Bad medicine: the sale of Medibank Private

Other means to privatise include selling an organisation in whole or in part or to another entity.Such a trade sale would have to address one major issue: that competitive tension inherent in the industry will be maintained or heightened. This can most easily be secured by forbidding the sale to rival domestic insurers. Selling the organisation to say an American HMO (Health Maintenance Organisation) or for that matter a Japanese, Korean, Singaporean or Chinese HMO would serve to maintain or even increase competition in the industry. Market forces could be used to a far greater extent in the setting of Medibank's price, as tender offers (for a trade sale) lead to more accurate pricing. In the United States it is common for parties keen to own a piece of the freshly baked pie to make firm bids stating both the prices they are offering and quantities of shares they are prepared to buy in advance. If this method were aped in Canberra, it would enable the Commonwealth Government to exploit the information it learns from foreign healthcare providers.

This contrasts markedly with the insular approach often used in Australia and the United Kingdom, which involves focusing on the domestic investor market and sounding out a handful of financial institutions close to the seats of power to indicate the 'appropriate" price.

Another simple and inexpensive option is to hawk Medibank (lock, stock and barrel) to say private equity groups or sovereign wealth funds. A transparent, public auction for the entire company, taking bids from all corners of the world will maximize the sale proceeds. And this is surely the best result for all Australians.

After all, aren't transparent, open auctions the most popular method of selling the family home when Australian Mum 'n Dads want to maximize the price?

IPOs for state owned assets, as commonly conducted, serve little purpose other than to enrich so few at the expense of so many.

Just ask the Brits.