The government is gambling on an untested and untried method of private sector investment to get its $33 billion plan to reduce debt and build infrastructure across the line.
The plan, to retain ownership of Powerlink, Energex and Ergon, but share the income the businesses generate with the private sector in return for investment in the network – a sort of debt swap – was announced by the government at the same time it handed down its budget.
It hopes to raise $25 billion under the plan but it won’t say how. Nor will it give details of who could be interested or even how it would work.
Treasurer Tim Nicholls said it was something that “has never been proposed before in Australia”.
“That involves the state retaining ownership of the shares in that business, but agreeing to share the income, the profits of those businesses with the private sector and in return the private sector has to pay a premium for that share and also to help with the cost of the expansion of that network,” he said.
“We are proposing retaining ownership but inviting the private sector to inject capital to replace the government debt with private debt.
“If we go down that path our debt will be reduced by $25 billion, our interest payments will be reduced by about $1.3 billion and then we will also have funds to spend in the future.”
It forms the bulk of the government’s ‘The Strongest and Smartest Choice plan’ which aims to raise $33.6 billion.
That money will then form the framework of how it plans to reduce the debt with 75 per cent of the proceeds, or $25 billion, being used for debt reduction.
The rest, a shave over $8 billion, is to be used as a treasure chest for infrastructure and community building spending but again Mr Nicholls could give no details on a time line, how he plans to deliver the government's wish list or, more importantly, what would happen is the private sector did not come through.
Mr Nicholls said all would be eventually be revealed but that would take time. The sale/investment plan, if the government is re-elected, is scheduled to take place across six years, or two terms of government.
As to what the money will be spent on, that won’t be finalised until September following public consultation.
The treasurer said he wanted a “very careful, planned and methodical” approach to the entire proposal, adding that he was prepared to wait until the government received the value it believed its investment and sale opportunities were worth.
For Labor it was an opportunity to showcase a major policy difference, shaped by bitterness and regret of its own hard learned lesson on the topic.
“The Premier’s answer is to sell off everything he can get his hands on, but that will only lead to more job cuts and higher power prices,” Opposition Treasury spokesman Curtis Pitt said.
“Queenslanders don’t want more asset sales and they don’t want even higher electricity prices.
“Labor stands with the people of Queensland in their opposition to Campbell Newman’s asset sales.
“The choice is now clear: the LNP will sell your assets, Labor won’t.”
Electrical Trades Union state organiser Stuart Traill said the government was “privatising the rewards while keeping the risks”.
“They have failed the cost of living test and they have been found wanting on the economic impacts of their incompetence," he said.
"The budget, despite all the service and job cuts and higher prices, has blown out by a staggering $1.6bn” he said.
But the devil is in the detail – and at this stage, that’s something no one can provide.
This means 10 months of hard sell of a policy shell, helped with a soon-to-commence $5.2 million advertising campaign, and a government counting on a patient constituency.