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.