She did say that in her speech to Parliament:
At times in our history the government of Queensland has sold beer, sawn and milled timber, retailed fish and even had 90 state owned butcher shops.
In Brisbane, our electricity network wasn’t state owned until 1977. And we didn’t own power stations until then either.
We’ve always owned a railway, but never owned a communications company. While we’ve retailed fish and meat, we’ve never been greengrocers.
So Bligh is arguing that what states own over time changes, and changed circumstances require decisions about what assets a state should own and what trading enterprises a state should be involved in.
She was actually quite articulate and even eloquent in the several times I’ve heard her on local ABC radio. And the speech in parliament is not bad at all. It’s just that people don’t listen. As soon as the interview ended callers, probably about 3 to one, rang in expressing visceral displeasure in no uncertain terms.
So the politics is lousy. But will we, as Bligh suggests and no doubt hopes, come to see the wisdom in the long run?
Contrary to comment on the earlier thread Bligh said on radio that they would keep the enterprises that paid a good dividend. Indeed in the speech she says:
The Government will forgo annual estimated returns of approximately $280 million as a result of the sale program which represents a return on investment of less than 2%.
Also these particular operations require new capital:
However the $12 Billion in avoided capital will save Queensland around $750 million every year in interest.
But later in the speech she says:
Paying off our debt faster is like paying off a home faster – this measure alone means we will save almost $300 million in interest payments over the next four years. (Emphasis added)
What’s that? $300 million over four years? Something doesn’t add up.
Moreover, even though private enterprise might need to invest that $12 billion, I don’t see how she can guarantee that they will. But if they do, those enterprises will need to service the capital and earn a decent, respectable return, otherwise it would be their fiduciary duty to their shareholders to invest somewhere else. $750 million interest on $12 billion borrowing means an interest rate of 6.25%. I imagine capitalists would want a return on investment of at least double that rate. So prices will go up.
So the whole thing doesn’t make sense to me. Looks like window dressing, stemming from pnic and desperation. In this the Federal Opposition, with its endless banging on about $300 billion of debt and its pursuit of the ‘Beazley black hole’ meme when in government, has made sensible public policy almost impossible.
The interest payments on the projected Commonwealth debt are forecast to top out in a few years time at $7 billion pa. That is 2.4% of Government receipts (not outlays) in the 2009-10 budget. Given the Opposition’s fondness for domestic analogies, who would be troubled by a house mortgage with repayments 2.4% of current after-tax income?
Meanwhile Bligh expected opposition to her privatisation plan to be “instinctive”. She’s not wrong and it seems there will be a backlash from the unions, and no doubt the party conference on the weekend.
In the AFR yesterday Qld ALP State president and AMWU Secretay Andrew Dettmar said the asset sale was “tragic”.
“I don’t think there’s anybody who can pretend to be happy about this,” he said. “Over 100 years of public policy is going to be disposed of inside the life of this parliament. I think that is tragic for Queensland.”
At a rough guess the unions at the time would have opposed the disposal of the 90 state butcher shops. However, that doesn’t alter the politics right now.
There has been masses of coverage in the local paper under the heading Queensland for sale.
Dettmar says the asset sales will leave the likes of Rio and BHP Billiton effectively in charge of regional economies, from pit to port.
I’m reminded of the last days of the Goss government, which seemed to be determined to upset everybody. To increase the range of upset citizens Bligh put forward in the same speech the intention to cease what has become known as the fuel subsidy. As this RACQ document shows it is actually not a subsidy at all:
The Queensland Fuel Subsidy Scheme was established in 1997 to offset the effective application in Queensland of a Commonwealth administered, state tax on petrol and diesel fuel. At present, the scheme reduces taxation of petrol and diesel fuel by 9.189 cents per litre, comprising a direct tax offset of 8.354 cents per litre and a GST saving of 0.835 cents per litre.
So Queensland is not saving $600 million pa, it’s getting $600 million in a new tax, albeit one that is already in vogue in the rest of Australia.
