ACCC warns states against privatisation to boost budgets

THE head of the nation's competition watchdog has warned state governments against selling off assets for a quick buck.

In a speech in Sydney on Friday, Australian Competition and Consumer Commission chairman Rod Sims said governments needed to avoid a situation where immediate financial benefit came at the cost of an "effective tax on future generations".

"Some of Australia's key infrastructure assets, including significant ports and railways, are likely to be privatised in the coming years," Mr Sims said.

"The value of the assets to be sold is likely to be high and governments have begun announcing projects they will invest in as a result of the profits generated from these privatisations."

The Federal Government has offered the states and territories incentive payments of 15% of the value of any asset they sell, provided the proceeds go towards new infrastructure.

Mr Sims warned against selling major assets for a temporary budget boost and said governments should ensure sold infrastructure was closely regulated to alleviate competition and monopoly concerns.

He said there was a strong incentive for governments to maximise the sale price of their assets and this could come at a price.

He said there were risks that could follow a major sale if the new owners had a monopoly through the road, port or energy infrastructure they had bought.

"Monopolies can be harmful in that they can limit investment and innovation in upstream or downstream industries," he said.

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