The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Media Release of 26/07/2007

NO.066

PRODUCTIVITY COMMISSION RESEARCH PAPER ON THE FINANCIAL PERFORMANCE OF GOVERNMENT TRADING ENTERPRISES

The Treasurer today welcomed the release of the Productivity Commission's research paper into the financial performance of Government Trading Enterprises (GTEs) from 2004-05 to 2005-06.

The research paper provides an independent and comprehensive analysis of the financial performance of various GTEs, most of which are owned by State and Territory Governments and operate in the electricity, water, transport and forestry sectors.

The Productivity Commission has reported that the overall financial performance of all sectors generally improved in 2005-06.

However, the Commission has found once again that about half of the monitored GTEs earned less than the average return on long-term bonds in 2005-06, with an even greater proportion failing to earn a commercial rate of return (which includes a margin for risk).

In addition the Commission reported that over 2004-05 and 2005-06, GTEs in the electricity sector paid out around $2.5 billion in dividends to State and Territory Governments, GTEs in the water sector paid out nearly $2 billion, and GTEs in the rail and ports sectors paid out over $200 million, respectively (table attached).  In the case of the electricity and water sectors, dividend payouts were well in excess of 50 per cent of operating profits after tax.

The Commission quite rightly emphasises the importance of GTEs operating efficiently, given their role as significant providers of infrastructure services that are fundamental to the wellbeing of Australians.

Timely and effective implementation of COAG’s National Reform Agenda commitments, agreed between the Australian and State and Territory Governments in April of this year, will go a long way towards realising the gains from improving productivity, competitiveness and efficiency in crucial infrastructure sectors.

These reforms have the potential to boost Australia’s productive capacity at a time when we should be doing everything possible to capitalise on the favourable global economic environment.

It is also incumbent upon the States and Territories to ensure that they undertake sufficient investment in essential transport and other economic and urban infrastructure, so as to deliver the appropriate level and quality of services to Australian businesses and households.

The research paper is available on the Productivity Commission’s website: www.pc.gov.au.

MELBOURNE
26 July 2007

Contact:           Renae Stoikos 03 9650 0244



Productivity Commission research paper on the financial performance of Government Trading Enterprises in 2004-05 and 2005-06 – information on dividend payouts, by sector

 

2004-05

2005-06

Change
($m)

Change
(%)

Total dividends 2004-05 to 2005‑06

Electricity(1)                  

 

 

 

 

 

Dividends ($m)

1151.7

1365.8

214.1

18.6

2517.4

Dividend payout ratio (%)(2)

115.9

68.5

 

 

 

Water

 

 

 

 

 

Dividends ($m)

893.7

1 102.7

209.0

23.4

1996.4

Dividend payout ratio (%)

80.2

77.9

 

 

 

Urban Transport

 

 

 

 

 

Dividends ($m)

2.3

34.8(3)

32.5

1413.8

37.1

Dividend payout ratio (%)

40.4

440.2

 

 

 

Rail(4)

 

 

 

 

 

Dividends ($m)

193.1

68.5

-124.6

-64.5

261.6

Dividend payout ratio (%)

86.2

10.0

 

 

 

Ports

 

 

 

 

 

Dividends ($m)

88.6

121.7

33.1

37.4

210.2

Dividend payout ratio (%)

36.4

39.3

 

 

 

Forestry

 

 

 

 

 

Dividends ($m)

55.6

59.1

3.5

6.3

114.7

Dividend payout ratio (%)

-228.6

91.7

 

 

 

  1. Includes Snowy Hydro Limited, in which the Australian Government has a 13 per cent shareholding.  Snowy Hydro Limited paid total dividends to all owners of $110 million in 2004-05 and $70 million in 2005-06.
  2. Ratio of dividends to operating profit after tax. An indication of the share of after-tax profits that are returned to shareholders.  A ratio greater than 100 indicates an entity has paid a dividend that exceeds its current after-tax profits, suggesting that some portion at least has been funded through previous years’ retained earnings or from borrowings.
  3. Solely attributable to special dividends paid by TransAdelaide to the South Australian Government, for the sale of tram infrastructure assets and depreciation funding.
  4. Includes Australian Rail Track Corporation (ARTC), owned by the Australian Government.  The ARTC paid no dividends in 2004-05 and 2005-06.