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Strong Choices asset privatisation overview

 By Jonathan Pavetto, Consultant

The Queensland Government has recently confirmed the privatisation program it will take to the next election. The program includes the long term lease of several government businesses, which amount to around 12% of state government assets.

Overview of assets to be privatised

The assets on offer for long term lease in the program include:
• Separation and lease of SunWater's industrial water pipelines;
• Amalgamation of Ergon Energy's retail portfolio with Stanwell's electricity generation assets;
• CS Energy's retail and generation assets;
• Non-core business functions of Stanwell and CS Energy;
• Electricity network companies, Powerlink (transmission), Ergon Energy and Energex (distribution);
• The Port of Townsville, aggregated with the Mt Isa to Townsville rail line (excluding the Port of Lucinda)
• The Port of Gladstone (excluding the Port of Bundaberg)

What's new?

Under the final plan, assets will only be offered under long-term leases for 50 years, with the option for another 49. This means, the Queensland government can raise money to reduce public debt, invest in economic infrastructure and retain ownership of the assets.

Allocation of proceeds

The long-term lease of Queensland assets is expected to raise $37 billion, which will be spent on debt reduction ($25 billion), invested in productive infrastructure ($8.6 billion) and allocated to reduce cost of living pressures on Queensland families ($3.4 billion).

Reducing public debt by the targeted $25 billion will lower public debt to the manageable levels identified in the Queensland Commission of Audit. The debt reduction will also lower the state's annual interest bill from $4 billion to $2.7 billion.

$8.6 billion of the proceeds will be spent on a state investment program, comprising of 11 different funds. These funds include:
• Rural and Regional Roads Fund ($1.5 billion)
• South East Queensland Roads Fund ($1.5 billion)
• Public Transport Rail Infrastructure Fund ($1 billion)
• Bus and Train Project in Brisbane CBD ($1 billion)
• Future Schools Fund ($1 billion)
• Rural and Regional Economic Development Fund ($700 million)
• Local Government Co-investment Fund ($500 million)
• Future Fund for Natural Disasters ($500 million)
• Entrepreneurial and Innovation Fund ($500 million)
• Community Hospitals Fund ($300 million)
• Cultural Infrastructure Fund ($100 million)

The proceeds of the lease of government assets will also be used to reduce the cost of living for Queenslanders. A $3.4 billion Cost of Living Fund has been announced, but information on specific initiatives has not yet been made public.

More information can be found at www.strongchoices.qld.gov.au

 

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