Officials are responding to the economic crisis by selling off state assets and discontinuing an expensive tax-supported subsidy of industry.
Only two months after winning an early election on a platform of financial management, Ms Bligh yesterday confirmed five government-owned corporations would be sold over the next five years and the 8.35 per cent fuel subsidy abolished from July 1.
Queensland Motorways Limited, the Port of Brisbane, Forest Plantations Queensland, and the Abbot Point Coal Terminal will be privatised, as will Queensland Rail’s coal business and possibly even its freight arm and regional network.
Ms Bligh – who had not canvassed such drastic measures during the campaign and briefed caucus and selected union leaders only on Monday night – said the Government expected to raise $15 billion from the sales and save $2.4billion over four years on the fuel subsidy.
While the state will lose about $280million in annual dividends from the GOCs, the decision to reduce the scope of the public sector means it will no longer have to fund $12 billion in envisaged capital works over the next five years, and realise insurance savings of about $750 million a year. [...]
But Queensland Labor Party president and Australian Manufacturing Workers Union state secretary Andrew Dettmer yesterday said the decisions were “tragic for Queensland”.
Queensland Council of Unions boss and former party president Ron Monaghan – who admitted being “gobsmacked” at the scale of the revenue-raising measures being undertaken – predicted a heated state conference at the weekend.
While in NSW an ALP revolt over planned electricity privatisation brought down former premier Morris Iemma, in Queensland the Labor Government routinely ignores party policy and it is understood only two of the 51 caucus members opposed the measures on Monday.
Nonetheless, Ms Bligh will still face hostile delegates on Sunday – she will miss the Saturday session in order to host Queensland’s 150th birthday celebrations – and possibly even strike action in the coming months.
“There is no doubt that a number of trade unionists feel very passionate about this issue and oppose the government view,” Ms Bligh said. “My job is to govern for all Queenslanders and to do the right thing by those Queenslanders, to put us in a position where we can keep growing, in our services like schools and hospitals that people need.”
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I am sooooooo envious!
So,
* Eliminate government subsidies
* Sell government own companies to the private sector
* Reduce and eliminate debt
* Focus on essential services
*blink* *blink*
Awesome…
Now if only she can follow up with changing some of laws regarding civil liberties that she changed, in the police state of Queensland. She could probably cut some spending in other areas too, like her travel. The state should have been in a much, much better financial position to start with too considering the rich dirt being sold in ‘boom’ times.. However kudos is due for going against party policy.
The ALP needs to realize that these corporations are being sold, not destroyed. If the unions employed here are productive and efficient, then they have nothing to worry about. They ought to be more concerned about all the scarce resources that these Government Owned Corporations waste/destroy if they were allowed to survive. Waste drives the cost of everything up, since more resources (labor, materials, time, etc.) are used than necessary.
I was about to give three cheers for Ms Bligh, but she showed her colors when she talked about growing government “services” like schools and hospitals. Funny how some people think waste is acceptable for some projects but not others.
A bit off topic on government services: What if you were mugged at gunpoint tonight? Let’s say he rifles through your wallet and takes $10 out of the $50 you were carrying. Next, the assailant hands you a Happy Meal and says, “No need to thank me; it’s a service to you.”
You didn’t want a Happy Meal? Too bad for you; it’s a mandatory service for your own good.
This is the most encouraging thing that I have read in a long time. Now if we can just get some US politicians to learn from her example.
Great news for Australia, now if only American politicians could start thinking like this…
Hmm… this ‘subsidy’ is really a state-funded 8c/L rebate of the federal fuel levy, which I believe is 38c/L. And 10% of the fuel price is the federal GST, which is paid back to the states anyway, so all this means is that the government will be taking in more tax in total (albeit in a roundabout and wasteful way.)
Selling off state assets is a good thing though, even though they really have no choice as the Queensland government recently lost their AAA rating and need to pay down debt. No doubt the sale will be bungled somehow; Queensland is famous for almost absurd levels of government corruption and incompetence.
…but the federal backdrop is dismaying…”stimuli” of all shapes and colours, impending unionocratization of industrial relations, vilification of business, and a emissions trading scheme on the horizon.
monetary policy has been better than america’s, but personal debt levels are extremely high, and one suspects that the labor party will do what it takes to transfer private debt to the public balance sheet.
Agreed newson (who the hell are you – you’re brilliant and should be a govt advisor!).
QLD’s actions are necessitated by (1) lack of tax revenues (and, of course, the inability to print money like the central govt) (2) reduced commodity prices. This amounts to “selling the farm” to some degree. It’s probably a move in the right direction, but against a tidal wave of monetary madness from the “ultimate monopolist” (the evil/criminal counterfeiting reserve bank), it’s not going to matter in the scheme of things.
California is faced with the same dilemma.
Sad, not glad.
More good news from AUS! Some senior bureaucrat, Debora Picone, has moaned how Australia may not have a ‘free’ Health service in five years time! I think she’s trying to rally the legions of the left, but it’s an encouraging thought! (We Aussies saddled ourselves with Medibank, a lot like the British NHS. I don’t know why, except we were following European social fashions, and it seemed cool at the time.)
abom, i’m just an abn, one of millions biting the pillow as we get what “we” voted for, long and hard. but bad as taking it is, i couldn’t swap roles in good conscience. but, thanks anyway.
