It makes better economic sense to sell state assets than lease them and Queensland's debt level is "totally over stated," a QUT economist says.
QUT financial economist Dr David Willis warned if assets were poorly maintained by private companies the state could be forced to buy them back before the end of the lease.
"If assets are leased there must be strict regulatory over sight in case they need to be returned to the state more quickly than anticipated," he said.
"The case of Railtrack in the UK should be closely looked at - where the country's rail services were sold off before the collapse of the private company forced it to be effectively renationalised six years later."
Dr Willis said the 99-year lease play would net the government and taxpayers the immediate windfall of $37 billion but lose the roughly $2 billion a year in annual revenue that these assets bring in.
"The other problem with a long-term lease is that in 99 years technology will have advanced and we won't be getting our electricity, for example, by poles and wires. So these assets will be of little value to the state by the time they are returned," he said.
"It would still be prudent to pay down part of the debt, but if the government wants to use assets to do this, it should be a straight sale not a lease, with part of the proceeds used to buy new assets.
"I think the strategy of generating immediate revenue from assets is fine as long as they are sold, a substantial amount of debt is paid down, and part of the money is used to buy or create other assets that earn an income.
"If the interest saved from paying off debt is equal to or close to the the $2 billion income the assets were bringing in, then for me it is a sound strategy."
Dr Willis also said the state's real debt is around $48 billion, not the $80 billion claimed by the State Government.
"To say the debt is at $80 billion now is totally incorrect. If you look at actual bonds and paper debt outstanding the figure is $48 billion," he said.
"The $80 billion figure is a projection based on a lot of assumptions."
Media contact:
Rob Kidd, QUT Media, 07 3138 1841, rj.kidd@qut.edu.au
After hours, Rose Trapnell, 0407 585 901
