State-owned enterprises told to sharpen up their act

Bill English

Ministers have put the hard word on state-owned enterprises, telling them they must improve profits and productivity.

State-owned Enterprises Minister Simon Power and Finance Minister Bill English yesterday called the chairs of 13 of the 15 SOEs to the Beehive where they were given "a clear message" about what was expected of them.

"The Government is concerned about the financial performance of SOEs, coupled with the challenging economic conditions, and we regard a new focus as necessary," Mr English said after the hour-long meeting.

"A return on equity across the SOE portfolio of 1.5 per cent is not good enough."

Mr English said SOEs represented a $24 billion taxpayer investment and 20 per cent of the Crown's balance sheet.

"The Government expects them to focus on how they are running their busnesses, where the potential for productivity lies, and how they compare with their private sector counterparts."

Mr Power said he and Mr English had emphasised that better performance must not be at the expense of consumers.

"We made it clear we expect SOEs to use levers other than blunt instruments like prices and jobs to achieve performance," he said.

"We expect them to be profitable and return appropriate dividends to the taxpayer - but without ratcheting up prices."

When Mr Power announced the meeting two weeks ago the Labour Party said the four state-owned energy companies would have to increase power prices to meet the Government's demands.

Prime Minister John Key said that would not be acceptable.

- NZPA