Power sale an option in Qld selloff

The Queensland government has opened the door to further privatisation of its power sector assets as it struggles to revive the state's financial health.

Since Queensland Premier Campbell Newman was elected last year he has moved to slash government costs, starting with a hefty round of public sector retrenchments while the state considers privatising and outsourcing a host of other services.

A review led by former federal treasurer Peter Costello called for the full sale of the Queensland government's remaining electricity assets, including its "poles and wires" distribution assets.

In its response on Tuesday, the Queensland government ruled out selling the power sector's distribution assets, although it opened the door to selling power generation assets.

It sold the state sector's electricity retailing assets to Origin Energy and AGL several years ago.

In response to the Costello recommendations, the Newman government said it would seek a mandate from the electorate before anything was sold.

Even so, selling the power generation assets was "worthy of an open and transparent ... debate", the government said, pointing to the "significant financial risks" of continued ownership.

Queensland's main government-owned power generators are CS Energy and Stanwell.

The planned asset sales follow a study released on Monday by the Australia Institute, which cast doubt on the benefits of privatisation in the power sector, by pointing to the fact power price rises have outstripped the underlying rate of inflation.

The Energy Supply Association on Tuesday rejected this study, arguing electricity prices in Victoria, which has fully privatised its power industry, have risen less than other states, with Victoria among the most competitive in the world.

"Deregulation encourages competition and that's what keeps prices ... [as] low as possible," head of the association Matthew Warren said. "Since South Australia announced it was deregulating retail prices in December last year, retailers there have delivered price cuts of between 9 and 16 per cent."

Along with opening the door to selling further power industry assets, Queensland said it would move to introduce contestability and competitive tendering to the public transport sector, as well as study privatising the ports of Gladstone and Townsville.

The government was also open to the possibility of selling off Queensland Investment Corporation.