It would be poor public policy to earmark the earnings from the long-term leasing out of the Port of Townsville for investment in North Queensland, as desired by Townsville community leaders. The Townsville Bulletin reports today:
A LONG-TERM lease on the Port of Townsville is estimated to be worth more than $405 million and the region’s leaders have been warned they must push the Government to reinvest a fair amount back into the city.
Regional economist Colin Dwyer said last week’s sale of the Port of Newcastle for $1.75 billion on a 98-year lease gave an indication of the price tag on Townsville’s port.
The sale price for the Port of Newcastle was 27 times its annual dividend and, using the same formula, Mr Dwyer said the Port of Townsville would be worth at least $405 million…
…Townsville City Mayor Jenny Hill agreed it was vital a fair share was reinvested into the area that built the port.
“The wealth of that port has been generated through Townsville and the region, so it shouldn’t just all be about paying down the state’s debt,” she said.
“It should be about investing as much as you can into developing the region.”
It appears that lessons in public finance are desperately needed in Queensland. Investments should be made if it’s determined (hopefully by a rigorous cost-benefit analysis) that they would yield a net community benefit. Just because money becomes available from an asset sale/lease doesn’t mean it should automatically be re-invested in a project and certainly it shouldn’t automatically be re-invested in the same region, because better opportunities may be elsewhere. The Government needs to consider whether there are worthwhile projects around the State – all the State, not just NQ – to invest in. Otherwise it should use the money to pay down the debt, because restoring our AAA credit rating should be a priority, given the hundreds of millions of dollars we could save in interest payments each year if we regain it.
As a former North Queenslander I understand people in NQ feel frustrated by how they are treated by George St, but I’ve never been convinced NQ has got a raw deal from George St. For previous related comments of mine, see:
Northern economic cooperation appears sensible, but may not last
Townsville Super Stadium-land sales link would only be indirect
On the merits of selling/leasing out the Port of Townsville, see Brad Rogers’s post Queensland ports for sale.
Quite right Gene! Of course the other problem with investing cash back into the “area where the sold asset came from” is that it perpetuates a situation where asset-rich areas maintain that advantage over areas with no, or limited, assets. This argument basically says ” If you haven’t already got any assets worth selling then you won’t get any news ones”; hardly an equitable or efficient process by which to allocate funds!
Thanks Pete. Very good point that applying that argument could work against NQ.