Debt must be reduced to return to AAA credit rating: Nicholls

THE man holding Queensland's purse strings says the state has two choices - higher taxes or an asset sell-off.

Treasurer Tim Nicholls said selling government-owned businesses was among 155 recommendations the Cabinet would discuss as they poured over the Costello Commission of Audit on Wednesday.

He said the only way to return to a AAA credit rating was to reduce debt.

"The practical way of doing that as suggested by the commission is to sell government-owned businesses," he said.

"That's something the government is considering and discussing.

"Queenslanders need to have a discussion about the choices they want to make - do they want to have increased taxes and charges or sell down government businesses to reduce debt so we can continue to deliver services."

Mr Nicholls said the government was still anticipating a fiscal surplus by 2014-15 but it would need a 1% surplus a year for the next 50 years to achieve a AAA rating.

The government is expected to release former Australian Treasurer Peter Costello's Commission of Audit Report next week but the Cabinet met at the Executive Building on Wednesday to discuss which recommendations they will pursue or debate with the public.

Premier Campbell Newman publicly declared on Tuesday that he was "in the main" against asset sales.

He promised he would not sell the Port of Gladstone or any electricity assets without asking Queenslanders for their opinion.

But Mr Newman said Queenslanders could not "just put our heads under the pillow and pretend it's going to go away".

When asked how he would convince the premier that asset sales were the way to go, Mr Nicholls said the premier was "very amenable" to the discussions.

"The important thing though is that we are not doing it in the way Labor did it, that is springing it out of the blue, rushing a fire sale of assets," he said.

"We've been very open about it, there will be no sale of government businesses without taking it to the people first."
Energy Minister Mark McArdle said the asset sale discussion should be if, not when.

Agriculture Minister John McVeigh would not share his opinion on asset sales going into the audit meeting.

"We are studying the report and unlike the former government would never make any decision without going to the people first," he said.

Tourism Minister Jann Stuckey said she had read the whole 1000-page report and it was "fairly bleak reading".