December 12, 2013
The State Government will commission “scoping studies” by investment banks and financial advisers into the future of Stanwell and CS Energy, Treasurer Tim Nicholls said today,
Mr Nicholls said no decision had been made and “commentary to the contrary is simply wrong and ill-informed” however he confirmed to ABC’S “The World Today” radio program this afternoon that the government was investigating the potential of “getting out of ownership” of the two power generators to help pay down debt.
A separate State Government study will also look at the “possible creation of an integrated retail and generation business, incorporating Ergon Energy’s retail business with other power assets as a means of increasing competition in the market”.
A media release by the State Government stated that Queensland’s “unsustainable debt levels” were prompting the action.
Mr Nicholls said the State Government had worked hard to rein in debt but “more needed to be done to tackle Labor’s debt and ensure future services for Queenslanders could be properly funded”.
“Labor’s debt has cast a dark shadow over the State’s finances and the Commission of Audit found we would need to pay down debt by $25-30 billion to restore our AAA credit rating,” he said.
“Queenslanders are currently paying out around $4 billion a year in interest on Labor debt and that’s money that could be used for frontline services like health, education and police.
“We have achieved what savings we can in government expenses, keeping expenses growth at 0.2 per cent for 2012-13 and at an average of 3 per cent over the forward estimates.”
Mr Nicholls said it was now time to methodically work through “some of the other possibilities”.
The scoping studies into Stanwell and CS Energy would “form the basis for a considered and mature conversation with Queenslanders about the future of these businesses in the context of the $80 billion legacy of debt left by Labor”.
“While it’s important for the Government to ensure Queenslanders have a reliable power supply, it doesn’t necessarily follow that the Government needs to own power stations,” Mr Nicholls said.
Mr Nichools said the government was acting in response to the Commission of Audit – undertaken by former Howard Government Treasurer Peter Costello – who recommended Queensland undertake detailed investigations into the future of the generating businesses.
“In line with the Government’s response to the Commission of Audit, studies will also be done into the options for the Gladstone Ports Corporation and the Port of Townsville Limited.
“We committed to investigate the option of long-term leases being made available for these two ports and these studies will look at the feasibility of that recommendation.”
Mr Nicholls said the Government maintained its commitment not to sell any government-owned businesses without a mandate.
He said investment banks and other commercial advisers with the necessary experience to conduct the studies would be invited to tender for the work, which is expected to be conducted in early 2014.
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