity. Moreover, public utility services are not determined based on economic standard, but are rather determined based on non-economics, political and social considerations. Privatisation is promoted to prevent losses as most public industries suffer increased losses. More importantly, privatisation lowers the burden on the government because losses experienced through the public sector firms are not borne by the government. Organisers of public firms are indifferent to losses incurred or profits earned (Moulton & Wise 2010, p.349). No attention is paid to efficiency and productivity of the public companies. In addition, there lack the spirit of competition among these firms for need of accountability. Production quality deteriorates and the pubic become the losers. Privatising Medibank will increase competition in private sector. According to Medibank (2014), the sale of the enterprise will increase competition in the private health sector, leading to improved health upshots and better value of the people of Australians. The company vows to remain committed on the requirements of their customers through provision of excellence customer experience. Moreover, the proceeds from the sale of the company will be used to improve the country’s infrastructure. The main goal of privatisation is to augment competitiveness and efficiency among the sectors besides increasing private profit, productivity of public organisations. Privatisation augments competitive power, lowers public deficit and deficit financing by the government, and reinforces industrial management, attainment of quick industrial development and making of optimum utilisation of economic facilities (Jain 2002, p.279). Given the goals of privatisation, the government of Australia should privatise Medibank. Privatisation of Medibank will enhance the performance of the company through lowering government interference in the operations of the company. In the Australian public sector, businesses were initially carried out under the guidance of minsters with routine decisions having to be ratified by politicians or minsters. Privatisation of Medibank will lower the economic burden. This is because the government’s economic burden is lowered when the private sector contributes to heavy capital investments. Through privatisation, the government lowers costs to the payers of tax. While privatisation has become a public policy option in the modern world, the new public management provides a blueprint where potentially lucrative and legitimate ways of augmenting effectiveness and efficiency of the country (Rainey 2009, p.5). Australia has emerged as a notable reformer in privatisation and has reaped benefits from privatising public firms. However, the idea of publicness is pertinent to privatisation decisions and it entails restraint, results, and contexts (Aulich 2011, p.201). Privatisation of public firms extend beyond structural foundation of organisational ownership to the manner in which firms interact with each other, deliver services and goods and subject to control and oversight in the interest of the public well-being (Rainey &Bozeman 2000, p.448). Conclusion A major element of novel public management in numerous jurisdictions has been the changeover of public by private sector ownership, and the substitution of public delivery and financing of services through private mechanisms. Although, there is little proof that ownership is a major aspect in organisational performance and efficiency, scores of jurisdictions such Australia places increased faith in privatisations as way of attaining considerable efficiency in provision of public services. However, technology, task and size in government entities demonstrate that these variable impacts public organisation more than anything linked to their status as publicly owned entities. Although opponents of privatisation claim that privatisation lowers the services available to the public, increases costs to consumers, lack transparency, instigates insufficient accountability and oversight, the private sector can offer increased effectiveness, more creativity in services and better quality services compared to the government. Through privatising Medibank, the government will lower costs to payers of tax, lower economic burden and political interference, promote competition, besides driving improved health and value upshots. Reference List Aulich, C 2011, ‘It’s not ownership that matters: its publicness’, Policy Studies, 32, 3, pp.199-213. Capling, A 2003, ‘Democratic Deficit, the Global Trade System and 11 September’, Australian Journal of Politics & History, 49, 3, pp. 372-379. Fairbrother, P 2002, Privatisation, globalisation, and labour: Studies from Australia. Australia: Federation Press. Jain, T 2002, Economics for engineers. London: FK Publications. Mcllroy, J 2014, Government moves to sell Medibank private, Green left Weekly, available from https://www.greenleft.org.au/node/56202 (22 April, 2014). Medibank 2014, Medibank, Available at http://www.medibank.com.au/about-us/privatisation/ (22 April, 2014). Moulton, S., Wise, C 2010, ‘Shifting boundaries between the public and private sectors: Implications from the economic crisis’, Public administration review, 70, 3, pp.349-360. OECD, 2012, OECD economic surveys: Australia 2012. Sydney: OECD Publishing Rainey, H 2009.Understanding and managing public organizations.4th ed. San Francisco, CA: Jossey-Bass. Rainey, H., Bozeman, B 2000, ‘Comparing public and private organizations: empirical research and the power of a priori’, Journal of public administration research and theory, 10, 2, pp. 447-469. Read More