Government owned corporations performance and governance
The Office of Government Owned Corporations (OGOC) supports and advises shareholding Queensland Government Ministers on the State’s ownership and administration of 17 Government owned corporations (GOCs). This includes ensuring a strategic approach to policy development for GOCs, monitoring performance and ensuring GOCs comply with relevant legislation. The 17 GOCs in Queensland operate in energy, transport, water and other essential infrastructure. View the full list of GOCs below.
Our clients
We provide diverse services to a wide range of clients encompassing:
- shareholding Ministers and their representatives/advisors
- energy sector (generation, distribution and transmission businesses)
- transport sector (rail and ports)
- other sectors (funds management and water resources).
Services to these clients include:
- providing critical analysis and assessment of GOC operations and investments, ensuring a rigorous, efficient and effective GOC governance regime
- building and maintaining effective client relationships
- conducting structural reviews to ensure an economic, reliable and efficient delivery of services
- developing strategic advice and medium to long-term policy objectives for individual GOCs and the GOC sector as a whole, as well as advising GOCs of shareholding Ministers’ requirements and decisions and facilitating their implementation.
Structure
- Under Treasurer, Gerard Bradley
- Deputy Under Treasurer, Tim Spencer
- Executive Director, Adrian Noon
- Deputy Executive Directors, Karen Masnata and Pauline Elliot
- Director, Energy, Stephen Hoult
- Director, Transport, Resources and Corporate, John Lawlor
- A/Director, Policy and Governance, Anthony Keogh
- Director, Fiscal and Strategy, Virginia McCabe
- Deputy Executive Directors, Karen Masnata and Pauline Elliot
- Executive Director, Adrian Noon
- Deputy Under Treasurer, Tim Spencer
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.
Key issues facing the output
- Queensland’s annual electricity consumption over the last three years averaged approximately 50,600 gigawatt hours. Electricity consumption in Queensland is expected to grow at an annual average of 3.9 percent over the next three years to 2010–11.
- New demand for rail and port capacity for coal exporters in excess of current supply capacity has recently emerged as Queensland’s export coal production continues to forecast rapid growth. Substantial investments by GOCs are being made in rollingstock and infrastructure capacity for increased customer requirements.
In addition, the Queensland Government has launched the Coal Transport Infrastructure Investment Program that incorporates GOC sector investment as well as investment by private operators. - The State’s strong economic performance is creating competition for skilled services, particularly in regional areas. This is requiring GOCs to implement innovative solutions in order to meet capital expenditure plans.
- For 2008–09, GOCs have budgeted $6.2 billion for their capital program. This will require debt funding of $3.8 billion primarily for key infrastructure projects under the South East Queensland Infrastructure Plan and Program.
- The introduction of a National Emissions Trading Scheme (NETS) in 2010 is expected to result in higher electricity prices. There is considerable uncertainty about the impact a NETS will have on the electricity market as the targets and framework of the scheme are yet to be determined.
Output performance highlights
| Measure | Target | Actual | |
|---|---|---|---|
| Quantity | |||
|
Number of GOC Statements of Corporate Intent completed |
18 | 161 | |
| Quality | |||
| Percentage of Ministerial correspondence prepared to agreed Treasury standards | 95% | 95% | |
|
Number of performance monitoring reports completed |
66 | 66 | |
| Timeliness | |||
|
Percentage of Statements of Corporate Intent received and reviewed within the scheduled timeframe |
95% | 100% | |
| Cost | |||
|
Cost of monitoring and governance per GOC |
$180,000 | $220,0002 | |
Variances
1. This number comprises 15 Statements of Corporate Intent of GOCs and one Operational Plan of Forestry Plantations Queensland (FPQ).
In 2007–08, actual numbers of SCIs received and reviewed by OGOC was 15 instead of the targeted 18 due to the following reasons:
a) When the Golden Casket transaction was completed on 29 June 2007, it ceased to operate as a GOC. 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 two parties.
b) Ownership, management and control of the Port of Bundaberg was transferred from the Bundaberg Port Authority to a subsidiary of the Port of Brisbane Corporation on 1 October 2007.
c) As part of the State Government’s initiatives to support energy solutions for industry within Queensland, Enertrade’s assets were transferred by way of a regulation issued under the Government Owned Corporations Act 1993. The transfer was completed in October 2007. Enertrade ceased trading in January 2008 and was formally wound up by regulation on 18 April 2008.
2. The actual cost of monitoring and governance per GOC increased to $220,000 as compared to the published budget of $180,000 due to amalgamation costs for GOCs. Although the number of entities has been reduced from 18 to 15 GOCs, significant effort was still required to oversee the implementation of these restructures within the GOC sector.
Our business priorities
Business priority
Work in conjunction with GOCs to implement administrative and governance arrangements resulting from amendments to the Government Owned Corporations Act 1993.
- Assisted GOCs to convert from statutory GOCs to company GOCs
In 2007–08, we assisted three statutory GOCs to become company GOCs, following amendments to the Government Owned Corporations Act 1993 in 2006–07. Company GOCs are subject to the Corporations Act 2001 and oversight by an independent regulator, the Australian Securities and Investments Commission.
In the year ahead, we will assist GOCs to comply with relevant policies and legislative frameworks, work with the remaining statutory GOCs as they move to become company GOCs, and organise regular forums for GOC company secretaries to build a shared understanding of shareholding Ministers’ expectations on GOC governance.
Business priority
Actively monitor GOCs operational and financial performance and assess investment proposals.
- Monitored effectiveness and efficiency in service delivery
An important role of OGOC is to actively monitor GOCs’ operational and financial performance to achieve effectiveness and efficiency in the delivery of services.
This role also ensures that the Queensland community benefits from dividends and tax equivalent payments.
