Financial Performance of Government Trading Enterprises, 1998-99 to 2002-03

The Productivity Commission has released an update 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 $58 billion in 2002 03 and they controlled assets valued at more than $170 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.

Over the 1998-99 and 2002 03 monitoring period, the profitability of businesses generally improved. Aggregate return on assets rose from 5.6 to 6.1 per cent for the GTEs as a group (excluding Telstra). In 2002 03, profitability in the electricity, ports and forestry sectors improved, whereas in the railways sector it declined. The financial performance of the water and urban transport sectors was largely unchanged.

The Commissioner overseeing the study, Mike Woods, said “the financial performance of GTEs has improved overall. ” Even so, “despite governments’ objective to operate them in a commercial manner, the majority are still failing to achieve a commercial rate of return.”

The study also revealed that there is scope to improve the reporting and performance monitoring accountability mechanisms of GTEs.

This study forms part of a continuing program of research into the performance of economic infrastructure industries and the impact of microeconomic reforms.