THE NSW government has pocketed about $21 billion in asset sale funds from the Hunter over almost three decades.
So, where’s our $21 billion in funding?
It’s a tempting way to think about the way government works. When we think about the proceeds of privatisation, we tend to link it to big ticket spending items. Things that we can point to, and that politicians can pose next to.
In reality, it’s not so simple. Other things cost money too. Like health, education, and welfare. And, what’s more, we spend more on those things now as a percentage of our overall economy than we used to because, whether we realise it or not, the electorate expects more from its governments than ever before.
But it’s not our fault we think like this – it’s been a central tenet of this government. Mike Baird won an election arguing for the sale of the state’s electricity network on the back of the idea that it would fund infrastructure to grow the state’s economy.
Big ticket road and rail funding projects – mostly in Sydney – helped to convince the electorate that it was a good idea to sell those assets.
Part of the reason NSW has been able to do this is because of the Commonwealth government’s “asset recycling scheme” – a legacy of the 2014 budget – which rewards states for selling public assets by allowing them to apply for a 15 per cent top-up in funding for infrastructure projects built from the proceeds of asset sales.
The problem with this approach to government, some economists argue, is that it gives a false price point for public assets.
As the economist Stephen Koukoulas told a federal Senate economics committee in 2015, “if anybody offered me 15 per cent more for anything, I would be very tempted to sell it whether I wanted to or not because I know I would be able to do something else with the money”.
“It is interesting that none of these assets have been sold until this bonus, or incentive … has been offered,” he said.
“Presumably all of a sudden these assets are not more valuable – arguably, in a low inflation environment with a very subdued rate of economic growth, they are worth less today than they were some time ago.”
Given the Hunter’s contribution to the state’s coffers, it’s beholden on the government to give projects such as the Lake Macquarie interchange serious consideration.