That subterfuge aside, most of the commentariat have simply said the the removal of the “subsidy” is good policy without saying why. I suspect that the price increase will only affect consumption marginally. The transport industry, already on low margins, will have margins squeezed further or will have to pass on the cost which will feed into the economy generally. Farmers and horticulturalists who use a lot of fuel will be also squeezed when making a crust is already difficult. Motorists generally are likely to spend less in other discretionary areas rather than consume less fuel. Without a concommitant effort to upgrade public transport they are unlikely to forsake their vehicles to any great extent.
So more grief for marginal environmental gain.
Bligh strikes me as being quite stubborn, she might term it “steadfast”, so I expect the general outcry will have no effect. But she will find her newly badged “Renewing Queensland Plan” hard to sell.
Update: Elsewhere at Quiggin.
As Brian points out Bligh’s argument for privatisation makes no sense.
A basic fact that Anna Bligh refuses to acknowledge, is that privatisation will not spare the Queensland public the expense of rectifying our financial problems. It can only make the expense greater.
They will be greater because we will have to one way or another pay the cost of private profit, CEO’s salaries, the cost of privatisation (including a bill of at least $200 million bill to Queensland to taxpayers for advisers as reported in Printed Courier Mail story of on page 61 of today’s Courier Mail “Adviseres to reap squillions from state’s auction”) and the loss of democratic control of assets.
If Anna Bligh choose to be ’stubborn’ in her determination to ignore the wishes of the public who have made their opposition to privatisation of their assets abundantly clear in recent days, then those opposed to privatisation will need to be even more ’stubborn’.
If she is not stopped then democracy will have no meaningful content left in the state of Queensland.
I urge everyone who can make it to begin by attending the protests outside the state Labor conference on Saturday and Sunday thie weekend in ordr to make your feelings known to this Government.
Mmm, private sector investment in privately owned public assets. Goes something like this isn’t it?
1. Sell off fringing assets (like the huge swathes of land that often comes with the business) and make a killing
2. Run down the remaining assets and live off the depreciation
3. Wait for it all to bad and then go cap in hand to the government saying if they don’t cough up with the readies then they’ll have to start diminishing services.
Or is that just Teltra? Or Railtrack (UK)? Or …
When the barbarians sold SA off to thier mates some time ago they trotted out the same excuses as Anna.
“We are in debt up to our eyeballs cos of the silly ALP
We will save trillions of dollars in debt reduction
Millions of new jobs will be generated
We will develop umpteen billions of dollars of water exports, whatever, the day after tomorrow,trust us.
No services will be affected, trust us on that.
Prices will not go up, thats another thing you can trust us on.
Why, you ask, well because everybody knows public enterprises are inefficient, run by lazy people and private enterprise is soooooo much better.
Things will be better!!!”
Sound familiar?
A 20% increase in food price from the fuel “subsidy” cancellation, that’s the claim. It’s a bit hard to see how that could be, but you’ve been warned!
I can’t believe the emotional, silly responses to the asset sales program. How do you expect the State to finance its spending needs in the current climate? You would prefer Bligh to sack teachers? Close down hospitals? Or just conjure up money from thin air?
Taking one of the state enterprises in question — Forest Plantations Queensland — why does anyone think it must remain in public ownership? We’re not talking about national parks or wilderness areas. It’s just an organisation that grows and sells plantation timber — just another type of agricultural crop.
Does anyone think the Qld Government should be operating cane fields or pumpkin farms or cattle ranches? No? Then why is it important for them to be flogging timber?
So if profit, CEO salaries, and “the loss of democratic control of assets” are intrinsically bad things, why don’t we just nationalise the entire economy? Let everything be run by the public service, and we’ll be living in Paradise, comrade!
Brian, the 20% rise in food prices claim is clearly a gross exaggeration. The 8 cent subsidy represents – what – 6% of the current price of fuel? Fuel costs do represent a substantial part of the cost of producing and transporting food, sure, but they obviously represent less than 100% of the cost. So the cost can’t go up by more than 6%.
Possibly, but generally governments of all stripes have never been very sensible users of debt. It limits the options, but more importantly, it limits the risks too.
