Good returns for forests, ports

06/08/2008 - 22:00

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The federal government's Productivity Commission has released its evaluation of the financial performance of 86 government trading enterprises across Australia.

Good returns for forests, ports

The federal government's Productivity Commission has released its evaluation of the financial performance of 86 government trading enterprises across Australia.

The report also examines the impact on capital management of inadequate compensation for community service obligations and of the persistent poor performance of some GTEs.

The 86 GTEs monitored provide services in key sectors of the economy -- including electricity, water, urban transport, railways, ports and forestry -- and account for around 1.7 per cent of Australia's GDP.

Aggregate profitability increased in the electricity, urban transport and ports sectors, but declined in the rail, water and forestry sectors.

Despite some improvement, about half of the monitored GTEs did not achieve commercial rates of return in 2006-07, underscoring a long-term inability to operate these businesses on a fully commercial basis in accordance with competition policy undertakings.

The commission observed that the efficient operation of GTEs was important both to the wellbeing of the community and the competitiveness of Australian industry, and continuing poor performance of many GTEs was of concern.

The economic and social benefits to the community over and above the direct benefits paid for by consumers to GTEs is recognised and it is current government policy to make payments to the GTEs for meeting CSOs.

Urban transport, rail and forestry GTEs rely most heavily on government grants, with WA's Public Transport Authority receiving 83 per cent of its revenue from grants.

Overall return on assets improved to 11.5 per cent in 2006-07 for electricity GTEs, though WA businesses do not participate in the National Electricity Market.

WA's electricity generator, Verve Energy, recorded a loss before tax of $75.8 million in 2006-07 and attributed this to limited gas availability, forcing the use of higher-priced liquid fuels. It also cited the vesting contract with electricity retailer Synergy as limiting its ability to charge market rates, which was reflected in its loss before tax.

Western Power recorded a profit before tax of $99.3 million in 2006-07.

Synergy recorded a profit before tax of $64.2 million in 2006-07 and received $30.9 million in CSO funding for a number of services including rebates for seniors, veterans and pensioners.

Horizon Power recorded profit before tax of $11.5 million in 2006-07 with total assets increasing by 23.3 per cent, which included the recognition of two new power stations valued at $91.5 million.

For water GTEs, overall profit before tax decreased by 7.8 per cent in real terms, with WA water provider Water Corporation bucking the trend with a 39 per cent increase in profit before tax.

Eighteen water GTEs received CSO funding totalling $745 million in 2006-07, providing 10.2 per cent of sector income.

The volume of water supplied by most metropolitan water GTEs has decreased since 2001-02, however the Water Corporation experienced a significant increase (9.9 per cent) in urban water supplied over the same period.

WA transport service provider Public Transport Authority (PTA) recorded a profit before tax of $41 million in 2006-07, a $40.4 million increase on 2005-06.

This was attributable to a $100 million increase in total revenue received from the WA government.

Prices for PTA's services are set by the WA Government and in 2006-07, fare increases were restricted to the change in CPI.

Port GTEs increased their overall after-tax profit by $28.2 million in real terms to $462 million in 2006-07.

Within the sector, most of the increase in profit was attributable to Central Queensland Ports Authority and Tasmanian Ports Corporation, with profits declining for six GTEs.

Fremantle Port Authority handled total port trade of 25 million tonnes in 2006-07, 32,000t less than in 2005-06.

Bunbury Port Authority handled 13.5mt of cargo in 2006-07, representing a 10.8 per cent increase from 2005-06, with alumina accounting for 67 per cent of total port throughput by tonnage in 2006-07.

Australia's largest port by tonnage is Port Hedland Port Authority, which handled total cargo throughput of 112mt, the majority of which was iron ore.

Albany Port Authority had a cargo throughput of more than 3.5mt in 2006-07, representing a 31.6 per cent increase on 2005-06.

Dampier Port Authority ranked as Australia's second largest port by tonnage with the main cargoes moving through the port being iron ore and liquefied natural gas.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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