I spoke with Steve Austin on 612 ABC Brisbane yesterday morning regarding the Queensland Government’s election costings, after Steve first spoke with Treasurer Tim Nicholls (3 days until the election – Treasurer Tim Nicholls). The main point I made was that, while it appears the Government will be able to meet its election commitments from the asset lease proceeds (plus the 1 billion dollars or so it had stashed away in departmental budgets), the costings document didn’t respond to the Quiggin critique – that is, that the State Budget will be worse off because forgone income from government-owned businesses will exceed interest savings from debt reduction paid for by lease proceeds.
The Government still has not released any modelling of the impact of the proposed asset leases on the Budget bottom line. As I’ve noted previously, because the Government is not allocating all of the $37 billion in lease proceeds to debt reduction, but is instead spending $8.6 billion on infrastructure (including poor investments such as the Townsville Super Stadium) and $3.4 billion on cost-of-living measures, it won’t get the maximum reduction in interest payments it could. As such, it’s very likely the interest savings from the $25 billion of debt reduction won’t fully offset lost income from the leased-out assets.
My comments were later reported in an ABC news article: