Queensland State Budget 2011–12

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That's because they have a system that is more focused on getting people around the city not bringing them in from their coastal towns

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From The Australian click here!

Final $2.2bn rail stake 'pawned' to pay off debt

Final $2.2bn rail stake 'pawned' to pay off debt

    by: Michael McKenna, Queensland political editor
    From: The Australian
    October 10, 2011 12:00AM

THE Bligh government has racked up a $2.2 billion loan against the remaining taxpayer-owned stake in Queensland Rail.

It had promised that would be sold from next year and used to pay off its spiralling debt.

Almost a year after the privatisation, it has emerged the state government is facing a $200 million interest bill after it cashed in early on the third share of QR National that was not offered in last November's public float.

In a complex deal, Queensland Treasury took out a 100 per cent loan to buy the government's remaining stake in the rail and freight company, with the $2.2bn poured into its coffers.

Treasurer Andrew Fraser told The Australian the money had been used to pay off "general government debt".

Griffith University economist Tony Makin described the deal as a "fiscal fiddle", with state opposition Treasury spokesman Tim Nicholls saying the government has "taken out a loan to pay off a loan".

"Queensland under Labor is now paying interest on interest and the state debt is heading north to $85bn, more than when the assets were first put up for sale in the first place," Mr Nicholls said.

The government had undertaken not to sell any of its stake until after QR National reports its financial results for 2011-12 to the stock exchange, with Mr Fraser saying after the June budget that he remained committed to using the proceeds to pay down debt.

The $2.2bn loan arrangements were revealed in this month's annual reports of Queensland Treasury Holdings and the Queensland Treasury Corporation, both government-owned, which lent the money for the share buyout.

Mr Fraser said the deal was an "accounting transaction" and the government had used the $2.2bn to pay off debt as promised, in line with the $4.6bn raised from the sale of 66 per cent of QR National on the sharemarket.

"The $2.2bn received from QTH was used to pay down debt, while QTC still carries outstanding debt of $2.2bn," Mr Fraser said. "That will be paid out when the government sells QTH's stake in QRN."

Mr Fraser confirmed interest on the loan had already risen to $94m.

By the time the shares are sold on to the market, the interest bill could be more than $200m, which will be taken out of the proceeds of the sale.

The loan was taken against the institutional strike price of $2.55, at the time of the float, with the shares closing at $3.11 on Friday.

Professor Makin was surprised by the deal and said it was difficult to trace where the money had been spent.

"It now looks like a $2.2bn dollar fiscal fiddle," he said.

Mr Nicholls said the government had "pawned" Queensland's remaining shareholding in QR National.

"Queenslanders were disappointed about being lied to about the asset sales by the Bligh Labor government, but thought that at least the government had kept a stake for the future," he said.