Based on the experiences of WA, this will be an improvement. Rio lays more super-heavy track in a day than the state government can lay of commuter rail in weeks.
Umm, the removal of a Government subsidy for emitting CO2?
OK, Brian, you’ve pointed out that it can be thought of as a new tax, rather than the removal of a subsidy. But regardless of how one views it, Bligh’s move will (a) make one major type of emissions more expensive, and (b) raise desperately-needed revenue. That isn’t a good thing?
I find this an astonishing argument from someone who has written detailed and eloquent posts about climate change.
You suggest that this will have little effect on petrol consumption. I’m not sure I agree with that, in the absence of economic estimates of the elasticity of demand.
But if you are right about that, then we might as well just give up the fight against climate change right now. If petrol consumption, and energy usage in general, turn out to be highly inelastic, then both emission-trading schemes and carbon taxes will fail, and we might as well just start building dykes!
“I urge everyone who can make it to begin by attending the protests outside the state Labor conference on Saturday and Sunday thie weekend in ordr to make your feelings known to this Government.”
I’ll be making mine inside the conference and loudly.
And unsurprisingly the elasticity of petrol has been extensively studied around the world. In the short term it is not very elastic. In the long term, reasonably so.
People do eventually alter their behaviour to reduce consumption. And that’s a good thing, remember?
Actually, that would be a pretty cool trick.
Good on you, Steve.
I think all those state politicians, all but two of whom voted against Labor policy and the clearly expressed wishes of the Queensland public and in favour of privatisation inside the caucus let alone n the floor of Parliament will have some explaining to do.
If I were a member of the Labor Party, I would be demanding the disendorsement of each and every one of those MPs.
Even if Labor were to lose office as a result, then at least we stand a good chance of having a proper Labor Government elected and probably sooner rather than later.
I have no problems with cancelling the Fuel Subsidy. It all fell in a heap in the late 90’s when the feds had to bring in a fuel tax to subsidise the losses elsewhere when the High Court ruled that the states couldn’t levy excise taxes.
We went from having no tax and cheaper fuel to having to fund money back to fuel companies as a subsidy to create an artificial wholesale price. Of course, that gave all the power to the fuel companies who could set the wholesale price to whatever they liked and we couldn’t argue the point. The GST weakened this further to the point where local prices were often so close to NSW it wasn’t funny.
At least now we get to compare apples with apples.
Whilst I’m also in favour of it as a carbon killer, I suspect we’ll need more than an 8c hit to “shock” our behaviour – try a $1 tax and we might see some change. That said, I can remember some fool economist on the Today program once arguing that “studies have shown that people are unlikely to change their behaviour until fuel is something like $9-10 a litre”. Mmm, $500+ to fill up my car each week – and only THEN will I change my behaviour? “Let me see, it costs me as much to run my car as pay off my house” … I can see how it would be a difficult choice.
I’m in favour of getting rid of the fuel subsidy. If the gummints gunna spend approx $600 million yr then I’d rather it go to hospitals than saving a few bucks on a trip to the beach.
As for selling off public assets, firstly I’m wary of previous privatisation debacles, and secondly if it’s such a good idea then it should have been done when we could have got a better return. There’s probably lots of other cash-strapped gummints also trying to flog off the public silverware, so dumping assets in a buyer’s market doesn’t strike me as good policy.
Robert Merkel @ 6, without doing the maths that was pretty much my gut reaction to the 20% increase in food prices claim. The problem with such claims is that they aren’t even a serious ambit claim so the credibility of the person making the claim tends to be the casualty.
I thought one of the problems cause by the GFC was that private investors couldn’t borrow funds as easily any more? So rather than the media loading themselves up with debt and going on a shopping spree, today we see Mac Bank going cap in hand to the Chinese begging for a loan at any price?
Exaggeration aside, it’s not just that prices are down, so is purchasing power. Who, exactly, is going to buy these assets, and what return will they need to be able to afford to do so? Or will we see state banks buying them via intermediaries?
Paulus, you’re presuming the sale of assets will save or make the QLD government some money.
