Western Australian treasurer Mike Nahan says asset privatisation can raise $16 billion to help pay down debt and fund Perth’s new rail line to the airport, and long-talked-about MAX light rail line.
Nahan, who unveiled the 2016/17 state budget on Thursday, says the privatisation of a number of assets could result in proceeds of around $16 billion.
The treasurer said the Government would seek to sell off major electricity distributor Western Power, and the poles and wires owned by Pilbara electric business Horizon Power.
Those sales would add to the proposed sale of Fremantle Port, the Utah Point bulk terminal at Port Hedland, and the state-owned TAB betting agency.
$11 billion of the $16 billion Nahan expects to raise would go towards paying off the state’s debts, which are estimated to pile up to $40.1 billion by 2019/20.
The remaining $5 billion would be poured into an Infrastructure Fund, to prop-up a massive $23 million asset investment program over the next four years.
$1.8 billion is set aside to be spent on transport infrastructure (roads and rail) in the 2016/17 financial year.
This includes $104 million for the Forrestfield Airport Link, which has a targeted completion date of 2020.
It also includes $427 million for the on-again, off-again MAX light rail project, with the treasurer saying planning work will go ahead in the 2016/17 financial year.
$156.6 million is also set aside for the public transport component of the new Perth Stadium, with work including the construction of Perth Stadium station to replace Belmont station, as well as the construction of the Swan River pedestrian bridge and two special event bus stations.
As is so often the case in budget matters, however, the treasurer’s word is far from final.
Commentators believe he faces a steep uphill battle to win approval for asset privatisation, especially on the scale revealed in Thursday’s budget.
“This is a real game changer,” Nahan argued in his budget speech.
“The repayment of $11 billion in debt will represent around a 30% reduction in net debt by the end of the forward estimates, and will reduce the State’s annual interest bill by hundreds of millions of dollars.
“And the $5 billion Infrastructure Fund will provide a ready source of non-debt funding for essential infrastructure, which may include new public transport infrastructure, new roads, new schools and other economic and social infrastructure to facilitate the continued growth of Western Australia.”
The assets proposed for sale make up only a small portion of WA’s asset base, Nahan added, estimating the asset base to be worth over $190 billion.
Privatisation plans are opposed by the state’s Labor Opposition. The position of the Nationals – allies of the Liberals in Government – is also unclear.