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The Forum > Article Comments > The election best lost > Comments

The election best lost : Comments

By Tim O'Hare, published 12/2/2015

Queensland Labor boxes itself in with its anti-asset sales mandate and will be punished by having to implement the impossible agenda of no cuts, retaining assets and delivering a surplus.

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" Labor's strategy was in Palaszczuk's words to run 'a referendum on asset sales', an extraordinary single-issue campaign against a policy they advocated at the 2012 election, and it worked" REALLY ?? SINCE WHEN DID ANNA BLIGH GO INTO THE 2012 ELECTION SAYING THAT LABOR WAS GOING TO SELL ASSETS? The way I recall was Anna Bligh only announced AFTER she won the 2012 election that she was going to sell assets and no matter how much the Unions screamed, Bligh still sold the assets. "Anna - Stacia" as Transport Minister presided over the sale of Qld Rail assets.
Posted by Merilyn Haines, Thursday, 12 February 2015 9:35:30 AM
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This is because nobody on the conservative side has another idea beyond privatizing income earning assets!?

There are other better solutions to getting infrastructure built, and something we have yet to try here, very popular overseas, is self terminating thirty year bonds. And sort of enables us to have our cake and eat it too!

The only trick is to chose projects that have to earn an income; like say, the endlessly delayed second range crossing.

I mean what truckie in his or her right mind is going to burn an extra fifty dollars worth of fuel just to avoid seven buck toll to use a seriously quicker range crossing?

And no the tunnels don't need to be big enough to accommodate once a month wide or explosive loads!

That's how you price them beyond any reasonable cost. I mean, it might make sense if every second truck carried and extra wide load; and a hundred dollar toll was extracted?

And who in their right mind would put an explosive load in a tunnel? Wasn't one critical, blown away bridge, already enough?

There simply has to be literally dozens of shovel ready projects around Oz that could be financed off budget, via the same funding paradigm?

Finance as many as there's money for!

I mean, we have a super fund larger than our economy; and always on the lookout for SAFE (tax free?) investments!

And that's all we need to get thousands economically engaged and leverage additional snowballing economic activity and ever more tax receipts!

Doing nothing is simply not an option! So, chart another course that will meet with voter approval!

Who cares if that then causes the big end of town and a few circular thinking conservatives, to throw a hissy fit!?

Even there there's some consolation in opening a myriad of private investment doors, even as a pitiful few close! And no, none of them ever result in private ownership of critical infrastructure!

If management teaches just one thing, it teaches that there is always a better way.
Posted by Rhrosty, Thursday, 12 February 2015 12:43:45 PM
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Rhorsty; Do you have any examples of this type of funding?
Posted by omni, Friday, 13 February 2015 1:27:55 PM
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Bond financing has a number of issues that are being played out right thruout asia as follows.

1) Government must play a significant role in ensuring their provision and in regulating price.
2) The utility of the asset controls the bond rather than the strength of the balance sheet for the builder-operator, to get the utility up you need to grant the operator monopoly or near monopoly status, this is politically unpalatable.
3) During the construction phase you are in negative cash flow with no fixed end date for that to change. (construction variability)
4) Operational phase has variable cash flow depending on Government changes and demand risk. When one adjusts for these risks by using flexible terms contracts investor incentive tanks.
5) The long term nature of bonds are of interest to investors such as superannuation companies who, by their very nature, are risk adverse. It follows that they are not a source for construction phase finance. That has to be provided by or underwritten by government = increased debt.
6) Bond financing IS used once the assets are built as the cash flow settles and the bond (or asset value) is properly settled against income.
7) Asset value based on income is often less than the utility value to the peoples the asset has been built to serve. Meaning someone has to pick up the difference, typically this is done by government which increases debt.

Overall, it is my view that taking low performing assets and turning them into new assets with higher utility is the way forward. The utility of the poles and wires does not evaporate, they are still there feeding our economy power, yet under the plan to sell-lease these assets we have increased utility from the new assets we construct. this is how you have your cake and eat it.
Posted by omni, Saturday, 14 February 2015 7:25:43 AM
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