Beattie right to recommend asset leases, but his advice has come too late

Former Queensland Premier Peter Beattie is right to recommend the leasing out of State-owned assets, as reported in the Australian today (see Beattie sees the light on leases, which is behind the paywall). But unfortunately he is over a year late in offering this advice, as the current Government was elected on a platform of total opposition to privatisation. It would have been good if the former Premier could have persuaded the then Opposition to have been less ideological on the issue in the lead up to the 2015 election.

For several years on this blog, I have argued that privatisation of state-owned assets would benefit Queenslanders through the more efficient operation of the assets by the private sector (e.g. see my Productivity and Privatisation speech from 2014). I have also discussed the desirability of regaining our AAA credit rating through paying off a large chunk of our $80 billion of borrowings with privatisation proceeds. And I have noted that, without the proceeds the previous Government would have had from asset leases, the current Government has insufficient money in the forward estimates to fund the level of infrastructure spending that is likely desirable (e.g. see New Qld Government faces big fiscal challenges). Beattie is absolutely correct, but, alas, his words have come too late to make a difference I suspect.

Peter_Beattie,_BYCC,_August_2013_(cropped)

Former Qld Premier Peter Beattie

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3 Responses to Beattie right to recommend asset leases, but his advice has come too late

  1. Jay says:

    one would have to think that this may be opportunistic and the beginning of the State Government softening up the Unions for leases. Mr Beattie would still be very influential in the STate politics arena and he maybe suggesting one of his 5 point plans that he was famous for to get Qld building again.

    • Gene Tunny says:

      Yes, that is possible. That would be a risky strategy given how hard the govt campaigned against asset leases and would likely lead to a major loss of credibility. Thanks for the comment Jay.

  2. Jim says:

    Good advice is never too late. The issue will needs to be periodically considered in the future.

    I’m not one for selling/leasing the assets just for the sake of it, particularly as some provide a very positive cash-flow and market return to the taxpayer. This is particularly the case where much of the ‘capital recycling’ that is proposed is to be spent on assts that don’t generate cash-flow and/or the same returns (roads to nowhere, uneconomic dams, or stadiums anyone?). If you sell them, pay off the debt, don’t waste the money.

    I’ve always argued that privatisation (sale or lease) should be assessed on a case by case basis. And one of the things the State should be considering is the risk of technological obsolescence resulting in stranded or under-utilised assets in the long-run. I’d put electricity generation and distribution assets and some of the ports primarily reliant on coal and gas exports into the ‘risk of technological obsolescence’ category. I’d rather see these assets off the Government’s balance sheet now (sold at a slight discount), than see them become part of a fire sale and/or massive liability to taxpayers in 30 years time.

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