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Queensland road projects to hinge on asset sales

Future funding for roads in Queensland will depend on whether the state’s government can privatise assets

 

Future funding for road projects throughout Queensland will hinge on whether the state’s government can offload public assets and encourage private sector investment in electricity networks.   

Queensland treasurer Tim Nicholls has tied the introduction of multi-billion dollar road investment programs to a plan that includes the sale of electricity firms and the lease of ports.  

A $1.5 billion rural and regional roads fund and an equivalent program for the south-east of the state will be implemented over six years if the government can raise enough funds from its plan.  

Nicholls announced the move while handing down the state’s budget yesterday.

Assets flagged for sale include Ergon Energy’s retail business, the industrial pipelines arm of SunWater and electricity generation businesses Stanwell Corporation and CS Energy.  

The government wants to issue 99-year leases on the Port of Townsville, Mt Isa rail line and the Port of Gladstone.  

Furthermore, it is asking the private sector to invest in the electricity networks of Powerlink, Energex and Ergon in exchange for a share in the revenue streams from each entity.   

Nicholls expects the combination of measures to raise $33.6 billion, $25 billion of which will go to reducing Queensland’s $55 billion debt.  

The remaining $8.6 billion will be funneled into infrastructure projects, such as the road programs.   

“At their current value, the asset transactions proposed to reduce debt could potentially deliver proceeds of $33.6 billion, enough to return state debt to more sustainable levels and invest in vital infrastructure needed for a growing Queensland,” Nicholls says.  

He says the government will only proceed with its plans if it wins at the next election due in March 2015.  

Nicholls says the government’s proposals are an alternative to increasing taxes or reducing services.  

“Not everyone will agree with all the choices we make about how to pay for things in the future,” he says.  

“But Queenslanders will know that we have funding certainty so we can invest in the things we need for a growing and ageing population, like hospitals, schools and roads.” 

The $8.6 billion allocated to infrastructure includes public transport projects, schools funding, rural and regional development, hospitals and money to cover natural disasters.   

The budget includes $188 million in state funding for projects on the Bruce Highway next financial year, including continuing work on duplicating the route between Cooroy and Curra.  

Work will also continue on the Townsville Ring Road and the Gateway Pacific motorway, along with upgrades to key routes including the Warrego, Cunningham and New England highways.    

The budget allocates $30 million next financial year in funding toward the second range crossing in Toowoomba. The federal government is contributing the lion’s share of the $1.6 billion 41km road project.  

Queensland will chip in $458 million in 2015-16 and $825 million the following year, with funding dropping to $291 million in 2017-18.

The federal government has pledged $1.2 billion over four years from July 1 this year.   

Once complete, the second crossing will provide a bypass route to the north of Toowoomba.

It will run from the Warrego Highway at Helidon to the Gore Highway at Athol via Charlton.   

Lobby group Infrastructure Partnerships Australia has welcomed the government’s plans and expects the ports of Townsville and Gladstone to fetch a total of $6.6 billion. 

“We would reasonably expect Gladstone to reflect the sort of pricing on other recent transactions, which would deliver a return to taxpayers of between $2.8 billion and $3.8 billion,” IPA chief executive Brendan Lyon says.

“The budget shows that asset sales are the only option to fund new infrastructure. Without asset sales, Queensland gets no new infrastructure.”

Lyon believes the government will garner enough support for its privatisation plans. 

“With a large portion of infrastructure funding contingent on asset sales, the community will understand and support ambitious reform,” he says. 

“Queensland is in a hard position, because expenses are outstripping revenues, adding to the state’s existing high debt load.”

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