I’ve started doing occasional posts for a new venture, Asian Correspondent. You can find me here. Only occasional, so RSS is probably the way to go.
Update 12/12: This was initially posted here and emailed to QIC on the morning of 10 November. As yet, no response. And, apart from a snark by Andrew Fraser, no public response to my piece in last week’s Fin pointing out that the government’s case for privatisation was entirely spurious
As you may be aware, I have been very critical of the “Myths vs Facts” booklet which is, as far as I know, the only document released by the Queensland government to present its case for sales of public assets. In today’s ABC News, you are quoted as supporting the sales and saying
It can curtail its spending on its infrastructure program and let service quality deteriorate, it can raise taxes to pay for the interest bill that’s building up, or it can rearrange its balance sheet – sell those assets which don’t have a particular need to be in Government hands and own assets that should be,
This statement appears to endorse the government’s claims that investment in non-income generating assets can be financed by the sale of income-generating assets, with no need for additional revenue to service the associated debt. In my view, these claims are obviously fallacious, and I would appreciate clarification on a number of questions. I think these questions admit an unequivocal “Yes” or “No” answer, with supporting argument if desired.
1. Do you believe that the “Facts and Myths” booklet presents a fair statement of the arguments for and against privatisation, offering Queenslanders sufficient information on which to make an informed judgement?
2. Do you endorse the statement that ‘Keeping these businesses would cost the Government $12 billion over the next five years. That’s $12 billion spent on new coal trains and new wharves that can«t be spent on roads, schools or hospitals.?
3. Do you regard the statement that “The total return from all five businesses in 2008-09 was approximately $320 million … When the sale process is completed, it is anticipated the Government will save $1.8 billion every year in interest payments” as providing a fair basis for assessing the fiscal costs and benefits of privatisation?
With my regards,
Note: A previous version was addressed to Bernie Fraser, but Doug McTaggart’s comments appear more directly relevant.
91 years ago, the world marked the end of the Great War that had consumed tens of millions of lives, mostly those of young men sent to die far from home in a cause that few could explain, then or now. It was a false dawn. The chaos unleashed by the Great War spawned more and greater wars, revolutions and genocides that continued through most of the 20th century and still continue, in places, even to this day.
How could such ordinary, seemingly decent, men pursue such an evil and self-destructive course, and yet, in most cases, attract and retain the support of their people? I find it hard to understand.
It’s time, once again for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.
I managed to get something of a response from the Queensland Treasurer, Andrew Fraser to my critique of the case for privatisation put forward by the government. Fraser says
The global financial crisis has ripped a $15 billion hole in the state budget. There is no evidence to suggest the state is about to see that hole repaired despite the marginal turnaround in the economy.
“The fact is, Queensland will be better off.
“The myth is that John Quiggin represents the view of mainstream economists.
“The Government is not undertaking this process for the fun of it.”
A couple of responses.
First, the sale of $15 billion of assets does not in any way resolve a $15 billion shortfall in income (the “hole” in Fraser’s statement). The sale value of $15 billion (assuming it’s realised) represents the private sector valuation of the earnings from the assets. Perhaps (though this hasn’t been shown) the value in continued public ownership is less than $15 billion, but it can’t be much less. The coincidence between the two numbers is, intentionally or otherwise, deceptive.
Second, if Fraser is right, it ought to be easy to find mainstream economists to agree that his comparison between last years dividends to general government and the $1.8 billion interest saved (mostly by the GOCs) themselves if the assets are sold and $12 billion of investment is foregone. Any takers?
Finally, it’s worth asking why the government is doing this. My guess is that they place much more weight than they should on the AAA rating, and that Treasury is still pursuing the ideological goals of the 1980s and 1990s.
The right-left Culture Wars have sputtered to a halt, and now, one of the longest-running of culture wars, that of Mac vs PC (or rather, Mac OS vs MS-DOS and then Windows) can finally be declared at an end. After this piece by Charlie Brooker, nothing more need ever be written on the subject (hat tip, Nancy Wallace).
It’s time again for weekend reflections, which makes space for longer than usual comments on any topic.
I’ve been very critical of the Queensland government’s proposed asset sales, which, I think, will worsen the fiscal position of the state in the long term. But, the combination of economic downturn associated with the global recession and continuing needs for infrastructure expenditure mean that the government is right to point out the problems and to state the need for politically unpalatable responses. I don’t have the resources of the Treasury, which means, among other things, that I can’t tell how big the problem is now, given that there has been a substantial recovery since the budget in June. So, I’ll just list some possible responses, some of which can be undertaken unilaterally, others requiring co-operation among the states, and, last but not least, action required from the Commonwealth government.