Legislation providing the framework to enable the sale of the SGIO by public float has been introduced into State Parliament.
The Minister assisting the Treasurer, Geoff Gallop, said today the SGIO Privatisation Bill 1992 was an historic piece of legislation - the first of its kind in Western Australia providing for the sale by public float of a statutory authority.
"The decision to sell the asset was made after considering the needs of the organisation, the priorities facing the State and the very competitive condition of the local insurance industry," Dr Gallop told Parliament.
"It was considered that a privately-owned SGIO would further strengthen competition in the market place and provide a return in the best interests of the people of Western Australia."
Dr Gallop said the decision to float the SGIO affirmed the Government's commitment to use available resources to best advantage. It was also part of the Government's continued commitment to microeconomic reform.
The Minister said the Government accepted its ongoing responsibility for social insurances such as industrial diseases and compulsory third party insurance through the new Insurance Commission of Western Australia (ICWA), which would replace the State Government Insurance Commission.
Legislation to establish ICWA was also introduced into Parliament today.
"The SGIO sale signals the Government's faith in the stability and strength of the local industry and the future contribution SGIO Insurance Limited can make in the private sector," Dr Gallop said.
"After considering possible options, the Government came to the view that there was no longer any strategic or moral reason to continue an involvement in the general insurance field, when in the future those resources could be better used in core areas like health and education.
"In addition, the Government recognised that the SGIO was being increasingly constrained by public ownership in its ability to grow and compete."
Dr Gallop said that the SGIO's annual report for the last financial year, which showed a $31 million turn-around in operating profit before abnormal items and growth in net assets of 60 per cent from $38 million to $64 million, demonstrated that the SGIO was ready for launching as a public company.
"The public float of the SGIO will create a strong Western Australian-based general insurance company and will provide Western Australians with an opportunity to invest in one of the State's great enterprises," the Minister said.
"The timing of the float and the price of shares to be offered will depend upon market conditions and, in accordance with the corporations law, will be announced in a prospectus."
Dr Gallop said the Government would not hold a `golden share' in the private company because there were already a large number of locally-based general insurers. However, limited takeover protection was included in the legislation.
For two years, interest in the new company would be limited to a maximum of 15 per cent of voting shares. After that period, the takeover provisions of corporations law and of the Insurance Acquisitions and Takeovers Act would apply, as they did to all other general insurance companies.
The transfer of employees from the State Government Insurance Commission to the new company would be voluntary.
"The talent, dedication and experience of SGIO staff is essential to the ongoing success of SGIO Insurance Limited," Dr Gallop said.