Young Jonathan: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Text is incorporated into the Bound Volume 
Young Jonathan: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Sitting date: 29 June 2010. Volume:664;Page:12244. Text is incorporated into the Bound Volume.] 
JONATHAN YOUNG (National—New Plymouth) 
: 
 I am very happy to speak on Mighty River Power. We have heard some excellent information about this State-owned enterprise and about its success particularly during times of drought. Just recently I visited Lake Karapiro and drove over the dam that I used to walk over many times as a young boy. I swam in the lake went down the slide and watched people water-ski. The Rowing World Championships will be held on Lake Karapiro in the not too distant future and those rowers will have a lake full of water. We would not believe it now but we have come through a tremendous drought which has affected Mighty River Power’s dividends. 
This is a Government that believes in improvement; it really does. It is a Government that is focused on improvement in the return to the taxpayer of value for money. The Minister for State Owned Enterprises mentioned that towards the end of December 2008 the annualised return on equity was 1.5 percent but that has increased for the 6 months to the end of 31 December 2009 to 4.4 percent. We have to acknowledge that that is three times the rate of return. This is during a time when power costs in terms of inflation have been dramatically less than in the era of the previous Government when between 2000 and 2008 we saw an increase of four times the rate of inflation at 66 percent. We are achieving this improved rate of return on equity because we are expecting and driving for greater efficiency. 
In Mighty River Power’s statement of corporate intent one of its key objectives is to be as profitable and efficient as comparable businesses that are not owned by the Crown. It is good to see that we are seeing that sort of rate of return. We know that in 2008-09 Mighty River Power generated revenues of $1.1 billion and that came through not only its generation but also an increase of 1.7 percent growth in its customer base during that financial year which has continued to increase. By the end of 2009 there was a an increase of 50000 customers so the total customer base was 400000. Indeed this is a State-owned enterprise that is not only generating electricity from 90 percent renewable sources but also has increasing support from the people of New Zealand. We are happy to see that. It has shifted a number of its premises to Rotorua and the member for Rotorua Todd McClay forgot to mention and asked me to pass on that 60 jobs have come to his city because of that. He is very very pleased about that. 
The shareholding Ministers continue to look for a range of measures in terms of performance. To this end shareholding Ministers asked officials to establish a range of financial performance indicators to be used across the portfolio covering shareholder returns profitability efficiency leverage and solvency. There are many market forces and disciplines brought to bear in our State-owned enterprises. We have to congratulate Mighty River Power on its great financial result during a time when the water source and supply was severely depleted. In fact it had the highest capital return for the 2008-09 financial year out of all the Government-owned generators. It credits this to its focus on energy trading a large hydroelectrical component in its portfolio and a strategic move into geothermal generation. We heard the member for Taupo Louise Upston speak about that and how it brought a great increase. Thank you. 
Report noted.