A MOVE by the Queensland government to lease out a series of its assets, including the Ports of Gladstone and Townsville, has been applauded by the Australian Industry Group (Ai Group).

The Strong Choices Plan aims to reduce government debt levels, which at about $80 billion are the highest of any state in Australia.

Under the Strong Choices Plan, the state government will seek to lease some assets to reduce its debt totalled at about $80 billion.

“We welcome the release of the Strong Choices Plan as a further step in the important dialogue with Queenslanders around privatisation,” Ai Group Queensland director Jemina Dunn said.

Ms Dunn said Queensland businesses had an open mind when considering any proposals to sell or lease publically-owned assets.

“The alternative of raising taxes including payroll tax to pay down debt is not supported by Ai Group,” Ms Dunn said.

“This would have significant and counterproductive impacts on business competitiveness and the broader Queensland economy and community.”

However, Ms Dunn indicated that both businesses and industry would need more clarity on how asset lease proceeds would be spent.

“In this regard we will be examining revenue expenditure proposals contained in the plan closely in coming days,” she said.

Apart from the need to pay down debt, Ms Dunn said the proceeds of any asset sales or leases should be put towards investing in a pipeline of rigorously assessed productivity-boosting infrastructure projects.

“Government needs to be careful any revenue from privatisation is not frittered away on projects that do not contribute to long term productivity gains,” she said.

“Infrastructure is a key priority for industry with a recent Ai Group survey reporting that 73% of Queensland businesses identified it as one of their top three priorities.”

Election mandate needed for plan

The Queensland government’s proposal to offer assets previously intended for sale or private investment for lease only will go ahead only if it receives a mandate at next year’s state election.

In a publically accessible review of the plan, the Campbell Newman-led government said the state would retain ownership of the assets while allowing the private sector to operate, maintain and expand the assets over the lease term.

The plan is to offer the assets for lease for 50 years with an option to extend for 49 years should key lease conditions be met.

The total value of the state’s assets is estimated at about $291 billion, with the assets the government is prepared to consider for sale, lease or private sector participation, representing about $33.6 billion on a book-value basis – about 11.6% of the state’s total assets.

The government has already reeled off some of the assets it iss eyeing under the plan, with industrial water pipelines of SunWater and the generation assets CS Energy and Stanwell to be offered for lease only.

Electricity distribution and transmission businesses Energex, Ergon and Powerlink, which were previously nominated for private sector hybrid investment, would also now be offered for lease.

The proposal to lease the Ports of Gladstone and Townsville aggregated with the Mt Isa Rail Line, originally flagged in the proposlas draft plan, remains unchanged.

Gladstone is currently world’s fifth largest coal export port, with annual throughput of about 70 million tonnes per annum. In the 2013-2014 financial year, the port posted record figures, with throughput totalling 98.3Mt.

However traffic through the port is expected to increase dramatically, with the LNG industry set to commence trade through the Port of Gladstone in late 2014.

Government-owned Gladstone Ports Corporation (GPC), which runs the ports of Gladstone, Rockhampton and Bundaberg, is currently focused on managing the significant growth phase that will occur in the next few years as a result of three LNG export projects coming online.

A spokeswoman for the GPC said it did not make public comment on issues such as government decisions, including a potential lease of GPC.