Professor John Rolfe from CQ University. Photo: Chris Ison / The Morning Bulletin
Professor John Rolfe from CQ University. Photo: Chris Ison / The Morning Bulletin Chris Ison

Gladstone electorate not convinced about asset lease

CQUniversity economist and deputy dean of research, Professor John Rolfe, reflects on one of the main issues raised at Tuesday night's Meet the Candidates night - the lease of the Port of Gladstone.

THE proposed lease of the Port of Gladstone is the touchstone issue for the seat of Gladstone in the Queensland election.

At a public forum at CQUniversity Gladstone Marina on Tuesday night, the four candidates for the seat outlined their stance on the key issues for the electorate - and the port dominated discussion.

LNP candidate Michael Duggan supported the proposed lease as part of a package to address Queensland's debt issue, but emphasised that management of parks and other community assets would be separated from the port operations and continued.

The other candidates, Glenn Butcher (Labor), Craig Butler (Independent) and Craig Tomsett (Greens) were firm in their opposition to any sale or lease of the asset.

This election, more than any other in recent years, is a contest of ideas about how to manage the economy.

Voters are keenly aware that economic storm clouds are close; while Gladstone is one of the 'muscle' towns of industrial development in Australia, the downturn in the resources sector and the looming completion of construction of the LNG projects means jobs are harder to find and boom conditions are fading.

The Port of Gladstone is in the sights of the Queensland Government, as it tries to balance the books with asset sales.
The Port of Gladstone is in the sights of the Queensland Government, as it tries to balance the books with asset sales. Emily Kemp

In Queensland, the two key parties have very different positions on these issues.

The Labor opposition is in retreat from their previous economic management strategy.

Under Beattie and Bligh, Labor sought to transform Queensland from a resources economy to service and knowledge economy.

The 'Smart State' saw boom proceeds used to expand infrastructure, services and the public sector.

But expenditure ran ahead of income, despite unpopular services 'dividends' which initially disguised the trend.

The Global Financial Crisis saw the system unravel, Queensland lost its coveted 'AAA' rating, and public debt increased rapidly, despite the unpopular sale of public assets.

This process also misjudged the economy and the electorate, failing to capitalise on the once-in-a-lifetime resources boom, and hurting struggling households with increasing utility costs.

The emphasis on south-east Queensland, at the expense of rapidly expanding regional centres including Gladstone, was also a misstep.

Since the incumbent LNP took office, they have been following the script from the Queensland Commission of Audit report in February 2013; get government spending under control, run a budget surplus, and sell public assets in order to rein in the debt and regain the 'AAA' credit rating.

RG Tanna Coal Terminal, Gladstone.
RG Tanna Coal Terminal, Gladstone. Brenda Strong

Expenditure has been trimmed under the Campbell Newman's LNP, most notably through the loss of 14,000 public service jobs, roughly half the increase in public service positions over the previous three years of the Labor government.

So far their economic strategy has been largely successful, but fiscal control makes for boring politics - there are few photo opportunities in reducing spending and cutting jobs.

The next stage of the LNP economic strategy is to lease some government-owned corporations, including the Gladstone Port.

Initial proposals to sell the assets were deeply unpopular, so the current plan is to put 99-year leases up for tender.

However, the core goal of reducing debt is weakening, as a significant portion of the forthcoming proceeds are being earmarked to fund a multitude of other infrastructure projects around the state that involves a whiff of pork barrelling.

The move to leasing rather than outright sale raises questions about exactly what relationship will exist between the Gladstone Ports Corporation, the State Government, and the Gladstone community.

These pressures drove priorities identified by each candidate at the public forum in Gladstone, and explained the support that they received from the audience on the night for particular issues.

The East Shores precinct in Gladstone.
The East Shores precinct in Gladstone. Mike Richards

Opposition to any sale or lease of the port appears to be driven by concerns that the proceeds will be wasted in south-east Queensland, that the Ports Corporation will no longer provide community services and drive local development, and that job losses will impact on an already fragile economy.

Other concerns included the standard of facilities and services, particularly in health, education and roads, and a perception that previous governments had short-changed the regional area.

Each candidate was passionate about their key issues, and showed they were closely involved with the electorate.

The debate illustrates the challenges that any Queensland government will have in reconciling economics and politics, regardless of which party wins office.

Debates about reducing the public debt don't grip public attention, except in terms of how the funds will be raised.

Given that all the choices, reducing public expenditure, raising taxes or selling off assets, are unpalatable, parties are either emphasising associated expenditure carrots (LNP), pretending that the debt can be paid off under a business-as-usual approach (Labor), or ignoring the issue (minor parties and independents).

Economists like me generally support asset sales.

Once business units are established the private sector is much better at running them, while government involvement in operations blurs the line between regulatory, efficiency and transparency aims.

The dual benefits of debt reduction and efficiency gains have made privatisation one of the key micro-economic reforms of the past quarter-century, helping Western economies to restructure and grow; yet the Gladstone community remains to be convinced.



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