Asset sales fund set to climb beyond $10bn

THE fund underpinning the nation’s new asset sales program is set to climb next financial year to well over $10 billion.

THE fund underpinning the nation’s new asset sales program is set to climb next financial year to well over $10 billion as the Abbott government attempts to kickstart $125bn worth of infrastructure activity.

The government said yesterday it would use nearly $6bn in unspent money to act as the starting point for the Asset Recycling Fund to be accessed by the states for nation-building projects.

Proceeds from the looming Medibank Private float, said to be worth as much as $4bn, will be poured into the ARF, as will returns for a number of other potential privatisations.

While the Snowy Hydro was not listed as a potential sale, the federal, NSW and Victorian governments are expected to discuss a potential sell-off, worth as much as $6bn.

Australia Post, long mooted as a target for sale, has been taken off the chopping block after Labor failed to modernise the business, with it to deliver just a $21 million dividend next financial year.

The Australia Post dividend will potentially fall to zero the following financial year.

The government said yesterday that scoping studies would be conducted to examine the future structure of Defence Housing Australia, the Royal Australian Mint, Australian Hearing and Australian Hearing.

Finance Minister Mathias Cormann said the government would pursue significant asset sales. The expectations of more than $10bn already pouring into the fund is significant because if the states sell off every possible asset, the federal government will need to find at least $15bn in bonus payments.

The commonwealth has offered to pay the states a 15 per cent bonus for every dollar they take from privatisations and the money is then reinvested into new public works.

The Victorian government this month announced plans to sell off the Port of Melbourne, the nation’s busiest container port, with a likely value of at least $5bn.

The Queensland government is debating what assets should go and the NSW government recently sold the Port of Newcastle — the world’s biggest coal port — for $1.75bn.