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Annual Report 2006-07

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Government owned corporations performance and governance

The Office of Government Owned Corporations (OGOC), established in 2000, supports and advises shareholding Queensland Government Ministers on the State's ownership and administration of 18 Government-owned corporations (GOCs). This includes ensuring a strategic approach to policy development for GOCs, monitoring performance and ensuring GOCs comply with relevant legislation. With the 18 GOCs in Queensland operating in energy, transport, water and other essential infrastructure, OGOC deals with a range of complex issues.

Vision

To provide high level quality commercial, strategic, and policy advice in relation to the Government's portfolio of GOCs.

Mission

To lead the management of the State's interests in its GOCs, with a view to encouraging them to strive to achieve market-like returns on that investment, while at the same time ensuring that the GOCs provide high quality infrastructure and related services and meet appropriate corporate governance standards.

Structure

• Under Treasurer, Gerard Bradley
  • Deputy Under Treasurer, Tim Spencer
    • Executive Director, Adrian Noon
      • Deputy Executive Directors, Karen Masnata and Kylie Dickson 
        • Director, Energy, Stephen Hoult
        • Director, Transport, Resources and Corporate - vacant
        • Director, Policy and Governance, Virginia McCabe
        • Director, Fiscal and Strategy - vacant

Key issues facing the output

• Electricity demand in Queensland is growing at twice the rate of other states. In addition, there is reduced power generation at Tarong and Swanbank power stations due to drought, which is also affecting other generators in the National Electricity Market.
• The State's strong economic performance is creating competition for skilled services, particularly in regional areas, and is requiring GOCs to implement innovative solutions in order to meet their capital expenditure plans.
• The introduction of full retail competition into the electricity and gas retail markets in Queensland from 1 July 2007 and its impact on energy GOCs.
• For 2007-08, GOCs have budgeted $4.6 billion for their capital program, which will require debt funding of $1.3 billion to meet demand for efficient and reliable services.
• Current demand for rail and port capacity for coal exporters exceeds supply due in part to the significant and unforeseen increase in coal customers. Substantial investments are being made in rollingstock and infrastructure capacity for increased customer requirements.
• Implementation of changes to the Government Owned Corporations Act 1993 including the conversion of statutory GOCs to company GOCs and its impact, together with an alternative governance framework for GOC senior executive remuneration.

Output performance highlights

Measure	Target	Actual
Quantity
Number of GOC Statements of Corporate Intent completed	18	18
Quality
Percentage of Ministerial correspondence prepared to agreed Treasury standards	95%	99%
Timeliness
Percentage of Statements of Corporate Intent received and reviewed within the scheduled timeframe	95%	100%
Cost
Cost of monitoring and governing per GOC	$0.17M	$0.18M

Strategic business priorities

• Finalised Statements of Corporate Intent on schedule

  Working collaboratively with GOCs, we finalised their Statements of Corporate Intent for 2007-08 in a timely manner and they were agreed to by the GOC boards and shareholding Ministers by 30 June 2007.

  In 2007-08, we will work closely with GOCs to finalise their Statements of Corporate Intent for the following financial year. The contents and format of statements are to be agreed by the GOC boards and shareholding Ministers by 30 June 2008.

• Returned benefits to the community

  A total of $1.8 billion in GOC sector dividends and tax equivalent payments was collected by Treasury for the Queensland Government in 2006-07. This includes an impact on tax equivalents from the sale of energy retail assets. These dividends and tax equivalents were directed to fund essential government services for the Queensland community.

  GOCs are expected to return $1 billion in 2007-08 which will provide significant funding for the delivery of services to Queenslanders while at the same time meet the Queensland Government's priorities.

• Assessed risk to protect Queensland's investments

  Throughout 2006-07, we assessed 42 GOC investment proposals to a total value of $2.3 billion to identify potential risks to the State and confirm risk management strategies.