Several instances suggest it could be quite the opposite. eg Metlink. Kennett’s rail privatization has been a service-disaster, and hasn’t saved VIC taxpayers one red cent.
Complete FAIL. 0/10.
Paulus @ 8 on the fuel subsidy, what I don’t lie is empty gestures that do little good and do some harm along the way. Perhaps this one was worth a separate post. I was hoping someone might know about price elasticity in this area and it turns out someone did.
I can think of four identifiable sectors each with different characteristics and perhaps worthy of different policy considerations.
First there is the ordinary consumer/citizen. I wouldn’t worry too much about adverse impacts there if price is going to change behaviour in the long run, which Martin B says it will. But we still need to re-engineer public transport and take other measures, like promoting plug-in hybrids with access to renewable power etc. We’ve done posts on this kind of thing in the past.
Second, there is the transport industry. I won’t try to elaborate on this one at this stage, but realistic savings of emissions will involve a lot more than raising the price of fuel, which might be even a bit counterproductive by making us less competitive.
Third, there are industries which are major users of fuel where there doesn’t seem to be an alternative, for example mining, farming and horticulture. I’m not averse in general to raising more tax from mining, but apart from hydrocarbons are we gaining anything by making mining more expensive as an industry? It’s a question.
Food producers are in a different category. At the extreme we are told that under BAU there will only be the capacity to feed a billion people by 2100. I don’t know whether that’s right but it is the trend that is important – population going up and food production capacity going down. Under these circumstances we should have a policy bias towards preserving food production capacity.
The fourth is probably a variation of the first and I’m in that category myself. I’m thinking of a legion of people who use a motor vehicle for business purposes to the extent where they deduct expenses for taxation purposes. For many of us using a vehicle is unavoidable and I don’t do any fun trips now. So increasing the price of fuel is not going to help the environment one little bit. What will we can talk about another day.
So in addition to empty gestures I think blanket policies of this kind are often problematic and can have unintended consequences.
Just to add to that, 8c as such is not going to make any difference. My perception is that if the price of fuel hits $2 per litre there will be a very brisk business in LPG conversions and people will be actively looking for fuel efficient vehicles.
moz @ 16, that absolutely is a problem. Bligh and treasurer Andrew Fraser have been saying that there won’t be any fire-sales or forced sales. But on your point about Macquarie is a bit close to the bone. We have some shares in Macquarie Communications Infrastructure Group, which is fine as far as I can see as a business, but with debt a bit higher than is currently fashionable. So the management is recommending we sell to a Canadian pension fund for less than half what we paid for it.
Wankers!
If those 90 butcher shops were able to serve up decent meat then I’d be all for nationalisation of butcher shops.
Bloody vegetarians have got it easy these days – butchers haven’t even heard of two -tooth, no one ages their meat properly and no one gives a fuck.
Sheesh I remember when lamb shanks were given away free – yes free.
Now they are as dear as the crappy SPRING lamb available all bloody year round.
Not sure about the price elasticity of petrol. When the price jumped suddenly and dramatically 18 months ago, city commuters flocked onto suburban trains in their THOUSANDS within weeks. But the price rise was far above 8cents per litre.
(in Melbourne)
Incidentally, demand for public transport continues to skyrocket in Melbourne. Apparently it’s grown another 13% in the 12 months to March 2009
It has been of great annoyance to me the use of the word “subsidy” when relating to the fuel rebate being handed back to Queensland motorists. Go check out the link to RACQ Brian placed in the post for this thread. My memory goes back to 1997 & I thought at the time, why call this a subsidy, is there an ulterior motive for naming it as such somewhere down the track? Anna hasn’t been subsidising a pollutant out of the Qld treasury funds & the goodness of her dear little heart. She has been merely handing on funds that the Feds have been giving Qld.
Now despite what I have just wrote I don’t totally disagree with the first part of the comment #13 Go Troppo. But let’s be honest about it, this is a new tax. If as part of the effort to reduce carbon emissions we need to a tax fuel, fine, but only after a proper investigation of the full ramifications for all of the large decentralised state of Qld. It is as Brian wrote in comment #18, “an empty gesture”; “unintended consequences”.
