Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

Something affecting the lives, the lifestyle and the quality of life of Queenslanders is the Labor state government’s intention to privatise state-owned assets and government-owned corporations. We are talking about a $15 billion conundrum for Queenslanders, which the previous speaker, the member for Oxley, did not even refer to. This challenge came from the Queensland Labor Premier Anna Bligh. After holding on in a very narrow state election in 2009, she brought on this issue on the grounds of the emerging global financial crisis and then delivered the ultimate uncertainty for Queenslanders by proposing to sell off Queensland’s assets.

She announced on 2 June 2009 that she would privatise five of the government-owned corporations and commissioned a series of scoping studies to provide a ‘warts and all’ assessment of how this would be done, from the accounting of it to the merchant banks that would monitor the sale. What was promised, of course, was a fulsome explanation of exactly how this would be done. True to this Premier’s form, we are yet to see any details, except that this sale will be executed as a series of packages over the coming years and that the port of Brisbane may well be the second entity sold after the Queensland forestry commission.

The grounds that have been presented and then advanced for selling off these corporations are the budget black hole that was allegedly brought about by the global financial crisis. The figures quoted were $4 billion, rising to $14 billion and then $15 billion. But now revision of this data suggests that those amounts may be as small as $2.7 billion. The average taxi driver in Queensland would ask: ‘How can you sign a massive coal or mining deal for Queensland and talk about it being the greatest commodity or resource deal done in Australia’s history, and by the same token be presenting an argument that there is a financial black hole that cannot be filled any other way but by selling off Queensland’s crown jewels?’

The claim here is a simple one: there needs to be a sale of $14 billion to $15 billion of state assets to fund this spurious black hole. But let us get one thing clear: the black hole is not a GFC induced crisis. It is due to overspending and poor fiscal control by the Queensland government of its own state bureaucracies, firmly, wholly and 100 per cent owned by the Bligh government. The claim, of course, is that they are going to have no choice but to sell off Queensland assets not just for the return on that investment but also to save the expense of future government investment in these corporations. How can one consider investment in a profit-earning entity as an expense that has to be filled by selling off that entity? That does not even make sense to people who did not study economics, and I do not know how the Premier can possibly sell this to her own members, to union members or to members of the Queensland general public.

Let us start with the Port of Brisbane, because that is my concern, it being so close to the seat of Bowman. It deals with 2,500 ships every year and it offloads five million tonnes of cargo. It is worth in the vicinity of $5 billion every year in cargo. Advice on the sale is going to come from Minter Ellison and Deloitte. The debate has already begun on whether it should be sold off and lost forever, leased for 99 years or simply floated on the stock exchange. One thing is for sure: it is very hard for this Premier to find friends who support the idea of selling it off forever. So there has been a little tweak done: it is now going to be a 99-year lease so that it can no longer be called a ‘sale’ in the true sense of the word.

Most people regard handing over jewels like the Port of Brisbane for 99 years as effectively the same as a sale. The polling that has been done in Queensland has shown that two-thirds of people did not fall for it, about 16 per cent are worried about it, and 15 per cent are slightly mollified by the fact that in 100 years time the Queensland people will get these assets back. So we are left with the dealing around a 99-year lease. Effectively, it is going to rip the heart out of suburbs in my electorate and neighbouring electorates—the suburbs of Tingalpa, Hemmant, Murarrie, Wynnum, Manly, Lota, Wellington Point and Birkdale. These are the suburbs that have the people, the families, that work at this port and are regarded as part of our community.

Do not make the mistake of thinking that I will never support privatisation. I will support rational and sensible privatisation at a time when the economy can gain the most from it. What I do not support is a fire sale—selling at the worst possible time as the way out of a fiscal crisis and getting the lowest possible return from it. They are doing it because they see no other option available to them as the state government. Their AAA rating has already been forsaken and they see it as the only way out of a very, very dark economic space.

I would like to refer to some work done on this by a number of people. I would like to consider the words of Bob Walker, the University of Sydney Professor of Accounting who wrote a report looking at the urgency of selling infrastructure in 2010. It explored the claims that a reduction in forecast revenues led to the postulated black hole of $15 billion and that the retention of these public assets would require $12 billion, just to keep them running. While that may be true, it is spurious to say that that is a cost that can be saved, because you would not invest in any of these unless the return was going to be far greater than the investment in the first place. So we are looking at the net benefit. It is erroneous of the state government to start quoting the costs of holding on to public assets as if they are a net cost. They are not; they are balanced against the profits that can be made by that entity.

The report also explored the state government’s argument that the downgrading of the credit rating would immediately cost $200 million annually. This is the reality that the state government is facing right now. QCU general secretary Ron Monaghan said that the report justified the union campaign, and, when you are a Labor administration looking around for friends, it is tough when you cannot get the warm embrace of the unions. Monaghan proposed that he would write to the Treasurer seeking a detailed response to the report. I would like to see what that response is, because selling off a profit-making entity like the Port of Brisbane is absolutely crazy if the state itself, as a monopoly, can determine the pricing at the port while it owns the entity. Why would you want to sell off something that was running a profit every year unless you were utterly convinced that in the budget cycle over decades this was a perfect time to privatise the port?

I guess what we are speaking to is the fact that these are latter-day converts to privatisation. It is not in their hearts. This is being done out of naked and frightened necessity, because it is the only way out of the fiscal disaster that has been self-imposed by a government that has been unable to rein in costs. They cannot rein in the size of their bureaucracies. They have been too frightened to implement any efficiency yields or gains in the state bureaucracies. They are left with no other option but to try and balance the books. That is the great tragedy. If we had to distil it into a sentence, it could be: this is a frightened Labor state administration potentially in its darkest hour, potentially in its final years as an administration, selling off what our state can never get back. That is the tragedy of what is being done.

Quiggin actually did some work and he argued last year that the total return on the five businesses that are going to be sold may well be around $320 million. That was stated by the state government themselves. But those amounts only consisted of dividends. The government’s calculation of $1.8 billion of savings on interest payments on their massive Bligh Labor government debt each year is also entirely invalid because new investments like coal infrastructure, as we are familiar with, really can only be justified if regulators are convinced that that additional revenue will actually exceed the costs of borrowing. The above-mentioned revenue would cover the interest needed to service the additional debt, so why would you forgo owning an entity on the simple grounds that the only way to stay in front is to lose that entity altogether?

Let us look at some really rudimentary modelling that was used by Professor Quiggin. The estimated sale price was $15 billion. Half of that simply pays off debts that already exist. So the state can really only look forward to about $7.5 billion of net return to the government in the form of revenue. We know that the interest saving, if they can rescue their AAA rating, is around $266 million over four years. We already know the combined profits were closer to $1 billion last financial year, not those spurious dividend figures that were being peddled by the government in their own ‘myths v facts’ publication. What we have in those figures I have just provided are the basic nuts and bolts of a true economic evaluation of what Queensland stands to lose in this panicked mid-term sell-off by the Queensland Treasurer and the Queensland Premier.

We know that the public purse could well be worse off by between $234 million and $484 million every year. That is basically the billion dollar profit, less the $516 million. In the long term it seems likely that, if you held on to these assets, returns would grow much faster than the interest repayments on debt, which are fixed. To quantify those, one way to estimate that long-term loss is to discount the annualised loss using a real interest rate of four per cent, which is the six per cent cost of money less two per cent inflation. So the implied reduction in the net worth of the public sector is $5.85 billion to $12.1 billion—(Time expired)