The Queensland Government could finance plans and proposals for projects such as North Bank, light rail and an extension of South Bank with Federal Government bonds now that the interest rate is the lowest since 1942.
Queensland University of Technology (QUT) finance lecturer Dr David Willis, from the School of Economics and Finance, said the state governments had a golden opportunity to borrow to fund infrastructure projects at zero real interest rates for 10 years.
"The Queensland and other state governments should approach the Federal Government to allow them to use its guarantee to push a state bond to the equivalent of a federal government bond," Dr Willis said.
"The Federal Government offered this same facility to the banks through the GFC so it is nothing new".
"As it is only a contingent liability, the Federal Government could still achieve its goal of a balanced/surplus budget. At the same time it could support the states in a much-needed stimulus program at what would work out to be over 10 years a zero interest rate."
Dr Willis said the State Government could look at re-financing at this new cheaper rate.
"It depends on how the government has financed its present debt. Such a scheme could allow Queensland to borrow more for the same repayments."
Media contact: Niki Widdowson, QUT media officer, 07 3138 4999 or n.widdowson@qut.edu.au.
