Getting budget back on track vital for state's future
HAS your mortgage ever kept you awake at night? If so, spare a thought for Queensland Treasurer Tim Nicholls.
While servicing your $300,000 debt may be costing you sleep, the Treasurer is being kept awake by an $80 billion debt - and the need to cut this figure by at least $25b, if the state is to win back its triple A credit rating.
To convince us of the need to sell state-owned assets - including Gladstone's port - Mr Nicholls embarked on a tour of key Queensland cities and met with community and business leaders.
On Thursday, he met with a group of Sunshine Coast business, community and government leaders - and pulled no punches in communicating the urgency of his debt-slashing mission.
"The one thing that holds us back from being able to achieve what we believe is Queensland's full potential, is the level of debt that the state holds," Mr Nicholls told the meeting.
"That is projected to reach $80b in 2014-15. That's $15,000 for every Queenslander - twice the average of the rest of the country. It's been a very steep increase in debt."
Mr Nicholls said previous governments failed to balance their budgets and had to make up the difference by borrowing.
"We're losing the capacity to fund new infrastructure so if, for example, we wanted to talk about the (Brisbane to Nambour) rail upgrade, it'll be on the list but it's not going to get funded," he said.
Mr Nicholls said the government was advised to urgently pay back at least $25b in debt or risk being unable to fund anymore infrastructure.
"We've got to go from 80 to 55. That'll get our triple A credit rating back and give you sufficient credit to be able to borrow to fund infrastructure in the future," he said, explaining that was the number the commissioner of the audit said would enable it to borrow again without imperiling its credit rating, and would free up sufficient funds to enable the government to continue to invest in the state."
Mr Nicholls said the government had identified several state-owned assets that if sold, would enable it to pay back the $25b.
He said these included the ports of Townsville and Gladstone and possibly the Mount Isa to Townsville railway line.
Mr Nicholls said the government was also considering selling two coal-fired power generators (CS Energy and Stanwell) and the industrial assets of Sunwater.
"In terms of the big power distributors, Powerlink, Ergon and Energex, we would look at alternative ways of getting private finance into them, while still maintaining majority ownership position," he said, adding CS Energy had not made a profit since 2008 and three years ago, received $300m from the government to keep it solvent.
"So it's selling electricity into a national market, over which we have no control, at the same price it was selling electricity 10 years ago," Mr Nicholls said.
"In the same period, its salary costs have gone up by better than 4% a year, until this year, when they went up by 2.5%.
"So you have to say, is that an asset the people of Queensland are better off owning, or is that an asset that the people of Queensland are better off selling - if we can sell it?
"We haven't made a decision about whether we will do that but it needs to be considered because it is, on the face of it, the right solution for the problem we have."
Mr Nicholls said the government was also contemplating savings that could be achieved by selling Queensland's regional rail network.
"Currently, we're in discussions with Australian Rail Track Corporation about our regional rail network and the opportunities around the Australian Rail Track Corporation taking over the ownership of that from Queensland Rail, so we become effectively the runner of trains," he said.
"That's something that we wouldn't be selling, that's something we would pay to give away because we would avoid the ongoing cost of maintenance and upgrading, and they have more funds to do it."
The massive investment that has gone into the gas fields and the gas-processing plants in Gladstone will naturally come off. You can't keep building at that rate
While the subject of the two-hour gathering at Lake Kawana Community Centre was paying down a sky-rocketing state debt, the meeting was hardly all doom and gloom.
Meeting participants were told the latest economic figures showed the state was well on its way to recovery from the lows of the 2008 global financial crisis.
"Growth is going really well. In the year to September 2013, Queensland's gross state product grew by 4.1% and that's double the rate of the rest of Australia," Mr Nicholls said.
"We anticipate that this growth will go up to 6% in 2014-15, so we're on an upward trajectory. That 6% will be on the back of gas exports, predominantly.
"We're certainly seeing a return to the construction industry, with housing approvals and other approvals starting to come through.
"But there's still a bit of a way to go to see construction start on these approved projects.
"Resources continue to be strong. But resources in terms of investment are tapering off.
"The massive investment that has gone into the gas fields and the gas-processing plants in Gladstone will naturally come off. You can't keep building at that rate."
Mr Nicholls said no decisions had been made on asset sales and meetings with community leaders were the first step in a long process of public consultation and exploration of solutions to Queensland's debt.
He said the government would produce a draft plan, which he would release as part of the Budget.