'Bleed businesses dry': Gladstone Ports to borrow millions for debt
THE government-owned Gladstone Ports Corporation will have to borrow money to make up for what it gave the state back last year.
In the first independent audit report into government-owned corporations since the state increased its percentage takings on its port and rail assets from 80% to 100%, Auditor-General Anthony Close warned there would be repercussions on the ground.
Over the last two years, the state's rail and port entities have returned $364million and $553million to the government.
But despite that profitability, state assets including GPC, would start to see reduced profit margins, higher company debt, higher interest and lower government returns.
On top of the combined $553million the ports popped into the state's coffers last year, GPC gave a $315million special dividend.
The government's Debt Action Plan was introduced mid-last year to pay off Queensland's debt; one aspect being to move debt from the State Government onto the books of these government-owned corporations.
"The special dividend declared by GPC in 2015-16 of $315 million, funded by these new borrowings, will result in a 6.4 per cent increase in the level that it is financed through borrowings," the report read.
"Funding dividends from the asset revaluation surplus reduced this reserve at GPC from $463 million to $302 million
The report predicts state port and rail assets will have to borrow $648million in order to afford payments of returns to the government that were declared in 2015-16.
It also said the increased debt would challenge the companies' capacity to invest in infrastructure and maintenance, especially if the state continued to take 100% of their profits after tax.
However the audit found that increased profitability was due to several factors, including increased revenues, which was directly related to "access to commercial facilities" in Gladstone.
The impact of GPC's LNG and WICET facilities produced a $20.5 million boost in harbour dues for the port.
But the report did find "one significant deficiency" at GPC, which "may lead to the value of assets being materially misstated in the financial statements".
GPC chief executive officer Peter O'Sullivan said the port's "reporting models will be refreshed in 2016-17 and improved governance arrangements over changes to the models are being implemented".
State Shadow Treasurer Scott Emerson said, "this is exactly the kind of short-sighted thinking that has left Queensland stagnating under Labor".
"We've always said (Treasurer) Curtis Pitt's plan to bleed these businesses dry in a bid to prop up his ailing budget would leave Queenslanders paying more in the long run."
Mr Pitt made no apologies for stopping the asset sales planned by Tim Nicholls.
"Queenslanders wanted to keep our assets in public hands and they expect us to make them work on a commercial footing in their interests," Mr Pitt said.
"The documents tabled by the Auditor-General simply corrects the breakdown by financial year of returns to the government from port GOCs and QR."
"In developing the Debt Action Plan it became clear there was a capacity to increase the gearing levels of the state's GOCs to more commercial levels."
An earlier version of this article said State Shadow Treasurer Scott Emerson said Queenslanders were bearing the brunt of lost opportunities when the assets could have been sold to pay down the debt. This was incorrect.