Throughout 2007–08, we reviewed 66 GOC quarterly reports to monitor their performance. In the year ahead, OGOC will continue to fulfil this monitoring role through reviewing quarterly reports from 15 GOCs and one corporation sole (Forestry Plantations Queensland).
- Protected the State’s investments
In 2007–08, we assessed 39 investment proposals to a total of $4.8 billion to identify potential risks to the State and confirm risk management strategies.
The major investment proposals we assessed included:
- Queensland Rail’s Jilalan Rail Yard upgrade and Goonyella to Abbot Point expansion project (including Northern Missing Link)
- Cairns Port Authority’s Domestic Terminal Redevelopment
- Port of Brisbane Corporation’s construction of wharves and associated land works for terminals.
In the year ahead, we will continue to encourage GOCs to achieve market-like returns on investments, while at the same time ensuring they provide high-quality infrastructure and reliable services.
- Collected funds for critical infrastructure projects
In 2007–08, Queensland Treasury collected $1.2 billion in dividends and tax equivalent payments to fund critical infrastructure projects for water, rail and ports projects, electricity distribution and transmission networks, climate change and clean coal initiatives, and social housing stock. These projects will benefit Queenslanders while meeting the Queensland Government’s priorities. In the year ahead, we will collect $1 billion in forecast revenue to fund Government services.
- Supported large capital expenditure
Throughout 2007–08, we supported GOCs’ large capital expenditure by administering equity injections totalling $513 million on behalf of shareholding Ministers. Equity injections ensured the implementation of vital infrastructure projects to provide reliable supply and efficient delivery of services needed for our fast-growing State.
In the year ahead, we will continue to support shareholding Ministers by evaluating capital expenditure programs for 2008–09 budgeted at $6.2 billion, including electricity distribution network upgrades worth $1.9 billion.
Business priority
Work with GOCs to develop Statements of Corporate Intent in accordance with Government’s shareholding and legislative timeframes.
- Finalised Statements of Corporate Intent on schedule
Working collaboratively with GOCs, we finalised15 Statements of Corporate Intent for 2008–09 on schedule. These statements were agreed to by the GOC boards and shareholding Ministers by 30 June 2008.
In the year ahead, we will work closely with GOCs to finalise their Statements of Corporate Intent for the following financial year. The contents and format of the 2009–10 statements are to be agreed to by the GOC boards and shareholding Ministers by 30 June 2009.
Business priority
Streamline administrative processes relating to governance arrangements for GOC chief and senior executives.
- Boosted efficiency for GOCs
In 2007–08, we reduced time pressures on GOC boards and streamlined administrative requirements by incorporating the dividend consultation process with the preparation of GOCs’ Statements of Corporate Intent. During 2008–09, we will consider further scope to streamline and enhance administrative processes.
- Issued updated governance arrangements
To further streamline administrative and approval processes, we issued updated governance arrangements to GOCs that outlined submission requirements for chief and senior executive appointments and remuneration. In the year ahead, we will design processes to audit GOC compliance with the updated governance arrangements.
Business priority
Continue to monitor the impacts of industrial relations issues on GOCs.
- Finalised employment and industrial relations plans
As part of our monitoring and advisory role, we worked collaboratively with GOCs to finalise their employment and industrial relations plans for 2008–09 and incorporate these plans into their Statements of Corporate Intent. This work involved providing input into submissions on GOC enterprise bargaining frameworks and agreements. In 2008–09, we will review the Employment and Industrial Relations Planning Guidelines. We have and will continue to monitor the impacts of industrial relations issues on GOCs, including any Commonwealth legislative changes, in order to incorporate these and any other relevant developments in the Employment and Industrial Relations Planning Guidelines.
The 17 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
Ports
- Bundaberg Port Authority2
- Cairns Ports (formerly Cairns Port Authority)3
- Gladstone Ports Corporation (formerly Central Queensland Ports Authority)3
- Mackay Ports (formerly Mackay Port Authority)3
- Port of Townsville (formerly Townsville Port Authority)3
- Port of Brisbane Corporation Limited4
- Ports Corporation of Queensland Limited4
Rail
- QR Limited4
Water
- SunWater
Notes:
1. In December 2007, the Government sold Enertrade’s gas business, which includes the North Queensland Gas Pipeline, gas compression facilities at Moranbah and management of the Townsville Power Station Power Purchase Agreement to a consortium of AGL Energy and Arrow Energy. Enertrade ceased operations in early 2008.
2. On 1 October 2007, the ownership, management and control of the Port of Bundaberg was transferred from the Bundaberg Port Authority to a subsidiary of the Port of Brisbane Corporation.
3. Change of entity’s name was made effective on 13 March 2008.
Coal review strengthens links in chain
Queensland is gearing up to respond to world demand by providing infrastructure to support the efficient delivery of coal to local and global markets. Coal trains, like this one at Hay Point Port in Mackay, are helping to drive our State’s economy further.
Demand for Queensland’s coal is on the increase, and the State’s Government owned corporations are crucial to securing export earnings, jobs and the State’s place in world markets.
Central Queensland’s Goonyella system is a transport and logistics network connecting coal mines west of Mackay to the world’s largest coal export terminal at Hay Point. To maximise the performance of the system’s supply chain, in 2007–08 former Pacific National CEO Stephen O’Donnell conducted the Goonyella Coal Chain Capacity Review with help from a joint State Government-Queensland Resources Council steering committee.
The review’s recommendations – which include a business improvement program, a new central coordination role and the purchase of additional trains – are anticipated to deliver immediate and long-term gains in system capacity and effectiveness.
These improvements are expected to benefit coal companies, their customers, Government and privately owned rail and port owners and operators, and the communities of Queensland.
Image courtesy of Queensland Department of Mines and Energy
Last reviewed 5 November 2008
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