28/09/2004 - 22:00

Money spinners

28/09/2004 - 22:00

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The State Government’s three big business enterprises – Water Corporation, Western Power and LandCorp – played a significant part in last year’s bumper budget surplus, with higher profits leading to increased dividends and “tax equivalent” payments.

Money spinners

The State Government’s three big business enterprises – Water Corporation, Western Power and LandCorp – played a significant part in last year’s bumper budget surplus, with higher profits leading to increased dividends and “tax equivalent” payments.

Newly released annual accounts show the three agencies collectively paid dividends of $412 million and tax equivalent payments of $302 million.

However, a close review of the accounts reveals the three agencies are not as lucrative as first appears.

They all receive multi-million dollar payments from the State Government to cover their so-called community service obligations.

As such, the dividends have in large part returned money from whence it came.

Looking ahead to the 2004-5 financial year, State treasury is assuming Western Power’s dividend and tax payments will fall substantially but the other businesses are expected to deliver higher returns.

The Water Corporation posted an 18 per cent lift in net profit to $386 million last year, a result helped by 34 per cent growth in revenue from developers’ contributions.

The State Government received total dividends of $291 million and tax equivalent payments of $168 million.

The dividends were just ahead of the Government’s CSO payments of $268 million, to subsidise the cost of country water services and pensioner discounts.

At Western Power net profit rose 8.8 per cent to $241 million on the back of a modest 4.1 per cent increase in sales revenue.

Its CSO payments, for pensioner concessions, were a relatively modest $35 million.

Despite the higher profit, its dividend was cut by 13 per cent to $104 million.

Chairman Neil Hamilton said an outstanding performance in the industrial program made a big contribution to the result.

State treasury has forecast an even lower dividend next year of $93 million, as a result of profit being dented by increased spending on network infrastructure and higher fuel costs.

Like the Water Corporation, LandCorp also benefited from the buoyant property market.

Annual sales increased to $148 million, 15 per cent above budget, while profit before tax jumped to $45 million, 57 per cent above budget.

The Government’s CSO payments to LandCorp jumped to $41 million, mainly to cover the cost of acquiring land at Hope Valley and Wattleup.

That compared with LandCorp’s annual dividend of $17 million, double the previous year’s level.

State treasury expects the dividend will double again next year to $35 million as LandCorp’s profit is boosted by increased land sales.

The Water Corporation is expected to deliver a slightly higher dividend next year, despite the impact of water restrictions and a freeze on charges.

 

Government Dividends

 

AGENCY                                DIVIDEND

Water Corporation                   $291m

Western Power                        $104m

LandCorp                                $17m

Other government business       $37m

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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