Pressure to sell off state assets

PRESSURE is mounting on the incoming Liberal government to consider selling state-owned businesses to fund infrastructure projects.

An in-principle deal was struck between the state treasurers and their federal counterpart, Joe Hockey, on a proposal that encourages states to privatise publicly owned assets such as energy companies and ports, in return for federal infrastructure funds.

Tasmania's likely new treasurer, Peter Gutwein, could not go to yesterday's meeting as he is yet to be sworn in. He said the new government would be briefed on the proposal next week.

During the election campaign, the Liberals ruled out selling off any state-owned businesses to plug budget deficits or help fund election promises.

Yesterday Mr Gutwein said there were still no plans to sell any assets but he did not repeat the earlier commitment ruling that out.

"There is a proposal that was discussed today that will need to go before cabinet and be discussed by my cabinet colleagues," Mr Gutwein said.

The new ministry will be sworn in at Government House in Hobart on Monday.

Under the proposal, the federal government would set aside a new pool of funds to give the states and territories incentive payments of 15 per cent of the value of the government-owned asset they were proposing to sell.

The states would only be able to spend the Commonwealth funding on infrastructure projects.

The size of the pool will not be released until the May federal budget is handed down.

Economist Bruce Felmingham said it was foolish of the Tasmanian Liberals to have ruled out selling assets in the lead-up to the election.

"They can't afford to stick to the promise of not selling the assets," Dr Felmingham said.

He said the Midland Highway upgrade and more irrigation projects could be the targets of additional infrastructure spending.

The Communications, Electrical and Plumbing Union urged the new state government to keep its pre-election commitment and not give in to the federal treasurer's "new funding blackmail policy".

"The news today that federal Treasurer Joe Hockey will give states an ultimatum, sell profitable public assets that provide important state revenue or lose federal funding, is the action of a bully-boy, stand-over man that should anger Tasmanians," CEPU secretary Trevor Gauld said.

Tasmania's Treasury and Finance Secretary, Tony Ferrall, attended the meeting in Canberra yesterday as an observer.


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