At the IAQ Infrastructure Summit in Brisbane on Thursday last week, several participants lamented that Queensland was missing out on the benefits of so-called asset recycling that NSW and Victoria were expecting. The privatisation issue will not die in Queensland, and the current state of the debate is nicely set out in an article by the Courier-Mail’s State Political Editor Steven Wardill in today’s paper (pay-walled, sorry):
The article quotes me towards the end (see the extract below). For the record, I am supportive of privatisation, largely due to the substantial efficiency gains that have been demonstrated by numerous privatisations around the world since the 1980s. To me, the main issue is who will run particular assets most efficiently and productively. For the Queensland assets that have been proposed for privatisation in the past, I expect that would be the private sector.
The Government may lose a revenue stream, but this would be partly offset by a reduction in interest payments on government debt (if the proceeds were used to pay down debt), and the public would benefit from more efficiently run assets and lower prices for their services than otherwise. If the Government were to use privatisation proceeds to fund new infrastructure, such as a new road or tunnel, the new asset would yield benefits to the community, such as a reduction in travel times.
Here is an extract from today’s Courier-Mail (p. 53) with my comments:
Economist Gene Tunny says while the income argument to keeping assets makes sense, what happens when they’re not profitable anymore?
“By owning those assets the Government is assuming the risk,” Tunney says. “However, in the future, these assets might not generate these returns and they’re left holding stranded assets.”
The whole argument – whether you’re for or against – comes down to the question of what you expect governments to do.
In Tunny’s view, whether to sell or not should be viewed through what is in the best interests of the broader economy rather than just the government’s balance sheet.
The assets are still part of the economy and potentially run more efficiently while the State could reduce debt and tackle other, sometimes more intangible, issues in its bailiwick.
“You could be saving money on the debt repayments or buying something else,” Tunny says.
“It may not show up as a revenue stream in the Budget but it could, for instance, improve travel times.”