Treasury two years ago advised the Government to have greater private sector involvement in state-owned enterprises (SOEs) to improve their performance.It also pushed for SOEs to borrow more from the private sector and pay special dividends to the Crown,
Treasury two years ago advised the Government to have greater private sector involvement in state-owned enterprises (SOEs) to improve their performance.
It also pushed for SOEs to borrow more from the private sector and pay special dividends to the Crown, arguing higher debt would put pressure on SOEs to perform.
It also advocated smaller and better quality SOE boards, according to Treasury reports released under the Official Information Act to the left wing blog The Standard. The reports were also obtained by NZPA.
In releasing the reports Treasury said no work had been commissioned by the Government on the sale of state assets. It is the government's policy not to sell state assets in its first term.
The Treasury report on improving the performance of SOEs said the current model is sound but the performance of SOEs has eroded over time.
"We think the model needs to be reinvigorated," Treasury said.
While recognising government policy and the broad political support for retaining state control and ownership of current commercial assets, better performance would be achieved by moving toward greater private sector involvement in SOEs, Treasury said.
"In our view greater private sector involvement with and scrutiny of SOEs would be the most effective way of improving SOE performance," Treasury said.
Options include the sale of bonds to the public or the partial listing of subsidiaries of SOEs on the stock exchange.
A number of SOEs have joint ventures with private sector companies, like the NZ Post's courier business joint venture.
"It is a relatively small step in substance to move from the Government owning less than 100 percent of a SOE subsidiary, to non-Government owned shares in a subsidiary being publicly tradable," the report said.
A further step would be to partially list some SOEs on the stock exchange in the same was as Air New Zealand is partially listed.
"This in our view would deliver greatest performance gains."
Only large SOEs would be suitable for partial listing. The report notes that partial listing is not consistent with government policy and Treasury does not intend under taking any work on partial listing.
The report also advocates greater public disclosure by SOEs, including annual meetings and investor presentations.
A separate report examines issues relating to a sale of hybrid bonds by NZ Post listed on the stock exchange's debt market.
The report notes that the market's continuous disclosure rules require material information to be communicated to the exchange before any other party, including ministers and this may conflict with the "no surprises" policy for ministers.
The debt market may be very willing to be flexible and NZ Post can discuss matters with ministers and officials up to the point where they become "sufficiently certain".
Treasury concludes that reporting requirements should not stand in the way of a NZ Post debt issue.
Two internal papers have been commissioned by Treasury's executive leadership team on SOE ownership, including issues of concern to the public connected with privatisation and these are still in draft form.