Paulus @ 5 said:
Paulus, it was the LNP before the election who were indulging in magic pudding economics, by extracting a savage productivity dividend from existing government expenditure, not sacking anyone, maintaining existing government services and enhancing them in many areas with totally unbelievable promises, maintaining expenditure on infrastructure and not going into debt. It made them pretty much unelectable if you had any concern about the conduct of Queensland’s affairs.
In this case all the entities to be sold are trading profitably and I gather all need capital expenditure. Private enterprise is going to have to find the debt or equity finance to do what’s necessary, and charge enough to service the funds employed. As derrider derider said on the other thread, what we are looking at here is window dressing, partly for the benefit of the electorate and partly to appease the ratings agencies, and Bligh and Fraser have admitted that there are no guarantees in that quarter.
As to the in principle question, I think you have to take each case on it’s merits. I know nothing about Forest Plantations Queensland and have no opinion about it. My main concerns are in areas providing monopoly or near monopoly type services to the public and the cost of entry for competition is high. So the butcher shops can go private, although there may have been other considerations and market failure at the time.
I am also concerned in areas such as hospitals and schools where the services provided may be more narrowly defined or distorted for profit. Moreover there is a temptation to take short-cuts on the quantity and quality of staff to the detriment of the service provided.
In this case Bligh/Fraser have avoided selling services provided directly to the public, although the Queensland Motorways thing is curious where the tolling franchise is being sold while the road ownership is kept. On my simple view it can’t be too complicated to make money out of collecting tolls, but I might be missing something.
The QR Coal Network is a strange case. As Mark said, Queensland public services depend on cross subsidy. You could never raise locally enough money to build and operate a school at Weipa or Mornington Island. Making money out of moving coal can’t be too hard. In the early days I understand royalties were so low that rail charges was about all we got out of it.
So this whole thing is motivated, I think, by issues based on perception rather than reality, dressed up to look like brave and visionary action in the face of a crisis. Whatever the rationalities or otherwise of opposition to the sale, the opposition, if talk-back is any guide, is emotionally based and visceral, not susceptible to rational arguments and in many cases ignorant of the facts. If you are not impressed with the arguments here, try talk-back.
So politically the whole thing can’t work.
still@downfall @ 25, spot on. I suspect the “subsidy” thing was spin from the start, and it tends to put a different gloss on its withdrawal.
Just had a nice chuckle – her Branch has thrown her out.
Heh!
That’s correct Razor. The South Brisbane branch of the Australian Labor Party has voted unanimously for the expulsion of Anna Bligh from the Labor Party.
See report in the Courier Mail.
Good on them!
At least some in the Labor Party still have backbones.
Ms Bligh, do you mean? Another mutiny? Will they leave her to drift in a small boat? Fletcher: you are no Christian, sir!!
If an election was held today we’d see at least 6 Green MP’s in the QLD legislative assembly. That is IF they regain some conviction and stop bowing to their masters in this ridiulous QLD Labor Lies Inc.
(Cross-posted to johnquiggin.com_
If anyone wants to know the story behind these words in the editorial in today’s Courier Mail:
Madonna King put the question to Andrew Fraser on my behalf and mentioned my named during the interview. It was the one attempt by the ABC to raise this issue during the whole of the election as far as I am aware, and an extremely lame attempt at that. I have written of this in “Brisbane ABC suppresses alternative candidates in state elections despite listener dismay with major parties” of 30 Apr 09.
As far as I am aware, I was the only candidate who contesting those elections, who anticipated the outrage that is now unfolding before our eyes and attempted to do something to prevent it.
If anyone here is going to the state ALP conference this weekend and intends to stand up to the Bligh/Fraser junta please read articles at candobetter.org/QldElections, where you should be able to find ammunition that will help you to tear them to shreds.
I’ve just caught up with Quiggin’s view. In short:
Good: Queensland Forests.
Bad: Queensland motorways.
Ugly: QR coal freight and coal terminals.
