SGIO to be sold

The Government has decided to sell the SGIO.

Premier Carmen Lawrence said in her Economic Development Statement that the Government would seek a buyer for the SGIO or sell it by way of a float.

"With the deregulation of financial markets there is no longer a need for State-owned insurance offices to generate competition," Dr Lawrence said.

"Greater competition also carries increased risk for the Government through its exposure in the marketplace as owner of the SGIO."

Dr Lawrence said that as a competitor in the market, the Government also had to respond to pressures for growth to maintain or increase market share. 

"The result of this is an inevitable need for additional capital to maintain prudential and solvency margins.

"While the State benefits from dividends and payments from the SGIO in lieu of tax, the Government believes that the benefits of disposal of the SGIO's assets outweigh the income it receives."

Dr Lawrence said the proceeds from the sale would be used to reduce debt.

"It will also reduce the Government's debt servicing costs, and these savings can then be applied to high priority community services," she said.

It was unlikely that maximum benefits could be gained from an immediate sale, considering the current depressed economic climate.

"The Government will call for expressions of interest but I would stress that there will be consultations with the SGIO's Board, management, employees and unions before any agreement is concluded," Dr Lawrence said.

Legislation currently before Parliament would make the SGIO entirely independent from its present parent organisation, the State Government Insurance Commission.

The Government would retain its interest in 'social insurance' through the SGIC, which would become the Insurance Commission of Western Australia.

The Commission would continue SGIC's responsibilities in areas including compulsory third party insurance, Government workers' compensation insurance, industrial diseases insurance and management of the Government's self insurance arrangements.