Queensland privatisations: good, bad and ugly
I’ve been opining in all sorts of media on the Queensland government’s asset sales programs. A couple of general points, both favorable.
1. The government has said that the sale process will take 3-5 years, and that the assets won’t sold if the offers are inadequate. They need to be held to this
2. The privatisation story has swamped the abolition of the fuel subsidy. At some level, I think everyone recognises that this program was at best an unaffordable luxury in the current environment, and at worst a counterproductive and damaging misuse of public funds.
Coming to the asset sales, and with a whole day to reflect on a $7 billion program here are my provisional views
Good: Queensland Forests. State forestry has never made commercial sense, since the timber industry has always had effective control, ensuring no proper return on the public capital investment. There were moves towards reform, but plenty of obstacles. Easier to let a private buyer set commercial prices
Bad: Queensland motorways. Toll roads are bad, private toll roads are worse. We need a comprehensive system of road pricing, with congestion as the main driver. The existence of privately owned toll roads is a huge obstacle to this goal
Ugly: QR coal freight and coal terminals. There are potential gains here, but there are also some huge traps, as illustrated by disastrous rail privatisations elsewhere. And there will be a lot of problems with wages and working conditions to be sorted out. I don’t think the government will be able to get away with using privatisation as a backdoor route to large-scale redundancies, but a sale with union conditions attached will have obvious problems
Indifferent: Port of Brisbane. A regulated monopoly asset with secure returns. Selling this and using the proceeds to repay debt doesn’t really change anything but perhaps it will fool Standard and Poors.