A final report of Queensland’s Commission of Audit, headed by former Treasurer Peter Costello, has recommended sales of energy assets as the best way for the state to pay down A$25 billion (€20 billion; $25 billion) to A$30 billion of debt and restore the state’s AAA credit rating.
The Commission concluded that adjustments to the state’s operating budget alone will not be enough to achieve the desired result. It said that by delivering a fiscal surplus of 1 percent of revenue annually, it would take 50 years to reduce debt by A$25 billion.
Instead: “The state will have to manage its balance sheet quite differently. If it is to substantially reduce debt, it will have to review its assets. It will have to decide whether it wants to tie up large capital sums in businesses it currently owns and operates.”
Government-owned energy assets include the likes of electricity generating company CS Power, power generator Stanwell and transmission network operator Powerlink.
The sale of such businesses – which has long been touted in certain quarters – would interest infrastructure investors for two reasons. Firstly, there would be interest in the assets themselves. Secondly, some of the proceeds from such sales would likely be re-invested in other types of infrastructure – including situations where private capital could play a part.
However, no one is holding their breath just yet. In the wake of the report, Queensland Treasurer Tim Nicholls reiterated the government’s position that there would be no rush to sell. The government had previously said that no asset sales would take place before the next state election, which could take place as late as June 2015.
“Queensland’s finances are in dire straits and while the Newman government has ruled out asset sales in its first term, the Commission of Audit’s report again points to a sound case to to revisit the issue in the coming years,” said infrastructure lobbying group Infrastructure Partnerships Australia in a statement.
Earlier this week, Queensland announced a blueprint for reforms to the state’s health sector, potentially paving the way for greater private capital involvement.