  The major investment proposals assessed included:

  • Queensland Rail's Broadlea to Wotonga Track Duplication
  • Cairns Port Authority's Cityport Precinct 12 Marina Site Development
  • SunWater's Monto Minerals Limited Goondicum Pipeline Project
  • Port of Brisbane Corporation's development of infrastructure within and connecting to north shore Hamilton
  • Tarong Power Station control systems refit
  • CS Energy Metgasco gas farm-in investment
  • ongoing investment in the electricity distribution and transmission network to ensure security of electricity supply.

  In the year ahead, we will continue to assess GOC investment proposals with other shareholding departments.

• Supported GOC's capital expenditure

  Equity injections totalling approximately $540.3 million were administered in 2006-07 on behalf of shareholding Ministers to support large capital expenditure programs. A number of GOCs are now carrying out these programs.

  We will continue to support shareholding Ministers by evaluating capital expenditure programs for 2007-08. The GOC sector's total budgeted capital expenditure for 2007-08 is approximately $2.8 billion, including electricity distribution network upgrades worth $1.7 billion.*

  *ENERGEX $914.3 million and Ergon Energy $823.6 million. Source: State Budget 2007-08 Capital Statement.

• Assist GOCs with the conversion process from statutory GOCs to company GOCs

  Following amendments to the Government Owned Corporations Act 1993 in 2006-07, all statutory GOCs will become company GOCs through the course of 2007-08.

  In the year ahead, we will assist GOCs to comply with relevant policies and legislative frameworks as they convert. We will also organise regular forums for GOC company secretaries or their equivalents to build a shared understanding of shareholding Ministers' expectations about GOC governance generally.

The 18 Government owned corporations

Energy

• CS Energy Limited
• ENERGEX Limited
• Ergon Energy Corporation Limited
• Queensland Electricity Transmission Corporation Limited (Powerlink Queensland)
• Queensland Power Trading Corporation (Enertrade) ¹
• Stanwell Corporation Limited
• Tarong Energy Corporation Limited

Funds management

•  Queensland Investment Corporation

Gaming

• Golden Casket Lottery Corporation Limited ²

Ports

• Bundaberg Port Authority ³
• Cairns Port Authority
• Central Queensland Ports Authority
• Mackay Port Authority
• Port of Brisbane Corporation
• Ports Corporation of Queensland
• Townsville Port Authority

Rail

• Queensland Rail

Water

• SunWater

In addition, OGOC is working closely with Forestry Plantations Queensland (FPQ) to monitor its performance. Although FPQ is not a GOC under the GOC Act, OGOC has recently been assigned to manage FPQ's relationship with its responsible Ministers.

1. On 15 May 2007 the Premier announced that the assets managed by Enertrade would be transferred to other GOCs. On 3 June, the Government announced further that the Enertrade gas business, which includes the North Queensland Gas Pipeline, gas compression facilities at Moranbah and management of the Townsville Power Station Power Purchase Agreement, would be sold along with the five GOC-owned wind farms and associated development sites. Enertrade will be wound up following the completion of the sale process. This is expected to be some time in early 2008.

2. The Golden Casket transaction was completed on 29 June 2007. The Government transferred the State's shareholding in Golden Casket Lottery Corporation Limited to Tattersall's Limited and a Licensed Lottery Operator Agreement was entered into between the parties. Under the agreement, Golden Casket will operate lotteries in Queensland until 2072 using the State's Lottery Licence (held by Queensland Lottery Corporation Pty Ltd). As part of the transaction, the Lotteries Amendment Act 2007 commenced on 29 June 2007, introducing new licensing arrangements for the conduct of lotteries in Queensland. Queensland Lottery Corporation Pty Ltd has been issued a Lottery Licence and Golden Casket has been issued a Lottery Operator's Licence. The State retains ownership of the key Golden Casket brands and trademarks, which have been licensed for use to Golden Casket.

3. The ownership, management and control of the Port of Bundaberg is to be transferred from the Bundaberg Port Authority to a subsidiary of the Port of Brisbane Corporation. The target date for the transfer is 1 October 2007.

Last reviewed 29 September 2008

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