Financial Performance of Government Trading Enterprises 1997-98 to 2001-02

The Productivity Commission has released a study on the financial performance of 84 Commonwealth, State and Territory government businesses. These businesses provide essential services such as electricity, water and urban transport, as well as managing extensive rail, port and forestry assets. Combined, their revenues were $55 billion in 2001-02 and they controlled assets valued at more than $162 billion.

The study provides data on their financial performance over time and comparisons of performance among businesses in the same industry. It also includes information on aspects of corporate governance that can potentially affect long-term financial performance.

The results indicate a downward trend in the financial performance of many government businesses. Thirty businesses reported lower returns than those of the previous year, particularly in the ports and urban transport sectors. The profitability of half the businesses that have been monitored since 1997-98 has deteriorated in the past five years.

Commissioner Mike Woods, said: ‘Despite the objective of governments to operate these businesses in a commercial manner, over half of the monitored businesses earned less than the long term bond rate in 2001-02. An even greater number failed to achieve a commercial rate of return.’

This study forms part of a continuing program of research into the performance of economic infrastructure industries and the impact of microeconomic reforms. This years study starts an examination of the governance of GTEs.