Financial Performance of Government Trading Enterprises

The Productivity Commission has released an update on the financial performance of 85 Australian, State and Territory Government trading enterprises (GTEs). The report — Financial Performance of Government Trading Enterprises 2000-01 to 2004-05 also examines the capital structures of GTEs and capital withdrawal by State and Territory governments.

The 85 GTEs monitored in this report controlled assets valued at more than $186 billion and generated $63 billion in revenue, accounting for 86 per cent of all revenue generated by government owned businesses.

In 2004 05, aggregate profitability increased in the electricity, water and urban transport sectors compared with the previous year. Profitability declined in the railways, forestry and ports sectors.

Despite some improvement, a majority of the monitored GTEs failed to obtain commercial rates of return in 2004 05. The proportion of GTEs falling below this threshold has not changed significantly for over a decade.

Commissioner Mike Woods said that ‘COAG’s decision to reinvigorate reform through a new National Reform Agenda is timely because of the lack of long-term improvement in overall performance’. He added that ‘the Commission’s continued monitoring of GTEs will assist in evaluating the progress and gains from further infrastructure reforms’.

Financial performance monitoring of GTEs forms part of the Commission’s research into the performance of Australian industries and the progress of microeconomic reform. The monitored GTEs provide services in key sectors of the economy — including electricity, water, urban transport, railways, ports and forestry.