Australia Privatized Medibank to Boost Infrastructure

Australia Privatized Medibank to Boost InfrastructureThe sum raised by the selling of the company is an amount that exceeds the most optimistic forecasts. It is the second largest IPO in Australia, following that of Telstra phone operator in 1997.

Shortly after his election in September 2013, Liberal Prime Minister Tony Abbott warned that Medibank would be sold. This insurer, created 37 years ago, has 3.8 million customers. The 23 million Australians have access to free health care through Medicare, but most of them also have private insurance.

The finance minister said in October that the sale of Medibank would put an end to a conflict situation, where the government was both the market regulator and the owner of the largest player in the market.

The proceeds from the sale of Medibank will be invested in a vast infrastructure program set up by the government, and in particular in a fund that helps various Australian states to build or upgrade roads, airports, or expand rail etc.

The additional growth

Tony Abbott said that ever since his election he wanted to be “the prime minister of infrastructure.” He made it his priority to reinvigorate growth affected by the end of the mining boom. The government promised to invest $50 billion in 2020 for the realization of “vital transportation infrastructure.” According to the Treasurer Joe Hockey, the construction program is the largest hydroelectric project from the Snowy Mountains in New South Wales, which began in 1949.

While the budget deficit is widening, reaching nearly $50 billion, the government is further promoting privatization to finance the development of infrastructure. The various Australian states are called to separate assets. Victoria, for example, should assign its lease of the Port of Melbourne. If the regions are investing the money raised in new infrastructure, the state abound that investment up to 15% of the value of the asset sold.

“This construction program will transform infrastructure across the country and lay the foundations for future growth. Once the projects is launched, it will add about 1% of GDP,” promises the government in a report published in May 2014. In the shorter term, the work must create jobs.

Thus, in Melbourne, the construction of the East West Link, a new connection highway, will improve access to employment areas and economic centers, and create 6,000 jobs, according to the government. The total amount of the contract, a public-private partnership, is 6.8 billion Australian dollars, of which 1.43 billion will go to the Bouygues Group, responsible for the design and construction of the road.

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