Power Simon: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Text is incorporated into the Bound Volume 
Power Simon: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Sitting date: 29 June 2010. Volume:664;Page:12237. Text is incorporated into the Bound Volume.] 
Hon SIMON POWER (Minister for State Owned Enterprises) 
: 
 We are nearly halfway through a debate on some of the State-owned enterprise matters in this financial review estimates debate so I thought I would take a call at the midway point on the broader range of State-owned enterprises that have been selected by members for debate this afternoon. 
Hon David Cunliffe 
: Stung out of his slumber. 
Hon SIMON POWER 
: Well if that last contribution was the result of a Harvard education I think we have all got problems. The shareholding Ministers are custodians of around $25 billion of investment by taxpayers and State-owned enterprises. Members might be interested to know that this represents slightly more than 20 percent of the net worth of the Crown. Additionally State-owned enterprises hold almost $47 billion in assets. In the 2009 financial year they paid about $647.6 million in dividends which included a $150 million special dividend from both Meridian and Mighty River Power. 
The responsibility of shareholding Ministers is to ensure that this investment the $25 billion effectively delivers an appropriate return. As the member who has just resumed his seat David Cunliffe asserted correctly with regard to the facts recent returns—returns prior to this financial year—have been unsatisfactory although as Minister Brownlee pointed out they are now starting to improve. For the whole State-owned enterprises portfolio there was an annualised return on equity of 1.5 percent for the 6 months ended 31 December 2008. This increased to 4.4 percent for the 6 months ended December 2009. However the shareholding Ministers are firmly of the view that there is still plenty of room for improvement and we will be continuing along with officials to work with State-owned enterprises during the current business planning round to develop appropriate performance expectations. 
The shareholding Ministers will be looking at a range of measures in terms of performance. To this end Ministers have asked officials to establish a range of financial performance indicators to be used across the portfolio covering shareholder returns profitability and efficiency leverage and solvency. These indicators have now been agreed following consultation with State-owned enterprises and should be included in each of the companies’ 2010-11 statements of corporate intent. Shareholding Ministers will also use the current business planning round as an opportunity to discuss capital structure and dividend expectations. 
Hon Trevor Mallard 
: They’ve always looked at all of those anyway. 
Hon SIMON POWER 
: No they did not actually. Disturbingly they did not I say to Mr Mallard. The money invested in State-owned enterprises is taxpayers’ cash; it is not money that necessarily belongs to State-owned enterprises. That provides an incentive to see money returned to the Crown as a dividend. Of course those discussions as to whether money should be reinvested in the State-owned enterprises or returned to Ministers by way of dividend go on as part of that business planning round. 
The issue that the member who was previously on his feet raised about price rises deserves a quick comment before I resume my seat and allow the debate to continue. His Government had 9 years to implement his plan for dividends to be used to reduce power prices. Between 2000 and 2008 we saw increases of about 66 percent in those prices across the board. Over that period the Crown took $3.5 billion in dividends. I think it is a bit rich now for members opposite to give examples or advice about what this Government should be doing in that regard when those members had plenty of time to put their plan in place. Extracting performance is a very high priority for shareholding Ministers. We are making some progress but there is much work still to be done.