Government will act on audit and sell assets: Norton Rose

The Commonwealth government may appoint a number of investment banks this year to study the best way to privatise four state assets identified by the National Commission of Audit as ripe for sale in the short term, says Iain Laughland, a partner at law firm Norton Rose Fulbright.

“I wouldn’t be surprised to see a privatisation program initiated soon,” Mr Laughland told Data Room in an interview.

The commission identified Snowy Hydro, which the Commonwealth has a 13 per cent stake, Australian Hearing Services, Defence Housing Australia and ASC, which builds naval combat vessels, as assets to be sold as part of plan to bring the budget back into surplus.

Last year, the government appointed Lazard for a so-called scoping study of health insurer Medibank Private. Lazard recommended Medibank be sold in an initial public offering and that share sale will go ahead in the next 12 months.

Mr Laughland said some of the Commonwealth’s assets may be sold to a single buyer while an asset such as Snowy Hydro may be sold via an IPO after investment banks have conducted so-called scoping studies. The Commonwealth’s stake in Snowy Hydro’s fixed assets is worth $233 million.

Other state assets identified by the commission to be privatised in the medium term include Australian Rail Track Corporation, with assets worth $4.46 billion, and Australia Post and its $1.61bn worth of assets.

“I wouldn’t be surprised to see the government implement the commission’s recommendations promptly,” says Mr Laughland.

Still, bankers who spoke to Data Room on condition they not be identified expected few of the iconic assets the commission recommends will be privatised.

States including Queensland have appointed investment banks to conduct scoping studies. Premier Campbell Newman has bank recommendations on the potential sale of the ports of Townsville and Gladstone as well as a number of the state’s electricity assets. Western Australia is looking to sell some state assets to help return it to a triple A credit rating and New South Wales may sell its electricity assets following the sale of the ports of Botany, Kembla and Newcastle.

(Reporting by Brett.Cole@businessspectator.com.au)

(Editing by miranda.maxwell@businessspectator.com.au)