Essays on Should the Australian Government Privatise Medibank Case Study

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The paper "Should the Australian Government Privatise Medibank" is a perfect example of a business case study.   The proposed privatisation of Medibank is not trendy, but as Zehavi (2012, p. 197) indicates, it is not easy to unearth grounds for public policy to substantiate the on-going public ownership. However, investors will be worried by the in doubt policy setting the Medibank will endure. A number of investors, recalling the returns from the privatisations of the Commonwealth Serum Laboratories as well as Commonwealth Bank, will take the plunge with fervour, but others will cautiously evaluate the risks of the policy (Colley & Head, 2013, p. 867).

Any person worried about wealth inequity cannot back the privatisation of Medibank, which will undoubtedly be jointly owned; thus, decreasing the tax weight on the Australian workforce. Additionally, after years of  decline in labour’ s income share, privatising Medibank would present additional returns to capital thus, heightening Australia wealth inequalities (Onselen, 2014). According to Bastos et al. (2014, p. 252), the privatisation of Medibank would present more money to capital, impinging further the wealth inequality; reference has little belief that this is not the objective of the current Australian government.

It is tricky to advocate, as antagonists do, that since a corporation is owned by the government, then it is inherently unproductive (Crowe, 2014). Those who desire to see Medibank go into private hands must substantiate why Australia must give up those dividends, as well as why the government must not partake as a capitalist too. They have to substantiate why, after those dividends are in existence, an increase in taxes will be an excellent public policy.   The essay seeks to provide a critical analysis with regard to if the Australian government should privatise Medibank. Critical Analysis According to Docherty (2014), the affluence for the Medibank relies much on government policy.

Barely a year passes devoid of experiencing a policy tweak; for instance, lately, the Gillard government decided to use a means test to the rebate of the private health insurance, get rid of the rebate on lifetime health insurance, as well as heighten taxation incentives for workers with high earnings to hold insurance (Huyghebaert et al. , 2014, p. 31). Besides, every year the minister of health is required to set permissible increases in the insurance premium.

Davidson (2014) asserts that it is not possible to list every Medibank policy situation; however, they can be grouped into a few possibilities. The most important possibility is business as usual situation, which reference terms as a prolongation of the friendly setting the company has enjoyed ever since the mid-90s during Howard government. From the time when the lifetime cover was introduced in 2000, the policy of health insurance has remained stable throughout Labor as well as Coalition governments (Black et al. , 2013, p. 298). The current political climate in Australia seems to support business as usual situation, but Medibank privatization is expected to be marred with politics both in opposition and government side (Carrigan, 2013, p. 29).

Even though scores of in the commentariat presumed that election of Tony Abbot was not imminent, or that his government will support private insurance as compared to that Rudd-Gillard Government, Medibank privatization under Abbott government proves the commentariat were wrong. McGrath (2014) posits that investors must discern that privatization of Medibank will extremely be subsidized.

For instance, this year direct budgetary subsidy is estimated to be $5.3 billion, with another $1.6 billion in form of rebate exemption of the private health insurance from the levy. Additionally, there is considerable taxation returns inevitably in consequence of individuals taking out insurance to evade the Medicare levy surcharge (MLS) (Carrigan, 2013, p. 30). With regard to any industry standards, Cai et al. (2014, p. 403) believe these are enormous subsidies, and different from the automakers the fiscal rationalization for aid to private health insurance has by no means been an issue to the review of Australian Productivity Commission.

However, most studies exhibit that private health insurance is a costly means to finance health care (Fahim & Siddiqui, 2013, p. 27; Colley & Head, 2013, p. 869). This is to the level that people desire to share their costs of health care, the most upright as well as resourceful way is by means of one nationwide insurer, such as Medicare. Another policy scenario is the basic review of private health insurance, which would seemingly make out a proposal to stop all subsidies.

According to Fahim and Siddiqui (2013, p. 27), a government that is market-oriented could decide on higher co-payments levels prior to the Medicare cuts that are safe, whereas a Marxist government could select an entirely free system. Undoubtedly, both are fiscally valid but Medibank bears every competition cost, and therefore the investor's risk in the privatization of Medibank is an outburst of fiscal accountability in public policy bringing about more evenhanded as well as resourceful way of subsidizing health care by means of one national insurer. Therefore, maybe Medibank privatization it is not such a big risk (Crowe, 2014).

References

Bastos, P., Monteiro, N.P. & Straume, O.R., 2014. The impact of private vs. public ownership on the level and structure of employment. The Economics of Transition, vol. 22, no. 2, pp.247-80.

Black, S., Kirkwood, J., Williams, T. & Rai, A., 2013. A History of Australian Corporate Bonds. Australian Economic History Review, vol. 53, no. 3, pp.292-317.

Cai, W., Li, H. & Zeng, C., 2014. Competition or privatization: which is more effective in China's banking sector reform? Applied Economics Letters, vol. 21, no. 6, pp.402-06.

Carrigan, C., 2013. Privatisation: the threat to Australia's public hospitals. Australian Nursing and Midwifery Journal, vol. 21, no. 3, pp.28-31.

Colley, L.K. & Head, B., 2013. Changing Patterns of Privatization: Ideology, Economic Necessity, or Political Opportunism. International Journal of Public Administration, vol. 36, no. 12, pp.865-75.

Crowe, D., 2014. We have no policy on privatisation, says Cormann. [Online] Available at: http://www.theaustralian.com.au/national-affairs/we-have-no-poliicy-on-privatisation-says-cormann/story-fn59niix-1226796126622# [Accessed 6 May 2014].

Davidson, S., 2014. Privatising Medibank makes sense. [Online] Available at: http://catallaxyfiles.com/2014/03/26/breaking-news-government-announces-the-privatisation-of-medibank/ [Accessed 6 May 2014].

Docherty, P., 2014. Privatising Medibank: will an IPO deliver for taxpayers? [Online] Available at: http://theconversation.com/privatising-medibank-will-an-ipo-deliver-for-taxpayers-24848 [Accessed 6 May 2014].

Fahim, S.M. & Siddiqui, K., 2013. Privatization of Habib Bank: Corporate Governance Compliance. IUP Journal of Corporate Governance, vol. 12, no. 4, pp.26-29.

Huyghebaert, N., Quan, Q. & Sun, L., 2014. Financing decisions after partial privatization in China: Can a stock market quotation really provide discipline? Journal of Financial Intermediation, vol. 23, no. 1, pp.27-46.

Matsumura, T. & Tomaru, Y., 2012. Market Structure And Privatization Policy Under International Competition. The Japanese Economic Review, vol. 63, no. 2, pp.244-58.

McGrath, P., 2014. Health insurer NIB expects Medibank to pursue takeovers after privatisation. [Online] Available at: http://www.abc.net.au/news/2014-03-26/health-insurer-nib-expects-medibank-to-pursue/5347662 [Accessed 6 May 2014].

Naito, T., 2013. Privatization Of Public Firms And Urban Unemployment In An Integrated Economy. Review of Urban & Regional Development Studies (RURDS), vol. 25, no. 2, pp.93-106.

Onselen, L.v., 2014. Privatising Medibank makes sense. [Online] Available at: http://www.macrobusiness.com.au/2014/03/privatising-medibank-makes-sense/ [Accessed 6 May 2014].

Zehavi, A., 2012. Welfare State Politics in Privatization of Delivery: Linking Program Constituencies to Left and Right. Comparative Political Studies, vol. 45, no. 2, pp.194-219.

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