Yes, and for American readers, interestingly enough this is actually a Labor party government, which is the Australian equivalent of Democrats.
“Just an abn” – that’s hilarious for anyone owning an Aussie business! The GST tax return is a bloody nightmare, but nowhere near as complex as the income tax return and trust law. Only the rich can afford the lawyers to escape to the Caymans.
At some point you have to stop biting the pillow and turn around and put your fingers through the eyes of your adversary. We’re close to that point. Very, very close….
From what I’ve read, the Canadian federal government is also considering selling state owned agencies and companies. Although they will still probably be regulated to the core, it’s still better than nothing…
As a current victim of the aforementioned States extensive tyranny… let me assure you, there really isn’t anything good about this development.
Considering the fact it’s not the right way to de-socialize, it is also unfortunate that this mob of corrupt, inept and immoral bunch of block headed buffoons – couldn’t & wouldn’t adopt the ethically & economically correct policy, even if they tried.
This whole endeavor is highly suspect. Methodological individualism gives guidance for a proper analysis and we are yet to see who ends up with the ‘public assets’.
From a historical perspective, the Soviet Union and it’s crumbling comes to mind. The Communists in power sold ‘public assets’ and “privatized”. They sold it all off to party apparatchiks and other wealthy individuals, essentially maintaining the centralization of power. This is exactly what is going on here.
From my understanding, all those govt corporations mentioned have a monopoly and it will be maintained when they sell them off. Queensland rail owns all the railway lines, giving it all to one company hardly breaks it’s ability to maintain a monopoly – one source of restricting competition.
There is even a “Office of Government Owned Corporations” – http://www.ogoc.qld.gov.au/ . 15 Corporations in total owned by the QLD Govt.
“…discontinuing an expensive tax-supported subsidy of industry”.
That’s a poor description. The subsidy isn’t of industry but of all petrol users (including consumers), and it’s actually only giving back what the federal government takes on petrol and remits to the states – there’s no subsidy specifically to industry, and it’s not drawn from broader taxes. It’s just an inefficient attempt to restore at the state level what gets distorted at the federal level.
Governments have historically done a pretty bad job of running businesses. The USSR ran its economy directly into the ground. China seems to be doing pretty well to the extent that it permits free enterprise to function. It appears to me, being a simple back-country bankruptcy lawyer, that a way to reduce the economic misery the country is dealing with right now might be to reduce taxes and get government out of the business of running businesses. I keep thinking of the Post Office. If banks and automobile manufacturers are run as well as the Post Office….well, we ain’t seen nothin’ yet.
“Governments have historically done a pretty bad job of running businesses”.
That actually depends on the kind of business they were trying to operate, and how many costs they were able to throw onto others (i.e., how they could subsidise things). The British ran tea and opium plantations this way in India, and the Dutch produced cash crops in the East Indies – all highly profitable and commercial, but all resting on being able to apply local labour at lower than market rates, concealed taxation. The commercial operation was still necessary to get something marketable back in Europe or in other markets.
Agreed. Governmen monopolies can work quite well, in the sense that they can be highly profitable.
The British government and “Billy The Kid” Jardine did do an excellent job monopolizing the opium/heroin drug trade back in the 19th century, with the highest quality opium being produced in India, Burma and elsewhere under the watchful auspices of the benevolent British “Vempire”.
Central banking and the imposition of a monopoly currency also produces incredible profits for the private banks and is a government run monopoly (legal tender laws successfully impose monopoly fiat currencies all around the world).
The question is whether this is market efficient in the long run. Often monopolies are run like criminal organisations because of the need for…how do I put this…”strict enforcement” of payment terms and “strict enforcement” against competition.
The Mafia also understands the need for “strict enforcement” of payment terms, but they didn’t make it into the Italian parliament until relatively recently. They were a very slow and backward organization. The Bank of England was “legalized” in 1694 and really led the world as a model in legalizing what was previously criminal activity (counterfeiting).
So government monopolies are likely to be unstable in the long run, although highly profitable in the short run
“Governmen” = Govern Men = Government. It’s always a form of coercive exploitation to “govern men” because if people wanted to do it voluntarily there would be no need to “govern men”, would there?
I posted about this over at ALSblog (Australian Libertarian Society) though with a different slant.
Describing it as a subsidy is a bit of a fib (well, OK – a lot). It is in fact a state-based rebate of a federal tax… not the most efficient means of reducing tax – but this isn’t abolishing a subsidy as much as raising a tax.
Our politicians are pretty prone to spin – they even described the tax increase as “saving taxpayers $2.4b over four years”… in other words, paying more tax is saving money!
In boom times , the state governments in Australia still ran deficits with ever increasing spending. The fact that they are now privatising assets is perhaps a “silver lining”, but it’s also a case of them being unwilling to cut spending. In short, there is little to be envious of.
Its interesting to see what she’s selling. All of those government businesses are likely to be hit indirectly by a carbon tax, coal rail and ports particularly. I wonder if there’s a greenhouse costing in the advisory papers?
PS I’m in Canberra nice to see so many Aussies on the blog.
I live in South Australia. I heard about this.
Wesleybruce made a good point about the businesses being likely to be hit by a carbon tax. Could turn out to be a good decision for the QLD gov, if they can get the right price.
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