Hon Bill English
Minister of Finance
Hon Simon Power
Minister for SOEs

9 April 2009 Media Statement

Ministers seek better performance from SOEs

The Minister of Finance Bill English and the Minister for State Owned Enterprises Simon Power tonight gave the 13 chairs of the 15 state-owned enterprises a clear message of what taxpayers expect of them.

"The Government is concerned about the financial performance of SOEs, coupled with the challenging economic conditions, and we regard a new focus as necessary," Mr English said.

"As shareholders of the SOEs, which comprise just under $24 billion in taxpayer investment and 20 per cent of the Crown's balance sheet, we are committed to raising issues relating to the contribution by SOEs to the economic recovery.

"A return on equity across the SOE portfolio of 1.5 per cent* is not good enough.

"This was the first opportunity to meet all the chairs in one room against a background of deteriorating economic circumstances.

"They were told that the remainder of the Crown's balance sheet – ministries and departments – have been subjected to value-for-money reviews and scrutiny of their spending, and we expect a similar level of focus to be applied by SOEs to their own businesses.

"The Government expects them to focus on how they are running their businesses, where the potential for productivity lies, and how they compare with their private sector counterparts," Mr English said.

Mr Power said the Government's approach to assessing performance will be three-tier: individual SOE performance, portfolio-wide performance, and performance within the Crown balance sheet.

"But there has to be a balance. We made it clear we expect SOEs to use levers other than blunt instruments like prices and jobs to achieve performance.

"SOEs have to be mindful of the effects of pricing and remuneration. We expect them to be profitable and return appropriate dividends to the taxpayer – but without ratcheting-up prices.

"We emphasised that better performance must not come at the expense of consumers and businesses, and that SOEs should be mindful of the current economic climate when paying bonuses.

"We are driving an agenda that will see an eventual regime of disclosure around the performance of SOEs mirror those applied to publicly listed companies for transparency and good-practice reasons," Mr Power said.

* Based on annualised figures from the 2008/09 interim results

ENDS

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