Indifferent: Port of Brisbane.
Came across some figures last night that illustrate the need to look at the entire picture across the state of Queensland in regards to the effect on fuel usage from policy change of privatisation & removal of the fuel rebate. I can’t comment on passenger train services in the SE & but in the focus of servicing the cash cow of hauling coal, all the rest of QR bulk freight business has suffered badly in recent years.
“Successful grain train movement has been at a pitiful 20 to 30 percent over the past three week, meaning that more than 9000t per day is moving by truck to Brisbane.”- source Agforce
Just look at that figure quoted, 9 000 t/day by truck & think about the extra fuel being burnt in this operation against an improved situation where QR were to run an efficient freight business. Other results from this inefficiency is, trucks are on the road with cars going through Brisbane to the port & increased damage to the roads. Take a drive past Toowoomba on the Warrego highway not only will you note a road deteriorating to dangerous levels but also giant heaps of grain tarped down awaiting transport.
Now I’m not advocating immediate fire sale privatisation in the time of economic downturn will solve this problem, but something needs to be done. “without a guaranteed service level agriculture will be shoved off rail all together under either Government or private ownership.” Agforce
I think the fuel subsidy is a bad idea, but they have no right to break this promise in the way they have.
People must not allow this to be used as some kind of bargaining chip that would in any way sweeten the outrage of the asset fire sale.
The dishonesty is beyond belief.
Has anyone got a copy of the Courier Mail?
I couldn’t locate the story about Bligh’s own branch calling for her resignation. (I will have another look at it when I get it back off my neighbour.) I would have thought that such a sensational story deserved to be on the front page.
Having briefly slapped the Government on the wrist for it’s blatant deceit, in a short article by Steven Wardill on Thursday and in yesterday’s editorial, the Courier Mail is now running full steam ahead in its clamouring for privatisation.
daggett, it’s on page 4. Electoral mutiny for Bligh, by Steven Wardill. A thin slither single column story nearly pushed off the page by the double spread Father furious at dive death term, for those who don’t know, about the American pleading guilty to manslaughter of his newly wed wife when they were diving on the Reef a couple of years ago.
Thanks, Brian.
During the election, on 7 March their editorial stated: “… if Mr Springborg wants to achieve his aim of returning the Budget to surplus by 2012 he will have to implement a redundancy program and he will have to sell assets. The voters understand this …”
So, even it acknowledged that privatisation was an issue at stake in the recent elections, if not from the quarter that it has now eventuated.
However, the Courier Mail made no other effort to alert its readers to this fact.
That’s interesting, daggett. It’s amazing how these editorial writers have certain knowledge about what the electorate does and doesn’t understand.
I think it would have been a case of wake up in fright if they’d voted LNP, as it has been with the ALP.
The LNP does however have the advantage of not being the ones who got Qld into the current financial red hole.
Bligh, it seems, has had a win.
So, the Queensland branch has carried (60%/40%, I gather) a “motion acknowledging that the sales are going ahead”, thereby raising the white flag before the Bligh/Fraser junta.
What a disgrace!
I would like to see how those 60% of conference delegates justify their shameful surrender before the trade unionists and ordinary workers that they’re supposed to represent, not to mention the broader Queensland public, who were never told of these privatisation plans at the last election, and who are every bit as opposed to privatisation.
So, did anyone else here attend the protest against privatisation today?
There should definitely be another at the opening of Parliament on 16 June.
daggett, on the TV news one of the union reps suggested that there were quite a few empty seats when the vote was taken, but I have no idea what that really means.
Brian, Possibly, a number of delegates chose to run away rather than take a stand one way or the other. Whatever, I see no excuses. The fact remains that all too many delegates at today’s conference have shown that they have no backbone.
As if Anna could care less really, she’s achieved her ambition to get in the history books as Australia’s first elected woman head of state. Like she gives a stuff about her seat of South Brisbane, she didn’t even mention it in her victory speech. She’ll be happy to be thrown out on her arse, like JWH, and get to say goodbye to all that, and hello Ros, thanks of keeping my seat warm.