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Queensland’s A$37bn privatisation plan called off

Investors fret over heightened competition for the few leases still to be sold by the Australian state after general elections fail to produce a clear winner.

Queensland’s Liberal National Party (LNP) on Monday dropped its pledge to privatise A$37 billion (€25.5 billion; $28.8 billion) of infrastructure assets as a last-ditch effort to gather enough support to form a minority government.

General elections held this weekend in the Australian state failed to produce clarity over which of the two leading parties would be able to claim victory, with both the LNP and the Labor Party – expected to win 41 and 44 parliamentary seats respectively – falling short of the 45 seats needed for a majority. This led the incumbent LNP to cancel its ambitious programme of leases sales to try and win over two MPs from Rob Katter’s Australian Party, which is poised to become kingmaker.

“We went to the people of Queensland seeking a mandate for asset leases and we didn’t get that mandate. So the question is gone completely,” commented former Queensland Deputy Premier Jeff Seeney, who today resigned from the LNP leadership team.

Katter said he was prepared to have discussions with both factions but singled out the privatisation plan as “the only deal breaker”. He added that the results were an opportunity to push for infrastructure projects in rural and regional Queensland, areas that he said traditionally failed to attract the mainstream parties’ attention.

Investors expressed disappointment as the news emerged. A global fund manager told Infrastructure Investor that the election outcome would likely lead to tightened competition for the last leases still planned to be sold, as none of the four power asset sales, and only two of the four ports privatisations, are now expected to go ahead.

He also said industry players nationwide would delay work on promised public-private partnerships transactions and privatisations as the Queensland developments were seen as reflective of a general shift in public attitudes across states.

Standard & Poor’s on Monday said the state’s attempts to win back a AAA rating would be at risk after decisions to cancel asset sales, as it would make it harder for the new government to balance the budget and alleviate its A$80 billion debt burden. 

Additional reporting by Anne-Sophie Briant