As the Federal, Victorian and NSW Governments hurtle down the path
towards a $3 billion float of the Snowy Mountains Hydro-Electric
Authority, the Queensland government is going in the opposite
direction, yesterday splashing $446 million on the monopoly WA rail assets that were
only privatised in December 2000.

In fact, there are some interesting parallels with Singapore Inc and,
once Telstra is fully privatised, Queensland will emerge as the
Australian state apparatus with the largest single pile of assets both
in net and gross terms.

Queensland Rail is already a very big business, as you can see from its
latest annual report.
In 2004-05 it made a record profit of $287
million and paid a record $193 million dividend to the state
government. With $8.56 billion in assets, it turned over $2.5 billion
last
financial year, but gearing is already a touch high with total debt of
$3.8 billion now expected to top $4 billion.

Media-tart Peter Beattie was all over the press today, so clearly
yesterday’s Queensland Rail announcement was not “the sh*t I don’t
want”, which is what he last
week said would be handed to deputy premier and new Queensland
Treasurer, Anna Bligh.

Presumably it will be Bligh who will decide if Queensland Rail abandons
its dividend to fund the ARG acquisition out of operating cash flow or
whether it will go further into debt.

The fact that a state-owned company can absorb such a move is testament
to the huge balance sheet strength that Queensland boasts.

After 10 years in Government, John Howard and Peter Costello have only
now turned their minds to the huge issue of plugging the $90 billion
liability for Commonwealth superannuation liabilities. The contrast is stark indeed with Queensland which has fully funded
super and a $45 billion asset pile sitting inside the Queensland
Investment Corporation.

Apart from flogging the Queensland TAB and the Dalrymple Bay coal
terminal, Queensland has largely shunned privatisation and still
controls much of the state’s electricity industry and most of the ports.

Indeed, when the Feds decided to flog off all their airports,
Queensland Inc swooped, with the government-owned Port of Brisbane
Authority contributing 37% of the $1.37 billion that was paid for
Brisbane Airport in the mid-1990s. Now they’ve become even more audacious,
snapping up the WA rail assets.

Queensland has managed to achieve all this despite easily having the
lowest taxes in the country. Sure, some service levels remain below
other states due to historical under-spending which dates back to the
Bjelke-Petersen years, but in balance sheet terms they are literally
tens of billions of dollars ahead of any other jurisdiction.

Finally, the parallels with Singapore Inc might get even more
interesting given the rumours that Temasek Holdings, the Singapore
Government’s Investment arm, is eyeing Chris Corrigan’s vulnerable
Patrick Corp.

The PSA business has just lost a bidding war for P&O and is hungry
for more port assets. Similarly, Singapore Airlines would presumably be
delighted to take the controlling stake in Virgin Blue off Patrick’s
hands, particularly if Federal Cabinet shuts the door once
again on the Pacific Route.

Peter Fray

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