In handing down its 2014 Budget, the Queensland Government has announced a major sale of government assets designed to fund new infrastructure projects and reduce government debt.
Thursday, 5 June 2014
Professionals Australia Infrastructure Campaign Director Bede Payne said that the Budget raised more questions than it answered, particularly around the impacts for members on the sale of public assets.
“We know that without enough engineering capacity governments waste million in taxpayer funds. Our concern is that this Budget contains significant plans to sell public assets. We will be working closely to examine the detail and implications for members in the coming weeks and months,” said Mr Payne.
“The Budget contains a $2.27 billion deficit and predicts debt levels rising to $80 billion. State revenue has decreased significantly and there has been the removal of significant federal government funding.
The Queensland Government hopes to raise $33 billion by selling power generation assets, leasing the ports of Gladstone and Townsville and engaging in what Mr Payne described as “untested debt-profit swap in the electricity transmission sector”.
The Government has said that $25 billion of the money raised through asset sales, will be used to reduce debt, while $8.6 billion will be used to fund infrastructure projects such as the Bus and Train (BAT) Tunnel.
Roads and Transport
The Government has earmarked $5.4 billion for roads and transport, with more than a $1 billion being split between the Bruce Highway upgrade and the second Toowoomba Range Crossing.
In rail, money has been allocated to purchase new rolling stock, and there has future fund to mitigate against the financial impact of renewal work associated with natural disaster.
“Investment in infrastructure, like the BAT, is always welcomed but this comes with an important caveat – without the appropriate engineering capacity – the government will waste millions.”
“Professionals Australia calls for the Queensland Government to invest in its engineering capacity at this pivotal time. Investment now, will save taxpayers millions in the long run.
Recent research from Deloitte Access Economics into infrastructure blow-outs, has shown that the long term average for infrastructure wastage runs above 6.5 per cent, with major project wastage at 13 per cent. Much of this waste can be attributed to lower than satisfactory engineering capacity in the public sector, effectively rendering the Government an uninformed purchaser.
Mr Payne said that with significant reductions in Queensland’s engineering capacity over the previous five years and Deloitte’s analysis, “we estimate that over $500 million will be wasted from the Government’s $8.6 billion bucket”.
“With the Toowoomba Range Highway expected to cost $1.7 billion, we are now looking at blow-out of more than $215 million.
“The Government needs to assess how much it is wasting by not hiring the right people. We are talking about huge sums lost in a constrained economic environment. We absolutely need to work on rebuilding the infrastructure expertise and experience within organisations like DTMR.
If sales in energy generators go ahead, it is likely that any new operators will look to restructure in an effort to maximise profits.
“Our concern in energy generation and transmission is all about safety and reliability. Our members ensure that the public gets the best out of these assets.
“Any reduction of expertise in this sector needs to be weighed against the possibility of energy shedding but more importantly – reduced maintenance standards.
“If this plan goes forward, it will definitely affect the way in which these assets are managed and maintained.
As always, Professionals Australia will work closely with delegates and members to understand the detail of all measures put forward in the Budget.