MAC’s cash cow plan has ‘no credibility’
A Motor Accident Commission insider has poured cold water on an internal plan to keep the insurance provider in public hands, saying it was predicated on shaky logic.
The Advertiser reported last week that the MAC board was stung by the Weatherill Government’s decision to sell off its assets and open the market to private insurers, instead proposing an alternative plan whereby the commission remains public but serves as a “cash cow”, with a $100 million annual dividend to be paid towards general revenue.
But a source has told InDaily the proposal was “very, very mischievous” and had “no credibility from a financial point of view”.
“It was predicated on MAC making excessive returns for the next decade,” the source said.
MAC’s investment returns have exceeded their benchmark in five of the past eight years – and every year since 2012 – with a $483 million surplus reported last year.
You might like
“It’s had three good years, which has enabled MAC to build up a significant war chest (but) it’s not sustainable,” said the source, arguing the premise of the board’s paper was that MAC’s returns remain strong for the next decade.
“The way financial markets work, returns can’t be guaranteed…and if they were, you should use that money to reduce premiums.”
The argument over privatisation was ignited again yesterday, when Under Treasurer Brett Rowse told parliament’s Budget and Finance Committee the Government had considered an unsolicited bid for a Waste Water Treatment plant in Aldinga owned by SA Water, and revealed there had been further consideration to selling off HomeStart assets.
Asked by committee chair Rob Lucas whether further work was being done “on the possible privatisation of HomeStart”, Rowse answered: “I am unable to answer that question.”
Stay informed, daily
He then clarified that this was because he could not talk about issues before cabinet, before taking issue with the term “privatisation”, as it implied a wholesale sell-off.
“I think if you are selling off part or the whole of the book of HomeStart, a lot of people would classify that as privatisation … What word would you prefer to call it?” quizzed Lucas.
“I would say it was transferring part of the book to the financial market,” responded Rowse.
Treasurer Tom Koutsantonis reiterated he had no plans to sell off any part of HomeStart, but conceded he did not consider it an “essential service”.
But the state Liberals themselves remain wedged on the issue of privatisation, with Federal MP for Mayo and Minister for Infrastructure Jamie Briggs this morning declaring he supported selling off SA Water.
“Yes I personally do, yes,” he told ABC Radio 891.
“Absolutely it’s doable, and I think in the current situation SA finds itself in, and the need for additional infrastructure to help grow our economy, I think it would be wise for people to stop running scare campaigns about it and instead have a genuine assessment.”
Briggs said there was “an opportunity at the moment, particularly with a large amount of money floating around the globe looking for a home, to take advantage of mature assets … and reinvesting the proceeds in greenfields infrastructure”.
Joe Hockey has previously encouraged state treasurers to sell significant assets, including SA Water. But Lucas, the state Liberals’ Shadow Treasurer, said: “We respect the private views that federal Ministers express but they’re not the policy of the South Australian Liberal Party.”
“(Opposition Leader) Steven Marshall has made it clear at the last election and since then that’s not our policy,” Lucas said.
Want to see more stories from InDaily SA in your Google search results?
- Click here to set InDaily SA as a preferred source.
- Tick the box next to "InDaily SA". That's it.
