Financial Performance of Government Trading Enterprises 2004-05 TO 2005-06

The Productivity Commission has released its latest scorecard on the financial performance of 85 Australian, State and Territory Government trading enterprises (GTEs). The report - Financial Performance of Government Trading Enterprises 2004-05 to 2005-06 - also examines the influence of different asset valuation methods and rate of return measures on performance comparisons and capital management.

The 85 GTEs monitored in this report control just under 3.5 per cent of Australia's non household assets ($197 billion), and account for around 2 per cent of GDP.

Although in aggregate, profitability increased in all sectors (with the largest improvements in the electricity, railways and forestry sectors), 37 per cent of GTEs recorded declines, and 13 per cent did not report a profit.

Despite some improvement, about half of the monitored GTEs did not achieve commercial rates of return in 2005-06, underscoring a long-term failure of governments to operate these businesses on a fully commercial basis in accordance with their competition policy undertakings.

Commission Chairman Gary Banks said that the efficient operation of GTEs is important both to the wellbeing of the community and to the competitiveness of Australian industry, including our export 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.